Internship Report

on
Investment Management Process of Islami Bank
Bangladesh Limited: A study on Pallabi Branch

Tajul Islam

BBA Program-2017 (20th Batch)

ID-128

Supervisor:

Mohammad Abdul Jabber

Assistant professor

Department of Management

University of Dhaka

28th February, 2018

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 Letter of Transmittal
28th February, 2018

Mohammad Abdul Jabber

Assistant professor
Department of Management
Faculty of Business Studies
University of Dhaka

Subject: Submission of Internship report on “Investment Management Process of Islami

Bank Bangladesh Limited: A study on Pallabi Branch”.

Dear Sir,

With due respect, I would like to inform you that I have prepared my internship report on
“Investment Management Process of Islami Bank Bangladesh Limited: A study on Pallabi
Branch” for the BBA program. I have prepared this report based on the practical work
experience and data collected through interview and observation of the working process of
IBBL Pallabi Branch. There might be errors through oversight in the report and I sincerely
apology for such unintentional errors. I would be grateful to you if you kindly consider my
mistakes.

I hope you would be kind enough to accept my internship report and oblige thereby.

Thanking you

-------------------

Tajul Islam

ID-128

BBA program 2017 (20th Batch)

Department of Management
University of Dhaka

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 Student’s Declaration
I, Tajul Islam hereby declare that the internship report titled “Investment Management
Process of Islami Bank Bangladesh Limited: A study on Pallabi Branch” is individually
prepared by me after completing the 60days internship at IBBL Pallabi Branch, dhaka and a
comprehensive study on the investment management process of IBBL. Nothing of this report
is duplicate and no information is used which is highly confidential of IBBL and the
information of this report is not against the law of the country.

I would like also to declare that the report is prepared exclusively for academic purpose and
not for any other reason.

-------------

Tajul Islam

ID: 128

BBA program 2017, 20th Batch

Department of Management

University of Dhaka

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 Supervisor’s authorization

This is to certify that Tajul Islam; bearing ID no 128 is a regular student of BBA 20th batch,
Department of Management. His internship has successfully been completed at Islami Bank
Bangladesh Limited, Pallabi Branch and the report titled “Investment Management of Islami
Bank Bangladesh Limited: A study on Pallabi Branch has been prepared under my
supervision and guidance. He collected the required information in consultation with me.

I wish him every success in life.

-----------------------

Mohammad Abdul Jabber

Assistant professor
Department of Management
Faculty of Business Studies
University of Dhaka

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 Acknowledgement

First of all, I would like to thank and express my deep gratitude towards the Almighty Allah
for making me enable to complete this report.

I express my heartiest gratitude and respect to my internship supervisor for his excellent
guidance and support to complete this report properly.

My sincere gratitude toward the IBBL Pallabi Branch officials Mr. Shahidul Islam, Mr.
Liton, Mr. Roisul Islam and Mr. Nayem Amin for helping me to complete this report with
giving information.

I express my gratitude towards the IBTRA authority and the faculty namely Dr. Saleh Matin
and Zakia Akhter Khanom for making an environment to complete internship program along
with training facilities.

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 Acronyms
IBBL=Islami Bank Bangladesh Limited

IBTRA= Islami Bank Training and Research Academy

BB=Bangladesh Bank

MSA= Mudaraba savings Account

MTDR=Mudaraba Term Deposit Receipt

QTDR= Quard term Deposit receipt

MDB=Musharaka Documentary Bill

MPI=Murabaha Post Import Investment

MPI TR=Murabaha Post Import Investment Trust Receipt

HPSM=Hire Purchase Under Shirkatul Melk

TR=Trust Receipt

ATM=Automated Teller Machine

VISA= Visual Interactive Sensitivity Analysis

I banking=Internet banking

MSSA=Mudaraba Special Savings Account

DPS=Deposit Pension Scheme

LC=Letter of Credit.

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 Executive Summary

The research was conducted to understand the investment management process of Islami
Bank Bangladesh Limited and the study was made on Pallabi Branch. This study reveals the
investment mechanism used by IBBL those are Bai, share and hire purchase under shirkatul
melk. IBBL uses these mechanisms as a tool of business and these are totally interest free
claimed by IBBL. IBBL is based on shariah and investment is made through the principles of
shariah. The hidden truth behind the success of IBBL investment is asset backing against
investment.

Islami Bank Bangladesh Limited is considered as the first interest free bank in South-east
Asia. It was incorporated in 1983 and from then it is a profitable organization and the
organization dramatically grown. It is most profitable bank among the banks of Bangladesh.
It is the top in position for the last couple of years in case of profit. The objective of this
study was to complete requirement of BBA program as well as to identify the modes of
investment and disbursement procedure along with the idea about the investment products of
IBBL. The study was focused on the investment process and practice in IBBL. It covered
how the bank manages its investment process as well as investment mechanism. IBBL
Pallabi Branch offers a full range of deposit products such as saving deposit, current deposits,
and fixed deposits and so on. This is a descriptive research and it is basically a mixture of
both primary and secondary data. The overall analysis of the study was made on the basis of
secondary data. IBBL strives to achieve superior financial performance to be considered a
leading Islamic bank by reputation and performance.

IBBL mobilizes deposits, disburses investment, handle foreign exchange, and remit money to
home and abroad. It also provides the locker service to its customers. It has deposit products,
investment products and services to its customers. IBBL has term deposit products; savings
deposit products, investment products and services like online service, sms service, card
service, utility bill service, foreign remittance service etc. IBBL has strong liquidity and the
bank is based on shariah which is the main reason behind its success over the years. Good
management and ethical banking by the bank are also the reasons of its success. IBBL still
lacks smooth automation services. Recent political involvement in the management of IBBL
is a threat to its success.

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IBBL basically provides investment in non-funded way. Pay order is sent to the seller of
goods and the clients cannot receive cash money. IBBL provides investment in industrial,
commercial and housing sectors and so on. Most of its investment is made in industrial and
housing sector by HPSM mode. In HPSM mode costly machinery is bought by the bank and
rented to the clients. Bank provides it to the clients and receives rent against that and after the
fulfillment of the payment the ownership is transferred. Bank also provides investment
through bai Muajjal, Murabaha and Salam mechanism to ensure early recover of the
investment. IBBL has launched Rural Development Scheme and Urban Poor Development
Scheme. RDS and UPDS are the newly activated scheme of IBBL and the Pallabi Branch
ranked the highest position in UPDS investment.

