Internship Report Depositor Buying Behavior an Analysis on Social Investment Bank Limited Principal Branch @ AssignmentBasket

7/31/2019 Internship Report Depositor Buying Behavior an Analysis on Social Investment Bank Limited Principal Branch @ Ass

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--AANNAANNAALLYYSSIISSOONNSSIIBBLL,, PPRRIINNCCIIPPAALLBBRRAANNCCHH

Exam Roll: 020 008


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--AANNAANNAALLYYSSIISSOONNSSIIBBLL,, PPRRIINNCCIIPPAALLBBRRAANNCCHH

PPRREEPPAARREEDDFFOORR::

Chairman

I nternship Placement Commit tee

PPRREEPPAARREEDDBBYY::

Exam Roll: 020 008Registrat ion No: 18100

4th year, 8th semesterBatch No.: 11 th, BBA Program

Academic Session: 2001- 2002

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January 22, 2007

Chairman

Internship Placement CommitteeDepartment of Business Administration

Jahangirnagar University

Savar, Dhaka

Subject: Submission of I nternship Report

Dear Sir:

I am delighted to submit my internship report styled - Depositor Buying Behavior -An Analysis

on SIBL, Principal Branch as part of my BBA degree requirement. I have completed a 12 - week

internship at Social Investment Bank, Principal branch, Dilkhusha, Dhaka. I was assigned to do a

survey on the depositors of SIBL to find out their preference factors for selecting any banking

services to keep their deposits.

I enjoyed working on the report and if you have any quarries related to the report, I will be glad

to respond to them.

Sincerely yours,

Exam Roll: 020008

Registration No: 18100

4th year, 8th semester

Batch No.: 11th, BBA Program

Academic Session: 2001-2002

Department of Business Administration

Jahangirnagar University, Dhaka


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All praises to the Almighty Allah for giving me the patience and ability to complete my internship

program.

Very sincerely, I acknowledge my gratitude and indebtedness to my departmental supervisor, Mr.

Kamrul Arefin for his guidance and evocation of ideas for this report. And I am also thankful to all

the faculty members and teachers of DBA for equipping me with the knowledge and tools for

preparation of such a report.

My heartfelt thanks go to my supervisor at the Social Investment Bank, Mr. Tahirul Islam, Vice

President, and Branch Manager, Principal branch, Social Investment Bank Limited, for hisvaluable support and considerations during my entire tenure of internship.

During my internship and preparing my internship report, I received a very much friendly and

wholehearted cooperative attitude from all the staffs and members of the bank. I would like to

thank them for their cooperation that helped me to complete my internship and prepare the

report. In this connection I would like to mention some names, likely- Mr. Shamsul Alam, FAVP;

Mrs. Dina Khurshid, Executive Officer; Ms. Salma Akhter, Officer; and Ms. Afrina, Officer; SIBL,

Principal Branch.

My special thanks to Mr. Ataur Rahman, General Manger, Department of Currency Management,

and Payment System, Bangladesh Bank, without whose help I could not get the chance of doing

internship in Social Investment Bank.

I also express my sincere gratitude to all the people who participated in the survey. All of them

were busy clients of the bank. Yet their patience, positive attitude, responses, and suggestions

provided valuable inputs in preparation of this report.

Finally, my gratitude is due to my parents and friends for their enthusiastic co-operation and

constant encouragement.


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Topic Page No.

Abbreviation v

Executive Summary vi

1.0 I ntroduction 1

1.1 Origin of the Report 1

1.2 Objectives of the Report 1

1.2.1 Primary Objective 1

1.2.2 Secondary Objectives 1

1.3 Methodology 1

1.4 Limitations 1

1.5 An Overview of Banking Sector in Bangladesh 1

1.6 The Genesis of Islamic Banking in Bangladesh 1

1.7 Role of Bangladesh Bank in Promoting Islamic Banking in Bangladesh 2

2.0 Organization 3

2.1 A Snap Shot of the Company 3

2.2 History of Birth of SIBL 3

2.3 Mission, Visions and Objectives of SIBL 3

2.3.1 Mission 3

2.3.2 Vision 4

2.3.3Objectives 4

2.4 Head office & Branch Network 4

2.5 Organization Structure of SIBL 42.5.1 Management of SIBL 4

2.5.2 Organization Chart of SIBL 4

2.5.3 Functional Divisions and Departments 7

2.8 SWOT Analysis of Social Investment Bank Limited 7

3.0 Project Part 8

3.1 Introduction 8

3.2 Background 8

3.3 Objectives of the Report 8

3.4 scope of the Report 8

3.5 Methodology 9

3.5.1 Research Design 9

3.5.2 Sources of Information 9

3.5.3 Sample Design 9

3.5.4 Questionnaire Design 9

3.5.5 Field Work 9

3.5.6 Analyzing and Reporting of The Findings 9

3.6 Limitations 10

3.7 Literature Survey 10

3.7.1 Consumer Buyer Behavior 10


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3.7.2 Model of Depositors Buyer Behavior 10

3.7.3 Characteristics Affecting Depositors Behavior 11

3.7.4 Types of Buying- decision Behavior 11

3.7.5 Buyer Decision Process 12

3.8 Target market of SIBL 12

3.9 Banking Services of the Social Investment Bank in Bangladesh 123.9.1Formal banking Services 12

3.9.1.1 Business/ Corporate Banking of SIBL 12

3.9.1.2 Consumer Banking 12

3.9.1.2.1 Deposit Products of SIBL 13

3.9.1.2.2 Online Banking Services 14

3.9.1.2.3 ATM & Credit Card Services 14

3.9.1.2.4 Ancillary Services 14

3.9.1.3 Correspondent Banking 14

3.9.1.4 Loan, Advances, and Credit Facilities 15

3.9.1.5 Foreign Exchange Transaction Services 15

3.9.2 Non Formal banking Services 16

3.9.3 Voluntary Banking Services 16

4.0 Analysis of the Data and Survey Findings 17

4.1 Importance of Different Factors for Selecting any Banking Services to Keep

Deposits

17

4.2 Types of Return Prefer Most 20

4.3 Reason for Preferring that Specific Type of Return on Deposit 20

4.4 Keep Deposit in Another Bank Not, If Get High and Ensured Return 21

4.5 Whether One Feels Comfortable to Do Transactions in SIBL in its Shariah

Culture

21

4.6 Whether Engaging In Islamic Banking Facilities Will Allow to conform to

Shariah or Not

22

4.7 Level of Interest to Use Shariah Banking Services Than Traditional Banking

Services

22

4.8 How Strictly the Islamic Banks in Bangladesh Following Islamic Shariah

Principles to Run Banking Business

23

4.9 How Strictly SIBL Following Islamic Shariah Principles to Run Banking

Business

23

4.10 Level of Satisfaction About SIBL 24

4.11 Changes Needed in SIBLs Banking System 24

4.12 Changes Needed in SIBLs Different Banking Services 25

4.13 Changes Needed in SIBLs Organization Culture 254.14 Changes Needed in SIBLs Branch number 26

4.15 Changes Needed in SIBLs Operations Hour 26

4.16 Changes Needed in SIBLs Service Quality 27

4.17 Changes Needed in SIBLs Service Charge 27

4.18 Changes Needed in SIBLs Other Facilities (Like ATM, Online Banking) 28

4.19 Number of Account Holders in Different Accounts In SIBL (in %) 28

5.0 Demographic Information Analysis and Survey Findings 29


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Topic

Page No.

Table 1: Sum, Average, and rank of the Factors for selecting any banking services 19

Table 2: Cross tab (type of return* Keep deposit in another bank rather SIBL if get

high and ensured return on deposits)

21

Table 3: Cross Tab Analysis of the Demographic Information 33

Table 4: weight of different options in Five Point Likert scale 37

Table 5: Average Calculation example 37

Table 6: value of Different questions answers asked through five point Likert 37

5.1 Age 29

5.2 Gender 30

5.3 Marital Status 30

5.4 Educational qualification 31

5.5 Occupation 31

5.6 Gross Family Disposable Income (monthly) 325.7 Cross Tab Analysis of the Demographic Information 32

6.0 Findings at a Glance 33

7.0 Recommendation and Conclusion 35

7.1 Recommendations 35

7.2 Recommendation to SIBL Authority By the Respondents 36

7.3 Conclusion 36

8.0 Appended Part 37

8.1 Tables 37

8.2 Questionnaire 38

9.0 Bibliography 40


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LLIISSTTOOFFFFIIGGUURREE

Topic Page No.

