CHAPTER -2
25
Profile of Sample Banks
2.0.0 Banking Sector in Bangladesh
2.0.1 Introduction
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'.
2.0.2 Number and Types of Banks
The number of banks in all now stands at 49 in Bangladesh. Out of the 49 banks, four
are Nationalised Commercial Banks (NCBs), 28 local private commercial banks, 12
foreign banks and the rest five are Development Financial Institutions (DFIs).
Sonali Bank is the largest among the NCBs while Pubali is leading in the private ones.
Among the 12 foreign banks, Standard Chartered has become the largest in the
country. Besides the scheduled banks, Samabai (Cooperative) Bank, Ansar-VDP
Bank, Karmasansthan (Employment) Bank and Grameen Bank are functioning in the
financial sector. The number of total branches of all scheduled banks is 6,038 as of
June 2000. Of the branches, 39.95 per cent (2,412) are located in the urban areas and
60.05 per cent (3,626) in the rural areas. Of the branches NCBs hold 3,616, private
commercial banks 1,214, foreign banks 31 and specialised banks 1,177.
Bangladesh Bank (BB) regulates and supervises the activities of all banks. The BB is
now carrying out a reform programme to ensure quality services by the banks.
26
Nationalised Commercial Banks (NCBs)
1. Sonali Bank
2. Janata Bank
3. Agrani Bank
4. Rupali Bank
Private Commercial Banks (PCBs)
1.Pubali Bank
2.Uttara Bank
3.National Bank Ltd.
4.The City Bank Ltd.
5.United Commercial Bank Ltd.
6. Arab Bangladesh Bank Ltd.
7. IFIC Bank Ltd.
8. Islami bank Bangladesh Ltd.
9. Al Baraka Bank Bangladesh Ltd.
10. Eastern Bank Ltd.
11. National Credit & Commerce Bank Ltd.
12. Prime Bank Ltd.
13. South East Bank Ltd.
14. Dhaka Bank Ltd.
15. Al-Arafah Islami Bank Ltd.
16. Social Investment Bank Ltd.
17. Dutch-Bangla Bank Ltd.
18. Mercantile Bank Ltd.
19. Standard Bank Ltd.
20. One Bank Ltd.
21. EXIM Bank
22. Bangladesh Commerce Bank Ltd.
23. Mutual Trust Bank Ltd.
24. First Security Bank Ltd.
25. The Premier Bank Ltd.
26. Bank Asia Ltd.
27. The Trust Bank Ltd.
28. Shahjalal Bank Limited (Based on Islamic Shariah)
Foreign Banks
1.American Express Bank
2.Standard Chartered Bank
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3.Habib Bank Ltd.
4.State Bank of India
5.Credit Agricole Indosuez (The Bank)
6.National Bank of Pakistan
7.Muslim Commercial Bank Ltd.
8.City Bank NA
9.Hanvit Bank Ltd.
10.HSBC Ltd.
11. Bank Al-Falah
Development Banks
1.Bangladesh Krishi Bank
2.Rajshahi Krishi Unnayan Bank
3. Bangladesh Shilpa Bank
4.Bangladesh Shilpa Rin Sangstha
5.Bank of Small Industries & Commerce Bangladesh Ltd.
Others
1. Ansar VDP Unnayan Bank
2. Bangladesh Samabai Bank Ltd. (BSBL)
3.Grameen Bank
4.Karmasansthan Bank
2.0.3 Bangladesh Bank
Bangladesh Bank (BB) has been working as the central Bank since the country's
independence. Its prime jobs include issuing of currency, maintaining foreign
exchange reserve and providing transaction facilities of all public monetary matters.
BB is also responsible for planning the government's monetary policy and
implementing it thereby.
The BB has a governing body comprising of nine members with the Governor as its
chief. Apart from the head office in Dhaka, it has nine more branches, of which two in
Dhaka and one each in Chittagong, Rajshahi, Khulna, Bogra, Sylhet, Rangpur and
Barisal.
2.0.4 Accounts: Current, Savings
Current Account
Generally this sort of account opens for business purpose. Customers can withdraw
money once or more against their deposit. No interest can be paid to the customers in
this account. If the amount of deposit is below taka 1,000 on an average the bank has
authority to cut taka 50 from each account as incidental charge after every six months.
Against this account loan facility can be ensured. Usually one can open this account
28
with taka 500. One can open this sort of account through cash or check/bill. All the
banks follow almost the same rules for opening current account.
Savings Bank Account
Usually customers open this sort of account at a low interest for only security. This is
also an initiative to create people's savings tendency. Generally, this account is to be
opened at taka 1000. Interest is to be paid in June and December after every six
months. If money is withdrawn twice a week or more than taka 10,000 is withdrawn
(if 25% more compared to total deposit) then interest is not paid. This account
guarantees loan. Almost all the banks follow the same rules in the field of savings
account, except foreign banks for varying deposit. On an average, all the banks give
around six percent interest.
Special Services
Some Banks render special services to the customers attracting other banks.
2.0.5 Internet Banking
Customers need an Internet access service. As an Internet Banking customer, he will
be given a specific user ID and a confident password. The customer can then view his
account balances online. It is the industry-standard method used to protect
communications over the Internet.
To ensure that customers' personal data cannot be accessed by anyone but them, all
reporting information has been secured using Version and Secure Sockets Layer
(SSL).
2.0.6 Home Banking
Home banking frees customers of visiting branches and most transactions will be
automated to enable them to check their account activities transfer fund and to open
L/C sitting in their own desk with the help of a PC and a telephone.
2.0.7 Electronic Banking Services for Windows (EBSW)
Electronic Banking Service for Windows (EBSW) provides a full range of reporting
capabilities, and a comprehensive range of transaction initiation options.The customers
will be able to process all payments as well as initiate L/Cs and amendments, through
EBSW. They will be able to view the balances of all accounts, whether with Standard
Chartered or with any other banks using SWIFT. Additionally, transactions may be
approved by remote authorization even if the approver is out of station.
2.0.8 Automated Teller Machine (ATM)
Automated Teller Machine (ATM), a new concept in modern banking, has already
been introduced to facilitate subscriber 24-hour cash access through a plastic card. The
network of ATM installations will be adequately extended to enable customers to nonbranch banking beyond banking.
29
2.0.9 Tele Banking
Tele Banking allows customers to get access into their respective banking information
24 hours a day. Subscribers can update themselves by making a phone call. They can
transfer any amount of deposit to other accounts irrespective of location either from
home or office.
2.0.10 SWIFT
SWIFT is a bank owned non-profit co-operative based in Belgium servicing the
financial community worldwide. It ensures secure messaging having a global reach of
6,495 Banks and Financial Institutions in 178 countries, 24 hours a day. SWIFT global
network carries an average 4 million message daily and estimated average value of
payment messages is USD 2 trillion.
SWIFT is a highly secured messaging network enables Banks to send and receive
Fund Transfer, L/C related and other free format messages to and from any banks
active in the network.
Having SWIFT facility, Bank will be able to serve its customers more profitably by
providing L/C, Payment and other messages efficiently and with utmost security.
Especially it will be of great help for our clients dealing with Imports, Exports and
Remittances etc.
2.1.0 Islami Bank Bangladesh Limited (IBBL)
2.1.1 Introduction
Bangladesh is one of the largest Muslim countries in the world. The people of this
country are deeply committed to Islamic way of life as enshrined in the Holy Qur'an
and the Sunnah. Naturally, it remains a deep cry in their hearts to fashion and design
their economic lives in accordance with the precepts of Islam. The establishment of
Islami Bank Bangladesh Limited on March 13, 1983, is the true reflection of this inner
urge of its people, which started functioning with effect from March 30, 1983. This
Bank is the first of its kind in Southeast Asia. It is committed to conduct all banking
and investment activities on the basis of interest-free profit-loss sharing system. In
doing so, it has unveiled a new horizon and ushered in a new silver lining of hope
towards materializing a long cherished dream of the people of Bangladesh for doing
their banking transactions in line with what is prescribed by Islam. With the active cooperation and participation of Islamic Development Bank (IDB) and some other
Islamic banks, financial institutions, government bodies and eminent personalities of
the Middle East and the Gulf countries, Islami Bank Bangladesh Limited has by now
earned the unique position of a leading private commercial bank in Bangladesh.
2.1.2 Birth History of IBBL
In January 1981, the Head of the Government, President of the Peoples Republic of
Bangladesh while addressing the 3rd Islamic Summit Conference held at Makkah and
Taif suggested, "The Islamic Countries should develop a separate Banking system of
30
their own in order to facilitate their trade and commerce" This statement of the
President indicated favourable attitude of Bangladesh towards establishing Islamic
Banks and financial institutions in the country.
Earlier, in November 1980, Bangladesh Bank, the country's central bank, sent a
representative to study the working systems of several Islamic Banks abroad. In
November 1982, a delegation of Islamic Development Bank (IDB) visited Bangladesh
and showed keen interest to participate in establishing a joint venture Islamic Bank in
the private sector. They found a lot of works have already been done and Islamic
Banking was in a ready form for immediate introduction. Two professional bodies
namely Islamic Economics Research Bureau (IERB) and Bangladesh Islamic Bankers
Association (BIBA) made significant contribution towards introduction of Islamic
Banking in Bangladesh. They came forward to provide training on Islamic Banking to
top Bankers and Economists to fill-up the vacuum of leadership for the future Islamic
Banks in Bangladesh. They also held seminars, symposium and workshops on Islamic
Economics and Banking throughout the country to mobilise public opinions in favour
of Islamic Banking. Their professional activities were reinforced by a number of
Muslim entrepreneurs working under the aegis of Muslim Businessmen-Society. These
organisations concentrated mainly in mobilising equity capital for the emerging
Islamic Bank.
At last, the long drawn struggle to establish an Islamic Bank in Bangladesh became a
reality and Islami Bank Bangladesh Limited was incorporated on 13th March, 1983
and commenced banking operations on and from 30th March, 1983 as the first Islamic
Bank in the South East Asia. It is the first joint venture Bank in Bangladesh. The initial
capital of Taka 56 million of the Bank was contributed by 11 foreign Islamic Banks
and institutions, two foreign nationals, 4 Islamic Institutions and 19 local Industrialists
and Philanthropists.
The Bank is committed to run all its activities as per Islamic Shariah. IBBL through its
steady progress and continued success has, by now, earned the reputation of being one
of the leading Private Sector Banks of the country. The distinguishing features of
IBBL are as under:
 All its activities are conducted on interest-free system according to Islamic Shariah.
 Investment is made through different modes permitted under Islamic Shariah.
 Investment-income of the Bank is shared with the Mudaraba depositors according
to a ratio to ensure a reasonably fair rate of return on their deposits.
 Its aims are to introduce a welfare-oriented banking system and also to establish
equity and justice in the field of all economic activities.
 It extends co-operation to the poor, helpless and low income group of the people
for their economic upliftment particularly in the rural areas.
 It plays a vital role in human resource development and employment-generation,
particularly for the unemployed youths.
31
 Its aim is to achieve balanced growth & development of the country through
investment operations, particularly in the less developed areas.
2.1.3 Administrative Structure of IBBL
Islami Bank Bangladesh Limited is managed by a 24 Member Board of Directors. Of
the Directors, 9 are foreigners and 15 local. A 9 Member Executive Committee has
been formed by the Board of Directors for efficient operations of the Bank. A Shariah
Council consisting of Ulamas, Economists, Financial and Legal Experts
advises the Board on Shariah issues concerning operations of banking business.
Besides, a Management Committee comprising of the Senior Executives and headed
by the Executive President looks after the affairs of the Bank. Day to day management
is entrusted to the Executive President who is assisted by the Management Committee
and Member-Secretary, Shariah Council. IBBL serves its customers through 111
Branches. (as on 31.8.99)
The Board of Directors and the Executive Committee are highly efficient teams
consisting of industrialists, businessmen, technocrafts, bankers, management experts
and parliamentarian. The Shariah Council members are renowned ulamas, bankers,
economists, researches and one of them is a member of the National Assembly. The
Executive management consists of professional Bankers deeply dedicated to run the
Bank efficiently.
The Islamic Bank Foundation established for providing financial assistance to the poor
and needy people through various income generating, health care, relief and
rehabilitation education and special programs is a result of social welfare commitment
of IBBL.
A layout of Management Structure and Legitimate Hierarchy of Management of IBBL
are presented in the following pages.
32
MANAGEMENT STRUCTURE OF ISLAMI BANK BANGLADESH LTD. AS
ON 31.12.2006
BOARD OF DIRECTORS
SHARIAH COUNCIL
Shariah Department
EXECUTIVE COMMITTEE
BOARD’S
COMMITTEE
1.
2.
3.
4.
5.
6.
7.
8.
ISLAMI BANK
FOUNDATION
Islami Bank
Foundation
A. Islami Bank
Hospital (3 Nos.)
B. Islami Bank
Selection Committee
Shariah Implementation
Committee
Real Estate Committee
Standing Committee for
Inv. Planning &
Implementation
Committee to study Audit
& Inspection Reports of
IBBL.
Review Committee.
Assignments and
Privileges enjoyed/to be
enjoyed by the Directors.
Accounts Finalisation
Committee.
A
B
C
D
E
2
1
3
4
5
6
7
8
C.
D.
E.
IBTR
A
EXECUTIVE PRESIDENT
EVP
Investment
Division
F.
G.
MANAGEMENT COMMITTEE
Technical Institute
(4 Nos.)
Islami Bank Model
School & College
(1 No.)
Monorom(1 No.)
(Departmental
Store)
Islami Bank
Cultural Centre(1
No.)
Centre for
Integrated
Development for
the Disabled(1 No.)
Islami Bank Service
Centre(2 Nos.)
Audit &
Inspection
Department
DE
P
EVP
Operations
Division
EVP
International
Division
Corporate Branches (3)
Local
Office
G
G
Board Secretary
Nawabpur
Branch
F
Zonal Offices (6)
Dhaka
Dhaka
Chittagong
Legitimate Hierarchy
ofSouth
Management
North
Zone
Board of Directors
Foreign Exchange
Branch
Branches
Branches
Executive
Committee
(18)
(18)
Branches
(16)
(18)
Executive President
Deputy Executive President
33
Khulna
Zone
Branches
(18)
Bogra
Zone
Comilla
Zone
Branches
(20)
Branches
(18)
Executive Vice President
Senior Vice President
Vice President
Assistant Vice President
Senior Principal Officer
Principal Officer
Senior Officer
Officer
Assistant Officer, Grade-I
Assistant Officer, Grade-II
Assistant Officer, Grade-III
Other Employees:
1.
Senior Assistant
2.
Cashier-cum-Assistant
3.
Senior Messenger-Cum-Guard/Senior Security Guard/ Senior Godown Guard.
4.
Messenger-Cum-Guard Grade-I/Security Guard Grade-I
Godown Guard Grade-1.
5.
Messenger-Cum-Guard Grade-II/Security Guard Grade-II/
Godown Guard Grade-II.
Technical and Blocked Cadres:
1.
Mechanic/Electrician/Driver Grade-I
2.
Driver Grade-II
3.
Mali/Cleaner.
It is to be marked for the following factors in case of employees’ promotion and
incentives:
1. Senior Messenger-Cum-Guard, Senior Security Guard & Senior Godown Guard
will be promoted to Asstt. Officer Grade-III only if they have requisite
qualification as per promotion criteria and found qualified for promotion.
2. The Grades will, however, ultimately be abolished whenever all the existing
manpower in the grades will be otherwise absorbed, promoted or retired.
3. No further recruitment in the Grades will be made either by direct recruitment or
by promotion.
34
3. Messenger-Cum-Guard Grade-I and equivalents will be promoted to the Asstt.
Officer Grade-III only, if they have requisite qualifications as per promotion criteria
and found qualified for promotion.
2.1.4 Shariah Council
Islam is not merely a religion but a complete code of life. This code is enshrined in the
Islamic Shariah, the body of laws that is the primary source of guidance for Muslims
on all aspects of life.
The Shariah Council of the Bank is playing a vital role in advising, guiding &
supervising the implementation and compliance of Shariah principles in all business
activities of the Bank. The Council, which enjoys a high status in the structure of the
Bank, consists of prominent Ulema, reputed Bankers, renowned Lawyers and eminent
Economist. Members of the Shariah Council meet frequently and deliberate on
different issues confronting the Bank on Shariah Matters.
They also conduct Shariah inspection of Branches regularly, so as to ensure that the
Shariah principles are implemented and complied with meticulously by the Branches
of the Bank. It may be mentioned here that Shariah Council also examines the Final
Accounts of the bank and submits a separate report in this respect.
2.1.4 Islamic Bank Training & Research Academy (IBTRA)
Islami Bank Training & Research Academy (IBTRA) was established simultaneously
with the establishment of the bank in the year 1983 for the purpose of imparting
training to manpower of all levels and conducting research programs. To cater the
increasing training and research needs, the Academy has been up-graded in 1994 and
an Academic Council has been formed to formulate policies to provide special
emphasis on (i) Islamic Economics and Banking and (ii) practical operations on both
Conventional and Islamic Banking system.
The activities of IBTRA covers both training and research on various aspects of
Islamic banking. The Academy developed a rich Library of its own with a treasure of
valuable books on different subjects including Islamic Economics, Banking,
Comparative Philosophies and Journals of home and abroad and research articles and
documents. Employees of the bank, Learners and researches have been taking full
advantage of the Library.
Academy conducts the different training courses of the Islami Bank’s Officials for
their development. The Academy also conducts workshops, Executive Development
Program, Seminars and Internship Program of BBA, MBA and final year students of
Management department, Finance & Banking Department and Marketing Department
of the University of Dhaka.
Besides, a motivational program is introduced for the clients of the Bank. Client
Orientation Programs are arranged at different branches for disseminating the concept
of Islamic economics and banking and to acquaint the clients with the operations of
Islamic Banking System.
35
2.1.5 Publicity and Public Relations
The Bank, since its birth, has been relentlessly working to project and promote the
ideals of Islam in the fields of economics and banking and to reach the people of all
walks of life and bring home to them the concept of Islamic banking. Thus, it has been
able to create a favorable image about Islamic Banking among the people. The Bank
releases advertisements through Radio, Television and News paper to make urban and
rural masses aware of the ever growing concept, modes of operation, Schemes and
services of the Bank and to focus on its progress and motivate traders, businessmen
and industrialists to establish and broaden their business links with the Bank. To
promote healthy growth of art and literature in the country, literary magazines are
patronized. Attractive multicolor posters are also being published for depicting the
aims and objectives of people oriented special investment Schemes of the Bank.
2.1.6 SWOT Analysis of IBBL
On the basis of banking scenario in home and abroad and considering IBBL's
performance, strengths & weaknesses of IBBL and opportunities & threats for IBBL
can be identified as below –
STRENGTHS
i) Islamic Image.
ii) High reputation in home & abroad.
iii) Largest branch network among Private Banks.
iv) Adequate Capital base.
v) No provision shortfall
vi) Strong and stable deposit base.
vii) Diversified investment base.
viii) Negligible insider investment
ix) Gradual increase of market share of business.
x) Product innovation.
xi) Acknowledged market leader.
xii) Expanding social services
xiii) Dedicated policymaking body.
xiv) Visionary and diehard professional leadership.
xv) Training & Research facilities.
xvi) Competitive cost advantages
xvii) Pricing effectiveness
xviii) Distribution effectiveness.
xix) Cash flow.
xx) Honesty/Honest & dedicated employees.
Xxi) Having shariah board.
36
WEAKNESS
i) Slow and delayed customer service.
ii) Growing number of incidence of fraud and forgery.
iii) Deterioration of assets quality in some areas.
iv) Inadequate computerisation.
v) Lack of dynamic, specialised and experienced manpower at different levels.
vi) Absence of shariah compatible and good investment opportunities.
vii) Lengthy operational procedures.
viii) Lesser volume of cost free fund
ix) Lesser volume of ancillary income.
x) Inadequate clients motivation.
xi) Less advertising/promotional campaign
xii) Non-ability to produce on time.
xiii) Under manpower
xiv) Poor working environment/House keeping.
xv) Absence of dealing room operation.
xvi) Surplus liquidity.
xvii) No-job Rotation
xviii) Lackings in quality Investment.
xix) Doing business within traditional sectors.
xx) Small/Narrow product line.
xxi) Limitation of Shariah in introducing some operations like forward Booking.
xxii) Absence of Mudaraba and Musharaka Investment.
xxiii) Salary structure is less.
OPPORTUNITIES
i) Introduction of new deposit, investment and service products.
Ii) Vast untapped market.
Iii) Expanding banking operations by forming subsidiaries.
iv) Scope of establishing branch network home and abroad.
v) Leadership in islamisation of banking in the country.
vi) Serving additional customer groups.
vii) Expanding product line to meet broader range of customer needs.
viii) Diversifying into related products.
ix) We are operating in a Muslim Country.
x) Falling trade barriers in attractive foreign markets.
xi) To enhance Market Share.
37
THREATS
i) Non-performaing investment.
ii) Deterioration (in some cases of morale standard of the employees.
iii) Arrival of competitors in the market.
iv) Unethical banking practices in the banking community.
v) Unislamic banking practices by the so-called competitors.
vi) Better working environment of the competitors.
vii) Adverse change in the policy.
viii) Lack of guidelines/supports from central bank for Islamic Banking.
ix) Absence of Islamic Money Market.
x) General dishonesty/fund diversifying nature of customers/investment clients.
xi) Changing client/buyer needs.
xii) Growing bargaining power of customers & suppliers.
xiii) Growing financial institutions other than banks with substitute products.
xiv) Slower market growth.
xv) Adverse shifts in foreign exchange rates and trade policies of foreign governments.
xvi) Entry of lower cost competitors.
xvii) Internationalization of industry.
xviii) Political instability.
xix) Inadequate knowledge of Islamic banking
XX) System among common people.
2.1.7 Deposit Schemes of IBBL
Islami Bank gives special importance on savings. The objectives and principles of
savings policy of the bank are:
 To encourage people to save for self and for the country as a whole.
 To develop a sustained savings habit among the people.
 To mobilize deposits through the operation of following accounts:
1.
Al-Wadeeah
It is one of the Islamic Principles based on which transactions of economic & noneconomic natures are performed. The root word of Al-Wadeeah is 'Wada' which means
to keep some thing with somebody with trust with the permission of use. The word AlWadeeah denotes the thing or fund kept with some persons.
The word 'Amanah' has also the similar meaning that is commonly used but there is a
distinct difference between Al-Wadeeah and Al-Amanah. In Al-wadeeah principle, the
person receiving the thing or fund can use it with the permission of the giver, and if it
is a fungible type of items (that which is consumed in one use) return a similar type of
things on demand to the giver. On the Other hand, in Amanah, the very thing, goods or
fund are required to be returned and there is no permission of using the same.
38
Al-wadeeah Deposit Accounts are as under:
a)
Current Account
b)
Non-Resident Taka Account
c)
Convertible Taka Account
d)
Foreign Currency Deposit Account
e)
Other Accounts
i)
Sundry Deposit Account
ii)
Drafts Payable Account
iii)
Payment Order Payable Account
iv)
Profit Payable Account
v)
TT payable Account.
2. Al-Mudaraba
It is one of the important modes of investment and business in the Islamic Shariah.
Rather, it is a mode towards which the Islamic Banks all over the world have set their
goal to arrive at.
Mudaraba is the name of the business or enterprise done under a contract between two
parties one of them provides funds and the other provides labour.
The party who is financing is known as Sahib-al-Maal and the one who uses the fund
is known as Mudarib. The result of the enterprise, if it is profit, is shared as per ratio
agreed upon previously in the contract; if it is loss, it is entirely borne by the fund
giver. The financer has no scope of taking part in the operational aspect of business.
However, if the loss is incurred due to the inefficiency or negligence of the Mudarib,
the loss will have to be shared by him.
Since there is no element of interest in this transaction and only the result is shared, it
is termed as one of the ideal modes of investment in Islamic Shariah. Al-Mudaraba
Accounts are given below: a)
Savings Account
b)
Savings Bond
c)
Hajj savings Account
d)
Special Savings (Pension Scheme) Account
e)
Term Deposits Account
f)
Special Notice Deposit Account.
Features of Various Deposit Schemes:
1.
Al-Wadeeah
a)
Current Account
i)
Current Account can be opened by firms, companies and individuals etc. with a
minimum balance of Taka 500/- only.
39
ii)
iii)
iv)
b)
i)
Current A/c can be operated by cheque.
No profit is paid on Current A/c
Statement of A/c is provided monthly to the A/c holder.
Non-Resident Taka Account
Non-Resident Taka Account can be opened by overseas banks and
correspondents.
ii)
This account may be opened with initial deposit sent from abroad in a freely
convertible currency.
c)
Convertible Taka Account
i)
Convertible Taka Account may be opened in the names of foreign
organisations/nationals viz diplomatic missions, U.N. organisations etc.
ii)
These accounts may be credited with foreign currency brought in or remitted
from abroad or transferred from a Foreign Currency account or any other Non
Resident Taka Account.
d)
Foreign Currency Deposit Account
i)
Foreign Currency Deposit Accounts may be opened in the names of
Bangladeshi nationals residing abroad, foreign nationals residing abroad or in
Bangladesh and also foreign firms, foreign missions and their expatriate
employees.
ii)
Payments outside the country may be made freely from this account to the
extent of balances lying therein.
iii)
No Payment in foreign exchange may be made to or on behalf of any resident in
Bangladesh out of the foreign currency account.
e)
Other Accounts
Other Accounts include the following:
i)
Sundry Deposit Account
ii)
Drafts Payable Account
iii)
Payment Order Payable Account
iv)
Profit Payable Account
v)
TT payable Account.
2.
a)
i)
ii)
iii)
iv)
b)
i)
Al-Mudaraba
Savings Account
Savings Account can be opened in the name of individuals singly & jointly,
educational institutions, clubs, Associations and socio-economic institutions.
A minimum balance of Taka 1000.00 is required for opening the Account.
Account can be operated by cheque.
75% weightage is given to savings account holder for sharing profit.
Savings Bond
Savings Bond can be purchased by individual aged 18 years and above,
educational institutions, clubs, associations and other socio-economic
institutions.
40
ii)
iii)
iv)
8 years and 5 years term Bonds are available.
Taka 5000, Taka 10,000, Taka 25,000, Taka 50,000, Taka 1,00,000 Taka
5,00,000 denominated Bonds are issued.
125% and 110% weightages are assigned to saving Bond of 8 years and 5 years
respectively.
c)
i)
ii)
iii)
Hajj Savings Account
Hajj Savings Account can be opened only in the name of individuals.
The period of deposit is 1 year to 25 years
110% weightage is given to Hajj savings Account.
d)
i)
Special Savings (Pension Scheme) Account
Persons of 18 years and above can open special savings (Pension Scheme) A/c
either for 5 years or 10 years duration.
Monthly installment ranges from Taka 100 to Taka 1000 per month.
130% weightage is assigned to 10 years deposit and 110% to 5 years deposit.
ii)
iii)
e)
i)
ii)
Term Deposits Account
Deposits under the above scheme can be made for 3,6,12,24 & 36 months at a
multiple of Taka 1000 and above by an individual, clubs, societies etc.
The following weightages are assigned to Term depositors:
36 Months
24 " 12
"
6
"
3
"
98%
-
100%
Weightage
"
96%
92%
88%
"
"
"
f)
Special Notice Deposit Account
i)
ii)
ii)
Special Notice Deposit A/c can be opened by firms, Companies, Societies etc.
Deposits are withdrawable by cheque giving prior notice.
55% weightage has been assigned to Short Notice Deposit.
2.1.7 Investment Schemes of IBBL
The special feature of the investment policy of the Bank is to invest on the basis of
Profit-Loss Sharing System in accordance with the tents and principles of Islamic
Shariah. Earning profit is not the only motive and objective of the Banks investment
policy rather, emphasis is given in attaining social welfare and in creating employment
opportunities. The principles of investment operations of the Bank are:
41
 To invest fund strictly in accordance with the principles of Shariah.
 To diversify its investment portfolio by size of investment, by sector of investment,