IBBL Pallabi Branch has made investment of 1319.61 million taka in different sectors
through its various investment modes. In the last five years IBBL Pallabi branch has made
investment nearly 3000 million taka which is the highest in amalgamation of the investment
of the last five years. IBBL has a long disbursement process and non-cash investment facility
sometimes discourages the clients to get investment from the bank. IBBL is fully Islamic
bank but the recently recruited officials are not exactly concerned about the shariah
compliance which is a matter of concern and training period is the best time to make them
concerned. IBBL follows the micro credit system of Grameen Bank which may involve
interest but the process is little bit different from that. It would be better to formulate the plan
that doesn’t involve interest like the Grameen bank micro credit system.

IBBL portfolio is not diversified and investment is made in some particular sectors like
industry, housing, real estate etc. IBBL is optimistic that the volume of business will be on
the increase through its pragmatic and market friendly policies. As the numbers of Islamic
Banks are increasing, IBBL needs to be more competitive for the coming days.

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 Table of Contents

Letter of transmittal -------------------------------------------------------------------------

Student’s declaration-------------------------------------------------------------------------

Supervisor’s authorization --------------------------------------------------------------------

Acknowledgement -----------------------------------------------------------------------------

Acronyms -----------------------------------------------------------------------------------------

Executive summary ------------------------------------------------------------------------------

Chapter -1: Introduction

1.1 Background of the study-------------------------------------------------------------------- 02

1.2 Rationale of the study------------------------------------------------------------------------ 02
1.3 Objectives of the study----------------------------------------------------------------------- 03
1.4 Scope of the study ---------------------------------------------------------------------------- 03
1.5 Limitations of the study---------------------------------------------------------------------- 03
1.6 Literature review ----------------------------------------------------------------------------- 04-6

Chapter-02: Methodology of the study

2.1 Research Design--------------------------------------------------------------------------------- 08

2.2 Time frame of data collection------------------------------------------------------------------ 09

2.3 Type of research--------------------------------------------------------------------------------- 09

2.4 Sources of data ---------------------------------------------------------------------------------- 09

2.4.1 Primary sources of data----------------------------------------------------------------------- 09

2.4.2 Secondary sources of data -------------------------------------------------------------------- 09

2.5 Data collection method---------------------------------------------------------------------------- 10

2.6 Analysis tools--------------------------------------------------------------------------------------- 10

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Chapter-03: Organizational Profile

3.1 Historical background of IBBL--------------------------------------------------------------- 12

3.2 Vision of IBBL---------------------------------------------------------------------------------- 13

3.3 Mission of IBBL-------------------------------------------------------------------------------- 13

3.4 Corporate strategies of IBBL------------------------------------------------------------------ 14

3.5 Objectives of IBBL----------------------------------------------------------------------------- 14

3.6 Banking Functions of IBBL------------------------------------------------------------------- 14

3.7 Products and services of IBBL---------------------------------------------------------------- 15

3.7.1 Services of IBBL---------------------------------------------------------------------------- 15

3.7.2 Term Deposit products --------------------------------------------------------------------- 16

3.7.3 Saving deposits products------------------------------------------------------------------- 16

3.7.4 Investment products------------------------------------------------------------------------- 17

3.7.5 IBBL card services -------------------------------------------------------------------------- 17

3.7.6 IBBL online services ------------------------------------------------------------------------ 18

3.8 SWOT analysis of IBBL-------------------------------------------------------------------- 18-19

3.9 Organization structure of IBBL--------------------------------------------------------------- 20

Chapter-04: Internship days at a glance

4.1 Internship 60 days in brief ------------------------------------------------------------------ 22

4.2 Training in IBTRA--------------------------------------------------------------------------- 23

4.3 Smart banking desk-------------------------------------------------------------------------- 24

4.4 Investment section--------------------------------------------------------------------------- 24

4.4.1 Modes of Investment --------------------------------------------------------------------- 24- 28

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4.4.2 Investment schemes of IBBL------------------------------------------------------------ 29-33

4.4.3 Models of charging securities----------------------------------------------------------- 34

4.5 Help desk working---------------------------------------------------------------------------- 35

4.6 Account opening section--------------------------------------------------------------------- 35

4.7 Account closing cheque issuing desk working-------------------------------------------- 36

4.8 Closing ceremony ----------------------------------------------------------------------------- 36

Chapter-05: Analysis and major findings of the study

5.1 Investment approval process of IBBL -------------------------------------------------- 38

5.2 Total investment analysis for the last five years--------------------------------------- 39

5.3 Sector wise analysis of investment ------------------------------------------------------ 40

5.4 Sector wise trend analysis of investment------------------------------------------------- 41

5.5 Investment in 2017 ------------------------------------------------------------------------- 42

5.6 Investment in 2016-------------------------------------------------------------------------- 43

5.7 Sector wise investment in 2017------------------------------------------------------------ 44

5.8 Classified investment of the last five years----------------------------------------------- 45

5.9 Major findings of the study----------------------------------------------------------------- 46

Chapter -06: Recommendations and conclusion

6.1 Recommendation on major findings ------------------------------------------------------- 48

6.2 Conclusion -------------------------------------------------------------------------------------- 49

Annexes-------------------------------------------------------------------------------------------------

References ---------------------------------------------------------------------------------------------

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 List of tables

Number of table
Topic of the table
1.6 List of the articles behind building primary
knowledge
2.2 Time frame of data collection

4.1 Internship 60days in brief

4.4.2 List of household items

5.1 Mode wise investment of couple of years

5.3 Sector wise investment

List of figures

Number of figures Name of the figures

2.1 Research design
3.7 Products and services
3.7 Services of IBBL
3.7 Term deposit products
3.7 Savings deposit products
3.7 IBBL card services
3.9 Organization structure of IBBL
4.4.1 Modes of investment
5.1 IBBL investment approval process
5.2 Mode wise total investment
5.4 Investment trend
5.5 Mode wise investment in 2017
5.6 Mode wise investment in 2016
5.7 Sector wise investment in 2017
5.8 Classified investment of the last five years

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Chapter 01

Introduction

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1.1 Background of the study

The internship program is an integral part of Bachelor of Business Administration

(BBA).This program creates a unique opportunity for the students to apply their theoretical
knowledge into practice and gain valuable real world business experience. During the
program, students can also realize existing business condition apart from having
opportunities to solve the problem using various analytical tools. It has become essential for
every person to have some idea on the bank and banking procedure.

