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Internship Report Scribd SIBL
Internship Report Scribd SIBL
1 ABSTRACT
Social Islami Bank Limited (SIBL) is a banking company registered under the companies Act 1994
with its head office 15 Dilkusha C/A, Dhaka-1000. The bank operates as a scheduled bank under a
banking license issued by the Bangladesh Bank. The Bank started its operation from 22, November
1995. SIBL is a capitalized new generating Bank with an authorized capital of Taka 4000 Million in
2008 and paid up capital of Taka 585 million in 2008 and also 585 million respectively as of
December 2007. In the formal corporate sector, this Bank would, among others, offer the most up-to
date banking services through opening of various types of deposit and investment accounts, financing
trade, providing letters of guarantee, opening letters of credit, collection of bills effecting domestic
and international transfer, leasing of equipment and consumer durables, hire purchase and
installment sale for capital goods, investment in low-cost housing and management of real estates,
participatory investment in various industrial, agricultural , transport, educational and health
projects and so on. In the Non-formal non-corporate sector, it would, among others, involve in cash
Waqf Certificate and development and management of WAQF and MOSQUE properties, and Trust
funds. For coordinating my internship I have been placed in Social Islami Bank Limited, IDB Bhaban
Branch, and Dhaka. There are 03 sections in IDB Bhaban Branch. They are: 1) General Banking .2)
Investment Department 3) Foreign Exchange Department. Accordingly I shall work all of the
sections. I shall devote my utmost effort and attention to learn bankers functions. After completion of
the internship, I will render my all knowledge to present the report on Overall banking System of
Social Islami Bank Limited- A Special Focus on Fund Management.The report is divided into Seven
Chapters. 1) Introduction 2) Organization 3) Branch operation 4) Online banking 5) Performance,
Ratio and SWOT Analysis 6) Project Analysis Fund Management 7) Concluding Remarks. In the
organizational part will briefly describe overview of the organizations historical background,
functions, business philosophy, ownership pattern, foreign correspondents and overseas operations
and benefits provided to customers by the organization. Branch operation part will describe the
product and service provided to the customers by a branch.
2.1 INTRODUCTION
Since the establishment of Social Islami Bank Limited has come forward as a private
commercial bank and very encourage has come forward as the stimulator of economic
activities in the country. The bank has been entrusted with the responsibility of
undertaking various steps related to the development of the countrys commercial,
industrial and agricultural sectors. The banking sector of a country is called the economic
barometer of the country. As a pioneer commercial bank in the private sector in
Bangladesh, Social Islami Bank provides considerable financial helps to the business
sector that imports industrial goods and/or exports excess production outside the country
for profit. Thus for imports the Social Islami Bank provides LIM (Loan against Import
Merchandise) and LTR (Loan against Trust Receipt) facility and for exports provides
both pre shipment and post shipment finances. Thus with these bank helps the prospects
in the business sector has increased more than ever before.
2.2 HISTORICAL BACKGROUND OF SIBL
Social Islami Bank Limited (SIBL) is a banking company registered under the companies
Act 1994 with its head office in 15 Dilkusha C/A, Dhaka-1000. The bank operates as a
scheduled bank under a banking license issued by the Bangladesh Bank, Central Bank of
the country. The Bank started its operation from 22, November 1995. SIBL is a
capitalized new generating Bank with an authorized capital and paid up capital of Taka
585 million in 2007 and also. 585 million respectively as of December 2006.Currently the
bank has 24 branches of which 12 in Dhaka, 4 in Chittagong, 1 in Sylhet, 2 in
Narayanganj, 1 in Bogra, 1 in Khulna, 1 in Rajsahi, 1 in Sirajgonj. The bank undertakes
all types of banking transaction to support the development of trade and commerce in the
country. SIBL services are also available for the entrepreneurs to set up new venture and
BMRE of industrial units. To provide clientele services in respect of international trade it
has established wide corresponded banking relationship with local and foreign banks
trade and financial interest home and abroad.Since the very inception, Social Islami Bank
Ltd. is working with the philosophy of serving the nationals as an ideal and unique
financial house. Every organization has some objectives of its own. The prime objective
of Social Islami Bank Ltd. is to earn profit throw undertaking the responsibility of
providing financial help for the development of the countrys commercial and industrial
sector.
Address
Telephone No.
01713-018779
Principal Branch
Agrabad Branch
031-714041
Khulna Branch
041-722133
Sylhet Branch
Rajshahi Branch
Gulshan Branch
Bogra Branch
051-65833
10
Sirajgonj Branch
0751-63203
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12
Khatunganj Branch
01819-315328
13
Panthapath Branch
01913-088821
14
Chandaikona Branch
01715-805435
15
Sonargaon Branch
01819-251709
16
01817-530004
17
Halishahar Branch
01819-345299
18
Hasnabad Branch
01711-565893
19
Dhanmondi Branch
01819-274072
20
82 Nawabpur Road.
21
22
Uttara Branch
23
Fatullah Branch
01911-358157
24
Mirpur Branch
01819-403982
01711-946325
0721-812317
01819-215161
7395118-9
01911-350966
8115789
7174994-5
01819-326288
8961124
2.5
MISSION OF SIBL
High quality financial services with the latest technology.
Fast, accurate and satisfactory customer service.
Balanced & sustainable growth strategy.
Optimum return on shareholders equity.
Introducing innovative Islamic banking products.
Attract and retain high quality human resource.
Empowering real poor families and create local income opportunities.
Providing support for social benefit organizations- by way of mobilizing
funds and social services.
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11
Particulars
31.12.2008
31.12.2007
Growth Rate %
2,732,256,352
2,092,951,320
30.54562
2,071,378,746
1,705,054,119
21.48463
660,877,606
387,897,201
70.37442
450,879,515
350,231,722
28.73749
1,291,706,859
902,503,334
43.12489
504,342,309
421,720,430
19.59162
787,364,550
480,782,904
63.76717
Total Provision
432,551,257
212,920,488
103.1515
354,813,294
267,862,416
32.46102
202,068,294
150, 037,061
34.67892
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13
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In case of Co-operative Society/ societies Limited,a) Copy of Bye-law duly certified by the Co-operative officer.
b) Up to date list of office bearers.
c) Resolution of the Executive Committee as regards of the account.
d) Certified copy of Certificate of Registration issued by Registrar, Co-operative
Societies.