viz industrial, commercial, agricultural and by geographical area.
To ensure mutual benefit-both for the Bank and the investment client - by
professional appraisal of investment proposals, judicious sanction of investment,
close and constant supervision and monitoring thereof.
To make investment keeping the socio-economic requirement of the country in
view.
To increase the number of potential investors by making participatory and
productive investment.
To finance various development schemes for poverty alleviation, income and
employment generation with a view to accelerating sustainable socio-economic
growth and upliftment of the society.
To invest in the form of goods and commodities rather than giving out cash money
to the investment clients.
 To encourage social upliftment enterprises.
 To shun even high profitable investment in fields forbidden under Islamic Shariah
and are harmful for the society.
The Bank extends investments under the principles of following modes of
Investment:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Bai - Murabaha
Bai - Muazzal
Hire-Purchase
Musharaka
Mudaraba
Ijrara
Bai-Salam
Ishtisna
Quard
Welfare-oriented Investment Schemes:
a)
Small Transport Investment Scheme
b)
Transport Investment Scheme
c)
Doctors Investment Scheme
d)
Small Business Investment Scheme
e)
Agriculture Investment Scheme
f)
Poultry Investment Scheme
g)
House hold Durables Investment Scheme
h)
Housing Investment Scheme
i)
Rural Development Scheme
42
Features of Various Investment Schemes: 1. Bai-Murabaha:
It is a contract in which a client wishing to purchase raw materials finished goods,
commodities, spares, machinery equipments or any other goods request the Bank to
procure the items and sell them to him at cost plus a declared profit payable at the time
of taking delivery of the goods.
Important features:
*
Cost of the goods sold and the amount of profit added herewith should be made
known to the client.
*
Bank procures and stores the goods, in its own or hired godown.
*
Delivery of the goods to the clients is made only against payment of cost plus
profit either at a time or in installments as agreed upon.
*
On expiry of the stipulated period, bank can charge compensation and dispose
of the goods at its own discretion.
*
Examine shariah permissibility of the items. Reject proposal outright if not
permitted by Shariah.
2. Baimuazzal (Deferred Sale):
It is a contract in which a client wishing to purchase raw materials, finished goods,
commodities, spares, machines, equipments or any other goods request the Bank to
procure the items and sell them to him at a price payable at a future date in lumpsum
or in installments.
*
It is a credit sale. The bank transfers ownership and possession of the goods to
the clients before receipt of sale price.
*
Sale price of the goods is payable by the client at a specified future date.
3. Hire Purchase:
It is a contract under which the Bank invests in equipment, machinery, transport or
other durable articles for the clients against an agreed rental together with on
undertaking from the clients to make full payment of price to the Bank of periodical
installment for the purpose of essential purchase of the concerned rented article.
*
Bank retains ownership of the asset and is entitled to receive agreed rental unit
full payment of purchase price thereof by the client is meant up.
*
Possession of the asset is passed on to the client for his exclusive use. Bank as
the owner and the client as the hirer.
*
In case of Hire Purchase, the hire acquires ownership of the asset on full
payment of agreed value but in case of leasing operations, ownership of asset is
not transferred to the lessee.
43
5. Musharaka:
Musharaka (Partnership) is another type of financing utilized by Islamic Banks. In this
form of financing, two or more financiers provide the finance for a project. All the
partners are entitled to a share in the total profits of the project according to a ratio that
has been mutually agreed upon. However, any losses are to be shared exactly in
proportion to the capital contributed. All the partners have a right to participate in the
management of the project. However, they may also waive this right in favor of any
specific partner.
6. Mudaraba:
Mudaraba is a deed on the basis of which an agreement is signed between a Bank and
a person (Real person or a legal entity) in order to enter into a commercial (Purchase
and a sale of goods) investment and jobbing transaction. In this kind of agreement, the
bank, as the owner, acts as the supplier of the necessary cash and the other party as the
mudarib or amel. Capital owner is the Saheb-E-Mal and capital user is called Mudarib.
All profits earned through the relevant transactions, shall be decided between the bank
and the amel. On the winding up of the job, the ratios for this dividend shall be those
initially agreed upon. The modern Islamic Bank is based on a framework that may be
called a triple Mudaraba. This is structured as follows:
The group of individuals who wish to invest their capital, i.e. the depositors of a bank.
The Mudarib to whom the individuals entrust their capital by contract i.e. the bank.
The entrepreneur, with whom the Mudarib signs a separate contract, passing to him the
capital which was originally entrusted to him by the investors.
Mudaraba transactions are allowed only where the purchase or sale of goods does not
involve any physical or chemical changes. Mudaraba can be classified on the basis of
business nature into 3 types such as:
i)
Domestic Trading Mudaraba: When purchases and sales are performed only
within the country, it is known as Domestic Trading Mudaraba.
ii)
Import Mudaraba: When goods are imported from abroad and sold in the
country it is known as Import Mudaraba.
iii)
Export Mudaraba: If Mudaraba is conducted for exportation of goods to
foreign countries, it is known as Export Mudaraba.
The bank may make insurance one of the conditions for the grant of facilities.
Duration of the Mudaraba shall be the date of signing of the agreement. In the case of
Import Mudaraba on the basis of the credits or sight / time drafts it should not be later
than the date of opening of the Letter of Credit and it should be noted that the date of
drawing on the funds of the documents from the bank accounts by the correspondent
are not be considered the basis for the duration of the Mudaraba. In Mudaraba
Transaction, the bank shall supervise the utilization of the capital, its return as well as
the operation processes involved. In this respect the amel is under obligation to
maintain all documentation and sale or purchase of the goods.
44
The amel has no right, without the agreement of the bank, to sale goods, relating to the
Mudaraba on credit. If any loss incurs in the project, in that case the capital owner of
the project will share loss in full. The Mudarib was in no way liable for such losses.
His only commitment was his time and effort.
Mudaraba are two types: i)
Mudaraba Mutlak
ii)
Mudaraba Mukkaida
i)
ii)
Mudaraba Mutlak : Here the complete freedom given to the Mudarib i.e. He
will do the business in any place of any goods (permisible to Shariah). Here is
the Mudarib is quite free from restrictions.
Mudaraba Mukkaida : Here the business area, place, Specification of goods,
style of business, Time gape of business, number of partners etc. fixed by the
agreement of Mudaraba Mukkaida. Here the complete freedom not given to the
Mudarib. Mudarib will do the business with the instruction of shaheb-E-Mal.
The complete freedom given to the Mudarib from any liability for capital in the event
of loss and the disjunction between the owner of the capital and the third parties
involved constitutes the distinctive characteristic of the Mudaraba.
6. Ijara (Leasing)
Islamic leasing is not unlike its western counterpart. Islamic banks use this mode to
finance capital goods to industry, charging a fixed rental with the repayment installments.
Ijara wa iqtina is a leasing method ending with the client owning the goods leased.
7. Bai-Salam or Bai-Salaf:
This is a system of agricultural finance whereby small farmers are provided with their
daily needs during the season and sometimes with cash for agricultural operations. It is,
however, open to abuse and does not reward the farmer so has not so far been used by
Islamic banks.
The product is delivered at a future date for a price paid in advance. Muslim jurists have
laid down several important conditions for this procedure:
a. The price agreed for the product should be paid in full in cash at the time of the
contract. In this way, the total risk is borne by the financier. This is meant to avoid the
unfair practice, known as shail, where financiers pay low installments throughout the
season in order to ensure their profits and hedge against failure of delivery. Without this
condition, the jurists are agreed that the salam contract is null and void.
b. Delivery of the goods must be postponed for a fixed time. If the contract were used to
acquire the goods immediately, it would, in fact, be a trick to get them at a reduced price.
c. The goods must be of a type that is commonly available at the time fixed for delivery.
45
This ensures that the financier does not carry unnecessary risk and enables the farmer to
obtain the product from another source if need be. The contract must specify clearly the
kind and quality of goods to be delivered.
This modality would seem to be a fair way of providing forward financing for small-and
medium-range farmers.
8. "Istishna" Mode of Investment
The word "Ishtishna" has derived from SANA-AA. Which means manufacturing and
construction?

Value/Price is to be paid before delivery of goods.

Both delivery and price may be deferred as per HANAFI School of thought.

Risk and conversion both are permitted.