Figure 1: Organization Chart of SIBL 5

Figure 2: Model of Consumer Buyer Behavior 11

Figure 3: Types of Buying- decision Behavior 11

Figure 4: Buyer Behavior Decision Making Process 12

Figure 5: Importance of Different Factors for Selecting any Banking Services to

Keep Deposits

18

Figure 6: Types of Return Prefer Most 20

Figure 7: Keep Deposit in Another Bank Not, If Get High and Ensured Return 21

Figure 8: Whether One Feels Comfortable to Do Transactions in SIBL in its Shariah

Culture

21

Figure 9: Whether Engaging In Islamic Banking Facilities Will Allow to conform to

Shariah or Not

22

Figure 10: Level of Interest to Use Shariah Banking Services Than Traditional

Banking Services

22

Figure 11: How Strictly the Islamic Banks in Bangladesh Following Islamic Shariah

Principles to Run Banking Business

23

Figure 12: How Strictly SIBL Following Islamic Shariah Principles to Run Banking

Business

23

Figure 13: Level of Satisfaction About SIBL 24

Figure 14: Changes Needed in SIBLs Banking System 24

Figure 15: Changes Needed in SIBLs Different Banking Services 25

Figure 16: Changes Needed in SIBLs Organization Culture 25

Figure 17: Changes Needed in SIBLs Branch number 26Figure 18: Changes Needed in SIBLs Operations Hour 26

Figure 19: Changes Needed in SIBLs Service Quality 27

Figure 20: Changes Needed in SIBLs Service Charge 27

Figure 21: Changes Needed in SIBLs Other Facilities (Like ATM, Online Banking) 28

Figure 22: Number of Account Holders in Different Accounts In SIBL (in %) 29

Figure 23: Age 29

Figure 24: Gender 30

Figure 25: Marital Status 30

Figure 26: Educational qualification 31

Figure 27: Occupation 31

Figure 28: Gross Family Disposable Income (monthly) 32


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AABBBBRREEVVIIAATTIIOONNSS

Abbreviations used throughout the report are as follows:

o SIBL Social Investment Bank Limitedo MCB Multinational Commercial Banko PCB Private Commercial Banko NCB Nationalized Commercial Banko IB Islamic banko MIB Multinational Islamic Banko SWIFT Society for Worldwide Inter-bank Financial

Telecommunication

o ATM Automated Teller Machineo BB Bangladesh Banko A/C Accounto ICT Information & Communication Technologyo E- cash Electronic Casho HPSM Hire purchase( Participatory Ownership)

o LTD Limitedi. AD Authorized Dealer


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EEXXEECCUUTTIIVVEESSUUMMMMAARRYY

Social Investment bank Limited is a fourth Islamic Bank in Bangladesh. It is developing and

expanding its branches in the country with innovating products, and banking services, to gain

greater acceptance as an effective and efficient means of intermediation and to contribute to theoverall wealth creation. To gain greater acceptance, to contribute to overall wealth creation and

compete with other conventional banks, the factors that contribute to depositors preference to

select SIBL need to be studied. The objectives of the report are: To find out depositors

preferences factors to select any bank to keep their deposits, To find out the reasons for

preferring some specific factors than other factors to keep deposits, To know SIBLs Depositors

perception about SIBL as an Islamic bank, To find out SIBLs depositors belief about using

Islamic banking services and their level of interest to use Islamic banking services, To find out

SIBLs Depositors level of satisfaction and their expected changes about SIBL, To find out the

buyer group of deposit products of SIBL, and to know SIBLs major functions, and its products.

The research is a descriptive research and target population is the depositors of SIBL, Dilkhusha

Principal Branch, Dhaka. Convenient sampling method used to conduct the study and sample sizeis 100. Data collected through personal interviewing with structured questionnaire by the

researcher himself. Simple tabulation had done for data analysis. Consumer buyer behavior is a

system in which the individual consumer surrounded by an immediate and a wider environment

that influences his or her goals. These goals are ultimately satisfied by passing through a number

of problem-solving stages leading to purchase decisions. Generally people select any banking

services to satisfy the need of keeping their deposit, taking loans, and having other ancillary

services. To select any banking services to keep deposits, consumers will ideally consider Bank's

reputation and image, Availability of wide range of services, Return on deposits, Bank Location

and number of branches, Operations hours, Service quality, Service charges, Availability of other

facilities (like ATM, online banking etc), type of bank (like MCB, PCB, NCB) etc. There are wide

differences between the conventional banking system and Islamic banking system. The maindifference is that, profit and loss sharing practice of Islamic banks. So the consumers of

conventional banks and consumers of Islamic banks, consider different factors to keep their

deposits. Such as: to select any Islamic bank people also consider the Banking system (like

Shariah based banking system or Traditional banking system), Organization culture, strictness in

following the Shariah law to run the banking system etc. The main findings of the report are:

Return on deposit is most important factor for selecting any banking services to keep deposits,

then service quality and then operations hour is most important to the respondents; Bank's

reputation and image, Ownership type of the bank and other factors are least important factors

for selecting any banking services to keep deposits to the respondents; 80% of the respondents

said that they prefer ensured return on deposit. Reasons for preferring ensured return on deposit

that the respondents said are: It is better to be ensured about the return as it is safe, No risk ofhaving lower amount of deposit, there is no loss in such type of return on deposit. Reasons for

preferring unensured return on deposit that the respondents said are: As unensured return on

deposit is the main feature of Islamic banking system they prefer this, as business has risk to do

loss, depositors should share the risk as this procedure is fair. 60% of the respondents, who said

that they prefer ensured return on deposit, said they will keep their deposits in another bank

from SIBL if they get high and ensured return on your deposits. But 20% respondents who said

that they prefer ensured return on deposit, said will not keep their deposits in another bank from


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SIBL if they get high and ensured return on your deposits. All the respondents said that they feel

comfortable to do transactions in SIBL in its Shariah culture. 80% of the respondents said that,

they believe that engaging in Islamic banking facilities will allow them to conform to Shariah and

most of the respondents are interested to use Shariah banking services than traditional banking

services, 70% of the respondents think that, Islamic Banks in Bangladesh following Islamic

Shariah principles moderately strictly to run banking business. And 30% of the respondents think

that, Islamic Banks in Bangladesh not strictly following Islamic Shariah principles to run banking

business, 90% of the respondents think that, SIBL following Islamic Shariah principles

moderately strictly to run banking business, most of the respondents are satisfied about SIBL,

According to 80% of the respondents, SIBL should strictly follow Shariah based banking system,

According to 70% of the respondents SIBL need to introduce more Islamic services, According to

70% of the respondents SIBL should strictly follow Shariah culture, According to 80% of the

respondents SIBL need more branches, according to 80% of the respondents operation hour

need to be increased, According to all of respondent, SIBL need to improve their service quality,

70% of the respondents said service charge needed to be reduced and According to 90% of the

respondent SIBL need to increase other facilities like ATM, online banking.


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11 ..00IINNTTRROODDUUCCTTIIOONN

11 ..11 OORRIIGGIINNOOFFTTHHEERREEPPOORRTTThis report on Depositor Buying Behavior -An Analysis on SIBL, Principal Branch is initiated as

part of' the Internship Program which is a BBA Degree requirement of Department of BusinessAdministration, Jahangirnagar University, Dhaka. A 12-week internship at Social Investment BankLimited, Principal Branch, Dhaka, preceded the preparation of the report. The report topic wasselected by the internal supervisor Mr. Kamrul Arefin, Associate professor, Department ofBusiness Administration, Jahangirnagar University and later was approved by external supervisorMr. Tahirul Islam, SVP and Branch Manager, Principal Branch, Social Investment Bank Limited.

11 ..22OOBBJJEECCTTIIVVEESSOOFFTTHHEERREEPPOORRTT

11..22..11 PPRRIIMMAARRYYOOBBJJEECCTTIIVVEEi. To correlate theoretical learning acquired through classroom study with the real

life business situation faced as an internee during the Internship period.

11..22..22SSEECCOONNDDAARRYYOOBBJJEECCTTIIVVEESSThe objectives of the organizational part the report are:

ii. Name, Location, and Historical background of the SIBL.iii. Mission, Vision, slogan, and objectives of the SIBL.iv. Organizational Structure and description of various functional departments of

SIBL.v. SIBLs strengths, weakness, opportunities, and threats.

11 ..33MMEETTHHOODDOOLLOOGGYYFor this organization part only secondary data has been used. Secondary data collected from the

website of SIBL, Published Journal, newspaper, and the Internet. Data analysis through statisticaltools is not done in this objective part.

11 ..44LLIIMMIITTAATTIIOONNSSi. Insufficient Timeii. Some information that the organization feels confidential for them, unwilling to provide.11 ..55AANNOOVVEERRVVIIEEWWOOFFBBAANNKKIINNGGSSEECCTTOORRIINNBBAANNGGLLAADDEESSHHThe banking system of Bangladesh is a mixed one, comprising nationalized, private, and foreigncommercial banks. The financial system of Bangladesh consists of Bangladesh Bank (BB) as thecentral bank, 4 nationalized commercial banks (NCB), 5 government owned specialized banks, 30domestic private banks, 10 foreign banks and 28 non-bank financial institutions. The financial

system also embraces insurance companies, stock exchanges, and co-operative banks. Thecommercial banking system dominates Bangladesh's financial sector with limited role of Non-Bank Financial Institutions and the capital market. (Financial System, 2006)

11 ..66TTHHEEGGEENNEESSIISSOOFFIISSLLAAMMIICCBBAANNKKIINNGGIINNBBAANNGGLLAADDEESSHHIslamic banks can provide efficient banking services to the nation if they are supported withappropriate banking laws, and regulations. This will help them introducing PLS modes ofoperations, which are very much conducive to economic development. It would be better if


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Islamic banks had the opportunity to work as a sole system in an economy. That would provideIslamic banking system to fully utilize its potentials.At birth, Bangladesh inherited an interest based banking system, which was introduced hereearlier when the country was a part of British Colony. Since its inception Bangladesh saw a newtrend in banking both at home and abroad. Islamic banking was successfully tried in Egypt.

