Prepared For

Trisha Ahmed (TSA)

Course Instructor
Department of Accounting and Finance
Course- FIN 464
Sec-02
Prepared By

Name
Bank Management
ID

Abid Hasan Roman

FIN 4641330807630
Jafrin Sultana 1420263030
S M SANJIL NOUROZE 1330142630
TANJILA SULTANA LIPI 1320757030
Introduction
Islamic banking has been defined in a number of ways. The definition of Islamic bank,
as approved by the General Secretariat of the OIC, is stated in the following manner.
"An Islamic bank is a financial institution whose status, rules and procedures expressly
state its commitment to the principle of Islamic Shariah and to the banning of the receipt
and payment of interest on any of its operations. Shawki Ismail Shehta viewing the
concept from the perspective of an Islamic economy and the prospective role to be
played by an Islamic bank therein opines: "It is, therefore, natural and, indeed,
imperative for an Islamic bank to incorporate in its functions and practices commercial
investment and social activities, as an institution designed to promote the civilized
mission of an Islamic economy. Ziauddin Ahmed says, "Islamic banking is essentially a
normative concept and could be defined as conduct of banking in consonance with the
ethos of the value system of Islam.

Bai Al Inah

It is a particular financing competence cans contribution personalities in meeting

financial responsibilities and down payments for a car, houses, home repairs and
others.

The Appropriateness of this Bank

Malaysian people between the ages of 18 and 55 years (58 years old -
government employees only)

Management employees with a least possible income of RM700.00

Private region employees by way of an income of RM3000.00

Employees in facility for not less than 3 years

This bank working by giving some ways and Product:

Established on Islamic agreement

Greatest Efficacious in the Malaysian market
 Bank earned a name for itself in the market as House of Inah due to its
successful record.
Charity mostly for facilities put RM 200,000 with a 20 year repayment period

Special Features andthe Elements

Low monthly payment

Fast Authorization
No sponsor and guarantee
Revenue amount is low as 3.25% and
Terms and conditions relate

Buyer and seller: In cooperation parties must have complete capacity, which means
that they have reason and discretion.

Price: The price must be set on the spot and must be known to the buyer.

Subject matter: The subject matter should be lawful and owned by the seller, it should
be deliverable, and should be precisely determined at the time of contract.

Offer and acceptance: The form of the contract must comprise an offer from one party
and an acceptance from the other. Moreover, is necessary that the acceptance must
conform to the offer in all its details.

Bai-Salam

The term Bai-Salam has been derived from Arabic words (Baiun and Salamun). Bai-
Salam means advance purchase and sale. Bai-Salam may be defined as a contract
between a Buyer and a Seller under which the Seller sells in advance the certain
commodities/products permissible under Islamic agreement.

Feature

Bai-Salam is a mode of investment allowed by Islamic agreement in which

commodities/products can be sold without having the said commodities/ products
either in existence or physical/constructive possession of the seller.
 Generally, Industrial and Agricultural products are purchased/ sold in advance
under Bai-Salam mode of Investment to infuse finance so that production is not
hindered due to shortage of fund/cash.
It is permissible to obtain collateral security from the seller client to secure the
investment from any threats non-supply/partial supply of commodities/products,
supply of low quality commodities/Products etc.
It is also permissible to obtain Mortgage and/or Personal Guarantee from a third
party as security before the signing of the Agreement or at the time of signing the
Agreement.
Bai-Salam on particular commodities/products or on a product of a particular field
or farm cannot be affected. [for Agricultural Product(s) only].
The seller (manufacturer/producer) client may be made agent of the Bank to sell
the goods delivered to the Bank by him provided a separate agency agreement is
executed between the Bank and the Client (Agent).

Bai Bithaman Ajil

Bai Bithaman Ajil is a deferred payment sale, which works like a Murabahah contract,
but with payment generally made on a deferred basis. In some countries Bai Bithaman
Ajil is also known as Bay al Muajjal (Pakistan) or Bay Muazzal (Bangladesh). As partial
security, the correspondent bank would, on adding his confirmation, debit the Islamic
banks with a certain cash margin which it will transfer immediately to its own account.
(They are authorized to do this automatically). Thus Islamic banks need in fact, only to
keep sufficient balances in their correspondent banks account to cover the cash
margins of the letters of credit and not the whole value of these letters.

Current Accounts Performed in the normal banking traditions;

Saving Accounts This banking service is offered free of charge
It is given with the explicit approval of the depositor that it will be subject to profit
and loss. (Risk-sharing being the basic characteristic of Islamic financing).
The investment account holder is entitled in the case of profit to all the
profit actually realized by the investment account.
 Letter writer banking services Islamic banks also offer their services in the sphere
of international trade finance through correspondent banking.

Islamic banks, however, may ask a correspondent bank to add their confirmation to
letters of credit opened on behalf of foreign suppliers to importers.. Either Islamic bank
keeps huge surpluses in their account with the correspondent bank to cover its
obligations to the third party while it seeks to replenish its account with the
correspondent bank. This in fact would be lending by the correspondent bank for which
Islamic banks would not accept to pay any interest. Foreign banks accepted dealing
with Islamic banks on the basis of mutual agreements advised and accepted by simple
exchange of letters to avail Islamic banks with confirmation facilities up to an agreed
ceiling without charging interest should the accounts go red. In consideration, Islamic
banks undertake to abide by the following:-

All types of money transfers Domestic as well as international bank transfers are
offered.
Collection of bills (but not their discounting).
Letters of credit and guarantees all forms of letters of credit and letters of
guarantee. Islamic banks charge fees for these services. This is permissible in
Islam.
Safes Safe custody services are also available in some Islamic banks.

Islamic Bank in Bangladesh

Islamic Bank Bangladesh Limited is a sharia compliant bank in Bangladesh which

started operations on 30 March 1983. It is a public limited company registered under the
Companies Act of 1913. IBBL is a joint venture of the government of Bangladesh, 22
businessmen of Bangladesh, Islamic Development Bank, and investment firms and
banks from Muslim Middle Eastern countries and 63% shared owned by the above
shareholders and 60,000 people of Bangladesh are owners of the rest 37 percent
shares.

The most important facilities and features of founding Islamic bank in Bangladesh and
all over the world are to support, temporary and cultivate the claim of Islamic main
beliefs in the business sector. More in detail, the facilities of Islamic banking when
observed in the framework of its role in the economy are listed as following:

To offer contemporary financial services in conformity with Islamic Shariah

To contribute towards economic development and prosperity within the principles
of Islamic justice;
Optimum allocation of scarce financial resources; and
To help ensuring equitable distribution of income.
These objectives are discussed below.
Interest-based banking, which is considered a practice of Riba in financial
transactions, is unanimously identified as anti-Islamic.
Another important facilities of Islamic banking is the optimum allocation of scarce
resources.
Islamic Banking for rightful distribution of resources

Conclusion

It give the impression from the overhead characterizations that Islamic banking is a
system of financial intermediation that escapes receipt and payment of interest in its
transactions and behaviors its operations in a way that it helps succeed the objectives
of an Islamic economy. On the other hand, this is a banking system whose operation is
based on Islamic principles of transactions of which profit and loss sharing is a major
feature, ensuring justice and equity in the economy. That is why Islamic banks are often
known as profit and loss sharing banks.