Goods may be fungible or non-fungible.
9. Quard-e-Hasana (Profit Free Loans):
Most Islamic banks also provide profit free loans (Quard-E-Hasana) to their customers.
However, practice differs in this respect. Some banks provide the privilege of profit free
loans to the holder of investment account at the bank. Other banks provide profit free
loans to needy students and the economically weaker sections of society. Yet others
provide profit-free loans to small producers, farmers and entrepreneurs who are not
qualified to receive financing from other sources. The purpose of these profit-free loans is
to help them to become independent or to raise their incomes and standard of living.
Second-helping to increase production with due emphasis on agricultural, livestock, and
industrial production.
10. Welfare-Oriented Investment Schemes of IBBL
The Bank, since its inception, has been working for the upliftment and emancipation of
the under privileged, down trodden and neglected sections of the populace and has taken
up various schemes for their well being. The objectives of these Schemes are to raise the
standard of living of low-income group, development of human resources and creation of
avenues for self employment.
a. Small Transport Investment Scheme
Under the scheme, the Bank's providing Babytaxi, Tempo and Mishuk (a locally
produced three-wheeler auto transport) to the educated youths for their self employment
and to replace the traditional slow-moving transport system of the metropolis. Such
employment, it is hoped, will invigorate the moral fibre of the society. Present member of
clients under the scheme is 221, amount disbursed in Taka 10 million.
b) Transport Investment Scheme
To ease the existing transportation problem and ensure speedy economic growth and
development of the country, particularly the expansion of trade, commerce and industry,
the Bank has taken up this scheme. Under this scheme, investment is being allowed to the
46
existing successful businessmen and potential entrepreneurs in this sector for all types of
road and water transport like bus, mini-bus, truck, launch, cargo-vessel, transport for rent
a car service and babytaxi, tempo, pick-up van for self-employment and ambulance for
clinic & hospital.
The Bank is also extending investment facilities to multinational companies, established
business houses and well to do officials and professionals for acquisition of private cars,
micro-bus and jeeps. Number of clients under the scheme is 1802 and amount disbursed
Taka 990 million.
c) Doctors Investment Scheme
The Bank has taken up this scheme to help un-employed qualified doctors to go for selfemployment and to provide the latest medical equipments to specialist doctors to extend
modern medicare facilities throughout the country. Amount disbursed under the scheme
is Taka 50 million and number of clients is 52.
d) Small Business Investment Scheme
This scheme has been taken up for self-employment of educated unemployed youths of
rural and urban areas and to provide investment to small businessmen and entrepreneurs.
Investment is extended for about 200 economic activities in sectors as live-stock, fishery,
agro-farming, processing and business, manufacturing, trading/shopkeeping,
transportation, agricultural implements, forestry and service viz. laundry, signboard
painting etc. Under this scheme small businessmen and entrepreneurs are given
investment upto Taka 30 thousand without any collateral and upto Taka 50 thousand on
easy terms and conditions. Taka 440 million has so far been disbursed under the scheme
and number of clients is 10107.
e) Agriculture Implements Investment Scheme
In keeping with the people-oriented and welfare objectives of the Bank, this scheme has
been introduced to provide power tillers, power pumps, shallow tubewells, thrasher
machines etc. on easy terms to unemployed rural youths for self-employment and to the
farmers to help augment production in agricultural sector. Number of clients in this sector
is 701 and amount disbursed is Taka 20 million.
d) Poultry Investment Scheme
To create opportunities for self-employment of educated youths and small entrepreneurs
and to meet the country's growing demand of protein food like chicken, eggs etc. this
scheme has been introduced. Number of clients in this scheme is 2 and investment
disbursed is Taka 1 million.
47
e) Household Durables Investment Scheme
The objective of the scheme is to increase standard of living and quality of life of the
fixed income group by extending them investment facilities to purchase household
articles such as furniture, electric and electronic equipments like television, refrigerator,
gas cooker etc. Number of clients under this scheme is 58741, amount disbursed is Taka
1590 million.
f) Housing Investment Scheme
The Bank has introduced this scheme recently to ease the serious housing problem in the
urban areas and to make arrangement for comfortable accommodation of the fixed
income group. Number of clients here is 117 and amount disbursed is Taka 130 million.
g) Rural Development Scheme
Bangladesh is predominantly an agricultural country with vast majority living in rural
areas. More than 50% of the rural people live under the poverty line, Seasonal
unemployment and underemployment is so acute that many people remain idle and
without job in most of the time of the year. As a result, people in large number are
migrating to urban areas, particularly in metropolis in search of employment thereby
creating social and environmental hazards. Islami Bank has, therefore, taken up a scheme
to reactivate the rural economy and develop model villages through integrated approach.
The objective of the scheme is to create income generating and productive selfemployment opportunities through extension of investment for the development of rural
areas and thereby contribute in alleviating rural poverty.
The scheme has, by now, been introduced in 38 districts through 52 branches of the Bank
which will gradually be extended throughout the country. Investment under this scheme
is allowed for the purpose of, amongst others, production of 21 types of main crops viz.
food, cereals and cash crops, off farm activities like dairy, beef fattening, goat rearing,
poultry, shop keeping, peddling etc. Rural transport like rickshaw, rickshaw van, cart etc.
irrigation equipment, hand tubewell housing materials, in all cover about 343 types of
economic activities. Under the scheme the IBBL has so far provided investment of Tk.90
million to 14123 clients. Islami Bank Foundation, a subsidiary of the Bank, engaged in
social welfare activities shall, side by side, take care of the requirement of sanitation,
medicare and education of the village through integrated area development approach
under Islamic model. The Rural Development Scheme is operating very successfully. The
recovery rate under the scheme is 99%.The Rural Development Scheme of IBBL is a
very popular investments scheme. This scheme is so competitive that the NGOs
providing micro credit on traditional interest system find in difficult to continue their
activities in the areas where IBBL's Scheme is functioning.
48
2.1.8 Foreign Exchange Business
Foreign Exchange deals with foreign trade and foreign remittance. Foreign trade is
Import and Export. Foreign remittance is inward remittance and outward remittance.
Islami Bank is doing Import, Export and Remittance business with satisfactory
performance. The achievement of Islami Bank in the area of foreign exchange business
has been quite phenomenal. The Bank has been providing services to import and export
trade and for repatriation of hard-earned foreign exchange of Bangladeshis living and
working abroad.To handle foreign exchange business effectively and efficiently. The
Bank developed a wide network of correspondents throughout the world.
2.1.9 Achievements of IBBL
The IBBL has many successful stories of achievements. These are summarized below:
1.
IBBL is the pioneer institution for introduction of Islamic Banking in
Bangladesh.
2.
The success of IBBL has imbibed other sponsors at home and abroad to
establish Islamic Banking in Bangladesh. Three national, one international
Islamic banks have been established in the country. A private sector traditional
bank has also established two full fledged Islamic Banking branches. Several
other existing and proposed traditional banks have also expressed their intention
to introduce Islamic Banking.
3.
IBBL has successfully mobilised deposits from a section of people who hither
to before did not make any deposit with interest based banks.
4.
The Islamic Banking products which are offered by IBBL through its 107
branches located at important centres all over the country and spontaneous
acceptance of those products by the people proves the superiority of Islamic
Banking.
5.
IBBL's market share of deposit investment and ancillary business is steadily
increasing.
6.
IBBL, though still a tiny bank, handles more than 10% of country's export and
import trade.
7.
Among the contemporary commercial Banks IBBL's position is first in respect
of mobilisation of deposit, deployment of fund and earning profit.
8.
Investment in industrial sector occupies 52% of IBBL's investment portfolio.
This is a unique example of industrial finance by a commercial Bank.
9.
More than 105000 workers are employed in the industrial projects financed by
IBBL. IBBL has thus made significant contribution to solving unemployment
problem of the country.
10.
Dhaka,the capital of Bangladesh being a Mega city-has acute transport problem.
IBBL has joined hands with an enterprising group to introduce a fleet of
Premium Bus Service which has attracted the attention of all section of the
people and mitigated transportation problem of the city to some extent.
11.
IBBL has introduced several other welfare oriented investment schemes, such
as Small Transport Investment Scheme, Small Business Investment Scheme,
49
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Agriculture Implements Investment Scheme, Poultry Investment Scheme,
Household Durable Investment Scheme, Housing Investment Scheme etc.
IBBL launched a Rural Development Scheme for providing finance to down
trodden section of the populace - an area where no other Commercial Bank has
extended any finance. IBBL's mission is to reach to all 68000 villages of the
country as early as possible.
IBBL has contributed 850 million Taka as income tax to the Government
Exchequer on its net profit over the last fifteen years.
At the initiative and drive of IBBL, several universities in Bangladesh have
introduced courses on Islamic Banking and Finance.
IBBL has organized a good number of national and international Seminars on
Islamic Banking and Economics. Importantly, IBBL sponsored a Seminar at
Dhaka with a view to forming an Islamic Common Market.
IBBL has been continuously pursuing the Government to allow formation of
Islamic Insurance Company. It has been learnt that the Government is
contemplating to grant license for establishing an Islamic Insurance Company
in the near future.
IBBL has earned reputation in the country as a corruption free institution.
IBBL is held in high esteem in the banking circle as a good managed bank.
Under the leadership of IBBL, Bangladesh Association of Banks (BAB) has
been formed. This is a platform to ventilate the stand-points on banking issues
of the private sector banks.
IBBL has taken initiative to form an Association of Islamic Banks in
Bangladesh for furtherance of the causes of Islamic Banking.
IBBL has established a foundation called Islami Bank Foundation for carrying
out social welfare activities. The foundation has taken up a number of schemes
covering the whole of Bangladesh. A sum of Taka 260 million has so far been
spent in social welfare activities.
As one of the leading non-government voluntary organizations of the country, the
Foundation is working with unique and special programs for the welfare of distressed
humanity and to make poor, down trodden, landless and assetless people self-reliant. The
aims and objectives of the Foundation are to serve the distressed humanity, promote
people oriented mass education, extend health and medicare facilities to the poverty
stricken people in urban and rural areas, create facilities for productive self-employment
and develop human resources for improving economic condition and quality of life, assist
healthy growth of art, culture and literature, science and technology, sports, research and
propagation of Islamic teachings. The foundation has taken up a number of schemes
covering the whole of Bangladesh. Some important Schemes of the Foundation are: -
50
1. Income Generating Scheme
The objective of this scheme is to encourage unemployed youths in nation building
activities and to make them self-reliant. This scheme has been taken up to train rural
health workers and to fund poultry, pisciculture, cottage industry, small trading, in
addition to providing rickshaws, sewing machines etc. for income and employment
generation.
2. Educational Scheme
Scholarship & stipend are awarded to the poor and meritorious students under this
scheme.
3. Health Scheme
This scheme has been taken up to establish child and maternity centres, charitable
dispensaries, provide grants for medical treatment of the poor install tube-wells for the
supply of pure drinking water and build sanitary latrines in order to fulfil health needs
of the rural people.
5. Humanitarian Assistance
Humanitarian Assistance are provided to the poor, disabled persons, families affected
by river erosion and for marriage of poor girls.
6. Emergency Relief Operations
Financial assistance to the people affected by natural calamities is provided under this
scheme.
7. Service Center
The Foundation has been establishing permanent service centres in coastal areas and
off-shore islands to be used for the purpose of integrated social development as well as
safe shelter during natural disaster.
8. HRD Programme
Under HRD programme, the foundation has established several Technical Training
Centres for imparting vocational training and kindergarten Schools. Projects like
mosque based income generating centres and prisoner rehabilitation projects are
expected to be established in the near future.
9. Assistance to Mosque
Financial assistance for construction, extension and renovation of mosques are
provided under this scheme.
10. Dawa Programme
Islamic Research magazines and other Islamic Literatures are distributed under this
programme among academicians, journalists, judges, Lawyers, high officials, bankers,
litterateurs, and important libraries and institutions of the country.
51
11. Sales Centre
Foundation has established sales centres to encourage poor women folk for selfemployment and for marketing home made garments, handicrafts and other items
produced by them.
12. Islami Bank Hospital
The Foundation has set up hospitals for providing modern medical treatment to all
sections of the people at reasonable cost. By now, the Islami Bank Hospitals have
earned good reputation in the society.
National and international ratings of IBBL
IBBL's past performances have been evaluated by Bangladesh Bank, several credit
rating agencies home & abroad and by the local press.
International Press
“In the midst of a difficult Banking system known to be plagued by high nonperforming loans (NPLs), one could easily conclude that it would be difficult to find a
bank that is different from norm. However, IBBL provides a refreshing change and is,
thus, a pleasant surprise. Although it does not command the market share as the 4
public sector banks, IBBL, which claims to have little interference in lending from the
government, has nonetheless, managed to find a niche market of its own-says the
‘BANK ATCH’ a New York based international Credit Rating Agency in its January
30, 1998 issue. “As a market leader offering banking services based on the Islamic rule
of Shariah, IBBL's profitability trend has been quite impressive. The Bank's ability to
keep its return on asset (ROA) well above the industry's average reflected its resilience
to possible shocks in the banking system. Concerns over massive NPLs and under
provisioning are common amongst local banks. But this seems well resolved in IBBL.
IBBL's good performance and solid capital base have indeed provided refreshing
change found within a banking system saddled and held back by huge NPLs” the
above agency continued to comment in the same issue.
National Press
“It is one of a few local banks according to CAMELS (Capital, Assets, Management,
Earnings, Liquidity & Sensitivity) rating made by the Bangladesh Bank. It holds the
highest amount of liquidity among all banks and its ability to keep return on assets at
1.07 percent is well above the banking sector's average of 0.33 percent”- The Financial
Express, Dhaka commented in its issue of May 28,1998.
“The Holiday” in its 29th August, 1997 issue carried out a report under the heading
“Setting a precedence of sound banking” and commented “While the country's
banking system is burdened with bad debt portfolios and also suffers from a liquidity
52
shortage, the Islami Bank Bangladesh Ltd. (IBBL) has created a unique precedence by
improving its reserve and deposit positions substantially, making handsome profits,
and offering attractive dividends to its share holders and depositors.”
IBBL's World rating
As per Bankers' Almanac (January 2001 edition) published by the Reed Business
Information, Windsor Court, England, IBBL's world Rank is 1771 among 3000 banks
selected by them. This position was 1902 among 4500 selected banks as on January
1999 edition. IBBL's country Rank is 5 among 39 banks as per ratings made by the
above Almanac on the basis of IBBL's Financial Statements of the year 2001.
Award and Prizes: International & National Perspective:
IBBL was awarded for several times by international & national organisations. The Global
Finance, a reputed London based quarterly magazine, awarded IBBL as the best bank of the
country for the year 1999 and 2000. IBBL has got the 2nd prize of National Export Fair for its
pavilion of Service Organisation in 1985.
2.1.10 Constraints and Prospects of Islamic Banking System in Bangladesh
2.10.a Legal and practical Constraints being faced by Islamic Banks in Bangladesh
Despite tremendous popular support, spectacular success in terms of mobilisation of
deposit and distribution of profit, Islamic Banking in Bangladesh is yet to achieve the
desired level of success due to the absence of appropriate legal framework for carrying
out Islamic banking operations in the country. All the government approved securities
in Bangladesh are interest-bearing. Besides, Islamic Money Market in Bangladesh is
yet to be developed. As a result, the Islamic banks, which are committed to avoid
interest, cannot invest the permissible part of their statutory liquidity reserve and short
term liquidity surplus in those securities.
There are other problems, such as (a) Shortage of professional conversants with Islamic Banking;
(b) Lack of familiarity with the Islamic products by the International Financial and
non-financial sector.
(c) Severe competition in the financial sector;
(d) Economic slow down and political situation of the Country;
(e) Inadequate track record of Islamic Banking.
(f) Absence of infrastructure for Islamic trade financing.
(g) Income tax laws and structure are not conductive to Musharaka Mode of
Financing.
(h) The existing process of investment recovery laws are lengthy and cumbersome
and also not appropriate for recovery of investments made under Islamic modes.
In spite of the present limitations. Islamic banking system has tremendous potentiality
and good prospect in Bangladesh. Firstly, the successful launching and operation of
Islamic banks in Bangladesh has established the fact that banking without interest and
the launching of Islamic Money Market in the country are feasible. Secondly, Islamic
53
banks have brought together many depositors and entrepreneurs under their fold and
coverage. These depositors and entrepreneurs so long avoided interest-based banking
on grounds of religious injunctions.
2.10.b Prospects of Islamic Banking in Bangladesh
Despite the above problems and shortcomings the Islamic Banks have the following
further good prospects to grow:
a)
Islamic bank investment portfolio can be diversified and extended for long term
financing under Musharaka and Mudaraba.
b)
The clients of the Islamic Bank may be equipped with knowledge of Islamic
banking through seminars and symposiams.
c)
Islamic banks can develop unanimous Shariah Manual or guide lines for day-today consultation and clientele motivation.
d)
Islamic Banks can expand their network in the rural areas of Bangladesh.
e)
The research and development (R&D) for Islamic Economics, Banking and
Finance can be geared up.
f)
Co-operation among Islamic Banks can be extended throughout the world.
g)
Muslim countries, who have established Islamic Banks, if involve with
international trade on Islamic principles, that would contribute to grow
international transactions under interest-free system. This will further help
developing an Islamic Common Market.
h)
The Central Banks of the Muslim Countries can help creation of environment
for Islamic Banking with more responsibilities.
i)
Uniform accounting systems and standards can be developed for providing
consistency in accounting treatment of various operations and products of
Islamic Banks.
j)
New and innovative products can be designed for financing on profit and loss
sharing basis.
2.10.c Global Scenario of Islamic Banking in the 21st Century
To face the challenges of the 21st century, necessary preparation is being taken from
every corner of economics with the progressive forces. Judging from the progress of
Islamic economics thus far, it is seemed that we could not develop a complete system of
Islamic Economics that could be considered as a viable or better alternative to the
prevailing system. Because the 21st century is not going to provide us a similar economic
environment anymore. With the complete implementation of the World Trade
Organisation (WTO) in the year 2003. In efficiencies and low productivity of the Islamic
financial institutions will certainly jeopardies their success. Though the theme of Islamic
economics is ancient. But its gradual development is found very lately. So, it has various
lackings and problems for its development.
54
The following are main problems facing regularly:
a) Necessary Islamic Economist is not available:
Islamic economist requires knowledge of "Shariah" and mastering Arabic. However,
Shariah is a discipline in its own right that is not easy to be master by economists,
especially for those who do not speak Arabic. Mixing both economics and Shariah seems
to be required for Islamic economics to make measurable advances in the 21st century.
Number of Surah economist is very small.
b) Shortage of Islamic financial Institutions :
Sufficient Islamic Financial Institutions has not yet been established to face the future
competition in the 21st century.
c) Un-Islamic Central Bank:
In most muslim countries, Central Bank is not islamic. Under un-Islamic Central Bank,
an Islamic Bank and other financial institutions cannot run smoothly.
d) Un-Islamic Government:
In most muslim countries, Government is un-Islamic. So, their administrative, legal,
social, political system and financial policy is not favourable to establish of Islamic
economics. In this situation, Islamic Financial Institutions have to face a lot of obstacles.
e) Information Technology:
There is another domineering factor that will overwhelm us in the 21st century namely
information age. We have noticed that knowledge-based economics is becoming more
and more fashionable, particularly in West. Yet not a single muslim country is at par with
any at there western nations thus, far either in terms of technological advancement, or in
terms of participation.
f) Shortage of efficient and skillful manpower:
Shortage of efficient and skillful manpower is one of the main obstacles to reach the
desired goal of Islamic Banking and other financial institutions.
2.1.11 Aims and Objectives:
1. To conduct interest-free banking.
2. To establish participatory banking instead of banking on debtor-creditor
relationship.
3. To invest on profit and risk sharing basis.
4. To accept deposits on Mudaraba & Al-Wadeah basis.
5. To establish a welfare-oriented banking system.
6. To extend co-operation to the poor, the helpless and the low-income group for
their economic upliftment.
7. To play a vital role in human development and employment generation.
55
8. To contribute towards balanced growth and development of the country through
investment operations particularly in the less developed areas.
9. To contribute in achieving the ultimate goal of Islamic economic system.
2.1.12 Corporate Information:
(As on 31st December 2006)
1. Date of Incorporation
:
13th March 1983
2. Inauguration of 1st Branch :
(Local office, Dhaka) 30th March 1983
3. Formal Inauguration
:
12th August 1983
4. Share of Capital
A. Local Shareholders
:
42.63%
B. Foreign Shareholders
:
57.37%
5. Authorized Capital
:
Tk.5,000.00 million
6. Paid-up Capital
:
Tk.3,456.00 million
7. Deposits
:
Tk.132,419.40 million
8. Investments (including investment in Shares) Tk.117,132.83 million
9. Foreign Exchange Business :
Tk.201,822.00 million
10. Number of Branches
:
186 (as on Dec '07)
11. Number of Shareholders :
20,960
12. Manpower
:
7,459
2.1.13 Functions:
1.
2.
3.
4.
5.
6.
The functions of Islami Bank Bangladesh Limited are as under:
To maintain all types of deposit accounts.
To make investment.
To conduct foreign exchange business.
To extend other banking services.
To conduct social welfare activities through Islami Bank Foundation.
2.1.14 Membership of Different Organization / Chamber:
Local:
1. Bangladesh Institution of Bank Management (BIBM)
2. The Institution of Bankers Bangladesh (IBB)
3. Bangladesh Association of Banks (BAB)
4. Bangladesh Foreign Exchange Dealers' Association (BAFEDA)
5. Central Shariah Board for Islamic Banks of Bangladesh
6. International Chamber of Commerce- Bangladesh
56
Foreign:
1. International Association of Islamic Banks (IAIB), Jeddah, K.S.A.
2. Accounting and Auditing Organizations for Islamic Financial Institutions
(AAOIFI), Manama, Bahrain.
3. General Council of Islamic Banks & Financial Institutions (GCIBFI), Manama,
Bahrain (IBBL is a member of its Executive Council)
4. Society for Worldwide Inter-bank Financial Telecommunication (SWIFT)
2.1.15 Paid-up Capital and Reserve:
The Authorized Capital of the Bank is Taka 5000.00 million and Paid-up capital is
Taka 3,456.00 million in 2006. The Paid-up Capital was Taka 67.50 million in 1983.
The Reserve Fund of the Bank has been increasing steadily. On 31st December 1983,
it was Taka 0.36 million and stood at
Taka 6551.23 million as on 31st December 2006.
Taka 5450.94 million as on 31st December 2005.
Taka 4329.92 million as on 31st December 2004.
Taka 3280.80 million as on 31st December 2003.
Taka 23852.07 million as on 31st December 2002.
Taka 1998.04 million as on 31st December 2001.
Taka 1759.65 million as on 31st December 2000.
Taka 1115.61 million as on 31st December 1999.
Taka 1011.84 million as on 31st December 1998.
Taka 930.17 million as on 31st December 1997.
Taka 759.39 million as on 31st December 1996.
Taka 535.08 million as on 31st December 1995.
Taka 303.57 million as on 31st December 1994.
2.1.16 Equity:
As per Capital Adequacy Policy prescribed by Bangladesh Bank, the Central Bank of
the Country, bank has maintained 9.11% Capital on its Risk-Weighted Assets against
which total equity of the Bank as on September 30, 2007 stood at Taka 12,135 million.
This was Taka 10,435.96 million in 2006, Taka 8,331.14 million in 2005, Taka
6,691.12 million in 2004, Taka 5,266.47 million in 2003, Taka 3,540.52 million in
2002, Taka 2,993.24 million in 2001,Taka 2,671.06 million in 2000, Taka 1,659.26