In case of Non- Government College/School/ Madrasha/ Muktab,a) Up to date list of the Governing Body/ Managing committee.
b) Copy of resolution of the Governing Body/ Managing Committee.
In case of Trustee Board,a) Prior approval of Head Office of the Bank.
b) Certified copy of Deed of Trust, up to date list of members of the Trustee Board
and Certified copy of the Resolution of Trustee Board to open & operate the
account.
In case of Minors Account,a) Putting the word MINOR after the title of the account.
b) Recording special instruction of operation of the account.
c) The account opening form is to be filled in and signed by either of the parents or the
legal guardian appointed by the Court of Law & not by the Minor.
In case of Limited Company,a) Certified true copy of the Memorandum & Articles of Association of the
company.
b) Certificate of Incorporation of the company for inspection and return with a duly
certified photocopy for banks records.
c) Certificate from the Registrar of the Joint Stock Companies that the company is
entitled to commence business (in case of Public limited Co. for inspection and
return) along with a duly certified photocopy for Banks records.
d) Latest copy of Balance Sheet.
e) 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/
Managing Director of the company.
a) List of Directors with address (a latest photocopy of the form-xii).
b) Authorized signature.
c) Name.
15
General conditions of governing Current / Savings Account,(a) Minimum Balance to be maintained in current account Tk. 10,000 /- and in Savings
account Tk. 5.000/- .
(b) A suitable instruction by an introducer acceptable to the Bank is required prior to
opening an account.
(c) Recent photographs of the Account openers duly attested by the Introducer must be
produced.
(d) When cheques deposited are payable by other banks or outstation they are available
after clearing or collection only, Service charge will be charged @ Tk, 100 /- in
Current account and Tk 50 /- in Savings account yearly or as charged by the Bank
from time to time as and when required.
Provisional profit rate for Savings Account (SB) @ 6.85% (Half years compounding).
Deposits Accepted by SIBL
Mudaraba saving Deposit (MSD)
These are profit bearing deposit accounts. The drawings are restricted in respect of both
the amount of withdrawal and the frequency thereof so that the payment of interest does
not become any compensating for the banker. Some time the restrictions are ignored
against the depositors written confirmation to forgo his claim for interest on the total
balance for the whole month of withdrawal.
Special Saving Scheme
Mudaraba Hajj Saving Scheme
Hajj is one of the basic pillars of Islam- the complete code of life. SIBL has introduced a
scheme in the name & style Mudaraba Hajj Saving Scheme to facilitate the intending
Muslims to perform Hajj properly at appropriate age. This is purely a saving scheme for
Hajj. Any Muslim intending in perform Hajj by building up deposit required for meeting
Hajj expenses will select one of the 20 alternative choices based on duration of period
from 1 year to 20 years for building- up savings by monthly installments under this
scheme.
Mudaraba Education Scheme
SIBL being encouraged by the success of the Mudaraba deposit accounts, has introduced
another savings scheme namely Mudaraba Education Scheme
Initial Deposit
Maturity Period
Total Payment
25,000
25,000
25,000
25,000
7 Years
10 Years
15 Years
20Years
55,000
77,000
136,000
240,000
1,000
1,500
2,500
4,500
16
2,050/-
Tk. 10 lac
20
25
1,050/550/-
Tk. 10 lac
Tk. 10 lac
The amount in the above is an estimated amount and may vary at maturity.
After starting of operation of this scheme size of installment cannot be changed
Mudaraba Special Savings (Pension) Scheme
Any Bangladeshi person aged above 18 yrs and having sound mental condition can may
open this scheme. To open this account there must be a signature of a valued introducer.
Parents or legal guardians can open this scheme in the name of their underage children.
After maturity estimated profit will be applied as follows:
Monthly Installment
Estimated amount after maturity
5 years
10 years
100
8,000
22,500
200
16,000
45,000
300
24,000
67,000
400
500
1000
32,000
40,000
80,000
90,000
1,12,500
1,25,000
17
@10.50
@11.75
@12.00
@12.25
18
19
20
21
22
Charges
A commission of 0.15% is taken on the draft value & Tk.50/= is taken as postal charge.
Mail or Telex Transfer (TT)
Telex transfer is another widely used mode for remittances of funds. In case of telex
transfer the message for transfer of funds is communicated through tested telex. SIBL
generally recovers from the telex charges in addition to the usual service charges.
Issuing of TT
SIBL follows the following procedures:
i)
The customer deposits money with SIBL to be sent.
ii)
The customer obtains a cash memo containing TT serial
number.
iii)
TT serial number, notifying part name is mentioned in the
telex message.
iv)
The Telex Department confirms transmission of the telex.
Accounting entries for TT
Cash A/C, Clients A/C -----------------------Dr.
SIBL General A/C (Local Office branch) ---------------Cr.
Procedures for the incoming TT
After receiving the telex, it is authenticated by test. TT Serial number is verified by the
TT in-Concern branch register. The following entries are given in the vouchers,SIBL General A/C (Local Office branch) -----------------------Dr.
Clients A/C------------------------------------------Cr.
Tk. 50/= is taken as postal charge. The minimum commission is Tk. 50/= or o.15% of the
amount whichever is higher.
3.1.4 Cash Section
The cash section of any branch plays very significant role in general banking department.
Because, it deals with most liquid assets The SIBL Local Office Br has an equipped cash
section. This section receives cash from depositors and pay cash against cheque, draft,
PO, and pay in slip over the counter.
Receiving Cash
Any people who want to deposit money will fill up the deposit slip and give the form
along with the money to the cash officer over the counter. The cash officer counts the
cash and compares with the figure written in the deposit slip. Then he put his signature on
the slip along with the cash received seal and records in the cash receive register book
against A/C number.
At the end of the procedure, the cash officer passes the deposit slip to the counter section
for posting purpose and delivers the duplicate slip to the clients.
23
Account treatment
Particulars
Cash A/C
Customers A/C
Dr./Cr.
Dr.
Cr.
Disbursing Cash
The drawn who wants to receive money against cheque comes to the payment counter and
presents his cheque to the officer. He verifies the following informationa) Date of the cheque
b) Signature of the A/C hold
c) Material alteration
d) Whether the cheque is crossed or not
e) Whether the cheque is endorsed or not
f) Whether the amount in figure and in word correspondent or not
Then he checks the cheque from computer for further verification. Here the following
information is checked:
1) Whether there is sufficient balance or not
2) Whether there is stop payment instruction or not
3) Whether there is any legal obstruction (Garnishee Order) or not
After checking everything, if all are in order the cash officer gives amount to the hold and
records in the paid register.