During the seventies, Islamic Development Bank (IDB) and a number of Islamic banks at nationallevels were established in the Islamic world. At home, the Islamic groups were vigorouslyworking for adoption of Islam as the complete code of life. Two professional bodies IslamicEconomics Research Bureau (IERB) and Bangladesh Islamic Bankers Association (BIBA) weretaking practical steps for imparting training on Islamic Economics and banking to a group ofbankers and arranging some national and international seminars/workshops to mobilize local andforeign people and to attract investors to come forward to establish Islamic bank in Bangladesh.Their professional and right-thought activities were streamlined by a number of enthusiasticbusinessmen in Bangladesh. They concentrated mainly in mobilizing equity capital for theprospective Islamic bank. Due to continuous and dedicated work of the above groups andindividuals and active support from the Government, Islamic banking established in earlyeighties. Now Islamic banks have been operating in Bangladesh for about one and half decadealongside with the traditional banks. Out of over 49 banks only seven banks are Islamic banks.

And besides these full-fledged Islamic banks, two conventional banks in the private sectornamely the Prime Bank Limited and Dhaka Bank Limited have opened two full-fledged Islamicbanking branches and Islamic Banking Counter respectively to deal with the Islamic bankingbusiness parallel to their conventional operations. Like any other traditional commercial banks,Islamic banks do mobilize deposits and produce loans. But their mode of operation is based onShariah, which different from the other traditional commercial banks. However, the seven Islamicbanks operating in Bangladesh are: Islami Bank Bangladesh Limited, Al-Arafa Islami Bank Ltd,Social Investment Bank Limited, Oriental Bank Limited, Shahjalal Islami Bank, Bank Al FalahLimited, and EXIM Bank Limited. (Sarkar, 1999)

11 ..77RROOLLEEOOFFBBAANNGGLLAADDEESSHHBBAANNKKIINNPPRROOMMOOTTIINNGGIISSLLAAMMIICCBBAANNKKIINNGGIINNBBAANNGGLLAADDEESSHHThough there is no complete Islamic Banking Act for controlling, guiding and supervising the

Islamic banks in Bangladesh, some Islamic banking provisions have already been incorporated inthe amended Banking Companies Act, 1991 (Act No. 14 of 1991). Bangladesh Bank did not setup any separate Department at its Head Office to control, guide, and supervise the operation ofthe Islamic banks. Inspection and supervision of the Islamic banking operations are conducted bythe Bangladesh Bank as per the general guidelines framed for the conventional banks. So,ensuring implementation of Shariah principles in the Islamic banks are being conducted by theirown Shariah Councils. The role of Bangladesh Bank in controlling, guiding and supervising theIslamic Banks in Bangladesh in accordance with Islamic Shariah is very minimal. In observing theShariah implementation status of the Islamic banks, Bangladesh Bank examines only the reportof the respective banks Shariah Councils. However, the inspectors and supervisors of BangladeshBank are not equally familiar with the technicalities of the different operational methodologies ofthe Islamic banking. This is because of the fact that there is no separate Department to look intothis important matter.According to new proposed guidelines formulated by Bangladesh Bank, a

commercial bank may form a separate company with Tk 100 crore paid up capital for providingIslamic banking services. The subsidiary company will need to off-load 49 percent of its sharewhile the parent company may own the remaining 51 percent. As for the new Islamic banks, theproposed guidelines state that the sponsors will have to off-load 50 percent of the bank's sharesand sponsor directors will not be allowed to own shares worth more than Tk 2.5 crore. It seemsthat Bangladesh Bank is creating unjustified trouble for the Islamic banks in the country and atthe same time strongly discouraging other commercial banks to have separate Islamic, orinterest-free windows that can run parallel with conventional windows. Difficult laws could not


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only act as hindrance for the growth of Islamic banks in Bangladesh but for the economic growthof the country as well. (Zahid, 2006)

22..00OORRGGAANNIIZZAATTIIOONNPPAARRTT

22..11 AASSNNAAPPSSHHOOTTOOFFTTHHEECCOOMMPPAANNYY

Name of the Company : Social Investment Bank Limited.Legal Form : A Joint Venture of Islamic BankDate of I ncorporation : 5th July, 1995Date of Commencement : 22nd November, 1995Operation Structure : Three Sector banking system, Formal Sector-

Commercial Banking with latest technology; Non-FormalSector- Family Empowerment Micro-Credit &Micro-enterprise Program and Voluntary Sector- SocialCapital Mobilization through Cash Waqf and others.

Principal Branch : 15, Dilkhusha C/A, Dhaka-1000

Telephone : +880 2 9564764, +880 2 9559241Fax : +880 2 9568098, +880 2 9564944Telex : 642425 DBL FX BJSWI FT Code : SOIVBDDHNumber of Branches : 24E-mail : [email protected] Site : www.siblbd.com

22..22HHIISSTTOORRYYOOFFBBIIRRTTHHOOFFSSIIBBLLSocial Investment Bank Limited is a fourth Islamic Bank in Bangladesh. It was incorporated on5th July, 1995 and launched its banking operations of 22nd November, 1995. The authorizedshare capital of the bank was Taka 1000.00 million divided into one million shares of

Taka1000.00 each. Social Investment Bank limited (SIBL) started its journey with the concept of21st century Islamic participatory three sector banking, comprising Formal, Non-Formal &Voluntary Sector. While Formal Sector deals in general commercial banking with latest technologyas a scheduled bank, Non-Formal Sector deals in Family Empowerment Micro-credit, Micro-Enterprise and SMEs financing with a view to poverty reduction and unlock the potentials of themissing middle who had not been properly addressed by the Corporate Banking Sector. UnderVoluntary Sector, the bank is doing Welfare-banking through its Cash Waqf Scheme, aninnovative financial product for Social Capital mobilization introducing for the first time in thehistory of banking. Having inspired with the above program, few renowned personalities of theIslamic world namely (i) H.E. Dr. Hamid Al Gabid, Former Secretary General of OIC & PrimeMinister of Niger (ii) H.E. Dr. Abdullah Omar Nasseef, Deputy Speaker of Saudi Shoura Council &Ex-Secretary General of Rabeta Al-Islami (iii) H.E. Ahmed M. Salah Jamjoom, Former CommerceMinister of Saudi Government & (iv) Prof. Dr. Ahmad El-Naggar (Egypt) have joined with this

noble endeavor to assist the poverty alleviation of Bangladesh.

22..33MMIISSSSIIOONN,,VVIISSIIOONN,,SSLLOOGGAANN,,AANNDDOOBBJJEECCTTIIVVEESSOOFFSSIIBBLL2.3.1 Missionof SI BL

To provide high quality financial services with the latest technology.To provide fast, accurate and satisfactory customer service.Balanced & sustainable growth strategy.Optimum return on shareholders' equity.


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Introducing innovative Islamic Banking products.Attract and retain high quality human resources.Empowering real poor families and create local income opportunities.Providing support for social benefit organizations - by way of mobilizing funds and social

services.

2.3.2 Vision of SI BLReduction of Poverty Level" is its Vision.

2.3.3 SloganWorking Together for a Caring Society

2.3.4 Objectives of SI BLTo establish a partnership relationship with customers and to eliminate the idea

of the debtor-creditor relationship of traditional banks.To establish welfare oriented banking system.To mobilize savings towards productive sectors.To invest on profit and risk sharing basis.To invest to those businesses sectors those are found legal from religious point

of view.To accept deposits on profit and loss sharing basis.To create employment opportunities by investing savings towards prospective

economic sectors.To extend banking services towards the poor, helpless and low-income group of

people in the society in order to uplift of their standard of living.To contribute to establishment of a society by equitable distribution of wealth.To establish justice in trade and commerce in the country.To develop morals among the people and to establish the Shariah in the field of

trade and commerce.To render services for the economic development of the nation.

To contribute towards establishment of an Islamic Economic System in theCountry.

22..44BBRRAANNCCHHNNEETTWWOORRKKOOFFSSIIBBLLThe total number of branches of SIBL is 24. 12 in Dhaka , 4 in Chittagong, 1 in Khulna , 1 inSylhet, 1 in Rajshahi, 1 in Bogra, 2 in Shirajganj and 2 in Narayanganj.

22..55OORRGGAANNIIZZAATTIIOONNSSTTRRUUCCTTUURREEOOFFSSIIBBLL

22..55..11 MMAANNAAGGEEMMEENNTTOOFFSSIIBBLLThe bank is managed by a 24-member Board of Directors including three foreign directors and itssub-committee. The bank has also an 8-member Shariah Council consisting of Fuqaha, Islamic

Economist and lawyer. The Council gives decision on Islamic issues which are followed by thebank. The Executive Committee includes Advisors, Chairman, Vice- Chairman, group of Directors,Managing Director. There is another committee of audit. The Executive Committee approvesvarious proposals brought by the management prior to implementation. All proposals are placedto the committee throw the Managing Director of the Bank. All decisions are executed by twoseparate divisions: operation and business. A number of people are working under the MD; thesepeople belongs to the second stage of the organizational structure, they are- group of ExecutiveVice president, number of Senior Vice presidents, then Vice presidents, again Senior AssistantVice presidents, First Assistant Vice presidents and Assistant Vice presidents. The proposals are


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initiated by the mid level managers and then forwarded to the MD through the Head of Branchesor the Head of Divisions.