million in 1999, Taka 1,517.55 in 1998, Taka 1,429.86 million in 1997, Taka 1241.05
in 1996,Taka 813.09 million in 1995,Taka 420.06 million in 1993, Taka 537.35
million in 1994 and Taka 420.06 million in 1993.
57
2.1.17 Performance:
(Amount in Million Taka)
Particulars
2001
2002
2003
2004
2005
2006
Authorized Capital
1,000.00
1000.00
3000.00
3000.00
5000.00
5000.00
Paid-up Capital
640.00
640.00
1920.00
2304.00
2764.80
3456.00
Reserves Fund
1,998.04
2852.07
3280.37
4329.92
5450.94
6551.23
Total Equity
2,993.24
3540.51
5266.47
6691.12
8331.14
10435.96
Total Deposits
(Including bills
payable) Gross
41,640.94
56,246.37 70,552.65
88,452.18
108261
132814.00
Total Investments
(Including Inv in
Share) Gross
37,648.75
49,185.92 62,755.90
83,893.63
102145
123959.00
Import Business
25907.00
33,788.00 46,237.00
59,804.00
74,525.00
96870.00
Export Business
16082.00
16,673.00 21,738.00
29,192.00
36,169.00
21133.00
Remittance
9879.00
14,670.00 16,668.00
23,669.00
36,948.00
53819.00
Total Foreign
Exchange Business
51868.00
65,131.00 84,643.00 112,665.00
147,642.00
201822.00
Total Income
4,259.55
5,234.07
6,841.29
8262.73
10586.78
14038.30
Total Expenditure
3,683.43
4,240.02
6039.28
6419.74
8424.36
11129.63
Net Profit before Tax
576.12
994.05
802.01
1842.99
2162.42
2908.67
Payment to
Government (Income
Tax)
181.48
397.62
426.61
829.35
973.09
1490.12
Dividend
25%
25%
20%
(Stock)
20%
(Stock)
25%(Stock)
15% Cash
10% Bonus
Total Assets
(including Contra)
58,644.46
77,463.12 98,046.85 125,776.94
150959.66
188115.27
Total Assets
(Excluding Contra)
49,551.87
65,080.12 81,704.74
102149.28
122880.35
150252.82
Fixed Assets
1,276.89
2552.70
3067.90
3724.69
1725.53
2036.65
58
No. of deposit
account holder
1,355,053
16,51122
19,94266
22,91269
2705180
3207131
No. of investment
account holder
176,138
1,96295
22,3954
26,4863
297943
421751
Cumulative amount
of disbursement from
RDS
1323.87
2,029.67
2923.60
4216.77
6033.36
9303.12
Outstanding
Investment of RDS
371.1
432.1
570.9
789.97
1106.00
2242.00
RDS no. of A / C
holder
100,470
107,225
130,465
163,465
164116
295012
RDS no. of village
2,214
2875
3700
4230
4560
8057
Number of Foreign
Correspondents
815
830
840
850
860
870
Number of
Shareholders
9,917
10,747
14,196
15,892
17201
20960
Number of
Employees
3831
4249
4673
5306
6202
7459
Number of Branches
121
128
141
151
169
176
Book value per Share
( Taka)
3519
4205
2181
2257
3013
3019.66
Earning per Share
(Taka)
617
932
195.92
518.59
487.57
485.94
Market Value per
Share (Taka)
(Highest)
3,205.00
3656.00
2595.00
4833.00
5580.00
4749.00
Capital Adequacy
Ratio
9.24%
8.64%
9.43%
9.21%
9.44%
9.43%
(Note: One Million = Ten Lac)
59
2.2.0 Export Import Bank of Bangladesh Ltd.
2.2.1 Introduction
"Export Import Bank of Bangladesh Ltd." usually named as "EXIM Bank" is a
completely shariah based Islamic bank. All of its activities are being operated under
the norms of Islamic shariah. The bank was established as a traditional bank on the 3rd
of August in the year of 1999. Though it started its operation as a traditional bank, it
was converted to an Islamic bank on the 1st of July in the year of 2004. The bank has
got a dramatic change through this conversion.
2.2.2 Vision And Mission
Vision:
The gist of vision of Export Import Bank of Bangladesh Ltd. is “Together Towards
Tomorrow”. The bank believes in togetherness with its customers, in its march on the
road to growth and progress with services. To achieve the desired goal, there will be
pursuit of excellence at all stages with a climate of continuous improvement, because,
in Export Import Bank of Bangladesh Ltd., everybody believes the line of excellence
is never ending. Bank’s strategic plans and networking will strengthen its competitive
edge over others in rapidly changing competitive environments. Its personalized
quality services to the customers with the trend of constant improvement will be
cornerstone to achieve bank’s operational success.
Mission:
1. To be the most caring and customer friendly and service oriented bank.
2. To create a technology based most efficient banking environment for its
customers.
3. To ensure ethics and transparency in all levels.
4. To ensure sustainable growth and establish full value of the honorable
shareholders and
5. Above all, to add effective contribution to the national economy.
2.2.3 Achievement
It is a great success that by the grace of Almighty Allah, the bank have been migrated
at a time with all the branches from its conventional banking operation into shariah
based Islamic banking operation without any trouble. Lot of uncertainties and
adversities were there into this migration process. The officers and executives of the
bank motivated the valued customers by counseling and persuasion in light with the
spirit of Islam especially for the non-Muslim customers. IT division has done the
excellent job of converting and fitting the conventional business processes into the
processes based on shariah. It was possible by following a systematic procedure of
migration under the leadership of honorable Managing Director.
2.2.4 Corporate Culture
This bank is one of the most disciplined banks with a distinctive corporate culture.
The bank believes in shared meaning, shared understanding and shared sense making.
People can see and understand events, activities, objects and situation in a distinctive
60
way. They mould their manners individually to suit the purpose of the bank and the
needs of the customers who are of paramount importance to the bank. The people in
the bank see themselves as a tight knit team/family that believes in working together
for growth. The corporate culture the bank belongs has not been imposed; it has rather
been achieved through bank’s corporate conduct.
2.2.5 Social Commitment
The purpose of the banking business is, obviously, to earn profit, but the promoters
and the equity holders are aware of their commitment to the society to which they
belong. A chunk of the profit is kept aside and/or spent for socio-economic
development through trustee and in patronization of education, art, culture and sports
of the country. The bank wants to make a substantive contribution to the society where
it operates, to the extent of the separable resources.
2.2.6 Shariah board:
The Board of directors has formed a shariah supervisory board for the Bank. Their
duty is to monitor the bank’s transactional procedures, & assuring its shariah
compliancy. This board consists of some members headed by a Chairman.
The tasks of the shariah supervisor in summary is replying to queries of the bank’s
administration, staff members, shareholders, depositors, & customers, follow up with
the Shariah auditors and provide them with guidance, submitting reports & remarks to
the fatwa & shariah. Supervision board and the administration, participating in the
bank’s training programs & handling the duty, help the bank in numerous ways.
2.2.7 Export Import Bank of Bangladesh Ltd. at a Glance:
(Amount in Crore)
Sl. No. Particulars
2000
2005
2006
01.
Paid-up Capital
22.50
87.89
171.38
02.
Equity
26.52
191.24
311.17
03.
Total Deposits
393.45
2831.92 3503.20
a) Demand Deposits
89.56
394.59
378
b) Time deposits
303.89
2437.33 3125.20
04.
Investment
217.05
2604.63 3264.12
05.
Off balance sheet activities
765.35
3371.67 4179.35
06.
Gross Income
18.74
161.15
201.39
07.
Gross Profit
9.97
117.58
137.87
08.
Net Profit After Tax
4.81
55.53
65.02
09.
Number of Employees
237
687
765
10.
Number of Branches
8
28
30
11.
Salary & allowance
3.70
23.17
33.10
12.
Earning Assets
361.37
2767.93 3487.45
13.
Return on Assets (After Tax)
5.34 %
1.73%
1.65%
14
Price Earnings Ratio
n/a
10.53%
7.74%
61
2.2.8 SWOT Analysis of Export Import Bank of Bangladesh Ltd.:
SWOT is an acronym for the internal strength and weakness of a firm and the
environmental Opportunity and Threat facing that firm. So, if we consider Export
Import Bank of Bangladesh Ltd. as a business firm and analyze its strengths,
weaknesses, opportunities and threats the scenario are be as follows:
Strengths:
Energetic as well as smart team work.
Good Management
Cooperation with each other
Membership with SWIFT
Good banker-customer relationship
Strong Financial Position
Online Banking Services
Strong position in CAMELS rating.
Opportunities:
Growth of sales volume
Change in political environment
Launching own ATM card services.
Threats:
Different services of FCB’S (Phone Banking/Home Ban king)
Existing card services of Standard Chartered Gridlays Bank
Daily basis interest on deposit offered by HSBC
Entrance of new PCB’s
Weakness:
Lack of proper motivation, training and job rotation
Lack of experienced employees in junior level management
Lack of own ATM services.
2.2.9 Products of EXIM Bank Ltd.:
Deposit Products:
1. Al-Wadiah Deposit Account
2. Mudaraba Deposit Account (RFCD, NFCD)
3. Mudaraba Savings Monthly Scheme (Money Grower)
4. Mudaraba Income Scheme (Steady Money)
5. Mudaraba Super Savings-Double in 6 years
6. Mudaraba Multiplus Savings-More than triple in 10 years
7. Mudaraba Education Savings- For Higher Education
8. Mudaraba Hajj Prokalpa
62
9. Mudaraba Credit Cards
10. Foreign Currency Deposit Account
Investment Products:
1. Corporate Finance
2. Commercial Finance
3. Industrial Finance
4. Project Finance
5. Lease Finance
6. Syndicate Finance
7. Hire Purchase Finance
8. Real Estate Finance
2.2.10 Export and Import Trade Handling and Financing
As a commercial Bank, they do all traditional Banking business including the wide
range of savings and credit scheme products, retail banking and ancillary services with
the support of modern technology and professional Excellency. But its main focus is,
for obvious reason, on export and import trade handling and the development of
entrepreneurship and patronization of private sectors.
2.2.11 Shariah Auditing
This is the civil supervisory aspect that shapes the Bank’s main feature. It’s existence
is part of the Sharia Supervision procedures. One of it’s main task is to check the
Sharia compliancy in the Bank’s transactional procedures in accordance to the Fatwas
issued in that regard, under the guidance of the Sharia Supervisor. The Sharia auditor
is assigned the task of revising the Bank’s transactional procedures throughout the year
to check the extent to which the staff members and the different departments have
abided by the regulations, advices, and Fatwas issued by the Fatwa & Sharia
Supervision Board, forums, & banking conferences. As well as, assuring that all the
contracts that states a right for the Bank or an obligation on the Bank is certified by the
Fatwa & Sharia Supervision Board. Moreover, the Sharia Auditing submits periodic
reports to the Sharia Supervisor in order to be proposed to the Fatwa & Sharia
Supervision Board to state what it finds appropriate in that regard.
2.2.12 Banking with shariah principles
Export Import Bank of Bangladesh Limited is the 1st bank in Bangladesh who has
converted all of its operations of conventional banking into shariah-based banking
since July/2004. We offer banking services for Muslims and non-Muslims alike
allowing our customers choice and flexibility in their savings and investments. Our
products are approved by our Shariah Board comprising of veteran Muslim scholars of
our country who are expert in all matters of Islamic finance. The process by which
Noriba's investments are designed and executed allows the Bank to offer a
63
combination of Sharia compliance and capital markets expertise that is unique
throughout the world.
The Noriba Sharia Board commits Noriba to the strict adherence to the requirements
of the Sharia as a result of the Bank’s sole focus on Sharia-compliant investments and
the full supervision of its financial products and transactions. Noriba experts
specifically design each of the Bank's investment vehicles with the approval of the
Noriba Sharia Board. Once the given product or transaction has been arranged, the
Noriba Sharia Board carefully screens it for compliance before giving final approval
for its implementation. This control mechanism guarantees that all aspects of Noriba's
final products and banking transactions are in adherence with the guidelines of the
Sharia.
2.2.13 Branches of Exim Bank:
Total number of branch of that bank are 35. These are mentioned below:
1. Motijheel Branch
2. Panthapath Branch
3. Agrabad Branch
4. Khatungonj Branch
5. Gazipur Branch
6. Imamgoanj Branch
7. Gulshan Branch
8. Sonaimuri Branch
9. Sylhet Branch
10. Nawabpur Branch
11. Narayangonj Branch
12. Shimrail Branch
13. Rajuk Avenue Branch
14. New Eskaton Branch
15. Uttara Branch
16. Laksham Branch
17. Mirpur Branch
18. Jubilee Road Branch
19. Elephant Road Branch
20. Gazipur Branch
21. Mawna Branch
22. Bogar Branch
23. Jessor Branch
23. Malibagh Branch
24. Ashulia Branch
25. Ashuganj Branch
26. CDA Avenue Branch
64
27. Chowmuhani Branch
28. Satmasjid Road Branch
29. Bashundhara Branch
30. Fenchuganj Branch
31. Comilla Branch
32. Rangpur Branch
33. Moulovi Bazar Branch
34. Savar Bazar Branch
35. Karwan Bazar Branch
2.2.16 sections of EXIM Bank
EXIM Bank has three sections for its different tasks. They are 1. General section: It deals with the normal task of a bank. That means receiving
deposits and payment of demands of the customers.
2. Investment Section: This section deals with all kinds of investment projects
such as Local investment and Foreign transactions investment (letter of credit).
3. Remittance: This section deals with remittance transactions.
2.2.17 Corporate Information
Date of incorporation
: June 2002, 1999
Inauguration of first Branch: August 03, 1999
Authorised Capital
: Tk.350.00 Crore
Paid-up Capital
: 171.375 Crore
Number of Branches
: 35(Thirty Five)
Credit Rating: Long Term : A- (Adequate Safety)
Short Term – ST-3 (Good Grade)
2.3.0 Al-Arafah Islami Bank Limited
2.3.1 Introduction
Al-Arafah Islami Bank incorporated in Bangladesh as a banking company in 1995
with limited liability by shares. It started business on 27 September of that year with
an authorised capital of Tk 1,000 million. At inception, its paid up capital was Tk
101.20 million divided into 101,200 ordinary shares of Tk 1,000 each. 23 sponsors of
the bank subscribed the total issued capital.
Al-Arafah Bank is an interest-free shariah bank and its modus operandi is substantially
different from those of regular commercial banks. The bank however, renders all types
of commercial banking services under the regulation of the Bank Companies Act
1991. It conducts its business on the principles of musharaka, Bai-murabaha, Baimuajjal and Hire Purchase transactions. A Shariah Council of the bank maintains
constant vigilance to ensure that the activities of the bank are being conducted
according to the precepts of Islam.
65
The management of the bank is vested in a 23-member board of directors, who oversee
the affairs of the bank through a managing director, the chief executive officer of the
bank.
All activities of the Al-Arafah Islami Bank are conducted on an interest-free system
according to Islamic Shariah. It invests all of its surplus funds on the basis of the trade
mode of financing ensuring buying and selling of halal commodities and on a profit
and loss sharing basis. A fixed percentage of income derived from investment of
mudaraba deposits is distributed to the mudaraba deposit holders. The investment of
the bank is supervised strictly so that no investment becomes overdue with
consequential loss of investment income.
Its modes of investments are: a) Mudaraba finance - purchase and sale of commodities
as per requests by clients permissible under shariah regulations; b) Bai-Muajjal - cost
plus sale of the commodity on deferred payment basis against adequate collateral; c)
Bai-Salam (advance sale) - buying of goods from producers/suppliers on payment in
advance after entering into a firm contract and receipt of their delivery at a future
specified date; d) Ijara Bil-Bai (Hire Purchase Sirkatul Meelk) - purchase of durable
items on equity participation by both the bank and the client and handing them over to
the client on installment sale rental basis; e) Mudaraba - entire capital provided by the
bank against firm assurance of the entrepreneur that he will manage the business
properly and efficiently as manager and the profits derived from the investment will be
shared in accordance with the agreement between the bank and the client; and f)
Musharaka - capital is provided by the bank and the investment client on the basis of
partnership, in which profit is shared in agreed ratio and the loss is shared on equity
ratio.
The bank has recently introduced some schemes for upliftment of fixed wage-earners
as well as small traders and for income generating activities. These are: Desired
Durables Investment Scheme (DDIS), Masjid Madrasah based Investment Scheme
(MMIS), Small Business Investment Scheme (SBIS), Special Pally Biniog Prakalpa
(Rural Investment Project) and Transport Investment Scheme.
2.3.2 Special Features of the Bank
1. All activities of the Bank are conducted under an interest-free system according
to Islamic Shariah.
2. It's investment policies under different modes are fully Shariah compliant.
3. During the year 2003, 70% of the investment income has been distributed
among the Mudaraba depositors.
4. It believes in providing dedicated services to the clients imbued with Islamic
spirit of brotherhood, peace and fraternity.
66
5. The bank is committed towards establishing a welfare-oriented banking system
to meet the needs of low income and underprivelage class of people.
6. The Bank upholds the Islamic values of establishment of a just economic
system through social emancipation and equitable distribution of wealth.
7. Following the Islamic traditions, it is assisting in the economic progress of the
socially disadvantage people; in the creation of employment opportunities and
in upliftment of rural areas to ensure a balance development of the country.
8. The Bank believes in social and philanthropic activities and has established
AIBL English Medium Madrasha and AIBL library. More endeavours will
inshallah follow in future.
2.3.3 Deposit Schemes
1. Al Wadea Current Deposit (CD)
2. Mudaraba Saving Deposit (MSD)
3. Mudaraba Term Deposit (MTD)
4. Mudaraba Short Notice Deposit (SND)
5. Monthly Profit Based Term Deposit (PTD)
6. Monthly Installment Based Term Deposit (ITD)
7. Monthly Installment based Hajj Deposit (MHD)
8. Onetime Hajj Deposit (THD)
9. Marriage & Investment Deposit (MIS)
10. Al-Arafah Savings Bond (ASB)
11. Foreign Currency Deposit (FCD)
12. Pension Deposit Scheme (PDS)
13. Cash Waqfa Deposit Scheme (CWD)
14. Mudaraba Millionaire Deposit scheme
15. Mudaraba Double Deposit Scheme
16. Mudaraba Lacpoti Deposit Scheme
17. Mudaraba Kotipoti Deposit Scheme
2.3.4 Investment Schemes
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:
1.
2.
3.
4.
5.
6.
Murabaha
Bai-Muazzal
Bai-Salam
Hire Purchase (HPSM)
Mudaraba
Musharaka
67
7. Qard
8. Special Investment
2.3.5 Foreign Exchange Trade
A substantial amount of income of the bank has been derived from Foreign Exchange
business. The bank handled import business to the tune of Tk.5559.27millipon in the
year 2001 as against Tk. 5979.90 million during the preceding year. On the other hand,
the export business handled by the bank during the year amounts to Tk. 2524.63
million as against Tk. 3313.20 million during the preceding year.
The bank is under correspondence with 35 foreign banks in 170 places of the globe for
establishing correspondents and agency relationship. Besides our foreign exchange
trade has improved due to introduction of SWIFT.
2.3.6 Branches of AIBL
(A) Dhaka Division (22)
1. Motijheel
2. Moulvi Bazar
3. Nawabpur Rd.
4. VIP Rd.
5. Motijheel Corp.
6. New Elephant Rd.
7. Uttara Model Town
8. North South Rd.
9. Banani
10. Mirpur
11. Mymensingh
12. Mouchak
13. Dhanmondi
14. Madhabdi
15. Pagla
16. Joydebpur
17. Mohammadpur
18. Narayangonj
19. Islampur
20. Dilkusha
21. Kapashia, Gazipur
22. Progati Sarani,Badda
(B) Barisal Division (01)
1. Barisal
(C) Chittagong Division (10)
68
1. Agrabad
2. Khatungonj
3. Jubilee Rd.
4. R Nizam Rd.
5. Comilla
6. Companigonj
7. Gallai
8. Chowmuhani
9. Feni
10. Cox's Bazar
(D) Sylhet Division (05)
1.
2.
3.
4.
5.
Laldighirpar
Zindabazar
Moulvi Bazar
Rupashpur
Beani Bazar, Sylhet.
(E) Khulna Division (04)
1.
2.
3.
4.
Khulna
Shatkhira
Benapole
Jessore
(F) Rajshahi Division (04)
1. Rajshahi
2. Bogra
3. Saidpur
4. Mohadebpur
2.3.7 Corporate Information
Date of Registration
Inauguration of first Branch
Authorised Capital
Paid-up Capital
Equity
Number of Branches
Deposit
Investment
Number of Manpower
Number of Shareholder
:
:
:
:
:
:
:
:
:
:
June 18, 1995
September 27, 1995
Tk.250.00 Crore
85.42 Crore
169.01 Crore
46 (Forty Six)
1677.53 Crore
1742.31 Crore
912
4487
69
2.4.0 Shahjalal Islami Bank Limited (SJBL)
2.4.1 Introduction
Shahjalal Islami Bank Limited (SJBL), a Sharial Based commercial Bank in
Bangladesh was incorporated as a Public Limited Company on 1st April, 2001 under
Companies Act 1994. The Bank commenced commercial operation on 10th May 2001
by opening its 1st branch, i.e., Dhaka Main Branch at 58, Dilkusha, Dhaka obtaining
the license from Bangladesh Bank, the central Bank of Bangladesh.
2.4.2 Objectives
From time immemorial, Banks principally did the functions of moneylenders or
"Mohajans" but the functions and scope of modern banking are now a days very wide
and different. They accept deposits and lend money like their ancestors, nevertheless,
their role, as catalytic agent of economic development encompassing wide range of
services is very important. Business commerce and industries in modern times cannot
go without banks. There are people interested to abide by the injunctions of religions
in all sphere of life including economic activities.
Human being is value oriented and social science is not value-neutral. Shahjalal Islami
Bank believes in moral and material development simultaneously. "Interest" or
"Usury" has not been appreciated and accepted by "the Tawrat" of prophet Moses, "the
Bible" of prophet Jesus and "the Quran" of Hazrat Muhammad (SM). Efforts are there
to do banking without interest. Shahjalal Islami Bank Limited avoids "interest" in all
its transactions and provides all available modern banking services to its clients and
wants to contribute in both moral and material development of human being. No
sustainable material well-being is possible without spiritual development of mankind.
Only material well-being should not be the objective of development. Socio-economic
justice and brotherhood can be implemented well in a God-fearing society.
Other objectives of Shahjalal Islami Bank includes:
To establish interest-free and welfare oriented banking system.
 To help in poverty alleviation and employment generations.
 To contribute in sustainable economic growth.
2.4.3 Vision and mission
Vision:
 To provide quality services to our customers,
 To set high standards of integrity,
 To extend our customers innovative services acquiring state-of-the-art technology
blended with Islamic principles, and brings total satisfaction to our clients,
sponsors and employees.
70
Mission:
To expand Islamic banking through welfare oriented banking system, ensure equity
and justice in economic activities, extend financial assistance to poorer section of the
people and achieve balanced growth and equitable development.
2.4.4 Products & Services:
a. Deposit Products:
Shahjalal Islami Bank Limited accepts deposits on the basis of Mudaraba in the
following types of accounts, and pays profit, like that of dividend in these accounts,
except Al Wadia Current Account.
The relationship between banker and customer is not debtor-creditor relationship of
conventional banks. The depositor is a partner in business with SHAHJALAL ISLAMI
BANK LIMITED.
Customers deposit their fund in the following types of Accounts:
1. Mudaraba Short Notice Deposit Account
2. Mudaraba Savings Account
3. Mudaraba Term Deposit Account
4. Other Scheme Deposit Accounts
Average 70% of profit earned by the bank is distributed proportionately among
depositors annually.
b. Investment modes:
To provide interest-free Banking Shahjalal Islami Bank has adopt the following modes
of investment:
1. Musharaka (equity participation on the basis of sharing profit and loss)
2. Mudaraba (sharing of profit and loss in business where one of the partners provides
expertise and management and other partner provides capital remaining inactive)
3. Murabaha (buying and selling of commodities, goods etc. with profit)
4. Bai-Muajjal (credit sale with profit)
5. Ijara (leasing for rent)
6. Hire purchase or Shirkatul Melk
7. Bi-Salam (purchasing of agricultural products while in production and providing
advance money to the producers)
8. Istishna (purchasing of industrial products while in production and providing
advance money to the producers).
9. Quard.
71
2.4.5 Computer services:
Shahjalal Islami Bank is computerized and provides the following services some of
these services will be introduced soon.
Shahjalal Islami Bank Limited introduced a few schemes, which are very popular:
1. Online services
2. Automated Accounting
3. Integrated System
4. Signature Verification
5. Any Branch Banking
6. ATM Services (to be implemented)
7. POS Services (to be implemented)
8. Other Delivery Channel Services (to be implemented)
2.4.5.a SJIBL VISA Card
Card is considered as a new dimension of product resulting from technological
development in the banking arena. In line with our affiliation with VISA International
for VISA ATMs and POS, the following two products are launched broadening service
products of the Bank to the clients:
1.
VISA Electron (SJIBL VISA Debit Card - local)
2.
VISA Prepaid (SJIBL VISA Prepaid Card)
SJIBL VISA Debit Card: To a customer, “My card, my money” concept is used for
Debit Card. Any accountholder of SJIBL can apply for a SJIBL VISA Debit Card
against his/her Al-Wadiah Current Deposit (AWCD), Mudaraba Savings Deposit
(MSD) or Mudaraba Short Notice Deposit (MSND) Account. He/she is fully
authorized to enjoy the benefits of cash withdrawal from ATMs, liberty of shopping,
dining, paying utility bills and having access account information through SMS, etc.
round the clock.
SJIBL VISA Prepaid Card (Local): SJIBL VISA Prepaid Local Cards are open to
the customers even having no account with Shahjalal Islami Bank Limited.
Cardholders can have the card against prepayment and have access from anywhere in
Bangladesh. SJIBL VISA Prepaid Local Cards are accepted locally at all VISA labeled
merchant outlets, ATMs, etc.
SJIBL VISA Prepaid Card (International): SJIBL VISA Prepaid International
Cards are also open to the customers even having no account with Shahjalal Islami
Bank Limited. Cardholders can have the card endorsing US Dollar paying against
Travel Quota, Exporters Retention Quota or marking lien of his/her FC Account.
72
SJIBL VISA Prepaid International Cards are accepted world wide at the entire VISA
labeled merchant outlets, ATMs, etc.
SJIBL VISA Prepaid Card (Dual): The Dual Card is a hassle free product, no need
to carry two separate plastic cards for local and international card. Now, with one
plastic card the Cardholders can enjoy all the benefits and make transactions locally &
globally from their Prepaid card account at all the VISA labeled merchant outlets,
SJIBL VISA Souvenir Card (Gift Card – Local): SJIBL Souvenir Card is a very
attractive and stylish product. Like a Gift Card, SJIBL Souvenir Card can be used by
anyone wishes to. The intending customer may have the card instantly or may
customize the card as required. The SJIBL Souvenir Cards are accepted locally at the
entire VISA labeled merchant outlets, ATMs, etc.
2.4.5.b GP Bill
Grameen Phone subscribers availing the service to pay their bills, advances, security
deposit and other related charges through all branches of Shahjalal Islami Bank
Limited.
2.4.6 Shariah Council
Shariah Council of the Bank is playing a vital role in guiding and supervising the
