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Internship Report on
“Overall Branch Banking and A Comprehensive Review on Investment of Al-
Arafah Islami Bank Limited”
1
“Overall Branch Banking and A Comprehensive Review on Investment of Al-
Arafah Islami Bank Limited”
Submitted to
Professor Ashraf Hossain
Dean
School of Business
Asian University of Bangladesh
Submission Date
March 30, 2008
2
Md.Ataur
Rahman
Program - BBA
ID # 200330154
Major in Marketing
Uttara Campus
This report is submitted as the partial
fulfillment of BBA program
3
Date: August 2, 2007
To
Sub: Submission of Internship report on “Overall Branch Banking and A Comprehensive Review
on Investment of Al-Arafah Islami Bank Limited."
Dear Sir,
With due respect and humble submission I would like to inform you that I am the students of
Md.Shohel Khan ,School of Business . It is indeed a great pleasure to have the opportunity to
submit the Internship report. I have prepared the opportunity to submit the Internship report
according to your instructions. The topic name is " Overall Branch Banking and A Comprehensive
Review on Investment of Al-Arafah Islami Bank Limited. ". While preparing this Internship
report I came to know about several terms on banking sector. I have tried my best to present all
the things to make the report more informative and usual one. If any part of the assignments
means inappropriate and irrelevant with the subject please advise me.
In fine I am very grateful to you for assigning such an important area of banking and your kind
and generous guidance to make the report successful.
Thanks and Best Regards,
Md. Shohel khan.
ID:200420373
Batch:21st
Program:BBA
Major:Finance
AUB
4
I would like to acknowledge the guidance and effort of Internship and
placement committee for arranging such a nice program for co-relating
theoretical learning with real life situation.
It’s a pleasure to convey my heartiest gratitude and greeting to my
honorable supervisor Mr. Md. Zahid hossain, Lecturer, School of Business,
Asian University of Bangladesh (AUB). None of his co-operation it would
have been possible to prepare the report into a nice ending.
I would also like to acknowledge and thanks the following personnel who
has extended their whole-hearted co-operation for preparing the report.
1.Md. Forkan Uddin Managing Director Experience : Over 25 Years of Travel Trade and International Recruitment Special Record : Founder of Saimon Group of Companies, the giant Travel and International Recruitment House in BangladeshPresident of Association of Travel Agents in Bangladesh (ATAB)Director of Dhaka Chamber of Commerce & Industries (DCCI) 2.Wazirul Alam Position : Director, Sales & Marketing Experience : Over 30 years in multinational companies Special Record : Ex-Country Manager, American Express Travel Related Services –Bangladesh,Executive member of The Institute if Management Consultants of Bangladesh,General Secretary of The Institute of Marketing & Research Bangladesh.
3.Col.(Retd.) Shafi Ahmed Position : Director, Administration Experience : Over 28 Years in
Bangladesh Army Special Record : Achieved “Ellie Wiesel Ethical Award” for distinguished
services in East Timor, as member of UN Team.
I am also gratitude to all other Personnel of Link Persons International Ltd. for
their earnest co-operation.
Finally, I would like to convey my heartiest thanks and gratitude to all of my
teachers, friends, and many others who extend their support to prepare the
report.
5
ACKNOWLEDGEMENT
Preface
We shall be benefited of by our education if we can effectively apply the institutional education
in practical fields. Hence, we all need practical education to apply theoretical knowledge in real
world. By considering this importance arranges internship program each semester compulsory
for the students of Bachelor of Business Administration to complete the requirement of the
course. As a part of this program my topic of the study was selected as “Overall Branch
Banking and A Comprehensive Review on Investment of Al-Arafah Islami Bank Limited.”.
I tried my best to conduct effective study by collecting current data. Even though if mistake
appears, it is truly undesirable. So I would request to look at the matter with merciful eyes.
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Table of Contents
Chapter – 1 Introduction 01-051.01 Introduction 011.02 Rational of the study 031.03 Scope of the study 041.04 Methodology 041.05 Time period of the study 041.06 Sources of data collection 041.07 Objectives of the report 05
Chapter – 2 Organizational overview 06-152.01 Organizational overview of AIBL 072.02 Historical background of AIBL 072.03 Mission of AIBL 082.04 Vision of AIBL 082.05 Special feature of the bank 082.06 Objectives of AIBL 092.07 Auditors 102.08 Training and Motivation 102.09 Human Resources in AIBL 112.10 Line of business 112.11 Activities of AIBL Foundation 122.12 Branches of AIBL 132.13 Hierarchy of position in AIBL 142.14 From of organization 152.15 Environment of AIBL 15
Chapter – 3 AIBL Products and Service 16-223.01 Deposit 173.02 Investment 193.03 Foreign trade 22
Chapter – 4 Overall Branch Banking 23-954.01 General Banking practices in AIBL 244.02 Cash 244.03 Procedures of opening of Accounts 25
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4.04 Types of Deposit Account and There Formalities 254.05 Remittance 324.06 Advance Banking 344.07 Formalities for opening Foreign Currency (FC Account) 514.08 Import Procedure 544.09 Export Procedure 594.10 Incoterms 654.11 Back to Back L\C 674.12 Foreign Exchange 684.13 Letter of Credit (L\C) 794.14 Procedure for opening L\C 844.15 Clearing House & Collection of Bill 94
Chapter – 5 Investment 96-995.01 Definition of Investment 975.02 Introduction of Investment 975.03 AIBL 2006 Deposit, Investment & Assets Information 98
Chapter – 6 Investment Decision 100-104
6.01 Lending Decision 1016.02 Safety 1016.03 Liquidity 1016.04 Profitability 1026.05 Purpose 1026.06 Security 1036.07 Disposal 1036.08 National Interest 104
Chapter – 7 Role of CIB in Bangladesh 105-107
7.01 Role of CIB in Bangladesh 1067.02 Functions of CIB 106
Chapter – 8 Credit Risk Analysis 108-122
8.01 Credit Risk Grading 1098.02 Definition of Credit Risk Grading 1108.03 Function of Credit Risk 1108.04 Use of credit Risk Grading 1118.05 Numbers & Short Name of graders Used in the CRG 1118.06 Regulatory Definition of Grading of classified accounts 1128.07 Basis of Loan classification 1128.08 How to Complete Investment (Credit) Risk Grading 115
Chapter – 9 Investment Assessment 123-127
9.01 Investment Assessment 124
Chapter – 10 Concluding Part 128-135
10.01 Summary of Findings 12910.02 Problems & Limitation 13110.03 Recommendation 13210.04 SWOT Analysis in AIBL 133
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Executive SummaryExecutive Summary
Through this Internship report an attempt has been made to assess the
performance of Al-Arafah Islami Bank Limited (AIBL). Basically this
report has been developed from the basis of secondary data. The sources of
information are annual report of the bank, internet, newspaper, magazine
etc. My experience also helps me to establish this report.
Banking is a system of intermediation. Modern commercials banks since their
early days had been doing two main functions. These are Acceptance of
deposits from the public and lending money to the people.
In addition, they also involved themselves in investment. Apart from the
principal function, they also have to render various services to the people.
The ever-changing demands of the society, business and industry have led
the banks to undertake such services for enhancing their utility to the society
at large. Based on nature of these services, they may be classified as under
(a) agency services: collection and payment of cheques, payment on behalf
of customs, purchase and sale of stocks, acting as trustees, acting as agency
(b) General services: opening letter of credit, safe custody, dealing in foreign
exchange, providing Investment reports, underwriting of loans, providing
remittance facilities, complete service in foreign trade.
The structure of the banking system has changed substantially over the last few years.
NCBs’ role has gone down. Their share in total assets went down from 54 percent in 1998 to
34 percent in 2006. On the other hand, PCBs’ share went up from 27 percent in 1998 to 65
percent in 2006. The change reflects adoption and implementation of new policies for the
banking sector.
It is unlikely true that default culture in our banking sector is a common phenomenon which
hampers the strength of the banking sector. But arrival of private bank in our economy has
rapidly change this environment. The classified loan over the total loan of our private bank is
between 5%-8% whereas it is more than 25% in our government bank. As a private
commercial bank we are very much conscious in this regards.
9
One important challenge that the banking sector is facing is the introduction
of information technology in the banking system in an aggressive manner.
This is required to improve management efficiency, reduce operational cost,
improve customer services, and increase transparency.
The earning and profitability of the banking sector have also improved in recent years and it
is generally measured by return on assets (ROA) and return on equity (ROE).
Hence, the banking sector would play a vital role in the development of the
country and efficient and sound banking management would led the country
to reach at the highest peak of success.
AIBL aims at maintain in effective relationship with the customers, marketing of Investment
products, exploring new business opportunities etc. AIBL takes well calculative business risk
while safeguarding it’s capital, financial resources and profitability from various risk.
Presently, Al-Arafah Islami Bank Ltd. has got 46 braches and a total of 784 employees
working in AIBL (as of June 2006). Its authorized capital is Taka 250 crores and the paid-up
capital is Taka 85.40 crores
The bank conducts its business on the principles of islami sarih. Musharaka, Bai-Murabaha,
Bai-Muajjal and Hire Purchase investment modes are approved by Bangladesh Bank.
Naturally, its mode and operations are substantially different from those of other
conventional commercial banks. There is a Shariah Council in the bank who maintains
constant vigilance to ensure that the activities of the bank are being conducted on the
precepts of Islam.
The Al-Arafah Islami bank has an Asset Liability Committee (ALCO) that reviews liquidity
requirement of the bank, the maturity of assets and liabilities, deposit and lending pricing
strategy and the liquidity contingency plan. The prime objective of the ALCO is to monitor
and avert significant volatility in net profit income, investment value and exchange earnings.
AIBL strives hard to optimize profit through conduction of transparent business operations with
in the legal and social framework with malice to none and justice for all.
To achieve the maximum benefit from the investment both funded and non
funded the major issue is select the sound ones. In this regard project
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appraisal as well as evaluation should be considered most. Before financing
in any project the quantities and qualitative judgment is essential. The
financial strength, management structure, business size, business line,
nature of business, competitor etc. should be identified. After financing
strong monitoring is also required. As a member of the banking family we are
bound to follow the rules and regulation of the government. So we are
conscious enough to conduct our operation abiding by direction of
Bangladesh Bank. For this reason we have to serve different information in
the credit information bureau of Bangladesh Bank.
11
1.01 Introduction:
12
The Jews in Jerusalem introduced a kind of banking in the form of money
lending before the birth of Christ. The word 'bank' was probably derived from
the word 'bench' as during ancient time Jews used to do money -lending
business sitting on long benches.
First modern banking was introduced in 1668 in Stockholm as 'Svingss Pis Bank’,
which opened up a new era of banking activities throughout the European Mainland.
In the South Asian region, early banking system was introduced by the Afgan traders
popularly known as Kabuliwallas. Muslim businessmen from Kabul, Afganistan came to
India and started money-lending business in exchange of interest sometime in 1312
A.D. They were known as 'Kabuliawallas'.
The financial system of Bangladesh consists of Bangladesh Bank (BB) as the central
bank, 4 nationalized commercial banks (NCB), and 5 government owned specialized
banks, 30 domestic private banks, 10 foreign banks and 28 non-bank financial
institutions. The financial system also embraces insurance companies, stock exchanges
and co-operative banks
The structure of the banking system has changed substantially over the last few years.
NCBs’ role has gone down. Their share in total assets went down from 54 percent in
1998 to 40 percent in 2006. On the other hand, PCBs’ share went up from 27 percent in
1998 to 43 percent in 2006. The change reflects adoption and implementation of new
policies for the banking sector.
One important challenge that the banking sector is facing is the introduction of information
technology in the banking system in an aggressive manner. This is required to improve
management efficiency, reduce operational cost, improve customer services, and increase
transparency.
Hence, the banking sector would play a vital role in the development of the country and
efficient and sound banking management would led the country to reach at the highest
peak of success.
1.02 Rational of the study:
With the rapid growing competition (due to free market economy) among nationalized,
foreign and private commercial banks as to how the banks operates its banking
13
operation and how customer service can be made more attractive, the expectation of
the customers has immensely increased. Reciprocating the sentiment,
commercial/private banks are trying to elevate their traditional banking service to a
better standard, to meet the challenging needs, demands. Side by side these banks
have now concentrated their attention towards diversification of their products for better
performances and existence. For the above circumstances, it has become necessary
for Al-Arafah Islami Bank Ltd, one of the leading commercial banks, to focus its
attention towards the improvement of the customer service. That’s why it is quite
justified to make an in-depth study about its operation and evaluate the service provided
by this bank and scope for its improvement. The study may help formulating policy
regarding the ideas relating to the feelings of the customers and bankers.
Further more, Al-Arafah Islami Bank Ltd executives who are actually executing the
policies undertaken by the top management will have a chance to communicate their
feelings and will have the feedback about their dealing from the customers.
1.03 Scope of the Study:
The scope of this report is to analyze the operation of all departments and to evaluate
the performance of the different departments of Al-Arafah Islami Bank Ltd
1.04 Methodology:
The methodology of the report is stated below, which was appropriately exercised in
achieving the above stated objective.
1.05 Time period of the study:
For the fulfillment of the desired purpose following working days are spend to various
department:
Al-Arafah Islami Bank Ltd. Motijheel Branch, Rahman Mansion, 161, Motijheel C/A, Dhaka,
Bangladesh.
1.06 Sources of Data collection:
The inputs are collected from two sources:
a) Primary Sources :
Discussion with Bank Officers.
Personal observation.
Desk work in different sections/departments.
14
b) Secondary Sources:
Annual report of the Bank.
Consultation of related book and publications.
Different Statements.
File, Balance sheet and various documents.
c) Data Processing:
Collected information is processed by the use of computer system. Detailed
analysis, working variables and working definitions are embodied in the report
1.08 Objectives of the Report:
The primary objectives of the report are:
To submit a report, for the fulfillment of my BBA practical.
The main objective of this report is to find out the “Overall Branch Banking and A
Comprehensive Review on Investment of Al-Arafah Islami Bank Limited.”.
To gather comprehensive knowledge on overall banking functions and the
expectations of the customers regarding the service level of the bank.
Identify the factors contributing to the attractive and operative performance of the
local branch of the bank.
To make a study of the facts in order to arrive at certain conclusion about overall
banking operation.
Identify the main objectives of AIBL Investment Disbursement.
To find out the sector in which AIBL provides Investment.
To evaluate financial affairs of the Bank
To visualize the quantitative and qualitative aspects of AIBL
To identify policy recommendations for further improvement
15
2.01 Organizational Overview of Al-Arafah Islami Bank Ltd :
Al-Arafah Islami Bank Ltd. as the name implies a newly formed commercial bank in
Bangladesh. It has been incorporated in Dhaka, Bangladesh as a public limited
company and its Head Office of the Bank is located at Rahman Mansion, 161, Motijheel
C/A, Dhaka- 1000.
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In the world of consumerism the business organization of the world strive for the
consumers satisfaction as a number one business strategy whatever may be the
product of the organization, either service or non service. Service is the product of bank.
There is a saying that customer service starts rights right from the stairs of the bank
building. The guard at the door is first person pep resents of the bank, receives a
customer with wishes in smiling face.
