Internship Report On Assessing Customer Satisfaction Level at “Al-Arafah Islami Bank Ltd.

” Laldighirpar Branch, Sylhet

Prepared ByMd.Bazlur Rahman Khan ID No.: 073-116-020 BBA 13th Batch Major in Accounting & Information Systems Department of Business Administration Metropolitan University, Sylhet

Supervised ByMd. Masud Rana Assistant Professor, Department of Business Administration Metropolitan University, Sylhet

Date of Submission- September 14, 2011

In The Name of ALLAH, The Beneficent, The Most Merciful

Dedicated to My respective Parents Who always Loved me Lot

Letter of Transmittal
September 12, 2011 Mr. Md. Masud Rana Supervisor & Assistant Professor Department of Business Administration Metropolitan University, Sylhet

Subject: Submission of the Internship Report Sir, It is my pleasure to submit my internship report titled “Assessing Customer Satisfaction Level at Al-Arafah Islami Bank Ltd. Laldighirpar Branch, Sylhet” that has been prepared as an integral part of my degree requirement. I put my best effort to follow the instructions of you in preparing this report. The internship program was very much valuable to me as it helped me to gain experience from practical field. While preparing this report I went through extensive literature survey and interviewed with the bank officials and customers. It was a great learning experience for me. I tried to the maximum competence to meet all the dimensions required from this report. However some of the aspects are unintentionally overlooked. It is hoped that you would ignore any discrepancies considering my limitations. I will highly appreciate if you kindly accept the report. Your positive action regarding this matter would be very much helpful for our academic as well as professional career. Thanking you in advance for your assistance and advice.

Sincerely yours,

Md.Bazlur Rahman Khan ID No.: 073-116-020 BBA 13th Batch Major in Accounting & Information Systems Department of Business Administration Metropolitan University, Sylhet

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Date: September 13, 2011

Certificate of the Supervisor
I am very much pleased to declare that Md.Bazlur Rahman Khan, ID No. 073-116-020, student of BBA, Department of Business Administration, Major in Accounting & Information Systems, 13th Batch, Metropolitan University, Sylhet, Bangladesh. He has completed his Internship Report on Assessing Customer Satisfaction Level at of Al-Arafah Islami Bank Limited. His work is satisfactory. Moreover, I am glad to inform that his report has been prepared under my active supervision. Now I am convinced to permit his Report before the respective panel of judges. He has reviewed all the relevant information and collected latest data from the different sources. I hope that this Report will contribute in his career. I wish all the best in his effort.

Md. Masud Rana Assistant Professor Department of Business Administration Metropolitan University, Sylhet.

Al-Hamra, Zindabazar, Sylhet-3100, Bangladesh Phone: +880 821 713077,713078 Fax: +880 821 713304 E-mail: info@metrouni.edu.bd www.metrouni.edu.bd Established in 2003, Metropolitan University is approved by the government of the Peoples Republic of Bangladesh and the University Grants Commission of Bangladesh.

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ABSTRACT
The Islamic banking system has gained momentum worldwide. There are now 180 Islamic banks & financial institutions operating in Asia, Africa, Europe and the USA with more than 8000 branches with an estimated $170 billion. The popularity of Islamic banking system is not limited to the Islamic banks only. Increasingly large international conventional banks are showing interest in the Islamic banking system as well. For instance, Citibank has established branches in countries like Bahrain and Sudan to operate in accordance with Islamic Shari’ah principles. The consequence of this is that Islamic banks operating in Islamic countries are faced with strong competition not only from Islamic banks but also from non-Islamic rivals. Though the Islamic banking system is different from the conventional banking system, there are some similarities between the two. For instance, an Islamic bank conducts its activities in accordance with the Islamic Shari’ah principles that strictly prohibited any payment or receipt of interest. However, the Islamic bank can also offer products and services which are similar to those offered by a conventional bank. When competition intensifies and when banks start to offer more or less similar products and services, it is the customer’s satisfaction that can influence the performance of an Islamic bank and determines its competitiveness and success. Hence it is of paramount importance to assess the degree of customer satisfaction towards Islamic banks operating in Islamic countries. In this context, a number of questions can be raised. For example, in a country where the majority of the population are Muslims and where both Islamic as well as conventional banks operate, “what are the main factors that motivate customers to deal with either an Islamic bank or a conventional bank or both?”, and “to what extent customers are satisfied with their banks?” In this study, an attempt is made is to assess the degree of customer awareness and satisfaction towards Al-Arafah Islami Bank.

AC KNO W L E DG E ME NT

All gratitude and thanks to almighty “ALLAH” the gracious, the most merciful and beneficent who gave me courage to undertake and complete this task. I am very much obliged to my ever caring and loving parents whose prayers have enabled to reach this stage. I am grateful to almighty ALLAH who made me able to complete the work presented in this report. It is due to HIS unending mercy that this work moved towards success. I am highly indebted to my honorable supervisor Md. Masud Rana, Assistant Professor, Department of Business Administration, Metropolitan University, for his guidance and cooperation that helps me immensely to prepare this report. I would like to express my gratitude to Md. Haroon-Ur-Rashid, Vice President & Manager, AlArafah Islami Bank Ltd. Laldighirpar Branch, for giving me the opportunity, appointment for the internship program that I have completed, who help me without considering any business purpose and also sharing his practical experience. And last but not the least, I heartily thank to all officers of AIBL, Laldighirpar Branch for their sincere co-operation and who helped me to learn about banking during my three months internship. It would not be possible to prepare the internship report without their help and valuable advice and instruction. I feel great pride and pleasure on the accomplishment of this report.

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EX E C U T I V E S U M M A R Y
In a changing marketing environment, any commercial organization is required to be customer oriented. As customers in the banking industry are becoming more demanding and increasingly mobile between competing financial providers, simply being customer-focused is not enough. Since customers are the driving force of Islamic financial institutions, hence customers’ satisfaction is a very important aspect in the competitive market. Therefore, Islamic financial institutions need to take seriously their products marketing aspect in consonance with Islamic business ethics. Through this Internship report an attempt has been made to assess the customer satisfaction level at Al-Arafah Islami Bank Limited (AIBL), Laldighirpar Branch, Sylhet. Basically this report has been developed from the basis of Primary and secondary data. The sources of information are face to face interview with customer, the questionnaire, annual report of the bank, different websites, newspaper etc. My experience also helps me to prepare this report. The objectives of my study is to know about what level the customers are assured by competence, courtesy, credibility and security by the bank and its employees, Assess willingness of employees to help customers & to provide prompt service, Know the ability of employees to perform promised service dependently and accurately etc.. Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service. The state of satisfaction depends on a number of both psychological and physical variables, which correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction can also vary depending on other options the customer may have and other products/services against which the customer can compare the organization's products/services.

A firm’s future profitability depends on satisfying customers in the present – retained customers should be viewed as revenue producing assets for the firm (Anderson and Sullivan 1993; Reichheld 1996; Anderson and Mittal 2000). According to Drucker (1954), the principle purpose of a business is to create satisfied customers. Increasing customer satisfaction has been found to lead to higher future profitability (Anderson, Fornell, and Lehmann 1994), lower costs related to defective goods and services (Anderson, Fornell, and Rust 1997), increased buyer willingness to pay price premiums, provide referrals, and use more of the product (Reichheld 1996; Anderson and Mittal 2000), and higher levels of customer retention and loyalty (Fornell 1992; Anderson and Sullivan 1993; Bolton 1998). Increasing loyalty, in turn, has been found to lead to increases in future revenue (Fornell 1992; Anderson, Fornell, and Lehmann 1994) and reductions in the cost of future transactions (Reichheld 1996; Srivastava, Shervani, and Fahey 1998). All of this empirical evidence suggests that customer satisfaction is valuable from both a customer goodwill perspective and an organization’s financial perspective. During my study, I used three techniques; i.e. face to face interview, deskwork in different departments and servqual instrument- the structured questionnaire of twenty different questions to assessing the customer satisfaction of AIBL (Laldighirpar Branch). The data that obtained from the survey was than analyzed and interpreted by using statistical tools. From the interpretation of survey result, a number of findings and recommendations were suggested that may help the organization to take necessary steps to improve their service and get more satisfied customers.

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Table of Contents
Title of the Report Letter of Transmittal Latter of Acceptance Certificate of Internship from AIBL Abstract Acknowledgement Executive Summary Chapter 1- An Introduction to the Report................................................................................................ 1 1.1 Introduction ...................................................................................................................................... 2 1.2 Origin of the Report.......................................................................................................................... 3 1.3 Background of the Report ................................................................................................................ 3 1.4 Objective of the Report .................................................................................................................... 4 1.5 Scope of the Report .......................................................................................................................... 5 1.6 Methodology of the Study ................................................................................................................ 5 1.6.1 Primary Data Collection ......................................................................................................... 5 1.6.2 Secondary Data Collection ..................................................................................................... 6 1.7 Limitations of the Report.................................................................................................................. 6

Chapter 2- Overview of “Al-Arafah Islami Bank Ltd.”.......................................................................... 7 2.1 Introduction ...................................................................................................................................... 8 2.2 Al-Arafah Islami Bank Ltd............................................................................................................... 8 2.3 Vision of AIBL................................................................................................................................. 9 2.4 Mission of AIBL ............................................................................................................................ 10 2.5 Commitments ................................................................................................................................. 10 2.6 Pledges & Commitments of the sponsor director of AIBL ............................................................ 11 2.7 Special features of AIBL ................................................................................................................ 13 2.8 Form of Organization ..................................................................................................................... 14

2.9 Hierarchy of position in AIBL ....................................................................................................... 17 2.10 Shari’ah Board of AIBL ............................................................................................................... 18 2.11 Activities of Shari’ah Supervisory committee for the year 2010 ................................................. 20 2.12 Capital Market Services ............................................................................................................... 22 2.13 Position in the Stock Market ........................................................................................................ 22 2.14 Progress Analysis ......................................................................................................................... 23 2.15 Capital Adequacy & Reserve Fund .............................................................................................. 24 2.16 Deposits ........................................................................................................................................ 26 2.17 Investment .................................................................................................................................... 28 2.18 Small & Medium Enterprise Investment ...................................................................................... 30 2.19 Grameen Small Investment Scheme............................................................................................. 31 2.20 Investment on Agricultural Sectors .............................................................................................. 33 2.21 Rural Agricultural Investment Scheme ........................................................................................ 34 2.22 Investment on Women Entrepreneurs .......................................................................................... 35 2.23 Al-Arafah Solar Electricity Investment Scheme .......................................................................... 36 2.24 Treasury Operations ..................................................................................................................... 37 2.24.1 Local Treasury .................................................................................................................... 37 2.24.2 Foreign Exchange Treasury ................................................................................................ 37 2.25 The International trade ................................................................................................................. 38 2.26 Income .......................................................................................................................................... 39 2.27 Expenditure .................................................................................................................................. 39 2.28 Operating Profit ............................................................................................................................ 40 2.29 Dividend ....................................................................................................................................... 41 2.30 Information Technology ............................................................................................................... 42 2.31 Marketing & Business Development............................................................................................ 44 2.32 Audit & Inspection ....................................................................................................................... 44 2.33 Rating Report ............................................................................................................................... 46 2.34 Human Resource .......................................................................................................................... 46 2.35 Training & Motivation ................................................................................................................. 48 2.36 Risk Management......................................................................................................................... 49 2.37 Implementation of BASEL-II....................................................................................................... 50 2.38 Branch Network ........................................................................................................................... 50 2.39 Cards & Retail Banking................................................................................................................ 51

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2.40 Appointment of Statutory Auditor................................................................................................ 51 2.41 AIBL at a Glance.......................................................................................................................... 52 2.42 Corporate information for the Year 2010 ..................................................................................... 53 Chapter 3- Products & Services of AIBL ............................................................................................... 54 3.1 Various deposit product of the bank in 2010.................................................................................. 55 3.2 Investment modes of AIBL. ........................................................................................................... 58 3.3 SME Banking ................................................................................................................................. 60 3.4 Microfinance .................................................................................................................................. 62 3.5 Corporate Social Responsibility ..................................................................................................... 64 3.5.1 Conceptualization of CSR..................................................................................................... 64 3.5.2 CSR Activities of AIBL........................................................................................................ 64 3.5.3 Some CSR Activities of AIBL in details .............................................................................. 65 Chapter 4- Customer Satisfaction based on theoretical aspect ............................................................ 68 4.1 Introduction .................................................................................................................................... 69 4.2 Definition of Customer................................................................................................................... 69 4.3 Definition of Satisfaction ............................................................................................................... 70 4.4 Definition of Customer Satisfaction ............................................................................................... 71 4.5 Shari’ah Basis of Customer Satisfaction ........................................................................................ 71 4.6 CSA Role vis-à-vis Service Expectation ........................................................................................ 72 4.7 Sales Behavior Model Based on Islamic Business Ethics .............................................................. 74 4.8 Importance of Customer Satisfaction ............................................................................................. 77 4.9 Factors affecting Customer Satisfaction......................................................................................... 79 4.10 Customer Satisfaction- A Critical component of profitability ..................................................... 81 4.11 Effect Customer Satisfaction on profitability ............................................................................... 81 4.12 Consequences of Customer Satisfaction and Dissatisfaction ...................................................... 83 4.13 Moving from Customer service to Customer satisfaction ............................................................ 84 4.14 Techniques used to measuring Customer Satisfaction ................................................................ 85 4.15 Steps in assessing Customer Satisfaction ..................................................................................... 86 4.16 Customer Satisfaction in seven steps............................................................................................ 87 4.17 To improve customer satisfaction, there have 3 principles of employee satisfaction .................. 88 4.18 Summary ...................................................................................................................................... 91

Chapter 5- Assessing Customer Satisfaction at AIBL, Laldighirpar Branch, Sylhet......................... 92 5.1 Measuring Customer Satisfaction................................................................................................... 93 5.2 Methods used in Assessing Customer Satisfaction at AIBL (Laldighirpar Branch) ...................... 94 5.3 Analysis of Customer Satisfaction ................................................................................................. 97 5.3.1 Gender Frequency................................................................................................................. 97 5.3.2 Age Group Frequency........................................................................................................... 98 5.3.3 Profession Frequency............................................................................................................ 99 5.3.4 Statements in the Tangible Dimension ............................................................................... 100 5.3.5 Statements in the Reliability Dimension............................................................................. 102 5.3.6 Statements in the Responsiveness Dimension .................................................................... 104 5.3.7 Statements in the Assurance Dimension ............................................................................. 106 5.3.8 Statements in the Empathy Dimension ............................................................................... 108 5.3.9 Summary of the survey result for five dimensions ............................................................. 110 Chapter 6- SWOT Analysis.................................................................................................................... 112 6.1 Introduction .................................................................................................................................. 113 6.2 SWOT Analysis............................................................................................................................ 113 6.2.1 SWOT Analysis of AIBL ................................................................................................... 114 Chapter 7- Findings of the Analysis ...................................................................................................... 117 7.1 Findings ........................................................................................................................................ 118 7.1.1 Quantitative Findings.......................................................................................................... 118 7.1.2 Qualitative Findings............................................................................................................ 119 7.2 Problems & Limitations ............................................................................................................... 120 Chapter 8- Recommendations & Conclusion ....................................................................................... 121 8.1 Recommendations ........................................................................................................................ 122 8.2 Conclusion................................................................................................................................... 124 Appendices............................................................................................................................................... 126 Appendix-I: Questionnaire ................................................................................................................. 127 Appendix-II: Survey Result................................................................................................................ 130 Bibliography ............................................................................................................................................ 136

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CHAPTER 1

AN INTRODUCTION TO THE REPORT

1.1 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, the Afghan traders popularly known as Kabuliawallas introduced early banking system. Muslim businesspersons from Kabul, Afghanistan came to India and started money-lending business in exchange of interest sometime in 1312 A.D. They were known as 'Kabuliawallas'. The financial system of Bangladesh consists of Bangladesh Bank (BB) as the central bank, 4 nationalized commercial banks (NCB), and 4 government owned specialized banks, 30 domestic private banks, 9 foreign banks and 62 non-bank financial institutions. The financial system also embraces insurance companies, stock exchanges and co-operative banks The structure of the banking system has changed substantially over the last few years. NCBs’ role has gone down. Their share in total assets went down from 54 percent in 2000 to 40 percent in 2010. On the other hand, PCBs’ share went up from 27 percent in 2000 to 43 percent in 2010. The change reflects adoption and implementation of new policies for the banking sector. One important challenge that the banking sector is facing is the introduction of information technology in the banking system in an aggressive manner. This is required to improve management efficiency, reduce operational cost, improve customer services, and increase transparency.

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Hence, the banking sector would play a vital role in the development of the country and efficient and sound banking management would led the country to reach at the highest peak of success.

1.2 Origin of the Report
Bachelor of Business Administration (BBA) is one of the most commendable professional degrees. The main objective of BBA degree is to provide the students with the practical aspects of academic learning to the organizational setting. For the attainment of that purpose curriculum and syllabus is designed in a manner so that students are facilitated to have practical or empirical working experience to some extent. Inclusion of internship is a proof of one of the attempts. I am a student of Metropolitan University, Sylhet. In BBA, my major subject is “Accounting & Information Systems”. For that consequence, I choose the banking sector for performing my internship and the organization is the Al-Arafah Islami Bank Ltd. (AIBL) in this regard. My research topic is “Customer Satisfaction Level at Al-Arafah Islami Bank Ltd., Laldighirpar Branch of Sylhet”. My faculty supervisor Mr. Md. Masud Rana, Assistant professor of the Department of Business Administration, approved the topic and authorized me to prepare this report as part of the fulfillment of internship requirement.

1.3 Background of the Report
With the rapid growing competition among nationalized, foreign and private commercial banks as to how the banks operates its banking operation and how customer service can be made more attractive, the expectation of the customers has immensely increased. Reciprocating the sentiment, commercial and private banks are trying to elevate their traditional banking service to a better standard, to meet the challenging needs and demands. Side by side, these banks have now concentrated their attention towards diversification of their products for better performances and existence. For the above circumstances, it has become necessary for Al-Arafah Islami Bank Ltd, one of the leading commercial banks, to focus its attention towards the improvement of the

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customer service. That is why it is quite justified to make an in-depth study about its operation and evaluate the service provided by this bank and scope for its improvement. The study may help formulating policy regarding the ideas relating to the feelings of the customers and bankers. Furthermore, Al-Arafah Islami Bank Ltd executives who are actually executing the policies undertaken by the top management will have a chance to communicate their feelings and will have the feedback about their dealing from the customers.

1.4 Objectives of the Study
Broad Objective: The principal objective of this study is to determine the customers‘satisfaction level of Al-Arafah Islami Bank Ltd., Laldighirpar Branch of Sylhet. Specific Objectives: The specific objectives of the study are toa. Know the ability of employees to perform promised service dependently and accurately. b. Know to what level the customers are assured by competence, courtesy, credibility and security by the bank and its employees. c. Measure to what extent the tangible appearances are satisfying customers. d. Evaluate customers’ satisfaction in getting convenient banking hour, care & individual attention. e. Assess willingness of employees to help customers & to provide prompt service. f. Compute the unweighted overall satisfaction level of the customers & weighted customer satisfaction Index.