Account treatment:
Particulars
Dr./Cr.
Customers A/C
Dr.
Cash A/C
Cr.
The cash section of SIBL deals with all types of negotiable instruments, cash and other
instruments and treated as a sensitive section of the bank. It includes the vault which is
used as the store of cash instruments. The vault is insured up to Tk. 60 laces. If the cash
stock goes beyond this limit, the excess cash is then transferred to Head Office. When the
excess cash is transferred to SIBL Head Office. The cash officer issues IBDA.
Account treatment:
SIBL General A/C
Dr.
Cash A/C
Cr.
When cash is brought from SIBL Head Office then,
Account treatment:
Cash A/C
SIBL General A/C
Dr.
Cr.
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25
26
Import Trade
When a particular country wishes and does bring in some goods and services from
another country, trade occurring between these two countries is called import trade.
Import trade means procurement and purchase of goods and services from another
country or countries. Therefore, purchasing function of international trade is called import
trade.
Export Trade
Selling of goods and services or other sales related function for the transfer of surplus
goods or services for a value or just to merchandise them abroad trade occur between
countries. Thus export or sale of additional goods and services or surplus goods and
services is called export trade. There is another peculiar type of export trade named ReExport Trade.
Import
The bank defines import as to bring in, from abroad, something in kind of goods or
services (to behave lawfully). It includes the following services:
1. Letter of Credit (L/C) opening.
2. Presentation/Retirement of import documents.
The import mechanism first involves the issuing of a L/C as an instrument by a bank on
behalf of one of its customers, authorizing an individual or a firm to draw draft on the
bank or on one of its correspondents for its account under certain conditions stipulated in
the credit. Secondly the bank import mechanism involves the retirement of import
mechanism on receiving the payment or under certain conditions against the security of
payments made by the importer in documents stipulating an advance payment date.
Import Operation
Actually the import procedure is a result of a two-party negotiation or contract. Once the
importer has accepted the suppliers offer, he agrees to open a Letter of Credit in favor of
the latter. Thus the import procedure of the bank starts with the opening of the credit. The
entire import mechanism of this branch is enumerated below.
Terms of Credit
First of all the concerned banker asks the importer to present and show the terms of the
credit that the importer wishes to issue. The terms of the letter of credit are based on the
contract between the importer and the exporter and the import license or the authorization
permits for import under free list as the case may be, issued in the name of the concerned
importer. The terms of the credit specify importantly, amount of the credit, name and
address of the beneficiary and the opener, particulars of the goods, their make, quantity
and price basis, tenor of bill of exchange, period and mode of shipment, whether part
shipment allowed, port of shipment and of destination, nature of credit, expiry date,
names and number of sets of shipping and other documents.
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Import Limit
Highest annual imports limit 5 Lac.
Highest annual imports limit 15
Lac.
Highest annual imports limit 50
Lac.
Unlimited annual import capacity.
28
29
30
31
32
33
34
35
Invoice
The invoice is the important document of the letter of credit. It is the sellers bill for the
merchandise. In other words, the invoice is a document containing the description of the
goods shipped, their marks, make, quantity, and prices, charges for packing, freight,
insurance etc. as are applicable as per terms of the contract as well as the name of the
carrying vessel and the date of sailing. There are different types of invoices in use. Such
as:
The Commercial Invoice
The commercial invoice is a statement of accounts drawn by the seller address to the
buyer giving the details of the amount stated therein which is based on the terms of the
contract entered into between the buyer and the seller. The exporter must dully sign a
commercial invoice.
Details found in a typical commercial invoice are name and address of the buyer and the
seller, the vessel of shipment, port of discharge etc. Also the shipment import and export
permit numbers, the number of contract and invoice and other essential details of the
transaction are recorded on the invoice. The financial terms of the sale, such as whether
under letter of credit, sight drafts etc., are given. The number of packages and the
identifying mark and numbers of them are clearly indicated. The goods contained in the
packages are detailed and prices are given item by item. The commercial invoice is
neither a document of title, nor it is negotiable. Its main utility is that it acts as a bookdevice for both seller and buyer.
The Consular Invoice
Another special type of invoice named consular invoices are required depending upon the
trade regulations in importing country. It is made out in a prescribed format, certified and
signed by an individual of the importers country national working as a consulate in the
exporter country. In some cases it is also seen that exporters own invoice is authenticated
by the embassy or consulate instead of issuing consular invoice. This type of invoice is
called legalized invoice.
The Certified Invoice
Certified invoice is an invoice, which bears a signed statement, by someone in the
importers country who have inspected the goods and found them in accordance with
those specified in the contract.
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37
Non-shipping Documents
There are a number of other documents, which have importance in dispatch of goods in
foreign trade. A brief discussion on these documents is given below:
The Documentary Letter of Credit
A Letter of Credit is issued by a bank (Issuing Bank) at the request of an importer
(applicant) in favor of an exporter (beneficiary) from whom the importer has contracted
to purchase some commodity or commodities. The importer, the exporter, and the issuing
bank are, thus, obviously parties to a Letter of Credit. There is, however, one or more
than one bank that is involved in various capacities and at various stages to play an
important role in the total operation of the credit.
The Ships Reports
In the ships report the following information is found:
(a) The name of the ship.
(b) The name of the registered port and the registration number.
(c) Nationality of the ship owner or the name of the state belonging to the ship.
(d) The name of the loading port.
(e) The name of the captain of the ship or the principal of the ship.
(f) Number of the employees and the officers of the ships.
(g) Reports of things used by the employees, captain and officers of the ship.
(h) Detail reports of the transported merchandise.
(i) The name and address of the exporter.
Post-Shipment Finance
The post-shipment finance is the financial facility extended by the banks after the goods
have been shipped and against the submission of export documents evidencing the
dispatch of goods. Post-shipment finance portfolio is in existence since the day
international trade has been known, but more precisely after the First World War. After
that the international trade is ever increasing, and the shipping documents against which
the exporters are getting financial facilities are well accepted.