As our educational system predominantly text based, inclusion of practical orientation

program is an exception to the norm. From practical knowledge, we will be able to know real
life situations and start a career with some practical experience. After the completion of BBA
program I was placed in Islami Bank Bangladesh Limited for the internship program under
the guidance of my faculty supervisor. The duration of my organizational attachment is 2
months, starting from 7th January 2018 to 7th March 2018. For successful completion of
BBA program; it requires submitting a report, which would illustrate a basic reflection of the
learning.

1.2 Rationale of the Study

In our economy, there are mainly three types of schedule commercial banks are in operation.
They are nationalized commercial banks, local private commercial banks and foreign private
commercial banks. Islami Bank has discovered a new horizon in the field of banking area,
which offers different General Banking, Investments and Foreign Exchange banking system.
So, I have decided to study on the title “Investment Management Process of Islami Bank
Bangladesh Limited (IBBL)”.Because the internship program of the university is an integral
part of the BBA program. This also provides an opportunity to the students to minimize the
gap between theoretical and practical knowledge.

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1.3 Objectives of the study
The main objective of the report is to complete the requirement of BBA program.
The secondary objectives of the study are;
 To identify the investment activities of Islami Bank Bangladesh Ltd
 To identify the investment management process of IBBL
 To understand the existing mechanism of investment modes of IBBL
 To evaluate the performance of investment schemes
 To suggests remedial measurement for the improvement of the whole process of the
Investment Department.

1.4 Scope of the study

The scope of this report is confined to investment management process and practice in Islami
Bank Bangladesh Limited (IBBL). It only covered how the bank manages investment process
as well as investment mechanism.

1.5 Limitations of the study

Objective of the practical orientation program is to have practical exposure for the students.
My permanent status is for only two months, which is somehow not sufficient enough to
gather adequate experience of such vast banking business. After working whole day in the
office it is very much difficult to study again the theoretical aspects of banking. Finally, as
the banks renovation activities is going on so the physical working condition was not healthy
enough that we thought it would be.
Other limitations-
 Eight weeks of time are not enough for the study.
 The staffs of the branch are some time so busy that they could not help us all time.
 Preparing internship report is really troublesome.
 Collection of data is not smooth Analyzing with financial data is much more
confusing and complicated than any other data.

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1.6 Literature Review
Investment is the employment of funds on assets with the aim of earning income or capital
appreciation Investment has two attributes namely time and risk. Present consumption is
sacrificed to get a return in the future. The sacrifice that has to be borne is certain but the
return in the future may be uncertain. This attribute of investment indicates the risk factor.
The risk is undertaken with a view to reap some return from the investment.

Investment management process is the process of managing money or funds. The investment
management process describes how an investor should go about making decisions.
Investment decisions involve a trade-off between the return and risk. Investors should be
willing to purchase a particular asset if the expected return is adequate to compensate for the
risk (Jones et al., 2009). In financial asset investment, there is a theory namely Modern
Portfolio Theory which is developed by Markowitz in the 1952. Markowitz said, “Don’t pull
all of your eggs in one basket”. Portfolio diversification works to reduce the risk of a
portfolio to an investor (Jones et al., 2009). Investment management involves, a proper
investment decision making of what to buy & sell, Proper money management in terms of
investment in a basket of assets so as to satisfy the asset preferences of investors, reduce the
risk and increase returns. Rubinstein (2006) argues that the other ancillary aspects are as per
needs of investors, namely: regular income or stable return, appreciation of capital,
Marketability and liquidity, Safety of investment and Minimizing of tax liability.

Markowitz Portfolio (1952) postulated that an investor could optimize return and inversely
mitigate losses by proportioning asset classes which in turn adapts the inherent risk of each
asset. The principles of MPT assume that all investors are willing to accept a certain level of
risk for the highest possible return. Given the choice, investors will likely choose the least
amount of risk for the greatest level of return. MPT implies that through diversification, an
investor can optimize return and mitigate losses by taking a calculated level of risk. MPT
introduced commonplace terms like 80/20 portfolio (80% stocks, 20% bonds), 60/40
portfolio (60% stocks, 40% bonds). The Efficient Frontier Markowitz' work on an
individual's investment behavior is important not only when looking at individual
investment, but also in the context of a portfolio. The risk of a portfolio takes into account
each investment's risk and return as well as the investment's correlation with the other
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investments in the portfolio. A portfolio is considered efficient if it gives the investor a
higher expected return with the same or lower level of risk as compared to another
investment.

The efficient-market hypothesis (EMH) is a theory in financial economics that states that
asset prices fully reflect all available information. A direct implication is that it is impossible
to "beat the market" consistently on a risk-adjusted basis since market prices should only
react to new information or changes in discount rates (the latter may be predictable or
unpredictable).

The EMH was developed by Professor Fama who argued that stocks always trade at their fair
value, making it impossible for investors to either purchase undervalued stocks or sell stocks
for inflated prices. There are three variants of the hypothesis: "weak", "semi-strong", and
"strong" form. The weak form of the EMH claims that prices on traded assets (e.g., stocks,
bonds, or property) already reflect all past publicly available information. The semi-strong
form of the EMH claims both that prices reflect all publicly available information and that
prices instantly change to reflect new public information. The strong form of the EMH
additionally claims that prices instantly reflect even hidden "insider" information.