22..55..22OORRGGAANNIIZZAATTIIOONNCCHHAARRTTOOFFSSIIBBLL((FFIIGGUURREE::11))


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Figure 1: Organization Chart of SIBL


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NNoottee((FFoorrFFiigguurree11))::HRD= Human resource department

o Policy & Administrationo Disciplinary & Appeal

SIBL TI= SIBL training institute

o Trainingo LibraryBDMD= Business Division and marketing division

o Branches Control and General bankingo Marketing and business development

GD= general services Divisiono Premises, decoration and deed stocko Printings, stationary and storeso Transport and maintenances

ICTD= information and communication technology divisiono Systems and installationo Banking network

FAD= Financial administration division

o Accounts and transactiono Reconciliation and fund management

MIS, P& RD= MIS, planning and Research divisiono MIS( management information system)o Planning and research

ID= international divisiono Depositors bankingo Foreign exchange business operationo Treasury function

LD= law divisiono Sanction ( legal action)o Follow up

NF & VBD= non formal & voluntary banking divisiono non formalo voluntary banking

IRMD= investment risk management divisiono investment approvalo investment administrationo end use and recovery

CBD= Corporate banking divisiono project financeo syndicated finance

ICCD= internal control and compliance divisiono audit, inspectiono monitoringo compliancePRD= public relations divisions MDS= managing directors secretariat

MDS= managing directors squad CMS= chairmans secretariat


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22..55..33FFUUNNCCTTIIOONNAALLDDIIVVIISSIIOONNSSAANNDDDDEEPPAARRTTMMEENNTTSS

SIBL is mainly operated in 3 Functional divisions/ sector:a) Formal Sector- Under this sector 3 departments are mainly operated:

iii. General Banking Departmentiv. Investment Departmentv. Foreign Exchange Transaction Department

b) Non-Formal Sector - Family Empowerment Micro-Credit & Micro-enterprise program areoperated under this sector.

c) Voluntary Sector - Social Capital mobilization through CASH WAQF and others are operatedunder this sector.

Other departments are: Information & Communication Technology Division, FinancialAdministration Division, International Division, Business Development & Marketing Division, Audit& Inspection Department, Share Department, Human Resources Division, SIBL Training Institute,Law & Recovery Division, Law Department, Board Audit Cell, MIS, Planning & Research Division,Internal Control & Compliance Division and Investment Risk Management Division.

22..77SSWWOOTTAANNAALLYYSSIISSOOFFSSOOCCIIAALLIINNVVEESSTTMMEENNTTBBAANNKKLLIIMMIITTEEDD

SSTTRREENNGGTTHHSS Up-to-date Technology. 24 branches all over the country with

online banking facilities in 20 branches. Correspondent relationship with almost

all major 122 Banks of 109 countries ofthe world.

SWIFT at 9AD Branches. Different types of Islamic Banking

Products. Experienced management team. Low employees turn over and satisfiedmanagement team. Social marketing practices made a good

image to the society.

OOPPPPOORRTTUUNNIITTIIEESSo Increased demand of Islamic

banking services.o Latent demand of different type of

Islamic banking services.

WWEEAAKKNNEESSSSEESSLower customer service quality.Insufficient number of ATM Booth.Inefficient Islamic Investment RiskAnalysis and measurement methodologyby the employees.Lack of Full-fledged Shariah Audit.Lack of Intention of the Management to

be strict with Shariah Guidelines.

TTHHRREEAATTSS1. Lack popularity of PLS mode

among the depositors.2. Increased Competition from

fellow Islamic banks and otherconventional banks.

3. Declining Profit.4. Lack of Shariah Manual or

Guidelines.5. Lack of Control and Supervision

by the Central bank on the Basisof Islamic Shariah.

6. Economics slowdown and7. Political Situation of the Country.


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To know SIBLs Depositors perception about SIBL as an Islamic bank.To find out SIBLs depositors belief about using Islamic banking services and their level ofinterest to use Islamic banking services.To find out SIBLs Depositors level of satisfaction and their expected changes about SIBL.To find out the buyer group of deposit products of SIBL.

To know SIBLs major functions, and its products

33..44SSCCOOPPEEOOFFTTHHEERREEPPOORRTTThe scope of the report is limited among the existing deposit product Depositors of SIBL,principal branch, Dilkhusha, Dhaka.

33..55MMEETTHHOODDOOLLOOGGYY

33..55..11 RREESSEEAARRCCHHDDEESSIIGGNN

The research is descriptive research as because it is designed to describe the characteristics orbuying behavior of the population.

33..55..22SSOOUURRCCEESSOOFFIINNFFOORRMMAATTIIOONNFor this project part both primary and secondary data has been used. Primary data has beencollected through a survey, which was done on the depositors of SIBL, principal branch with astructured and disguised questionnaire. And secondary data has been collected from SIBL, booksand published journal of SIBL.

33..55..33SSAAMMPPLLEEDDEESSIIGGNNi. Target Population:The depositors of SIBL Principal Branch, Dilkhusha, Dhaka.

ii. Sampling Frame:The sample frame is the list of account holders in SIBL principal branch,

Dilkhusha, Dhaka. The list was collected from the SIBLs office.iii. Sampling Method:Convenient sampling method used to conduct the study. The account

holders who have come to the SIBL, principal branch, to do their transactions are interviewedwith the structured questionnaire.

iv. Sample Size:The number of account holders in SIBL, Principal Branch is 20000. From it,0.5% is chosen as sample size.

33..55..44QQUUEESSTTIIOONNNNAAIIRREEDDEESSIIGGNNThe questionnaire is a structure and disguised questionnaire. Buying behavior is influenced bydifferent factors and characteristics of the Depositors. Here cultural factors were not considered

as all the Depositors of SIBL are Muslim and follow Islami and Bangladeshi culture. And socialfactors were not considered as it would be difficult to analyze and take long time. To analyze thePersonal factors, respondents were asked some personal information through multiple responsequestions. To analyze Psychological factors such as perception, attitude, questions asked throughmultiple response questions and belief through a five point Likert scale. To evaluate theDepositors preference factors to keep deposit in any bank, in the questionnaire some commonfactors (that generally people consider to keep deposit) are given to the respondents to evaluatethem according the importance to them to select any banking services for keeping their deposits,in a five point Likert scale. To measure the post purchase behavior, Depositors satisfaction level

The Sample size = 20000* 0.5% = 100


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about SIBL, asked through 5 point Likert scale. Expectations or wants of the respondents aboutSIBLs different services are asked through multiple response questions. And there are two openend questions asking the reason for preferring specific type of return on deposit andrecommendations by the respondents to SIBL.

33..55..55FFIIEELLDDWWOORRKKData collected through personal interviewing with structured questionnaire by the researcherhimself.

33..55..66AANNAALLYYZZIINNGGAANNDDRREEPPOORRTTIINNGGOOFFTTHHEEFFIINNDDIINNGGSSFor analyzing data Simple tabulation had been done. These data analyzed using the softwareSPSS 12.0 and MS Excel. Analyzed data represented through pie and bar graphs and some tablesare also used to represent the data.. Findings are based on the data analysis. And the core of thereport divided into four parts. The first part includes an introduction about Islamic banks inBangladesh. The second part of the report includes elaborate description about the organization.The third presents a literature survey, an in-depth analysis of the data collected; findings,recommendation and conclusion, and the last part of the report include appended part of thereport.

33..66LLIIMMIITTAATTIIOONNSSThe duration of the study is very short and analyzing depositor buying behavior and

preference is a very complicated process. So the adequate analytical tools for properevaluation of depositor buying behavior to select SIBLs banking facilities could not beused.

For time and cost constraints, the sample size had to be restricted to 100 only.It was very hard to fill up the questionnaires as the A/C holders who come in SIBL to use the

banking facilities are very busy by nature.The findings of the survey were based on the SIBLs depositors of principal branch,

Dilkhusha, Dhaka City; the results may not reflect the same for other branches of SIBL aswell as for other areas of the country.

As convenient sampling method used and as it is a non probability sampling method, randomsampling error may occur.

33..77LLIITTEERRAATTUURREESSUURRVVEEYY

33..77..11 CCOONNSSUUMMEERRBBUUYYIINNGGBBEEHHAAVVIIOORRConsumer buying behavior can be formally defined as: the acts of individuals directly involved inpurchasing and using economic goods and services, including the decision making processes thatprecede and determine the acts of purchasing and using economic goods and services. This is asystem in which the individual consumers surrounded by an immediate and a wider environmentthat influences his or her goals. These goals are ultimately satisfied by passing through a number

of problem-solving stages leading to purchase decisions. (Kotler & Armstrong, 2003-2004)

The main functions of commercial banks are acceptance of deposits, lending, and investment.And ancillary services include agency services, collection, and payment of cheques, payment onbehalf of customers, purchase, and sale of stocks, acting as trustee, opening letter of credit, safecustody, etc. So generally people select any banking services to satisfy the need of keeping theirdeposit, taking loans, and having other ancillary services. To select any banking services to keepdeposits, Depositors will ideally consider Bank's reputation and image, Availability of wide rangeof services, Return on deposits, Bank Location and number of branches, Operations hours,


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Service quality, Service charges, Availability of other facilities (like ATM, online banking etc), typeof bank (like MCB, PCB, NCB) etc. There are wide differences between the conventional bankingsystem and Islamic banking system. The main difference is that, profit and loss sharing practiceof Islamic banks. So the Depositors of conventional banks and Depositors of Islamic banksconsider different factors to keep their deposits. Such as: to select any Islamic bank people may

also consider the Banking system (like Shariah based banking system or Traditional bankingsystem), Organization culture, strictness in following the Shariah law to run the banking systemetc. (Hegazy, 1995)So it is imperative for SIBL to understand why people choose which type of banking system,either conventional banking system or interest-free banking system, to satisfy their financialneeds.