3.2.2 FOREIGN REMITTANCE
According to Foreign Exchange Regulation Act 1947, the commercial banks or the
authorized dealer who has the Bangladesh Bank authorization can do Foreign Exchange.
According to this Act, TC (Traveler Cheque), Drafts are included in Foreign Exchange.
SIBL, Foreign Exchange Branch provides its customer with the foreign remittance
facilities by issuing Foreign Demand Drafts, Traveler Cheque, Endorsing passport for
cash etc.
Travelers Cheque
It is the safest way to carry money from one country to another. It can be change in any
country of the world. Even if the Traveler Cheque (TC) is lost then the holder of the T.C
can inform it to the bank and the bank will inform it to the agencies so that no one can encash the T.C while issuing a Traveler Cheque (T.C) a signature is needed, so that no one
can en-cash it except the holder and also another signature is needed in encashment in
front of the banker. So Traveler Cheque (T.C) is the safest way to carry outside the home
country. A customer is permitted to endorse maximum US$ 3000 per year for travel in
countries other than SAARC countries and US$ 1000 for travel in SAARC countries. If
SAARC countries are to be visited by road then maximum US$ 500 can be endorsed per
passport per year. At a time cash cannot be endorsed over US$ 500.
Issue of Travelers Cheque
There are some requirements, which are to be fulfilled by the TC publisher:
1. Passport holder himself to be present to issue TC purchasing.
2. The passport has to be a valid one.
3. Air ticket has to be confirmed.
4. Steps involved in issue of TC:
5. After verifying all these documents, the customer as asked to fill up prescribed
application form.
6. In the application the customer states the amount he is willing to endorse and it is
to be verified that his required amount is within the stipulated amount.
7. Then the customer pays cash or by debiting hid account the Travelers Cheque is
issued.
39
8. Endorsement is given on the passport and on the ticket. Customer fills up the
Travel and miscellaneous form.
9. Purchase application form is prepared and handed over to the purchaser along with
the Traveler Cheque.
10. Entry is given in three registers: Foreign Currency Issue Register, Travelers
Cheque On Hand Register and Foreign Currency In Hand Register.
Payment of Travelers Cheque
When a customer wants to encase his TC, he has to show his passport and it is to be
verified from the passport that he has traveled outside the country. Then 1. The TC will have to be scrutinized very strictly;
2. If everything in the TC is in order then the customer will be asked to give
signature on the place of Counter Signature;
3. If the signature agrees with the one in place of the signature of the holder then
the payment will be made through giving cash to the customer or crediting his A/c;
4. Travelers Cheque will be crossed and endorsement given on the back of the
received TC.
Endorsement of Cash
Cash Foreign Currency can also be remitted through endorsement in the passport. In case
of endorsing cash on passport, the requirements are same as in case of travelers cheque.
But the only exception is that the passport holder is not required to be present by himself.
Foreign Currency Account
The accounts maintained in foreign currencies are known as foreign currency account.
The Authorized Dealers may open foreign currency accounts in the names of followings
without prior approval from Bangladesh Bank.
a) Bangladesh nationals residing abroad.
b) Foreign nationals residing in Bangladesh and also the foreign firms registered
abroad and operating in Bangladesh or abroad.
c) Foreign Missions and their expatriate employees.
Branches are mainly deals with two types of foreign currency accounts, namely:
a) Non-Resident Foreign Currency Deposit Account (NFCD).
b) Resident Foreign Currency Deposit Account (RFCD).
Non-Resident Foreign Currency Deposit Account (NFCD)
All nonresident Bangladesh nationals and persons of Bangladesh origin including those
having dual nationality and ordinarily residing abroad, may maintain interest bearing time
deposit accounts named Not-Resident Foreign Currency deposit (NFCD)Accounts with
the Ads.
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Eligible persons
a. Bangladesh nationals working and earning abroad.
b. Bangladesh nationals serving with Embassies /High Commission of Bangladesh in
foreign countries including officers /Staff of Govt. / Semi Govt.
Autonomous/nationalized sector posted/ deputed abroad.
c. Shore staff posted abroad (Crew of BSC not entitled).
d. Foreign nationals and companies registered and /or incorporated abroad, institutional
investors and 100% (Hundred Percent) Foreign owned industrial unit of EPZ
(Minimum Amount USD 25000/- or equivalent).
Resident Foreign Currency Deposit (RFCD)
Ordinary resident of Bangladesh may open and maintain Resident Foreign Currency
Deposit (RFCD) accounts with foreign exchange brought-in at the time of their return
from travel abroad. Any amount brought in with declaration to Custom Authorities in
form FMJ and up to US$ 5000/- brought in without any declaration can be credited to
such accounts.
Deposit
The depositors must submit a declaration mentioning the date of return from abroad and
the amount of Foreign exchange brought in at the time of crediting to RFCD account to
the effect that Foreign exchange (i) is not a receipt against export of goods or services
from Bangladesh (ii) is not a commission due from abroad arising from business in
Bangladesh.
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Code
Interest rate
Features
14
11.25%-16%
Loan (General)
13
12%-16%
House
Building
Loan (staff)
House
Building
Loan (General)
Transport
Loan (Staff)
Transport
Loan (General)
Demand
Loan
Industrial
Credit
12
7%
24
12.75%-16%
32
7%
17
15%
16
7%-14.5%
22
12.5%-16%
Cash Credit
18
11%-16%
31
15%
15
11%-15%
(Hypothecation)
Past
Due
Bills
Loan against
Trust
Receipt
(LTR)
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43
2) After receiving the loan application form, SIBL sends a letter to Bangladesh Bank for
obtaining a report from there. This report is called CIB (Credit information Bureau)
report. This report is usually collects this report if the loan amount exceeds Tk. 50
Lac. But SIBL usually collects this report if the loan amount exceeds Tk.10 Lac. The
purpose of this report is to being informed that whether the borrower has taken loan
from any other bank; if yes then whether these loans are classified or not.
3) After receiving CIB report if the Bank thinks that the prospective borrower will be a
good borrower, then the bank will scrutinize the documents. In this stage, the Bank
will look whether the documents are properly filled up and signed.
4) Then comes processing stage. In this stage, the Bank will prepare a Proposal contains
following information
a) Name of the Borrower
b) Nature of Limit
c) Purpose of Limit
d) Extent of Limit
e) Security
f) Margin
g) Rate of Interest
h) Repayment
Branch incumbent (Local Office Br.) has the discretionary power to sanction loan (SOD)
up to Tk. 25 Lac against financial obligations by informing Head Office. But in that case,
the Branch Manager has to give attention to the following matters:
- The interest rate of the loan must not be less than 4.5% and
- The borrower must maintain 10% margin.