implementation and compliance of Islamic Shariah principles in all activities of the
Bank since its very inception. The Council, which enjoys a high status in the structure
of the Bank, consists of prominent ulema, reputed banker, renowned lawyer and
eminent economist.Members of the Shariah Council meet frequently and deliberate on
different issues confronting the Bank on Shariah matters. They also conduct Shariah
inspection of branches regularly so as to ensure that the Shariah principles are
implemented and complied with meticulously by the branches of the Bank.
2.4.7 Branches of SJIBL
SL Name of the Branches
Dhaka Zone
1 Dhaka Main Branch
2 Mitford Branch
3 Dhanmondi Branch
4 Gulshan Branch
5 Foreign Exchange
6 Joydevpur Chowrasta Branch
7 Kawran Bazar Branch
8 Uttara Branch
9 Bangshal Branch
10 Baipail (Dhaka EPZ) Branch
11 Narayanganj Branch
SL
18
19
20
21
22
23
24
25
26
73
Chittagong Zone
Agrabad Branch
Khatunganj Branch
Jubilee Road Branch
Muradpur Branch
Sylhet Zone
Sylhet Branch
Dargah Gate Branch
Beanibazar Branch
Moulvibazar Branch
Khulna Zone
Khulna Branch
12
13
14
15
16
17
Satmasjid Road Branch
Banani Branch
Joypara Branch
Motijheel Branch
Mirpur Branch
Savar Branch
2.4.8 Corporate Information:
Commencement of Business :
Number of Branches
:
Number of Employees
:
Authorized Capital
:
Paid-up Capital
:
Face Value per Share
:
10th May 2001
21
377
Tk.200 Crore
187.16 Crore
Tk.100.00
2.5.0 Prime Bank Limited
2.5.1 Introduction
The bank was incorporated as a public limited company in Bangladesh under
Companies Act 1994. It commenced its banking business with one branch from April
17,1995 under the license issued by Bangladesh Bank. Presently the bank has 42
branches all over Bangladesh and a booth located at Dhaka club, Dhaka. Out of above
42 branches, 05 branches are designated as Islamic Branches complying with the rules
of Islamic Shariah, the modus operandi of which is substantially differently from other
branches run on commercial conventional basis. The bank is listed with Dhaka Stock
Exchange Limited and Chittagong Stock Exchange Limited as a publicly quoted
company for its general class of share.
The principal activities of the bank are to provide all kinds of commercial banking
services to its customers through its branches in Bangladesh. The bank also carries out
merchant banking activities under the license issued by the Securities and Exchange
Commission (SEC), Dhaka, Bangladesh.
In the backdrop of economic liberalization and financial sector reforms, a group of
highly successful local entrepreneurs conceived an idea of floating a commercial bank
with different outlook. For them, it was competence, excellence and consistent
delivery of reliable service with superior value products. The sponsors are reputed
personalities in the field of trade and commerce and their stake ranges from shipping
to textile and finance to energy etc.
As a fully licensed commercial bank, Prime Bank Ltd. is being managed by a highly
professional and dedicated team with long experience in banking. They constantly
focus on understanding and anticipating customer needs. As the banking scenario
74
undergoes changes so is the bank and it repositions itself in the changed market
condition.
Prime Bank Ltd. has already made significant progress within a very short period of its
existence. The bank has been graded as a top class bank in the country through
internationally accepted CAMELS rating. The bank has already occupied an enviable
position among its competitors after achieving success in all areas of business
operation.
Prime Bank Ltd. offers all kinds of Commercial Corporate and Personal Banking
services covering all segments of society within the framework of Banking Company
Acts and rules and regulations laid down by our central bank. Diversification of
products and services include Corporate Banking, Retail Banking and Consumer
Banking right from industry to agriculture, and real state to software.
Prime Bank Ltd., since its beginning, has attached more importance in technology
integration. In order to retain competitive edge, investment in technology is always a
top agenda and under constant focus. Keeping the network within a reasonable limit,
our strategy is to serve the customers through capacity building across multi delivery
channels. Our past performance gives an indication of our strength. We are better
placed and poised to take our customers through fast changing times and enable them
compete more effectively in the market they operate.
The bank has consistently turned over good returns on Assets and Capital. During the
year 2006, the bank has posted an operating profit of Tk. 2131 million and its capital
funds stood at Tk 4409.21 million. Out of this, Tk. 1750 million consists of paid up
capital by shareholders and Tk. 2659.21 million represents reserves and retained
earnings. The bank’s current capital adequacy ratio of 9.95% is in the market. In spite
of complex business environment and default culture, quantum of classified loan in the
bank is very insignificant and stood at less than 0.82%.
2.5.2 Deposit Schemes:
Bank is the largest mobilizer of surplus domestic savings. For poverty alleviation, we
need self-employment, for self-employment we need investment and for investment
we need savings. In the other words, savings help capital formations and the capital
formations help investments in the country. The investment in its turn helps
industrialization leading towards creation of wealth of the country. And the wealth
finally takes the country on road to progress and prosperity. As such, savings is
considered the very basis of prosperity of the country. The more the growth of savings,
the more will be the prosperity of the nation.
The savings rate in Bangladesh is one of the lowest in the world. In order to improve
the savings rate, Financial Institutions responsible for mobilization of savings should
offer attractive Savings Schemes so that the marginal propensity to save increases. The
75
savings do not, of course, depend only on the quantum of income but largely depend
on the habit of savings of the people.
2.5.3 Vision of The Bank
To be the best Private Commercial Bank in Bangladesh in terms of efficiency, capital
adequacy, asset quality, sound management and profitability having strong liquidity.
2.5.4 Mission of The Bank
1. To build Prime Bank Limited in to an efficient, market driven, customer focused
institution with good corporate governance structure.
2. Continuous improvement in our business policies, procedure and efficiency through
integration of technology at all levels.
2.5.5 Strategic Priorities of The Bank
To have sustained growth, broaden and improve range of products and services.
2.5.6 Objectives of Prime Bank Limited
The objectives for which the bank is established are as follows:
1.
2.
3.
4.
5.
6.
7.
To carry on, transact, undertake and conduct the business of banking in all
branches.
To receive, borrow or to raise money on deposit, loan or otherwise upon such
terms as the company may approve.
To carry on the business of discounting and dealing in exchange of shares and
securities and all kinds of mercantile banking.
To provide for safe-deposit vaults and the safe custody of valuables of all kinds.
To carry on business as financiers, promoters, capitalists, concessionaires and
brokers.
To act as agents for sale and purchase of any stock, shares or securities or for any
other momentary or mercantile transaction.
To establish and open offices and branches to carry on all or any of the business
abroad and within the country provided prior permission is obtained from
Bangladesh bank.
2.5.7 Management and Human Resources
A well-educated, skilled and enterprising workforce with wide experience in the
banking is a precondition for the continued growth and progress of any bank. PBL’s
aim is to recruit and retain a competent workforce. In the expectation of continued
growth, the bank in 1998 established a training institute for its own staff. Prime Bank
recruits experienced bankers as well as fresh graduates and trains them through the
76
Training institute. Its human resources strength is 894 as on December 31, 2004. All of
the top executives of the bank have diversified Banking and Auditing experience for
many years with leading Private Commercial Banks and other financial institutions.
2.5.8 Departments of Prime Bank LTD.
Total division and departments of Prime Bank Limited can be classified under three
main aspects of banking.
1. Administrative department
2. Operational department
3. Miscellaneous/other department
2.5.9 On-line Banking
The bank has set up Wide Area Network (WAN) across the country within its all
branches to provide on-line branch banking facility to its valued customers. The
service named “PRIMELINE” has opened up several possibilities of improved
customer services. Under this facility client of one branch are able to do banking
transaction at any other branch of the bank. The bank hosted its Web Site
(www.prime-bank.com) to facilitate dissemination of information about the banking
services and facilities of Prime Bank Limited all over the world.
2.5.10 Information Technology in Banking Operation
Prime Bank Limited has adopted automation in banking operation from the first day of
its business. The main objective of this automation is to provide efficient and prompt
services to its valued clients. At present all the branches of the bank are computerized
under UNIX operating system to provide best security to the information. Prime Bank
Limited is providing comprehensive range of banking services with utmost care and
efficiency to its customers. Auto Teller Machine is used to count money properly to
save client’s valuable time as well. The customer can draw money/cash from their
account within a minute.
2.5.11 SWIFT Service
Prime Bank Limited is one of the first few Bangladeshi Banks to obtain membership
of SWIFT (Society for Worldwide Inter-bank Telecommunication). SWIFT is a
members’ owned cooperative which provides a first and accurate communication
network for financial transactions such as Letter of Credit, Fund Transfer etc. By being
a member of SWIFT, the bank has opened up possibilities for uninterrupted
connectivity with over 5700 user institutions in 150 countries all over the world.
77
2.5.12 Products and Services of Prime Bank Limited
Prime Bank Limited offers various kinds of deposit products and loan schemes. The
bank also has highly qualified professional staff members who have the capability to
manage and meet all the requirements of the bank. Every account is assigned to an
account manager who personally takes care of it and is available for discussion and
inquiries, whether one writes, telephones or calls.
2.5.13 Performance at a glance
( Taka in Million)
Particulars
Income Statement
Interest Income
Interest Expense
Net Interest Income
Non-interest Income
Non-interest Expense
Net Non-interest Income
Profit before provision and tax
Provision for loans and assets
Profit after provision before tax
Tax including deferred tax
Profit after tax
Balance Sheet
Authorized Capital
Paid-up Capital
Total Shareholder's equity
Deposits
Long-term liabilities
Loans and advances
Investments
Property, Plant and Equipment
Earning Assets
Net current assets
Total assets
Current ratio
Debt equity ratio
Other Business
Import
Export
Remittance
Guarantee Business
2002
2003
2004
2005
2006
1620
1055
565
631
448
183
748
51
697
279
418
2159
1408
751
841
591
250
1001
232
770
394
375
2641
1616
1025
946
824
121
1146
82
1064
452
612
3446
2271
1175
1232
886
346
1520
320
1201
633
568
5199
3698
1500
1732
1101
631
2131
390
1741
689
1052
1000
600
1526
16482
5350
12687
1996
219
15125
437
19359
1.00
8.56%
1000
700
1732
20483
7052
16492
2750
256
19335
583
24249
0.96
8%
1000
1000
2240
28069
7371
23220
3084
322
27131
(1299)
32362
1.06
7%
4000
1400
2808
36022
11406
31916
3940
372
36727
31
41506
1.00
7%
4000
1750
3860
54724
16877
45010
7844
412
55458
5286
60899
0.88
7%
19564
12190
1252
3659
25441
16490
3063
4248
36747
19502
2140
4085
40303
28882
3688
5303
52639
41801
15050
5386
78
Inland letter of credit
Capital Measures
Total risk weighted assets
Core capital (Tier-I)
Supplementary capital (Tier-II)
Total Capital
Tier-I capital ratio
Tier-II capital ratio
Total capital ratio
Credit Quality
Non performing loans (NPLs)
% of NPLs to total loans and
advances
Provision for unclassified loans
Provision for classified loans
Share Information
Market price per share (Taka)
No. of shares outstanding (million)
No. of shareholders at actual
Earning per share (Taka)
Dividend
Cash
Bonus
Effective dividend ratio
Market capitalization
Net assets per share (Taka)
Price earning ratio (times)
Operating Performance Ratio
Net interest margin on average
earning assets
Net non-interest margin on average
earning assets
Earning base in assets (average)
Cost income raito
Cost deposit raito
Cost of funds on average deposits
Return on average assets
Return on average equity
Other information
No of Branches
No of employees
No of foreign correspondents
1523
3729
4267
5405
10174
13389 16455
1526
1782
139
176
1665
1958
11.409
10.83
1.04 1.07%
12.44 11.90%
23050
2240
236
2476
9.72
1.02
10.74
31890
2808
369
3177
8.80
1.16
9.96
44324
3860
549
4409
8.71
1.24
9.95
188.22
326.53
352.73
308.21
367.15
1.48%
1.98%
1.52%
0.96%
0.82%
131.73 171.73%
122.81 249.44
231.73
174
364.80
127.00
544.80
308.52
307.51
6
1727
59.73
36.67%
20%
16.37%
40%
1845.06
234.81
5.15
374.25
7
1993
37.55
62.86%
20.00%
42.86%
67.70%
2619.75
233.12
9.97
4.26%
4.36%
4.41%
3.68%
3.23%
1.38%
1.45%
0.52%
1.08%
1.37%
75.53%
37.48%
76.98%
7.13%
2.38%
30.03%
79.02%
37.11%
80.52%
7.62%
1.72%
22.70%
82.08%
41.83%
80.72%
6.66%
2.16%
30.43%
86.45%
36.82%
88.60%
7.09%
1.54%
22.51%
90.02%
34.07%
82.25%
8.15%
20.5%
31.55%
27
730
422
30
777
441
36
894
501
41
1024
517
50
1172
528
79
879.50 681.50
528.75
10
14
17.50
2620
4467
5262
43.71
40.59
60.11
40.00%
25.00 30%(proposed)
40.00% 25.00%
30%
47.06% 29.17%
33%
8795.00 9541.00
9253.13
223.98 200.57
220.57%
20.12
16.79
8.80%
Average earning assets
Average total assets
Average deposits
Average equity
13254.64 17230.13 23233.08 31929.08
17547.94 21804.03 28305.38 36933.96
14795.74 18482.42 24276.24 32045.85
1392.34 1654.14 2010.83 2523.90
46092.85
51202.88
45373.27
3333.94
2.5.14 Rating Rationale
Assessment
Prime Bank is among the best of Bangladeshi banks. Our Individual rating reflects its
reasonably sound financial condition but also its relatively short history, as well as the
challenging operating environment in Bangladesh. Although it has grown rapidly since
its inception, it has maintained a far healthier financial profile than the problematic
state banks or other private banks. PB has been profitable since its first year of
operations.
Support
Given its small size and private ownership, Prime Bank would look to its own
shareholders for support should this be needed. However, in the absence of a large,
institutional controlling shareholder, we have reservations as to their propensity or
ability to provide funds in an extreme situation. The government's propensity to
provide timely support to Prime Bank is also likely to be less than for larger state
banks. We therefore, assign a support rating of "5" to Prime Bank, which implies that
support is possible but cannot be relied upon.
2.5.15 Organogram of Prime Bank Limited:
Board of
Directors
Executive
Committee of
the Board
Policy
Committee of
the Board
Board
Secretariat
Board Audit
Cell
Managing
Director
Senior
Executive Vice
President
Corporate
Affairs
Division
D.M.D
Research &
Development
80
H.R.D
Marketing
Credit
2.2.20 Information Technology Department
2.5.16 Stake Holders Benefits
Customers, Securities & Exchange Commission, Bangladesh Bank, Government is the
stake holders of any bank & Prime Bank is not exception. SEC, Bangladesh Bank,
requests the bank to submit report in each 7 days. Employees of prime bank can collect
information about all transactions at a glance. The process the data & make report
using computer information system for Bangladesh Bank. The process takes a little
time than if it is done by manually.
Prime Bank can implement any new rules which come from regulatory authority in a
short time. They can inform all branches in a short. So that all branches can know the
change of rules & regulations any time.
2.5.17 Prospects:
Size is a crucial issue in banking and Prime Bank, being a very small bank has its
limitations. With an equity base of only BDT 1.5bn (USD 26mn), Prime Bank does
not have the critical mass to cater to large borrowers or expand its business (including
its proposed consumer banking initiatives) beyond a certain level. To be fair, the bank
has so far done an excellent job in catering to the requirements of its traditional
customers, the small to medium exporters, despite operating in a challenging
environment. The bank has tentative plans to strengthen its equity to BDT 5bn, but the
time frame is somewhat uncertain, and it is unclear whether it will be through fresh
equity infusion, or through retained earnings over the years. As for all Bangladeshi
private banks, Prime Bank’s shareholders are individuals, and their ability to infuse
large amounts of capital is unclear. Nevertheless, in the near-term, Prime Bank should
continue to perform satisfactorily, even as its high growth rate (albeit from a smaller
base) is a slight concern. However, it is difficult to comment on the longer-term
prospects of the bank (three years and beyond). Although there is some recognition
amongst policy makers that there were too many (private) banks in the country, and a
consolidation at some stage may be desirable, their near-term priority seems to be to
address the huge asset quality problems of the state banks, and possibly privatize some
of those. Therefore, consolidation amongst private banks does not appear likely over
the next 2-3 years.
2.5.18 RISK MANAGEMENT
Risk management is not sophisticated in Bangladesh by international standards,
although it is improving in private banks. Prime Bank’s Board of Directors is
responsible for setting strategic risk objectives and the risk appetite of the bank.
Reporting to the Board are the Management Committee (which takes all policy
decisions and is chaired by the CEO) and the Credit Committee, which is chaired by
the Additional Managing Director, and meets every week. The bank has also recently
81
set up an Asset and Liability Committee (ALCO), which is headed by the Additional
MD, and is responsible for liquidity management, management of interest rate and
other market risks and for maturity mismatches. The ALCO also determines the
pricing policy of the bank for its various assets and liabilities. While audit and
inspection of various branches is an integral part of internal operational management,
the bank has also set up a Board Audit Committee for the past one year (on the
recommendations of the central bank). This committee monitors audit reports and
reviews audit objections and generally ensures compliance with the rules and
regulations of the central bank. Bank management claims that the setting up of this
committee has improved the compliance culture and corporate governance within the
bank.
Credit Risk:
Prime Bank primarily lends for trade finance although some amount of project
financing is also undertaken. The bank has generally maintained a conservative
approach towards lending and management claims that their credit appraisal process is
more stringent than that of its local peers (we were informed that typically only one
out of three proposals originating at the branch level is eventually approved). The bank
follows a two-tier credit screening process: the branch prepares a credit proposal and
sends it to the Head Office, where the credit officers analyse the business risks and the
nature of the collateral. If acceptable, a detailed credit memo is prepared and sent to
the Credit Committee, which comprises senior credit and operations executives. The
managing director can approve proposals up to BDT 30m while proposals between
BDT 30m and BDT 50m are referred to the management committee; proposals above
BDT 50m can only be approved by the Board. Fitch understands that cash flow is the
primary consideration for all loan proposals although the nature of collateral is also
taken into account while sanctioning proposals.
Loss Reserves:
Prime Bank’s level of financial disclosure is higher than most of its local peers. While
it classifies NPLs in accordance with Bangladesh Bank (Bangladesh’s central bank)
regulations, which are somewhat liberal by international standards, it nevertheless
makes loan loss provisions in excess of statutory regulations. The excess amount is
disclosed in the bank’s annual report, as is the huge shortfall in the case of government
banks’ annual reports.
Market Risk:
Prime Bank is exposed to interest rate and liquidity risks on account of a structural
maturity mismatch arising from funding the loan and fixedincome investment portfolio
(mainly government bonds) primarily through short-term customer deposits. These
risks are slightly mitigated due to high renewal rates of the bank’s deposits. Foreign
currency loans are fairly well matched with foreign currency deposits (about 3% of
total deposits) and the bank manages small mismatches through swaps and foreign
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exchange contracts. We are informed that most of the bank’s foreign exchange
business is client-driven although proprietary trading may slightly increase in future
with improved skill sets of its traders. All foreign exchange activities are subject to
central bank guidelines, and strict trading limits, such as intra-day, overnight and stoploss limits.
Currently, the treasury activities of the bank are quite limited and there appear to be
satisfactory control mechanisms to ensure segregation of duties between dealers and
the back office. However, the bank’s ability to manage its overall operational risk,
particularly in light of the Basle 2 guidelines, is likely to be inadequate, similar to most
of the Bangladesh banking sector. None of the banks in Bangladesh are presently in a
position to quantify the amount of market risk in their books, although Prime Bank has
some tentative plans to introduce ‘VaR type’ measurement tools in a few years’ time.
2.5.19 Deposit Schemes:
The savings rate in Bangladesh is one of the lowest in the world. In order to improve
the savings rate, Financial Institutions responsible for mobilization of savings should
offer attractive Savings Schemes so that the marginal propensity to save increases. The
savings do not, of course, depend only on the quantum of income but largely depend
on the habit of savings of the people.
01.
02.
03.
04.
05.
06.
07.
08.
09.
10.
11.
12.
13.
14.
Contributory Savings Scheme
Monthly Benefit Deposit Scheme
Education Savings Scheme
Fixed Deposit Scheme
Short Term Deposit
Lakhopati Deposit Scheme
Double Benefit Deposit Scheme
Foreign Currency Account
Resident Foreign Currency Deposit Account
Non-resident Foreign Currency Deposit Account
Non-resident Taka Account
Non-resident Investors Taka Account
House Building Deposit Scheme
Prime Millionaire Scheme
Loan Schemes:
01. General Loan Scheme
02. Consumer Credit Scheme
03. Lease Finance
04. House Building Loan & Apartment Loan Scheme
05. Advance against Shares
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06. Custodial Services for investors (both individual & institutional) investing in
through Stock exchange
07. One stop services for payment of utility bills.
08. Credit card
2.5.20 Network Structure
Prime Bank Limited use WAN (wide area network) to connect all branches with Head
Office. This system is operated by the head office of prime bank. Prime Bank has 42
existing branches around Bangladesh & those are far away from one branch to another.
In order to communicate with all branches WAN system is perfect to them. Prime
Bank also uses LAN (local area network) system. It has three head office branches in
Motijheel. These three branches are connected by LAN system because some
information is only used by head office branches.
Hardware and software Components:
Hardware Components of Prime Bank are-IBM, P series, X series, DS 4800, Database
server, Application server, Storage tape library and oracle database etc. These
machines are used in Head Office of Prime Bank & these are connected by LAN
system.
Previous Hardware Components:
Prime Bank Limited used UNIX, HP server. These components had some problemsUnable to provide online service.
Shortage of storage capacity. Prime Bank has a number of accounts. The system could
not store huge amount of information.
Service was not quick.
From 1997-2005 they used PC Bank which was a full Banking software made by a
Bangladeshi company.
Present hardware and software:
Now they use P series, X series, DS4800 hardware and T24 Automated full banking
software which is made by a Switzerland company. Now the bank can provide online
banking by using new machines & new software. Facilities of online banking areAccounts holder can check account balance from any branches.Customers can deposit
& withdraw money in any time through ATM card.
Future services:
By using TEMENOS T24 Automated banking software, near future Prime Bank will
provide the modern services to its clients.
2.5.21 Facilities for all types of customers
SMS banking –Account holder can check a account balance through mobile phone
SMS banking .It will save time and transportation cost .No need to go to bank to know
account balance .
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Internet banking –Prime bank will provide internet banking service for their
customers .Customers of prime Bank will able to perform banking activity in front of
computer in home.
Online bill payment
services-Prime bank account holder will be able to pay
Electricity bill, Gas bill, Telephone bill by using ATM card through online bill
payment system.
2.5.22 Internally developed Software:
Prime bank internally developed some software and information system .These
software are used for internal operationIn-house Resource information system
Classified Loan Management
2.5.23 Users Benefit:
There are two types of usersExternal users: The main focus of all activities of a bank is customers. They use
online, ATM card to with draw money.
Internal Users: Board of directors & management. Management use information
technology for quick decision making.
In order to made decision, information is necessary. Information Technology store
huge data & process the data then give information in a short time.
2.5.24 Islamic Mode of Operation:
Prime Bank Limited has started its operation as a Conventional Bank in April 1995.
But pretty soon afterwards, within few months, the Bank has taken up the Challenge to
start Islami Banking Operations. The Challenge is not so much as in operating Islamic
Banking but in maintaining both the forms in Parallel. From its inception as an Islami
Bank the bank has proven itself to be worthy of its slogan of ‘Bank with a Difference’,
through successful operation of Islami Banking.
Prime Bank has started its Islami Banking operation through its first Branch being
inaugurated at 19, Dilkusha C/A, Dhaka on 18 December 1995. Since then it has so far
has established four more branches at different locations in the Country. Because of its
popularity and management’s commitment toward social well being gradual expansion
of Prime Bank’s Islami Banking operations is assured. Following are the salient
features of Islamic Banking, as is practiced in Prime Bank Limited:
1. All activities are conducted according to Islamic Shariah.
2. Interest free monetary operations.
3. Building partnership relation between the Bank and its customers.
4. Following Islamic principles in its investment portfolio.
5. While investing special consideration to social needs is given.
6. Through small and long term deposit schemes providing hope to the poor income
