Welcome to my
presentation
Presented by
MD.Hasibur Rahman
major in Finance
ID:B081718
Depertment of Business Administration
IIUC-Dhaka campus
PRESENTATION TOPIC
“Modes of Investment of IBBL:an exploratory
study on Islami Bank Bangladesh Limited ”
1.1 Introduction:
 Because of globalization today’s world enhances the opportunities of business and
investment, for economic empowerment modern world put a great effort favoring from
all aspect. As a result, in the modern society commercial banks occupy a position of
economic importance. They play a significant role to meet up the needs of the society
such as large-scale production, capital formation, industrialization, growth of trade and
commerce etc. Islami Bank does not pay interest .
to depositor. Instead depositors participate in the profitability of the bank. The Bank
participates in financing long-term projects on the basis of profit-loss sharing instead of
granting credit facilities with interest. IBBL also performs various social welfare
activities through its subsidiary organ named Islami Bank Foundation (IBF). In this
report, I undertake microscopic analysis mainly on Different Investment Modes of
IBBL and sketch picture of the same.
Objectives and Philosophy of the study:
 The objective of the study is to fulfill the requirement of BBA
program as well as to gain practical exposures about investment of
IBBL. In line with the broad objective, the detailed objectives of
the study may be spelled out as follows:

To familiar the history and operations of Islami Banking in
Bangladesh.

To fined out the overall pictures of investments of IBBL.

To identify strength and weakness of investments of IBBL.

To identify the problems related to investments faced by IBBL.

To recommend actions that may be necessary to redesign the
investments of
IBBL.
Methodology of the study:
 The study is performed based on the information
extracted from different sources collected by using
a specific methodology. This report is analytical
in nature. The methodology is:
 Data collection: Source of data of this report can be
divided into two categories
Methodology continued……..
 Primary Sources:
 Face to face conversation with the respective officers and
staffs.
 Interviewing officers and staffs.
 Relevant file study on provided by the officers concerned.
 In depth study of selected cases.
Secondary sources:
 Website of IBBL.
 Annual Report of IBBL.
 Audit Reports.
 Relevant books, Newspapers and Journals.
 Internet and various study report.
Modes of investment
• an exploratory study on Islami Bank
Bangladesh Limited

When money is deposited in the IBBL, the bank,
in turn, makes investments in different forms
approved by the Islamic Shariah with the
intention to earn a profit. Not only a bank, but
also an individual or organization can use Islamic
modes of investment to earn profits for wealth
maximization. Some popular modes of IBBL’s
Investment are discussed below.

Bai Modes
Share Modes
Ijara Modes


Bai Modes
Bai-Murabaha
 Bai-Muazzal
 Bai-Salam
 Quarde-e-Hasana

Bai-Murabaha (Contract Sale on Profit)

“Bai-Murabaha" means sale on agreed upon profit. Bai-Murabaha may be
defined as a
contract between a Buyer and a Seller under which the Seller sells
certain specific goods
permisIBBLe under Islamic Shariah and the Law of the land to the Buyer
at a cost plus
agreed profit payable in cash or on any fixed future date in lump sum or
by installments.
The profit marked-up may be fixed in lump sum or in percentage of the
cost price of the
goods.
Bai-Muazzal (Deferred Sale)

“Bai-Muazzal” means sale for which payment is made at a future fixed
date or within a fixed period. In short, it is a sale on Credit. The BaiMuazzal may be defined as a contract between a buyer and a seller under
which the seller sells certain specific goods, permisIBBLe under Shariah
and law of the country, to the buyer at an agreed fixed price payable at a
certain fixed future date in lump sum or in fixed installments.
Bai-Salam (Advance payment)

“Bai-Salam” means advance sale and purchase. Bai-Salam may be defined as a
contract
between a buyer and seller under which the seller sells in advance in the
certain
commodities and products IBBL under Islamic Shariah and the law of the land to the
buyer at a agreed price payable on execution of the said contract and the
commodities
and products to the buyer at a future time in exchange of an advanced price fully
paid on
the spot. Here the buyer makes an advance payment, but the delivery is delayed
until
sometime in the future. Usually the seller is an individual or business and the buyer
is the
bank.
Quarde-e-Hasana Term Deposit Recite

The word “Quarde” is an “Arabic word” which means loan or credit on advance. The
literal meaning of Quarde is giving “Fungible goods” for use without any extra value
returing those goods. It must follow the principal of equal foe equal return
with
homogeneous goods. Fungible goods may be rice, oil, salt, money etc. In banking
sector
money is used as quarde. Quarde is Halal by Islam for not to pay any extra or
interest in
return.
 Mudaraba
 Musharaka
Mudaraba (Investment made by the entrepreneur)

The word “Mudaraba” means “travel” for undertaking business The
term Mudaraba
refers to a contract between two parties in which one party supplies
capital to the other
party for the purpose of engaging in a business activity with the
understanding that any
profits will be shared in a mutually agreed upon. Losses, on the other
hand, are the sole
responsibility of the provider of the capital. Mudaraba is also
known a Qirad and
Muqaradah
Musharaka (Partnership based Investment)