Except this case, the branch has to send the proposal to the Head Office. Head Office will
prepare a minute and submit it before the Executive Committee (EC). The minute has to
be passed by EC. After passing the minute, it will be sent to Bangladesh Bank for
approval in case of following:
If the proposed limit exceeds 15% of Banks equity;
If the proposed limit against cash collateral securities
exceeds 25% of Banks equity.
5) After the sanction advice, Bank will collect necessary documents (charge
documents). These documents are-------a) Joint Promissory Note
b) Single Promissory Note
c) Letter of Undertaking
d) Loan Disbursement Letter
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45
46
Steps in documentation
Obtaining the documents.
Stamping (Stamp Act-1899)
Witnessing.
Execution of Documents.
Registration of Documents (assignment on the body of an insurance Policy,
Mortgage deed, Advance to a limited company etc.)
Common Compulsory Documents
Letter of Acceptance about the terms and conditions laid down in Sanction
Advice.
D.P. Note (Depending on the types of borrowers)
Letter of Arrangement.
Besides, there are other documents that are to be obtained depending on the types of
Advance. Such asIn case of loan
1. Letter of Disbursement.
2. Letter of Authority (if required)
3. Letter of Hypothecation (when goods are hypothecated as security)
4. Insurance Policy (if required).
5. Any other document as stated in Sanction Advice.
In case of overdraft
1. Letter of Continuity.
2. Letter of Authority (if required)
3. Letter of Hypothecation (when goods are hypothecated as security)
4. Insurance Policy (if required)
5. Any other document as stated in Sanction Advice.
In case of cash credit
1. Letter of Continuity.
2. Letter of Authority (if required)
3. Letter of Pledge/Hypothecation.
4. Insurance Policy under Banks Mortgage clause.
5. Letter of disbursement incase of renewed go down.
6. Any other document as stated in Sanction Advice.
Transport Loan
1. Letter of hypothecation of vehicles (in separate form)
2. Photocopy of blue book
3. Photocopy of rote permit
4. Insurance policy under Banks mortgage clause
47
Legal Mortgage
1. Mortgage deed (certified copy)
2. Registration receipt in
3. Chain of documents for title (original if available)
4. C.S,S.A and R.S parcha
5. Up to date Rent Receipt
6. Non-encumbrance certificate
7. Power of Attorney (if asked for)
8. Legal opinion
9. Valuation Certificate
10. Location plan etc./Site plan etc
Equitable mortgage
1. Chain of documents for title
2. original title deed
3. C.S, S.A A and R.S parcha
4. Up to date Rent Receipt
5. Memorandum of deposit of title deed
6. Registered power of Attorney
7. Legal opinion
8. Valuation Certificate
9. Location plan etc
10. Non-encumbrance Certificate
3.3.10 Credit Monitoring, Follow-up and Supervision
SIBL Officer checks on the following points:
1. The borrowers behavior of turnover
2. The information regarding the profitability, liquidity, cash flow situation
and trend in sales in maintaining various ratios.
3.3.11. Loan Classification
Like other banks, all types of loans of SIBL fall into following four scales:
1. Unclassified: Repayment is regular.
2. Substandard: Repayment is stopped or irregular but has reasonable prospect
of improvement.
3. Doubtful debt: Unlikely to be repaid but special collection efforts may result
in partial recovery.
4. Bad/Loss: very little chance of recovery.
3.3.12. Provision
Type of classification
Rate of provision
Type of classification
Rate of provision
Unclassified
Substandard
1%
20%
Doubtful
Bad debt
50%
100%
48
49
ONLINE BANKING
Information technology (I.T.) is a well known word, The developed countries of the
world reached to the peak of information technology. SIBL have no alternative to expand
of information technology. Tight now, SIBL are facing uneven competition with many
foreign banks in the country. For this, SIBL will have to take necessary preparation form
this moment.
Information Technology and Flow of Information is become very important in the present
world. Social Islami Bank needs to develop all their banking transaction with the help of
this technology and need to introduce online banking.
4.1 What is Online Banking?
Most people heard a lot about online banking but probably haven't tried it themselves.
People still pay their bills and deposit checks at banks branch, much the way their
parents did. They might shop online for a loan, life insurance or a home mortgage, but
when it comes time to commit, people can feel more comfortable working with his banker
or an agent they know and trust.
Online banking isn't out to change ones money habits. Instead, it uses today's computer
technology to give people the option of bypassing the time-consuming, paper-based
aspects of traditional banking in order to manage finances more quickly and efficiently.
4.2 Origin of Online Banking
The advent of the Internet and the popularity of personal computers presented both an
opportunity and a challenge for the banking industry.
For years, financial institutions have used powerful computer networks to automate
millions of daily transactions; today, often the only paper record is the customer's receipt
at the point of sale. Now that its customers are connected to the Internet via personal
computers, banks envision similar economic advantages by adapting those same internal
electronic processes to home use.
4.3 Brick-to-Click Banks
Today, most large national banks, many regional banks and even smaller banks and credit
unions offer some form of online banking, variously known as PC banking, home
banking, electronic banking or Internet banking. Those that do are sometimes referred to
as "brick-to-click" banks, both to distinguish them from brick-and-mortar banks that have
yet to offer online banking, as well as from online or "virtual" banks that have no physical
branches or tellers whatsoever.
The challenge for the banking industry has been to design this new service channel in
such a way that its customers will readily learn to use and trust it. After all, banks have
spent generations earning our trust; they aren't about to risk that on a Web site that is
frustrating, confusing or less than secure.
50
Most of the large banks now offer fully secure, fully functional online banking for free or
for a small fee. Some smaller banks offer limited access or functionality; for instance, you
may be able to view your account balance and history but not initiate transactions online.
As more banks succeed online and more customers use their sites, fully functional online
banking likely will become as commonplace as automated teller machines.
4.4 Virtual Banks
If anybody don't mind foregoing the teller window, lobby cookie and kindly bank
president, a "virtual" or e-bank may save very real money. Virtual banks are banks
without bricks; from the customer's perspective, they exist entirely on the Internet, where
they offer pretty much the same range of services and adhere to the same federal
regulations as corner bank.