The financial crisis during 2007-09 revealed many problems of understanding and learning
by Fund Management firms about their own business models and those of their investee
companies (especially banks, Holland 2010). In addition, there has been poor financial
performance by many FMs when delivering investment services to investors (Cuthbertson et
al 2006, 2008). Holland (2011) argues that Trustees, FM investors, and investee companies,
all require shared knowledge in the form of a grounded theory of FM to overcome these
problems. Holland, (2006) notes the limits of conventional finance theory in explaining FMs
and their performance. Historic field research by Clarkson (1963), Holland and Doran
(1998), Hellman (2000), Holland (2006), revealed an embryonic grounded theory underlying
FM structure and behaviour. However, the results were fragmented and a more coherent
explanation of FM was required. Embryonic grounded theory of fund management does not
address questions concerning the role of knowledge in FM decision context and process, and
their joint role in search for novel information of value in investment decisions. It does not
address the dynamic nature of FM both immediate and longer term.
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Table-01: Articles behind developing primary knowledge.
Year Author Concept

2003 S Arbeleche, M A H Dempster Portfolio management for pension fund.

2010 Leonardo da Vinci programme Investment Analysis and Portfolio Management

project

2011 The effects of portfolio management strategy on

Ben Jackson Micheni Charles financial performance of investment companies
in Kenya.

2011 By Leslie E. Christian A New Foundation for Portfolio Management

2011 By Reza Hamzaee Modern Banking And Strategic Portfolio

Management
2011 Pietro Cunha Dolci Antônio The dimensions of IT portfolio management –
Carlos Gastaud Maçada An analysis involving managers in Brazilian
companies.

2012 Johan Christian Hilstian Active Portfolio management and portfolio

construction-implementing investment strategy.

2015 Khaira Amalia Fachrudina , The Study of Investment Portfolio Management

Hilma Tamiami Fachrudin and Sustainability of Property and Real Estate
Companies in Indonesia Stock Exchange
2016 N. Instefjord Investment management

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 Chapter 02

Methodology of the study

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2.1 Research Design

The research has been designed in the following manner:

Internship Opportunity Search

Training and Placement in IBBL Pallabi Branch

Selection of topic of the study

Searching basic Information

Literature reveiw

Development of primary
knowledge

Observation

Data collection

Data analysis

Preparing a report

Draft submission

Final submission of report

Figure-01: Research Design

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2.2 Time Frame of data collection

This report has been prepared on the basis of experience gathered during the period of
internship form 23/01/2018 to 07/03/2018. Within this period four departments were visited
namely General Banking, Investment and A.D.C. departments. After 15 days training in
IBTRA I was placed in IBBL Pallabi Branch for practical work experience.

Table-02: Time division of working period in bank.

Section Duration Working Day

General Banking From 23/01/2018 to 01/02/2018 6
Investment From 04/02/2018 to 11/02/2018 6
A.D.C. From 12/02/2018 to 19/01/2018 6
Account opening 20/02/2018 to 01/03/2018 6

2.3 Type of research: Descriptive research.

2.4 Sources of Data: The report is prepared by using both primary and secondary data.

2.4.1 i) Primary Sources: A lots of the required information came from primary sources.
These sources are:

1. Officers

2. Supervisors

3. Clients of IBBL

2.4.2 ii) Secondary sources: Most of the information used in this report has been collected
from;

Booklets from Investment Division of IBBL, Pallabi Branch.

Annual report (2013, 2014, 2015, 2016 & 2017) of lslami Bank Bangladesh Ltd.

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 Islami Bank Training and Research Academy (IBTRA) Library.

Collection data from website of IBBL and IBTRA.

2.4.3 Data collection method:

Personal Interview: Face-to-face conversation and in depth interview with the respective
officers and clients of the branch about the investment mechanism of IBBL and the process
of managing investment and also about the recovery of investment of the last couple of years.

Personal observation: Observing the procedure of banking activities followed by Investment

department for the whole internship period. While working with the officials of investment
section, the whole process of the bank was observed.

Workshop by IBBL officials: Investment in charge, UPDS in charge, general banking in

charge and operations manager of IBBL Pallabi Branch conducted workshop for guiding us
about the overall IBBL activities.

Picking Information from brochures of IBBL: IBBL Pallabi Branch officials provided a
number of brochures to have knowledge on the activities of IBBL and those brochures are
the sources of information about the organization and the procedure of IBBL investment and
deposit.

Practical work exposures of the branch: By observing and writing deeds of the investment
section, practical and primary information was collected.

2.5 Analysis of Data: Some tools such as; table, pie chart, bar chart, graph are used in this
report for analyzing the collected data and interpret them clearly to identify the management
process of investment. Investment of IBBL Pallabi Branch is summarized which identifies
the portfolio of investment of the branch and it states the trend of the investment portfolio of
the branch.

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 Chapter 03

Organizational Profile

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 Islami Bank Bangladesh Limited

3.1 Historical background of Islami Bank Bangladesh Limited (IBBL)

Islami Bank Bangladesh Limited is a financial institution whose statutes rules and
procedures expressly state its commitment to the principles of Islamic shariah and to
the banning of the receipt and payment of any kind of interest on any of its operations.
The perception of Islami banking has been bloomed from the inspiration of building
up a society on justice in accordance with basic socio-economic principles of Islam.
The difference between Islamic and conventional banking is on principles.

In 1974, Bangladesh signed the Islamic Development Bank (IDB) charter and made
commitment to Islamize the banking sector gradually. In 1977, then Ambassador of
BD to UAE suggested the Govt. to establish an Islamic bank like Dubai Islamic bank.
In 1980, Bangladesh Bank (BB) deputed a representative to study the operations of
several Islamic banks abroad. In 1981 BB with Mr. Nurul Islam the then governor
decided in 17th bankers’ meeting to open Islamic banking window in all banks. This
meeting decided to open at least one Islamic branch in district level. IBBL was
incorporated as the first interest free bank in South-east Asia on the 13th March, 1983
as a public company with limited liability under the company act 1913. It is a joint
venture of Bangladeshi and overseas capital. The bank got license from Bangladesh
Bank as scheduled commercial bank to conduct banking business and started
functioning. The bank has opened 332 branches including 30 SME branches covering
important commercial areas. IBBL has 51 A.D. branches which directly have SWIFT
code to transact in foreign countries. IBBL Pallabi Branch is not an A.D. branch.
These branches can often do LC and other foreign remittance works. Non A.D.
branches work under the A. D. branches.

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3.2 Vision of IBBL

The vision of IBBL is to always strive to achieve superior financial performance, to

be considered a leading Islami bank by reputation and performance.

 To establish and to maintain the modern banking techniques

 To ensure the soundness and development of financial system
 To encourage savings in the form of direct investment
 To encourage investment particularly in projects which are more likely to lead
to higher employment.