33..77..22MMOODDEELL OOFFCCOONNSSUUMMEERRSSBBUUYYIINNGGBBEEHHAAVVIIOORRThe task of marketing is to identify consumers needs and wants accurately, then to developproducts and services that will satisfy them. For marketing to be successful, it is not sufficient tomerely discover what customers require, but to find out why it is required. Only by gaining adeep and comprehensive understanding of buyer behavior, marketings goals can be realized.Such an understanding of buyer behavior works to the mutual advantage of the consumers and

marketer, allowing the marketer to become better equipped to satisfy the consumers needsefficiently and establish a loyal group of consumers with positive attitudes towards the companysproducts. The central question for marketer is: how do consumers respond to various marketingefforts that the company might use? The starting point is the stimulus response model of buyerbehavior shown below (Figure 2). The figure shows that marketing and other stimuli enter intobuyer black box and produce certain responses. The marketer wants to understand how thestimuli are changed into responses inside the consumers black box, which has two parts. First,the buyer characteristics influence how he or she perceives and reacts to stimuli. Second, thebuyers decision process itself affects the buyer behavior. (Kotler & Armstrong, 2003-2004)

Figure 2: Model of Consumers Buyer Behavior

Marketing and Other Stimuli

Marketing OtherProduct EconomicPrice TechnologicalPlace Political

Promotion Cultural

Buyer Black Box

Buyercharacteristics

Buyer decision

Process

Buyer Responses

Product choiceBrand choiceDealer choicePurchase Timing

Purchase amount

33..77..33CCHHAARRAACCTTEERRIISSTTIICCSSAAFFFFEECCTTIINNGGCCOONNSSUUMMEERRSSBBUUYYIINNGGBBEEHHAAVVIIOORR

Consumers purchases are influenced strongly by cultural, social, personal, and psychologicalcharacteristics (Kotler & Armstrong, 2003-2004). Depositors of SIBL are mostly Muslims whofollow Islamic culture. Other characteristics like social factors, personal factors of the Depositorsare different. Motivation, perception, learning, and belief about Islamic banks strongly influence

the depositors to select SIBLs services as it an Islamic bank.

33..77..44TTYYPPEESSOOFFBBUUYYIINNGG--DDEECCIISSIIOONNBBEEHHAAVVIIOORRBuying behavior differs greatly for product to product and man to man. There are four type ofbuying behavior according to the Depositors involvement in purchase and differences foundamong different brands (Figure 3). (Kotler & Armstrong, 2003-2004)


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Figure 3: Types of Buying- decision BehaviorHigh I nvolvement

Low I nvolvement

Significant differencesbetween the brands

Complex buyerbehaviour

Variety seekingbehaviour

Few differences betweenthe brands

Dissonance-reducingbehaviour

Habitual buyingbehaviour

Selecting banking services generally shows complex buyer behavior as they are highly involved ina purchase services and perceive significant differences among different banking services. But asbuying decision behavior also varies man to man, it may be variety seeking behavior as peoplegenerally seek different type of banking facilities and do switching from one bank to anotherwhen they found significant differences. Or it may be dissonance buying behavior as peoplegenerally have post purchase dissatisfaction and change their bank when they perceive anotherone better.

33..77..55TTHHEEBBUUYYEERRDDEECCIISSIIOONNPPRROOCCEESSSS

Customers go through a five-stage decision-making process in any purchase. This is summarizedin the diagram below: (Figure 4). (Kotler & Armstrong, 2003-2004)

Different types factors that people consider selecting any bank to keep deposit and to get loans.To select any banking services to keep the deposits, Depositors will ideally search information

about return on deposit, operation hour, service quality etc. and evaluate these different factorsamong different banks and then do their purchase.

Figure 4: The Buyer Decision

Process


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33..88TTAARRGGEETTMMAARRKKEETTOOFFSSIIBBLL

The target customers of SIBLs different deposit products are:Individuals person (lived in both village and city area, age above 18, both male and female

and all social classes people in Bangladesh)Sole proprietorship, Private limited company, Public limited company, Partnership firmCo operative society (Professor. Dr. Mannan, 1995)

33..99 BBAANNKKIINNGG SSEERRVVIICCEESS OOFF TTHHEE SSOOCCIIAALL IINNVVEESSTTMMEENNTT BBAANNKK IINN

BBAANNGGLLAADDEESSHH

Social Investment bank offers different type of services to its target customers. To attractdepositors it offers wide range of deposit schemes and other banking services. Here all types ofbanking services of SIBL are discussed:

33..99..11FFOORRMMAALL BBAANNKKIINNGGSSEERRVVIICCEESSOOFFSSIIBBLL

33..99..11..11 CCOORRPPOORRAATTEEBBAANNKKIINNGGOOFFSSIIBBLLSIBL offers a full range of tailored advisory, financing, and operational services to its corporateclient groups combining trade, treasury, investment, and transactional banking activities in onepackage. Whether it is project finance, term loan, import or export deal, a working capitalrequirement or a forward cover for a foreign currency transaction, SIBLs Corporate BankingManagers offers the corporate clients the right solution.

33..99..11..22CCOONNSSUUMMEERRBBAANNKKIINNGGOOFFSSIIBBLLConsumer banking programme offers a comprehensive range of Islamic banking products andservices matching the need of every discerning customer. Transactional accounts, savings

schemes, cash Waqf schemes, or loan facilities from SIBL provide its customers a rare servicequality.

33..99..11..22..11 DDEEPPOOSSIITTPPRROODDUUCCTTSSOOFFSSIIBBLL

o Al Wadiah Current Deposit Scheme:Al Wadiah Current Deposit A/C is opened onproper introduction with minimum initial deposit fixed by the Bank. Al Wadiah Deposit isaccepted on Al Wadiah principles which mean Al Amanah with permission to use.According to this principle, Bank can use the fund of the account along with other fundsas per Shariah at bank's own risk. Account holder(s) will not share any profit/loss. TheLaw and regulation of Bangladesh, usual customs and procedures common to banks inBangladesh including Islamic Banking Principles shall apply to and govern the conduct ofaccount opened with the Bank.

o Mudaraba Savings Deposit Scheme:To open a Mudaraba Savings Deposit account inSIBL the following rules and regulations are applied: Mudaraba Savings Deposit of oneparty and on the basis of operation by another party this deposit is taken, by providingIntroducer of the account as required by the bank and by depositing a minimum amountany depositor or multiple depositor can open single or joint account. Any educationalinstitute, Club, Association or Social institutes can open this account, the bank maymerge amount collected through this deposit and may invest in any Shariah allowedinvestments and after determining the annual profit/loss the depositor will get his part ofprofit.


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o Mudaraba Monthly Profit Scheme:Under this scheme the depositor will get monthlyprofit on the deposited amount. The scheme provides monthly profit for service holderswho may deposit the pension benefit. For those Bangladeshis working abroad willing todeposit once and provide a fixed amount monthly to family and relative residing inBangladesh.

oHajj Scheme:Hajj is one of the most important bases of Islam. Religious Muslims tendsto perform Hajj when they gather financial ability. But they find it difficult to gather therequired amount to perform as there is no such systematic way of saving the money. Tohelp the Muslim brothers Social Investment Bank Ltd introduced Hajj/Umrah Scheme.Any Muslim Residing in Bangladesh may open an account under this scheme, and thisscheme will be accounted under Mudaraba rules. The account holder will have to enjoythe Profit / Loss of the Banks respective year.

o Mudaraba Double Benefit Deposit Scheme (MDBDS): The features of the schemeare that A/C holders have to keep deposit in every a fixed definite time such as: 1month, 6 month etc and after a fixed period he/ she will get double of the principalamount. Any desirous person may open the A/C, with minimum Tk 10,000/- orabove.

o Mudaraba Millionaire Scheme:Most of the people of Bangladesh are the followers ofIslam. They are mostly interested to make interest free deposits. Taking these facts intoconsideration SIBL introduced a monthly installment based "Mudaraba MillionaireScheme". Tk. 550/-, Tk. 1050/- or Tk. 2050/- is taken as monthly installment underMudaraba principles of Islami Shariah, Duration of this scheme will be 15, 20 and 25 yrs.

o Mudaraba Special Savings (Pension) Scheme: Generally people wants save aportion of their income for economic assurance at old ages. Taking the above reasonsinto account Social Investment Bank Ltd. had introduced monthly installment based"Mudaraba Special Savings (Pension) Scheme". Under this scheme any person candeposit a fixed amount monthly and after maturity the depositor will get a handsomeamount with increased profit. The depositor may encash the total amount at a time orcan take as monthly pension until a stipulated time.

o Mudaraba Education Savings Scheme: Education expenditure especially for higherstudies is increasing day by day. In many cases children lose the chance of education as

their guardians become unable to adjust with the expenditure. But if proper financialplanning is adopted earlier then it is easier for the parents to bear the expenses. Forthese reasons SIBL has introduced "Education Savings Scheme", which is based onShariah Principles. This scheme would enable the parents to bear child's educationalexpenses in a planned manner. Any amount of Tk. 25,000/- or multiple is accepted inthis scheme.

o Mudaraba Bashstan Savings Scheme: Housing has become one of the mostfundamental needs of human civilization. But most of the people of Bangladesh arelacking to fulfill this basic need. As a follower of Islamic Shariah, Social Investment BankLtd focuses forward to help people to fulfill this basic need. The depositor will enjoyearnings from investments under Islami Shariah based Mudaraba rules. As per rules ofIslami banking the actual amount may vary from the estimated amount.

oMudaraba Term Deposit scheme:Mudaraba Term Deposits are accepted by the bankwith a sum of Tk. 5000 or above (multiple of 1000) from individuals (single and joint),firms (proprietorship/partnership), limited companies, autonomous bodies, charitableinstitutions, association, educational institution, local bodies, trusts, etc, against issuanceof non transferable receipts in acknowledgement of MTD account may be opened in thenames of minors jointly with their guardians

o Mudaraba Mohrana Savings Scheme:As every male Muslims has given his wifemohrana after his marriage, SIBL has recently introduced this Scheme; where people cankeep their deposit for a certain period with changing profit rate.