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1.5 Scope of the Study
The report deals with measuring the satisfaction level of the customers of Al-Arafah Islami Bank Limited, Laldighirpar Branch, Sylhet. These customers are the people who have account in this branch. The total population is not covered here. It is based on sample survey. Thus, the satisfaction level of the entire customers of Al-Arafah Islami Bank Limited or any other branch of the bank is not measured here and these will not be a part of the report. The study was conducted from 2nd of May, 2011 to 31st of July, 2011. Thus, the samples were selected from the customers who came to bank in during this period. AIBL has been chosen for three reasons. First, this Bank is a Sharia’h based bank and is drawing attention of millions of customers to its products and services. Second, this is one of the largest and strongly profitable among private commercial banks in Bangladesh. Third, it offers a wide range of products and services and has customers of different classes of the society.

1.6 Methodology of the Study
In order to conduct this internship report both primary & secondary data have been utilized. 1.6.1 Primary Data Collection The primary data have been obtained through using following three techniques: a. Face to face conversation with the employees. b. Deskwork in different section/departments. c. SERVQUAL Instrument: To get quantitative data on customer satisfaction directly from customers with a view to measure their level of satisfaction I‘ve interviewed 50 account holders of Al-Arafah Islami Bank Ltd. having different profession & who lies in different age group using the SERVQUAL instrument. The interviews have been conducted using a structured questionnaire containing 20 questions representing the five dimensions of customer satisfaction measurement. A sample questionnaire has been annexed in the appendix part. The period of the study lies in between 2nd May, 2011 to 31st July, 2011.

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1.6.2

Secondary Data Collection

There have elaborations of different types of secondary data in my research. The sources are of those data’s are: a. Internal Sources:        Bank’s Annual Reports Official Documents & Ledger records of Bank Website of the bank Published literatures Journals & Newspapers Consultation of related books & publications. Website Surfing

b. External Sources

1.7 Limitations of the Report
The limitations of the report and the study are follows:           The report has been conducted within a short time frame. The study is self-financed. Only Laldighirpar Branch of the bank has been considered for the study. The sample size does not represent the total population. Samples were selected conveniently. For the convenient of the study, non-probability samples have been used. In many cases, up-to-date information is not published. All weights given are judgmental. Information regarding the competitors is difficult to get. As time frame was short and the whole study was conducted by one person there is chance of having error in any stage of data collection, data entry, data organizing, data sorting, data testing, data presentation, interpretation of result, etc.

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CHAPTER 2

OVERVIEW OF “AL-ARAFAH ISLAMI BANK LTD.”

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2.1 Introduction
Islami Banking System is becoming more and more attractive day by day to peoples irrespective of Nations, religious, colors and species. More than 300 Banks & financial institutions are serving Islami banking throughout the world. At present in our country 7 fully fledged Islamic Banks are working successfully. And other traditional banks have Islami Banking Wings conducting Shari’ah based banking activities. Recent Development of Bangladesh Government Islamic Investment Bond (BGIIB) is the milestone for Shari’ah based banking practices in Bangladesh. Al-Arafah Islami Bank Ltd. as the name implies a newly formed commercial bank in Bangladesh. It has been incorporated in Dhaka, Bangladesh as a public limited company and its Head Office of the Bank is located at Rahman Mansion, 161, Motijheel C/A, Dhaka- 1000. In the world of consumerism the business organization of the world strive for the consumers satisfaction as a number one business strategy whatever may be the product of the organization, either service or non service. Service is the product of bank. There is a saying that customer service starts rights right from the stairs of the bank building. The guard at the door is first person pep resents of the bank, receives a customer with wishes in smiling face.

2.2 Al-Arafah Islami Bank Limited
Islam provides us a complete lifestyle. Main objective of Islamic lifestyle is to be successful both in our mortal and immortal life. Therefore in every aspect of our life we should follow the doctrine of Al-Qur'an and lifestyle of Hazrat Muhammad (Sm.) for our supreme success With the objective of achieving success here & hereafter by pursuing the way directed by Allah and the path shown by His Rasul (SM), Al Arafah Islami Bank Ltd was established (registered) as a private limited company on 18 June 1995. The inaugural ceremony took place on 27 September 1995. The authorized capital of the Bank is Tk.5000.00 million and the paid up capital is Tk.
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4677.28 million as on 31.12.2010. Renowned Islamic Scholars and pious businessmen of the country are the sponsors of the Bank. 100% of paid up capital is being owned by indigenous shareholders. A group of established, dedicated and pious personalities of Bangladesh are the architects and directors of the Bank. Among them a noted Islamic scholar, economist, writer and ex-bureaucrat of Bangladesh government Mr. A.Z.M Shamsul Alam is the founder chairman of the bank. His progressive leadership and continuous inspiration provided a boost for the bank in getting a foothold in the financial market of Bangladesh. A group of 20 dedicated and noted Islamic personalities of Bangladesh are the member of Board of Directors of the bank. They are also noted for their business acumen. The authorized capital of Al-Arafah Islami Bank Ltd. is Taka 5000 millions and the paid-up capital is Taka 4677.28 millions. The equity of the bank stood at Tk. 9647.45 million as on 31 December 2010, the manpower was 1711 and the number of shareholders was 49,386. It has achieved a continuous profit and declared a good dividend over the years. High quality customer service through the integration of modern technology and new products is the tool of the bank to achieve success. The bank has a diverse array of carefully tailored products and services to satisfy customer needs. The Bank is committed to contribute significantly to the national economy. It has made a positive contribution towards the socio economic development of the country with 80 branches of which 21 is AD throughout the country.

2.3 Vision of AIBL
 To be a pioneer in Islami Banking in Bangladesh and contribute significantly to the growth of the national economy.

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2.4 Mission of AIBL
           Achieving the satisfaction of Almighty Allah both here & hereafter. Proliferation of Shari’ah Based Banking Practices. Quality financial services adopting the latest technology. Fast and efficient customer service. Maintaining high standard of business ethics. Balanced growth. Steady & competitive return on shareholders' equity. Innovative banking at a competitive price. Attract and retain quality human resources. Extending competitive compensation packages to the employees. Firm commitment to the growth of national economy.

 Involving more in Micro and SME financing. 2.5 Commitments
 Ours is a customer focused modern Islamic Banking sound and steady growth in both mobilizing deposit and making quality Investment to keep our position as a leading Islami bank in Bangladesh.   To deliver financial services with the touch of our heart to retail, small and medium scale enterprises, as well as corporate clients through our branches across the country. Our business initiatives are designed to match the changing trade & industrial needs of the clients.

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2.6 Pledges & Commitments of the Sponsor Director of AIBL
Whenever a new institution comes into existence, the sponsors claim that it would be an institution with difference. If a new institution does not have any novelty, why it should at all be brought into existence? The sponsors of AIBL in conformity with the tradition claim that it would be a bank with difference. The sponsors and promoters of AIBL made a few firm pledges and commitments in the name of Allah. These pledges and commitments have been included in the memorandum and articles of Association (Article 159) of AIBL (pp 65-71) incorporated with Bangladesh Bank, Registrar of Joint Stock Companies, Securities & Exchange Commission, etc. Some of those commitments, titled “Agreements, Pledges and Commitments of the Promoters, Sponsors & directors of AIBL” are given below: Objectives of the Sponsors AIBL has not been set up with the objectives of economic welfare and financial benefit of the sponsors and promoters in this world, on the contrary, they are desirous of welfare in the next world and Nazat in Akhirat which could be achieved more by rendering credit services by th sponsors and bankers to others than any service to themselves. Misuse of Power and undue Advantages The sponsor directors shall not try to avail undue advantages of any kind from the bank for themselves, or for firms, companies, institutions in which they have financial or other interest. The facilities which are legal, just and due to them, that they will avail of should be transparent and known to the Board of Directors leaving little scope for misunderstanding.

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Inspiration for Qurbani of Nafsaniyyat or Self-interest The promoters and sponsors of AIBL are imbued with the spirit of sacrifices and Qurbani of the family of “Hazrat Ibrahim (A.)” (PBUH), and which was rekindled by our beloved prophet “Muhammed (S.)” (PBUH) and “Sahaba-i-Keram” and thereafter by the “Sufi saints” who made supreme sacrifices and Qurbani for preaching of Deen of Allah to all comers of the world, particularly to this region. Clean Banking is “Ibadat” The sponsor directors agree to conduct clean banking under patronization of the government, and firmly believe that the association with this bank would be nothing but “Ibadat” and that they will act accordingly. Environment of AIBL Al-Arafah Islami Bank shall bear the mark of the Sunnah of our prophet “Muhammed (S.)” (PBUH), of our faith and conviction, our values and attitudes towards life and that the entire environment of Al- Arafah Islami Bank shall be in conformity with Sunnah, simple in style, noble and rich in thought, but dynamic and far reaching in impact, exemplary in efficiency and service to the customers. Sunnah of Keeping Deposit as “Amanat” The sponsors firmly and solemnly pledge and promise to hold the deposits and other fund as “Amanat” and sacred trust keeping in mind the Sunnah of our beloved prophet “Muhammed (S.) (PBUH)” who would hold the money and materials deposited with him even by the infields in great trust for which he earned the title of “Al-Ameen”.

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2.7 Special Features of AIBL:
    All activities of the bank are conducted according to Islamic Shari’ah where profit is the legal alternative to interest. The bank's investment policy follows different modes approved by Islamic Shari’ah based on the Qur'an & Sunnah. The bank is committed towards establishing welfare oriented banking system, economic upliftment of the low-income group of people, create employment opportunities. According to the need and demand of the society and the country as a whole the bank invests money to different 'Halal' business. The bank participates in different activities aiming at creating jobs, implementing development projects of the government and creating infrastructure.  The bank is committed to establish an economic system resulting in social justice and equitable distribution of wealth. It is committed to bring about changes in the underdeveloped rural areas for ensuring balanced socio economic development of the country through micro credit program and financing of SME's as well.  According to Mudaraba system, the depositors are the partners of the investment income of the bank. About 70% of the investment income is distributed among the Mudaraba depositors.   To render improved services to the clients imbued with Islamic spirit of brotherhood, peace and fraternity and by developing an institutional cohesion. The bank is contributing to economic and philanthropic activities. AIBL English Medium Madrasah and AIBL library patronize by the Bank are two such examples.

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Performance at a glance (In Million Taka)
56,000.00 48,000.00 40,000.00 32,000.00 24,000.00 16,000.00 8,000.00 0.00 Shareholder Equity deposit Investment Profit befor Tax & Provision 2006 1,690.18 16,775.30 17,423.20 969.77 2007 2,037.50 23,009.10 22,906.40 756.18 2008 2,705.74 29,690.12 27,742.58 1,528.10 2009 3,564.73 38,355.50 36,134.08 1,729.83 2010 9,647.45 52,973.97 53,582.96 3,059.98

2.8 Form of Organization
Board of Directors
   Chairman Vice Chairman Member : Badiur Rahman : Sarker Mohammad Shameem Iqbal : Alhajj Md. Harun-ar-Rashid Khan Alhajj Nazmul Ahsan Khaled Alhajj Abdul Malek Mollah Alhajj Hafez Md. Enayetullah Alhajj Abdul Moktadir Alhajj Ahamedul Haque
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Alhajj Abdus Samad Alhajj Abu Naser Mohammad Yeahea Alhajj Abdus Salam AlHajj Niaz Ahmed Md. Ashik Hossain Md. Rafiqul Islam Mohammed Emadur Rahman Mrs. Sabrina Farah Ahmed Anwar Hossain Dr. Momtaz Uddin Ahmed   Ex Officio Director : Ekramul Hoque (Managing Director) Company Secretary : Md. Mofazzal Hossain

Executive Committee
   Chairman Vice-Chairman Member : Alhajj Abdus Samad : Alhajj Abdul Malek Mollah : Alhajj Md. Harun-ar-Rashid Khan Alhajj Md. Nazmul Ahsan Khaled Alhajj Hafez Md. Enayetullah Alhajj Ahmedul Haque Alhajj Abu Naser Mohammad Yeahea

Audit Committee
 Chairman : Sarker Mohammad Shameem Iqbal

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Member

: Al-Hajj Niaz Ahmed Dr. Momtaz Uddin Ahmed

Shari’ah Supervisory Committee
  Chairman Member : Mufti Abdur Rahman :Mufti Ruhul Amin Moulana Abdul Basit Barkatpuri Mufti Muinul Islam Alhajj A. Z. M. Shamsul Alam Badiur Rahman  Secretary :Md. Abdur Rahim Khan

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2.9 Hierarchy of Position in AIBL
Managing Director Additional Managing Director Deputy Managing Director 1 Deputy Managing Director2 Senior Executive Vice President Executive Vice President Chairman Senior Vice President

Director

Vice Chairman

Vice President

Hierarchy Of AIBL

Assistant Vice President

First Assistant Vice President Senior Principal Officer

Principal Officer

Officer

Executive Officer

Senior Executive Officer

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2.10 Shari’ah Board of AIBL
Shari’ah Board Scholars of high repute with extensive experience in law, economics and banking systems and specializing in law and finance as prescribed by Islamic Shari’ah make up the AIBL's Fatwa & Shari’ah Supervision Board. The Board is appointed by the bank's Board of Directors. The Shari’ah Board supervises the development and creation of innovative Shari’ah -compliant investment and financing products and services. The Board is empowered to issue fatwas on any matter proposed to it by different business units of the bank. The Shari’ah auditors ensure that all the transactions are carried out in strict compliance to Islamic principles of banking. This framework along with a stringent compliance to rules has made AIBL the pioneering organization to practice Islamic finance in true letter and spirit. The name AIBL has come to signify innovation, financial dynamism, leadership and above all a complete assurance that all the transactions are free from riba (interest). The Board's Role The Fatwa & Shari’ah Supervision Board oversees the application of different aspects of Shari’ah in the Bank. It also ensures that all transactions are in strict compliance with the right of contradicting (fatwa) any violating procedures, if found. The Board of Directors is obligated to obey the fatwas, irrespective of whether a unanimous or a majority consensus secured the decision (clause ---- of the Bank’s Memorandum & Articles of Association). Board meetings are held periodically or whenever the need arises. The rights of the Board are enshrined in Article Seven o the Bank's Memorandum & Articles of Association (Clauses). Important Duties of the Shari’ah Board  As an expert source on Islamic Principles (Including Fatwas), the Board through a representative, usually the General Secretary of the Board, supervises the Shari’ah compliance of all the transactions in the Bank.

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To devote time and effort to devising more Shari’ah -compliant transactional procedures, templates and banking products that enable the Bank to adapt to market trends while maintaining a high competitive edge in deposit procedures, investments, and banking services. At the same time, the Board gives its opinion on proposed new templates, and banking transactions.

Analyzing unprecedented situations that are not covered by fatwa, in the Bank's transactional procedures or those reported by different departments, branches and even the customers. This is to ensure Shari’ah compliance before the Bank develops any new products or implements any new procedure.

Analyzing contracts and agreements concerning the Bank's transactions, as submitted by the Chairman of the Board of Directors or any department/branch within the bank or requested by the Board itself so that Shari’ah compliance can be evaluated and maintained.

   

Ensuring Shari’ah compliance in the implementation of all banking transactions and correcting any breaches. Analyzing administrative decisions, issues and matters that require the Board's approval. Supervising Shari’ah training programmes for the Bank's staff. Preparing an annual report in the Bank's balance sheet with respect to its Shari’ah compliance.

The Fatwa & Shari’ah Supervision Board submits a complete annual report for the Board of Director, summarizing all the issues referred to the Board, as well as its opinion on the Bank's transactional procedures.

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Shari’ah Supervisors The Clause ---- of the Bank's Memorandum & Articles of Association requires the Board of Directors to appoint a Shari’ah Supervisor, responsible for monitoring all the Bank's transactional procedures and assuring Shari’ah compliance. Also the General Secretary of the Fatwa & Shari’ah Supervision Board, the Shari’ah Supervisor handles queries about the Bank's administration from staff members, shareholders, depositors and customers, liaises with the Shari’ah auditors and provides them with guidance. He submits reports and suggestions to the Fatwa & Shari’ah Supervision Board and to the Chairman of the Board of Directors. The position also calls for participation in the Bank's training programmes. Shari’ah Auditing The supervisory function forms a part of the Shari’ah Supervision procedures, its main task being to check Shari’ah compliance under the guidance of the Shari’ah Supervisor. The auditors continuously review the Bank's transactional procedures to ensure adherence to the framework created by the Fatwa & Shari’ah Supervision Board. The Shari’ah auditors submit periodic reports to the Shari’ah Supervisor so as to monitor and maintain Shari’ah compliance.

2.11 Activities of Shari’ah Supervisory committee for the year 2010
Shari’ah Supervisory committee consists of 6 members specialized in Fiqhul Muamalat (Islamic Commercial Law) according to guidelines given by the Bangladesh Bank to ensure whether all banking operations are transacted in accordance with Islami Shari’ah i.e. Qur'an, Sunnah, Ijma and Iztihad. Shari’ah Supervisory committee has by the grace of Almighty Allah managed to contribute a lot to run all the business activities of the Bank according to Shari’ah guidelines. Honorable

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members of the Shari’ah Council sat in 3 General Meetings and 2 emergency meeting and 2 subcommittee meeting in the year 2010 to discuss the matters placed before them by the Board and management of the Bank to give directives and suggestions in the field of Shari’ah principles. Muraqibs of the Supervisory committee have visited all branches (78) of the Bank during the year to observe the Shari’ah compliance, give necessary instructions on the spot and submitted report to the Council. They have also submitted corrective measures to rectify the laws in implementing Shari’ah guidelines into the banking operations. The Shari’ah Supervisory Committee audited the Financial Statement for the year 2010 from Shari’ah point of view. After analyzing the Financial Statement the Shari’ah Supervisory Committee identified Tk.12.83 million as doubtful income, Tk. 54.04 million as compensation realized in different branches and Tk.0.25 million and Tk.0.82 million as interest income received from NOSTRO accounts of foreign correspondent Banks and Bangladesh Bank F.C clearing accounts respectively. Due to limitation in computer software of AIBL Capital Market Department the committee could not separate brokerage commission and margin profit income earned from Shari’ah approved securities and interest based bank and financial institution. As a result the entire amount of Tk.313.32 million earned from brokerage was identified for the time being as doubtful income and the Shari’ah Supervisory Committee in its 15th Board Meeting held in 22nd March 2011 has decided to finalize the Financial Statement for the year 2010 keeping doubtful income amounting Tk. 313.32 million apart from basic income which will be settled later on. A library has been established in the Shari’ah Council Secretariat of Al-Arafah Islami Bank having about 500 books on Qur'an, Hadith, Fiqh, Islamic Economics and Islami Banking. Honorable members of the Council give Shari’ah guidelines to run the Bank's operations taking necessary consultations and data from those books after exhaustive research and study.