3.3 Mission of IBBL

IBBL aims to be one of the leading banks of the country by fairness, quality and
operations. The bank has missions like;

 To establish Islamic banking system through the introduction of a welfare

oriented banking system.
 To achieve balanced growth and equitable development and justice in
economic activities.
 To diversify investment portfolio.
 To encourage socio-economic upliftment and financial services to the low
income community particularly in the rural areas.
 To extend innovative services for the customers.
 To ensure human resources development to meet the challenges of the time.

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3.4 Corporate strategies of IBBL

 To identify customers’ need and monitor their participation towards meeting

those requirements.
 To train & develop employees and provide them adequate resources to address
their needs.
 To strive customers’ best satisfaction and earn their confidence.
 To promote organizational efficiency by communicating company plans
policies and procedures openly to the employees in a timely fashion.
 To manage & operate bank in the most effective manner.

3.5 Objectives of IBBL

 To conduct all activities in accordance with Islamic shariah.

 To make financial transaction fully free of interest.
 To take different efforts to develop life style of less income groups.
 To serve the customers in excellence with cordiality.
 To establish welfare –oriented banking system.
 To establish participatory relation between the bank and clients.
 To establish justice and equity in business, trade and economics.
 To play vital role in HRD and employment generation.

3.6 Banking Functions of IBBL

I. To mobilize deposits
II. To disburse investment
III. To handle foreign exchange and foreign business
IV. Remittance: To remit money to home and abroad through TT, DD, Pay
order, Travelers’ cheques.
V. Other services e.g. Locker service, to receive different types of bills of
clients, to issue guarantees and counseling etc.
VI. To conduct CSR activities.

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3.7 Products and services

IBBL has the following products and services for the customers;

Products and services

Deposits Investments Services

Figure-02: IBBL products & services

Services provided by IBBL are the followings;

IBBL
VISA/VIS
TA card

Online
banking services Utility

Foreign
remittance

Figure-03: IBBL services providing currently

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 Term Deposit Products

IBBL term deposits are like the followings and MSSA, MTDR, MHSA are often taken by the
customers;

MTD
MSSA
R

Term MMS
MHSA
Deposit A

MNS
MSBA
BA

Figure-04: IBBL Term deposit products.

Savings deposit products of IBBL

IBBL is the bank of common people and every individual person can open an account for
savings with little amount credited in one’s account.

MSA-
MSA
RDS

Savings SMS
MSNA
deposit A

MFSA MIESA

Figure-05: Savings deposit products

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Investment Products

1. Bai Muajjal
2. HPSM
3. QTDR
4. MPI
5. Murabaha
6. Musharaka
7. QPF
8. QMSS
9. MDB
10. QSCA
11. MPI TR
12. Bai Salam
13. Bai Muajjal FC bills
14. Murabaha TR

IBBL Card services

Cards Cards

VISA Debit card Salary card

Khidmah Credit card Travel card

Hajj Card
Newly updated VISTA card

Figure-06: Card services of IBBL

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 Online services

 Internet banking ( I banking)

 E-commerce
 Islami bank Mcash
 Phone banking/mobile banking
 SMS banking
 Islami bank call center

3.8 SWOT analysis of IBBL

Strength –weakness- opportunity –threats (SWOT) analysis of IBBL is shown

below:

Strength

1. Strong liquidity
2. Based on shariah
3. Ethical banking
4. Strong top management
5. Strong fund sources
6. Largest network among private commercial banks
7. Quality products and services
8. Company reputation and goodwill

Weaknesses

1) Lack of full scale automation

2) IT and e-banking is not enough strong
3) Less efficient server
4) Lack of Islamic security market
5) Burdensome procedure in opening account

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Opportunities

1) Increasing islami instruments of investment

2) Increasing awareness about the procedure that Islami banks follow.
3) Asset backing against investment is widely accepting even by the conventional
banks.
4) Value addition in products and services
5) Increasing purchasing power of people
6) Increasing trend in international business

Threats

1. Pressure to decrease profit

2. Increase competition to collect govt. deposit
3. Political involvement
4. Increased completion for the market share in the industry
5. Turning of other conventional banks to Islamic bank.

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3.9 Organization Structure of IBBL

Islami Bank
Limited

Shariah Supervisory
Board of Review Committee
Committee
Directors

Risk Executive Audit Committee

Management Committee
Committee
IBBL Securities IBBL Capital IBBL Bank
Limited Management Foundation

MANAGING
DIRECTOR
Shari’ah Board Secretariat
Secretariat Division

Management Asset Liability

Committee (MC) Committee

IBBL Training & Human Research &

Research Academy Resources Development Division
Division

Operation Corpora Retail Internatio Developm Internal ICT Risk

s Wing te Investme nal ent Wing Control & C Wing Managem
Investm nt Wing BANKIN compliance ent Wing
ent G Wing Wing
Wing

VIGILANCE MD’s Secretariat

Squad
Zones Corporate
Branches

Figure-07: Organogram of IBBL

Page | 32
 Chapter 04

Internship Days at a Glance

Page | 33
4.1 Internship 60 days in brief

Internship program arranged by Islami Bank Training and Research Academy if for
60 days and I was placed from 07th January, 2018 to 01st March, 2018.

Table -03: Internship 60days division

Days of internship Section Works done Learned

1-15 days IBTRA Theoretical class Islamic Banking system

16-22 days A.D.C. Issuing card, How to use a VISA card, function of
Sending invitation newly updated VISTA card, how to
to receive card update a dormant account
,Updating the
dormant account
23-30 days Investment Writing deeds, Investment modes of IBBL, How to
informing the clients write a deed, how to write pay order,
to pay the out how to write vouchers, investment
standings, Searching sections of IBBL, UPDS disbursement
information of procedure
clients’ from the
files
31-37 days Help desk Informing the How to answer several questions in a
customer about their single attempt, supplying bank statement
account balance, to the customers, writing cheques of
giving statement, various types, how to fill up the form for
Writing cheques of clearing a cheque of other bank
people who can’t
write cheques,
helping people to
pay the installment
of DPS
38-45 days Account Writing account How to open an account, how to create a

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 opening opening form, deposit pension scheme, how to open
verifying the waqf account, writing account opening
documents borne by form, verifying NID of people from the
the customers, website of election commission, writing
opening account, pay slip.
helping people
writing the forms
46-53days Account Closing DPS, The process of closing a savings
closing MTDR, MSA, account, mudaraba term deposit
Issuing cheques account, mudaraba special saving
account, issuing cheques through
authorization and cheque entry system.
54-60days Closing IBTRA Submission of report assigned by
ceremony IBTRA, Presentation, debate
competition, Closing ceremony.