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o Mudaraba Marriage Savings Scheme: SIBL recently has introduced this savingsscheme to make it easier for people to bear the cost marriage ceremony.

o Mudaraba Foreign Currency Term Deposit Scheme (MFCTD): Bangladeshinationals residing, working and earning abroad / foreign nationals residing inBangladesh and also Foreign Firms registered abroad and operating in Bangladesh

/ Foreign missions and their expatriate employees may open this account. A/Cmay be opened in US Dollar, Pound Sterling or other eligible currencies at theoption of the A/C holder.

33..99..11 ..22..22OONNLLIINNEEBBAANNKKIINNGGSSEERRVVIICCEESSOOFFSSIIBBLLSIBL is providing Online Banking Service to its clients since January 2004 amongst 20 branches ofSIBL through which its customers have access to their A/C from another branch. The Bank hasdeployed this On-Line Banking system through V-Sat communication. The Information &Communication Technology (ICT) Department is closely monitors the online transactions. OnlineTransactions are executed by the PcBANK2000 integrated banking software through a secureddatabase and worldwide tested V-Sat Communication Link.

33..99..11..22..33AATTMM&& CCRREEDDIITTCCAARRDDSSEERRVVIICCEESSOOFFSSIIBBLLSIBL has introduced E-Cash ATM Debit Card service since June 2004 through E-Cash ATM boothswithin Dhaka, Chittagong, Sylhet, Rajshahi, and Cox's Bazaar city. Any body, who has aCurrent/Savings/Short Notice Deposit Account in SIBL in any branch, he/she can apply for E-CashATM Debit Card from that branch. Customer can get 24-hour Cash Withdrawal service includingholidays and can pay Grameen, Aktel and City Cell mobile phone bill through E-Cash ATM Booth.Now the bank has only 14 ATM booth in Dhaka city and 4 in other cities.

33..99..11..22..44AANNCCIILLLLAARRYYSSEERRVVIICCEESSOOFFSSIIBBLL Locker Service: Safe locker service is available at its Dhanmondi Branch & Gulshan

Branch. Client may keep his/her valuable ornaments, documents etc. into the locker againsta nominal yearly fee.

Utility Bill Receive:In the formal corporate sector, this Bank would, among others, offersthe most up-to date banking services through collection of bills like as gas bill, WASA bill,Bangladesh Telephone & Telegraph bill, and Electric bill.

33..99..11..33CCOORRRREESSPPOONNDDEENNTTBBAANNKKIINNGGOOFFSSIIBBLLIt have correspondent relationship with almost all major 122 Banks of 109 countries of the worldlike Standard Chartered Bank, American Express Bank Limited, HSBC, HBZ Finance, MashreqBank PSC, Dresdner Bank AG and with local banks in Pakistan, India, Nepal and Bhutan etc. withwhom it had advising, reimbursing and add confirming arrangement.

33..99..11..44LLOOAANN,,AADDVVAANNCCEESS,, AANNDDCCRREEDDIITTFFAACCIILLIITTIIEESSOOFFSSIIBBLLSIBL has mainly three types of loan and credit facilities:o Bai-Muazzal: Bai-Muazzal is a contract between Buyer and Seller under which the seller

sells certain specific goods ( permissible under Shariah and Law of the country ), to theBuyer at an agreed fixed price payable at a certain fixed future date in lump sum or within afixed period by fixed installments. The seller may also sell the goods purchased by him as perorder and specification of the Buyer. This mode is applicable for working capital financing.SIBL gives this type of loan in four sectors: commercial, house hold, Real estate, and Trust


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receipt where loan is allowed in the form of cash credit against hypothecation of goods &collateral security

o HPSM: Hire Purchase (Participatory Ownership) is a Special type of contract which is asynthesis of three contracts:

1. Shirkatul Melk: Shirkat means partnership. Shirkatul Melk means participation inownership. SIBL and other parties supply equity, purchase an asset; own the same jointly,and share the benefit as per agreement and bear the loss in proportion to their respectiveequity, the contract is called Shirkatul Melk contract.

2. I jarah:The term Ijarah has been derived from the Arabic words Ajar and Ujrat which meansconsideration, return, wages, or rent. This is the exchange value or consideration, return,wages, rent of services of an ASSET. Ijarah has been defined as a contract between twoparties, the Hiree and Hirer where the Hirer enjoys or reaps a specific service or benefitagainst a specified consideration or rent from the asset owned by the Hiree. It is a hireagreement under which a certain asset is hired out by the Hiree to a Hirer against fixed rentor rentals for a specified period. SIBL act as a hirer.

3. Sale: This is a sale contract between a Buyer and a seller under which the ownership ofcertain goods or asset is transferred by seller to the buyer against agreed upon price paid /to be paid by the buyer. Here SIBL act as seller who buy the goods as an agent of a party

and sold the good to the party at the previously determined price.Thus in Hire Purchase (participatory ownership) mode between SIBL and its clients supply equityin equal or unequal proportion for purchase of an asset like land, building, machinery, transportetc. Purchase the asset with that equity money, own the same jointly; share the benefit as peragreement and bear the loss in proportion to their respective equity. The share, part, or portionof the asset owned by the Bank is hired out to the client partner for a fixed rent per unit of timefor a fixed period. Lastly the Bank sells and transfers the ownership of it's share / part / portionto the client against payment of price fixed for that part either gradually part by part or in lumpsum within the hired period after the expiry of the hire agreement.

(1)Murabaha:Murabaha is a contract between a Buyer and Seller under which the Sellersells certain specific goods permissible under Islamic Shariah and Law, to the Buyer at acost plus agreed profit payable in cash on any fixed future date in lump sum or byinstallments. The profit marked-up may be fixed in lump-sum or in percentage of the

cost price of the goods. In case of Murabaha SIBL procures the goods as per indent ofthe customer, retain it in its custody and sell the same part by part or at a time to theclient who gave indent for the goods.

33..99..11..55FFOORREEIIGGNNEEXXCCHHAANNGGEETTRRAANNSSAACCTTIIOONNSSEERRVVIICCEESSOOFFSSIIBBLLForeign Exchange Trade of SIBL is dealt with its 9AD branches out of which 4AD branches are inDhaka and the remaining 5AD are in Chittagong, Khulna, Sylhet, Rajshahi, and Bogra.

o Export Finance:To facilitate the import obligation of the Bank as well as consideringthe requirement of foreign currency of the country it encourage potential exporters to do

their export business with them. It provides working capital on their requirement.Presently its export finance is extended for RMG and for non-traditional item that ishandled by a number of experienced bankers. It offers competitive exchange rate forforeign currency to our valued exporters.

o I mport Finance:SIBL also deals in import business and its import business is extendedto commercial importers (traders) for import of various Shariah approved items andindustrial importers (Users) for import of raw cotton, yarn, clinker, pharmaceutical rawmaterials, TV parts, Computer parts etc raw materials for their industries. It also providespost import finance.


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o Foreign Remittance: SIBL is playing an important role in the Foreign Remittancesector also. It has correspondent relationship with almost all major 122 Banks of 109countries of the world. Visitors of SIBLs website can download its Foreign CurrencyCurrent Account (FCCA) Opening Form from the Download Section to open FCCA accountto send remittances.

oSWI FT:SIBL is the member of SWIFT and it has 9AD SWIFT workstations in its 9ADbranches. Besides its 24 branches are equipped with online banking. It is trying to keepall the SWIFT workstations under online system. Inward remittances are credited to thebeneficiarys account on the same day of receipt if the beneficiary maintains A/C withthem or within next 24 hours on receipt of the same from our overseas correspondents.All correspondences of foreign trade both export and imports are communicated throughSWIFT. As a result foreign exchange trades become expeditious and instant.

33..99..22NNOONNFFOORRMMAALL BBAANNKKIINNGGSSEERRVVIICCEESSOOFFSSIIBBLL

Family Empowerment Micro-Credit Program: Family Empowerment Micro-CreditProgram is designed to develop the Socio-economic condition of the grass-root peoplecommitted to build a caring society by reducing poverty through income generation forsmall and low-income families, under which financing is provided without collateral.Familyempowerment Micro-Credit Program is a group-based lending. Investment is provided formaximum three years @ 10% return per annum at flat rate where maximum ceiling ofInvestment is Tk.25,000/-.

Family Empowerment Micro-Enterprise Program: Family Empowerment Micro-Enterprise program is introduced to enhance the Socio-economic condition of the potentialentrepreneur, small and medium Businessmen, successful Micro-Credit graduates throughincome generating activities. Ceiling of investment is from Tk.50, 000/= to Tk.5, 00,000/=@ 10% return per annum at flat rate for maximum three years. Investment up to Tk.50,000/= is provided without collateral. In case of investment of above Tk.50, 000/=minimum collateral security is required.

Family Empowerment Micro-Enterprise Program ( SMEs):Considering the potentiality

of SMEs sector, SIBL has launched Family Empowerment Micro-enterprise program (SMEs)to fulfill the diversified need of SMEs clients. Investment ceiling under this program isfrom Tk.2, 50,000/= to Tk.5, 00,000/=@ 14% return per annum for one year onrevolving basis.