group of the society.
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7.
8.
Client service centric banking, through which making the clients feel special.
Conduct welfare activates etc.
Service Portfolio:
Prime Bank provides following services under Islami Banking:
1. Deposit
2. Investment
3. Foreign Trade
4. Remittance and Fund Transfer
Weightage Principle in Distributing Profit to the Depositors:
Deposit of different A/Cs is not given equal weightage in ascertaining profit rate. Bank
gets opportunity to invest fund for long period if the deposit is obtained for long
period. If duration of deposit is long term the risk of deposit is higher. Depositor
participates in long term investment of the bank and face higher risk. As such, Bank
fix up profit on the different weightage against various types of deposit A/Cs on the
basis of risk.
2.5.25 Corporate Information
Incorporation of the Company :
Commencement of Business :
Number of Branches
:
Number of Employees
:
Authorized Capital
:
Paid-up Capital
:
Total Assets
:
Total Equity
:
12 February 1995
17 April 1995
50
1172
Tk.400.00 Crore
Tk.175.00 Crore
Tk.5120.28 Crore
333.39
2.6.0 National Bank Limited
2.6.1 Introduction
National Bank Limited has its prosperous past, glorious present, prospective future and
under processing projects and activities. Established as the first private sector Bank
fully owned by Bangladeshi entrepreneurs, NBL has been flourishing as the largest
private sector Bank with the passage of time after facing many stress and strain. The
member of the board of directors is creative businessman and leading industrialist of
the country. To keep pace with time and in harmony with national and international
economic activities and for rendering all modern services, NBL, as a financial
institution automated all its branches with computer network in accordance with the
competitive commercial demand of time. Moreover, considering its forth-coming
future the infrastructure of the Bank has been rearranging. The expectation of all class
businessman, entrepreneurs and general public is much more to NBL. Keeping the
target in mind NBL has taken preparation to open new branches by the year 2007.
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The emergence of National Bank Ltd. in the private sector is an important event in the
Banking arena of Bangladesh. When the nation was in the grip of severe recession,
Govt. took the farsighted decision to allow in the private sector to revive the economy
of the country. Several dynamic entrepreneurs came forward for establishing a bank
with a motto to revitalize the economy of the country.
National Bank Limited was born as the first hundred percent Bangladeshi owned Bank
in the private sector. From the very inception it is the firm determination of National
Bank Limited to play a vital role in the national economy. We are determined to bring
back the long forgotten taste of banking services and flavors. We want to serve each
one promptly and with a sense of dedication and dignity.
The then President of the People's Republic of Bangladesh Justice Ahsanuddin
Chowdhury inaugurated the bank formally on March 28, 1983 but the first branch at
48, Dilkusha Commercial Area, Dhaka started commercial operation on March 23,
1983. The 2nd Branch was opened on 11th May 1983 at Khatungonj, Chittagong.
At present, NBL has been carrying on business through its 91 branches spread all over
the country. Besides, the Bank has drawing arrangement with 415 correspondents in
75 countries of the world as well as with 32 overseas Exchange Companies. NBL was
the first domestic bank to establish agency arrangement with the world famous
Western Union in order to facilitate quick and safe remittance of the valuable foreign
exchanges earned by the expatriate Bangladeshi nationals. NBL was also the first
among domestic banks to introduce international Master Card in Bangladesh. In the
meantime, NBL has also introduced the Visa Card and Power Card. The Bank has in
its use the latest information technology services of SWIFT and REUTERS. NBL has
been continuing its small credit programme for disbursement of collateral free
agricultural loans among the poor farmers of Barindra area in Rajshahi district for
improving their lot. Alongside banking activities, NBL is actively involved in sports
and games as well as in various Socio-Cultural activities. Up to September 2006, the
total number of workforce of NBL stood at 2239, which include 1689 officers and
executives and 550 staff.
Since the very beginning, the Bank exerted much emphasis on overseas operation and
handled a sizeable quantum of homebound foreign remittance. The Bank established
extensive drawing arrangement network with Banks and Exchange Companies located
in important countries of the world. Expatriates Bangladeshi wage earners residing in
those countries can now easily remit their hard-earned money to the country with
confidence, safety and speed.
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Banking is not only a profit-oriented commercial institution but it has a public base
and social commitment. Admitting this true NBL is going on with its diversified
banking activities. NBL introduced National Bank Monthly Savings Scheme (NMS),
Special Deposit Scheme, Consumer's Credit Scheme and NBL Housing Loan, NBL
Small Business Loan, Small House Loan Scheme, Festival Small Business loan etc. to
combine the people of lower and middle-income group.
Inspired by its social obligation and commitment and responsibility, NBL has been
running a School and College up to Class XII solely on its own guardianship. From the
very inception, this institution has been maintaining a good track record of results at
the SSC and HSC Examinations. Conducted by a well-educated and trained team of
teachers, reputation of this institution has been increasing day-by-day as a result of
their relentless and sincere endeavor.
Transparency and accountability of a financial institution is reflected in its Annual
Report containing its Balance Sheet and Profit & Loss Account. In recognition of this,
NBL was awarded Crest in 1999 and 2000, and Certificate of Appreciation in 2001 by
the Institute of Chartered Accountants of Bangladesh.
2.6.2 Offers For Depositors
1. Savings Deposits Account
2. Current Deposits Account
3. Term or Fixed Deposit Accounts
4. Steady Money Deposit Accounts like STD (Short Term Deposit) A/c
5. Super Savings Deposit Accounts
6. Special Deposit Scheme
7. Monthly Savings Scheme
2.6.3 Offers For Borrowers
Funded Credit Facilities
1. Cash Credit (Hypo.)
2. Cash Credit (Pledge)
3. Over Draft facilities against Financial Instruments like FDR, TDR, MSS, etc.
4. Over Draft facilities against Work Orders
5. Over Draft facilities to participate in different tenders.
6. Term Loan for Long Term and Short Term
7. Purchasing or Discounting the Local and Foreign Documentary Bills
Non–Funded Credit Facilities
1. Issuing Bank Guarantee in the form of Performance Guarantee or Bid–Bond
2. Issuing Foreign Bank Guarantee
3. Issuing Shipping Guarantee
Import Credit
Issuing different types of L/C like Sight or Cash L/C, Deferred L/C
Post Import Credit facilities like –
1. PAD (Payment Against Documents)
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2. LIM (Loan against Imported Merchandise) facility – to retire the documents
against L/C(s)
3. LTR (Loan against Trust Receipt) facility – to retire the documents against L/C(s)
Export Credit
Issuing Back to Back L/C
Post Export Credit facilities like –
1. PC (Packing Credit)
2. ABP (Acceptance for Bills Payment)
3. LDBC (Local Documentary Bills Collection)
4. FDBC (Foreign Documentary Bills Collection)
2.6.4 Consumer Credit Scheme
NBL Consumer Credit Scheme gives a great opportunity to buy household and office
items on easy installments. This scheme gives the advantage of part payment to cope
with the high price tags of many necessary home and office appliances.
This scheme facilitate the limited earning persons to bring Television, Refrigerator,
VCR, Personal Computer, Photo Copier, Washing Machine, Furniture, Microwave
Oven, Car, and a number of other expensive items within the buying range. With this
scheme NBL makes better living possible for people living on fixed income.
Customers can buy those home and office equipment's without over taxing their
budget.
2.6.5 Products of Modern Age
Credit Card
Through its Credit Card both VISA and Master Card NBL has not only initiated a new
scheme but also brought a new life style concept in Bangladesh. Now the dangers and
the worries of carrying cash money are memories of the past.
Credit Card comes in both local and international forms, giving the client power to buy
all over the World. Now the customers enjoy the conveniences and advantages of
Credit Card as the step into the new millennium.
NBL ATM Service – Access to prompt cash
NBL has introduced ATM service to its Customers. The card will enable to save the
customers from any kind of predicament in emergency situation and time consuming
formalities. NBL ATM Card will give the distinguished Clients the opportunity to
withdraw cash at any time, even in holidays, 24 hours a day, 7 days a week.
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Joining with the world's largest money transfer service "Western Union", NBL has
introduced Bangladesh to the faster track of money remittance. Now money transfer
between Bangladesh and any other part of the globe is safer and faster than ever
before.
2.6.6 Other Special Banking Offers
1. Bridge Finance
2. Underwriting
3. Act as Manager to Issue in IPO of various Limited Companies
2.6.7 Creating Customer Loyalty
For a banking organization it is not a tough job to make the Customer loyal. If a
customer has a long association with a specific bank a weakness or loyalty been grown
up in his mind to the same Bank. It is a matter of customer psychology that when a
customer gets used to transact frequently with a bank normally he inclined to keep the
relationship going on with the bank unless and until he has got any bitter experience
with the said bank. However, it noted from numbers of instance that while any
customer get better facilities or more advantages from another bank they tends to
switch to another bank.
Like any other organization highly satisfied customers produce a great deal of benefits
for the bank. Satisfied customers are less price sensitive. They talk favorably to others
about the bank and its products and remain loyal for a longer period. If satisfaction
increases so does loyalty. Highly competitive markets show surprisingly little
difference between the loyalty of less satisfied customers and those who are somewhat
satisfied. However, they show a tremendous difference between the loyalty of satisfied
customers and completely satisfied customers. Even a slight drop from complete
satisfaction can create an enormous drop in loyalty.
This means that banks must aim high if they want to hold on to their customers.
Customer delight creates an emotional relationship with a product or service, not just a
rational preference. This, in turn, creates high customer loyalty.
National Bank limited has been able to develop customer loyalty among a major
portion of their old customers who have been banking for quite a long time. But, at the
same he also looses a considerable portion of his old customer who are less satisfied
and switches to another bank because of highly competitive market. The management
of NBL focuses on creating customer loyalty among the selected customers who are
profitable and tested ones.
2.6.8 Broadening Connections with the Customers
It is very important and significant function of a bank to broaden its connection with
the customers in order to retain their existing customers and getting their opinions,
views, comments basing which the bank can provide expected value to the customers
and make them satisfied. The connection can be maintained from the branch level or
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regional office level and from the top management of the Bank at Head Office
considering the necessity. If the connection occurred frequently the customer will
remain loyal and long term relationship can be built out of continuous and regular
connections.
In National Bank Limited connections with the customers happened from both branch
and Head Office level. However, as NBL has spread its branch network all over the
country, so it is not possible to maintain connections by the Head Office with the
customers of remote area. In this case, NBL has divided its branches in some regions
basis on their location and territory. For every region a regional office has been set up
so as to broaden the connections with customers of different territories.
2.6.9 Marketing Strategies
Marketing Strategies is a very important and significant task to achieve the
organizational goal and to maximize profit and minimize the cost. Banks require to
develop different effective marketing strategies and to update them so as to keep pace
with time and coup with the customer’s demand, needs and wants. Without effective
marketing strategies it is impossible to survive and to boost the organizations overall
conditions.
National Bank Limited gives lot importance on marketing strategies. NBL has a
Division in the Head Office called “Marketing Division” which is involved to develop
marketing strategies and implement the same under direct supervision of the Managing
Director. Branches also frequently asked for providing ideas to develop the effective
marketing strategies as they are directly involved with the customers and receiving the
views, opinions and advices from them.
2.6.10 Segmentation & Targeting
Today’s marketing concept in order to make the marketing activities more effective
Customers segmentation and targeting. The needs and demands varies among the
customers. Through market segmentation bank can divide large, heterogeneous market
into smaller segments that can be reached more efficiently and effectively with
products and services that match their unique needs. To make the marketing services
more effective banks have group the customers according to the different benefits that
they seek from the bank. Customers can be segmented on the basis of their nature,
size, purpose, etc. In the banking organizations segmentation must devised generally
with the view to full market coverage, however, some specialized product might be
segmented based on Selective Specialization or market specialization.National Bank
Limited practices the segmentation approach to render their service to the customers
more efficiently and effectively. In order to invest the money for long term and short
term or in the specialized sector like Readymade Garments sector, or different
industrial sectors, to invest for commercial or trading organizations, or individual
borrowers the bank efficiently segmented the customers in different groups and target
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them with different products and investments. As per different target group the bank
fix and allocate their assets to utilize them properly in a lucrative manner.
2.6.11 Positioning
Positioning is another crucial part of banking. Under the competitive market condition
banks have make their individual position in the market. If any bank cannot make it
strong position it cannot survive in the highly competitive market.
National Bank Limited has make a strong position in the banking sector of our country
providing value through their product, services, advices. Mention may be made here
that NBL played a very significant role for emerging the readymade garments sector
since early 1980s’ and make a distinguishable position in this sector. They also make
their position among all other economic sector providing value and meet their needs
and wants.
2.6.12 New Product Development
In order survive in the highly competitive market and achieve the organizational goals
banks have to develop new products and services with different dimensions so as to
retain their customers and attract the new ones with the passage of time.
National Bank Limited is striving relentlessly to develop new products and concepts
since their inception.
2.6.13 Pricing
Pricing is another vital factor for a banking organization. If any bank fails to determine
the price of the products and services properly it will be ruined very soon. During
pricing the products the following factors must be considered by the banks:
1. Competitive situation
2. Competitors pricing, cost and offers
3. Demand of the products and services
4. Cost of fund
5. Organizational goals both in the long run and short run
6. Price elasticity of demand
7. Economic conditions
National Bank limited determines the price of their products and services on
Competition–Based Pricing approach.
2.6.14 Promotional Activities
Promotional activities is one of the most significant and strong weapons for the
survival and to succeed among the competitors. The promotional strategy required for
effective marketing of the products includes direct contact with customers, advertising
Sales Promotion and Public Relations, Participating in the important social activities,
92
etc. Now a days banks also develop web site for electronic media based marketing and
promotion.
National Bank limited carries out effective promotional activities to reach to their
potential customers. Mention may be made here that National Bank Limited sponsored
the Senior Division Football League over the years and the title of the football league
is NBL Senior Division Football League.
2.7.0 Standard Chartered
2.7.0 Introduction
Standard Chartered Bank started its business in Bangladesh in 1948, opening its first
branch in the port city of Chittagong. The bank increasingly invested in people,
technology and premises as its business grew in relation to the country's thriving
economy. At present the bank has 6 offices in Dhaka Chittagong and Sylhet, including
the country's only offshore banking unit inside the Dhaka Export Processing Zone at
Savar.
Extensive knowledge of the market and essential expertise in a wide range of financial
services underline our strength to build business opportunities for corporate and
institutional clients at home and abroad. Continuous upgrading of technology and
control systems has enabled the bank of offer new services, which include unique
ATMs and Phone banking.
Standard Chartered's services in Bangladesh, ranges from Personal & Corporate
Banking to Institutional Banking, Treasury and Custodial services.
2.7.2 Organizational Overview
Standard Chartered Bank derives its name after two banks – Standard Bank of British
South Africa and the chartered Bank of India, Australia and China. The merger took
place in 1969. Standard Chartered Bank is regulated by the Bank of England and is a
clearing bank in the United Kingdom.
The new millennium brought with it two of the largest acquisition in the history of the
bank- the acquisition of the Grindlays Bank from the ANZ group for a consideration of
$1.34 billion and acquisition of the Chase Consumer Banking Corporation in the Hong
Kong for $ 1.32 billion. These acquisitions demonstrate Standard Chartered Bank’s
firm commitment to the emerging markets.
Standard Chartered employs 29,000 people in over 500 offices in more than 50
countries. The group provides consumer-banking services to individuals and small to
medium size businesses, and offers Wholesale Banking capabilities to corporate and
institutional clients. With 150 years in the emerging markets the group has unmatched
knowledge and understanding of its customers in its markets. Standard Chartered
93
recognizes its responsibilities to its staff and to the communities in which it operates.
Their 150 years of history gives them a deep better understanding of their markets,
their customers, and the local communities in which they operate. It is a strong
platform for future growth.
Standard Chartered is holding leading positions in dynamic markets. They are in some
of the world’s fastest growing markets including he United Arab Emirates, India,
China, and the markets of South Asia. They are present in many of their markets for
several generations and have became a trusted partner to businesses and individuals. In
other words, they are trusted and well respected provider of financial products and
services. They have built up an enviable knowledge of local markets in Asia, Africa,
the Americans and the Middle East. In many cases, they have had a presence for more
than a century. Their first two branches were in Calcutta and Shanghai and we have
been operating continuously in China for the last 144 years.
2.7.3 The Impact of War
Even the First World War offered opportunities for expansion when the Standard Bank
set up a branch in Tanzania shortly after British troops occupied the formerly German
administered Dar es Salaam in September 1916. Both banks survived the inter-war
years but the world trade slump led to the closure of operations in the Canary Islands,
Liberia, the Netherlands, and Equatorial Guinea. Disaster struck the Chartered Bank's
office in Yokohama, Japan, when it was destroyed by an earthquake in 1923 killing a
number of staff. The Chartered Bank was particularly effected by the Second World
War when numerous Asian countries were occupied by Japan.
2.7.4 The Post War Years
After the Second World War many countries in Asia and Africa gained their
independence. This led to local incorporation in some countries, particularly in Africa.
Other operations such as those in Iraq, Angola, Myanmar and Libya were nationalised,
while in Indonesia the Jakarta office was destroyed in an attempted coup d'etat. In
1948 the Chartered Bank opened in Bangladesh and during 1957 it acquired the
Eastern Bank. The Eastern Bank gave the Chartered Bank a network of branches
including Aden, Bahrain, Beirut, Cyprus, Lebanon, Qatar and the United Arab
Emirates. The Chartered Bank also entered into a joint venture to form the IranoBritish Bank which opened for business in 1959. The bank grew rapidly and had 24
branches when it was nationalised in 1981. By the mid 1950s the Standard Bank had
around 600 offices in Southern, Central and Eastern Africa. Its network grew
substantially in 1965 when it merged with the former Bank of British West Africa
which had some 60 branches in Nigeria, 40 branches in Ghana and eleven branches in
Sierra Leone in addition to operations in Cameroon and Gambia. Despite these
acquisitions and expansion into new countries such as Mexico, South Korea and Oman
(1968), both the Standard and Chartered Bank networks were comparatively small.
Both viewed the future with some trepidation as the need to protect themselves from
94
acquisition became ever more apparent. Standard Chartered PLC In 1969 the decision
was made by the Standard Bank and the Chartered Bank to undergo a friendly merger
thus forming Standard Chartered PLC. It was one year later that the descendants of the
"Chartered Bank of India, Australia and China" were finally permitted to open a
representative office in Sydney, Australia. Standard Chartered subsequently acquired
the UK based Hodge Group, in which it already had a minority shareholding, and the
Wallace Brothers Group. The Hodge Group brought to Standard Chartered an
extensive network of UK offices specializing in installment credit and industrial
leasing, and after a period of rationalization its name was changed to Chartered Trust
Limited. Standard Chartered's operations in Jersey emerged from the integration of
other Hodge Group businesses with those of Wallace Brothers Bank (Jersey), Limited.
Standard Chartered decided, after the merger, to expand the Group outside its
traditional markets. In Europe a number of offices were opened including Austria,
Belgium, Denmark, Ireland, Spain and Sweden as well as several major cities in the
UK. Standard Chartered also opened offices in Argentina, Canada, Colombia, the
Falkland Islands, Panama and Nepal. In the USA a number of offices were opened and
three banks were acquired. These included the Union Bank of California which gave
Standard Chartered a presence in Brazil and Venezuela. The opening of a branch in
Istanbul in 1986 was overshadowed by a far more dramatic event when Lloyds Bank
of the UK made a hostile take-over bid for Standard Chartered. Standard Chartered
won its right to remain independent but entered into a period of considerable change.
By the late 1980s Standard Chartered already had considerable exposure to third world
debt. To this was added provisions against loans to corporations and entrepreneurs
who could not meet their commitments. Standard Chartered reviewed its operations
and decided to focus on its core strengths of Consumer Banking, Corporate &
Institutional Banking and Treasury in its well established operations in Asia, Africa
and the Middle East. This led to a series of divestments notably in Europe, the United
States and Africa. During this time staff numbers were reduced; businesses not
considered core were sold or closed; associate holdings disposed of; unprofitable
branches closed and back office functions consolidated. In addition expensive
buildings were sold with the proceeds reinvested in the business, and the senior
management team was radically changed and strengthened.
2.7.5 Standard Chartered in the 1990s
Even within this period of apparent retrenchment Standard Chartered expanded its
network, re-opening in Vietnam in 1990, Cambodia and Iran in 1992, Tanzania in
1993 and Myanmar in 1995. With the opening of branches in Macau and Taiwan in
1983 and 1985 plus a representative office in Laos (1996), Standard Chartered now
has an office in every country in the Asia Pacific Region with the exception of North
Korea. In 1998 Standard Chartered concluded the purchase of a controlling interest in
Banco Exterior de Los Andes (Extebandes), an Andean Region bank involved
primarily in trade finance. With this purchase Standard Chartered now offers full
banking services in Colombia, Peru and Venezuela. In 1999, Standard Chartered
95
acquired the global trade finance business of Union Bank of Switzerland. This
acquisition makes Standard Chartered one of the leading clearers of dollar payments in
the USA. Standard Chartered also opened a new subsidiary, Standard Chartered
Nigeria Limited in Lagos, acquired 75 per cent of the equity of Nakornthon Bank,
Thailand; and agreed terms to acquire 89 per cent of the share capital of Metropolitan
Bank of the Lebanon.
2.7.6 Business Activities of the Global Standard Chartered Bank:
The bank provides a full range of products and services all around the world, some of
which are mentioned here:
(a) Global Consumer Finance:
There are seventy-six branches and finance centers under this division in about the
countries with a workforce of 1616 employees. Some of the services provided by this
divisions are unsecured personal loans, credit cards and retail store cards, vehicle
related leases, etc.
(b) Personal Banking:
There are about 410 branches with a workforce of 12,000 employees working under
this division in 28 countries. Some of the services provided by this division are various
kinds of insurance and loans, account maintenance, travelers cheques and money
exchange etc.
(c) Global Corporate and Institutional Banking:
There are 350 branches under this division. This division provides services in 42
countries. The services provided by this division are International Trade Management,
Institutional banking, Treasury, Custody and Cash Management.
(d) Global Custodial Service:
There are 17 offices under this division and about 900 staff members, operating in 14
countries and headquartered in Singapore. Standard Chartered Equator fulfils standard
Chartered Bank’s strategic commitment to provide custody and clearing services in the
Greater Asia. Standard Chartered Bank has one of Asia’s leading custodians over 40
years. Equator’s focus is on the followings:

Commitment to equity

Dedication to the customer needs

Sustained investment in people and systems.
(e) International Trade Management:
Principle services of this division are to the people are Import Letter of Credits(L/C),
Import Bills for Collection, Back to Back Letter of Credit, Direct Export Bills for
Collection, Bulk Letter of Credit Collection, Bonds and Guarantees.
(f) Global Cash Management:
The division is operational in all countries where the group has Corporate &
Institutional Banking division. Standard Chartered Bank recognize the importance of
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Cash Management to corporate and institutional customers and offers a comprehensive
range of services and liquidity management. Services provided worldwide by this
division with stress on Asian delivery.
(g) Global Institutional banking:
Throughout Standard Chartered Bank’s network of more than 600 offices in over 40
countries, it is very well positioned to provide a wide range of services to institutional
clients: commercial, merchant & central banks; brokers and dealers; insurance
companies; fund managers and others. Offices of emerging markets of Asia, SubSaharan, the Middle East and Latin America are complemented by the branches in the
developed countries such as USA, UK and Japan and bank’s membership of the
clearing systems in those countries. The Institutional banking group has a network of
offices in 25 countries throughout Asia, North America, Europe, Africa and The
Middle East.
(h) Global Electronic Banking:
Electronic Banking Provides various types of support through a wide range of
operating systems, sweeping transaction accessories with the provision of reporting
features or other special functions.
2.7.7 Branches of Standard Chartered in Bangladesh
After acquisition, Grindlays Bank is a part of Standard Chartered Group. The Bank
presently has 18 outlets in 5 cities serving over 1,25000 customers. The network of
SCB Bank in Bangladesh includes:







10 Branches in Dhaka city
1 Branch in Savar EPZ (recently started with full banking operations)
1 Branch in Narayanganj
3 Branches in Chittagong
1 Branch in Khulna
1 Branch in Sylhet.
1 Branch in Bogra
2.7.8 Product Division
There are different divisions for targeting different type of customers. Mainly consist
of two divisions, that is Consumer Banking Division (C B) and other is Corporate
Banking Division named Corporate and Institutional Banking (C & I).
 Consumer banking division meets the needs of individual customers with various
products like Savings Account, Extra Value Savings Account, Access Account,
Call Deposit, FCY Deposit, NFCD Fixed Deposits, RFCD Account, Personal
Loans, Auto Loans, Flexi loans, Cash Line, Installment loans, etc. This department
also deals with other savings instruments like education savings scheme, rainy day
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scheme, marriage day scheme, millionaire scheme (some printed brochures are
enclosed in the Appendix)
 Corporate and institutional banking meets the needs of companies, banks and other
financial institutions. Standard Chartered provides a full range deposit and loan
products to it's corporate clients. Rapid decision-making is an important feature of
SCB’s services to international and domestic companies doing business in
Bangladesh. All accounts are assigned to a Relationship Manager to look after
client needs. Each relationship manager keeps close contact with the client
obtaining in-depth knowledge of the client's business and providing timely advice.
 This division’s products include network banking and borrowing services like
working capital loan, long term loans, short term loans, margin account,
commercial large loans, real estate apartment loans, heavy transport buying loans,
real estate mortgage loans, construction loans, restaurant loans, and above all it
includes all international trade related services like L/C issuing, L/C amendment,
L/C Transfer, L/C Confirmation, Negotiation, Bank Guarantees, etc. These
products are only served to the corporate clients of the bank, and those are mostly
local corporate, large and local corporations, multinational national companies. List
of some of them are given in the appendix section.
This focus allows the business to develop an in-depth understanding of the banks
customer’s evolving requirements. This in turn enables SCB to develop the products
and services that help them to stand out from the competition. Treasury provides
support to the customers of both these business and develops customers (both
individual and organizational) of its own.
2.7.9 The Division of SCB Bangladesh
The bank is divided into several divisions and business units, which are also further
sub-divided. The divisions are mainly based on some service lines designed for and
provided to targeted customers, other divisions and units are there to support the
business activities of the major service based divisions. The following is the list of the
divisions of SCB in Bangladesh. Note that the divisions are little different compared to
the major areas of the Group.
2.7.10 Major Business Units
(a) Corporate Banking Group
Standard Chartered Bank offers its local customers a wide variety of financial services.
All the accounts of corporate clients, which mainly comprise the top local and
multinational companies operating in Bangladesh, are assigned a Relationship
Manager (RM) who maintains regular and close contact to cater to their needs. The
objective of this department is to maintain a thorough knowledge of the client's
business and to develop positive relationships with them. This is maintained through
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interactions to offer timely advice in an increasingly competitive business
environment. The expertise of the Financial Institution (former Institutional Banking)
and Treasury groups is also available whenever required. The unique Off-shore
Banking Unit (OBU) in Savar offers a full range of facilities to overseas investors, and
recently that Savar Branch have expanded many of its activities. The Corporate
Banking Group in Bangladesh has displayed a spirit of community involvement by
working with NGOs to underwrite soft loans.
Standard Chartered Bank offers its corporate customers:
 The wide varieties of lending needs are offered with skilled and responsive
attention.
 Project finance and investment consultancy.
 Syndicated loans.
 Bonds and Guarantees.
 Local and International Treasury products.
The trade finance of Standard Chartered Bank takes care of the commercial activity
related issues, particularly those related to import and export finance services. Some
of the services are:
Some of the services are:
Trade finance facilities including counseling, confirming export L/Cs and issuing of
import L/Cs, backed by its international branch and correspondent loan network Bond
and Guarantees Project finance opportunities for import substitution and export
oriented project
(b) Treasury Division
The foreign exchange and money market operation of the Standard Chartered Bank in
the world is extensive. Exotic currencies happen to be one of its special areas of
strength. A 24 hour-service is provided to customers in Bangladesh through the Bank's
network of dealing centers placed in the principal of the world. The Bank's treasury
specializes in offering solutions to those who wish to manage interest rate and
currency exposures that result from trade, investment and financing activities of other
dynamic economies of the region. Treasury operations are developed in line with
changing market conditions to provide the best services to its customers. According to
BAFEDA (Bangladesh Foreign Exchange Dealers Association), Standard Chartered
Bank presently controls 42% of the local foreign exchange market's traded volume.
(c)
Financial Institution Department (Former Institutional Business
Group)
Financial Institution Department (former Institutional Banking) is a specialized
banking unit of Standard Chartered, providing products and services to the specific
needs of other banks and financial institutions. It assists the local banks by taking care
of their cross-border business through the worldwide Standard Chartered Bank
networking over 40 countries. It offers various services like L/C Confirmation,
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Negotiation, Inter and intra Bank Guarantee, Local Bill Discounting, L/C Advising,
L/C Transfer, L/C amendment advising, Reimbursement Undertaking and Authorities,
Fund Transfers, Export proceeds, BDT Draft Drawing, International Payments (T T’s),
Account Services (Vostro Account Management)
(d) Consumer Banking Division
Superior retail banking services comprising a wide range of deposit and loan products
are offered by the Standard Chartered Bank to its individual customers. The Consumer
Banking division constantly faces challenges and meets them by developing new
products and services to fulfill the specific requirements of local and foreign
customers. Bank offers a 24-hour service in Bangladesh through its Moneylink ATM
network and Phone-link Phone Banking services.
The below mentioned type of accounts are served by the Consumer Banking Division.

Personal Current Account

Personal Savings Account

Personal Access Account

Consumer Fixed Deposit Account

Personal Call Deposit Account

Non-resident Foreign Currency Deposit Account

Resident Foreign Currency Deposit Account

Convertible Taka Account

Foreign Currency Accounts for Foreign Nationals

Foreign Currency Accounts for Bangladeshi Nationals

Escrow Account

Private Non-Resident Taka Account
(e) Card Division
Card is the latest area that has been identified for rapid development. The bank is the
one of the acquirers of three major cards in Bangladesh. Two of the credit cards are
VISA and MASTER CARD and the one is the charge card known as Japan Credit
Bureau (JCB). Standard Chartered Bank is the subsidiary or secondary agent of the
credit cards and a primary agent of JCB.
SCB started its cards operation in 1989 as a part of retail banking. Initially, SCB’s card
market was very small, with only 30 merchants. But seeing the economies and the
consumers’ attitude towards the credit card has given the opportunity to expand their
market base by acquiring high quality merchants in the chosen segment. The bank is
the first to introduce the TAKA CREDIT CARD. The card is issued basically to a
person’s name and the specific person can use the card in anywhere in Bangladesh.
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(f) Custodial and Clearing Service
Headquartered in Singapore, Standard Chartered Equitor fulfils the group's strategic
commitment to the provision of custodial service in Asia. Equitor's customers are
primarily foreign global custodians and broker/dealers requiring cross border
information as well as sub-custodian services. Standard Chartered Bank, Bangladesh
is responsible for the planning in Bangladesh, but the overall management of the
custody business is based on Equitor's international business strategy.
2.7.11 Information and Technology Department
This department is instrumental in the running of all the computerized operations of
the bank. They help in the implementation and generation of computerized reports.
Another major duty of the department is to maintain communication with the rest of
the world.
2.7.12 Operation
Operation is part of the support division, which helps to run the businesses of the bank
in a smooth and controlled manner. Since it helps mainly in processing the works of
the business units, any mistakes made can be easily detected and on time.
Following are the main functions of the operations department:
 Central operations deals with the closing and opening of accounts and other
payment and account related processing of the Personal Banking division
 Treasury operations help to deal with the processing works of the treasury division.
Loan Administration Unit (LAU) deals with the processing of the Corporate
Banking division.
 Operations also have a department that deals with internal projects that arises from
the need to deal with certain problems or to make certain changes.
2.7.13 Legal and Compliance
In the UK, Standard Chartered Bank is regulated by the Bank of England, while in
Bangladesh local banking laws regulate it and rules set by the Ministry of Finance and
Bangladesh Bank. It also encourages its staff to conform to an internal culture of
ethical behavior and sensitivities to the culture and religion of the country.
Some of the key areas that the Legal & Compliance department has to take care of are:
any kind of legal issues, to advise the CEO regarding all matters and the management
on legal and regulatory issues, correspond regulatory compliance issues to MESA
Regional Head of Compliance, and supervise internal control (e.g. internal audit).
2.7.14 External Affairs
This department deals with advertising, public relations, promotions, partial marketing
which involves disseminating new products and services to customers and above all
ensuring service quality.
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2.7.15 Human Resources Division
This department manages recruitment, training and career progression plan. Standard
Chartered Bank highlights the importance of developing its people to create a culture
of customer service, innovation, teamwork and professional excellence. SCB recruits
people by two ways. One is a “Management Trainee” that has a probation period of six
months and after the probation period the trainees will be counted as an officer and
they will do the different kinds of managerial works and another is “Non Management
Trainee” which does not have any fixed probation period. Time required for training is
department on the recruited person’s performance. In case of non-management trainee,
two ways of recruitment is taken place. They are (a) taken by signing a contract with
some outside organization for three months and after three months the contract may be
renewed or not depending upon the employee’s performance. These people coming
through outside contract are called “Out Source”. (b) Taken by signing a contract with
the bank for the three months and after three months the contract may be renewed or
not depending on his/her performance. These people coming through bank contract are
called “In source”.
2.7.16 Controlling Structure at SCB
Alike all other big multi-national companies, management in SCB consists of planning
organizing, directing, controlling all of the resources of an organization. The goal of
Standard Chartered Bank is to be the "Bankers of First Choice." Towards that goal, the
overall planning in the Organization is done at the headquarters level in Dhaka by a
Management Committee (MANCO), headed by the CEO and consisting of the
business heads like Corporate Banking, Consumer Banking, Treasury, Global Markets,
and from the support divisions the heads of Human Resource, Operations and Finance
Departments. They meet once a month, or when special situations arise, to plan the
strategic decisions. The decision making, although apparently based on a top-down
approach, leaves room for participation down to the level of department heads, which
are responsible for carrying out the planning of their department within the broad
guidelines set by MANCOM.
Among the broad strategic objectives are:

Creating a congenial work environment

Modernization of the management information system to achieve full automation
by drastically cutting down the paper works in long term.

Focusing on service quality and consume needs

Recruiting and maintaining top grade, efficient employees

To invest in those technological systems which will upgrade and enhance financial
services