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2.12 Capital Market Services
Al-Arafah Islami Bank Ltd. (AIBL) is a corporate member of Dhaka Stock Exchange Ltd. & Chittagong Stock Exchange Ltd. Membership Number of Dhaka Stock Exchange is 234 and Membership Number of Chittagong Stock Exchange is 139. After obtaining stock broker and stock dealer registration certificates from Securities and Exchange Commission it started share trading from 15th January 2009. Its functions includes: (a) Share trading services in DSE, (b) Margin facility through bai-muazzal system, (c) Full services Depository participant services and (d) Discretionary account services. From the very beginning it succeeded to achieve clients' satisfaction. As a result, it has been included in the DSE Most Active 20 Members list from the first month of its trading activities and during the year 2010 it secured 3rd position in the list. Considering ongoing clients demand, we have extended branches in Khulna, Sylhet, Chittagong, Barisal, Brahmanbaria, Uttara, Dhanmondi, Gulshan during the year 2010. As per direction of Bangladesh Bank and SEC a subsidiary company named "AIBL Capital Market Services Ltd." has been formed to conduct our brokerage business separately from the bank. In the meantime DSE and CSE membership has been transferred to the subsidiary company. We have applied to SEC for issuing Stock broker and Stock dealer registration certificate which is now under process.

2.13 Position in the Stock Market
Bank's share sustained a steady strong position since its induction at Dhaka Stock Exchange & Chittagong Stock Exchange in 1998. In Dhaka Stock Exchange the face value of taka 10 of our

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share was traded at taka 110.00 highest in 2010. The market trend of our bank's share in Dhaka Stock Exchange between January 2010 to December 2010 is stated in the list: Share price List Month January February March April May June July August September October November December Opening (Tk.) 52.23 58.50 51.88 54.73 73.00 86.70 94.10 99.20 101.90 66.40 69.00 72.30 High (Tk.) 59.30 61.40 54.50 75.40 100.00 96.00 104.90 102.90 110.00 72.60 77.90 73.50 Low (Tk.) 50.20 52.00 48.10 53.33 56.30 81.00 91.60 92.60 100.10 63.00 64.00 54.00 Closing (Tk.) 58.88 52.60 54.15 72.85 87.00 93.80 98.20 98.70 109.70 64.40 71.50 66.88

2.14 Progress Analysis
At the end of 2010, the number of depositors stood at 498,330 and the accumulated deposit was Tk. 52,973.97 million. The total number of investors stood at 40,672 and total investment extended to them was Tk. 53,582.96 million. During the year 2010 the total income was Tk. 7,522.25 million and total expenditure was Tk. 4,462.30 million. At the end of the year the profit before tax and provision stood Tk. 3,059.95 million.

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2.15 Capital Adequacy & Reserve Fund
According to BRPD Circular the Bank will have to maintain Tk. 4,000.00 million Capital & Statutory Reserve by August 2011. In compliance with the new provision, the bank has raised its Capital & Reserve from Tk. 4,065.96 million in the year 2010 to Tk. 10,512.81 million in 2010 by declaring 30% stock dividend out of the profit of the year 2009 and issuing right share worth tk. 2,338.64. The paid up capital of the bank has stood at Tk. 4,677.28 million at 31 st December 2010. The total reserve fund has stood at Tk. 1,746.42 million in the current year against Tk. 1,223.18 million at 31st December 2009. In this account, the bank experienced a growth of 42.78%. The Bangladesh Bank has fixed the ratio of capital adequacy against Risk-Weighted Assets at 9% or Tk. 2000 million whichever is higher. The capital adequacy ratio of the Bank as on 31.12.2010 is appended below:

Capital Adequacy Ratio
15

10

5

0 CAR

2006 10.71

2007 10.92

2008 11.21

2009 11.25

2010 14.49

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A. Tier-1: Core Capital Particulars Paid-up Capital Statutory Reserve Retained Earnings Minority Interest in Subsidiaries Total Core Capital B. Tier-2: Supplementary Capital Provision for Unclassified Investment Exchange Equalization Fund Assets Revaluation Reserve Total Supplementary Capital Total Capital (A+B) C. Capital Adequacy Ratio

(Amount in million BDT) 2010 4,677.28 1,681.82 1,274.86 1,948.89 9,582.85 897.66 Nil 32.30 929.96 10,512.81 14.49% 2009 1,798.95 1,156.52 542.60 Nil 3,498.07 533.53 2.06 32.30 567.89 4,065.96 11.25%

Shareholders Equity (In Million Taka)
10000 8000 6000 4000 2000 2006 Shareholders Equity 1690.18 0 2007 2037.5 2008 2009 2010 2705.74 3564.73 9647.45

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2.16 Deposits
The total deposit of the bank was Tk. 52,973.97 million at 31st December 2010 as against Tk. 38,355.50 million at 31st December 2009 recording a growth of 38.11% of which Tk. 115.05 million was bank deposit and Tk. 52,858.92 million was general deposit. The present strategy is to increase the deposit base through maintaining competitive profit rates and having low cost of funds to ensure a better spread with an average return on investment. The mix deposit of the bank on December 31, 2010 was as follow:

Deposit Growth (In Million Taka)
60000 50000 40000 30000 20000 10000 2006 Deposit 16775.34 0 2007 23009.13 2008 29690.12 2009 38355.5 2010 52973.97

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Deposit Mix 2010 Nature of Deposit Al-Wadeeah Current Deposit Mudaraba Savings Deposit Other Mudaraba Deposit Mudaraba Term Deposit Bills Payable Total BDT in Million 6,667.08 7,227.52 11,941.82 26,325.03 812.52 52,973.97 % of total Deposit 13 14 22 50 1 100

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2.17 Investment
The investment of the bank has stood at Tk. 53,582.96 million as on 31st December 2010 as against Tk. 36,134.08 (Net off PR) million in the previous year showing an increase by 48.29%. The investment portfolio of the bank is well diversified and covers a broad spectrum of businesses and industries including readymade garments, textile, edible oil, ship scraping, steel & engineering, chemicals, pharmaceuticals, cement, telecommunication, construction, health care, real estate, education, transport and investment under consumer schemes. We have geared up efforts to improve the recovery rate of disbursed investment and also taken adequate measures for converting the classified investment into performing assets. As a result, classified investment of the bank could be kept at a low level far below the national average. It is 1.14% in our bank as on 31 December 2010. The bank gives top-most priority to the creation of quality assets and does appropriate risk grading while approving commercial, trade and project investment to different clients.

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Sector wise Investment Sectors Agriculture,Fishing and Forestry Industry Construction Water Works & Sanitary Services Transport & Communication Storage Trade Finance Miscellaneous Total (Including Profit Receivable) Less Unearned Profit on Investment Total 2010 (Tk. In Millions) 685.40 14,277.03 2,512.86 102.27 1,535.76 17.99 32,786.47 4,786.02 56,703.8 3,120.84 53,582.96 2010 (Percentage) 1.21 25.18 4.43 0.18 2.71 0.03 57.82 8.44 100

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2.18 Small & Medium Enterprise Investment
To ensure proper manifestation and rapid advancement of Small & Medium Enterprises, a number of SME related schemes are running in this Bank. In the light of a unique definition by Bangladesh Bank, bank is giving priority over financing to three categories of enterprises viz. Industry, Trade & Services. Investment up to December 2010 of SME Sector is Tk. 14,499.30 million on which outstanding is 12,754.30 million, which is 24.62% of total investment portfolio. Besides, to speed up SME investment flow and to include in people who are beyond the range of banking facilities, a scheme named 'Small Enterprise Investment Scheme (SEIS)' is launched. With this scheme, operation of collateral security free SME investment is running. 71 branches of total 78 branches are under the operation. At the end of December 2010, number of security free SME clients is One Thousand One Hundred Twenty Eight (1,128) and investment is Tk.
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341.60 million which outstanding is Tk. 274.02 million. Skilled and experienced staff are recruited in different branches to ensure proper expansion of collateral security free SME investment. We prior Area Approach Method when SME financing. The statistics as on 31 December, 2010 is shown in the table: Particulars Total SME Investment Terms & Conditions SEIS Investment (Collateral Security Free ) Minimum Investment Maximum Investment Number of Clients Number of Branches under the scheme Rate of Profit Supervision Fee Maximum Duration Repayment system Recovery Rate Terms & Conditions Status Tk. 14,499.30 Million Stipulated by the Bank Tk. 341.60 Million Tk. 50,000.00 Tk. 700,000.00 1,128 Persons 71 09 % 0.50 % 3 years Monthly Installment 99.84% Soft

2.19 Grameen Small Investment Scheme
On the focus of socio-economic development of rural poor, a scheme named 'Grameen Small Investment Scheme (GSIS)' is running in the bank from the year 2001. At present, Forty Four (44) rural branches are included in this scheme and this number is increasing gradually. At the end of December 2010, Tk. 200.70 million is disbursed to Eleven Thousand Nine Hundred Sixty Four (11,964) clients in different income generated programs which outstanding is Tk. 83.00

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million. Functioning on the basis of Group and Samity, this scheme helps on socio-economic development of farmers, labours, fishermen, micro-businessmen and small entrepreneurs. Another important objective of this scheme is to give priority to make economically selfdependent of rural women entrepreneur. To get investment under this scheme, no collateral security is required. Repayment system is weekly installment basis. Basically, this scheme is one kind of supervised credit system and skilled personnel are working in different branches to ensure proper as well as continuous supervision. The statistics as on 31 December, 2010 is shown in the following tableParticulars Total Investment Minimum Investment Maximum Investment Number of Clients Savings by the Clients Number of Branches under the scheme Number of Samity Number of Group Rate of Return Repayment system Recovery Rate Number of Villages Covered Terms & Conditions Status Tk. 200.70 Million Tk. 5000.00 Tk. 30,000.00 11,964 Persons Tk. 11.60 Million 44 762 2497 10% Weekly Installment 99.97% 695 Soft

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2.20 Investment on Agricultural Sectors
To face the increasing food shortage of the country, bank is paying massive attention to invest on agricultural sectors. The main items of agricultural sectors are- crops, fisheries, warehouse, poverty alleviation, irrigation, livestock development etc. At the end of December 2010, total agricultural investment is Tk. 175.80 million of this fiscal year. At the end of Fiscal Year, Outstanding is 211.35 million. With collateral and without collateral both are practiced in agricultural investment. The statistics as on 31 December, 2010 is shown in the table: Agricultural Investment Particulars Investment Portfolio Fisheries Poverty alleviation Development of Livestock Warehouse of corps Crops Agricultural Machineries Irrigation Others Number of Clients Rate of Profit Recovery Rate Terms & Conditions Status Tk. 211.35 Million Tk. 71.16 Million Tk. 63.99 Million Tk. 32.41 Million Tk. 22.62 Million Tk. 20.28 Million Tk. 0.37 Million Tk. 0.32 Million Tk. 0.20 Million 7577 Persons 10% -13% 98.74% Stipulated by the Bank

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2.21 Rural Agricultural Investment Scheme
On the basis of socio-economic development of marginal and lessee farmers, an agricultural based programme named 'Rural Agricultural Investment Scheme (RAIS)' is launched. Development in country's internal food production as well as socioeconomic sector of farmers are the main focus of this programme. We have already listed One Thousand Five Hundred Fifty Five (1555) farmers under this scheme and total investment is Tk. 27.10 million on which outstanding is Tk. 17.60 million. The statistics as on 31 December, 2010 is shown in the table: Particulars Total Investment Minimum Investment Maximum Investment Number of Clients Number of Branches under the scheme Number of Samity Number of Group Rate of Profit Repayment system Recovery Rate Number of Villages Covered Terms & Conditions Status Tk. 27.10 Million Tk. 5000.00 Tk. 100,000.00 1555 Persons 24 124 315 10% Monthly/Weekly Installment 100% 128 Stipulated by the Bank

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2.22 Investment on Women Entrepreneurs
Al-Arafah Islami Bank Ltd. is working with women entrepreneurs to make them capable of earning by connecting with country's economic activities. We prior women entrepreneurs to invest on various productive sectors. By the side of collateral secured investment, collateral security free investment is also considered in the question of women development. The statistics as on 31 December, 2010 is shown in the table: Agricultural Investment Particulars Investment Portfolio Terms & Conditions SEIS (Women Entrepreneur) Investment Portfolio Number of Clients Rate of Profit Maximum Duration Repayment system Recovery Rate Terms & Conditions Microfinance (Women Entrepreneur) Investment Portfolio Number of Clients Rate of Return Recovery Rate Tk. 196.05 Million 9398 Persons 10% 100% Tk. 3.75 Million 09 Persons 9% 3 years Monthly Installment 100% Soft Status Tk. 685.80 Million Stipulated by the Bank

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2.23 Al-Arafah Solar Electricity Investment Scheme
A different type of investment scheme named 'Al- Arafah Solar Electricity Investment Scheme' is launched in order to face the present electricity crisis and to spread the benefits of renewable energy among the rural people. This program treats as a innovative step on the history of Private Banking Sector in Bangladesh. It also has unveiled the wide field of Green Banking concept, the burning issue. 'Solar Electricity Investment Scheme' is running under the control of SME Department with the support of newly created Power & Technology Unit. Skilled Engineers & Solar Technicians are recruited in order to ensure the perfect technical support. We have already established Twenty Five Thousand Five Hundred Ninety Five (25,595) Watt Power of electricity among Four Hundred Seventy Four (474) families through Eleven (11) Rural Branches so far. Besides, we have established One Thousand Twenty (1020) Watt Powered solar panel for our newly inaugurated South Jatrabari Branch to produce solar electricity for the branch use. We are running this program with own funding as well as skilled personnel. The statistics as on 31 December, 2010 is shown in the table: Particulars Total Investment Electricity Provided Number of privileged Family Number of Branches under the scheme Rate of Return Repayment system Recovery Rate Terms & Conditions Status Tk. 12.13 Million 25,595 Watt. Power 474 11 10% Down payment & Monthly Installment Basis 100% Soft

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2.24 Treasury Operations
AIBL Treasury included Local & Foreign Exchange money market operated under the norms of Islami Shari’ah principles and guideline of Bangladesh Bank which is the Core-banking and one of the best earning units of the Bank.

2.24.1 Local treasury
The Local treasury department operates its functions to maintain CRR & SLR matching with total deposit flow & Investment requirements of the Bank. But it does not participate in the call money market for complying of Islamic Shari’ah principles.

2.24.2 Foreign Exchange Treasury
The treasury environment is ever changing due to new market dynamics, products developments as such new risks are evolving on a continuous basis. As per instructions & guidance of highly skilled Management & Board of Directors, the Bank's Treasury activities have been expanding gradually in local and Global Market through its active Dealing room on those products permissible under Islamic Shari’ah to cope with the changing & challenging market situation. The Bank has separated Treasury front Office (Dealing Room), Mid Office & Back office with reporting lines each of the offices as per international best practices of Treasury Management. At present, The Bank's Treasury engages in providing competitive/live exchange rates, dealing with Merchant & Corporate transactions, contribution to stabilize the Inter-Bank Market, exploring new avenues/opportunity to utilize funds at home and abroad, managing local currency liquidity, day to day management of risk associated with Treasury activities and thereby ensures profitability of the Bank. The Management of the Bank has developed different strategies to check & controls key issues like Counterparty limit, Stop-Loss limit, daylight Limit, Management action triggers (MAT),

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Open Position/Overnight limit, time & amount limit for reconciliation of Nostro Accounts and ensure adherence/compliance of these limits. In order to globalize the Treasury activities, AIBL has in the meantime signed up agreement with ICICI Bank, Mumbai & Mashreq Bank, UAE for direct dealing through Online. Treasury is now trying to build up capacity to cope with all possible exigencies to maximize returns on Investment & minimizing risks hence the Treasury has emerged as the main source of non funded income. The treasury has introduced Total Quality Management (TQM) system to each field of its activities.

2.25 The International Trade
AIBL is quite active in conducting International trade activities through financing of Import, Export and foreign Remittances business. It has at present a network of 78 Branches throughout the country out of which 21 branches are authorized to deal in Foreign Exchange business. AIBL has 24 Nostro Accounts 229 Relationship Management Application (RMA) with different renowned Foreign Banks /Foreign Correspondents in 71 countries across the world. At the end of 2010, the total Foreign Exchange portfolio (Import, Export & Remittances) was Tk.92,408.40 Million showing a growth of 52.86% of this Bank in compare with the corresponding year. The total export of the Bank was Tk. 23,546.10 million in 2009, which was increased by 36.08 % to Tk. 32,042.40 in 2010. Similarly, the amount of import has increased from Tk. 34,074.80 million in 2009 to Tk. 55,934.10 million in 2010 experiencing a growth of 64.15%. The Inward foreign remittances business of the Bank recorded a tremendous growth rate of 56.48% from Tk. 2,832.28 million to Tk.4,431.90 million in comparison with last year due to starting live dealing by Treasury & delivery of quality services to the clients.

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2.26

Income

Investment income: The investment income was Tk. 4,143.30 million during the year 2010 which registered a growth of 3.47% over the previous year. Investment income is 55.08% of the total income of Tk. 7,522.25 million. Income from other than investment: The bank has earned Tk. 3,378.95 million from sources other than investment like commission income, exchange income, locker rent etc. in the current year which is 44.92% of the total income. It indicates 159.70% growth over the year 2009.

2.27 Expenditure
Profit paid to depositors: The Bank has paid the depositors Tk. 3,133.69 million which is 75.63% of the investment income and 70.23% of the total expenditure for the year 2010. It indicates 17.48% growth over the year 2009.

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Administrative and Other Expenses: The administrative and other expenses were Tk. 1,328.61 million during the year showing 46.25% growth over the year 2009. It is 29.77% of the total expenditure.

2.28 Operating Profit
The bank earned operating profit of Tk. 3,059.95 million during the year 2010. The pre-tax profit of the Bank during the year 2009 was Tk 1,729.83 million and thus the Bank attained Positive growth of 76.89% in respect of operating profit. The provision for income tax for the year amounted to Tk. 873.01 million and divisible profit available for appropriation amounted to Tk. 1,819.05 million.

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2.29 Dividend
The bank has been paying dividend every year since 1998 just after conversion of a public limited company. The Board of Directors of the Bank is pleased to recommend 26% stock dividend in the year 2010. Table of Historical Dividend Payment Percentage are as follows: Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Dividend (%) 7.5% Cash 20% Bonus 16% Bonus 15.50% Bonus 26% Bonus 35% Bonus 20% Bonus 30% Bonus 30% Bonus 26% Bonus

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2.30 Information Technology
Al-Arafah Islami Bank Ltd. with the vision of becoming the leading Bank in the country both in service and technical aspects have taken bold steps to full fill the requirements of the mass. Banking sector is going through massive change with the advent of new technologies as well as new ways and norms of banking. With information technology becoming the tool of almost every trade, IT Division at Al-Arafah Islami Bank took the challenge of giving the best possible service to its users and customers alike. AIBL's pledge to adhere with the principles of Islamic Norms and ethics and combine them with today's technology threw a great challenge to the IT division. It has been a while now that AIBL is providing True Centralized online payment services to its customers in all its branches. With 78 online branches AIBL is committed to provide online facilities at any new branch that is added to the banks existing network. To keep pace with the growing customer needs as well as

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new technologies AIBL has taken a number of steps to facilitate clients while improving the existing services and adding on new services. The bank is striving hard towards the goal of changing from brick to click bank while taking banking services to the people who are not yet under the banking umbrella. To begin with AIBL takes pride using successfully a locally developed Core Banking System which it feels is major step in promoting our local talent. IT Division of the bank works day and night with its partners finding ways to reduce costs without compromising with customer experience. By this time Bank can proudly announce that it is the part of Bangladesh Bank's recently launched Automated Clearing House (BACH) and its Electronic Fund Transfer Network (BEFTN). AIBL's IT division has worked in tandem with Bangladesh Bank's personnel to make the project successful and were among the first banks to successfully implement and comply to requirements provided by the Central Bank. With Allah Almighty's grace AIBL's IT Division has rose to the occasion and extended it's all out co-operation to the central Bank in implementing the new projects under the DIGITAL Bangladesh theme. Clearing is now completely automated along with Electronic Fund Transfer. Under the guidance of the Central Bank AIBL has provided CIB information as data with minimum error to the Central Bank. The project is under way and IT Division is extending full support to CIB Cell of Bangladesh Bank. Banks hand shake with the El-dorado project has facilitated the far flung customers with means to get access to their funds virtually in minutes which used to take not long hours but days to reach them.