Virtual banks pass the money they save on overhead like buildings and tellers along to
you in the form of higher yields, lower fees and more generous account thresholds.
4.5 SIBL will get Advantage from Online Banking
Convenience: Unlike a corner bank, online banking sites never close; they're
available 24 hours a day, seven days a week and they're only a mouse click away.
Ubiquity: If anybody out of state or even out of the country when a money
problem arises, he can log on instantly to his online bank and take care of
business, 24/7.
Transaction speed: Online bank sites generally execute and confirm transactions at
or quicker than ATM processing speeds.
Efficiency: One can access and manage all of his bank accounts, including IRAs,
CDs, even securities, from one secure site.
Effectiveness: Many online banking sites now offer sophisticated tools, including
account aggregation, stock quotes, rate alerts and portfolio managing programs
helps to manage all of the assets more effectively. Most are also compatible with
money managing programs such as Quicken.
4.6 Feature that can be gives in SIBL Online Banking
Making payments
Tracking payments
Stop payments by block cheque
Review personal account details, including balances and transactions
Pay bills online with the optional Online Bill Payment service
View images (front and back) of cleared checks and deposit slips
Receive e-mail notifications to alert to selected account activity
Schedule single one-time transfers or multiple transfers
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52
PERFORMANCE ANALYSIS
5.1 Performance of the Bank (SIBL): A brief review of the activities
I take this opportunity to place before you the present overall operational activities of the
Bank as follows:
a) Alhamdulillah during 2008 Bank has made a net profit after tax of Tk.
202,068,294 after providing provision as per requirements of Bangladesh Bank.
Business performance of 2009 shall be much better, inshallah.
b) The growth rate in formal sector-Deposit in 2008 was significant, based on actual
expected growth rate of deposit in 2008would be much better.
c) Banking with the poor (that is mainly with street children and poor family) under
micro credit and micro enterprise under family empowerment credit program
activities is increase very rapidly
Deposit
Deposit of the Bank was increased to Tk.19, 753,940,163 million during 2008 against
total deposit of Tk. 16,170,514,627 million in 2007, compared to growth rate of 22.16 %
in the Banking Sector of the country. In view of the fact that the main target group of
SIBL is lower and middle class people, this model of Banking is capable of absorbing
abnormal fluctuation of stock market due to this target group of depositors.
Investment
Bangladesh experienced worst flood in the century and volatile economic situation during
the year under report, investment activities stood Tk16,440,259,305 million in various
sector as at the end of 31st December, 2008.as against Tk.15,312901,478 million in 2007
Alhamdulillah, there was no as such overdue or classified investment as at 31 st December,
2008.
Liquidity
Liquidity maintained in the form of cash in hand and balance with Bangladesh Bank
including foreign currency notes stood at Tk.1, 702,267,359 million as at 31st December,
2008 against Tk. 1,384,245,001 million last year. Total liquidity increased was
Tk.318022358 million. Balance held with other banks stood at Tk.4, 602,084,949 million
as on 31 st December, 2008 as against Tk 1, 572,218,612 million last year.
53
Particulars
Import
Export
Remittance
Total
2003
2004
2005
2006
2007
2008
4035.90
4500.23
107.57
120.30
224.82
5528.40 10714.00
Growth
Rate
14.34 %
9961.60
-0.0702 %
459.90
-40.65 %
2.67 %
332.96
775.00
Source: Annul report of SIBL (2003, 2004, 2005, 2006, 2007 & 2008)
54
5.1.1. DEPOSIT
The deposit of Social Islami Bank Limitedhas rapidly increased from 2007 to 2008. The
deposit of SIBL in 2007 was Tk. 16,170,514,627 million where it was Tk19,
753,940,163. Million in 2008.
Table-1
Year
Deposit in million taka
2003
15141.332
2004
19709.31
2005
19704.16
2006
16,862.57
2007
16,170.51
2008
19,753.94
Source: Annul report of SIBL (2003, 2004, 2005, 2006, 2006, & 2008)
55
5.1.2 INVESTMENT
Investment of SIBL is increasing rapidly. In the year 2008 the amount of investment was
Tk. 16440.25 million which was Tk. 15312.90 million in 2007.
Table-2
Year
Advance in million taka
2004
10059.11
2005
12887.27
2006
15096.83
2007
15312.90
2008
16440.25
Source: Annul report of SIBL (2004, 2005, 2006, 2007, &2008)
56
13482.30
Source: Annul report of SIBL (2003, 2004, 2005, 2006, 2007 &2008)
9961.60
Source: Annul report of SIBL (2003, 2004, 2005, 2006, 2007& 2008)
57
58
5.1.7 COMMENTS
Though Social Islami Bank Limitedis a new bank, which started its operation in the last
half of the year 1995; it has now become a reputed bank. Its deposits and investment are
increasing rapidly. Its number of branches has increased up to 24. Its foreign exchange
business is also very credible. In a few days, it is well known in the banking sector that
SIBL gives a higher standard of banking services. During my precaution orientation
program in Local Office branch, I went through many experiences that made me think
SIBL-a bank of a very high standard.
5.2 RATIO ANALYSIS
Formula
Major Ratios
2008
2007
2006
2005
Profitability Ratios
Net Profit Total Assets.
Income to Total
Assets
0.0589
0.00292
0.00068
0.00389
Return on Assets
1.09%
0.61%
0.27%
.074%
18.02%
4.90%
0.48%
14.00%
0.171931
0.8029
0.000296
Return on Investment
Return on Working
Capital
Return on Fixed
Assets
Net Income to
Equity
2.0288
0.8744
0.3534
0.126
1.0984
0.7991
0.6372
0.2451
17.60
9.85
24
Price Earnings
Ratio-Times
28.79
18.27
76
1.559
143
26
Leverage Ratios
Total Debts Total Assets
0.932
0.950
0.954
0.957
13.740
19.079
21.055
22.700
0.0388
Liquidity Ratio
Current Assets Current Liabilities
Current Ratio
0.288
0.164
0.2215
-0.247
0.392
-0.0351
1.57
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Profitability Ratios
Profitability Ratio mainly covers how much profit the organization conducts or achieved
by its operation. And we know that Islami Banks main concentration is not for profit. So
for the particular Islami Bank profitability ratio is not so much important. But its
profitability ratios are good from the year of 2004 to 2008.