2.02 Historical Background of Al-Arafah Islami Bank Limited:
Al-Arafah Islami Bank Ltd. (AIBL) was incorporated on 18 June,1995 with authorized
capital of Tk.1000 million (100 Crore) and paid up capital of Tk.10.12 Crore paid up by
the Sponsors/Directors and Tk.10.12 Crore was offered to the public for subscribed
portion of public issue of shares. The Bank was formally inaugurated on 27 th
September, 2005 with Motijheel Branch (Principal Branch).The Management of the
Bank is vested in a Board of Directors consisting of 24 members including the Managing
Director of the Bank. Among 24 Directors 2 (two) Directors came from the public
shareholders. Managing Director is the chief executive of the Bank. There is a Shariah
council of 7 (seven) members in Al-Arafah Islami Bank Ltd. to monitor the investments
whether it invests in Shariah allowed sectors or not .Since its establishment, AIBL
opened 5 branches in 1995, 5 in 1996,10 in 1997, 10 in 1998, 5 in 1999, 2 in 2000, 3 in
2001, 1 in 2005, & 5 in 2006 i.e. at the end of 2006 the Bank Branch reaches to 46.Total
number of employees of the Bank was 771 in 1995 and reached to 912 in 2006 and
during the short period of its activities the Bank has made remarkable progress in
various activities. Since commencement of its activities on 18 June ,1995 the Bank has
mobilized the deposit of Tk.6415.79 million and 16775.33 million at the end of the year
1999 and 2006. Foreign exchange business handled by the Bank during the year 1999
to 2006 were Tk.7859.72 million and 11314.18 million respectively and investment was
Tk.3793.71 million and 17423.18 million at the end of the year 1999 and 2006
respectively. The bank earned a profit of Tk.31.70 million in the year 1999 compared to
Tk.470.02 million (profit after tax and provision) in the year 2006.
Al-Arafah Islami Bank Ltd. was established not only to earn profit and to develop
economy of the country but also it had an ultimate goal to get reward in the Heaven by
banning interest in business. Since its commencement the Bank has been trying to
17
achieve this goal. The Islam loving people specially who are not interested with interest,
should help this Bank giving deposit and taking investment from this Bank.
2.03 Mission of Al-Arafah Islami Bank Limited:
By establishing an interest free atmosphere in day to day business transactions, the
Promoters, Sponsors & Directors expect the Shafayat from our beloved Prophet Hadrat
Muhammad (S) and the ultimate emancipation in the Afterwards.
2.04 Vision of Al-Arafah Islami Bank Limited:
To establish an interest free transaction in the economy
2.05 Special feature of the bank:
i) All activities of the bank are conducted according to Islamic Sharia where profit is the
legal alternative to interest.
ii) The Bank’s investment policy follows different modes approved by Islamic Shariah
based on Quran & Sunnah.
iii) The Bank is committed towards establishing a welfare oriented banking system,
economic upliftment of the low-income group of people, create employment
opportunities.
iv) According to the needs and demands of the society and the country as a whole the
Bank invests money to different Halal business. The bank participates in different
activities aiming at creating jobs, implementing development projects taken by the
Government and developing infrastructure.
v) The Bank is committed to establish an economic system through social justice and
equal distribution of wealth.
vii) The Bank is contributing to economic and philanthropic activities side by side. Al
Arafah English Medium Madrasha and AIBL Library are among mention worthy.
(Source-Annual Report-2005, P-24)
2.06 Objectives of AIBL:
►To establish an interest free economy.
►To establish an modern banking system for all kinds of people
►To take part in the economic growth of the country.
►To eradicate the poverty and to do social services by establishing Schools,
Madrashas, University, Hospitals, Public Library etc.
18
►Finally to achieve ultimate goal i.e. Nazat in Akhirat.
2.07 Auditors:
In terms of Article 149 of the Articles of Association of the Bank M/S Pinaki and Co.
Chartered Accountants were re-appointed as external auditors for conducting the audit
of accounts as 31st December, 2000. The Auditor M/S Pinaki & Co. Chartered
Accountants being eligible offered themselves for re-appointment for the year 2001. But
now M/s Rahman Rahman Hoq becomes the auditor in the year 2005.
2.08 Training and Motivation:
Training and Motivation are utmost important to bring about positive change in the
outlook of the manpower and to increase efficiency. Set of trained and efficient
workforce is indispensable for any commercial bank and they are the fundamental
strength of the bank.
2.11.1 Al-Arafah English Medium Madrasah:
Al-Arafah English Medium Madrasah has been established by the Al-Arafah Bank
Foundation with a view to building next generation according to the ideals of peace and
equality of Islam and to establishing banking and other aspects of life in the way
2.12 Branches of AIBL:
AIBL started its working at 161, Motijheel C/A with a Branch named Motijheel Branch on
27th September,1995 was the first & main Branch of AIBL and has been operating
throughout the country. The Head Office of the Bank was situated at the same holding
of Motijheel Branch since its establishment but from 11 January, 2007 it has started its
working at its own premises 36, Dilkusha (6th, 7th, 8th & 9th floor), Dhaka-1000. The age of
the Bank is only 11 years and during this short period of time, the Bank has established
total 46 Branches over the country and made a smooth network inside the country. The
number of Branches as Division wise is mentioned in the following table:
Division No. of Br.
Dhaka Division 22
Chittagong Division 10
Rajshahi Division 4
19
Khulna Division 4
Sylhet Division 5
Barisal Division 1
Total 46
2.13 Hierarchy of Position in AIBL Bank
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Junior Officer
Senior Principle Officer
Principle Officer
Executive Officer
Assistant Officer
Assistant Vice President
Chairman AdvisorAdvisor Board of Director
Senior Executive Vice President
Senior Vice President
Vice President
Managing Director
Senior Assistant Vice President
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2.14 Form of Organization:
►Board of Directors
►Executive Committee
►Audit Committee
►Management Committee
►Shariah council
2.15 Environment of Al- Arafa Islami Bank :
“Al- Arafa Islami Bank shall bear the mark of the Sunnah of our prophet Muhammad (S),
of our faith and conviction, our values and attitudes towards life and that the entire
environment of Al- Arafa Islami Bank shall be in conformity with Sunnah, simple in style,
noble and rich in thought, but dynamic and far reaching in impact, exemplary in
efficiency and service to the customers.”
22
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3.01.1 Mudaraba Terms Savings Deposit:
Deposit in monthly installment @Tk.300/-, Tk.500/-, Tk.1000/-Tk.1500/- &
Tk.2000/- is obtained under the aforesaid scheme for a tenure of 5,8,10 and 12 years
and the same is withdrawal with
profit at the end of the tenure.
3.01.2 Monthly Profit based Term Deposit:
Under the above scheme, deposit of Tk. 1.00 lac and multiple thereof are accepted for a
term of 5 (five) years and the bank gave profit thereon Tk. 885 per month per lac and
proportionately on the rest amount of deposit under the category during the year under
review. The aforesaid rate shall, however, be adjustable at the close of calendar year on
finalization of accounts.
3.01.3 Monthly Haj Deposit:
Hajj deposit at monthly installment from 1 (one) year to 20(twenty) years are accepted
under the above scheme to enable the account holder to perform Hajj out of the
accumulated saving with profit.
3.01.4 Onetime Haj Deposit:
Under the above scheme, fixed amount of Hajj deposits are accepted from the clients
for particular term and as per rules profit is accumulated thereon per year in this regard.
As and when the fixed deposit is matured, Hajj expenses are defrayed by the same.
Under the scheme, the guardians may also open Hajj account to enable their
successors to perform Hajj. Highest amount of profit is paid in the above types of
deposit by the bank.
3.01.5 Savings Investment Deposit:
Deposit under the scheme is accepted by monthly installment and after expiry of the
term, double amount of such savings is given as investment in feasible sectors by the
bank as per choice of the depositors without any collateral security. Any one by saving
under the scheme can take business venture on utilization the amount saved under the
scheme as well as availing bank investment.
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3.01.6 Marriage Savings Deposit:
Fixed monthly installment for a particular period is to be deposited to defray the
expenses of marriage and the bank allows double of saving or Tk.30,000/- which is
higher as investment to procure ornaments, furniture, fixture etc., repayable in 24
monthly installment without any collateral security.
3.01.7 Savings Bond Deposit:
Under this scheme the bank has introduced saving bonds for Tk. 10,000/-, Tk.25,000/-
and Tk. 100,000/- for 3,5 and 8 years. After the completion of the tenure the depo
3.02 Investment:
The Total investment of the bank stood at Tk.5079.21 million against Tk.3728.41 million
during the corresponding period of last year. The percentage of increase is 36.23% as
against 13.00% in banking sector. The bank extends investments to the clients under
the following modes of investment under Islamic Shariah:
3.02.1 Bai-Murabaha or simply Murabaha:
The terms “Bai-Murabaha” have derived form Arabic words Bai and Ribhum. The
word “Bai” means purchase and sale and the word ‘Ribhum’ means an agreed upon
profit. So Bai-Murabaha means sale for an agreed upon profit. It may be defined as
a contract between a Buyers and a Seller under which the seller sells certain specific
goods permissible under Islamic Shariah and the word Law of the land to the Buyer
at a cost plus and agreed upon profit payable today or on some date in the future in
lump-sum or by installments. The profit may be either a fixed sum or based on a
percentage of the price of the goods.
3.02.2 Musharaka:
The word Musharaka is derived from the Arabic word Sharikah meaning partnership.
Islamic jurists point out that the legality and permissibility of Musharakah is based on
the injunctions of the Holy Qura’n, Sunnah and Ijma (consensus) of the scholars.
Musharaka transaction may be conducted in the following manner:
25
One, two or more entrepreneurs approach an Islamic Bank to request the financing required
for a project. The bank, along with other partners, provides the necessary capital for the
project. All partners including the Bank have the right to participate in the project. The profit
is distributed according to an agreed ratio. However, losses are shared in exactly the same
proportion in which the different partners have provided the finance for the project.
3.02.3 Mudarabah:
The term Mudarabah refers to a contract between two parties in which one party
supplies capital to the other party for the purpose of engaging in a business activity
with the understanding that any profits will be shared in a mutually agreed upon.
Losses, on the other hand, are the sole responsibility of the provider of the capital.
The first party provides capital and the other party provides the expertise with the
purpose of earning lawful profit (approved by Islamic law) which will be shared in a
mutually agreed upon proportion.
3.02.4 Bai-Muajjal:
The term ‘Bai’ and ‘Muajjal’ are derived from the Arabic words ‘Bai’ and ‘Ajal’ where
‘Bai’ means purchase and sale and ‘Ajal’ means a fixed time or a fixed period. So
Bai-Muajjal is a sale for which payment is made at a future fixed date or within a
fixed period. In short, it is a sale on Credit. It is basically a contract between a buyer
and seller under which the seller sells certain specific goods, permissible under
Shariah and law of the country to the buyer at an agreed fixed price payable at a
certain fixed future date in lump-sum or in fixed installments.
3.02.5 Bai-Salam:
The term Bai-Salam is used to define a sale in which the buyer makes advance
payment, but delivery is delayed until some time in the future. Usually the seller is an
individual or business and the buyer is the bank.
26
27
4.01 General Banking practices in Al-Arafah Islami:
Bangladesh is one of the less developed countries. So the economic development of the country depends largely on the activities of commercial banks. So we need toemphasis whether these commercial banks are effectively and honestly performing their functions, assigned duties and responsibilities. In thus respect we need to knoThe cash section of Al-Arafah Islami Bank Ltd deals with all types of negotiable
instruments, cash and other instruments and treated as a sensitive section of the bank.
It includes the vault that is used as the beyond this limit, the excess cash is then
transferred to Bangladesh Bank. This section performs the following functions:
1. Cash Packing:
After the banking hour cash is packed according to the denomination. Notes are
counted and packed in bundles and stamped with initial.
2. Allocation of Currency:
Before starting the Banking hour all tellers give requisition of money through “ Teller
cash proof sheet”. The head Teller writes the number of the packet denomination wise
in “Reserve sheet” at the end of the day, all the notes remained are recorded in the
sheet.
4.03 Procedure for Opening of Accounts:
Before opening of a currents or savings account, the following formalities must be
completed by the customer:
Submit application on the prescribed form.
Furnishing photographs- 2 (Two) copies.
Introduction by an account holder.
Putting specimen signatures in the specimen card.
Mandate, if necessary.
After fulfilling above formalities, opens an account for the client and provide the
customer with a pay-in-slip book and a checkbook in case of savings account and
currents account.
4.04 Types of Deposit Accounts and Their Formalities:
A. Current Account
In this kind of account a customer can deposit his money and can write one or more
check to withdraw their money. For doing this notice is not required. He can deposit it
whenever he/ she wants to and also can withdraw it whenever he/ she wants to
28
In The Name of Individual :
The client has to fill up a light green account opening form. Terms and conditions are
printed on the back of the form. The form contains the declaration clause, special
instructions etc. two copies of passport size photograph duly attested by the introducer
are affixed with the form.
In Joint Name:
In this type, the formality is same as individual account, but in the special instruction
clause, either or ‘survivor’ or ‘former or survivor’ clause is marked.
Proprietorship:
In addition the customer has to submit the valid Trade License and Tax Paying
Identification Number (TIN) along with the application.
Partnership:
In case of partnership account, the bank asks for,
A copy of the partnership agreement (Partnership Deed)
A letter signed by all the partners containing the following particulars.
The name and addresses of all partners
The nature of the firm’s business
The name of the partner authorized to operate the account in the name of the firm,
including the authority to draw, endorse and accepting the bills and mortgage and
sell the properties belonging to the firm.
Limited Company:
On having the desire to open an account from a limited company, an EXIM Bank Officer
asks for the following documents:
Registration Certificate from the Registrar of Joint Stock of Companies
Certificate of Incorporation
Certificate of Commencement of Business
Memorandum of Association
Articles of Association
Copies of Annual Accounts
Copies of the Board’s resolution, which contains
a). The name of the persons who have been authorized to operate the bank account on
behalf of the company.
29
b). The name of the persons who are authorized to execute documents with the bank on
company’s behalf.
Societies, Clubs and Associations:
In case of these sorts of accounts Al-Arafah Islami Bank Ltd requires the following
documents:
Registration Certificate Under the Societies Registration Act, 1962
Copies of Memorandum, Articles of Association
Resolution of the Managing Committee.
Power of Attorney to Borro
Non-government Organization (NGO):
The account opening procedure is same but in exception is that the Registration
Certificate from the Social Welfare Department of Government must be enclosed with
the application.
Joint Account in The Name of Minor:
A minor cannot open an account in his own name due to the incapacity to enter into a
contract. He can open an account in Al-Arafah Islami Bank Ltd in Joint name of another
person who will be guardian of him.
B. Savings Bank Account:
This deposit is basically meant for small-scale savers. There is restriction on
withdrawals in a month. Heavy withdrawals are permitted only against prior notice.
Interest is paid on these types of accounts.
Short-term Deposit (STD):
In Short-term Deposit, the deposit should be kept for at least seven days to get interest.
The interest offered for STD is less than that of savings deposit. In Al-Arafah Islami
Bank Ltd various big companies, Organizations, Government Departments keep money
in STD accounts. Frequent withdrawal is discouraged and requires prior notice.
Fixed Deposit:
They are also known as time liabilities or term deposits. These are deposits, which are
made with the bank for a fixed period specified in advance. The bank need not maintain
cash reserves against these deposits and therefore, the bank offers high are of interest
on such deposits.
30
In Al-Arafah Islami Bank Ltd, fixed deposit account is opened in two forms- Midterm
(MTD), which is less then one year & the other is Term Deposit, which is more than one
year.
Opening of Fixed Deposit Account :
The depositor has to fill an application form where in he mentions the amount of
deposit, the period for which deposit is to be made & the name/ names is which the
fixed deposit receipt is to be issued. In case of a deposit in Joint name Al-Arafah Islami
Bank Ltd. also takes the instructions regarding payment of money maturity of the
deposit. The banker also takes the instructions regarding payment of money on maturity
of the deposit. The banker also takers the instructions regarding payment of money on
maturity of the deposit. The banker also taker specimen signatures of the depositors.