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In line with the bank’s strategy of taking the bank to the customers AIBL will be launching its ATM / POS services by April 2011. Internet Banking (e-Commerce), Mobile banking (mCommerce) and other delivery channels will be available to customers in recent future. Bangladesh Bank coming up with guidelines for Internet and mobile fund transfer the Bank is ready to take the challenge and provide its customers the best possible experience of technology combined with safe and secure Banking. Al-Arafah renews its pledge to combine the latest technology available with cream of bankers to provide customers with an experience of hassle free banking where a customer can pay his /her utility bill even at dead of the night. Though AIBL have attained a lot in terms of respect from the banking industry and customers alike in terms of its ventures with technology its management is pledge bound to mix the latest trends in technologies with banking to provide the ultimate experience to its customers.

2.31 Marketing & business development
Competition has become severe, to ensure our market share and for business development of the bank, this division has been formed at the end of the year headed by a senior executive. This division will identify business opportunities, develop strategic business plan, Brand development and management, Market research - development and management of new product, event management and existing customer care.

2.32 Audit and Inspection
Experienced officials of Internal Audit and Inspection Division of AIBL conduct regular audit and inspection of the branches and Departments of Head Office for review of operational effectiveness and internal/external compliance requirements. In order to minimize risk and to

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detect the deficiencies/lapses, irregularities and reducing the risk, the Bank Branches and Head office divisions are subject to the following audit and inspections every year: a) Risk based comprehensive Audit & inspection – all the branches once in a year. b) Auditing of handling Foreign Exchange & Foreign Trade - quarterly basis. c) Surprise inspection at regular intervals. d) Auditing of each Division / Department of Head Office once in a year. During the year 2010, Bank's Audit Team undertook the following audit and inspections: Nature of Inspection Comprehensive & Risk Based Internal Audit & Inspection Surprise Inspection Internal Audit & Inspection (HO) 60 (Branches) 04 (Branches} 05 (Division/Dept.) Nos. of branches/division

To preclude incidence of errors and their recurrences, more emphasis was given on spot rectification of irregularities while auditing/inspecting a specific branches. In addition, Concurrent Audit and Self Audit are also introduced in the branches. Concurrent audit is a systematic and timely examination of financial transaction on a regular basis to ensure accuracy, authenticity and compliance with procedures and guidelines. Such audits are conducted by the Incumbent In-charges and assigned officers of the branches to bring down the irregularities at a minimum level instantly. In 2010, Bangladesh Bank inspection teams inspected different Branches & division and Department of Head office and also conducted Special Inspections on 06 Core Risk areas in Banking.

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Muraqibs of Shari’ah Supervisory committee conducted inspection in all branches of the bank during the year to observe the Shari’ah compliance.

2.33 Rating Report
Credit Rating Agency of Bangladesh (CRAB) Limited has adjudged A2 (pronounced Single A Two) rating in the Long Term and ST-2 rating in the Short Term for Al- Arafah Islami Bank Limited. Date of rating Validity : 22June, 2010 : 1 (One) Year

Definitions of A2 & ST-2 are given below: A2 (Strong Capacity & High Quality) : Commercial Banks rated in this category have strong capacity to meet their financial commitments but are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than commercial Banks in highrated categories. This level of rating is adjudged to be of high quality and is subject to low credit risk. ST-2 (High Grade): Commercial Banks rated in this category are considered to have strong capacity for timely repayment. Commercial Banks rated in this category are characterized with commendable position in terms of liquidity, internal fund generation and access to alternative sources of funds is outstanding.

2.34 Human Resource
Human resource is our prime asset. It is neither the machine nor the technology alone, but the invaluable mix of man -machine interface that makes technology work. We strongly believe while the capacity of machine is limited, the potential of human being is unlimited. The qualities

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of loyalty to the company and to the customers, tenacity to learn more and the commitment to perform characterize our human resource. Our employees with outstanding quality are rewarded in the Bank. As a result, our staff morale is very high. They show good performance in the Bank. The management frequently communicates with the employees and listens to their new ideas and suggestions. A major factor behind our success in 2010 and in the preceding years is our employees. The Human Resource Division of Head Office is responsible for fixing principles and policies concerning personnel and certain areas of administration. The division is responsible for employee relation, staffing succession, planning, training, employee benefits, compensation and their social security. The salary and compensation package for all levels of our employees was reviewed and revised last year to be competitive with all local private sector Banks and financial institutions in the country. It is targeted to attract and retain good performers in the Bank. We recruited 480 fresh entrants and 15 experienced Bankers during the year 2010 through a transparent recruitment process to fulfill the manpower requirement in the Bank. The Bank also sent 9 employees to BIBM, 07 employees abroad, 25 employees to Bangladesh Bank for training in different fields to upgrade themselves with the latest techniques of modern banking. We have 1,711 staff in the Bank of whom 73 are executives, 1339 are officers and 299 other staffs as on December 31st 2010. SL No. 1 2 3 Designation category Executives Officers others Total Number 73 1339 299 1711

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The Bank Plans to rationalize per-Branch employee by equitable Manpower distribution of human resource amongst the existing and future branches. As a part of social commitments Bank accommodated 279 students from different renowned universities for doing internship program in our Bank during the year 2010. The Bank has recruited experienced new manpower to strengthen its large scale operations. Total manpower employed in the Bank including Managing Director is 1,711 at 31 December 2010; which was 1,296 at the end of the last year.

2.35 Training & Motivation
Training is one of the most effective and well recognized weapon in developing human resources. Training programs are being carried out for the Probationary Officers, Assistant Officers, Junior Officers, Branch Managers and Officers of different grades and Executives by Al-Arafah Islami Bank Training & Research Academy from it's very inception. AIBTRA sets training-plans from the early hours of the year and every year a training calendar is prepared and approved by the Management. Training Academy conducts training Courses / Workshops simultaneously at Dhaka as well as outside Dhaka. Training courses, workshops, In-house training etc., are tabled and conducted on current day updated banking aspects concerning new ideas, procedures and techniques of banking. In the training sessions lecture methods as well as discussions, group discussions, case study, exercise, practical works, simulation method etc. are followed. Training materials e.g., course folders, CD etc comprising hand-out are delivered to the participants. For enhancing effectiveness, modern training aids e.g. multimedia projector, power point presentation, flip chart etc. are used. For the purpose of assessing trainees' knowledge and skill pre-course and post course evaluations are done. Evaluation of the trainers is also conducted secretly by the participants for making training more effective. In 2010 total number of 1808 trainees were trained at training Academy through 44 training courses / workshop consisting of 223 working days. A total 7091 executives/officials have trained on different subject through 8 outreach and 615 "In-house training at Branches". The numbers of officials trained in 2010 is 5 times of the total manpower of the Bank; That is, in this year each official has attended in an average of 5 (five) training programs. In these programs
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training sessions were conducted by resources persons from Bangladesh Bank, BIBM and many other government and private Bank and financial institutions besides Bank's own speakers. As a general member of Bangladesh Institute of Bank Management (BIBM) 9 officers and executives have got training form that institution on different courses in this year. At the same time, some other 25 officers and executives of the Bank have been trained in several training institutes including Bangladesh Bank Training Academy and others. Moreover, 7 executives of the Bank participated in training courses in India, Nepal, Singapore and Malaysia in the year of 2010.

2.36 Risk Management
During their operations, Banks are invariably faced with different types of risks that may have a potentially negative effect on their business. Risk Management in Bank operations includes risk identification, measurement and assessment, and its objective is to minimize negative effects on Bank's financial results. Considering the above, Banks are required to form a special organizational unit in charge of risk management. They have also required prescribing procedures for risk identification, measurement and assessment, as well as procedures for risk management. Like Other Bank, to minimize potential risks, Al-Arafah Islami Bank has also taken different steps as per direction of Bangladesh Bank. As a part of those initiatives our Bank has established a division named Risk Management Division whose main objective is to identify, measure and control of various risks prevailing over various operation of our Bank. Risk Management Division (RMD) generally cover six core risk areas of Banking, vis; Investment (Credit) Risk, Foreign Exchange Risk, Money Laundering Risk, Asset Liability Management Risk, Internal Control & Compliance Risk and IT Risk. These divisions are functioning independently according to guideline of Bangladesh Bank and required to report directly to the Managing Director of our Bank.

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2.37 Implementation of Basel-II
Basel-II a new framework for calculating minimum capital requirement is structured around three pillars: minimum capital requirement (on credit risk, operation risk and market risk), supervisory review process and market discipline. Implementation of Basel-II framework in Bangladesh will integrate the risk management process of the bank and its capital adequacy requirement. As per decision of the Basel II committee of Bangladesh Bank, all banks will start implementing revised regulatory capital framework "Risk Based Capital Adequacy for Banks" from January 2009. Following methodology of Basel II would be followed in Bangladesh: a) Standardized Approach against Credit Risk for calculating Risk Weighted Amount (RWA) supported by External Credit Assessment Institution (ECAIs) b) Standardized Rule Based Approach against Market Risk and c) Basic Indicator Approach for Operational Risk To create awareness among the credit officers, the bank has arranged training programs on Basel-II and its impact on selection of credit proposal. Moreover to comply with the instruction of Bangladesh Bank, the Bank has taken initiatives for quarterly reporting under Basel-II to Bangladesh Bank along with the existing capital adequacy rules and reporting.

2.38 Branch Network
AIBL started its working at 161, Motijheel C/A with a Branch named Motijheel Branch on 27th September,1995 was the first & main Branch of AIBL and has been operating throughout the country. The Head Office of the Bank was situated at the same holding of Motijheel Branch since its establishment but from 11 January, 2007 it has started its working at its own premises 36, Dilkusha (6th, 7th, 8th & 9th floor), Dhaka-1000. The age of the Bank is only 16 years and during this short period of time, the Bank has established total 80 Branches over the country and made a smooth network inside the country. In 2010, the Bank got approval to open 10 (Ten) new

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branches and 8 SME/Krishi Branches. The number of Branches as Division wise is mentioned in the following table: Division Dhaka Division Chittagong Division Sylhet Division Khulna Division Rajshahi Division Barisal Division Total No. of Br. 43 13 7 6 7 4 80

2.39 Cards & Retail Banking
By the Grace of Almighty Allah, Bank is going to Launch & Commerce ATM / Debit card product within 1st quarter in the year of 2011 which will add new channel among our prospective clients for making round the clock cash transaction facility. We have also plan to add new products considering Islamic Shari’ah say VISA Islamic Card , VISA Debit Card, Mobile Banking, SMS banking etc to facilitate electronic banking services to all categories of customers and also to create new sector for earning profit which will buildup Bank's image in new dimension. Hopefully we will be able to provide these services within next year under the dynamic guidance/leadership of the Board of Directors of the Bank and Management.

2.40 Appointment of Statutory Auditor
In the 15th Annual General Meeting of the Bank M/S Hoda Vasi Chowdhury & Co. and M/S ACNABIN Chartered Accountants were appointed External Auditors of the Bank for a term till conclusion of the 16th Annual General Meeting. As per Bangladesh Bank Rule M/s Hoda Vasi Chowdhury & Co. Chartered Accountants will be retired and M/S ACNABIN Chartered

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Accountants are eligible for another terms. The Board has approved M/S Masih Muhith Haque & Co. and M/S ACNABIN Chartered Accountants for re-appointment as External Auditors by the shareholders till the 17th Annual General Meeting.

2.41 AIBL at a Glance
Particulars Authorized Capital Paid up Capital Reserve Fund Shareholders’ Equity Deposit Investment Import Export Total Income Total Expenditure Profit before Tax Profit after Tax Income Tax Total Assets Fixed Assets Earnings per share (Taka) Dividend per share Bonus No. of Shareholders Number of Employees Number of Branches Manpower per Branch 5402 771 41 19 4487 912 46 20 12013 1033 46 23 10664 1080 50 22 11382 1296 60 22 2005 1000.00 677.94 542.22 1220.16 11643.66 11474.41 12631.60 4932.90 1452.68 904.48 548.20 262.90 215.10 15336.89 208.00 387.80 26.00% 2006 2500.00 854.20 835.98 1690.18 16775.34 17423.19 1882.14 914.27 2172.48 1202.71 855.47 470.02 385.45 21368.17 215.11 550.24 35% 2007 2500.00 1153.18 1091.95 2037.50 23009.13 22906.37 27042.72 12714.91 2955.61 2199.43 756.18 347.31 235.53 30182.32 334.48 30.12 20% 2008 2500.00 1383.81 905.33 2705.74 29690.12 29723.79 32685.13 20176.64 4387.26 2859.16 1528.09 668.24 590.66 39158.44 396.76 48.29 30% 2009 5000.00 1798.95 1223.18 3564.73 38355.50 36134.08 34074.80 23546.10 5305.63 3575.80 1729.83 858.99 594.19 48515.79 466.30 47.75 30%

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2.42 Corporate Information for the Year 2010
        Date of Incorporation: 18th June Date of Formal Inauguration: 27th Sept. Authorized Capital: Tk. 500 Crore Paid up Capital: Tk. 233.86 Crore (30.09.2010) Statutory Reserve: Tk. 148.74 Crore (30.09.2010) Total Equity: Tk. 461.88 Crore (30.09.2010) Number of Branches: 78 (2010) Number of Employees: 1700 (11.12.2010)

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CHAPTER 3

PRODUCTS & SERVICES OF AIBL

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3.1 Various Deposit product of the Bank in 2010 1. Mudaraba Term Deposit Deposit starts from Tk.50000 or above is obtained under the aforesaid scheme for tenure of 3, 6, 12, 24 and 36 months and the same is withdrawal with profit at the end of the tenure. 2. Mudaraba Savings Deposit Any person can open a Mudaraba Savings Deposit account by his/her name with a minimum balance of Tk. 500. The account holder can operate this type of deposit account as their wish, i.e. they can deposit and withdraw any amount of money at any time. 3. Short Notice Deposit (SND) This account is generally for business organization. The owner of business operates this account. Here the owner can deposit any amount at any time, but he have to inform or send a short notice to the bank authority before seven days of withdrawals. 4. Monthly Hajj Deposit Hajj deposit at monthly installment from 1 (one) year to 20(twenty) years are accepted under the above scheme to enable the account holder to perform Hajj out of the accumulated saving with profit. 5. Monthly Installment Term Deposit (ITD) Deposit in monthly installment @ Tk.300/-, Tk.500/-, Tk.1000/-Tk.1500/- & Tk.2000/- is obtained under the aforesaid scheme for a tenure of 5,8,10 and 12 years and the same is withdrawal with profit at the end of the tenure.

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6. Monthly Profit Based Term Deposit (PTD) Under the above scheme, deposit of Tk. 1.00 lac and multiple thereof are accepted for a term of 5 (five) years and the bank gave profit thereon Tk. 885 per month per lac and proportionately on the rest amount of deposit under the category during the year under review. The aforesaid rate shall, however, be adjustable at the close of calendar year on finalization of accounts. 7. Monthly Savings Investment (SID) Deposit under the scheme is accepted by monthly installment and after expiry of the term; double amount of such savings is given as investment in feasible sectors by the bank as per choice of the depositors without any collateral security. Any one by saving under the scheme can take business venture on utilization the amount saved under the scheme as well as availing bank investment. 8. One Time Hajj Deposit Under the above scheme, fixed amount of Hajj deposits are accepted from the clients for particular term and as per rules profit is accumulated thereon per year in this regard. As and when the fixed deposit is matured, Hajj expenses are defrayed by the same. Under the scheme, the guardians may also open Hajj account to enable their successors to perform Hajj. Highest amount of profit is paid in the above types of deposit by the bank. 9. Under this scheme the bank has introduced saving bonds for Tk. 10,000/-, Tk.25,000/and Tk. 100,000/- for 3,5 and 8 years. After the completion of the tenure the deposit. (a) Al-Arafah Savings Bond (3 Years) (b) Al-Arafah Savings Bond (5 Years) (c) Al-Arafah Savings Bond (8 Years)

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10. Marriage Saving Investment Scheme (MSIS) Fixed monthly installment for a particular period is to be deposited to defray the expenses of marriage and the bank allows double of saving or Tk.30,000/- which is higher as investment to procure ornaments, furniture, fixture etc., repayable in 24 monthly installment without any collateral security. There have some other deposit products of the bank11. Pensioners deposit scheme 12. Special Saving (Pension) Scheme 13. Cash WAQF 14. Lakhopati Deposit Scheme 15. Kotipati Deposit Scheme 16. Millionaire Deposit Scheme 17. Double Benefit Scheme 18. Triple Benefit Deposit Scheme

19. Probashi Kallyan Deposit Pension Scheme

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3.2 Investment modes of AIBL
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 Shari’ah:

Bai-Murabaha or simply Murabaha The terms “Bai-Murabaha” have derived from Arabic words Bai and Ribhum. The word “Bai” means purchase and sale and the word ‘Ribhum’ means an agreed upon profit. So Bai-Murabaha means sale for an agreed upon profit. It may be defined as a contract between a Buyers and a Seller under which the seller sells certain specific goods permissible under Islamic Shari’ah and the word Law of the land to the Buyer at a cost plus and agreed upon profit payable today or on some date in the future in lump-sum or by installments. The profit may be either a fixed sum or based on a percentage of the price of the goods. Musharaka The word Musharaka is derived from the Arabic word Sharikah meaning partnership. Islamic jurists point out that the legality and permissibility of Musharakah is based on the injunctions of the Holy Qura’n, Sunnah and Ijma (consensus) of the scholars. Musharaka transaction may be conducted in the following manner: One, two or more entrepreneurs approach an Islamic Bank to request the financing required for a project. The bank, along with other partners, provides the necessary capital for the project. All partners including the Bank have the right to participate in the project.