4.2 Training in IBTRA for the 1st 15 days

Islami Bank Training and Research Academy conducts the internship program of Islami
Bank Bangladesh Limited. For the first 15days, theoretical classes were held in IBTRA
campus on various topics of Islamic banking. Many high rank officials conducted the
sessions on Islamic Banking system. From the training sessions, Islamic Banking system,
Islamic banking history, Islamic Banking investment mode, IBBL anti money laundering
programs and IBBL services toward the customers were learned.

4.3 Smart Banking Desk 16-22 days

Introduction to online services of IBBL and the cards provided by IBBL were the basic
learning from A.D.C. and smart banking desk.

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 Online services

 Internet banking ( I banking)

 E-commerce
 Islami bank mCash
 Phone banking/mobile banking
 SMS banking
 Islami bank call center
 VISA debit card
 Khidmah Credit card
 VISTA card

4.4 Investment Section (23-30 days)

4.4.1 Modes of Investment

(a) Bai-salam

A buyer pays in advance for a specific quality of a commodity, deliverable on a

specific date at an agreed price. It is particularly applicable to seasonal purchase but it
can also be used for other goods in cases where the producer needs working capital to
run the production process.

(b) Istisna (Purchase order)

This is a sale and purchase contract where the seller undertakes to manufacture or
construct according to the specification given in the agreement. Main distinction
between bai Salam and Istisna is specification or customization and advance payment
is not necessary in Istisna.

(c) Bai Muajjal

In short, it is a sale on credit. A contract between a buyer and a seller under which the
seller sells certain specific goods (permissible under shariah and the law of the

Page | 36
country) , to the buyer at an agreed fixed price payable at a certain fixed future date in
lump sum or within a period by installments.

(d) Hire purchase under shirkatul melk

Shirkat means partnership and shirkatul melk means in ownership. When two or more
persons supply equity, purchase an asset, own the same jointly, and share the profit as
per agreement and bear the losses in proportion to their equity , the contract is called
shirkatul melk.

(e) Quard al Hasan

It is a virtuous investment. Through this mode, bank provides investment to its client
for a certain period which bears no profit/loss/compensation. It is given against fixed
deposit.

Modes of investment

Bai modes Share modes Ijarah modes

•Murabaha •Mudarba •Hire purchase Under

•Muajjal •Musharaka Shirkatul Melk
•Salam
•Istisna

Figure-08: Modes of Investment of IBBL

Bai Modes

a) Bai Murabaha: Bai Murabaha may be defined as a contract between buyer and
seller under which the seller sells certain specific goods permissible under shariah and
the law of the country at a cost plus agreed upon profit payable in cash or on any fixed
future date in lump sum or by installments. In short, it is a sale on cash.

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Features of Murabaha:

1. Three parties are involved: Bank,, client and supplier

2. Purchasing and selling price is mentioned in the deed
3. Client will be bound to take the delivery of goods by paying sale price as per
terms of the contract.

b) Bai Muajjal: The word bai means purchase and sale and the word Ajal means a
fixed time or fixed period. Bai Muajjal means sale for which payment is made at a
future date or within a fixed period. In short, it is sale on credit.

Features of bai Muajjal

a. Whether the goods that client intends to purchase are marketable and have
steady demand in the market.
b. Whether the goods are perishable in short or in long term duration.
c. Whether the price of the goods is subject to frequent and violent changes.

c) Bai Salam: The word bai Salam means advance sale and purchase. Bai salam is a
contract between a buyer and a seller under which the seller sells in advance the
certain commodity or products permissible under the shariah and the law of the
country at an agreed price payable on execution of the said contract and the products
are delivered as per specification, size, quality and quantity at a future time in a
particular place.

Features

a. Two parties are involved: bank and the client.

b. Advance purchase of goods by the bank from the clients.
c. Purchase price and profit need to be mentioned separately.
d. Bank may sell out the goods to anybody after getting delivery from the client.

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d) Bai Istisna: Istisna is a sale contract by which al sani (the seller) on the basis of
order placed by al mustasni (buyer) after having manufactured or otherwise acquired
al masnoo’s (the goods) as per specification sell the same to al mustasni for an agreed
upon price and method of settlement whether that be in advance, by installments or
deferred to the specific time. It is a condition of sale contract that al sani will provide
either the raw materials or labor.

Features

a. It gives the buyer opportunity to pay the price in some future time or
installments.
b. It is a binding contract and no party is allowed to cancel the contract after the
price is paid and received in full or in part or the manufacturer starts the work.
c. It is specially practiced in manufacturing and industrial sector.

Share modes of investment (profit sharing loss bearing)

a) Mudaraba

Mudaraba is a contract between banks and the clients where banks supply capital and
the client invest their labor, wisdom and skill. The first party is called Sahib al mal
and the latter is referred to as the mudarib. Any profits accrued are shared between the
two parties on a pre- agreed basis, while capital loss in exclusively borne by the
partner providing the capital except it is due to the breach of trust by mudarib.

Features

a. Bank supplies capital as sahib al mal and the client invests his labor and
wisdom.
b. The clients maintain administration and management.
c. Profit is divided as per agreement.
d. Bank bears the actual loss alone.

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b) Musharaka

Musharaka is a contract of partnership between two or more individuals or bodies in

which all the partners contribute capital, participate in the management, and share the
profit in proportion to their capital or as agreed ratio and bear the loss, if any, in
proportion to their capital.

Ijara Modes

The word Ijara has been derived from the Arabic word Ajir and Ujrat which means
consideration return, wages or rent. This is really the exchange value or consideration,
return, wages, rent of service of an asset.

Elements of Ijara

a. The warding: this includes offer and acceptance.

b. Contracting parties: a lessor, a lessee, the party that benefits from the use of the
property.
c. Subject matter of contract is rent and benefit.