Small, Medium and Micro-Enterprise Development Program jointly with JOBS

project, USAID:On the basis of Memorandum of Understanding (MoU) signed in 2001between Social Investment Bank Ltd. and Job Opportunity and Business Support (JOBS),collaborative efforts are being made to create easy access to business capital for the SmallMedium and Micro-Enterprises (SMEs) through enhancing the capacity and performance ofthe entrepreneurs with available technical assistance from JOBS to be financed throughSocial Investment Bank Ltd. under Family Empowerment Micro-Credit and Micro-Enterprise Program.

33..99..33VVOOLLUUNNTTAARRYYBBAANNKKIINNGGSSEERRVVIICCEESSOOFFSSIIBBLLCash Waqf Scheme:SIBL had introduced Cash Waqf Certificate, a new product for the first

time in the history of banking in Bangladesh. Cash Waqf provides a unique opportunity formaking investment in different religious, educational and social services. Savings madefrom earning by the well off and the rich people of the society can be utilized in ourorganized manner. Income earned from these funds will be spent for different purposeslike the purposes of the Waqf properties itself. Cash Waqf is an endowment in conformitywith Shariah, bank manages the Waqf on behalf of the waquif and Waqfs are done inperpetuity and the A/C is opened in the title given by the waquif. Waquif have the liberty


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to choose the purpose(s) to be served either from the list of 32 purposes identified by thebank, covering (a) family empowerment credits, (b) Human resource development, (c)Health and sanitation and social utility services, or any other purpose(s) permitted byShariah. Cash Waqf amount earns profit at the highest rate offered by the Bank from timeto time. Cash Waqf amounts remain intact and only the profit amount is spent for the

purpose(s) specified by the waquif. Unspent profit amounts automatically added to Waqfamount and earn profit to grow over the time. Waquif can also instruct the Bank to spendthe entire profit amount for the purpose specified by him/her.

Mosque Waqf Property Development Scheme:As a declared corporate policy, the Bankintends to help mosque and Waqf property holders with free consultation & technicalsupport so as to make it economically & socially self-sustained. The bank has completed asmall project for development of a mosque property at Uttar Khan, Dhaka. (SocialInvestment Bank Limited, 2006)

44..00AANNAALLYYSSIISSOOFFTTHHEEDDAATTAA AANNDDSSUURRVVEEYYFFIINNDDIINNGGSS

The results found after analyzing the data which were collected through interview with the

structured questionnaire, are described here:

44..11 IIMMPPOORRTTAANNCCEE OOFF DDIIFFFFEERREENNTT FFAACCTTOORRSS FFOORR SSEELLEECCTTIINNGG AANNYY BBAANNKKIINNGG SSEERRVVIICCEESS TTOO

KKEEEEPPDDEEPPOOSSIITTSS

Respondents were given 12 different factors (that people generally consider to select any bank tokeep deposit) to evaluate the factors according to importance to them to select any bankingservices to keep their deposit. After analyzing the data the following results are found (Figure 5):

o 40% of the respondents evaluate bank reputation and image as very important, 30%evaluate as not important and 30% evaluate as not very important

o Banking system evaluated as very important by 30% respondents, important as 20%,moderately important by 20%, not important by 30%.

o Availability of wide range of services evaluated as very important by 20% respondents,important by 10%, moderately important by 50% and not very important by 20%respondents.

o Return on deposit evaluated as very important by 60% respondents, important by 20%, notimportant by 10% and not very important by 10% respondents.

o Organization culture evaluated as important by 20% respondents, moderately important by70% respondents and not very important by 10% respondents.

o Bank location and number of branches evaluated as important by 40% respondents,moderately important by 40% respondents and not important by 20% respondents.

o Operations hour evaluated as very important by 10% respondents, important by 70%respondents and moderately important by 20% respondents.

o Service quality evaluated as important by 30% respondents, important by 40% respondentsand moderately important by 30% respondents

o Service charge evaluated as very important by 10% respondents, important by 30%respondents, moderately important by 20% respondents, not important by 30% and not veryimportant by 10% respondents.

o Availability of other facilities (like ATM, online banking etc) evaluated as important by 40%respondents, moderately important by 30% respondents and not important by 30%respondents.


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o Ownership type of bank (like MCB, PCB, NCB) evaluated as important by 10% respondents,moderately important by 10% respondents, not important by 40% and not very important by40% respondents.

o Other factors evaluated as moderately important by 10% respondents, not important by 20%respondents and not very important by 70% respondents.

After calculating the sum and average of the factors, it is found that, Banking system, Returnon deposits, Operations hours and Service quality are important factors; Bank's reputation and

image, Availability of wide range of services, Organization culture, Bank Location and number ofbranches, Service charges and Availability of other facilities( like ATM, online banking etc) aremoderately important; Ownership type of bank( like MCB, PCB, NCB ) is not important and Otherfactors is not very important to select any banking services to keep deposit to the respondent.(table 1: Sum, Average, and rank of the Factors for selecting any banking services and exampleof average calculation are given in appendix, page 47, table 5)

Table 1,Sum, Average, and rank of the Factors for selecting any banking services

Factors Sum Average Round I mportance Rank

Figure 5


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value (accordin

g toaverage)

Bank's reputation andimage

290 2.9 3 Moderately Important 8

Banking system 350 3.5 4 Important 4Availability of widerange of services


Return on deposits 410 4.1 4 Important 1

Organization culture 300 3 3 Moderately Important 7

Bank Location andnumber of branches


Operations hours 390 3.9 4 Important 3

Service quality 400 4 4 Important 2

Service charges 300 3 3 Moderately Important 7

Availability of other

facilities( like ATM,online banking etc)


Ownership type of bank(like MCB, PCB, NCB )

190 1.9 2 Not Important 9

Other factors 140 1.4 1 Not very Important 10

After calculating the sum and average of the factors, it had been ranked in the following wayaccording to the value of average: ( table 1)i. Return on deposits

ii. Service qualityiii. Operations hoursiv. Banking system

v. Bank Location and number of branchesvi. Availability of other facilities (like ATM, online banking etc) and Availability of wide range ofservices

vii. Service charges and Organization cultureviii. Bank's reputation and image

ix. Ownership type of bank (like MCB, PCB, NCB)x. Other factorsFrom the ranking of the factors, it is seen that, return on deposit is the most important factor forselecting any banking services to keep deposits, and then service quality and then operationshour are important to the respondents. Ownership type of the bank and other factors are leastimportant factors for selecting any banking services to keep deposits to the respondents.44..22TTYYPPEESSOOFFRREETTUURRNNPPRREEFFEERRMMOOSSTT

One important characteristic of Islamic banksis that sharing profit and loss with thedepositors. So return on deposits in Islamicbanks in not ensured and changes with time.Respondents were asked which type of returnthey prefer most between ensured andunensured return on deposit. 80% of therespondents said that they prefer ensuredreturn on deposit and only 20% said that they

Figure 6


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prefer uninsured return on deposit (Figure 6). Return on deposit is the 1st important factoramong 12 factors to select any banking services to keep deposits. (Table 1, page 27)

44..33RREEAASSOONNFFOORRPPRREEFFEERRRRIINNGGTTHHAATTSSPPEECCIIFFIICCTTYYPPEEOOFFRREETTUURRNNOONNDDEEPPOOSSIITT

Respondent are asked why they prefer that specific type of return. Most of them who preferensured return on deposit said the following reasons, which are almost similar.o It is better to be ensured about the return as it is safeo No risk of having lower amount of deposito There is no loss in such type of return on deposit

Respondents who said that they prefer unensured return on deposit has given the following the

reasons for preferring uninsured return on deposit, which are almost similar.o As this is the main feature of Islamic banking system they prefer unensured return on

deposit.o As business has risk to do loss, depositors should share the risk as this procedure is fair.So most of the respondents dont want to take risk related to their deposits and prefer ensuredreturn on deposits.

44..44KKEEEEPPDDEEPPOOSSIITTIINNAANNOOTTHHEERRBBAANNKKNNOOTT,,IIFFGGEETTHHIIGGHHAANNDDEENNSSUURREEDDRREETTUURRNN

Respondent are asked whether they willkeep deposit in another bank rather SIBL, if

they found ensured and high return on theirdeposit. 60% of the respondents said thatyes they would change their bank and 40%said no, they would not change the bank,they will stay in SIBL. (Figure 7)And from the following table (table 1) it canbe seen that, 60% respondents (who saidthat they prefer ensured return on deposit)said they will keep their deposits in another

Figure 7


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bank from SIBL if they get high and ensured return on their deposits. But 20% respondents (whosaid that they prefer ensured return on deposit) said they will not keep their deposits in anotherbank from SIBL if they get high and ensured return on their deposits. And 20% respondents,who said that they prefer unensured return on deposit, said they will not keep their deposits inanother bank from SIBL if they get high and ensured return on their deposits.

Table 2: Cross tab (type of return prefer most* Keep deposit in another bank ratherSI BL if get high and ensured return on deposits)

Type of Return on deposit prefer most

Ensured return ondeposit

Unensuredreturn ondeposit

Total

Whether one Keep deposit inanother bank from SIBL if one gethigh and ensured return ondeposits

Yes 60 0 60

No 20 20 40

Total 80 20 100

As most of the respondents prefer ensured return, most of them will change SIBL to keep depositif the get high and ensured return in another bank.