A fixed deposit account is then issued to the depositor acknowledging receipt of the
sum of money mentioned therein. It also contains the rate of interest & the date on
which the deposit will fall due for payment.
Payment of Interest:
It is usually paid on maturity of the fixed deposit. Al-Arafah Islami Bank Ltd calculates
interest at each maturity date and provision is made on that “Miscellaneous creditor
expenditure payable accounts” is debited for the accrued interest.
Encashment of F.D.R:
In case of premature FDR, Al-Arafah Islami Bank Ltd is not bound to accept surrender
of the deposit before its maturity date. In order to deter such a tendency the interest on
such a fixed deposit is made cut a certain percentage less a the agreed rate. Normally
savings bank deposit interest rate is allowed.
Loss of FDR:
In case of a lost FDR, the customer is asked to record a GD (General Diary) in the
nearest Police Station. After that the customer has to furnish an Indemnity Bond to Al-
Arafah Islami Bank Ltd a duplicate FDR is then issued to the customer by the bank.
4.02 Cash:
The cash section of Al-Arafah Islami Bank Ltd deals with all types of negotiable
instruments, cash and other instruments and treated as a sensitive section of the bank.
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It includes the vault that is used as the beyond this limit, the excess cash is then
transferred to Bangladesh Bank. This section performs the following functions:
1. Cash Packing:
After the banking hour cash is packed according to the denomination. Notes are
counted and packed in bundles and stamped with initial.
2. Allocation of Currency:
Before starting the Banking hour all tellers give requisition of money through “ Teller
cash proof sheet”. The head Teller writes the number of the packet denomination wise
in “Reserve sheet” at the end of the day, all the notes remained are recorded in the
sheet.
4.03 Procedure for Opening of Accounts:
Before opening of a currents or savings account, the following formalities must be
completed by the customer:
Submit application on the prescribed form.
Furnishing photographs- 2 (Two) copies.
Introduction by an account holder.
Putting specimen signatures in the specimen card.
Mandate, if necessary.
After fulfilling above formalities, opens an account for the client and provide the
customer with a pay-in-slip book and a checkbook in case of savings account and
currents account.
4.04 Types of Deposit Accounts and Their Formalities:
A. Current Account:
In this kind of account a customer can deposit his money and can write one or more
check to withdraw their money. For doing this notice is not required. He can deposit it
whenever he/ she wants to and also can withdraw it whenever he/ she wants to.
In The Name of Individual:
The client has to fill up a light green account opening form. Terms and conditions are
printed on the back of the form. The form contains the declaration clause, special
instructions etc. two copies of passport size photograph duly attested by the introducer
are affixed with the form.
In Joint Name:
32
In this type, the formality is same as individual account, but in the special instruction
clause, either or ‘survivor’ or ‘former or survivor’ clause is marked.
Proprietorship:
In addition the customer has to submit the valid Trade License and Tax Paying
Identification Number (TIN) along with the application.
Partnership:
In case of partnership account, the bank asks for,
A copy of the partnership agreement (Partnership Deed)
A letter signed by all the partners containing the following particulars.
The name and addresses of all partners
The nature of the firm’s business
The name of the partner authorized to operate the account in the name of the firm,
including the authority to draw, endorse and accepting the bills and mortgage and
sell the properties belonging to the firm.
Limited Company:
On having the desire to open an account from a limited company, an EXIM Bank Officer
asks for the following documents:
Registration Certificate from the Registrar of Joint Stock of Companies
Certificate of Incorporation
Certificate of Commencement of Business
Memorandum of Association
Articles of Association
Copies of Annual Accounts
Copies of the Board’s resolution, which contains
a). The name of the persons who have been authorized to operate the bank account on
behalf of the company.
b). The name of the persons who are authorized to execute documents with the bank on
company’s behalf.
33
Societies, Clubs and Associations:
In case of these sorts of accounts Al-Arafah Islami Bank Ltd requires the following
documents:
Registration Certificate Under the Societies Registration Act, 1962
Copies of Memorandum, Articles of Association
Resolution of the Managing Committee.
Power of Attorney to Borro
Non-government Organization (NGO):
The account opening procedure is same but in exception is that the Registration
Certificate from the Social Welfare Department of Government must be enclosed with
the application.
Joint Account in The Name of Minor:
A minor cannot open an account in his own name due to the incapacity to enter into a
contract. He can open an account in Al-Arafah Islami Bank Ltd in Joint name of another
person who will be guardian of him.
B. Savings Bank Account:
This deposit is basically meant for small-scale savers. There is restriction on
withdrawals in a month. Heavy withdrawals are permitted only against prior notice.
Interest is paid on these types of accounts.
Short-term Deposit (STD):
In Short-term Deposit, the deposit should be kept for at least seven days to get interest.
The interest offered for STD is less than that of savings deposit. In Al-Arafah Islami
Bank Ltd various big companies, Organizations, Government Departments keep money
in STD accounts. Frequent withdrawal is discouraged and requires prior notice.
Fixed Deposit:
They are also known as time liabilities or term deposits. These are deposits, which are
made with the bank for a fixed period specified in advance. The bank need not maintain
cash reserves against these deposits and therefore, the bank offers high are of interest
on such deposits.
In Al-Arafah Islami Bank Ltd, fixed deposit account is opened in two forms- Midterm
(MTD), which is less then one year & the other is Term Deposit, which is more than one
year.
The banker also taker specimen signatures of the depositors:
34
A fixed deposit account is then issued to the depositor acknowledging receipt of the
sum of money mentioned therein. It also contains the rate of interest & the date on
which the deposit will fall due for payment.
Payment of Interest:
It is usually paid on maturity of the fixed deposit. Al-Arafah Islami Bank Ltd calculates
interest at each maturity date and provision is made on that “Miscellaneous creditor
expenditure payable accounts” is debited for the accrued interest.
Encashment of F.D.R:
In case of premature FDR, Al-Arafah Islami Bank Ltd is not bound to accept surrender
of the deposit before its maturity date. In order to deter such a tendency the interest on
such a fixed deposit is made cut a certain percentage less a the agreed rate. Normally
savings bank deposit interest rate is allowed.
Loss of FDR:
In case of a lost FDR, the customer is asked to record a GD (General Diary) in the
nearest Police Station. After that the customer has to furnish an Indemnity Bond to Al-
Arafah Islami Bank Ltd a duplicate FDR is then issued to the customer by the bank.
Renewal of F.R.D.:
In Al-Arafah Islami Bank Ltd, the instrument is automatically renewed within seven days
after the date of its maturity if the customer does not come to en-cash the FDR. The
period for renewal is determined as the previous one.
4.05 Remittance:
Remittance can be done by telegraph transfer, mail transfer, traveler’s Cheque and
drafts and Cheque. There are two steps of remittance:
o Inland Remittance:
By using ways we can do it. When one bank sends these T.T, M.T, T.C or Cheque to
another bank than it will be called inland remittance. It is done within the country from
one bank to another.
o Foreign Remittance:
When a bank got this T.T, M.T, T.C and cheque from outside bank, which is not situated
in the home country than it will be called foreign remittance. Using these methods also
has done it.
Types of Remittance:
a) Between banks and non-banks customers.
35
b) Between banks in the same country.
c) Between banks in the different centers.
d) Between banks and central bank in the same country.
e) Between central bank of different customers.
Administration/ Monitoring:
The administration of the loan process shall ensure, compliance with all
laws and regulations at both local and global levels including bank policy as
set out in this document and the Bank's credit manual/circulars.
Types of Credit Activities:
Depending on the various nature of financing all the lending activities have been
brought under the following major heads:
1. Loan (General):
Short term and long term loans allowed to individual/ firms/ industries for a specific
purpose but a definite period and generally repayable by installments fall under this
head these types of lending are mainly allowed to accommodate financing under the
categories.
a). Large and Medium Scale Industries.
36
Loan
Long Term Short Term
House building loan, project or industrial
loan and transport loan.
Commercial Loan
Cash credit (pledge),Cash credit
(Hypothecation), Loan general,
Secured overdraf (SOD), Loan
aganist imported merchandise
b). Small and Cottage Industries. Very often term financing for agriculture and others
are also included here.
2. House Building Loan (General):
Loans allowed to individual/enterprises construction of house (residential or
commercial) fall under this type of advance. The amount is repayable by monthly
installment within a specified period, advances are known as Loan (HBL-GEN).
Introduction:
House Building loan is one of the common credit policies of banking sector. There was
only one institution in our country, which is specified in HBFC, Bangladesh House
Building Finance Corporation. Now days, besides this bank many commercial banks
and Leasing Company provides house-building loan to the customers.
Interest rate:
Currently the interest rate is 16%. But it may changes from time to time depending on
the market interest rate. From the customers point of view this changes have an
adverse impact on the customers. Some times if they have to bear a higher interest on
the principal amount which causes a great burden on them.
But from the bank's point of view this is very good to maintain the markup. Because
when the market interest rate raises 1% than they are getting 1% less markup. So for
this clause of increasing interest rate they can have the same markup by increasing the
interest rate changing on the clients. So this is very effective for the Bank to maintain
markup.
Disbursement Procedure:
The disbursement procedure or timing of disbursement depends on the client or the
progress of work of the construction. The disbursement can be made two or three
stages or more depending on the above conditions.
Mode of repayment:
The loan shall be adjusted by monthly installment basis. The repayment will start from
6(six) months of the date of first disbursement (it may change according to the terms
and conditions of the agreement)
Collateral:
The land and the construction on the land are normally given as collateral. It may
changes--
37
The documents to be obtained:
i. DP note.
ii. Letter of disbursement.
iii. Letter of installment.
iv. Letter of guarantee.
v. Letter of undertaking.
vi. Letter of agreement,
vii. Irrevocable general power of attorney.
viii. Memorandum of deposit of title deed.
ix. Any other documents if considered.
House Building Loan (Staff):
Loans allowed to the Bank employees for purchase/construction of house shall be
known as Staff Loan (HBFC-STAFF).
Other Loans to Staff:
Loans allowed to employees other than for House Building shall be grouped under head staff Loan (general). Cash Credit (Hypo)
Advances allowed to individual/ firm for trading as well as wholesale purpose or to
industries to meet up the working capital requirements against hypothecation of goods
as primary security fall under this type of lending. It is a continuous credit. It is allowed
under the categories:0
"Commercial lending" when the customer is other than an industry and "Working
Capital" when the customer is an industry.
Consumers Credit Scheme of Al-Arafah Islami Bank Ltd.
Introduction:
Consumer Credit Scheme is a major program of Al-Arafah Islami Bank Ltd. In CCS the bank
engage an agent who works on behalf of the Bank. This agent performs all the works prior to the
sanction of the CCS. They do the inspection and make all the documents necessary for CCS. For
this purpose they get commission.
Clients :
38
The clients are Service Holders and Businessman. Service holders can be Government
and Private. In case of Government officer, the client must be an officer in rank.
Products:
Electronic goods, cars, jeeps, microbuses, Mobile telephone, T&T telephone etc.
Profit Rate:
Down payment
Down payment is 20% of the CCS amount. It is considered as equity. The payment is
50% for vehicles.
Advance allowed for retirement of shipping documents w d release of goods imported
through LIC falls under trust with the arrangement that sale proceeds should be
deposited to liquidate the advances within a given period. This is also a temporary
advance connected with import and known as post-Import finance and falls under the
category "Commercial Banking.
IBP (inland bill purchased):
Payment made through purchase of inland bills/cheques to meet urgent requirement of
the customer falls under this type of credit facility. This temporary advance is adjustable
from the proceeds of bill/ Cheques purchased for Collection. It falls under the category
"Commercial Lending".
Credit Administration
The principle elements of bank credit administration are as follows:
A. Credit approval.
B. Credit file maintenance.
C. Facility evidence maintenance.
D. Credit monitoring and review.
Credit Approval:
The primary factor determining the quality of the Bank's credit portfolio is the ability of
each borrower to honor, on a timely basis, all credit commitments made to the Bank.
The authorizing credit personnel period to credit approval must accurately determine
this.
The credit approval process shall be governed by the Bank Credit Policy framework,
which can be summarized under the following:
Asstt. Vice President
39
The amount and scope of each Officer's lending authority is a function of the amount
and extent of authority required by the officer to carry out his /her responsibilities to the
Bank and its clients ma prudent, effective and efficient manner.
Approval under Dual Signature:
All approval of credit facilities must be conveyed under dual signature, and ideally both
he signatures must have the required lending authority. If however, two lending officers
of the required lending authority are not available, one of the signatories must have the
lending authority.
4.07 Formalities for Opening Foreign Currency (FC) Account:
The AD may without prior approval of the Bangladesh Bank open Foreign Currency
(FC) account in the name of:
1. Bangladesh national residing abroad.
2. Foreign nationals residing abroad/ in Bangladesh and also foreign firms
registered abroad and operating in Bangladesh and abstract.
3. Foreign Missions and their expatriate employees.
4. Resident of Bangladesh nationals working with the foreign/ international
organizations operating in Bangladesh provided their salary in paid in foreign
currency.
RATE OF EXCHANGE:
It means the price of one currency expressed in terms of another currency. Rate of
exchange is the rate by which the relation among different foreign currencies is
established in terms of local currency of that country. Value at which one country’s
currency can be converted into another’s currency.
4.08 Import Procedure:To import a person should be competent to be an “Importer”. According to Import and
Export control Act 1950, the office of Chief Controller of Import and Export provides the
registration (IRC) to the importer. After obtaining this person has to secure a letter of
credit authorization from Bangladesh Bank. And then a person becomes a qualified
importer. He is the person who requests or instructs to open an L/C. he is also called
opener or applicant of the credit
Importer’s Application for L/C Limit Margin:
40
To have an import L/C limit, an importer submits an application to the Department of Al-
Arafah Islami Bank Ltd furnishing the following information:
Full particulars of bank account.
Nature of business.
Required amount of limit.
Payment terms and conditions.
Goods to be imported.
Offered security.
Repayment schedule.
Now if the officer thinks the application to open an L/C in not fit, the following entries are
given to realize the L/C, Charges, Postage and L/C margin.
Presentation of the Documents:
The seller being satisfied with the terms and the conditions of the credit proceeds to
dispatch the required goods to the buyer and after that has to present the documents
evidencing dispatching of goods to the negotiating bank. After receiving all the
documents the negotiation bank then checks the documents against the credit
Invoice.
Bill of Lading
Certificate of Deposit
Packing List.
Weight List.
Shipping Advice.
Non-negotiable copy of bill of lading
Bill of Exchange
Pre-Shipment inspection report
Shipment Certificate.
Following Paper Required for New Imported While Opening on L/C:
The following papers are required when opening a new L/C:
Valid Import Registration Certificate (IRC).
Trade License.
TIN Certificate.
VAT Certificate.
Three (3) copies declaration by the importer that they have paid/
submitted return of income tax of proceeding last year.
41
Membership Certificate of Chamber of Commerce Industry.
According to be maintained with the bank.
Membership Certificate BGMEA (Incase of Garment Ind.)
Banded warehouse license (Incase of Export Oriented Industry).
LCA From.
Insurance cover note.
Proforma Invoice/ Indent.
Application for opening of L/C duly billed in and signed.
IMP form duly signed.
Payment Procedure of The Import Documents:
This is the most sensitive task of the import department. The officials have to be very
much careful while making payment. This task constitutes the following:
I. Date of payment: Usually payment is made within seven days after the
document have been received. If the payment is become deferred the negotiating
bank may claim interest for making delay.