Hire purchase under shirkatul melk (HPSM)

Under this mode the bank and the client supply equity in equal or unequal proportion
for purchase of an asset like land, building, machinery, transports etc. purchase the
asset with that equity money, own the same jointly, share the benefit as per agreement
and bear the loss in proportion to their respective equity. The share, part or proportion
of the asset owned by the bank is hired out to the client partner for a fixed period.
Lastly, the bank sells and transfers the ownership of its share to the client against
payment of price fixed for the part either gradually part by part or in lump sum within
the hire period or after the expiry of the hire agreement.

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Actually, it is synthesis of 3 contracts:

a) Shirkat
b) Ijara
c) Sale

Shirkatul melk: means share in ownership

Ijara: Means a hire agreement under which a certain asset is hired out by the hiree to
a hirer against fixed rent for a specific period.

Sale: It is a contract under which the ownership of certain asset transferred by the
seller to the buyer against agreed upon price to be paid by the owner.

4.4.2 Investment schemes of Islami Bank Bangladesh Limited

IBBL offers many types of investment schemes. These are;

a) Household durable scheme

b) Housing investment scheme
c) Real estate investment scheme
d) Transport investment scheme
e) Car investment scheme
f) Investment scheme for doctors
g) Small business investment scheme
h) Agricultural implements investment scheme
i) Rural development scheme ----RDS
j) Rural housing investment scheme
k) Micro industries investment scheme
l) SMEs investment scheme
m) Urban poor development scheme
n) Cluster investment scheme

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Household durable investment scheme

In a developing country like Bangladesh people of middle and lower middle class
especially service holders with limited income find it difficult to purchase articles like
refrigerators, televisions, sofa-set etc. which are part of modern and decent living.
People rarely can manage these with their limited income. IBBL has therefore,
introduced this scheme which has already created a great enthusiasm among the
people.

Household items are

Table-04: List of household items

Air conditioner Electronic goods Radio, TV

Crockery’s Kitchen kits Washing machine

Photo copier Mobile/telephone set Refrigerator

Water cooler Water purifier Ornaments of marriage

Motor cycle/ bi-cycle Furniture Educational equipment

Eligibility of the client

In case of Govt. semi-govt. and autonomous organizations the age of the investment
clients must be 35 and above with at least three years of service and he must have at
least three years of service before his retirement.

In case of others except service holders the age limit must be within 37-60 years.

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 Housing Investment scheme

Housing is one of the basic needs of human being. At present, housing problem in the
country particularly in the urban areas has taken a serious shape for the middle class
people. Keeping in the view, IBBL has introduced a scheme titled, “Housing
Investment Scheme” for the fixed income groups.

Target groups

a. In service defense officers.

b. University and college confirmed teachers.
c. Qualified engineers, doctors and established professionals.
d. Officials of reputed multinational, international financial organizations.
e. Permanent officials of govt.
f. University colleges and medical colleges.

Mode of investment: Hire Purchase Under Shirkatul Melk

Target area: Initially in Dhaka, Chittagong, Rajshahi, Sylhet and Narayanganj cities of
the country.

Small Business Investment Scheme

This scheme is taken up for self-employment of educated youths of rural and urban
areas and to provide investment to small businessmen and entrepreneurs. Investment
is extended for about 200 economic activities in sectors like;

a. Live-stock fishery
b. Agro-farming
c. Processing and business
d. Manufacturing
e. Trading and shop keeping
f. Transportation
g. Agricultural implements
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Mode of investment: HPSM, Bai Muajjal

Ceiling of investment: For Dhaka & Chittagong –maximum up to 1, 00,000 per client

Security

1. For investment up to 30,000 taka hypothecation of existing and future stock

goods is needed. Ownership of machine and equipment shall remain in bank’s
name.
2. Personal guarantee of financially sound respectable person.
3. The client shall have to give mortgage of immovable properties to the bank in
case of investment over 30,000 taka.

Transport Investment Scheme

To ease the existing transportation problem and to ensure speedy economic growth
and development of the country particularly the expansion of trade and commerce
and industry, the bank has taken up the scheme. Under the scheme investment is
being allowed to the existing successful businessmen and potential entrepreneurs
in this sector for all types of road and water transport.

Mode of transport

a) Road transport
 Private car, microbus, jeep
 Bus , truck, minibus
 Auto rickshaw, temp, pic up van
 Ambulance
b) Water transport
 Cargo vessel of maximum 500 tons.
 Ocean going vessel of maximum 800 tons.

Page | 44
Recovery of investment: Monthly installment starting immediately after the expiry of
gestation period fixed by the bank. Require number of postdated cheques for the
whole period of installments.

SME Investment Scheme

This scheme is intended to generate employment and self-employment by creating

new entrepreneurs. Under this scheme, investment is provided to business holders or
companies who have ability and experience in the related field.

Sectors under SME investment scheme;

Manufacturing: Food, agro based products, leather, garments, and handicrafts

Trading: Export import and other shariah approved wholesale and retail business.

Service: Telecommunication, Transportation, ICT, hotel-restaurant, hospital,

workshop.

Ceiling of investment: 50 thousand to 50 lacs for small enterprises

50 lacs to 10 crore for medium enterprises

Mode of investment:

Types of investment Mode

Term investment HPSM

Working capital Bai Murabaha, Bai Muajjal, Musharaka

Trading investment Bai Muajjal, Musharaka, Murabaha

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4.4.3 Models of charging securities

A wide range of securities is offered to banks as coverage for investment. The

following models of charging securities are applied in IBBL;

1. Pledge: Pledge is like lien but here bank enjoys more right. Banks can sell the
property without intervention of any court. But before selling, proper notice
must be given to the debtor. To create pledge, physical transfer of goods to the
bank is must.
2. Hypothecation: In this charge creation method, physically the goods remain in
the hand of the debtor. Documents of the tilted goods are kept in the bank. As
the gods remain to the borrower, bank regularly inspects the goods.
3. Lien: A lien is right of bank to hold the debtor’s property until the debt is
repaid. Lien gives bank the right to hold the property but not the right to sell
the property.
4. Mortgage: A mortgage is a debt instrument, secured by the collateral of
specified real estate property that the borrower is obliged to pay back with a
predetermined set of payments. Mortgages are used by individuals and
businesses to make large real estate purchases without paying the entire value
of the purchase up front. Over a period of many years, the borrower repays the
loan, plus interest, until he/she eventually owns the property free and clear.
Mortgages are also known as "liens against property" or "claims on property."
If the borrower stops paying the mortgage, the bank can foreclose.

