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Letter of Transmittal

Date: 20th January 2018


Aminul Haque Russel
Lecture
Department of Business Administration
Daffodil Institute of IT (DIIT)
Subject: Submission of Internship report
Dear sir,
It’s my Great pleasure to submit internship report on the project titled Islami Banking System in
Bangladesh- A Study on Al-Arafah Bank Ltd. This is a partial fulfillment of the requirement
of BBA program. As an intern of Al-Arafah Islami Bank Ltd. Investment department of the
branch and report is prepared focusing on the investment banking function and procedure of this
branch. A careful attention has been taken regarding data collection, relevance of data and
preparation of this report. The information provide in this report is very authentic and effort has
been provided to make this a comprehensive one.
For better understanding and reliability, this is being segmented various chapters and this will
provide an extensive source of information.
I convey my sincerest thanks and gratitude for giving me the scope and I believe that this report
will certainly help you in evaluating my course work.
I shall be pleased to answer any query as and when needed.
Thank you
Sincerely yours
…………………………………...
Md. Al-amin
Bachelor of Business Administration
Major in Marketing
Reg. no- 00002096234
Session – 2012-2013
Daffodil Institute of IT (DIIT)
National University

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Supervisor’s Declaration

This is to certify that Md. Al-amin student of Bachelor of Business Administration (BBA), Major
in finance of Daffodil Institute of IT (DIIT) has completed this internship report on Islamic
Banking System in Bangladesh overview Al-Arafah Islami Bank Ltd.

I believe that he has completed this report himself while he was performing internship in Al-
Arafah Islami Bank Limited.

I wish his every success in life.

_______________________________

Aminul Haque Russel

Lecturer

Department of Business Administration

Daffodil Institute of IT (DIIT)

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Student Declaration

I am, Md. Al-amin, Student of BBA, Reg No- 00002096234 at Daffodil Institute of IT, hereby
declare that the internship report on islami banking system of Al-Arafah Islami Bank Limited
is prepared by me internship at my Al-arafah Islami Bank Limited. Under the extensive
supervision and guidance of principal officer – Al-arafah Islami Bank Limited.

I also declare that the internship report is prepared for an academic purpose, alone.

……………………………………..
Md. Al-amin
Bachelor of Business Administration
Major in Marketing
Reg.no – 00002096234
Session- 2012-2013
Daffodil Institute of IT (DIIT)
National University

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Acknowledgement

First of all I would like to acknowledge “the Almighty”, the supreme authority of the universe.
This report is a product of hard study; Query involves many people’s considerate attention to it.
Without their assistance, suggestion, direction and co-operation preparation of this report would
have been impossible. So, I want to pay my gratitude to them.

I want to express my gratitude mainly to my supervisor AMINUL HAQUE RUSSEL. Lecturer,


BBA program, Daffodil Institution of IT, who helped me from the very beginning of my
internship search for attachment. Me honorable supervisor form time to time give me
appointment and suggest me to prepare this report finally made me possible to complete this
report which is a partial requirement of BBA program.

I also want to acknowledge JASHIM AHMED Chowdhury branch manager Islampur of Al-
arafah Islami Bank Ltd, Who helped me to manage attachment in this bank. Then I would like to
thank to Principal Officer IDRISH ALI, Officer RAJU AHMED & Manafuddin, who provide
me all the required information to make this report successful. I sincerely thanks to the
executives of Islampur of Al-Arafah Islami Bank Ltd, Who helped me very much in composition
of my internship per.

Overall, I also grateful to all staffs and officers of Al-Arafah Islami Bank Ltd. Islampur for their
Co-operation and help at the time of my work with them in that branch and to collect information
to prepare this report.

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Executive Summary
The report attempts to show the summarized picture of Overview of Islami Banking System in
Bangladesh of Overview Al-Arafah Islami Bank Limited. The aim of the study was to see Islami
Banking System in Bangladesh,. I have done the report of Islami Banking System in Bangladesh
of Al-arafah Islami Bank Ltd.