Advising a L/C:
It is customary to advise a credit to the seller through an advising bank. Advising
through a bank is a proof of apparent authenticity of the credit to the beneficiary to
whom it is addressed. Before forwarding/ advising the credit to the seller under
appropriate forwarding coverage, the advising bank have to verify the signature of the
officer of the opening bank and ensure that the terms and conditions of the credit are
not violation of the existing exchange control regulations and other regulations relating
to export. Very often advising bank receives requests from issuing ban to add their
confirmation while advising credit to the beneficiary.
Import Financing:
A) Letter of Credit (L/C) Facility:
Bank in favor of exporter on behalf of the importer issue L/C. L/C is issued to import
goods for trading and manufacturing process.
B) Loan Against Import Merchandise (LIM):
Loan Against Import Merchandise (LIM) is post import finance, which is granted in favor
of the importer to retire shipping documents against import of goods. This is generally
repaid within 30 days.
42
C) Loan Against Trust Receipt (LTR):
Loan Against Trust Receipt (LTR) is post import finance extended to the importer of
goods. Importer issues a trust receipt favor of Bank and takes possession of the goods
markets and sells the products and repay within the stipulated period.
4.09 Export Procedure:
The exports form Bangladesh is subject to export trade control exercise by the Ministry
of Commerce through Chief Controller of Export and Imports (CCI & E). no exporter is
allowed to export any commodity permissible for export from Bangladesh unless he is
registered with CCI & E and holds valid Export Registration Certificate (ERC). The
Export Registration Certificate (ERC) is required to be renewed every year. The Export
Registration Certificate (ERC) is to be incorporated on EXP forms and other documents
connected with exports.
4.12 Foreign Exchange:
Foreign exchange can simply be defined as a process of conversion of one currency
into another. A well know author of some popular books on foreign exchange, Dr. Paul
Einzig tells that foreign exchange means “a system or process of conversion of one
national currency into another and of transferring money from one country into another”.
In ordinary sense “Foreign Exchange” means Foreign Currency, which refers to the rate
of exchange the price of one unit of foreign exchange in terms of another currency. But
in its complete sense, foreign exchange means the mechanism or the media used and
the rate at which these media are exchange with another.
Foreign Exchange department is divided into two parts, the first one is the Export
Department and the second part is the Import Department.
4.12.1 Export Department:
When any organization wants to export any product to other country than that particular
organization usually opens an Export Letter of Credit (L/C) from this department.
Foreign Exchange Operation (Export Financing):
Exporter means any person lawfully exporting goods from Bangladesh to any other
country in the world. After shipment the exporter has to tender the documents to the
Bank within the stipulated period for the negotiation of the documents are drawn
Incentives are as follows:
Export Finance:
43
Interest Rate.
Incremental Incentive on Interest for Interest Based Bank.
Extent of Export Credit.
Checking and Advising of Export Letter of Credit:
On receipt of Export letter of Credit it is to be recorded in the Banks inward register and
then the signature of a Bank and finally it is to be forwarded to the beneficiary under
forwarding schedule.
Processing and Opening of Back-to-Back Letter of Credit:
An exporter desired to have an Import L/C limit under Back-to-Back arrangement. In
that case the following papers & documents are required:
Full Particulars of Bank Account.
Balance Sheet.
Statement of Assets & Liability.
Trade License.
Valid Bonded Warehouse License.
Membership Certificate.
Income Tax Declaration.
ACU Letter of Credit (L/C):
This types of L/C as same as Case L/C. reimbursement must be made on ACU
NOCTRO A/C countries. Reimbursement authority should be sending on the same day
of the Letter of Credit (L/C) is sent.
Procedure for Transferable Letter of Credit (L/C):
The original beneficiary when request the banker in writing to effect transfer the Letter of
Credit (L/C) to the second beneficiary, the signature of the original beneficiary on the
letter of request must be verified by his banker. The Letter of Credit (L/C) can be
transferred only on the terms and conditions specified in the original credit.
4.15 Procedure for Opening Letter of Credit (L/C):
An importer desirous to have an import Letter of Credit (L/C) limit must have applied to
the designated bank in prescribed form for sanction of margin, Letter of Credit (L/C) limit
it etc.
44
L/C Opening flow chart in case of BTB L/C:
Figure: Letter of Credit (L/C) Opening Process
Letter of Credit (L/C) Application:
For opening Letter of Credit (L/C) the client is to submit to the bank an application in the
printed format of the designated bank. This is called Letter of Credit (L/C) application
form, which is also an agreement between the importer and the bank. The form is to be
stamped under stamp Act. The importer must submit the LCA and IMP and Indent or
contract / purchase order/ proforma invoice (duly accepted by the importer) along with
Letter of Credit (L/C) application.
The Letter of Credit (L/C) application must be completed/ filled in and signed by the
authorized person of the importer giving the following particulars.
Full name and address of the supplier or beneficiary and importer.
45
Lien of Export L/COpening of BTB
L/C under that
Export L/C
ABP (Accepted
Bills For
Payment)
Under ProductionExport MadeCollection/ Purchase
of Export Bills
Collection From
Export L/C issuing
Bank
Nosto A/CInform To Head
Office
Head Office ETDA
A/C (Debit)
Credit Advice to
Branch
BTB Payment Respective
Party A/C
(Credit)
If PC Facility
Then
Adjustment
Brief description of the goods.
Last date of shipment and negotiation time (must not be beyond 30 days from the
shipment date).
Examination of Letter of Credit (L/C) Application:
On receipt of Letter of Credit (L/C) application an officer of L/C section must check it
very careful by the following manner.
That the terms and conditions as stipulated in the L/C application are consistent with
the exchange control and import trade regulation and UCPDC 500.
That all the information mentioned in above column have been furnished.
That the terms to be imported are eligible according to importers entitlement.
That the goods are not being imported or originated form South Africa or Israel.
If the goods are imported form any member countries of ACU.
That the validity of the L/C must not exceed the validity of LCA.
L/C is opened within the validity period permitted in the License.
For Letter of Credit (L/C) limit following information are to be furnished by the applicant.
Preparation of Credit Report:
Bank prepares credit report in prescribed forms. Character, Capacity and Capital, which
are known as the three C’s of credit. Instead of the three C’s some mentions the three
R’s i.e. reliability, responsibility and resources. To these three C’s we may add two more
C’s i.e. collateral and conditions.
Position of Letter of Credit (L/C):
Import section will see whether there is sufficient fund available in the account to cover
the margin to be sanctioned, commission, postage, cable or telex charge etc. If it is
found O.K, Letter of Credit (L/C) will be sanctioned.
In all cases the sanction must be informed to the importer for acceptance. On receiving
confirmation from the client then the terms and conditions of the sanctioned are
acceptable, the subsequent documentation/ charge document are taken up.
Following papers/ documents submitted by the importer before opening of the L/C:
Memorandum of (In case of partnership firm).
Resolution.
Photo One Copy.
46
VAT Registration Certificate.
Bank will supply the following papers/ documents before opening of the L/C:
Letter of Credit (L/C) Application Form.
LCA Form.
IMP Form.
Charge Documents Paper.
Guarantee Form.
The above papers must be completed duly filled in and signed by the party and verified
the signature.
Maintenance of Register:
The sanction must be recorded in the following registers:
Document Execution Registers. All the charge documents must be recorded in this
register.
Limit Register.
Liability Ledger.
Confidential Report of Beneficiary of Letter of Credit (L/C):
According to exchange control regulations bankers are required to obtain confidential
report of the beneficiary of Letter of Credit (L/C) before opening the same, if the amount
of Letter of Credit (L/C) exceeds Tk. 5 lac. Bank can open Letter of Credit (L/C) below
Tk. 5 lac without obtaining C.R.
Banker can write to their foreign correspondents to supply the C.R. But from practical
experience foreign correspondents of different country are not supplied timely.
To overcome the above situation bankers can conduit reference book i.e. MUWN/
DUNN/ BRADSTREET/ Trade directory of various chambers of commerce of different
countries in the world.
On receipt of C.R. form any source the banker can accumulate the same in one master
file.
LCA Registration:
Letter of Credit (L/C) authorization forms consisting of six copies. 1st copy for exchange
control purposes, 2nd copy for the licensing authority, 3rd and 4th copies for the CCI and
Procedure or Preparation and Dispatch:
47
Amendment is to be typed in the Banks printed format. The copies of the amendment
must be dispatched to all concerned as done in dispatching the L/C. Amendment can be
done either by cable/ telex or airmail.
Each and every amendment of L/C must be noted in the L/C file and copies of each
amendment are kept in the L/C file chronologically (date wise).
Bank Charge:
Amendment commission is to be realized from the party as per instruction of
Bangladesh Bank F.C. circulars.
Accounting Procedure:
Dr. Party’s Account.
Cr. Commission Account.
Cr. P & T Account.
4.16 Clearing House & Collections of Bill:
According to the Article 37(2) of Bangladesh Bank Order 1972, the banks, which are the
member of the clearinghouse, are called as Scheduled Banks. The scheduled banks
clear the cheques drawn upon one another through the clearinghouse. This is an
arrangement by the central bank where everyday the representative of the member
banks gathers to clear the cheques. Banks for credit of the proceeds to the customer’s
accounts accept cheques and other similar instruments.
Procedures for Collection:
The following procedures are taken for collection,
48
“Payee’s A/C Credited” endorsement
Entries are given in the outward clearing Register
“Clearing” seal is given Cheque
Cheques are sorted bank wise and entries are given to the computer
Entries are given to the “Clearing House Register”
Crossing of the cheques are done
Procedure for Outward Bills for Collection:
49
Depositing the cheque along with Deposit Slip
Crossing of the cheques are done indicating Principal Branch as collecting bank
Endorsement “Payee’s A/C will be credited on realization ” is given
Entries are given in the outward clearing Register
5.01 Definition of Investment:
50
Investment, transaction between two parties in which one ( the creditor or lender)
supplies money, goods, services or securities in return for a promised future payment
by the other ( the debtor or borrower). Such Transaction normally includes the payment
of interest to the lender. Investment may be extended by the public or private institutions
to finance business activities, agricultural operation, consumer expenditures or
government projects.
5.02 Introduction of Investment:
Modern Investment management is extended through specialized financial institutions
of which commercial banks are the oldest and most important. In present days of
industrial economics, the banks are able to extend and increase the supply of
Investment by the creation of Investment management for their loan customers. The
lender must judge each loan he makes on the basis of the charter of the borrower (his
intention to pay), (his capacity to pay), (based on his potential for earning) and his
collateral pledged in case of default on the loan. The terms of Investment transactions
may be publicly regulated to prevent abuses by customers and lenders as well as to
channel Investment in to particular sectors of the economy.
5.03 AIBL 2006 Deposit, Investment and Asset Information:
Deposit:The total deposit of the bank was Tk. 16775.33 million at 31st December 2006, of which
bank deposit was 611.72 million taka and general deposit was 16163.61 million taka. At
the same time in the last year, the amount was total deposit was 11643.66 million taka.
In this area the growth rate is 44.07%.
20022003
20042005
2006
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Deposit
Fig:1 Deposit
investment:
51
At the end of the year 2006, the amount of investment of the bank was Tk. 17423.19
million in comparison to Tk. 11474.41 million of the last year 2005. the amount of
investment has increased 5948.78 million taka within this period, which is around
51.84%
20022003 2004
2005
2006
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Investment
Fig: 2 Investment
Total Assets :
2006
1% 7% 5%
82%
1% 4% Cash in hand
B.Bank & S. Bank
Other Bank
Investment
Fixed Assets
Other Assets
Fig: Total Assets
1. Cash in hand 1%
2. B.Bank & S.Bank 7%
3. Other Bank 5%
4. Investment 82%
5. Fixed Assets 1%
6. Other Assets 4%
52
7.01 Role of CIB in Bangladesh:
53
Due to irregular and insufficient flow of credit information in the banking system the
proportion of classified loan in relation to total credit is very high. This proportion of
classified loan operated a bad culture in the Banking sector. In order to eliminate the
bad culture & to equip the banks with proper credit information for loan application
processing, proposal for relation of CIB was put forward by different committee and
organizations and it was established in 1992.
7.02 Functions of CIB:
i) To standardize information flow on loans/credits within the Bangladesh
Banking system.
ii) To increase the speed & accuracy with which the credit information is made
available to banker assessing credit role.
iii) To combine the information gathered on classified loans with the information
on newly sanctioned loans to the borrowers thereby making available on
integrated information package.
iv) To integrate the default loan information in the CIB its timely submission to
the banks for loan application processing.
v) To collect credit information on quarterly basis from banks.
54
8.01 Credit Risk Grading:
55
Credit risk grading is an important tool for credit risk management as it helps the Banks
& financial institutions to understand various dimensions of risk involved in different
credit transactions. The aggregation of such grading across the borrowers, activities
and the lines of business can provide better assessment of the quality of credit portfolio
of a bank or a branch. The credit risk grading system is vital to take decisions both at
the pre-sanction stage as well as post-sanction stage.
At the pre-sanction stage, credit grading helps the sanctioning authority to decide
whether to lend or not to lend, what should be the loan price, what should be the extent
of exposure, what should be the appropriate credit facility, what are the various facilities,
what are the various risk mitigation tools to put a cap on the risk level.
8.04 Use of Credit Risk Grading:
As evident, the CRG outputs would be relevant for individual credit selection,
wherein either a borrower or a particular exposure/facility is rated.
Risk grading would also be relevant for surveillance and monitoring, internal MIS
and assessing the aggregate risk profile of a Bank. It is also relevant for portfolio
level analysis.
8.05. Numbers & Short names of graders used in the CRG:
The proposed CRG scale consists of 8 categories with Short names and Numbers are provided as follows:
GRADING SHORT NAME NUMBER
Superior SUP 1
Good GD 2
Acceptable ACCPT 3
Marginal/Watch List MG/WL 4
Special Mention SM 5
Sub standard SS 6
Doubtful DF 7
Bad & Loss BL 8
8.06 Regulatory Definition on Grading of Classified Accounts:
Irrespective of credit score obtained by a particular obligor, grading of the classified
names should be in line with Bangladesh Bank guidelines on classified accounts, which
56
is extracted from “PRUDENTIAL REGULATIONS FOR BANKS: SELECTED ISSUES”
(updated till August 07, 2005) by Bangladesh Bank are presently as follows:
8.07 Basis of Loan Classification:
A. Objective Criteria:
Any Continuous Loan if not repaid/renewed within the fixed expiry date for repayment
will be treated as irregular just from the following day of the expiry date. This loan will be
classified as Sub-standard if it is kept irregular for 6 months or beyond but less than 9
months, as `Doubtful' if for 9 months or beyond but less than 12 months and as `Bad &
Loss' if for 12 months or beyond.
In case any installment(s) or part of installment(s) of a Fixed Term Loan is not repaid
within the due date, the amount of unpaid installment(s) will be termed as `defaulted
installment'.
B. Qualitative Judgment:
If any uncertainty or doubt arises in respect of recovery of any Continuous Loan,
Demand Loan or Fixed Term Loan, the same will have to be classified on the basis of
qualitative judgment be it classifiable or not on the basis of objective criteria.
Note:
a) Any change in classification criteria provided by the Bangladesh Bank shall
supersede this grading system for classified accounts.
b) An account may also be classified based on qualitative judgment in line with
Bangladesh Bank guidelines.
c) A particular bank may have classification criteria stricter than Bangladesh
Bank guidelines.
a) Evaluation of Security Risk:
Risk that the bank might be exposed due to poor quality or strength of the
security in case of default.
b) Evaluation of Relationship Risk:
These risk areas cover evaluation of limits utilization, account performance,
conditions/ covenants compliance by the borrower and deposit relationship.