44..55WWHHEETTHHEERROONNEEFFEEEELLSSCCOOMMFFOORRTTAABBLLEETTOODDOOTTRRAANNSSAACCTTIIOONNSSIINNSSIIBBLL IINNIITTSSSSHHAARRIIAAHHCCUULLTTUURREESIBL follow Shariah based organizationculture such as: female employeescovered with scarf and coats, azan atprayer time, welcome with salaam etc,which is different from other traditionalbanks organizational culture.

Organization culture or environmenthas an impact on the consumers ontheir buying behavior. Certain type ofenvironment makes the Depositorscomfortable and influences to do theirpurchase, and certain type ofenvironment may have negative impact.So Respondents were asked whetherthey feel comfortable to do transactions

Figure 8


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in SIBL in its Shariah culture to find that whether there is any effect of Islamic organizationculture of SIBL on their Depositors. And all the respondents said that they feel comfortable to dotransactions in SIBL in its Shariah culture (Figure 8). So we can say that SIBL Shariah culturedont have any negative effect on the Depositors rather it have a positive effect.

44..66WWHHEETTHHEERREENNGGAAGGIINNGGIINNIISSLLAAMMIICCBBAANNKKIINNGGFFAACCIILLIITTIIEESSWWIILLLLAALLLLOOWW TTOOCCOONNFFOORRMMTTOOSSHHAARRIIAAHHOORRNNOOTT

Belief is a descriptive thought that a personholds about something. As belief make upproduct and brand images and affects buyingbehavior, respondent were asked whether theybelieve that Engaging in Islamic bankingfacilities will allow them to conform to Shariahas this kind of belief may influence them toselect Islamic banking services. 80% of therespondents said yes, they believe thatengaging in Islamic banking facilities will allowthem to conform to Shariah. And 20% said no,

they dont believe so (Figure 9). So as most ofthe respondents believe that Engaging in Islamicbanking facilities will allow them to conform toShariah, it obviously positively affects theirbehavior in selecting Islamic banking services.

44..77 LLEEVVEELL OOFF IINNTTEERREESSTT TTOO UUSSEE SSHHAARRIIAAHH BBAANNKKIINNGG SSEERRVVIICCEESS TTHHAANN TTRRAADDIITTIIOONNAALLBBAANNKKIINNGGSSEERRVVIICCEESSRespondents were asked how muchintersted they are to use shariah bankingservices than tradinal banking services asto measure their attitude toward Islamicbanking. 30% of the respondents said thatthey are very interested to use shariahbanking services than tradional bankingservices, 40% of respondents said theyare intersted and 20% said they are

moderatly intrested and 10% said thatthey are not intersted to use shariahbanking services than traditional bankingservices (Figure 10). So most of therespondent has positive attitude towardislamic banks and are interrested to useislamic banking services than traditionalbanking services. (page 47, Table 6, row4, value=4 means interested)

Figure 9

Figure 10


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44..88HHOOWWSSTTRRIICCTTLLYY TTHHEE IISSLLAAMMIICCBBAANNKKSSIINNBBAANNGGLLAADDEESSHHFFOOLLLLOOWWIINNGG IISSLLAAMMIICCSSHHAARRIIAAHH

PPRRIINNCCIIPPLLEESSTTOORRUUNNBBAANNKKIINNGGBBUUSSIINNEESSSS

To find out the perception about Islamic

banks in Bangladesh, respondent wereasked what they think, How Strictly theIslamic Banks in Bangladesh followingIslamic Shariah principles to run bankingbusiness. 70% of the respondents thinkthat, Islamic Banks in Bangladesh followingIslamic Shariah principles moderately strictlyto run banking business. And 30% of therespondents think that, Islamic Banks inBangladesh not strictly following Islamic

Shariah principles to run banking business(Figure 11). So according to therespondents Islamic banks in Bangladeshfollowing Islamic Shariah principlesmoderately strictly to ran banking business.(page 47, Table 6, row 1, value=3, meansmoderately strictly)

44..99HHOOWWSSTTRRIICCTTLLYYSSIIBBLLFFOOLLLLOOWWIINNGG IISSLLAAMMIICCSSHHAARRIIAAHHPPRRIINNCCIIPPLLEESS TTOORRUUNNBBAANNKKIINNGG

BBUUSSIINNEESSSSTo find the perception about SIBL asIslamic bank, respondents were askedwhat they think, How Strictly the SIBLfollowing Islamic Shariah principles to runbanking business. 90% of the respondentsthink that, SIBL following Islamic Shariahprinciples moderately strictly to runbanking business. And 10% of therespondents think that, SIBL following

Islamic Shariah principles strictly to runbanking business(Figure 12). So accordingto the respondents SIBL following IslamicShariah principles moderately strictly to ranbanking business. (page 47, Table 6, row2, value=3, means moderately strictly)

Figure 11

Figure 12


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44..1100LLEEVVEELL OOFFSSAATTIISSFFAACCTTIIOONNAABBOOUUTTSSIIBBLL

To measure post purchase behavior,respondent were asked to state their

level of satisfaction in 5 point Likertscale. 40% of the respondent said thatthey are very satisfied about SIBL, 10%of the respondent said that they aresatisfied about SIBL, 40% of therespondent said that they aremoderately satisfied about SIBL and10% of the respondent said that theyare not satisfied about SIBL (Figure 13).So the respondents are moderatelysatisfied about SIBL. (page 47, Table 6,row 3, value=3, means moderatelysatisfied)

4.11 CCHHAANNGGEESSNNEEEEDDEEDDIINNSSIIBBLLSSBBAANNKKIINNGGSSYYSSTTEEMM

Then respondents were asked howSIBL need to have changes in somefactors, to increase their satisfaction touse SIBLs services. They were givenseveral factors.About its banking system, according to80% of the respondents, SIBL need tofollow Shariah based banking systemstrictly. According to 20% of therespondents no change needed aboutthe banking system. (Figure 14)

Figure 13

Figure 14


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44..1122CCHHAANNGGEESSNNEEEEDDEEDDIINNSSIIBBLLSSDDIIFFFFEERREENNTTBBAANNKKIINNGGSSEERRVVIICCEESS

About different banking services,according to 70% of the respondents

SIBL need to introduce more Islamicservices, according to 20% of therespondents SIBL need to introducemore services, according to 10% ofthe respondents SIBL needed nochange about there different bankingservices (Figure 15). It means there isa huge demand of Islamic bankingservices as well as other type oftraditional banking services among itsdepositors.

44..1133CCHHAANNGGEESSNNEEEEDDEEDDIINNSSIIBBLLSSOORRGGAANNIIZZAATTIIOONNCCUULLTTUURREE

About SIBLs organization culture,according to 70% of the respondentsSIBL should strictly follow Shariahculture, and according to 30% of therespondents SIBL needed nochanges in their organization culture.(Figure 16)

Figure 15

Figure 16


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44..1144CCHHAANNGGEESSNNEEEEDDEEDDIINNSSIIBBLLSSBBRRAANNCCHHNNUUMMBBEERR

About SIBLs branch number,according to 80% of therespondents SIBL need morebranches and according to 20%of the respondents no changeneeded. (Figure 17)

44..1155CCHHAANNGGEESSNNEEEEDDEEDDIINNSSIIBBLLSSOOPPEERRAATTIIOONNSSHHOOUURR

About SIBLs operations hour,according to 80% of the respondentsoperation hour need to be increased.Acccording to 20% no changeneeded about operation hour of SIBL.(Figure 18)

Fi ure 17

Figure 18


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44..1166CCHHAANNGGEESSNNEEEEDDEEDDIINNSSIIBBLLSSSSEERRVVIICCEEQQUUAALLIITTYY

About SIBL service quality,according to all of respondent,SIBL need to improve theirservice quality. (Figure 19)

44..1177CCHHAANNGGEESSNNEEEEDDEEDDIINNSSIIBBLLSSSSEERRVVIICCEECCHHAARRGGEE

About SIBL service charge,according to 70% of therespondents it needed to bereduced. And according to30% of the respondents SIBLneed no change about theirservice charge. (Figure 20)

Figure 19

Figure 20


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44..1188CHHAANNGGEESSNNEEEEDDEEDD IINNSSIIBBLLSSOOTTHHEERRFFAACCIILLIITTIIEESS((LLIIKKEEAATTMM,,OONNLLIINNEEBBAANNKKIINNGG))

About SIBLs other facilities, accordingto 90% of the respondent SIBL needto increase other facilities like ATM,online banking. And according to10% of the respondents no changeneeded about other services of SIBL.(Figure 21)

44..1199NNUUMMBBEERROOFFAACCCCOOUUNNTTHHOOLLDDEERRSSIINNDDIIFFFFEERREENNTTAACCCCOOUUNNTTSSIINNSSIIBBLL((IINN%%))

Among

alltheaccoun

thold

ers,52%of

theaccoun

thold

Figure 11


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ers are saving deposit account holder and 25% are current deposit holders, 11% are termdeposit holder and 5.3% are pension scheme holders. Number of Account holders of otheraccounts is very low. SIBL provide interests on the saving account deposits, term depositaccount, and other accounts except current account. As it was found that, return on deposit isthe most important factor among different factors for selecting banking services to keep deposits,

this may be reason of large number of account holders in savings account and term account.(Figure 22)

(Source: SIBL, list of account holders in different accounts)

55..00DDEEMMOOGGRRAAPPHHIICCIINNFFOORRMMAATTIIOONNAANNAALLYYSSIISS

Figure 22

7/31/2019 Internship Report Depositor Buying Behavior an Analysis on Social Investment

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