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The profit is distributed according to an agreed ratio. However, losses are shared in exactly the same proportion in which the different partners have provided the finance for the project. Mudarabah The term Mudarabah refers to a contract between two parties in which one party supplies capital to the other party for the purpose of engaging in a business activity with the understanding that any profits will be shared in a mutually agreed upon. Losses, on the other hand, are the sole responsibility of the provider of the capital. The first party provides capital and the other party provides the expertise with the purpose of earning lawful profit (approved by Islamic law) which will be shared in a mutually agreed upon proportion. Bai-Muajjal The term ‘Bai’ and ‘Muajjal’ are derived from the Arabic words ‘Bai’ and ‘Ajal’ where ‘Bai’ means purchase and sale and ‘Ajal’ means a fixed time or a fixed period. So BaiMuajjal is a sale for which payment is made at a future fixed date or within a fixed period. In short, it is a sale on Credit. It is basically a contract between a buyer and seller under which the seller sells certain specific goods, permissible under Shari’ah 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 The term Bai-Salam is used to define a sale in which the buyer makes advance payment, but delivery is delayed until sometime in the future. Usually the seller is an individual or business and the buyer is the bank.
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3.3 SME Banking
Small and Medium Enterprise (SME) is playing a significant role to the growth of overall GDP of the country. Of all industrial productions, a huge part stems from SME. In order to boost up the small and medium enterprises of the country, Bangladesh Bank has recently advised the commercial banks to enhance the flow of investment and offered directives and policies to supervise and monitor this sector. As SME has emerged as a thrust sector, Al-Arafah Islami Bank Ltd. also considers it important to extend and enhance finance for the same. Keeping this idea in the forefront, the bank has prepared an integrated policies, methods and procedures for SME investment.

Purpose
      To facilitate small and medium level entrepreneurs To boost up the small business in the country To facilitate the growth of agro-industries To create employment To broaden the base of Islamic Banking in the society To encourage women entrepreneurs

Modes
Working Capital Investment      Bai-Muajjal Murabaha / Murabaha TR MPI / MPI- TR Mudaraba Musharaka

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Fixed Capital Investment    HPSM (Equity required) Mudaraba Musharaka

Rate of Profit/ Rent
Working Capital Investment : 16% (On Reducing Balance Method) Fixed Capital Investment : 15% (On Reducing Balance Method)

Eligibility
          Permanent resident of Bangladesh The age must range between 25 years to 60 years Physically fit and capable of working hard Capable of reading & writing Capable of managing his / her business successfully Sufficient Infra-structure and skilled personnel At least 02 (two) years experience in the applied business Having Transparent CIB Report Valid Licenses, such as- Trade License, VAT registration, TIN, NOC from Environment Department (where applicable) Other terms and conditions stipulated by the bank

Securities against Investment
  Personal guarantee of spouse/parents/other family members. In case of limited companies, guarantees of all directors other than nominated directors shall be obtained.

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    

Registered mortgage of immovable properties with registered Power of Attorney (for 2 lac and above). Third party personal guarantee (at least one). Post dated cheques for each installment and one undated cheque for full investment value including full mark-up profit. Hypothecation on the inventory, receivables, advance payments, plant and machinery. Bank may relax the security for investment amount up to 2 lac for the growth of SME investment.

3.4 Microfinance
The economy of Bangladesh mostly depends on rural development. Poverty stands in the way of the growth of this economy. Although a number of NGOs and financial organizations work in the sub-urban and villages with a view to alleviating poverty, a very few are found working with the compliance of Islamic Sariah. It is a national responsibility to alleviate abject poverty from the rural area. To help change the socio-economic condition of the impoverished people of the villages, Al-Arafah Islami Bank Limited has initiated a project entitled "Krishi O Grameen Khudra Biniog Prokolpa (Microfinance). With this project, Bank is working for reduction of poverty, development in agricultural sectors, creation of job opportunities etc. We hope this will develop the socio-economic condition of a large segment of the rural folk. It is a group based work. The main characteristics are:       This is a supervised investment programme A group consists of 5 (five) members 8 (eight) groups make a Samitee. It means that a Samitee contains 40 members Every group has a Group Leader and a Deputy Group Leader Every Samitee has a Samitee Leader and a Deputy Samitee Leader All members must attend the weekly meeting

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Ceiling of Microfinance Investment is from Tk. 3,000 to Tk. 50,000.

Purpose        Modes   Working Capital Investment: Bai-Muajjal Fixed Capital Investment: HPSM (20% Equity required) To facilitate rural entrepreneurs To develop socio-economic condition of rural people To save rural people from usury To facilitate the growth of agro-industries To create employment scope To broaden the base of Islamic Banking in the rural society To encourage women entrepreneurs

Rate of Profit/ Rent  Working Capital Investment : 15%

Other Charges  Risk Fund : 1% of Investment Limit (Payable before disbursement)

Repayment   Weakly installment basis Number of installment is 50 (2% of Investment per week).

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3.5 Corporate Social Responsibility 3.5.1 Conceptualization of CSR The modern era of CSR concept was evolved in 1950s when it was more commonly known as social responsibility. CSR has been defined as "the integration of business operations and values whereby the interests of all stakeholders, including customers, employees, investors, and the environment are reflected in the organizations policies and actions. By CSR practices an organization can improve communication with the community and other stakeholders, ensure accountability and transparency in its operation, improve internal decision making and cost saving, enhance corporate image, improve reputation and ability to enlarge market share and Enhancement of customer true worthiness, profitability and sustainable development. 3.5.2 CSR activities of Al-Arafah Islami Bank Ltd. CSR is an integral part of corporate culture and ethics. AIBL respond positively in every sphere of social activities and delivering innovative solution to its valued customer and in the same manner AIBL also helping different areas of social activity through its CSR activities. During the year 2010 AIBL accomplished different humanitarian and social activities which include allocation of fund Tk. 24.00 million for AIBL foundation to establish kidney dialysis center, donation to liberation war Museuim Tk. 5 million, Bangladesh Olympic Association Tk. 5 million, FBCCI Social Activity Tk. 1 million, Nimtali tragedy Tk. 0.42 million, Pilkhana tragedy Tk. 0.48 million and different hospitals and universities. Besides, AIBL have taken a program to develop manpower and make them self employed as well as assisting them for employment in abroad.

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3.5.3 Some CSR Activities of AIBL in details:
Staff Welfare Project The Bank always keep a careful eye on the economic security and benefit of its staffs & officers. The Bank operates a contributory provident fund, a social security & benevolent fund and a gratuity fund for its employees. Al-Arafah Islami Bank Foundation The Bank has a foundation performing philanthropic activities. Al-Arafah English Medium Madrasah, Al- Arafah Islami Bank Library and Al-Arafah Islami Bank Foundation Kidney Dialysis Center are major three are of its philanthropic activities. AI-Arafah English Medium Madrasah & School Al-Arafah English Medium Madrasah & School, a promotional welfare project envisaged to transform our future generation Akhirat-oriented and at the same time provide them with faith based and modern education which would keep them in the mainstream of socio-economic life professionally established in 1998 by Al-Arafah Islami Bank Foundation. This is the first English Medium Madrasah & School in Bangladesh intended to foster the cause of Islamic education providing O' and 'A1 level education under Edexel, UK curriculum. Al-Arafah English Medium Madrasah & School is running a Hifz section along with its English medium curriculum. 10 Hifz students successfully completed the Hifzul Quran course from this section in 2010. At present total 225 students are studying in this institute. Since 1999 the institute is providing English medium education under Edexel, UK curriculum. Edexel, UK in Bangladesh agreed to train our teachers for O' level course. Our institute became the member of English Speaking Union launched by the British Ambassador in 2010 which is patronised by Her Majesty the Queen of UK. Al-Arafah English Medium Madrasah & School is a corporate member of British Council. Our students are enrolled as members of Young Learner Center (YLC). We are allowed at a time to
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borrow 25 books and educational DVDs for 7 weeks. Our students are taking part in all sorts of competition program in British Council. In 2007 one of our girl students took part in art competition on "Air Pollution" arranged by commonwealth through British Council. In 2008 our two students got 'B' & 'C' grade in essay competition arranged by British Council. A group of our students regularly goes to British council to join 'Young Learner Center' to read books and watch educational movies. Our students have also been participating in many Hand Writing competitions in National level since its inception. Our students won 3rd prize in 2008 at Dhanmondi local area Hand Writing competitions. 45 students took part in Hand Writing competition in 2008 arranged by Ekushey TV channel. Later it was telecast for viewers. Every participant got consolation prize. Some of our students joined International Scout moot on 28th December, 2002 in Thailand. Students of Al-Arafah English Medium Madrasah established English Language Club in 2006 to promote English Language in the Madrasah Campus. Club's main motto is to increase Language proficiency with correct pronunciation. Language Club Members are assigned to promote the habit of speaking English language among students. The Language Club is publishing a Language Magazine regularly. The Magazine contains 30 pages which encourage all level of students to write some articles for the magazine. Al-Arafah Islami Bank Library Library is the carrier & reservoir of knowledge. Al- Arafah Islami Bank has shown that is not only generates profit, but also contributes significantly in the field of providing good source of knowledge by establishing a public library at 32, Topkhana Road, Chittagong Bhaban (1st floor), Dhaka, thus strengthening social development. It harbours 22,000 books of reference for the researchers, students, professionals, bankers, physicians, engineers, politicians, writers or journalists, even for the kids. It is open to all throughout the year and well located & accessible to everybody. It has procured some exceptional collection of books on religion, economics,

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banking, computer science, business administration, sociology, English & Arabic language and juvenile literature in Bangla, English, Urdu & Arabic, which are very rare. Al-Arafah Islami Bank Foundation Kidney Dialysis Center Al-Arafah Islami Bank Foundation established an International Standard Kidney Dialysis Center to deliver the dialysis therapy to increasing kidney patient in Bangladesh at reduced price. AlArafah Islami Bank Foundation Kidney Dialysis Center is situated at Chattagram Bhaban (1st Floor), 32 Topkhana Road, Dhaka- 1000. National Professor Dr. M. R. Khan inaugurates this philanthropic Dialysis Center on December 04, 2010. This center is capable to deliver the dialysis therapy to eight kidney patients daily in two shifts. Al-Arafah Islami Bank Foundation authority is committed to deliver the health care service to the underprivileged people of Bangladesh in near future.

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CHAPTER 4

CUSTOMER SATISFACTION BASED ON THEORETICAL ASPECT

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4.1 Introduction
Superior service quality is widely acknowledged as a driver of perceived value, which, in turn, will enhance customer loyalty (Parasuraman and Grewal, 2000) and improve the provider‘s image, sales and profitability (Buzzell and Gale, 1987; Gummesson, 1993). Because satisfaction is basically a psychological state, care should be taken in the effort of quantitative measurement, although a large quantity of research in this area has recently been developed. Work done by Berry, Brodeur between 1990 and 1998 defined ten 'Quality Values' which influence satisfaction behavior, further expanded by Berry in 2002 and known as the ten domains of satisfaction. These ten domains of satisfaction include: Quality, Value, Timeliness, Efficiency, Ease of Access, Environment, Interdepartmental Teamwork, Front line Service Behaviors, Commitment to the Customer and Innovation. These factors are emphasized for continuous improvement and organizational change measurement and are most often utilized to develop the architecture for satisfaction measurement as an integrated model. Work done by Parasuraman, Zeithaml and Berry between 1985 and 1988 provides the basis for the measurement of customer satisfaction with a service by using the gap between the customer's expectation of performance and their perceived experience of performance. This provides the measurer with a satisfaction "gap" which is objective and quantitative in nature. Work done by Cronin and Taylor propose the "confirmation/disconfirmation" theory of combining the "gap" described by Parasuraman, Zeithaml and Berry as two different measures (perception and expectation of performance) into a single measurement of performance according to expectation. According to Garbrand, customer satisfaction equals perception of performance divided by expectation of performance.

4.2 Definition of Customer
The word derives from "custom," meaning "habit"; a customer was someone who frequented a particular shop, who made it a habit to purchase goods of the sort the shop sold there rather than elsewhere, and with whom the shopkeeper had to maintain a relationship to keep his or her "custom," meaning expected purchases in the future. A customer, also called client, buyer, or

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purchaser, is usually used to refer to a current or potential buyer or user of the products of an individual or organization, called the supplier, seller, or vendor. This is typically through purchasing or renting goods or services. The word “customer” has neither been defined by the Negotiable Instrument nor by any other law. Therefore, in the field of banking it is not cleared yet. According to Paget, the following characteristics will be present: a. There must be recognizable course or habit of dealing between the customer and a bank. b. Dealing between him and the bank must be in the nature of regular banking business. Zairi (2000) said, “Customers are the purpose of what we do and rather than them depending on us, we very much depend on them. The customer is not the source of a problem, we shouldn’t perhaps make a wish that customers ‘should go away’ because our future and our security will be put in jeopardy”. The Kerala high court in the case of Central Bank of India Limited, Bombay vs. Gopinathan Nair and others (1970) said, ―Broadly speaking, a customer is a person who has the habit of resorting to the same place or person to do business so far as the banking transactions are concerned. He is a person whose money has been accepted on the footing that the banker will honour his cheques up to the amount standing to his credit irrespective of his connection being of short or long standing‖ In th is study the ―customerǁ means those persons who have at least one active account of any kind at Al-Arafah Islami Bank Limited (Laldighirpar Branch).

4.3 Definition of Satisfaction
Satisfaction is ―the contentment one feels when one has fulfilled a desire, need, or expectation; "the chef tasted the sauce with great satisfaction". Here in the study customers agreement (agree & strongly agree) with the survey‘s statements will indicate their satisfaction.

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According to Hansemark and Albinsson (2004), “satisfaction is an overall customer attitude towards a service provider, or an emotional reaction to the difference between what customers anticipate and what they receive, regarding the fulfilment of some need, goal or desire”.

4.4 Definition of Customer satisfaction
Customer satisfaction, a term frequently used in marketing, is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals. Philip Kotler (2000) defined satisfaction as: “a person’s feelings of pleasure or disappointment resulting from comparing a product are perceived performance (or outcome) in relation to his or her expectations”. Hoyer and MacInnis (2001) said that “satisfaction could be associated with feelings of acceptance, happiness, relief, excitement, and delight.” It is seen as a key performance indicator within business and is often part of a Balanced Scorecard. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy.

4.5 Shari’ah - Basis of Customers' Satisfaction
When competition intensifies, Islamic financial institutions start to offer more or less similar products and services. There is no doubt that the customers perception of satisfactory service provided by the CSA (Customer Support Advisors) will influence the performance of an Islamic financial institution and determine its competitiveness and success. Therefore, the need to be customer-focused in the rapidly changing marketing environment has never been more important

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for Islamic banks and financial services than now. However, under the present circumstances, when customers are becoming more demanding and increasingly mobile between competing financial providers, being customer-oriented is not enough. Islamic financial institution and more specifically their contact employees (CSRs) need to be perceived by their customers as ethically Islamic. Islamic financial institutions should offer a complete range of Shari'ahbased products and services. Moreover, Islamic financial institutions should aim to satisfy their customers by letting them choose what is most suitable for them in line with Shari'ah. In other words, customers satisfaction from an Islamic financial institutions perspective is an important issue. Therefore, this article will highlight possible Islamic ethical sales behaviour as may be perceived by the customers of Islamic Financial Institutions.

4.6 CSA Role vis-à-vis Service Expectation
We seldom see that a CSAs behaviour reflect in the interaction between a CSA and a customer of an Islamic financial institution. Islamic ethics requires an individual to behave according to the rules of Islamic moral philosophy. It is a standard for judging the rightness not of an action per se, but of the action of one person relative to another, i.e. Islamic ethics is a basis for judgment in personal as well as collective interaction. It is some time observed that unethical sales behaviour as CSAs short-run conduct that enables them to gain at the expense of the customers. Examples of such activities include lying or exaggerating about the benefits of a product/service, lying about the competition, selling products/services that people do not need, giving answers when the answer is not really known and adopting manipulative influence tactics or high-pressure selling techniques. There are several distinct, separate objects based on which consumers will make judgements of their satisfaction. We frequently observe that the level of customers satisfaction, customers trust and loyalty to the Islamic financial institutions core services like Islamic mortgages, Islamic investment funds, Islamic insurance (takaful) and credit cards etc- depend on the CSAs efficiency in terms of Islamic marketing ethics. There is no doubt CSAs are the backbone of an
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Islamic financial institution in the customers eyes because they are the frontline service employees. However, in some cases, the contact employees are also the service providers. Even if some of the contact employees do not perform the service entirely, they may still personify the Islamic financial institution in the customers eyes. Each of these customer contacts has the potential of positively or negatively impacting customers satisfaction with the services of Islamic financial institutions or banks. More specifically, the services literature has widely recognised the importance of contact employees behaviour for customer satisfaction and loyalty. For example, customer satisfaction and repeated patronage may be determined solely by the quality of the personal encounter. It always happened that customers make a comparison between service expectations and performance that will result in either confirmation or disconfirmation. Customers expectations are confirmed when an Islamic financial product or service performance exactly meet expectations. Disconfirmation will be the result of a discrepancy between expectations and performance. Positive disconfirmation occurs when product/service performance exceeds prior expectations, and negative disconfirmation occurs when expectations exceed performance. Confirmation and positive disconfirmation will be likely to result in satisfaction, whereas negative disconfirmation leads to dissatisfaction.

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Figure 1-Ethical sales behavior on customer satisfaction

Therefore, customer expectations regarding the core service are highly dependent on the CSAs presentation in the service encounter. If the CSA behaves according to Islamic ethics, they are more likely to provide realistic expectations about the core service, and are less likely to push the customer into buying a service that a customer does not need. Consequently, these actions may result in confirmation or even positive disconfirmation between expectations and service performance, thus resulting in customer satisfaction with the core service.