57
Investment RISK
Financial Risk
Management Risk
Business/ Industry Risk
Relationship Risk
Security Risk
Leverage
Liquidity
Profitability
Coverage
Experience
Succession
Team Work
Business Outlook
Size of Business
Industry Growth
Market Competition
Barriers to Business
Account Conduct
Utilization of Limit
Compliance of Covenants/ Condition
Personal Deposits
Security Coverage
Collateral Coverage
Support
Age of Business
Fig. Investment (Credit) Risk Grading diagram
According to the importance of risk profile, the following weightages are proposed for
corresponding principal risks.
Step II Allocate weightages to Principal Risk Component
Principal Risk Components: Weight:
Financial Risk 50%
Business/Industry Risk 18%
Management Risk 12%
Security Risk 10%
Relationship Risk 10%
Principal Risk Components: Key Parameters:
Financial Risk Leverage, Liquidity, Profitability & Coverage ratio.
Business/Industry Risk Size of Business, Age of Business, Business Outlook,
Industry Growth, Competition & Barriers to Business
Management Risk Experience, Succession & Team Work.
Security Risk Security Coverage, Collateral Coverage and Support.
Relationship Risk Account Conduct ,Utilization of Limit, Compliance of
covenants/conditions & Personal Deposit.
Principal Risk Components: Key Parameters: Weight:
Financial Risk 50%
Leverage 15%
Liquidity 15%
Profitability 15%
Coverage 5%
Step III Establish the Key Parameters
Step IV Assign weightages to each of the key parameters.
Business/Industry Risk 18%
Size of Business 5%
Age of Business 3%
Business Outlook 3%
Industry growth 3%
Market Competition 2%
Entry/Exit Barriers 2%
Management Risk 12%
Experience 5%
Succession 4%
Team Work 3%
Security Risk 10%
Security coverage 4%
Collateral coverage 4%
Support 2%
Relationship Risk: 10%
Account conduct 5%
Utilization of limit 2%
Compliance of covenants
/condition 2%
Personal deposit 1%
After the risk identification & weightage assignment process (as mentioned above), the
next steps will be to input actual parameter in the score sheet to arrive at the scores
corresponding to the actual parameters.
a) Open the MS XL file named, CRG_SCORE_SHEET
Step V Input data to arrive at the score on the key parameters
b) The entire XL sheet named, CRG is protected except the particular cells to input
data.
c) Input data accurately in the cells which are BORDERED & are colored
YELLOW.
d) Some input cells contain DROP DOWN LIST for some criteria corresponding to
the Key Parameters. Click to the input cell and select the appropriate
parameters from the DROP DOWN LIST as shown below.
e) All the cells provided for input must be filled in order to arrive at accurate risk
grade.
f) We have also enclosed the MS Excel file named, CRG_Score_Sheet in CD ROM
for use.
The following is the proposed Credit Risk Grade matrix based on the total score obtained by an obligor.
Number Risk Grading Short
Name
Score
1 Superior SUP 100% cash
covered
Government
guarantee
International Bank
guarantees
2 Good GD 85+
3 Acceptable ACCPT 75-84
4 Marginal/Watchlist MG/WL 65-74
5 Special Mention SM 55-64
Step VI Arrive at the Credit Risk Grading based on total score obtained
6 Sub-standard SS 45-54
7 Doubtful DF 35-44
8 Bad & Loss BL <35
9.01 Investment Assessment:
Relationship Manager(s) \ Investment Officer(s) shall conduct a thorough
assessment of investment requirement before recommending any new proposal.
There after all investment at least annually at the time of renewal and enhancement.
The assessment procedure shall include the following issues:
1. mode of Investment
2. investment limit
3. Purpose of investment
4. Rate of profit
5. Primary Security
6. Collateral Security- its acceptability, its coverage, its control and genuine etc
7. Margin
8. Repayment capacity and repayment schedule
9. Period of investment
10.Other terns and conditions in case of necessity
In addition the RM (Relationship Manager ) \ Investment officers shall address the
fallowing issues which assessing investment proposal:
A. Customer analysis :
Capital structure of the company
Authorized capital and paid up capital
Reserve and retained earnings
Share holdings of the share holders
Management team
Group and affiliate companies
Ability to comply investment convent
Security
Ability and integrity
B. Industry analysis:
Contribution to GDP of the concern industry
Key risk factors of the industry
Growth of the industry
Domestic market of the industry
International market of the industry
SWOT of the industry
C. Supplier \ Buyer analysis :
Domestic
International
Potentiality of the buyer or supplier
Strength and weakness of the buyer or supplier
D. Historical Financial analysis :
Minimum three years Financial Statement (FSS) analysis
Guarantor (s) \ Corporate guarantor (s) Financial Statement analysis
Quality and sustainability of the borrower’s
Cash flow statement
Strength of the borrower’s balance sheet
Leverage
Profitability
E. Project Financial Performance:
Where term investment facilities are being proposed in favor of any new
industrial unit an expertise team comprising RM. Engineer in the concern field
and financial analyst. The team will prepare a feasibility study as per current
industrial policy.
F. Account Conduct :
►Trade payment
►Cheques payment
►Timely payments
► Irregular payment
►Bank’s investment payment with profit
►Excess over limit drawings
►Excess over DP drawing
►Bank’s commission and charges payment
G. Mitigating Factor : Following risk mitigating factors to be identified in the
investment assessment
Margin
Volatility
High debt load ( Leverage\Gearing )
Overstocking or debtor issues
Repaid growth, acquisition or expansion
Management changes or succession issues
Customer or Supplier concentration
Lack of transparency or industry issues.
H. Investment Structure:
Amount of investment
Tenors of investment
Justification of investment
Based on the project repayment ability installment to be determined
Proposed investment an oust and tenor is not excessive
I. Security:
Primary security should be acceptable, marketable & legal items
Slow, perishable, obsolete, banned, expired items not to be taken as
security
A current valuation of collateral security shall be obtained
10.01 Summary of Findings:
The 2 (two) months internship program has been going to be finished through writing
a report. During the time of internship I have tried with my best to acquire theoretical
and practical knowledge Banking business and the Management of Credit. Being an
employee of Al- Arafah Islami bank Ltd.
Chapter-1: Introduction is illustrated in chapter one. Here I have tried to find out the
scope of and the limitations of the study by discussing the background of the
program. This is just an introductory discussion.
Chapter-2: In chapter two I have tried to familiarize the organization with educated
society.
Chapter-3: In this chapter I tried to discuses in brief all types of AIBL Product and
Service.
Chapter-4: Bangladesh is one of the less developed countries. So the economic
development of the country depends largely on the activities of commercial banks.
Chapter-5: This chapter about Investment and information of Deposit, investment
and Asset of AIBL (2006)
Chapter-6: Chapter for helps us taking decision about any kind of Investment and on
what basis we will take decision are discussed here.
Chapter-7: Chapter seven plays an important role in financial sector. Credit
Information Bureau (CIB) of Bangladesh Bank helps to us detect any defaulter client
of any financial institution because all financial organizations send their defaulter
client list to the CIB.
Chapter-8: Chapter eight discusses investment proposal with an another angle.
Here risk is firstly measured and on the basis of calculated Risk investment proposal
is rejected or accepted.
Chapter-9: Chapter nine helps us to know how to asses Different types of customer.
It helps to select a good customer.
Chapter-10: Chapter ten is a concluding part of this report. Here problems &
limitations of AIBL for making investment are discussed and I have given
recommendations for rectifying these problems
10.02 Problems & Limitations:
During collecting of information and data from AIBL & making report for this project
the following problems have been followed:
i) Decision making process is very lengthy and sometimes it creates problems, which
is unexpected to the customers. Most of the cases Head Office controls the decision
making and it is centralized.
ii) The total number of employees in comparison with needed is very short. this is
hampering the daily operation of the Bank. For an example, Motijheel Branch
General Banking is suffering from shortage of employee.
iii) Lack of proper explanation of records and document records keeping system
10.3 Recommendations:
i) Decision Making: Decision making power should be decentralized effectively so
that business can promptly be enhanced.
ii)Number of Employees: A handsome number of qualified employees & staffs
should be appointed very soon for maintaining the normal flow of work.
iii) Records keeping system: Filing and record keeping system of the bank
should me modernized .At present operation system is partially computerized and on
line banking should be started very soon.
iv) Effective information system: Effectiveness of credit policy largely depends on
Bank’s branch, divisional & national level information system.
v) Development of manpower : Effective implementation of credit policy and
recovery tare depends on higher educated, trained and skilled personnel. Bank
should procure and develop such types of employees for its credit wings.
10.4 SWOT Analysis in AIBL:
Every organization is composed of some internal strengths and weaknesses and
also has some external opportunities and threats in its whole life cycle.
10.4.1 Strengths:
-AIBL provides its customer excellent and consistent quality is every service.
-AIBL is financially sound company.
- AIBL utilizes state of the art technology to ensure consistent quality and operation.
-AIBL provides its works force an excellent place to work
-AIBL already achieved a good will among the cli
-AIBL has research and training division.
10.4.2 Weaknesses:
-AIBL lacks well trained human resource in some area.
-AIBL lacks aggressive advertising.
-The procedure of credit facility is to long compare to other banks.
-Employees are not motivated in some areas.
10.4.3 Opportunities:
-Emergence of on line banking will open more scope for AIBL.
-AIBL can introduce more innovative and modern customer service.
-Many branches can be opened in local remote area as its high demand.
-AIBL can recruit experienced, efficient and knowledgeable officers and staffs as it
offers good working environment.
10.4.4 Threats:
-The worldwide trend of mergers and acquisition in financial institutions is causing
problems.
-Frequency taka devaluation and foreign exchange rate fluctuation is causing
problem.
-lots of new banks are coming in the scenario with new service.
- Local competitors can capture huge market share by offering similar products
10.5 Conclusion:
Al-Arafah Islami Bank ltd. is a non government commercial Bank in Bangladesh,
which started its business from 1995.I t is a unique combination of Shariah & Islamic
banking. Among non government commercial banks, Al-Arafah Islami Bank Ltd. is a
milestone for economic development. It has been playing an important role to
eradicate the unemployment problem in Bangladesh. Over 800 employees and 5500
shareholders are getting benefit from this organization. But most of the people in our
country have misconception about Islamic banking specially Al-Arafah Islami Bank
Ltd. & other Islamic banks. They can not find any difference in its operation between
conventional commercial Banks and Islamic Banks because they have no clear idea
about the activities as well as investment mechanism of Islamic banks.
The Bank is committed to run its activities as per Islamic Shariah and thus it has
different investment(credit) modes, different repayment schedules, different
disbursement procedure, different mark up system. and also has a different
Credit(Investment) policy. ‘Mark up’ means adding some additional value after
purchasing the goods but before to
sell the same to another people. This system is accepted in Islamic Shariah because
here money is converted to goods.’ Money begets money’ is prohibited in Islamic
Shariah. People is getting more benefit from the dealings of Islamic banking because
here quarterly interest is not charged and there is no possibility of interest to be
converted into principal. But it needs to mention here that Islamic Banks like AIBL
incurred huge loss in case of default cases. Islamic Banks can’t charge extra
amount on the residual principal of the overdue accounts like other conventional
banks but some compensation is imposed on the accounts to protect huge accounts
to be overdue/classified. It can not take part in call money market. Mudaraba,
Musharaka are another mode of investment in Islamic Banking. But here honesty is
the only pre-requisite. For ensuring more benefit, more facility from Islamic banks
like AIBL we have to be honest and more sincere to repay the taken money from
these banks in time.
If the Cheque is dishonored due to Insufficiency of funds than Al-Arafah Islami Bank
Ltd don’t charges any cost.
Rules for Passing a Cheque:
In order to enable the branches to facilitate their day-to-day transactions smoothly/
efficiently/ accurately, the following schedule of Power for passing of Cheques/
Instrument signature of vouchers shall come into force with immediate effect:
An authorized officer shall pass Cheque for less than TK. 10,000.00 singly after
proper supervision in computer print out.
Cheques for TK. 10,000.00 & above but below TK. 50,000.00 shall be passed
jointly by any two authorized officers after proper supervision by any one officer in
the computer printer out. He will however also ensure that no fictitious/ wrong
credit in the account has been posted on the day by referring to credit vouchers
of the day.
Cheques for TK. 50,000.00 & above shall be passed under joint signatures of two
officers, one of whom must be Manager of the branch. The procedures regarding
supervision of cheque as at (2) above must however be followed.
All suspense’s A/C (Debit) vouchers, Sundry Deposit (Debit) vouchers, Credit
A/C Debit Vouchers, Expenditure A/C vouchers must be signed by the incumbent
in-charge of the branch with any other authorized officer. As at the close of
Business of the day all transactions (both debit & credit) shall be checked by
referring to computer print out and relative cheque/ vouchers.
Apart from the above it will also be ensured that the total amount of debit & credit
totaling to Current A/C, Saving, STD & Term Deposit corresponds with the total of
cash receipt/ payment, transfer clearing (both outward and inward).
4.05 Remittance
Remittance can be done by telegraph transfer, mail transfer, traveler’s Cheque and
drafts and Cheque. There are two steps of remittance:
o Inland Remittance:
By using ways we can do it. When one bank sends these T.T, M.T, T.C or Cheque to
another bank than it will be called inland remittance. It is done within the country
from one bank to another.
o Foreign Remittance:
When a bank got this T.T, M.T, T.C and cheque from outside bank, which is not
situated in the home country than it will be called foreign remittance. Using these
methods also has done it.
Types of Remittance:
f) Between banks and non-banks customers.
g) Between banks in the same country.
h) Between banks in the different centers.
i) Between banks and central bank in the same country.
j) Between central bank of different customers.
1. Telegraph Transfer (TT):
A telegraph transfer (TT) is an instruction for transfer of money by telegraph cable
and telex from a bank in one center to another bank in a different center. Generally
this is an instruction from the importer’s bank to the exporter’s bank or some other
bank in the exporter’s country for transfer of money to a named person.
2. Mail Transfer (MT):
A mail transfer (MT) is the order to pay cash to a third party or for a credit to be
passed to the account of the payee in the books of the agent. The order is to be
made in writing and sent by mail. Mail transfers may be made by Airmail or Sea Mail,
but in ordinary circumstances mail transfer are made by air unless a customer to the
contrary makes a request.
3. Drafts and Cheques:
A draft is a pay order issued by one bank on another or on its branch. The purchaser
of a draft makes to the seller in local currency at the domestic center while the
paying after presentation of the draft by the beneficiary pays the beneficiary. There is
also risk of loss of the draft in transit.
4. Traveler’s Cheque:
It is the safest way to carry money from one country to another. It can be change in
any country of the world. Even if the Traveler Cheque (TC) is lost then the holder of
the T.C can inform it to the bank and the bank will inform it to the agencies so that no
one can en-cash the T.C while issuing a Traveler Cheque (T.C) a signature is
needed, so that no one can en-cash it except the holder and also another signature
is needed in encashment in front of the banker. So Traveler Cheque (T.C) is the
safest way to carry out side the home country
4.06 Advance Banking
Advance Banking is one of the significant schemes of the Al-Arafah Islami Bank Ltd
limited. It contributes a huge portion of income in the Al-Arafah Islami Bank Ltd total
revenue. It provides different types of loan to its borrowers as a lender. The bank
operates advance facilities through different branches but the entire loan sanction
procedure is controlled and monitored by Head Office.
Certain terms and condition are followed when the can is sanctioned to the
borrowers. Now advance banking is discussed in detail as follows:
Credit Policy:
Al-Arafah Islami Bank Ltd is a new generation Bank. It is committed to provide high
quality financial services/products to contribute to growth of G.D.P. of the country
through stimulating trade & commerce, accelerating the pace of industrialization,
boosting up export, creating employment opportunity for the educated youth, poverty
alleviation, raising standard of living of limited income group and over all sustainable
socioeconomic development of the country.