Creating an excellent brand image of the bank.
2.7.17 Personnel Policies:
The number of officers exceeds the number of clerk, which is a straight contrast to
local banks specially the nationalized commercial banks. Standard Chartered Bank
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pays great attention to recruiting high quality staff through proper evaluation and
improving their skills through structured training. Reward and punishment base on
strict performance evaluation and opportunities of promotion both in country and
abroad are two important features of the personnel policy of Standard Chartered Bank.
2.7.18 Recruiting, Training and Career Progression:
The recruitment process is based on references, advertisements and internships. Entry
point screening is done both by the written and oral test. The medical record of the
potential employee is very important and those suffering from potentially life
threatening and performance deterring diseases are not hired, even if they were
otherwise qualified. The placement of the staff is done in two ways. Either the
employee undergoes a management trainee program with a probation period of nine
months and is categorized as an officer leading to various managerial jobs, or is
recruited at a non-management level as banking assistance or support officer. There is
a structured training framework for all the employees, and a channel for moving
people from national to international positions. International graduate recruitment and
personal skill development for entry-level employees are a part of the human resources
development efforts at Standard Chartered Bank.
2.7.19 Planning, Organizing, Directing and Controlling
The top down planning approach is mostly followed at Standard Chartered Bank. The
top managers have the authority to decide how they will achieve their goal because
SCB group worldwide decides the goal. The Business Bank mainly does planning and
Retail Bank Division, IT Department provides all the assistance and information that is
required to create and execute long term and short term planning. Planning and IR
Department provides all the assistance and IT and other infrastructure in order to
reduce the paperwork IT has taken a plan to achieve the long tern plan. One branch
manager in each of it is managing SCB’s all branches. The performance of each
branch is solely dependent on the branch manager. Management is partly authoritative
and participant at the top level of SCB But every one has some assigned work to do for
the day and they cannot deny this. Sitting arrangement is created in such a way that coworkers can sit close to each other and have sharing of their work and at the same time
can have easy contact with each department coordinator/ Head. The work environment
is very friendly. The room contains sufficient amount of light and is always cooled by
high capacity air conditioners.
2.7.20 Five Values of Standard Chartered Bank
Standard Chartered Bank has five values and these values are key to their success.
These value determine how the employees achieve their goals, the way they work
together and how it feels to be a part of Standard Chartered Bank. In brief these values
are:
1. Courageous: Being courageous is about confidently doing what’s right. Often the
task may seem insurmountable but with courage and tenacity, the odds can be
overcome. A truly courageous act both inspires and builds character.
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2. Responsive: How we response to our customer will influence their belief in our
commitment to them. A proactive response is often unexpected and more effective
for that. It clearly demonstrates our willingness to go beyond the unexpected.
3. International: As a member of global village we view the world from the widest
perspective. We are all global citizens and the world is full of new opportunities
and exciting possibilities. We also deliver world class products and services.
4. Creative: Creativity belongs to those of us who are excited by challenges and
engage them in fresh thinking and an open mind. Creative thinkers are not limited
by convention but allow their minds to soar beyond predictable solutions.
5. Trustworthy: Trust is the foundation of every successful relationship. We trust
because we believe in the sincerity of our promise. Building trust can take forever.
Losing takes only moments.
2.7.21 SWOT Analysis
The acronym for SWOT stands for
 STRENGTH
 WEAKNESS
 OPPURTUNITY
 THREAT
The SWOT analysis comprises of the organization’s internal strength and weaknesses
and external opportunities and threats. SWOT analysis gives an organization an insight
of what they can do in future and how they can compete with their existing
competitors. This tool is very important to identify the current position of the
organization relative to others, who are playing in the same field and also used in the
strategic analysis of the organization.
Strength
 SCB’s Banking Experience for more than 55 years provides SCB the strength of
being the market leader in the foreign banking sector. This strength of SCB is
totally unmatched by any other multinational bank in Bangladesh, as the long term
success of a bank heavily depends on its reputation while dealing with every
sensitive commodity like money.
 SCB is the first bank in Bangladesh to issue Money link (ATM) card. As the
market leader, they showed the most substantial corporate strength among the
foreign banks by grabbing the opportunity that exists in the market.
 In Bangladesh SCB has wide range of customer base and is operating efficiently in
this country.
 SCB has a bulk of qualified, experienced and dedicated human resources.
 SCB has the reputation of being the provider of good quality services to its
potential customers
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Weakness
 SCB has fewer branches than their competitors. Such as SCB have only 18
branches whereas Uttara Bank Limited has 198 branches and 12 regional offices.
 SCG has more and high fees and charges compared to its rivals. Such as minimum
balance fee, ledger fee etc. as a result SCB is loosing its customers.
 SCB often has problem with market share as ATM machines. Customers often
complain that the ATMs are out of order.
 SCB hasn’t that much good market share as other multinational bank. It’s as
because SCB’s marketing strategy is not aggressive they always follow defensive/
conservative strategy. This may be considered as weakness.
Opportunity
 The population of Bangladesh is continuously increasing at a rate of 7.3% per
anam. The country’s growing population is gradually and increasingly leraning to
adaptation of consumer finance. As the bulk of our population is middle class,
different types of products have very large and easily pregnable market.
 The activity in the secondary financial market has direct impact on the primary
financial market. Investment is a national socio economic activity. And activity in
the national economy controls the bank.
 Bangladesh have a huge consumer base for maintaining several accounts. So SCB
has the opportunity to keep these customers by reducing its current fees and
charges.
Threat
 In today’s economy, substantial amount is remaining idle and currently the
investment in the secondary market by foreign is relatively low. These economic
situations of the country indicate political threats.
 Increased competition by other foreign banks is also another threat to SCB. At
present HSBC and CITI Corp are posing significant threats to SCB regarding retail
and business banking respectively. Furthermore, the new comers in private sector
Prime Bank, Dutch Bangla Bank, EXIM Bank, BRAC Bank, Southeast Bank,
Mercantile Bank, Social Investment Bank, Islami Bank are also coming up with
very competitive force.
2.7.22 Consumer Products of SCB
In the consumer market, SCB is well reputed for introducing innovative and lucrative
offers and products to its customers. SCB’s products have always been a master blaster
in the banking market.
(a) Personal & Joint Account
For opening a personal or a joint account one needs to submit a valid passport or any
identification attached with photo, one passport size photograph and needs to be
introduced by any account holder of SCB whose account is minimum six months old.
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To open the account the person needs to fill up a form mentioning his name, address,
telephone number, date of birth, occupation etc. as well as mode of operation and
specimen signature. Account holder must appoint a nominee with photograph and
signature who also must attest nominee’s signature and photo.
(b) Current Account
To open a Current Account one has to deposit a minimum of Taka.50, 000. And
account holder of those account need to have average balance of Taka 50000 at all
time, otherwise a charge of Taka 500 will be debited. And the closing charge for those
accounts is Taka 250, and if it is closed before six months, the charge will be Taka
500.
Current Accounts (Local Currency & Foreign Currency):
Minimum balance required
BDT 50,000 or equivalent
Interest Rate
No interest is paid
(c) Savings Account
To open a Savings Account one has to deposit a minimum of Taka. 100,000 and Taka
300,000 for extra value savings account (EVSA). And account holder of those account
need to have average balance of Taka 100,000 at all times, otherwise a charge of Taka
500 will be debited. And the closing charge for those accounts is Taka 200, and Taka
300 for EVSA accounts. If the A/C is closed before six months, the charge will be
Taka 500 and Taka 1000 for EVSA.
Average Balance
Average balance below BDT 100,000
Average balance BDT 100,000 to 500,000
Average balance BDT 500,000 to 1,000,000
Average balance BDT 1,000,000
Interest Rate
00.00%
04.50%
05.00%
05.50%
(d) Short Term Deposit (STD) Accounts:
Minimum balance for maintaining a STD (Short Term Deposit) or Call Deposit Account
is required BDT 250,000. Interest Rate on this type of account is 4.00% to 6.00% (Rate
varies on amount). The main reason for big clients to maintain this type of account is just
to earn interest on big amount on a daily basis.
(e) Access Account
Access account is quite new feature of SCB that allows customers to have an account
with SCB without any charges that are present in other types of accounts. Access
account differs from its other account services in the way that it requires no minimum
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deposit size and hence it doesn’t provide any interest. The advantage is that students /
people of medium income level trying to avoid high bank charges can use this account
to meet emergency cash requirements. The account holders do not get any facility of
cheque book and cannot withdraw more that Taka. 20, 000 in a day and also cannot
overdraw their account. The charges include Taka. 150 per year and Taka. 250 for
government excise duty. And the closing charge for those accounts is Taka 200.
(f) Resident Foreign Currency Deposit (RFCD)
Specially designed foreign currency account for resident Bangladeshis. Offers
wonderful opportunity to build a deposit base in foreign currency. Helps make for
overseas commitments and dues like credit card bills, traveling expense, recreation
tours, etc. This service is offered in currencies like USD, GBP and Yen. The interest
that SCB offers is very competitive, but the deposit can only be made in foreign
currency. The withdrawals can only be made in local currency. It offers fund
Remittance in LCY and FCY to any place in and out of the country.
(g) Foreign currency current account
Applicable to Bangladeshis working abroad, it can be opened in USD, GBP and Yen
without restriction on transaction frequency. Can be operated through nominees, in
absence of the account holder. Fund remains in foreign currency and is freely
remittable. The deposit can be made in foreign currency only (Cash, TC or Drafts or
transfer from other FCY account). But cash withdrawals can only be made in local
currency only. Fund can be used to make investment in Wage Earners' Development
Bond
(h) Non - Resident Foreign Currency Deposit (NFCD)
A short-term foreign currency deposit account suitable for Bangladeshis living abroad,
offering most competitive interest rates available in both local and international
markets. The interest paid in this account is in foreign currency, it can be opened for a
term of 1 months, 3months, 6 months and 12 months. The interest rates are tiered
(based on amount and term), but payable on maturity, but automatically renewable. It
can be used as security against personal/commercial loan.
2.7.23 Account Statement Charges
The charge for holding statements is BDT 1000 per annum per account, and for
Additional/ Duplicate statement (Per cycle) is BDT 200 per statement. Photocopy of
statements is Taka 1000.
2.7.24 ATM Card Charges
The annual fees for ATM card is Taka 150 per card, and the charge in case of damaged
or lost card is Taka 300 per card. And phone banking is absolutely free.
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2.7.25 Charges for Cash and Travelers Cheque Foreign Currency
For issuance of FCY cash, customers need to pay 1% of the transaction plus Taka
200/= per passport. And for issuance of Travelers cheque 1% of the transaction plus
Taka 200/=. The charge for encashment is absolutely free in case of travelers cheque
issued by SCB.And encashment for other bank’s issued T.C is 0.25% of the
transaction value or minimum BDT 500. SCB also provides encashment facility for
non-customers, is 0.25% of the transaction value or Taka 1,000.
2.7.26 Charges for maintaining Student file
For customers, opening student file for SAARC countries, they charge BDT 3500 per
student, per annum plus Taka 500 per remittance. This is a centralized system. No
matter where the customers conduct his/her banking, for opening and maintaining
student file, he/she is bound to come to SCB Kakrail Branch, which is at 109, Kakrail.
That branch exclusively deals with Student File. And, the charge for other countries is
Taka 5000 per student file plus Taka 500 per remittance. This opening of student file is
not available for non-customers.
2.7.27 Fixed Deposit Account
For a fixed deposit account a person needs to deposit a minimum of BDT 100,000.
After the maturity of the fixed deposit the depositor will get the principal along with
the interest. The interest rate for this fixed deposit varies with the amount and period.
The rate increases as the amount and time period increases.
Fixed Deposit (effective from 1st February 2003):
Local currency for Consumer Customer
Tenor
3 Months
6 Months
12 Months
2 Years
3 Years and above
Minimum amount
required
BDT 100,000
BDT 100,000
BDT 100,000
BDT 100,000
BDT 100,000
BDT 10M &
Below
7.00%
7.50%
7.75%
8.25%
8.50%
BDT Over
10M
7.75%
8.25%
8.50%
8.75%
9.00%
But the above deposit rates may be increased by 1.00% for priority/Wholesale clients at
the discretion of the Management. In that case, the branch sales and services manger
needs to obtain approval from HOC&I and HOCB for C&I and CB deposit respectively
with regard to above discretionary interest rates.
2.7.28 Lending Rates For Consumer Banking:
a. Money Builder
b. Cash Line (Loan)
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12.00% to 14.00%
11.00% to 13.00%
c. Cash Line (Overdraft)
12.00% to 14.00%
d. Instalment Loans:
i. Type A (100% Covered)
13.00% to 15.00%
ii. Type B (50% to 99% Covered)
15.00% to 17.00%
iii. Type C (30% to 49%)
17.00% to 19.00%
e. Personal Loan
18.00% to 20.00%
f. Supra National Organizations Personal 07.00% to 09.00%
2.7.29 Sole Proprietorship Account
Just like the personal and joint account, an account opening form and one passport size
photograph is required. The customer also needs to submit a copy of his trade license,
Sole proprietor Declaration From and signature. The account holder must attested
nominee’s signature photo.
2.7.30 Partnership account
Just like the sole proprietorship account, an account opening from and one passport
size photograph is needed. Account holder must appoint a Nominee’s signature and
photo. Moreover the customer is required to provide the following documents:





Required Certified copy of the Partnership Deed of the firm.
Certificate of Registration of the firm.
List of partners with their address.
Latest copy of Balance Sheet.
Extract of resolution of the partners of the firm for opening the account and
authorization for its operation duly certified by the firm’s Managing Partner.
 List of names with appointments and specimen of the persons who are authorized
to operate the account duly certified by the Managing Partner of the firm.
2.7.31 Limited Company Account
To open a limited liability company account the customer is required to submit the
following documents:
 Certified copy of the memorandum and articles of association of the company.
 Certificate of incorporation of the company.
 Certificate from the Joint Stock Registrar that the company is entitled to commence
business.
 Latest copy of Balance Sheet.
 Extract of Resolution of the Board / General Meeting of the company for opening
the account and authorization for its operation duly certified by the Chairman or
Managing Director of the company.
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 List of names with appointments and Specimen signatures of the persons
authorized to operate the account and request the bank to open a letter of Credit /
Guarantee duly certified by the Chairperson or Managing Director of the company.
2.7.32 Tele Banking Services
Tele banking service allows the account holders to make inquiries and service requests
over the telephone. To get this Service all a customer needs to do is to fill up a TeleBanking form mentioning his name, account number, contact address, and telephone
number. After the application TIN (Telephone Identification Number) is given to that
customer. TIN is a personal security password, which a customer can change at any
tine. A person who requests service through Tele Banking is required to take delivery
of the service by nominated branches within two days of requests. If a customer fails
to receive this service within two days the request will be cancelled and Taka. 200 will
be charged from his personal account
2.7.33 Speed Cheque Deposit
The Speed Cheque Deposit system saves a customer’s precious time by allowing him
to drop the Cheque in the Speed Cheque Deposit Box. All a customer needs to do is to
complete the Cheque deposit slip and keep the counterfoil. To complete the Cheque
deposit slip a person has to mention the account number of the Cheque, the name of
the bank with branch, cheque number and amount. After finishing writing the cheque
deposit slip the customer needs to staple the cheque with the slip and drop it inside the
box.
2.7.34 Money Link (ATM) Card
SCB Launched Automated Teller Machine (ATM) in Bangladesh in the year of 1998.
A person can access his personal, current and savings account 24 hours a day by using
a Money Link Card or ATM card in this machine. This card can be used for cash
withdrawal, cash / cheque deposit, fund transfer between accounts, balance inquires,
statement requests etc. Apart from SCB Money Link cards (ATM) it also accepts both
local and International Master Card and VISA Credit Cards. Taka 150 is charged per
ATM card for a period of 1 year. For security reason a person cannot access his
account without his PIN (Personal Identification Number).
2.7.35 Credit Card
Types of credit cards
1. Gold Master Card
2. Silver Master Card
3. VISA Silver Card
Requirements:
1. Completed credit card application form.
2. One copy of passport size photograph.
3. Minimum monthly income of Tk. 10,000 for Master and VISA Card Silver.
4. Minimum monthly income of Tk. 55,000 for Master Card Gold.
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5. Documents (e.g. Salary Certificates, Income Tax Certificates, 6 months bank
statement, Photocopy of passport or other Documents).
6. For foreigners, work permit from the ministry is required.
2.7.36 Features of Credit Card
 Wide Acceptance: SCB Credit Card is accepted at more than 3,000 outlets around
the country. One can use his/her card for everyday purchases as well as for high
value purchases. Its wide range of merchants include hotels, restaurants, airlines &
travel agents, departmental stores, hospital and diagnostic centers, jewelry shops,
electronic and computer shops, leather goods, mobiles and ISP’s and many more.
This number is increasing everyday to cater to customers growing needs.
 Easy Credit: With SCB Credit Card customers have the convenience to pay as
little as 5% of their outstanding on the card account every month, thus having the
power and flexibility to plan their payments. Minimum monthly payment is 5% of
the cardholders closing balance or Tk. 500 whichever is higher. If the closing
balance is more than Tk. 500 it must be paid in full.
 Instant Cash Advance: SCB Credit Card gives its customers to access to cash up
to 50% of the credit limit. Customer can withdraw cash advance from all SCB and
SCG ATM around the country, thus having access to cash 24 hours a day. Besides,
cash advance can also be taken from any of its branches across the country.
 Safe and Secure: Customer does not need to carry cash anymore if he/she is
carrying SCB Credit Card. If someone last his/her card can be protected from the
financial charges from the moment he/she reports to the bank.
 Air Accident Insurance: SCB Credit Card gives the customer free air accident
insurance coverage up to Tk. 100,000 (Silver Card) and Tk.500,000 (Gold Card).
This coverage is also applicable for supplementary cardholders.
 Supplementary Card: Customers can apply for supplementary card(s) for their
spouse, parents, sisters, brothers, friends of children over 18 years of age. All
charges on the supplementary card are reported on the monthly statement. Besides,
for customer’s peace of mind one can assign monthly spending limit on each
Supplementary Card. From March 2002 first Supplementary card is free for
lifetime.
2.7.37 SME Banking
Our SME Banking team is dedicated to you and your business. Our aim is to help your
business reach its fullest potential. We share your vision for growth and we'll support
you with customised product packages, responsive services and access to expert
advice. Our international network and trade expertise spanning Asia, Africa and the
Middle East are also an advantage when you're planning to expand business
operations.
Benefits at a glance:
a) Enjoy preferential pricing on business transactions.
b) Receive rewards on banking services rendered.
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c) Take advantage of our international network and trade expertise.
d) Gain unlimited access to professional advice, poducts and services through our
Relationship Manager.
e) Get the right products, services and support for your local and international
businesses.
2.7.38 Services
(a) Cash Management
We'll help you take control of your cash flow with banking and investment services to
suit the way you do business.
(b) FX/Treasury Services
Our foreign exchange services are designed to help you take advantage of market
movements with minimal risk.
© Trade Finance & Working Captial
We offer a comprehensive range of import and export services, plus Express Trade
services to boost your working capital.
(d) Loans & Mortgages
From SME mortgages to cross-border financing, we'll provide the funds you need to
drive your business forward.
(e) Transaction Banking
A world leader in trade finance solutions, cash management and securities services.
2.7.39 Leading the way in Islamic Banking
At Standard Chartered Saadiq our dedicated Islamic Banking team combines Shariah
expertise with strong business acumen to offer customers the best of both worlds comprehensive international banking services and a wide range of Shariah compliant
financial products based on Islamic values.
The word Saadiq means 'truthful' in Arabic, representing our commitment to provide
innovative banking solutions that uphold our customers' beliefs. Our aim is for
Standard Chartered Saadiq to be recognised as a leading provider of Islamic Banking
across the globe.
2.7.40 Personal Banking
Choose from a wide range of best-in-class financial products that comply with the
principles of Online Banking
2.7.41 Online Banking
Standard Chartered Online is an innovative Online Banking service that you can tailor
to suit your precise banking needs. It gives you convenient, round-the-clock banking
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services ranging from day-to-day account transfer transactions to real-time valuable
financial information. Now you can manage your finances anytime, anywhere.
2.7.42 Building a sustainable business
We have been in business for more than 150 years. We are certain that our success
over another 150 years will depend on our ability to deliver a sustainable business in
which our skills and talents turn issues into opportunities. That means taking a longterm view of the consequences of our actions.
To focus on areas where we can have the most impact we have identified seven pillars
to building a sustainable business.
(1) Sustainable lending
Sustainable lending & the Equator Principles
(2) Community investment
Educate 1m about HIV/AIDS
Standard Chartered wins a 2007 Global Business Coalition award
(3) Access to financial services
USD500m commitment to Microfinance
Helping promote economic development, reduce poverty and improve living standards
(4) Environment
As a bank, our own environmental impacts relative to other sectors are small, though
we are strongly committed to minimising them.
(5) Tackling financial crime
The threat that our products and services might be used by criminals is a significant
risk for Standard Chartered, as it is for any bank.
(6) Responsible selling & marketing
Treating customers fairly is a priority for the Bank and we want to set a standard for
openness and transparency with our customers.
(7) Great place to work
Standard Chartered employs almost 65,000 people in 56 countries and territories,
representing over 100 nationalities.
2.8.0 Citibank N A
2.8.1 Citibank N A
Citibank N A is a foreign private bank in Bangladesh. The Bangladesh branch
commenced its banking operations on 24 June 1995 after obtaining license from
Bangladesh Bank in January 1995. Before starting full-fledged banking activity
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through the branch at Dhaka, it established a foreign representative office here in
1987. The present branch of the bank is the upgraded and transformed shape of the
representative office.
Citi Group Inc., a merger of Citicorp Inc. and Travelers Group Inc. formed on 8
October 1998, is a bank holding company under the laws of United States of America.
It is the sole shareholder of Citibank N A and its head office in New York governs the
businesses of its Bangladesh branch. The bank commenced business in Bangladesh
with a paid up capital of Tk.204 million and total assets of Tk.809 million.
2.8.2 Principle Activities
The principal activities of the Dhaka branch of Citibank N A are to provide all kinds of
commercial and merchant banking services to its customers.
In addition to traditional lending activities, the bank is extensively involved in longterm financing in Bangladesh through equity participation and in other forms of term
investments. It has equity participation in Shinepukur Ceramic Ltd and the country's
first private television channel Ekushey (ETV).
Citibank N A provided support to large, medium and small scale industries in the form
of working capital financing, medium and long-term financing, export servicing and
import financing, and loans and advances to trade and commerce.
2.8.3 e-Solutions
Citibank offers to carry out all banking operations from anywhere around the world
with connectivity to CitiDirect Online Banking of Citibank. It is an award winning,
web-based delivery platform which is recognized worldwide in over 100 countries.
The operation in this platform is flexible, secure and cost-effective with a capability to
take care of all banking needs.
CitiDirect Online Banking is a complete package for managing all cash collection and
payment related transactions. It covers the process of payment from beginning-to-end
as creation of payment instruction and, authorization of the instruction which reaches
Citibank’s end instantly for processing. In today's world of decentralized operations,
this web platform offers the facility of remote authorization from any location. This
platform serves all reporting needs relating to monitoring sales collection account
transactions. CitiDirect helps also for account reconciliation where get the real time
account statement.
The trade service available in this platform offers the facility to track trade
documentation and Letter of Credit status in different transaction stages. It brings to
the unique features of
1. Customized reporting formats at request
2. Availability of saved reports both in the internet and in e-mail account
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3. Consolidated real-time transaction capabilities
4. Remote authorization and alert function
5. Wide range of import and export related trade services
6. Dedicated and experienced implementation manager's assistance
2.8.3 Mobile Based Remittance Service From Malaysia
Citibank and DIGI Telecommunications Sdn Bhd have teamed up to provide a new
service - DiGiREMIT - to facilitate the transfer of money from Malaysia to
Bangladesh, Indonesia and the Philippines. The new service is designed to simplify the
transfer of money by using mobile phones. DIGI acts as a remittance agent of Citibank
to its prepaid and postpaid cell phone customers, who can register at any of the 47
DiGi centers throughout Malaysia. The service offers issuance of drafts in Bangladesh
payable at over 800 locations, which are delivered between 24 to 72 hours. The
registration creates a virtual wallet for the customer to load up to Malaysian Ringgit
(RM) 5,000 at any one time. The customer can then remit via SMS anytime or over the
counter at designated DiGi outlets, subject to a limit of RM 5000 per transaction. The
fee for the service starts from RM 8. Customers will also automatically receive free
personal accident coverage along with that.
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