4.7 Sales Behavior Model Based on Islamic Business Ethics
Islamic ethical sales behavior, as perceived by the customers, is proposed to directly influence level of customer satisfaction by core service (H1) to high level of satisfaction (H2) as well as loyalty (H4) to Islamic financial institutions or banks. As for the indirect effects, it is suggested that the customers satisfaction with core service (H1) influences the satisfaction of customers loyalty(H4) level to Islamic banks. These two variables, in turn, lead to customers trust (H3). Finally, customers trust (H3) directly influence the increase of customers loyalty (H4) to Islamic banks. Details are explained in the following:

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1. Customer Satisfaction with the Core Service (H1) The customer satisfaction with CSAs increased when the customer felt the advisor had been fair in the transaction something, which is associated with Islamic ethical sales behaviour. The figure 1 shows that the perceived ethical standard of CSAs had a positive impact on customer satisfaction. In some service settings, discriminate validity between satisfaction with the CSA and the Islamic financial institution should not be necessarily expected. Taking this matter into account, we some times see that in a service context the CSA and the selling Islamic financial institution or banks products are often indistinguishable in the mind of the customer. Hence, a positive association exist between core service and level of customer satisfaction with an Islamic financial institution. 2. High Level Customer Satisfaction (H2) Leads to Trust (H3) and Loyalt y (H4) Research in services marketing has widely shown that customer satisfaction leads to customer loyalty. For instance, in the mainstream literate on marketing, there are many examples that whether customers had replaced their insurance policies or allowed them to lapse depended on their prior satisfaction with the whole life coverage. Similarly, the core-service satisfaction is positively associated with repurchase intentions. Furthermore, customer satisfaction with Islamic financial institutions has a significant and positive effect on loyalty. A few literature on customers of Islamic financial service industries provide evidence of the positive influence of customer satisfaction both with the Islamic financial institution as service provider and the core service on customer intention to use the facilitys services again, and recommend the service to a friend. With respect to the relationship between satisfaction with the Islamic bank and trust in the bank, the later may be viewed from a global perspective as an overall impression of the Islamic financial system. There is a long-term orientation in this variable, since trust is also conceptualised as a cumulative process that develops over the course of repeated, successful interactions. Satisfying encounters are hypothesised to reinforce customers trust in Islamic

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financial institutions. A highly satisfying experience with the Islamic financial institution may not only reassure the customer that their trust in the service provider is well placed, but also enhance the trust and loyalty. 3. Customer Trust (H3) to Islamic Banks Customers trust relate to a belief on the part of customers that the obligations of Islamic financial institutions are fulfilled. In other words, the customers believe and feel that a CSA of an Islamic financial institution selling products can be relied upon to behave in such a manner that the longterm interest of the customers will be served. Therefore, trust in an Islamic financial institution may be defined as customer confidence in the quality and reliability of the services offered by the Islamic financial institution. This conceptualisation of trust corresponds to the concept of post-trust that derived from the principles of muamelat based on Islamic business ethics. Service employees (such as CSAs) with whom the customers interact, confirm and build trust in the Islamic financial institution or detract from its reputation and ultimately destroy trust. Figure 1 suggest that Islamic ethical sales practices, as perceived by Islamic financial service customers have increased customers trust (H3) in CSAs. Therefore, there is a positive association between Islamic ethical sales behaviour and customers trust (H3) in the Islamic financial system. This can be explained by taking into account the important role of salespeople (CSAs) in the service setting. It means CSAs of Islamic financial institutions are always working as their backbone. Consequently, if the behaviour of the CSAs of a financial institution is perceived by customers as Islamic, the institution is also likely to be perceived as Islamic, because customer perceptions of contact employees will affect their perceptions of the Islamic financial institution. 4. Customer Loyalty (H4) to Islamic Bank An important consideration in a service financial institutions customer base is the degree to which its customers are loyal. Based on the principles of Islamic marketing ethics, customers

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loyalty to Islamic financial institutions is conceptualised as a combination of a customers intention to maintain an ongoing relationship with Islamic financial institutions, and their willingness to recommend Islamic financial institutions to other consumers. Customers perceptions of face-to-face interaction with CSAs have traditionally been considered one of the most important determinants for loyalty. Islamic ethical sales behaviour is likely to play a major role in developing customer loyalty. On the other hand, unethical sales behaviour is a short-run, expedient perspective devoid of any sense of social responsibility. Islamic ethics encourages sellers to foster long-term relationships with buyers. Building based upon the principles of equity, justice and welfare; Islamic ethical sales behaviour can be considered to be an investment in the equity formulation. If customers feel they are being treated unfairly by the CSA (because of unethical behaviour), perceptions of inequity will emerge which in turn may translate into a desire of the customer to leave the relationship with the Islamic financial institutions as represented by the CSA. Therefore, it may be stated that the greater the CSAs Islamic ethical behaviour as perceived by the customer, the greater the customer loyalty to Islamic financial institutions.

4.8 Importance of Customer Satisfaction
The key to business performance is the ability to satisfy and retain customers (Johnson & Gustafsson, 2000). Customer satisfaction is important because it says something about the company’s current condition. However, even more importantly, customer satisfaction says something about the company’s future. It reveals if customers will return to the company in the future (Fornell, 2007, p. 45). It does not matter how productive a company is if their customers are not satisfied with their offerings. They will simply take their business elsewhere. Satisfied customers, on the other hand, are more likely to return in the future. A single unsatisfied customer can send more business away from your company than 10 satisfied customers. Customer satisfaction and thus customer consumption are the center of business. All parts of

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business (employment, prices, profits, production, economic growth etc.) are dependent on customers consuming products (Fornell, 2007; Johnson & Gustafsson, 2000). “Satisfied customers are not only the sum total of the value of all other company assets – virtually all costs and revenues have some relationship, however weak or indirect, to customer acquisition and customer retention” (Fornell, 2007, p. 66). To create long-term profit and shareholder value, companies need to think of customers as investors and an economic asset. It is the customers that bring financial revenue to companies. Hence, customers are companies’ greatest asset (ibid.). Understanding the needs of the customer is critical. A business relationship, just like any other relationship, relies on both people getting their needs met. No matter what type of business, all customers want the same thing. They want to feel welcomed and appreciated by the staff. They don't want to get the impression that they are just being used by the company for money. Small interactions like "Thank you" and a nice smile can go a long way toward customer satisfaction. Make sure all employees operate with the same principles. A big part of customer satisfaction is reliability. If customers come to expect a certain mode of behavior from the business, employees should deliver it to them each and every time. Customers want to be able to rely on the employee. They expect consistent delivery times and support. By training the employees to treat all customers with the same respect, than customers will all have the same experience with the company, which will increase customer satisfaction.

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Be honest when the business doesn’t meet expectations. Customer satisfaction is at its most important when something goes wrong in the chain of delivery. Whether a customer was double charged or didn't receive what she ordered, employees need to handle the situation with the utmost care. Employee should apologize and take steps to rectify the situation. The phrase "the customer is always right" is at the core of a good customer satisfaction strategy. It doesn't matter whether or not the customer misread the instructions or made the mistake; the employee should take steps to make the customer happy. Customer satisfaction is the foundation of a good business. Satisfied customers will make a great foundation for return business, and they may also bring in their friends and associates. It is said that- “customers are the heart of any business.” It is the company’s responsibility to Keep them satisfied, and encourage them to tell their friends about their experiences with the business.

4.9 Factors affecting customer satisfaction
Many factors affect customer satisfaction. According to Hokanson (1995), these factors include friendly employees, courteous employees, knowledgeable employees, helpful employees, accuracy of billing, billing timeliness, competitive pricing, service quality, good value, billing clarity and quick service. This is shown in Figure below-

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Friendly Employees Helpful Employees Quick Service Overall Customer Satisfaction

Courteous Employees Knowledgeable Employees Accuracy of Billing Billing Timeliness Service Quality Competitive Pricing

Billing Clarity Good Value

Figure 2- Factors that Affect Customer Satisfaction

In order to achieve customer satisfaction, organizations must be able to satisfy their customers’ needs and wants (La Barbera and Mazursky, 1983). Customers’ needs state the felt deprivation of a customer (Kotler, 2000). Whereas customers’ wants, according to Kotler (2000) refer to “the form taken by human needs as they are shaped by culture and individual personality”. “The single most important factor that affects customer satisfaction is employee satisfaction,” says Howard J. Ross, president of a Maryland-based consulting firm. “Employees who feel satisfied and happy at their jobs naturally tend to be more helpful and considerate toward customers. It’s simple logic. If I like my job and the company I work for, I’m going to communicate to customers that we have a good product.”

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4.10 Customer Satisfaction – a Critical Component of Profitability
Exceptional customer service results in greater customer retention, which in turn results in higher profitability. Customer loyalty is a major contributor to sustainable profit growth. To achieve success, there must make superior service second nature of the organization. A seamless integration of all components in the service-profit chain – employee satisfaction, value creation, customer satisfaction, customer loyalty, and profit and growth – links all the critical dynamics of top customer service. Sadly, mature companies often forget or forsake the thing that made them successful in the first place: a customer-centric business model. They lose focus on the customer and start focusing on the bottom line and quarterly results. They look for ways to cut costs or increase revenues, often at the expense of the customer. They forget that satisfying customer needs and continuous value innovation is the only path to sustainable growth. This creates opportunities for new, smaller companies to emulate and improve upon what made their bigger competitors successful in the first place and steal their customers. Organizations are increasingly interested in retaining existing customers while targeting noncustomers; measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace.

4.11 Effect of Customer Satisfaction on Profitability
Customer satisfaction does have a positive effect on an organization’s profitability. According to Hoyer and MacInnis (2001), satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty, and positive word of mouth. Coldwell (2001): “Growth Strategies International (GSI) performed a statistical analysis of

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Customer Satisfaction data encompassing the findings of over 20,000 customer surveys conducted in 40 countries by Info Quest. The conclusion of the study was: A Totally Satisfied Customer contributes 2.6 times as much revenue to a company as a Somewhat Satisfied Customer. A Totally Satisfied Customer contributes 17 times as much revenue as a Somewhat Dissatisfied Customer. A Totally Dissatisfied Customer decreases revenue at a rate equal to 1.8 times what a Totally Satisfied Customer contributes to a business”. • • •

Zairi (2000): “There are numerous studies that have looked at the impact of customer satisfaction on repeat purchase, loyalty and retention. They all convey a similar message in that: Satisfied customers are most likely to share their experiences with other people to the order of perhaps five or six people. Equally well, dissatisfied customers are more likely to tell another ten people of their unfortunate experience. Furthermore, it is important to realize that many customers will not complain and this will differ from one industry sector to another. Lastly, if people believe that dealing with customer satisfaction/complaint is costly, they need to realize that it costs as much as 25 percent more to recruit new customers”. • • •

Aaker (1995) said that the strategic dimension for an organization includes becoming more competitive through customer satisfaction/brand loyalty, product/service quality, brand/firm associations, relative cost, new product activity, and manager/employee capability and performance (Figure).

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Customer Satisfaction / Brand Loyalty Product / Service Quality Brand / Firm Associations Relative Cost CURRENT PERFORMANCE LONG TERM PROFITS

New Product Activity

Manager/Employee Capability & Performance

Figure 3- Performance Measures Reflecting Long-Term Profitability

4.12 Consequences of Customer Satisfaction and Dissatisfaction
The consequences of not satisfying customers can be severe. According to Hoyer and MacInnis (2001), dissatisfied consumers can decide to: • • discontinue purchasing the good or service, complain to the company or to a third party and perhaps return the item, or, engage in negative word-of-mouth communication. •

Customer satisfaction is important because, according to La Barbera and Mazursky (1983), “satisfaction influences repurchase intentions whereas dissatisfaction has been seen as a primary reason for customer defection or discontinuation of purchase”.

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4.13 Moving from customer service to customer satisfaction
Companies often use the term customer service and customer satisfaction interchangeably, but they are very different. Customer service is what an organization provides to its customers and is relatively easy to measure. Typical measures include response time, time required to provide service, ability to address a customer's issues on the first call, procedures for handling customer complaints or returns, etc. Customer service is important and companies should examine all the ways in which they touch their customer, the service they provide and their measures to continuously improve that service. Customer satisfaction, on the other hand, is how the customer feels about the service they receive and the company that provided it. It is the customer's perception and emotional response, and the company has no direct control over it. It is harder to measure and even harder to improve. Most companies assume there is a direct relationship between customer service and customer satisfaction, which is often the case. But there is no guarantee that good customer service will create high customer satisfaction. Good technical service delivered with an attitude can leave a customer dissatisfied. Timely replacement of a defective product can be listed as good customer service, but the customer may still be unwilling to trust the company with future business. The reverse is also true. Difficult situations can be converted into extraordinary customer satisfaction, if the customer is handed with care and sensitivity. Some companies train employees in how to use poor service issues as an opportunity to turn a situation around and create a raving fan.

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4.14 Techniques used to measuring Customer Satisfaction
The Kano model is a theory of product development and customer satisfaction developed in the 1980s by Professor Noriaki Kano that classifies customer preferences into five categories: Attractive, One-Dimensional, Must-Be, Indifferent, Reverse. The Kano model offers some insight into the product attributes which are perceived to be important to customers. SERVQUAL or RATER is a service-quality framework that has been incorporated into customer-satisfaction surveys (e.g., the revised Norwegian Customer Satisfaction Barometer) to indicate the gap between customer expectations and experience. J.D. Power and Associates provides another measure of customer satisfaction, known for its top-box approach and automotive industry rankings. J.D. Power and Associates' marketing research consists primarily of consumer surveys and is publicly known for the value of its product awards. Other research and consulting firms have customer satisfaction solutions as well. These include A.T. Kearney's Customer Satisfaction Audit process, which incorporates the Stages of Excellence framework and which helps define a company’s status against eight critically identified dimensions. For Business to Business (B2B) surveys there is the InfoQuest box. This has been used internationally since 1989 on more than 110,000 surveys (Nov '09) with an average response rate of 72.74%. The box is targeted at "the most important" customers and avoids the need for a blanket survey.

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4.15 Steps in Assessing Customer Satisfaction
 Develop a listing and categorize your customers. This will include: a. External customers-those that use your services (directly and indirectly). b. Internal customers-all organizations have components that serve other components. These are internal customers.  Suppliers-traditionally, you are a customer to them but by thinking of them as a customer, and of the information and access they need to meet their contracts with you, you will gain dividends in your own services.     Categorize your products or services. Determine what needs and wants your services or products meet. Determine what sets your service apart from others? Establish a customer orientation to include: Customers should be encouraged to tell you about any problems, Customers should know their rights and responsibilities from the beginning, Customers should know how to take advantage of their rights, Customers should feel in control. Customers should know precisely who to contact  Carefully scrutinize how your customers reach you and what barriers they encounter: a. How does your telephone system work? What are average wait times? How many times is a caller referred before finding someone able to answer the question? b. Where are you offices located? Are they convenient for customers to find? Is parking available? c. What languages do your customers use? d. What does your reception area look like? Pleasant or foreboding? How long must people wait?  What printed material do you have that describes your agency or organization? Does it successfully inform existing and potential customers?

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How well are you using information technology to increase customer satisfaction? a. Do you have a web site? b. Do you know how much and what kind of traffic comes to the site? c. Does it provide address, telephone, fax and e-mail information? d. Does it have a search feature? e. Does the language on the site meet the language need of your customers?

These are some of the considerations that an organization should make as it starts to understand and improve customer satisfaction.

4.16 Customer Satisfaction in seven steps
It’s a well known fact that no business can exist without customers. Therefore, a business can go long run when its customer get value from the organization & if they are satisfied. An organization make its customers satisfied if follow seven (7) steps: 1. Encourage Face-to-Face Dealings 2. Respond to Messages Promptly & Keep Your Clients Informed 3. Be Friendly and Approachable 4. Have a Clearly-Defined Customer Service Policy 5. Attention to Detail (also known as ‘The Little Niceties’) 6. Anticipate Your Client’s Needs & Go out Of Your Way to Help Them Out 7. Honor Your Promises Customer service, like any aspect of business, is a practiced art that takes time and effort to master. All you need to do to achieve this is to stop and switch roles with the customer.

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4.17

To Improve Customer Satisfaction, there have 3 Principles of Employee

Satisfaction
If you’ve ever coveted a J.D. Power award for Customer Service Champions, or if keeping the customer service satisfaction (CSAT) scores high at your company falls under your job description, this post is for you. Improving CSAT scores, and ultimately, driving business by creating products and services that keep satisfied customers coming back for more is no easy task. Providing adequate training for your customer service representatives is necessary, for sure, but there’s more to the CSAT picture than simply a well-trained employee. How about a well-trained, happy employee? Now that’s a step in the right direction. Let’s look at three principles for improving employee satisfaction, which will positively influence customer satisfaction. Principle #1: Understand the link between employee satisfaction and customer satisfaction A widely researched topic in the customer service industry connects customer loyalty and employee satisfaction. Case studies and company profiles repeatedly show that for employees to provide not just good customer service—but great customer service—they must first be driven by loyalty and enthusiasm from their employer. In other words, you can’t force devotion or commitment on your employees, but you can foster it by creating a culture that invites pride and ownership in the job and company. To see the concept visually, the below graph, courtesy of MetricNet’s research on call center metrics, aptly illustrates the connection between employee satisfaction and customer satisfaction:

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Principle #2: Create a great work environment So it makes sense that happy employees make for happier customers. The research backs up a fairly intuitive concept. But to create an environment filled with smiling, customer-serving employees, simply offering your agents a great parking spot if they are chosen as employee of the month isn’t going to cut it. Neither is offering $.25 cent sodas out of the company soda machine. We could write a book on creating a great work environment (actually, we did!…and we wrote a training program, too), but for brevity’s sake, let’s take the example of one company, New Belgium Brewery in Colorado, that has a 97% employee retention rate. Why? The employees, quite simply, like their jobs. The happy staff at New Belgium are also productive, motivated employees that sell a product customers like. What exactly makes New Belgium employees so happy? Yes, they get to sample the beer they produce, but the management at New Belgium has taken deliberate steps to foster a loyal workforce through the following principles:

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Encourage employees to have ownership: The employee-owned culture at New Belgium means that employees participate in major decisions—they vote on everything from new technology purchases to new staff positions.

 

Reward employees for loyalty: How about a custom-made cruiser bike after a year of service and a trip to Belgium after 5 years of service? Create policies employees can be proud of: The Company has a strict policy of environmental stewardship and does things such as turning waste into livestock feed and using wind-powered electricity.

Lead by example: The founders of New Belgium are committed to sound business practices and stewardship in their community. They believe in what their company stands for, and they hire employees who reflect the company’s values.

Principle #3: Create an environment that encourages low turnover We’ve written previous posts about how customer service starts with your staff, and we’ve mentioned the importance of adequate employee screening, training, and paying fair wages. It’s a topic worth repeating. Turnover, quite simply, is expensive, a huge drain on time and company resources, and leads to overall low morale. There are many contributors to high turnover, including inadequate training, poor employee screening methods, and a rushed hiring process. If you think paying lower wages will save your company money in the long-run, first consider the costs of employee turnover. According to recent data, replacing an employee can cost anywhere from 30% to 150% of an employee’s annual salary and benefits. Therefore, if you have an employee making $40,000 a year, you could be paying between $12,000 and $60,000 just to hire a replacement. Even with a focused customer service skills training program, there are greater forces at play when improving employee satisfaction and creating a culture that drives high customer satisfaction rates. If you, or other powers-at-be in the company are downplaying the importance
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of employee satisfaction, examine your employee culture before attempting to fix your customer satisfaction rates.

4.18 Summary
There are a number of guidelines that an agency may want to remember when addressing improving and quantifying customer satisfaction information. These include:    State clearly what is being measured and how the measure is derived or calculated. Explain why the measure is relevant to the program or service being provided. Identify the data source(s) used to calculate the measure and indicate how often the data are updated, including basic information on how and when the data were collected and where the data can be obtained.  Include a supplemental attachment with information and explanation of data sources, specific agency contacts, methodology, and other information required to evaluate agency data for legislative audit purposes.   Develop systematic data retention schedules, which will allow interested parties to verify and further analyze customer satisfaction data. Adhere to guidelines for valid survey research including appropriate designs for data collection, questionnaire development, sampling and analysis. For purposes of routine management or quality improvement, any comments from customers may be useful, but casual comments or unrepresentative samples do not constitute adequate measures of customers' satisfaction with state agencies or their programs.  State agencies should develop standard questions that they use consistently from year to year to assess and report customers' satisfaction. Without consistent wording of questions, it is impossible to monitor performance over time.