To achieve the aforesaid objectives of the bank credit operation of the bank is of
paramount importance as the greatest share of total revenue of the Bank is
generated from it, maximum risk is centered in it and even the very existence of
Bank depends on prudent management of its credit port-folio. The failure of a
commercial bank is usually associated with the problem in credit portfolio and is less
often the result of shrinkage in the value of other assets. As such, credit portfolio is
not only features dominants in the assets structure of the Bank also.
To provide a broad guide line for the credit operation towards achieving the
objectives of the bank, for efficient and profitable deployment of its mobilized
resources and to administer the credit Portfolio in the most efficient way, a clearly
defined, well planned, comprehensive and appropriate Credit Policy and control
guidelines of the bank is a prerequisite.
In view of the above, this credit policy and guidelines of the bank has been prepared
subject to amendment, revision, re-adjustment and refinement as and when required
by the Bank.
The purpose of this policy statement, which replaces al previous ones, is to set out
the credit policies of the Board of Directors.
The policies are described as under:
Credit Principles.
Global Credit Portfolio Limits.
Types of Credit Activities.
Credit Administration.
Credit Principle
The following are the principles to be adopted for lending authority, approval,
monitoring and control on a basis consistent with the global operational objectives
and business strategies of the bank.
General:
The bank will provide suitable credit services and pr ducts for the markets in which it
operates.
Loans and advances shall normally be financed from customer’s deposits and not
out of temporary funds or borrowing from other Bank. Credit will be allowed in a
manner, which will in no way compromise the Bank's standards of excellence and to
customers who will complement such standards.
All credit extension must comply with the requirements of the of Bank's Memorandum &
Articles of Association, Banking Companies Act 1991 as amended from time to time,
Bangladesh Bank's instruction and other applicable rules and regulations.
Structural
The authority structure for extension of credit should enable effective adaptation to
changes in the economic, technological, regulatory and competitive environment
within which the Bank operates.
Performance
The conduct and administration of the loan portfolio should contribute, within defined
risk limitation, to the Bank's achievement of portfolio growth and superior return on
the bank's capital. Credit advancement shall focus on the development and
enhancement of customer relationship and shall be measured on the basis of the
total yield for each relationship with a customer (on a global basis), through
individual transactions should also be profitable.
Credit facilities will be extended to those companies/persons, which can make best
use of them, thus helping to maximize our profits as well as economic growth of the
country. To ensue achievement of this objective it will base its leading decision
mainly on the borrower's ability to repay. If credit facilities are grantee on a
transaction /one-off basis the yield from the facility should be commensurate with the
risk.
Loan pricing
Interest on various lending categories will depend on the level of risk and type of
security offered. It should be keep in mind that rate of interest is the reflection of risk
in the transaction. The higher is the risk, the higher is the interest rate. Interest may
be reviewed at least once in 6 (six) months and more often when appropriate. Fixed
interest rate should be discouraged; preferably all rates should vary with cost of
funds fluctuation based on a spread for profit
Effective yield can be enhanced to the extent borrowers are required to maintain
deposits to support borrowing activities. Commitment fee and service charges should
further improve yield where possible. All pricing of loams should however have
relevance with the market condition and be approved by the executive
Committee/Managing Director from time to time.
Administration/ Monitoring
The administration of the loan process shall ensure, compliance with all laws and regulations
at both local and global levels including bank policy as set out in this document and the
Bank's credit manual/circulars.
Proper analysis of credit proposal is complex and requires a high level of numerical
as well as analytical ability and common sense. To ensure effective understanding of
the concepts and thus common sense. To ensure effective understanding of the
concepts and thus to make the overall credit portfolio of the Bank healthy, proper
staffing of the credit departments shall be done through placement of qualified
officials who have got the right aptitude, formal training in finance, credit risk
analysis, Bank credit procedures as well as required experience. Where repayment
and interest servicing performance of a credit deteriorates it shall be identifies at an
early state and closely monitored to avoid low losses.
Loans/facilities where appropriate and related security shall be monitored and reviewed by a
separate unit unconnected with the credit, approval process on a regular basis in order to
assess the collect ability of the loan and effectiveness of the security. This unit will report to
the Managing Director or his designated officer.
Exception of Loan policy
It is recognized that there will be exceptions to the state policy, which can be
justified. However, the Board should approve these by the Executive Committee or
and the circumstances must be fully documented in the credit file.
Global credit Portfolio Limits:
The nature of credit portfolio shall be governed within guidelines set down by Head
Office and regulatory requirements. These guidelines will however be consistent with
the global limits identified below for the banks credit portfolio in aggregate. Criteria
for exposure to customers are set as under:
Total Facilities:
The aggregate of all cash facilities shall not exceed 80% of customer deposit. It is
further governed by the statutory and liquidity reserve requirement of Bangladesh
bank.
Term facilities:
Aggregate long-term facilities shall not exceed 20% of the total credit portfolio.
Facilities shall not be allowed for a period exceeding 5(Five) years. Any exceptions
will require the approval of the Board of directors.
Country/Cross Border Exposure:
Limits to be established by the Board for individual Country as well as for aggregate
Bank Credit exposures to different countries. These limits are to be reviewed from
time to time with due regard to the political and economic environment in each
country. The country exposure limits may be utilized up to maximum amounts for
different maturates as follows:
For maturity up to one year: 100%
For maturity up to two year: Maximum 50 % of the limit.
For maturity up to three year: Maximum 25% of the limit,
For maturity beyond three years: Maximum 10% of the limit.
For exceptions, approval is required from the Board of Directors.
Exposure to Customer Groups:
Credit facilities in aggregate extended to any one-customer group shall not normally exceed
15% of the capital fund or Tk. 10 (ten) crore whichever is lower. However, Board of
Directors may relax these limits in deserving cases. All proposals submitted to Head Office
will also be required to indicate the extent of Bank's global exposure to that customer group.
Sector-wise allocation:
Sector-wise allocation of credit shall be made annually with the approval of
Executive Committee/ Board of Directors. This will be reviewed from time to time.
Security:
Security accepted against credit facilities shall be properly valued and shall be
affected in accordance with the laws of the country in which the security is held.
An appropriate margin of security will be taken to reflect such factors as the
disposal costs or potential price movements of the underlying assets.
Syndication of Term Loans:
That study was part of the Federal Reserve business loan survey of 1955. At that
time about 30 percent of outstanding term loans conceited of individual loan
contracts under which the credit had been extended by more than one Bank. The
use of multiple participation may arise in either of three kinds of circumstances.
First, a small Bank may be faced with a credit demand that is in excess of its legal
lending limit, in which case it may seek in dispose of the "over line" credit to its city
correspondent. This form of "over line" lending is way of accommodating large local
customers while at the same time avoiding the commutative risk of losing them to
some other city lender. It is generally understood implicitly that a city correspondent
will not solicit the business customers of its country correspondents without their
permission.
Second, Large Banks, hard pressed for reserve funds, often sell portions of their term and other loans to country correspondents. The extent to which this practice is followed varies with the tightness of money markets. In recent years New York has often been hard pressed for funds while country financial institutions have still had unused lending capacity.
Third, some financial institutions prefer participation in lending in order to improved their credit diversification. For example: Banks in the southwestern state sometimes have encountered heavy demands for petroleum industry loans. Large-scale syndicates or pools were often formed for the granting of such loans.
Types of Credit Activities:
Depending on the various nature of financing all the lending activities have been
brought under the following major heads:
Loan
Long Term Short Term
House building loan, project or industrial
loan and transport loan.
Commercial Loan
Cash credit (pledge),Cash credit
(Hypothecation), Loan general, Secured
overdraf (SOD), Loan aganist imported
merchandise (LIM) and others loan.
1. Loan (General):
Short term and long term loans allowed to individual/ firms/ industries for a specific
purpose but a definite period and generally repayable by installments fall under this
head these types of lending are mainly allowed to accommodate financing under the
categories.
a). Large and Medium Scale Industries.
b). Small and Cottage Industries. Very often term financing for agriculture and others
are also included here.
2. House Building Loan (General):
Loans allowed to individual/enterprises construction of house (residential or
commercial) fall under this type of advance. The amount is repayable by monthly
installment within a specified period, advances are known as Loan (HBL-GEN).
Introduction:
House Building loan is one of the common credit policies of banking sector. There
was only one institution in our country, which is specified in HBFC, Bangladesh
House Building Finance Corporation. Now days, besides this bank many commercial
banks and Leasing Company provides house-building loan to the customers.
Interest rate:
Currently the interest rate is 16%. But it may changes from time to time depending
on the market interest rate. From the customers point of view this changes have an
adverse impact on the customers. Some times if they have to bear a higher interest
on the principal amount which causes a great burden on them.
But from the bank's point of view this is very good to maintain the markup. Because
when the market interest rate raises 1% than they are getting 1% less markup. So
for this clause of increasing interest rate they can have the same markup by
increasing the
interest rate changing on the clients. So this is very effective for the Bank to maintain
markup.
Disbursement Procedure:
The disbursement procedure or timing of disbursement depends on the client or the
progress of work of the construction. The disbursement can be made two or three
stages or more depending on the above conditions.
Mode of repayment:
The loan shall be adjusted by monthly installment basis. The repayment will start
from 6(six) months of the date of first disbursement (it may change according to the
terms and conditions of the agreement)
Collateral:
The land and the construction on the land are normally given as collateral. It may
changes--
The documents to be obtained:
x. DP note.
xi. Letter of disbursement.
xii. Letter of installment.
xiii. Letter of guarantee.
xiv. Letter of undertaking.
xv. Letter of agreement,
xvi. Irrevocable general power of attorney.
xvii. Memorandum of deposit of title deed.
xviii. Any other documents if considered.
House Building Loan (Staff)
Loans allowed to the Bank employees for purchase/construction of house shall be
known as Staff Loan (HBFC-STAFF).
Other Loans to Staff
Loans allowed to employees other than for House Building shall be grouped under head staff Loan (general).
Cash Credit (Hypo)
Advances allowed to individual/ firm for trading as well as wholesale purpose or to
industries to meet up the working capital requirements against hypothecation of
goods as primary security fall under this type of lending. It is a continuous credit. It is
allowed under the categories:0
"Commercial lending" when the customer is other than an industry and "Working
Capital" when the customer is an industry.
Cash credit (Pledge)
Financial accommodations to individual/Firms for trading as well as for wholesaler to
industries as working capital against Pledge of goods as primary security fall under
this head of advance. It is also a continuous credit and like the above allowed under
the categories.
a. "Commercial Lending"
b. "Working capital"
Hire-purchase:
Hire purchase is a type of installment credit under which the Hire-Purchaser agrees
to take the goods on hire at a stated rental, which is inclusive of the repayment of
principal as well as interest for adjustment of the loan within a specified period.
Lease Financing:
Lease financing is one of the most convenient sources of acquiring capital machinery
and equipment whereby a client is given the opportunity to have an exclusive right to
use an asset usually for an agreed period of the time against payment of rent. It is a
term financing repayable by installment.
Lease Finance of RYJM Bank Ltd:
The lease Financing is a major financial instrument in banking sector. As the Bank is
a leading financial institution in the financial sector in our country it also involves in
lease
Parties To A Latter of Credit (L/C):
i. Import/ Buyer/ Applicant.
ii. Export/ Seller/ Supplier.
iii. Issuing Bank/ Operating Bank.
iv. Advising Bank/ Notifying Bank.
v. Confirming Bank.
vi. Negotiating Bank.
vii. Paying Bank/ Reimbursing Bank.
Documents Required In Latter of Credit Operation:
Bill of Exchange (Drawer, Drawee and Payee).
Invoice (Performa Invoice, Commercial Invoice, Consular Invoice, Legalized
Invoice, Customer Invoice).
Packing List.
Certificate of Origin.
Inspection Certificate.
Insurance.
Marine Insurance Policy
Three types of Marin Insurance Policy:
1. ICC (A):- Covers Maximum Risk.
2. ICC (B):- Covers Moderate Risk.
3. ICC (C):- Covers Minimum Risk.
Covers Minimum Risk ICC (C) :
1. Loss or damage to the subject matter insured reasonably attributes to.
2. Fire or Explosion.
3. Vessel or credit being stranded grounded sunk or capsized.
4. Overturning or derailment of land conveyance.
5. Collision or contact of vessel craft.
6. Discharged of cargo at a port of distress.
7. Jettison.
Covers Moderate Risk ICC (B):
Same as ICC (C) and is addition:
1. Earthquake volcanic corruptions or heightening.
2. Jettison or washing over board.
3. Enter of sea lake or river water into vessel craft hold conveyance container lift-van
or place of storage.
Covers Maximum Risk ICC (A):
It covers all risk of loss or damage, but it does not state any specific risk as B & C
4.10 Incoterms:
Incoterms simply mean International Commercial Terms. These are also known as
contract terms or Trade Terms or Delivery Terms of Sales Terms or Purchase
Terms. These Terms are used in the field of International Trams or Foreign Trade,
Paris, France.
4.11 Back to Back Letter of Credit:
A back-to-back letter of credit is a new credit. It is different from the original credit
based on which the bank undertakes the risk under the back-to-back credit. In this
case the bank’s main surety/ security is the original credit. The original credit (selling
credit) and the back-to-back credit (buying credit) are separate instruments
independent of each other and in no way legally connected, although they both form
part of the same business operation. The supplier (beneficiary of the back-to-back
credit) ships goods to the importer or supplies goods to the exporter and presents
documents to the bank as is specified in the credit. It is intended that the exporter
would substitute hiss own documents and ships the goods to the importer, if
necessary and present documents for negotiation under the original credit, his
liability under the back-to-back credit would be adjusted out of these proceeds. The
export L/C is marked lien and no margin is taken.
4.12 Foreign Exchange:
Foreign exchange can simply be defined as a process of conversion of one currency
into another. A well know author of some popular books on foreign exchange, Dr.
Paul Einzig tells that foreign exchange means “a system or process of conversion of
one national currency into another and of transferring money from one country into
another”. In ordinary sense “Foreign Exchange” means Foreign Currency, which
refers to the rate of exchange the price of one unit of foreign exchange in terms of
another currency. But in its complete sense, foreign exchange means the
mechanism or the media used and the rate at which these media are exchange with
another.
Foreign Exchange department is divided into two parts, the first one is the Export
Department and the second part is the Import Department.
4.12.1 Export Department:
When any organization wants to export any product to other country than that
particular organization usually opens an Export Letter of Credit (L/C) from this
department.
Foreign Exchange Operation (Export Financing):
Exporter means any person lawfully exporting goods from Bangladesh to any other
country in the world. After shipment the exporter has to tender the documents to the
Bank within the stipulated period for the negotiation of the documents are drawn
under a Letter of Credit. If require, finance the duty drawback and cash
compensatory support claims of the exporter.
Export credit means any credit provided by an institution to an exporter in the form of
packing credit or post shipment credit. Packing credit means any loan or advance
granted or any other credit provided by an institution to an exporter for financing the
purchase, processing or packing of goods on the basis of Letter of Credit.
Post-shipment means any loan or advance granted or any other credit provided by
an institution to an exporter of goods from Bangladesh from the date of realization of
the credit after shipment of the goods to the date of extending the credit after
shipment of the goods to the date of realization of the export proceeds and includes
any loan or advance granted to an exporter in consideration of or on the security of
any duty drawback or any cash payment by way of incentive.
Incentives are as follows:
Export Finance:
Interest Rate.
Incremental Incentive on Interest for Interest Based Bank.
Extent of Export Credit.
Credit to First Time Applications.
Back-to-Back Letter of Credit.