It has mainly highlighted the business strategies and various Islamic Banking systems which
have been observed during the in chapter one discussed about introduction, origin, and objective,
sources of report data, scope and limitation of AIBL. In chapter two discussed about Company
overview, products & services of AIBL. Islamic banking system is the main part of the report.
Objective & principles of Islamic Banking, Sources of fund is internship program. For that
decided the whole report into six chapters. Discussed here this part mainly focused on Islamic
Banking System of AIBL and then Findings are made from the analysis. In chapter focused all
products of AIBL and described their Definition, Features, and Steps of contract in chapter four.
Focused all Islamic Banking System of AIBL and described this mode in this part I focused
Islamic Investment System, Islamic Investment Mode in this part. Sector abd discussed about
SWOT analysis of AIBL. That is including with strength, weakness, wise investment growth of
AIBL.

Finally Findings recommendations and conclusion are made in the last chapter.

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Table of Content
S.L no./Section Particulars Page no.
Letter of transmittal i
Supervisor Declaration ii
Student’s Declaration iii
Acknowledgement iv
Executive Summery v
Acronyms Ix
List of Table x
List of Figure & Graph xi

CHAPTER 1 INTRODUCTION 1 to 4

1.1 Introduction 2
1.2 Origin of the report 2
1.3 Background of the Study 2
1.4 Object of the study 3
1.5 Methodology of the Study 3
1.6 Scope of the Study 4
1.7 Limitations of the study 4

CHAPTER 2 ORGANIZATIONAL OVERVIEW OF AIBL 5 to 20


2.1 Background of the Organization 6
2.2 Vision 6
2.3 Mission 7
2.4 Goals and objective 7
2.5 Special features of the AIBL 7
2.6 Foreign exchange risk management 8
2.7 Activities of Shariah council 8
2.8 Product of AIBL 9
2.9 Management of AIBL 17
2.10 Human Resource Department of AIBL 17
2.11 Management Organogram 20
2.12 Organogram of Islampur Branch. 20

CHAPTER 3 Evolution of Islamic Banking 21 to 30

3.0 Emergence of Islamic Banking 22


3.1 The first attempt 24
3.2 The second attempt 24
3.3 Tabung Hajji: a successful attempt 25
3.4 Other attempts 25
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3.5 Iran Islamic Banking System 28
3.6 Pakistan Islamic Banking System 29
3.7 Bangladesh Islamic Banking System 30

CHAPTER 4 Islamic Banking System in Bangladesh Overview 32 to 50

Al-Arafah Bank Limited


4.0 Investment 33
4.1 Investment Modes of AIBL 33
4.2 Investment procedure of AIBL 34
4.3 investment products of AIBL 35
4.4 Bai-Murabaha 35
4.5 Share (partnership) Mechanism 41
4.6 Musharaka 46
4.7 IJARAH 50
4.8 HAIR-PURCHASE 50

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CHAPTER 5 SWOT Analysis of AIBL 54 to 61
CHAPTER6 Findings, Recommendations &Conclusion 57 to
6.1 Major findings from the analysis 58
6.2 Recommendations 59
63. Conclusion 60

REFERENCE Reference 61

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Acronyms
AIBL Al-arafah Islami Bank Limited

CRM Credit risk management

C&F Clearing and forwarding

DD Demand Draft

EPB Export Promotion

FDR Fixed Deposit receipt

IFDD Issuance of Foreign Demand Draft

IBCA Inter branch credit Advice

LCA Letter of credit authorization

L/C Letter of Credit

OBC Outward bill collection

OD Over draft

PO Payment order

STD Short term Deposit

SWOT Strength Weakness Opportunity and Threat

TT Telegraphic Transfer

SWIFT Society for worldwide interbank Financial


Telecommunication

RDS Rural Development Scheme

SME Small and medium Enterprises

List of Table

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Chapter Table no Table name Page no

2.8.5 Monthly deposit amount and 11


receivable after

2.8.6 Mudaraba Lakhpoti Saving 12


Chapter -2 Scheme

2.8.7 Mudaraba millennium Saving 12


Schemes

2.8.8 Mudaraba Kotipoti Saving 12


Schemes

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List of Figures & Graphs

Chapter Figure/Graph Figure/Graph Name Page no.

Figure 2.8.8 Grameen & small Investment Scheme 13

Chapter 2 Figure 2.10 Manpower position of AIBL 15

Figure2.11 Management Organogram 16

Figure2.12 Organogram of Islampur branch 16

Chapter 4 4.1 Investment Modes of AIBL 28

4.3 investment products of AIBL 30

Chapter 5 Figure 5.1 SWOT Analysis of AIBL 48

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