Leverage Ratios
Leverage Ratio covers the area in which we are discussing that how much borrowed
capital the bank gathered in respect to their own equity of shareholders equity. In this
particular bank the leverage ratio, we can see that their almost dependent on external
liabilities rather than internal liabilities or shareholders equity.
5.3 SWOT ANALYSIS
SWOT analysis is the detailed study of an organizations exposure and potential in
perspective of its strength, weakness, opportunity and threat. This facilitates the
organization to make their existing line of performance and also foresee the future to
improve their performance in comparison to their competitors. As though this tool, an
organization can also study its current position, it can also be considered as an important
tool for making changes in the strategic management of the organization.
S- STRENGTHS
W-WEAKNESS
O-OPPORTUNITIES
T-THREATS
Here is the SWOT analysis of SIBL:
Strength
Social Islami Bank is a new commercial bank in banking sector but it has built
strong reputation in short time. It provides extra ordinary services to its
customers.
The financial condition of Social Islami Bank is very strong, its loan and deposit
quality is better than any other commercial banks of Bangladesh.
It has a strong network throughout the country and it provides services of good
quality to every level of customers.
Their corresponding relationships with more than 200 international and local
banks of different countries have created global accessibility and relationship with
people.
Installation and use of highly sophisticated, automated system that enables the
bank to have on time communication with all branches reduces excessive paper
work and time for valued customer transaction.
60
Social Islami Bank is a new commercial bank in banking sector but it has built
strong reputation in short time. It provides extra ordinary services to its
customers.
The financial condition of Social Islami Bank is very strong, its loan and deposit
quality is better than any other commercial banks of Bangladesh.
It has a strong network throughout the country and it provides services of good
quality to every level of customers.
Weakness
One of the greatest weaknesses for Social Islami Bank is shortage of manpower in
every division. During the working hour of banks the employees cannot provide
proper attention to the customers that enhances customer dissatisfaction.
Higher service charge in some areas of its banking operation discourages
customers from opening or maintaining accounts with this bank.
Social Islami Bank is facing some problems from their competitors because
competitors are giving a higher interest rate in deposits without any reason which
will deteriorate its position than it was before. Because of this a lot of depositors
are leaving Social Islami Bank.
There is a very little practice for increasing motivation in the workers by the
management.
The SIBL was listed as a problem bank in 2005 by the central bank mainly due to
shortfall of capital, liquidity crisis and classified loans. The bank has now a
surplus capital of TK. 31 core
In 2005, the banks classified loan was over 11 percent of total outstanding loans
whereas its current classified loan is below 4 percent of the total loans.
Opportunity
There is a great opportunity to take new dimension of banking such as Islamic
banking, specialized banking. Otherwise, there are many sectors where this can
give special privileges.
The credit facility offered by Social Islami Bank has attracted security and status
conscious businessmen as well as service holders with higher income group.
61
Threats
The emergence of several private and foreign banks within the past few years
offering similar services with less or free charge for the facilities can be a major
threat for the bank.
Social Islami Bank. Sometimes the restrictions impose barrier in the normal
operations and policies of the bank.
Rival banks easily copy the product offering of SIBL. Therefore, this bank is in
continuous progress of product innovation to gain temporary advantages over its
competitors.
Sometime political loans are the threat for this banking service.
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01
02
03
04
05
06
Paid up capital
Statutory Reserve
Retained Earnings
1% provision on unclassified investment
Investment loss off setting Reserve
Exchange Equalization
585.00
290.98
90.44
147.33
8.15
6.12
Percentage
0.77%
1.89%
1.12%
1.39%
4.02%
20.46%
16.17%
26.46%
16.09%
8.62%
100.00%
6.1.2 Deposit
Since deposit is the life blood of the Bank, we drew-up service of action plan, both short
term and long term to raise the deposit base of the Bank in line with the directives of the
Bangladesh Bank. The short-term action plan included launching of special drive like
service months, deposit mobilization months; customers get together etc. during AprilJune and September-December 2007. in the service months new deposit of Tk.382.84
crore was mobilized. Alongside the treasury operation of SIBL was made prudently.
Resultantly, there was an increase in client deposit by Tk. 170.47 crore and avoid
dependency on Bank deposits as compared to 2005. Besides, borrowings of Tk.177 crore
from Bangladesh Government Mudaraba Islamic bond found has added qualitative value
in liquidity management of SIBL. Therefore, we could efficiently save the Bank from
manage the found and liquidity mishap despite liquidity crisis in 2007 in the market. As a
result of continuous evaluation and monitoring we could significant improve the deposit
mix in 2007.
63
The deposit of Social Islami Bank Limitedhas rapidly increased from 2007 to 2008. The
deposit of SIBL in 2007 was Tk. 16,170,514,627 million where it was Tk19,
753,940,163. Million in 2008.
Table 6.1: Year wise fund distribution in...
Year
Deposit in million taka
2003
15141.332
2004
19709.31
2005
19704.16
2006
16,862.57
2007
16,170.51
2008
19,753.94
Source: Annul report of SIBL (2002, 2003, 2004, 2005, 2007&2008)
64
To overcome the situation, we launched special drives to recover the sticky and classified
investments. The following graphs show the year wise position of investment:
Investment of SIBL is increasing rapidly. In the year 2008 the amount of investment was
Tk. 16440.25 million which was Tk. 15312.90 million in 2007.
Table 6.2: Year wise fund distribution
Year
Advance in million taka
2004
10059.11
2005
12887.27
2006
15096.83
2007
15312.90
2008
16440.25
Source: Annul report of SIBL (2003, 2004, 2005, 2007, &2008)
Liquidity
Liquidity in the form of Balance with Bangladesh Bank, Sonali Bank (as the agent of
Bangladesh Bank) and cash in hand including foreign currency stood at Tk. 1384.25
million as at 31st December 2007 as against Tk. 1079.25 million in last to your maintain
cash & statutory liquidity. The Bank is committed to maintain the cash and statutory
liquidity requirement to effectively manage the asset & liability portfolios of the Bank in
order to maximize the profit. As per guideline of the Bangladesh Bank ALCO(assets
liquidity committee) was formed in 2005 under Assets Liability management project,
which is highly concerned with proper liquidity management under the close supervision
of senior management. The Bank has a policy guideline on liquidity management as
approved by its Board of Director.