Substitute Benefit:
Exporter will get this benefit only for export oriented local waving/ Knitting
manufacturer.
Duty Draw Back:
An exporter of manufactured products is entitled to draw back the value of the
customer’s duties; sales tax etc. already paid on the importation of raw materials
used in the production or manufacture of the export products.
Export Credit Guarantee Scheme. Confessional Rate of Import Duty. Income Tax Rebate. Traveling Facilities.
Export Formalities:
Procedure for Registration of Exporter.
Books and Register/ Ledger Required for Export.
Export L/C Checking and Advising.
Formalities of Back-to-Back L/C Opening.
Accounting of Back-to-Back L/C.
B.B Bill Checking/ Lodgment.
Mechanism of Acceptance.
Pre-shipment Financing.
Export Document Checking and Negotiation/ Collection Basis.
Calculation of Offering Sheer for Fund Disbursement System.
Proceeds Realization Correspondence.
Formalities of Back-to-Back Payment System.
Substitute Benefit Realization/ Collection System.
EXP From Reporting of Bangladesh Bank.
Disposal of EXP Forms.
Disputes and Settlement of Export Claim.
Procedure for Obtaining Export Registration Certificate (ERC):
For obtaining export registration certificate from CCI & E, the following documents
are required
Application Form.
National Certificate.
Partnership Deed (Registered).
Memorandum and Article of Association and Incorporation Certificate.
Bank Certificate.
Valid Trade License.
Copy of Rent Receipt of the Business Firm.
Checking and Advising of Export Letter of Credit:
On receipt of Export letter of Credit it is to be recorded in the Banks inward register
and then the signature of a Bank and finally it is to be forwarded to the beneficiary
under forwarding schedule.
Processing and Opening of Back-to-Back Letter of Credit:
An exporter desired to have an Import L/C limit under Back-to-Back arrangement. In
that case the following papers & documents are required:
Full Particulars of Bank Account.
Balance Sheet.
Statement of Assets & Liability.
Trade License.
Valid Bonded Warehouse License.
Membership Certificate.
Income Tax Declaration.
Memorandum of Articles.
Partnership Deed.
Resolution.
Photographs of Al Directors.
On receipt of above documents and papers the Back-to-Back Letter of Credit
opening section will prepare a credit report. Branch must obtain sanction from Head
Office for Opening Back to Back L/C.
Back-to-Back Letter of Credit opened without Head Office concern because of
valued clients of the Bank. In that case an officer of Foreign Exchange Department
will send a Post to the Head Office for the opened Back-to-Back Letter of Credit
Exporters prepare the documents and submit the same to the Bank for negotiation.
Preparation of Export Documents: Export Documents Checking:
General Verification :
L/C Registers or Not.
Exporters Submitted Documents Before Expiry Date of the Credit.
Shortage of Documents etc.
Particular Examination:
Each and every Documents Should be Verified with the L/C.
Cross Examination:
Verified One Document to Another.
On receipt of documents it must be checked properly and then a proposal sheet
would be prepared as per Bank’s format indicating the full particulars of shipment
and discrepancies under the signature of authorized person and should be placed to
Manager for disposal instruction or sanction.
Sanction of Pre-shipment:
The party is to apply the Bank. On receipt of the application pre-shipment, section
will start scrutiny of the application.
Types of pre-shipment, whether clean/ pledge/ hypothecation of goods.
Whether the investment is within Bangladesh Bank credit restriction.
Whether the security offered is acceptable.
What is the purpose of the investment?
Whether the goods specified for finance is eligible for export under export control
rule.
How the PSI A/C will be adjusted.
Whether the item is traditional or non-traditional.
Disbursement:
Execution of Documents:
Execution of the charge documents.
Lien mark on Master Letter of Credit (L/C).
4.12.2 Import Department:
When any organization want to import any product from other country than the
particular organization usually opens an import Letter of Credit (L/C) from this
department.
Import of Goods by Letter of Credit:
A Letter of Credit is a conditional Bank undertaking of Payment. In other words Letter
of Credit is a letter form the importer Banker to the exporter that the bills if drawn as
per terms and conditions are complied with will be honored on presentation.
Following papers are to be submitted by the importer before opening the Letter of
Credit:
Trade License.
Import Registration Certificate.
Income Tax Declaration with TIN.
Membership Certificate.
Memorandum of Articles (in case of Ltd. Co).
Registered Deed (in case of Partnership firm).
Resolution.
Photographs.
VAT Registration.
Invoice:
The amount of invoice to be filled with that of draft.
The invoice is shown by the beneficiary and is signed by him.
Description of goods in the invoice and bill of landing are to be identical.
Back-to-Back Letter of Credit (L/C):
Back-to-Back Letter of Credit (L/C) is a type of Import L/C either in inland or in
abroad, which open against lien on valid export L/C.
In our country in export of garments, this method of finance of widely used and is
Restricted Letter of Credit (L/C):
When the negotiation is restricted to the Letter of Credit (L/C) advising bank only
against adding confirmation to the credit. This type of Letter of Credit (L/C) is called
restricted L/C.
4.15 Procedure for Opening Letter of Credit (L/C):
An importer desirous to have an import Letter of Credit (L/C) limit must have applied
to the designated bank in prescribed form for sanction of margin, Letter of Credit
(L/C) limit it etc.
L/C Opening flow chart in case of BTB L/C:
Figure: Letter of Credit (L/C) Opening Process
Letter of Credit (L/C) Application:
For opening Letter of Credit (L/C) the client is to submit to the bank an application in
the printed format of the designated bank. This is called Letter of Credit (L/C)
application form, which is also an agreement between the importer and the bank.
The form is to be stamped under stamp Act. The importer must submit the LCA and
Lien of Export L/COpening of BTB
L/C under that
Export L/C
ABP (Accepted
Bills For
Payment)
Under ProductionExport MadeCollection/ Purchase
of Export Bills
Collection From
Export L/C issuing
Bank
Nosto A/CInform To Head
Office
Head Office ETDA
A/C (Debit)
Credit Advice to
Branch
BTB Payment Respective
Party A/C
(Credit)
If PC Facility
Then
Adjustment
IMP and Indent or contract / purchase order/ proforma invoice (duly accepted by the
importer) along with Letter of Credit (L/C) application.
The Letter of Credit (L/C) application must be completed/ filled in and signed by the
authorized person of the importer giving the following particulars.
Full name and address of the supplier or beneficiary and importer.
Brief description of the goods.
Last date of shipment and negotiation time (must not be beyond 30 days from the
shipment date).
Insurance cover note number and name or the company.
Tenor of draft (i.e. sight/ usance/ deferred etc.).
Mode of advising L/C (i.e. airmail/ full telex/ short cable etc.).
Opening of L/C under UCPDC publication No. 500 ICC revision 1993.
Whether shipment/ transshipment is allowed.
Instruction to add confirmation.
LCA number.
Any other relevant information and instruction if any must be mentioned in the Letter
of Credit (L/C).
Examination of Letter of Credit (L/C) Application:
On receipt of Letter of Credit (L/C) application an officer of L/C section must check it
very careful by the following manner.
That the terms and conditions as stipulated in the L/C application are consistent
with the exchange control and import trade regulation and UCPDC 500.
That all the information mentioned in above column have been furnished.
That the terms to be imported are eligible according to importers entitlement.
That the goods are not being imported or originated form South Africa or Israel.
If the goods are imported form any member countries of ACU.
That the validity of the L/C must not exceed the validity of LCA.
Preparation of Credit Report:
Bank prepares credit report in prescribed forms. Character, Capacity and Capital,
which are known as the three C’s of credit. Instead of the three C’s some mentions
the three R’s i.e. reliability, responsibility and resources. To these three C’s we may
add two more C’s i.e. collateral and conditions.
Position of Letter of Credit (L/C):
Import section will see whether there is sufficient fund available in the account to
cover the margin to be sanctioned, commission, postage, cable or telex charge etc. If
it is found O.K, Letter of Credit (L/C) will be sanctioned.
In all cases the sanction must be informed to the importer for acceptance. On
receiving confirmation from the client then the terms and conditions of the sanctioned
are acceptable, the subsequent documentation/ charge document are taken up.
Following papers/ documents submitted by the importer before opening of the L/C:
Memorandum of (In case of partnership firm).
Resolution.
Photo One Copy.
VAT Registration Certificate.
Maintenance of Register:
The sanction must be recorded in the following registers:
Document Execution Registers. All the charge documents must be recorded in
this register.
Limit Register.
Liability Ledger.
Confidential Report of Beneficiary of Letter of Credit (L/C):
According to exchange control regulations bankers are required to obtain confidential
report of the beneficiary of Letter of Credit (L/C) before opening the same, if the
amount of Letter of Credit (L/C) exceeds Tk. 5 lac. Bank can open Letter of Credit
(L/C) below Tk. 5 lac without obtaining C.R.
Banker can write to their foreign correspondents to supply the C.R. But from practical
experience foreign correspondents of different country are not supplied timely.
To overcome the above situation bankers can conduit reference book i.e. MUWN/
DUNN/ BRADSTREET/ Trade directory of various chambers of commerce of
different countries in the world.
On receipt of C.R. form any source the banker can accumulate the same in one
master file.
Letter of Credit (L/C) Numbering in The Register:
If the Letter of Credit (L/C) application and other all formalities are found in order
then put the serial number in the Letter of Credit (L/C) opening register. This Letter of
Credit (L/C) number form on the appropriate blank space.
Enter in the Letter of Credit (L/C) opening register the following particular:
Date, Letter of Credit (L/C) value (F. Currency) and Bangladesh Tk., Rate of
Conversion, LCA No., CCI and E Registration No., Shipment Date, Expiry Date of
the L/C, Commission, postage and Telex etc. to be recovered.
Letter of Credit (L/C) Advising:
Letter of Credit (L/C) must be typed in the printed format of a bank, after typing,
Letter of Credit (L/C) should again be checked up by two authorized signatories and
would be dispatched under their full signature bearing their signature number.
Telex Letter of Credit (L/C):
If any importer desires Letter of Credit (L/C) to be transmitted by Telex. In that case
the whole of the Letter of Credit (L/C) is to be transmitted by Telex to the advising
bank by the opening bank.
In the last pare of the above Telex Letter of Credit (L/C) must be mentioned that the
telex message is an operative and no airmail confirmation will follow. In that case
reimbursement authority is to be sent to the reimbursing bank separately.
If the importer desires that the Letter of Credit (L/C) is to be advised by a short cable,
short cable be sent incorporation the principal terms of the Letter of Credit (L/C) as
under.
Advice our irrevocable Letter of Credit (L/C) No. … Date. …. Favoring …
(Beneficiary’s name and address).
Amount (Foreign currency).
Merchandise to be imported.
Last date of shipment.
Negotiation days.
Name of the Importer with address.
Test Number.
Air Mailing Details.
The airmail Letter of Credit (L/C) must state as under “this is in confirmation of our
cable date” this is necessary to eliminate the possibility of issuing two advises of
dispatching the same Letter of Credit (L/C) to the beneficiary by the foreign
correspondent.
Accounting Procedure for Opening Letter of Credit (L/C):
The following accounting system is followed I documentary credit. The register shall
be posted immediately on receipt of approval from the manager to open a L/C.
Foreign currency should not be purchased against L/C at the time of opening of L/C.
If necessary the importers may avail forward booking facilities from Head Office
subject to formal approach by the branch.
Amendment:
Amendment of irrevocable Letter of Credit (L/C) is not permissible without the joint
consent of all the parties involved in documentary credit operation.
Time Extension:
A written application forms the opener of Letter of Credit (L/C) and signature of the
opener to be verified.
Procedure or Preparation and Dispatch:
Amendment is to be typed in the Banks printed format. The copies of the
amendment must be dispatched to all concerned as done in dispatching the L/C.
Amendment can be done either by cable/ telex or airmail.
Each and every amendment of L/C must be noted in the L/C file and copies of each
amendment are kept in the L/C file chronologically (date wise).
Bank Charge:
Amendment commission is to be realized from the party as per instruction of
Bangladesh Bank F.C. circulars.
4.16 Clearing House & Collections of Bill:
According to the Article 37(2) of Bangladesh Bank Order 1972, the banks, which are
the member of the clearinghouse, are called as Scheduled Banks. The scheduled
banks clear the cheques drawn upon one another through the clearinghouse.
Procedures for Collection:
The following procedures are taken for collection,
“Payee’s A/C Credited” endorsement
Entries are given in the outward clearing Register
“Clearing” seal is given Cheque
Cheques are sorted bank wise and entries are given to the computer
Entries are given to the “Clearing House Register”
Crossing of the cheques are done
Procedure for Outward Bills for Collection:
Depositing the cheque along with Deposit Slip
Crossing of the cheques are done indicating Principal Branch as collecting bank
Endorsement “Payee’s A/C will be credited on realization ” is given
Entries are given in the outward clearing Register
5.01 Definition of Investment:
Investment, transaction between two parties in which one ( the creditor or lender)
supplies money, goods, services or securities in return for a promised future
payment by the other ( the debtor or borrower). Such Transaction normally includes
the payment of interest to the lender. Investment may be extended by the public or
private institutions to finance business activities, agricultural operation, consumer
expenditures or government projects.
5.02 Introduction of Investment:
Modern Investment management is extended through specialized financial
institutions of which commercial banks are the oldest and most important. In present
days of industrial economics, the banks are able to extend and increase the supply
of Investment by the creation of Investment management for their loan customers.
The lender must judge each loan he makes on the basis of the charter of the
borrower (his intention to pay), (his capacity to pay), (based on his potential for
earning) and his collateral pledged in case of default on the loan. The terms of
Investment transactions may be publicly regulated to prevent abuses by customers
and lenders as well as to channel Investment in to particular sectors of the economy.
5.03 AIBL 2006 Deposit, Investment and Asset Information:
Deposit:The total deposit of the bank was Tk. 16775.33 million at 31st December 2006, of
which bank deposit was 611.72 million taka and general deposit was 16163.61
million taka. At the same time in the last year, the amount was total deposit was
11643.66 million taka. In this area the growth rate is 44.07%.
20022003
20042005
2006
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Deposit
Fig:1 Deposit
investment:
At the end of the year 2006, the amount of investment of the bank was Tk. 17423.19
million in comparison to Tk. 11474.41 million of the last year 2005. the amount of
investment has increased 5948.78 million taka within this period, which is around
51.84%
20022003 2004
2005
2006
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Investment
Fig: 2 Investment
Total Assets :
2006
1% 7% 5%
82%
1% 4% Cash in hand
B.Bank & S. Bank
Other Bank
Investment
Fixed Assets
Other Assets
Fig: Total Assets
7. Cash in hand 1%
8. B.Bank & S.Bank 7%
9. Other Bank 5%
10. Investment 82%
11.Fixed Assets 1%
12.Other Assets 4%
Lending (Investment) Decision:
The principal function of a Bank is to lend or invest. Lending is a dynamic activity .It
helps to create entrepreneur and thus the country would be industrialized. When a
country becomes industrialized it eradicates poverty from the society and over all
from the country. Bank collects deposits from common people invest to the people
who are willi8ng to run business or to set up an industry. In this respect the Bank
takes collateral security to secure the invested amount.
Safety:
Safety is the first guiding principle of a prudent banker. A bank is in business to
make money. It mainly uses depositor’s fund as a means of its earnings. The money
of the depositor’s being repayable on demand or, after a short notice, determines the
capacity of a bank as to the period for which he can safety lend it out without an
uncalculated risk. Safety should never be sacrificed for profitability. Once the
confidence of the depositor’s is shaken, the banker cannot carry on the banking
business.