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CHAPTER 5

ASSESSING CUSTOMER SATISFACTION AT AIBL, LDP BR. SYLHET

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5.1 Measuring Customer Satisfaction
With the phenomenal increase in the country's population and the increased demand for banking services; speed, service quality and customer satisfaction are going to be key differentiators for each bank's future success. Thus it is imperative for banks to get useful feedback on their actual response time and customer service quality aspects of retail banking, which in turn will help them take positive steps to maintain a competitive edge. Organizations are increasingly interested in retaining existing customers while targeting non-customers; measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace. Lord William Thomson Kelvin (1824-1907) said, "If you cannot measure it, you cannot improve it." So to improve customer satisfaction level, measurement of customer satisfaction is must. Satisfied customers are central to optimal performance and financial returns. In many places in the world, business organizations have been elevating the role of the customer to that of a key stakeholder over the past twenty years. Customers are viewed as a group whose satisfaction with the enterprise must be incorporated in strategic planning efforts. Forward-looking companies are finding value in directly measuring and tracking customer satisfaction (CS) as an important strategic success indicator. Evidence is mounting that placing a high priority on CS is critical to improved organizational performance in a global marketplace. With better understanding of customers' perceptions, companies can determine the actions required to meet the customers' needs. They can identify their own strengths and weaknesses, where they stand in comparison to their competitors, chart out path future progress and improvement. Customer satisfaction measurement helps to promote an increased focus on customer outcomes and stimulate improvements in the work practices and processes used within the company. When buyers are powerful, the health and strength of the company's relationship with its customers – its most critical economic asset – is its best predictor of the future. Assets on the balance sheet – basically assets of production – are good predictors only when buyers are weak. So it is no wonder that the relationship between those assets and future income is becoming more and more tenuous. As buyers become empowered, sellers have

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no choice but to adapt. Focusing on competition has its place, but with buyer power on the rise, it is more important to pay attention to the customer. Requirement of ISO 9000:2000 Measurement of Customer Satisfaction is a new significant addition to the new ISO9000: 2000 standard. Organizations certified to this standard are now required to identify parameters that cause customer satisfaction or dissatisfaction and consciously measure them. Clause 8.2.1 in ISO 9000: 2000 states: "As one of the measurements of the performance of the Quality Management System, the organizations shall monitor information relating to customer perception as to whether the organization has met customer requirements. The methods for obtaining and using this information shall be determined." The requirement has been there in the QS 9000 standard clause 4.1.6 which says: "... Trends in customer satisfaction and key indicators of customer dissatisfaction shall be documented and supported by objective information. These trends shall be compared to those of competitors, or appropriate benchmarks, and reviewed by senior management."

5.2 Method used in Assessing Customer Satisfaction Level at (Laldighirpar Branch)
The Customer Satisfaction Measurement Model

AIBL

There are various models that are used in measuring the level of customer satisfaction. I have calculated the Customer Satisfaction Index (CSI). Because, it looks pretty smarter as it shows the satisfaction level as one number and this measure model considers various parameters and this is easy to calculate. The Customer Satisfaction Index represents the overall satisfaction level of that customer as one number, usually as a percentage. Plotting this Satisfaction Index of the customer against a time scale shows exactly how well the supplier is accomplishing the task of customer satisfaction over a period of time.

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The Questionnaire/ Instrument
I have followed the process of face to face interview in measuring the customers‘ satisfaction level. Because, it was convenient for me as I have passed much time at the bank during my internee program. The information collection was performed by using RATER or SERVQUAL Instrument. In the mid eighties, Parasuraman, Zeithaml and Berry (1988, 1991) conducted extensive studies in different industries and developed the SERVQUAL instrument: a 22-item scale with a set of service quality dimensions to quantify a customer‘s assessment of a company‘s service quality. Five key dimensions of service quality — reliability, responsiveness, assurance, empathy and tangibles — have been identified and form the foundation on which a lot of other studies on service quality have been built. By the early nineties the authors had refined the model to the useful acronym RATER. SERVQUAL is an empirically derived method that may be used by a services organization to improve service quality. The method involves the development of an understanding of the perceived service needs of target customers. These measured perceptions of service quality for the organization in question, are then compared against an organization that is "excellent". The resulting gap analysis may then be used as a driver for service quality improvement. SERVQUAL takes into account the perceptions of customers of the relative importance of service attributes. This allows an organization to prioritize. And to use its resources to improve the most critical service attributes. The data are collected via surveys of a sample of customers. In these surveys, these customers respond to a series of questions based around a number of key service dimensions. The methodology was originally based around 5 key dimensionsAssessing Customer Satisfaction Level at AIBL (Ldp. Br.) Page | 95

Tangibles- Physical evidence of the service: appearance of physical facilities, tools and equipments used to provide the service, appearance of personnel and communication materials. Reliability- The ability to perform the promised service dependably and accurately: consistency of performance and dependability, service is performed right at the first time, the company keeps its promises in accuracy in billing and keeping records correctly, performing the services at the designated time. Responsiveness- The willingness and/ or readiness of employees to help customers and to provide prompt service, timeliness of service: mailing a transaction slip immediately, setting up appointments quickly. Assurance- The knowledge and courtesy of employees and their ability to convey trust and confidence: competence (possession of the required skills and knowledge to perform the service), courtesy (consideration for the customer's property, clean and neat appearance of public contact personnel), trustworthiness, security (safety and confidentiality). Empathy- The provision of caring, individualized attention to customers: informing the customers in a language they can understand, Understanding customer's specific needs, providing individualized attention. The Rating Scale Customers‘ responses have been recorded by using 5 point Likert Scale or Technique where the customer were asked to evaluate each statement to rate their degree of agreements or disagreements with each of 22 statements. These degrees of agreements or disagreements were plotted on the 5 point Likert Scale where point 1 indicates ―Strongly Disagreeǁ and point 5 indicates ―Strongly Agreeǁ with the statement.
[Strongly Disagree]
1 2 3 4

[Strongly Agree]
5

Figure 1- 5 Point Likert Rating Scale

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5.3 Analysis of Customer Satisfaction
50 customers were surveyed as sample (from the population size of almost two thousand) under the study to measure the satisfaction level of the customers of Al-Arafah Islami Bank Limited (Laldighirpar Branch). The demographic information of samples is as follows: 5.3.1 Gender frequency Table 1: Sample‘s Frequency Distribution based on Gender Gender Male Female Frequency 36 14 Total= 50 Percentage 72% 28% Cumulative Percentage 72% 100%

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5.3.2 Age Group frequency Table 2: Sample‘s Frequency Distribution based on Age Group Age Group 18-25 Years 26-33 Years 34-50 Years 51-Above Frequency 14 18 15 3 Total= 50 Percentage 28% 36% 30% 6% Cumulative Percentage 28% 64% 94% 100%

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5.3.3 Profession frequency Table 2: Sample‘s Frequency Distribution based on Profession Profession Business Service Holder Student Others Frequency 21 15 12 2 Total= 50 Percentage 42% 30% 24% 4% Cumulative Percentage 42% 72% 96% 100%

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5.3.4 Statements in the Tangible Dimension Explanation- The statements under this group denotes the Physical evidence of the service. Aspects relating to tangible dimension of service quality were asked in 4 different questions. Survey Result- The summary of survey result of this dimension is shown by the following tableTable 1: Tangible Dimension Statements 1. AIBL has modern looking equipment and technologies that needs. 2. Your bank has convenient business hours. 3. The employees of the bank appear neat. 4. Materials associated with the service (pamphlets or statements) are visually 0 1 37 106 56 200 appealing at AIBL. Total 0 0 10 30 10 50 0 1 7 21 21 50 0 0 13 24 13 50 better satisfy your Strongly disagree 0 0 7 31 Disagree Average Agree Strongly agree 12 50 Total

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Interpretation of the Result- There is four (4) statements in the Tangible dimension and a number of Two Hundred (200) responses acquired. Among those two hundred responses- fifty six (56) customers are strongly agree, one hundred six (106) customers are agree, thirty seven (37) customers are average and only one (1) customer is disagree with above four statements. Out of four statements, the third statement “employees of the bank appears neat”, acquire the highest position as twenty one (21) customers are strongly agree, twenty one express agree, seven (7) customers express average opinion and only one (1) customer is disagree. Second statement “bank has convenient business hours” appears in the 2nd position, where thirteen (13) customers are strongly agree, twenty four (24) customers are agree and thirteen (13) customer expressed average opinion. First statement “modern looking equipment and technologies” of tangible dimension exists near to the second position. And ten (10) customers express strongly agree, thirty (30) express agree, ten express average opinion against the fourth statement “Materials associated with the service (pamphlets or statements) are visually appealing”. No customers express their opinion as disagree and strongly disagree to the first, second and fourth statement.
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5.3.5 Statements in the Reliability Dimension Explanation- Four attributes were grouped in this dimension and the respondents were asked to express their opinions. The attributes implies that” The ability to perform the promised service dependably and accurately”. Survey Result- Summary of the survey result of this dimension is shown by the following tableTable 2: Reliability Dimension Statements 5. When AIBL promises to do something by a certain time, it does so. 6. When you have a problem, employees give appropriate solution of your problems. 7. Your bank completes your transactions rapidly. 8. AIBL insists on error free records. Total 0 1 51 96 52 200 0 0 10 23 17 50 0 0 12 20 18 50 0 1 12 26 11 50 Strongly disagree 0 0 17 27 Disagree Average Agree Strongly agree 6 50 Total

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Interpretation of the Result- In the Reliability dimension, four (4) statements were grouped and Two Hundred (200) responses collected. Among those two hundred responses- fifty two (52) customers are strongly agree, ninety six (96) customers are agree, fifty one (51) customers are average and only one (1) customer is disagree with this dimension. Out of four statements, the third statement “bank completes your transactions rapidly”, stands in the highest position as eighteen (18) customers are strongly agree, twenty (20) express agree, twelve (12) customers express average opinion and no customer express their opinion as disagree. Second statement “appropriate solution of your problems” and fourth statement “AIBL insists on error free records” appears near the top position where fourth statement is in 2 nd place and second statement is in 3rd place. In strongly agree category, seventeen (17) customers put their opinion against fourth statement and eleven (11) customers put opinion against second statement.

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First statement of the dimension “promises to do something by a certain time, it does so” stands in the lowest position among the four statements. On this statement, six (6) customers are strongly agree, twenty seven (27) are agree and seventeen (17) customers give the average opinion. No customers put their perception as disagree and strongly disagree to the first, third and fourth statement.

5.3.6 Statements in the Responsiveness Dimension Explanation- Four attributes were grouped in this dimension and those attribute refers to “the willingness and/ or readiness of employees to help customers and to provide prompt service, timeliness of service”. Survey Result- Results acquired from the respondents against different statement of responsiveness dimension is given belowTable 3: Responsiveness Dimension Statements 9. Guidance at the entrance of the branch is satisfactory. 10. Employees in AIBL give you prompt service. 11. Employees in AIBL are always willing to help you. 12. Employees in AIBL pardon for making you wait. Total 0 0 59 91 50 200 0 0 17 24 9 50 0 0 12 21 17 50 0 0 14 24 12 50 Strongly disagree 0 0 16 22 Disagree Average Agree Strongly agree 12 50 Total

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Interpretation of the Result- There is four (4) statements in the Responsiveness dimension and Two Hundred (200) responses gathered where fifty (50) customers are strongly agree, ninety one (91) customers are agree, fifty nine (59) customers give average opinion. Among four statements, the third statement “Employees are always willing to help”, stands in the top as seventeen (17) customers are strongly agree, twenty one (21) express agree, twelve (12) customers express average opinion. A number of twelve (12) customer express their opinions as strongly agree to both the first and second statement of this dimension. Again, second statement acquires the opinion as agree and average from twenty four (24) customers and fourteen (14) customers, where the first statement acquires the number twenty two (22) and sixteen (16) in regular order. Only nine (9) customers put strongly agree opinion to the last statement. There have no any customers who give their opinion under disagree and strongly disagree category.

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5.3.7 Statements in the Assurance Dimension Explanation- Aspects relating to tangible dimension of service quality were asked in 4 different questions. The objective of these four questions is to know about courtesy and knowledge of employees and their ability to convey trust and confidence. Survey Result- The summary of the survey result of this dimension is shown by the following table. Table 4: Assurance Dimension Statements 13. The behavior of employees in AIBL installs confidence in you. 14. You feel safe in your transactions with AIBL. 15. Employees in AIBL area consistently courteous with you. 16. Employees in AIBL have the knowledge to answer your questions. Total 0 0 68 89 43 200 0 0 20 23 7 50 0 0 18 25 7 50 0 0 11 19 20 50 Strongly disagree 0 0 19 22 Disagree Average Agree Strongly agree 9 50 Total

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Interpretation of the Result- Four (4) statements in the Assurance dimension and two Hundred (200) responses collected. Among those responses- forty three (43) customers are strongly agree, eighty nine (89) customers are agree, sixty eight (68) customers expressed average perception. As twenty (20) customers give strongly agree opinion to the second statement “Customers feel safe in transaction”, and as it’s the highest number for strongly agree category than other statements of assurance dimension, therefore it stands in top position. Nineteen (19) customers put their opinion as agree and the rest eleven (11) give average opinion to the statement. In the first statement, the number of customer who expressed their perception as strongly agree, agree and average category is accordingly nine (9), twenty two (22) and nineteen (19). Third and fourth statement stands near the first one as seven (7) customers give strongly agree opinion to both the statement.

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5.3.8 Statements in the Empathy Dimension Explanation- The Empathy dimension refers to the degree of the provision of caring, individualized attention to customers. Survey Result- Summary of the survey result of this dimension is shown by the following table. Table 5: Empathy Dimension Statements 17. Service charges of AIBL are banks. 18. AIBL has your best 0 0 0 0 29 15 16 18 5 17 50 50 interests at heart. 19. The employees of AIBL understand needs. 20. AIBL has employees who give attention. Total 0 0 62 85 53 200 you individual 0 0 9 29 12 50 your specific reasonable to as other comparatively Strongly disagree 0 0 9 22 Disagree Average Agree Strongly agree 19 50 Total

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Interpretation of the Result- Empathy dimension is the combination of four (4) different statements. A total number of two Hundred (200) customer responses to those four questions. Among those respondents- fifty three (53) customers are strongly agree, eighty five (85) customers are agree, sixty two (62) customers expressed average perception. In this dimension, there have no any response to disagree and strongly disagree category. Nineteen (19) customers express their perception as strongly agree for the first statement of this dimension. And the next three statements achieve same perception from five (5), seventeen (17) and twelve (12) customers accordingly. Third and fourth statement more or less stands near the first statement. But in the second statement, large number of respondents’ shows average perception which indicates that the bank should pay more attention to this area of customer’s interest and desires.

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5.3.9 Summary of the survey result for five dimensions is shown in the following tableTable 6: Summary of Five Dimensions Dimension Tangible Reliability Responsiveness Assurance Empathy Total Strongly disagree 0 0 0 0 0 0 1 1 0 0 0 2 37 51 59 68 62 277 106 96 91 89 85 467 Disagree Average Agree Strongly agree 56 52 50 43 53 254 200 200 200 200 200 1000 Total

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The statistics shows that four hundred sixty seven (467) customers express their perception as Agree which is the highest number than rest four categories. Just two customer were disagree among which one is disagreed to the tangible dimension and another one is in reliability dimension. From the above statistics it can be said that the overall performance of the bank is satisfactory. But it should pay more attention to their service quality which may lead to get more highly satisfied customer and to compete with other banks.

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CHAPTER 6

SWOT ANALYSIS

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6.1 Introduction It has always been important for a business to know and understand how it fits in and interacts with the surrounding environment on both an internal (office/factory/shop environment) and external view (how business operates with the outside world).Researching the environment will benefit the company and management team by putting in a position to develop a strategy for both the long and short term. The most influential way of doing this is to perform a SWOT analysis of the company. The SWOT analysis comprises of the organization’s internal strength and weakness and external opportunities and threats. This analysis can be performed on a product, on a service, a company or even on an individual. It helps to identify where the company is strong and where is vulnerable, where company should defend and where it should attack. 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 indentify the current position of the organization relative to others, which are playing in the same field and also used in the strategic analysis of the organization. 6.2 SWOT Analysis The acronym for SWOT analysis stands for Strengths  Weaknesses  Opportunities  Threats

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6.2.1 SWOT Analysis of AIBL Every organization is composed of some internal strengths and weaknesses and also has some external opportunities and threats in its whole life cycle. Strengths AIBL provides its customer excellent and consistent quality is every service;  Financially sound company;  Utilizes state of the art technology to ensure consistent quality and operation;  AIBL provides its works force an excellent place to work;  Company name recognized on a National/Regional/Local level;  The company already achieved a good will among the client;  Charges on different services are comparatively low in AIBL than other banks;  The bank has research and training division;  Fully computerized accounts maintenance;  Well decorated and air conditioned facilities;  AIBL has a well-diversified pool of human resources, which is composed of people with high academic background. Also, there is a positive demographic characteristic- most employees are comparatively young in age yet mature in experience;  Excellent transport links (ease of access to/from the Company). Weaknesses Lacks well trained human resource in some area;  Lack of one stop service to the customer;  AIBL have no any ATM service or booth;  Taking less promotional activities than any other banks;  The procedure of credit facility is to long compare to other banks;  Employees are not motivated in some areas;

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 Initiate modern banking like Credit Card facilities, SMS banking, I-banking;  Rented premises (Adding to costs). Opportunities Emergence of online banking will open more scope for AIBL;  AIBL can introduce more innovative and modern customer service;  Bangladesh is developed by improving economic condition. The banking sector playing a vital role for this. With the change in the economy and increase in the population, demand for banking service is also increasing;  Many branches can be opened in local remote area as its high demand;  AIBL can recruit experienced, efficient and knowledgeable officers and staffs as it offers good working environment. Threats The worldwide trend of mergers and acquisition in financial institutions is causing problems;  Frequency taka devaluation and foreign exchange rate fluctuation is causing problem;  Lots of new banks are coming in the scenario with new service;  Some conventional banks are now a days starting Islamic banking service/window;  Local competitors can capture huge market share by offering similar products;  Restless political condition in Bangladesh, such as strike, boom blast, etc. threats the prosperity of bank;  As well as customer satisfaction authority must have to conscious about the employee satisfaction otherwise excessive labor turned will be a threat to the organization;  Number of potential competitors is increasing day by day;  Rising cost of Wages (Basic wage, etc);  Large and increasing competition;  Existing product becoming unfashionable or unpopular.

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As previously stated, SWOT analysis is used primarily to evaluate the current position of the business to determine a Management strategy for the future. It should also help to look at how management can do this by looking closely at company’s Weaknesses and Threats that have identified. Great care needs to be taken when planning a strategy not to disturb the balance of Strengths as management could find that their Strengths suddenly become a Weakness if they don’t use them. The way that SWOT has been introduced is the simplest way that it can be found. It can be used further to analyze the business (depending on its size) on a local, national and global level. This analysis will also help the management to forecast and prepare for the future accurately to give realistic objectives and tasks.