6.3 INVESTMENT RETURN AND DISTRIBUTION TO CONCERNED PARTIES
Particulars
31.12.2008
Profit paid on Depositors
1,705,054,119
Total Operating Expenses
421,720,430
Total Provision
212,920,488
Taxes Paid to Government
267,862,416
Earnings per share (EPS)
Net profit after tax
Number of ordinary shares outstanding
Earnings per share (EPS)
57,631,505
585,000
99
65
Amount (BDT)
6,170,514,627
B
A
,770,000,000
Outflow of
Funds
Investments
Investments
Amount
(BDT)
15,312,901,478
501,061,600
980,699,959
F
Asset Quality
M Management
Quality
E Earnings
L
Liquidity
FORMULA
Equity Capital+ Loan Loss
Reserve Total Assets 100
Commercial &Industrial Loans
Total Assets 100
Changing loans during the past 5
year (increase)
Income before securities gains and
loans Avg. total Assets 100
Total Assets Total Loans Total
Assets 100
66
2007
5.73 %
2005
5.23 %
77.76 %
74.15 %
10.81 %
1.48 %
1.02 %
22.24 %
25.85 %
FINDINGS
Bank is a financial institution. The service of a bank is considered as its product. Bank is
financial intermediary dealing in accepting surplus savings as deposits and extending
funds to those who can approach the bank with bankable projects. Amount of funds can
be increased or decreased depending on the professional skill of the bank executives.
Efficiency of customer service is related with progression of operation. Social Islami
Bank Ltd operations are increasing gradually. Each year deposits and investment growth
indicates SIBL better movement in the banking field, which is satisfying clients. As a
result, clients are increasing and ultimately equity is increasing. Gradually banks
operation is increasing. Investment is rising rapidly and a good response is getting from
the clients is different investment scheme. SIBL rising movement is generating increasing
profit. Clients satisfaction depends on the efficacy of customer service. All operational
improvement with profit leads us to say that value of customer service of SIBL is in the
positive situation.
General Banking Department
In general banking department they follow the computerized banking system.
They are using Data Base Networking in Information Technology (IT)
Department. So they can transfer data from branch to branch and branch to head
office by using one line.
Loans and Advance Departments
Political influence is one of the major problems in Bangladesh. Due to political
involvement the bank becomes bound to provide loans in some of the cases, which
are rarely recovered. Bank has to face this in convenience situation almost every
year and the percentage of such loans is about 20%
The loans and advance department takes a short time to process a loan because the
process of sanctioning loan is done by computerized system. If is in average 10
working days.
CIB report is not readily available from Bangladesh Bank.
Foreign Exchange Department
In foreign exchange department, it is required to communicate with foreign banks
frequently and quickly. To make the process easily, Telecommunication Network is
established in all branches.
A scheme is operating in the name of Instant Cash Scheme. Through this scheme,
Non Residence Bangladeshi can send money from any parts of the world.
67
68
RECOMMENDATIONS
The banks are actually service organizations. The main objectives of the world famous
and successful banking organizations are to make profit through addressing the clients
time to time with new pieces of service instruments. However my little experience earned
through this internship program took me to customers varying demands. I had several
frank discussions with the clients and officials, which have helped me to know about the
aforesaid findings and draw the following recommendation:
As one of leading Banks in Bangladesh, SIBL Bank should provide equal
emphasis in each department of banking service.
SIBL may also indulge in Tele Marketing. This will smooth the progress of them
to expand their sales.
SIBL should pursue an aggressive marketing to come up into limelight. Campaign
in order to build up a strong image reputation among the potential customers.
Campaign such as ad in the newspaper & magazine, billboard, neon signs,
publicity message. SIBL can pursue promotion campaign with its customers
particularly the corporate clients to build up a strong report. TV ad is also a major
method for attracting the potential customers. As it is an old bank, a strategy of
exposing the bank to the public must be taken so that general people will aware
about the emergence and growth of the bank. Sponsor in organizations picnic and
arrange or sponsor in cricket match can be method of advertise.
For monitoring and inspection of the current status of all the division for omitting
there lacking.
SIBL should appoint customer service officers in all branches. They solve
customers problem, answer inquiry of customers etc.
SIBL should differentiate its services adopting the modern facilities and diversify
products.
To achieve the goal, a bank must establish and adhere to adequate policies,
practices and procedures for evaluating the quality of asset and the adequacy of
loan provision and reserve.
69
CONCLUSION
Now a day banking organizations are one of most vital parts of an economy. Now banks
provide various services for individual, different firms, companies even for cultivation.
Banks offer a great accumulation of loans for personal and industrial purposes. SIBL is
running successfully and for its good deposit performance the bank occupies 2nd position
in the Islamic Banking Sector. Taken all in all, it can be safely said that SIBL action
program is directed towards development of an authentic participatory Economy beyond
Market Economy. The family empowerment credit program of Social Islami Bank is
gaining ground at the grass root field level in Bangladesh. Family Empowerment micro
credit and micro enterprises program must be designed in a manner so as to make a)
finance, b) production, c) marketing, d) trading, e) local specific survey and research as
well as moral integrity in one package. In SIBL approach, credit conveys the totality in
life and clearly linked to social context and cultural setting in conformity with Shariah.
There is a better chance in provision for social subsidy. De-secularizing credit may lead
to re-writing new economics. It is thus felt that the linking credit to social goals and
assignments will have far-reaching theoretical implications for development of an
alternative concept of new theories of income, output and employment.
This bank expresses its sincere thanks to the government of the Peoples Republic of
Bangladesh and Bangladesh Bank for their co-operation and valuable guidance to the
bank. SIBL also takes this opportunity to their valued clients, patrons, well wishers,
correspondents and the shareholders for their support and patronization extended during
the year under review. SIBL also records its appreciation for the services rendered by the
executives and the members of the staff for the stability and growth of the bank. SIBL
needs further active support and continued cooperation of Bangladesh Bank, ministry of
finance and other government agencies, executives and employees of the bank, valued
partners, clients and the community at large in accomplishing difficult tasks ahead of it.
BIBLIOGRAPHY
1. Social Islami Bank Annual Report.
2. Operational manual
3. Lecture sheet serve from SIBL training institute
4. www.siblbd.com
5. www.bangladeshinfo.com
6. www.google.com
7. www.valki.com
70