The word “Musharaka” is derived from the Arabic word “Sharikah”
meaning partnership.
Thus the word “Musharaka” means a partnership established
between two or more
partners for purpose of a commercial venture participated both in
the capital and
management. Thus, it involves different types of profit and loss sharing
partnership.
 Hire
purchase Under Sirkatul Meelk
 Hire Purchase under Shirkatul Melk is a
Special type of contract which has been
developed through practice. Actually, it is a
synthesis of three contracts:

Shirkat

ijara

Sale
It was a great experience to have learnt some
important banking, finance, marketing
functions that will help me in future. I could
learn how to file the official documents
accordingly and to keep track of those files.
This helped me understand the importance
of file management system of Islami Bank
Bangladesh Ltd.
I
have gathered a very good skill in
handling Electronic Integrated Banking
Software (EIBS), Web Based Remittance and
Investment which will help me in my future
job carrier.
I
have learned about how to import,openning
an L/C.
 Remittance handling
 Investment proceure
 Account openning
Analysis:








All activities are conducted on interest free system according to Islami
shariah
Investment is made though different modes as per Islami shariah.
Extend socio economics and financial services to individuals of all
economics
backgrounds with strong commitment in rural uplift.
Lack of strong initially to explore investment opportunities through
research and
markets.
All employees are not expert of online banking system.
Some of the employers try to violate Islami shariah when they
deal with
investment.
Most of the employers and employees are not Business graduate/
Master.
Security in bank is not standard.
Some Investment deal is very much slow.
Islami bank lacks efficient manpower.
(SWOT) Analysis










Strengths
Countrywide branch network.
Expatriates faith & inclination towards Islamic Banking.
Strong base of well-wishers.
General support of beneficiaries towards IBBL.
Wider network of arrangement.
SWIFT arrangements with major Banks.
Motivated and experienced human resources.
Weaknesses
Lack of proper automation.
Shortage of manpower.
Insufficient logistic support.

Concentration of remittance operation though a single location.

Non-offering special deposit & investment schemes for the expatriates.



(SWOT) Analysis continued…….
 Opportunities


New arrangement with some Exchange Houses.

Increase in skilled/ semi-skilled expatriates in various
countries.
On-line banking facilities.

Opening branches at the major remittance receiving localities.
Enforcement of Anti Money Laundering Act.

Floating and attractive Exchange Rate.

 Threats

Entering third generation banks to remittance business
Unusual exchange rate offered by competitor.
Aggressive marketing by some banks.
Operation of New Islamic Banks/ Branch
Trends of investment:2007to 2011
year
Investment(million taka)
263,225
214,616
180,054
144,921
113,575

2007
1
2008
2
2009
3
2010
4
2011
5

This Figure shows the upward trends for IBBL,
28
 .1.95%
0.80%
1.38%
0.57%
4.65%
4.41%
Bai-Murabaha
Hire purchase Under Sirkatul Meelk
Bai-Muazzal
Bill purchased and negotiation
Quard
30.42%
55.52%
Bai-Salam
Mudaraba
Musaraka
27.71%
43.30%
INDUSTRIAL
COMMERCIAL
REAL ESTATE
AGRICULTURE
TRANSPORT
1.74%
SME
5.41%
4.33%
17.53%
INVESTMENT OF SOME WELFARE SCHEMES( IBBL)
18000
16000
AMOUT IN MILLION TAKA
14000
12000
REIP
10000
8000
RDS
6000
SBIS
4000
2000
0
2010
2009
2008
YEAR
2007
2006
Any kind of bank Shariah based or interest based has to operate under regulatory
environment prepared and approved by the government. There are conflicts
between Islami Shariah and general Government rules and banking law. That’s
why Islami bank does not get the opportunity and help from the running law of
government.






•
Insurance company pools large amount of money, which is mainly invested by
bank. Islami bank does not get benefit from insurance companies directly.
Because insurance companies are not guided by Islami Shariah. So Islami Bank is
not interested to get insurance from that companies that’s why it is necessary to
establish Islami insurance policy.
•
Islami bank cannot accept securities & bonds from Bangladesh Bank because
these securities & bonds are not well instructed by Islami Shariah. Besides the
conventional banks get these benefits from Bangladesh Bank that helps them to
increase their wealth.
Islami bank lacks efficient manpower. In our country Islami bank spreading very
rapidly but still skilled manpower is not sufficient. Islami banking and Islami
economy must be included in the syllabus of schools and universities so that
Islami educated people can have opportunity to get employed in Islami bank and
the service of Islami bank can be better with the help of these skilled personnel.

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•

Islami banking system the collection of invested
money is easier that the conventional banking
because Islami bank concerns with the purpose
of investment not with only the invested money.
I also think that there is bright future waiting for
the Islami banking in Bangladesh. And IBBL is in a
position to go as a catalyst for this development
in the banking sector in Bangladesh. Another
thing I have to mention here that the IBBL is
going through the path in which they need to go
and as like today it will bring more new and
welfare oriented activities in the banking sector
in the years to come.
Thank you all for joining my
presenation
ALLAH HAFEZ