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CHAPTER 7

FINDINGS OF THE ANALYSIS

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7.1

Findings
  Quantitative findings Qualitative findings

The findings from the survey can be listed under following two head-

7.1.1 Quantitative Findings
The quantitative findings that are found by analyzing the customers‘response through SERVQUAL instrument are as follows From the analysis it is showed that, among the fifty (50) respondents there is only fourteen female customers which is short in number in compare with thirty six (36) male. This result says that, the bank provide less attention to female customers and as well as there have no any separate service desk for them.  The survey result of age group distribution indicates that, young and old age customers is only 14% and 3% respectively which is less than other two age group. It is happened because of lack of prompt service.  Result from profession distribution it is shown that there is only 12 students who visit the bank. This number is small rather than other profession. It is because of less or no product or service for students.  Ability of employees to perform promised service dependently & accurately- According to customers’ response, performance of all the dimensions listed under Reliability head (acting according to promises, sincerity in problem solving, performing the service right at the first time, providing service at the promised time & insistence on error free record) are quite. So, the employees are able to perform promised services dependently and accurately.  Responsiveness of employees to satisfy customers- According to customers response, statements under Responsiveness head (guidance at entrance, prompt service, willingness to help, seeking pardon for late) are satisfactory. Although the average result is

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satisfactory, there is a large number of customer who says that guidance at entrance and seek pardon for making wait is average that it is neither satisfactory nor dissatisfactory.  Assurance of competency, courtesy, credibility & security- From customers’ point of view, all dimensions listed under ―Assurance head (employees ‘behavior instill confidence in customers, safe felling in transactions, consistent good courtesy of employees & having decent knowledge of employees in answering customers queries) are quite satisfactory. So, on average the customers are assured enough by competence, courtesy, credibility and security of the employees and the bank.  Tangible appearances in satisfying customers- Customers of the bank are well satisfied with all types of tangible appearances (equipments, materials, physical facilities & employees) inside the bank. And these factors made the tangible dimension to stand top among all other dimensions.  Performance in personal care, understanding customers & offered banking hour- From the survey result it is found that “the employees of AIBL have the short interest of customers in their heart”. Other statements of Empathy dimensions such as service charges and individual interest is satisfactory from the customer point of view. So, from the quantitative analysis it is found that although in some dimensions customers are not properly satisfied, the overall result is pointing to a satisfactory level of customers‘satisfaction at Al-Arafah Islami Bank Limited, Laldighirpar Branch. There are some points where it needs to improve performance to increase the level of customer satisfaction. These are- holding best interest of customer, provide service as promised, providing information exactly when service will be provided, providing quick service, response timely to customers, etc.

7.1.2 Qualitative Findings
The key informants believe that the customers can be made more satisfied by providing them quick service. They also think that most of the customers deal with lower level officers of

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General Banking & SME department. Customers of the bank are increasing day by day. It will not be possible to serve customers then as they serve today. To make provide them prompt service without creating any queue more employees are needed under General Banking department. This will help them to carry on every day time consuming works like voucher sorting properly and thus there will be no pending works. They also believe that as the bank provides online services, it should use a better internet service or make contact with such a better internet service provider which can help the employees to provide quick and smooth service to the valued customers.

7.2 Problems & LimitationsDuring collecting of information and data from AIBL & making report for this project the following problems have been followed:  Decision making process is very lengthy and sometimes it creates problems, which is unexpected to the customers. Most of the cases Head Office control the decision making and it is centralized.  The total number of employees in comparison with needed is short. This is hampering the daily operation of the Bank. For an example, Laldighirpar Branch General Banking is suffering from shortage of employee.   Lack of proper explanation of records and document records keeping system. In many cases, there have lack of communication between different levels of employees.

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CHAPTER 8

RECOMMENDATIONS & CONCLUSION

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8.1 Recommendations
It was an interested experience to do internship in Al-Arafah Islami Bank Limited. The staff was highly cooperated and due to their help I learned big deal about modern banking. I suggest that such an internship program highly integrative for the students of business administration so that the students should be enquired with the knowledge of practice world .I do summarize that it would be a great help to me in selection of job or future field of work. It is very difficult for me to recommend with a practical experience of just almost 3 months. On the basis of interviews, study and observation I would like to put some suggestions, which will enable the bank to compete with other banks more effectively & efficiently. The suggestions are Maintenance of Time Slots for Each Customer to Serve: While employees deal with customers they can maintain standard time or time slots for each customer they handle and for each work they do. This consciousness will help to perform works quickly and to serve more customers.  Bank should give more attention to female customers and set up separate service desk for them.  As it is an Islamic bank there should be appoint female staff for provide prompt service to female customer.  Setup Electronic Calling Machine for Cash Counter- Most of the time there is a rush in the cash counter. To manage proper queue and to manage this rush properly setting up of Electronic Calling Machine can be effective.  Setting up of Query Desk/ Information Booth/ Reception Booth: A conventional query desk or reception booth or information booth can serve customers who make a phone or come at banks for simple query and this can reduce customers‘ rush to the officers table.  The employees should response more attractively and try to provide prompt service to customers of different age.  There need to start more separate and special service for students. Now-a day’s many banks provides student support service who wants to go abroad for higher study.
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 Decision Making- Decision making power should be decentralized effectively so that business can promptly be enhanced.  Appointment of more Employees under General Banking Department: More appointed employees can simplify the works of general banking and can serve the customers well. This will also help to ensure no work pending and no customer un-served. Appointment of more employees under this department will also reduce the workload of existing employees and will help to improve their morale.  Employee Training Workshops- Employees should be trained by arranging workshops time to time. Because this can release them from monotony, increase their knowledge and morale.  Appointing Female Employees- To understand the female customers‘ specific needs woman employees can be effective and a separate desk for women can improve the Islamic image of the bank and will secure the motto committed to cordial service.  The employees should be signed jobs for specific period and than they should shifted to other department so that they gain knowledge of other jobs.  Bank should properly advertise and Communicate to public about the services provided by it, so that more customers will be attracted.  System and operations should be more defined and organized. IT draw backs should be improved.  Lockers, ATM, all these facilities should be provided to attract more customers.  In a competitive financial market, their products & services need to focused more on customers’ needs then simply offering what the customers are offering  They should do more marketing activities to improve their presence in the minds of the target market and also the potential target market. As we see that, Media coverage of DBL is not so strong. To attract new clients, they should go for mass media coverage.

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8.2 Conclusion
During the three months internship program in Al-Arafah Islami Bank Limited in Laldighirpar branch at Sylhet, almost all the desk have been observed more or less. This internship program, in first, has been arranged for gaining knowledge of practical banking and to compare this practical knowledge with theoretical knowledge. All departments and sections are not covered in the internship program; so it is not possible to go to the depth of each activities of branch because of time limitation. However, highest effort has been given to achieve the objectives of the internship program. Al-Arafah Islami Bank ltd. is a non government commercial Bank in Bangladesh, which started its business from 1995. It is a unique combination of Shari’ah and Islamic banking. Among non government commercial banks, Al-Arafah Islami Bank Ltd. is a milestone for economic development. It has been playing an important role to eradicate the unemployment problem in Bangladesh. Over 1,700 employees and 11,000 shareholders are getting benefit from this organization. But most of the people in our country have misconception about Islamic banking specially Al-Arafah Islami Bank Ltd. and other Islamic banks. They cannot find any difference in its operation between conventional commercial Banks and Islamic Banks because they have no clear idea about the activities as well as investment mechanism of Islamic banks. The Bank is committed to run its activities as per Islamic Shari’ah and thus it has different investment(credit) modes, different repayment schedules, different disbursement procedure, different mark up system. And also has a different Investment policy. People are getting more benefit from the dealings of Islamic banking because here quarterly interest is not charged and there is no possibility of interest to be converted into principal. For ensuring more benefit, more facility from Islamic banks like AIBL we have to be honest and more sincere to repay the taken money from these banks in time.

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Developing a customer satisfaction program is not just about carrying out a survey. Surveys provide the reading that shows where attention is required but in many respects, this is the easy part. Very often, major long lasting improvements need a fundamental transformation in the organization, probably involving training of the staff, possibly involving cultural change. The result should be financially beneficial with less customer churn, higher market shares, premium prices, stronger brands and reputation, and happier staff. However, there is a price to pay for these improvements. Costs will be incurred in the research surveys are made. Time will be spent working out an action plan and in implementation of development process. Training may well be required to improve the customer service. The implications of customer satisfaction surveys go far beyond the survey itself and will only be successful if fully supported by the echelons of senior management.

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APPENDICES

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Appendix – I
Questionnaire for analyzing “Customer Satisfaction Level at Al-Arafah Islami Bank Ltd., Laldighirpar Branch, Sylhet.” Age: Profession: 18-25 Above Businessman Service holder Student 26-33 34-50 51Gender: Male Female Other

Please show the extent to which you believe AIBL has the feature described in the statement. Write number (1, 2, 3, 4, 5) that best shows your perceptions. Point Level of satisfaction 1 Strongly disagree 2 Disagree 3 Average 4 Agree 5 Strongly agree

Statements in the Tangible Dimension Statements 21. AIBL has modern looking Strongly disagree equipment and technologies that better satisfy your needs. 22. Your bank has convenient business hours. 23. The employees of the bank appear neat. 24. Materials associated with the service statements) (pamphlets are or visually Disagree Average Agree Strongly agree

appealing at AIBL.

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Statements in the Reliability Dimension Statements 25. When AIBL promises to do something by a certain time, it does so. 26. When you have a problem, employees 27. Your 28. AIBL records. Statements in the Responsiveness Dimension Statements 29. Guidance at the entrance of the branch is satisfactory. 30. Employees in AIBL give you prompt service. 31. Employees in AIBL are always willing to help you. 32. Employees in AIBL pardon for making you wait. Strongly disagree Disagree Average Agree Strongly agree bank insists give appropriate your solution of your problems. completes on transactions rapidly. error free Strongly disagree Disagree Average Agree Strongly agree

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Statements in the Assurance Dimension Statements 33. The behavior of employees in AIBL installs confidence in you. 34. You feel safe in in AIBL your area transactions with AIBL. 35. Employees consistently courteous with you. 36. Employees in AIBL have the knowledge questions. Statements in the Empathy Dimension Statements 37. Service charges of AIBL are reasonable as comparatively to other banks. 38. AIBL has your best interests at heart. 39. The employees of AIBL understand your specific needs. 40. AIBL has employees who give you individual attention. Thank you very much for your time, co-operation & patience **************************************************** Strongly disagree Disagree Average Agree Strongly agree to answer your Strongly disagree Disagree Average Agree Strongly agree

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Appendix – II
Survey Result 1. AIBL has modern looking equipment and technologies that better satisfy your needs. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 7 Agree (4) 31 Strongly Agree (5) 12 50 Total

2. Your bank has convenient business hours. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 13 Agree (4) 24 Strongly Agree (5) 13 50 Total

3. The employees of the bank appear neat. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 1 Average (3) 7 Agree (4) 21 Strongly Agree (5) 21 50 Total

4. Materials associated with the service (pamphlets or statements) are visually appealing at AIBL. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 10 Agree (4) 30 Strongly Agree (5) 10 50 Total

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5. When AIBL promises to do something by a certain time, it does so. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 17 Agree (4) 27 Strongly Agree (5) 6 50 Total

6. When you have a problem, employees give appropriate solution of your problems. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 1 Average (3) 12 Agree (4) 26 Strongly Agree (5) 11 50 Total

7. Your bank completes your transactions rapidly. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 12 Agree (4) 20 Strongly Agree (5) 18 50 Total

8. AIBL insists on error free records. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 10 Agree (4) 23 Strongly Agree (5) 17 50 Total

9. Guidance at the entrance of the branch is satisfactory. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 16 Agree (4) 22 Strongly Agree (5) 12 50 Total

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10. Employees in AIBL give you prompt service. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 14 Agree (4) 24 Strongly Agree (5) 12 50 Total

11. Employees in AIBL are always willing to help you. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 12 Agree (4) 21 Strongly Agree (5) 17 50 Total

12. Employees in AIBL pardon for making you wait. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 17 Agree (4) 24 Strongly Agree (5) 9 50 Total

13. The behavior of employees in AIBL installs confidence in you. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 19 Agree (4) 22 Strongly Agree (5) 9 50 Total

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14. You feel safe in your transactions with AIBL. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 11 Agree (4) 19 Strongly Agree (5) 20 50 Total

15. Employees in AIBL area consistently courteous with you. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 18 Agree (4) 25 Strongly Agree (5) 7 50 Total

16. Employees in AIBL have the knowledge to answer your questions. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 20 Agree (4) 23 Strongly Agree (5) 7 50 Total

17. Service charges of AIBL are reasonable as comparatively to other banks. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 9 Agree (4) 22 Strongly Agree (5) 19 50 Total

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18. AIBL has your best interests at heart. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 29 Agree (4) 16 Strongly Agree (5) 5 50 Total

19. The employees of AIBL understand your specific needs. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 15 Agree (4) 18 Strongly Agree (5) 17 50 Total

20. AIBL has employees who give you individual attention. Level of Satisfaction Strongly Disagree (1) 0 Disagree (2) 0 Average (3) 9 Agree (4) 29 Strongly Agree (5) 12 50 Total

Gender Distribution: Male Female Total 36 14 50

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Profession Distribution: Business Service holder Student Others Total 21 15 12 2 50

Age group Distribution: 18-25 y 26-33 y 34-50 y 51-Above y Total 14 18 15 3 50

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BIBLIOGRAPHY

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Books Warde, Ibrahim. (2000). "Islamic Finance In The Global Economy". Edinburgh: Edinburgh University Press.  Dr. Aly Khorshid (July 2009), Encyclopedia of Islamic Finance, published by Euromoney PLC,  Guidelines for Islamic Banking, Banking Regulation & Policy Department, Bangladesh Bank, Head Office, Dhaka; November 9, 2009 issue.  Bangladesh bank: Scheduled Banks Statistics, April-June, 1997 issue.  Al-Arafah Islami Bank Limited (1995): Memorandum and Articles of Association of alArafah islamic Bank Limited.  Mirakhor, A (1997), Progress and Challenges of Islamic banking, Review of Islamic Economics, vol. 4, No.2.  Aaker, D. A., (1995), Strategic Market Management. 4th ed., John Wiley, New York.  Hoyer, W. D. & MacInnis, D. J., (2001), Consumer Behaviour. 2nd ed., Boston, Houghton Mifflin Company.  Coldwell, J., at al, (2001), Customer Relationship Management, Tata McGraw-Hill, New Delhi.  Kotler, P., (2000), Marketing Management. 10 th ed., Prentice-Hall, New Jersey.  Johnson, M. D. & Gustafsson, A. (2000), Improving Customer Satisfaction, Loyalty, and Profit: An Integrated Measurement and Management System. Jossey-Bass Inc, San Francisco, California.  Fornell, C. (2007), The Satisfied Customer – Winners and Losers in the Battle for Buyer Preference. Palgrave Macmillan, New York.  Siddiqi, Mohammad Nejatullah (2001). Lecture Series on Islamic Bank and Finance. UCLA International Institute, Available at: <URL: http://www.international.ucla.edu/article.asp? parentid=15056>.  Usmani, Muhammad Taqi (n.d.). Musharakah & Mudarabah. <URL: http:// www.darululoomkhi.edu.pk/fiqh/islamicfinance/mudarabah.html>.

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Journals Errico, L and Farahbaksh, M (1998). Islamic Banking : Issues in Prudential Regulations and Supervision, IMF Working Paper No. Wp/9830,March 1998, International Monetary fund, JEL Classification Numbers.  Ahmed, E.A: Islamic banking: distribution of Profit (Case Study), Ph.D. Thesis, December 1990, University of Hull, UK.  Naqvi, Syed Nawab Haider (2000). “Islamic Banking: An Evaluation,” IIUM Journal of Economics and Management, 8(1).  Rich, Georg and Walter, Christian (1993). “The Future of Universal Banking”, Cato Journal,13(2).  Rohrbeck, R., Steinhoff, F. and F. Perder(2010) Sourcing Innovation from You Customer: How Multinational Enterprises use Web Platforms for Virtual Customer Integration, Technology Analysis & Strategic Management, Vol. 22, No. 4, pp. 117–131  Jacksonville Business Journal - by Harold Resnick  Naser, K., Jamal, A. and Al-Khatib, K. (1999), “Islamic Banking: A study of customer satisfaction and preferences in Jordan”, International Journal of Bank Marketing, Vol.17, No.3, PP.135-50.  Peterson, R.A. and Wilson, W.R. (1992), ``Measuring customer satisfaction: fact and artifact'', Journal of the Academy of Marketing Science, Vol. 20, pp. 61-71.  Levesque, T. and McDougall, G. H. C. (1996), “Determinants of customer satisfaction in Retail banking”, International Journal of Bank Marketing, Volume 14, No.7, PP. 12-20.  Taylor, S.A. and Baker, T.L. (1994), ``An assessment of the relationship between service quality and customer satisfaction in the formation of consumers' purchase intentions'', Journal of Marketing, Vol. 58, Summer, pp. 163-78.  Bowen, J. T. & Chen, S. L., May 2001, The Relationship Between Customer Loyalty and Customer Satisfaction, International Journal of Contemporary Hospitality Management, pp. 213-217.

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 Journal: Parasuraman, Berry, and Zeithaml (1988) - SERVQUAL: A multiple-item scale for measuring customer perceptions of service quality - Journal of retailing 64 (1) Spring.

Magazine & News Hokanson, S., January 2, 1995, The Deeper You Analyze, The More You Satisfy Customers, Marketing News, p. 16.  2000, Managing Customer Satisfaction: A Best Practice Perspective, The TQM Magazine, 12 (6), pp. 389-394.  Zairi, M., 2000, Managing Customer Dissatisfaction Through Effective Complaint Management Systems, The TQM Magazine, 12 (5), pp. 331-335.  Dr. Hayat Khan, “Islamic Banking: Bringing morality into finance”, published on ABC Online on Friday 19 June 2009.  Research Department, Bangladesh Bank (1997): On the Dynamism of Islamic banking in Bangladesh, latter issued to all the Islamic banks and Banks having Islamic banking Branches and Counters on 15th March, 1997 (Letter No. DR/PIED/IEC) 1/97).

Websites soe@uts.cc.utexas.edu  http://www.survey.utexas.edu  http://blue.census.gov/mso/www/npr/acsi.htm.  http://www.financialislam.com  http://www.eiu.com  http://www.scribd.com  http://www.ucti.edu.my  http://www.bizjournals.com/jacksonville/stories/2006/08/14/smallb3.html  http://www.customerservicemanager.com/customer-service-articles.htm

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 http://www.marketingprofs.com  http://islamicbanking.info/  http://www.iiibf.org/journal.html  http://www.1000ventures.com/business_guide  http://www.al-arafahbank.com  http://www.bangladesh-bank.org  http://www.ask.com  http://www.businessdictionary.com  http://www.managementstudyguide.com  http://www.nbrii.com/customer-survey-white-papers  http://www.allbusiness.com/sales/customer-service/471452-1.html  http://www.deepdyve.com/lp/emerald-publishing/islamic-banking-a-study-of-customersatisfaction-and-preferences-in-tvuw1J4l3Z

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