6.03 Liquidity:
Liquidity is the availability of bank funds on short notice. It is not enough that the
money will come back, it is also necessary that it must come back on demand or in
accordance with agreed terms of repayment. The borrower must be in a position to
repay within a reasonable time after a demand for repayment is made; otherwise, the
liquidity position of the bank is endangered
6.04 Profitability:
Commercial Bank has to distribute its resources in a manner that they meet the twin
requirements of liquidity and profitability. A banker has, therefore to see that major
portion of the assets owned by it are not only liquid but also aim at earning a good
4.05 Purpose:
A Banker would not through away money for any purpose for which the borrower
want. The purpose should be productive so that the money not only remains safe but
also provides a definite source of repayment. The banker should study the purpose
for which loan is required and the resources from which the borrower is expected to
repay. If the funds borrowed are employed for unproductive purposes like marriage
ceremony, pleasure trip, repayment of old debts etc.
6.06 Security:
It is the practice of banks not to invest money without any security. A banker would
normally like to recover the investment from the sell of the security. The importance
of an adequate and acceptable security can, however, be hardly over emphasized.
Security serves as a safety value for an unexpected emergency. Security taken by
Banks can be classified into two categories such as: i) Primary Security, ii) Collateral
Security.
6.07 Disposal:
The investment should be as much broad based as possible and must be in keeping
with the deposit structure. The investments must not be in particular direction or to
one particular industry because adversity may face problems but diversified
investments can minimize the risk.
6.08 National Interest:
Banking industry has significant role to play in the economic development of a
country. The banker would lend if the purpose of the investment is for overall
national development plans necessitating flow of credit to priority sector in the larger
national interest. Sometimes, the need of the borrower may be considered so
essential for the benefit of the national economy despite of heavy risk involved if the
investment may be granted.
7.01 Role of CIB in Bangladesh:
Due to irregular and insufficient flow of credit information in the banking system the
proportion of classified loan in relation to total credit is very high. This proportion of
classified loan operated a bad culture in the Banking sector. In order to eliminate the
bad culture & to equip the banks with proper credit information for loan application
processing, proposal for relation of CIB was put forward by different committee and
organizations and it was established in 1992.
7.02 Functions of CIB:
vi) To standardize information flow on loans/credits within the Bangladesh
Banking system.
vii) To increase the speed & accuracy with which the credit information is
made available to banker assessing credit role.
viii) To combine the information gathered on classified loans with the
information on newly sanctioned loans to the borrowers thereby making
available on integrated information package.
ix) To integrate the default loan information in the CIB its timely submission
to the banks for loan application processing.
x) To collect credit information on quarterly basis from banks.
8.01 Credit Risk Grading:
Credit risk grading is an important tool for credit risk management as it helps the
Banks & financial institutions to understand various dimensions of risk involved in
different credit transactions. The aggregation of such grading across the borrowers,
activities and the lines of business can provide better assessment of the quality of
credit portfolio of a bank or a branch. The credit risk grading system is vital to take
decisions both at the pre-sanction stage as well as post-sanction stage.
8.02 Definition of Credit Risk Grading (CRG):
The Credit Risk Grading (CRG) is a collective definition based on the pre-
specified scale and reflects the underlying credit-risk for a given exposure.
A Credit Risk Grading deploys a number/ alphabet/ symbol as a primary
summary indicator of risks associated with a credit exposure.
Credit Risk Grading is the basic module for developing a Credit Risk
Management system.
8.03 Functions of Credit Risk:
Well-managed credit risk grading systems promote bank safety and soundness by
facilitating informed decision-making.
8.05. Numbers & Short names of graders used in the CRG:
The proposed CRG scale consists of 8 categories with Short names and Numbers are provided as follows:
GRADING SHORT NAME NUMBER
Superior SUP 1
Good GD 2
Acceptable ACCPT 3
Marginal/Watch List MG/WL 4
Special Mention SM 5
Sub standard SS 6
Doubtful DF 7
Bad & Loss BL 8
8.06 Regulatory Definition on Grading of Classified Accounts:
Irrespective of credit score obtained by a particular obligor, grading of the classified
names should be in line with Bangladesh Bank guidelines on classified accounts,
which is extracted from “PRUDENTIAL REGULATIONS FOR BANKS: SELECTED
ISSUES” (updated till August 07, 2005) by Bangladesh Bank are presently as
follows:
In case of Fixed Term Loans, which are repayable within maximum 5 (five)
years of time:
If the amount of `defaulted installment' is equal to or more than the amount of
installment(s) due within 6 months, the entire loan will be classified as ‘Sub-standard;
If the amount of 'defaulted installment' is equal to or more than the amount of
installment(s) due within 12 months, the entire loan will be classified as ‘Doubtful;
If the amount of 'defaulted installment' is equal to or more than the amount of
installment (s) due within 18 months, the entire loan will be classified as ‘Bad & Loss.
B. Qualitative Judgment:
If any uncertainty or doubt arises in respect of recovery of any Continuous Loan,
Demand Loan or Fixed Term Loan, the same will have to be classified on the basis
of qualitative judgment be it classifiable or not on the basis of objective criteria.
Note:
d) Any change in classification criteria provided by the Bangladesh Bank
shall supersede this grading system for classified accounts.
e) An account may also be classified based on qualitative judgment in line
with Bangladesh Bank guidelines.
f) A particular bank may have classification criteria stricter than Bangladesh
Bank guidelines.
8.08 How to Complete Investment (Credit) Risk Grading
The following step-wise activities outline the detail process for arriving at credit
risk grading.
Step I: Identify all the Principal Risk Components
Credit risk for counterparty arises from an aggregation of the following:
Financial Risk
Business/Industry Risk
Management Risk
Security Risk
Relationship Risk
Each of the above mentioned key risk areas require to be evaluated and aggregated
to arrive at an overall risk grading measure.
c) Evaluation of Financial Risk:
Risk that counterparties will fail to meet obligation due to financial distress.
This typically entails analysis of financials i.e. analysis of leverage, liquidity,
profitability & interest coverage ratios. To conclude, this capitalizes on the risk
of high leverage, poor liquidity, low profitability & insufficient cash flow.
d) Evaluation of Business/Industry Risk:
Risk that adverse industry situation or unfavorable business condition will
impact borrowers’ capacity to meet obligation. The evaluation of this category
of risk looks at parameters such as business outlook, size of business,
industry growth, market competition & barriers to entry/exit. To conclude, this
capitalizes on the risk of failure due to low market share & poor industry
growth.
Evaluation of Security Risk:
Investment RISK
Financial Risk
Management Risk
Business/ Industry Risk
Relationship Risk
Security Risk
Leverage
Liquidity
Profitability
Coverage
Experience
Succession
Team Work
Business Outlook
Size of Business
Industry Growth
Market Competition
Barriers to Business
Account Conduct
Utilization of Limit
Compliance of Covenants/ Condition
Personal Deposits
Security Coverage
Collateral Coverage
Support
Age of Business
Fig. Investment (Credit) Risk Grading diagram
According to the importance of risk profile, the following weightages are proposed for
corresponding principal risks.
Principal Risk Components: Weight:
Financial Risk 50%
Business/Industry Risk 18%
Management Risk 12%
Security Risk 10%
Relationship Risk 10%
Step II Allocate weightages to Principal Risk Component
Principal Risk Components: Key Parameters:
Financial Risk Leverage, Liquidity, Profitability & Coverage ratio.
Business/Industry Risk Size of Business, Age of Business, Business Outlook,
Industry Growth, Competition & Barriers to Business
Management Risk Experience, Succession & Team Work.
Security Risk Security Coverage, Collateral Coverage and Support.
Relationship Risk Account Conduct ,Utilization of Limit, Compliance of
covenants/conditions & Personal Deposit.
Principal Risk Components: Key Parameters: Weight:
Financial Risk 50%
Leverage 15%
Liquidity 15%
Profitability 15%
Coverage 5%
Business/Industry Risk 18%
Size of Business 5%
Age of Business 3%
Business Outlook 3%
Industry growth 3%
Market Competition 2%
Entry/Exit Barriers 2%
Management Risk 12%
Step III Establish the Key Parameters
Step IV Assign weightages to each of the key parameters.
Experience 5%
Succession 4%
Team Work 3%
Security Risk 10%
Security coverage 4%
Collateral coverage 4%
Support 2%
Relationship Risk: 10%
Account conduct 5%
Utilization of limit 2%
Compliance of covenants
/condition 2%
Personal deposit 1%
After the risk identification & weightage assignment process (as mentioned above), the
next steps will be to input actual parameter in the score sheet to arrive at the scores
corresponding to the actual parameters.
e) Open the MS XL file named, CRG_SCORE_SHEET
f) The entire XL sheet named, CRG is protected except the particular cells to input
data.
g) Input data accurately in the cells which are BORDERED & are colored
YELLOW.
Step V Input data to arrive at the score on the key parameters
h) Some input cells contain DROP DOWN LIST for some criteria corresponding to
the Key Parameters. Click to the input cell and select the appropriate
parameters from the DROP DOWN LIST as shown below.
g) All the cells provided for input must be filled in order to arrive at accurate risk
grade.
h) We have also enclosed the MS Excel file named, CRG_Score_Sheet in CD ROM
for use.
The following is the proposed Credit Risk Grade matrix based on the total score
obtained by an obligor.
Numbe
r
Risk Grading Short
Name
Score
1 Superior SUP 100% cash
covered
Government
guarantee
International Bank
guarantees
2 Good GD 85+
3 Acceptable ACCPT 75-84
4 Marginal/Watchlist MG/WL 65-74
Step VI Arrive at the Credit Risk Grading based on total score obtained
5 Special Mention SM 55-64
6 Sub-standard SS 45-54
7 Doubtful DF 35-44
8 Bad & Loss BL <35
10.01 Summary of Findings:
The 2 (two) months internship program has been going to be finished through writing
a report. During the time of internship I have tried with my best to acquire theoretical
and practical knowledge Banking business and the Management of Credit. Being an
employee of Al- Arafah Islami bank Ltd.
Chapter-1: Introduction is illustrated in chapter one. Here I have tried to find out the
scope of and the limitations of the study by discussing the background of the
program. This is just an introductory discussion.
Chapter-2: In chapter two I have tried to familiarize the organization with educated
society.
Chapter-3: In this chapter I tried to discuses in brief all types of AIBL Product and
Service.
Chapter-4: Bangladesh is one of the less developed countries. So the economic
development of the country depends largely on the activities of commercial banks.
Chapter-5: This chapter about Investment and information of Deposit, investment
and Asset of AIBL (2006)
Chapter-6: Chapter for helps us taking decision about any kind of Investment and on
what basis we will take decision are discussed here.
Chapter-7: Chapter seven plays an important role in financial sector. Credit
Information Bureau (CIB) of Bangladesh Bank helps to us detect any defaulter client
of any financial institution because all financial organizations send their defaulter
client list to the CIB.
Chapter-8: Chapter eight discusses investment proposal with an another angle.
Here risk is firstly measured and on the basis of calculated Risk investment proposal
is rejected or accepted.
Chapter-9: Chapter nine helps us to know how to asses Different types of customer.
It helps to select a good customer.
Chapter-10: Chapter ten is a concluding part of this report. Here problems &
limitations of AIBL for making investment are discussed and I have given
recommendations for rectifying these problems
10.02 Problems & Limitations:
During collecting of information and data from AIBL & making report for this project
the following problems have been followed:
i) Decision making process is very lengthy and sometimes it creates problems, which
is unexpected to the customers. Most of the cases Head Office controls the decision
making and it is centralized.
ii) The total number of employees in comparison with needed is very short. this is
hampering the daily operation of the Bank. For an example, Motijheel Branch
General Banking is suffering from shortage of employee.
iii) Lack of proper explanation of records and document records keeping system
10.3 Recommendations:
i) Decision Making: Decision making power should be decentralized effectively so
that business can promptly be enhanced.
ii)Number of Employees: A handsome number of qualified employees & staffs
should be appointed very soon for maintaining the normal flow of work.
iii) Records keeping system: Filing and record keeping system of the bank
should me modernized .At present operation system is partially computerized and on
line banking should be started very soon.
iv) Effective information system: Effectiveness of credit policy largely depends on
Bank’s branch, divisional & national level information system.
v) Development of manpower: Effective implementation of credit policy and
recovery tare depends on higher educated, trained and skilled personnel. Bank
should procure and develop such types of employees for its credit wings.
10.4 SWOT Analysis in AIBL:
Every organization is composed of some internal strengths and weaknesses and
also has some external opportunities and threats in its whole life cycle.
10.4.1 Strengths:
-AIBL provides its customer excellent and consistent quality is every service.
-AIBL is financially sound company.
- AIBL utilizes state of the art technology to ensure consistent quality and operation.
-AIBL provides its works force an excellent place to work
-AIBL already achieved a good will among the cli
-AIBL has research and training division.
10.4.2 Weaknesses:
-AIBL lacks well trained human resource in some area.
-AIBL lacks aggressive advertising.
-The procedure of credit facility is to long compare to other banks.
-Employees are not motivated in some areas.
10.4.3 Opportunities:
-Emergence of on line banking will open more scope for AIBL.
-AIBL can introduce more innovative and modern customer service.
-Many branches can be opened in local remote area as its high demand.
-AIBL can recruit experienced, efficient and knowledgeable officers and staffs as it
offers good working environment.
10.4.4 Threats:
-The worldwide trend of mergers and acquisition in financial institutions is causing
problems.
-Frequency taka devaluation and foreign exchange rate fluctuation is causing
problem.
-lots of new banks are coming in the scenario with new service.
- Local competitors can capture huge market share by offering similar products
10.5 Conclusion
Al-Arafah Islami Bank ltd. is a non government commercial Bank in Bangladesh,
which started its business from 1995.I t is a unique combination of Shariah & Islamic
banking. Among non government commercial banks, Al-Arafah Islami Bank Ltd. is a
milestone for economic development. It has been playing an important role to
eradicate the unemployment problem in Bangladesh. Over 800 employees and 5500
shareholders are getting benefit from this organization. But most of the people in our
country have misconception about Islamic banking specially Al-Arafah Islami Bank
Ltd. & other Islamic banks. They can not find any difference in its operation between
conventional commercial Banks and Islamic Banks because they have no clear idea
about the activities as well as investment mechanism of Islamic banks.
The Bank is committed to run its activities as per Islamic Shariah and thus it has
different investment(credit) modes, different repayment schedules, different
disbursement procedure, different mark up system. and also has a different
Credit(Investment) policy. ‘Mark up’ means adding some additional value after
purchasing the goods but before to
sell the same to another people. This system is accepted in Islamic Shariah because
here money is converted to goods.’ Money begets money’ is prohibited in Islamic
Shariah. People is getting more benefit from the dealings of Islamic banking because
here quarterly interest is not charged and there is no possibility of interest to be
converted into principal. It can not take part in call money market. Mudaraba,
Musharaka are another mode of investment in Islamic Banking. But here honesty is
the only pre-requisite. For ensuring more benefit, more facility from Islamic banks
like AIBL we have to be honest and more sincere to repay the taken money from
these banks in time.
Reference:
1) Export Promotion Bureau, Bangladesh; -Md.Mahmudul Alam(Senior officer of RMG sector)2) Bangladesh Export Processing Zone (EPZ); - Abu Abbas (Empolee of Dhaka EPZ, Saver, 01711027535)3) Bangladesh Bank export Cell;
-Md. Shah Newaz (Senior officer of exporting department, 01717573473)
4) Journal on ‘Garments Sector of Bangladesh; its prospects and problems’ -Published by Center for Policy Dialogue (CPD) in 2007
5) A journal Published by Bangladesh Bureau of Statistics (BBS) in 2006 6) WWW. Google .com
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