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4.5 Help Desk (31-37 days)

Clients used to ask about the balance of their account and ask to help them write down
the cheque and paying slip. Most of the clients ask for bank statement of their account
and solvency certificate issued by the IBBL officials were distributed according to the
requirements of the clients. Clients came to help desk and asked for information about
current profit rate of IBBL on various types of deposits.

4.6 Account opening desk (38-45days)

In the account opening desk, it was the foremost duty of us to fill up the account
opening forms of the clients. Personal details and income sources of the account
holder were being collected and verified through documents. Mudaraba savings
account, Mudaraba term deposit receipt, mudaraba cash waqf account were opened.
For opening account NID verification is a must and it was done through the website
of the election commission.

The deposit account facilities provided by IBBL are;

(a) Al-Wadeah Current Account

IBBL operates Al wadeah current account on the principles of al wadeah. The bank
commits to refund money deposited in these accounts on demand of customers. On
the other hand, the bank takes permission from the customers that the bank may
utilize their money. Customers may operate these accounts as their desires. No profit
is disbursed in these accounts and depositors do not bear any loss.

(b) Mudaraba accounts

The following accounts are operated on the principles of mudaraba:

a) Mudaraba savings account

b) Mudaraba term deposit account
c) Mudaraba special notice account

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 d) Mudaraba Hajj savings account
e) Mudaraba savings bond
f) Mudaraba special savings (pension) account
g) Mudaraba monthly profit deposit account
h) Mudaraba muhor savings account
i) Mudaraba Waqf cash deposit account
j) Mudaraba foreign currency deposit account

4.7 Account closing and cheque issuing desk (46-53 days)

To close various types of account including savings, DPS, TDR etc. were done in this
section. To close an account all types of record cheque book, paying slip card have to
be submitted with an application provided by bank. To close an account of died
person to pay the nominee was the longest process. Indemnity form, relationship
certificate from the authority, death certificate of that person are needed to close an
account of a died person.

4.8 Closing ceremony (54-60 days)

In IBTRA all the internees of this particular course are requested to share branch
experience and the biggest part of learning from those days are presentation in front of
high rank IBBL officials and debate competition.

Page | 48
 Chapter 05

Analysis and Findings

Page | 49
5.1 Investment Approval Process Model

IBBL follows the following process of approving investment proposal;

Figure-09: IBBL investment approval process

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Mode wise investment

Investment of IBBL Pallabi Branch for the last few years is summarized to highlight the data
of those years. Investment from 2013 to 2017 is as follows in a table;

Table-05: Mode wise investment from 2013 to 2017. (In million)

Name of mode 2013 2014 2015 2016 2017

Bai Muajjal 39.81 62.45 68.88 60.78 74.87

HPSM 351.37 591.45 715.06 835.55 371.53
Bai Salam 4.23 6.80 7.01 11.92 18.24
QTDR 37.8 47.02 45.04 38.76 48.90
Bai Murabaha 84.73 161.13 215.93 .25 285.30
MPI .50 6.13 16.65 3.84 6.13
Others 107.79 10.52 7.93 328.22 520.77
Grand Total 626.23 885.50 1076.50 1278.86 1319.61

5.2 Total investment

The amalgamated investment mode wise are shown in graph to highlight the data of the last
few years.

3000
2500
2000 2017
1500 2016
1000 2015
500
2014
0
2013

Figure-10: Total investment mode wise from 2013 to 2017

Page | 51
The investment of IBBL Pallabi Branch is increasing in amount every year. The amount of
investment increased 3.19% than the last year. In the recent years HPSM investment was the
highest but it fall to 371.53 as the branch is trying to diversify its portfolio. Investment
through Bai Murabaha mechanism is on the increase and the QTDR is also on the increase as
it is a fine opportunity to take investment against fixed amount kept in the bank in the form
of Deposit Pension Scheme or Mudaraba Term Deposit Receipt.

5.3 Sector wise analysis of investment

Table-06: Sector wise investment from 2013 to 2017. (In million)

Sector name 2013 2014 2015 2016 2017

Industrial 33.63 104.94 131.2 413.92 487.89
Commercial 55.04 77.88 109.6 131.68 126.13
Real Estate 33.66 50.93 57.67 .20 67.42
Transport 1.88 2.35 1.35
Housing 351.37 422.92 448.47 427.09 371.53
Investment
SHBIS 95.41 161.98 170.85 193.99 198.12
Others 7.01 51.04 49.77 43.96 65.04

Investment of IBBL Pallabi Branch is basically concentrated on few sectors. In the last two
years the investment in industrial sector is rising while housing investment is decreasing day
by day. IBBL Pallabi Branch has made investment of 487.89 million while it was 413.92 in
the year 2016 and 131.2 in 2015. Investment in the industrial sector is rapidly increasing as
the area is being industrializes in the last few years. The branch has made 371.53 million
investment in housing sector which was 427.09 in the year 2016 and 448.47 in the year 2015.
Investment in housing sector is slightly decreasing as the area is almost made residential.

Page | 52
The investment of IBBL Pallabi Branch for the last five years are summarized to identify in
which sector the branch has made its investment in large number.

IBBL Pallabi branch is in the Dhaka North region which is basically garments based
industrial area and that’s why the investment is basically in industrial sector and in the
housing sector as Pallabi is a residential area. Pallabi area is becoming a great sector of
housing investment facility as the area is becoming residential day by day. IBBL Pallabi
branch is concentrating to take the opportunity of investing in housing sector to develop the
sector as well as to earn profit. As this area is not a good place for investing in transport
sector, Pallabi branch has it least amount of investment in transport sector.

5.4 Sector wise trend analysis of investment

IBBL Pallabi Branch investment trend for the last three years are shown in a graph to identify
the ups and downs in portfolio design. The portfolio of the branch seems to be covered
basically by industrial sector and the housing sector.

600

500

400
2015
300
2016
200 2017

100

0
Industrial Commercial Housing SHBIS

Figure-11: Investment trend (sector wise) from 2015 to 2017

Investment of IBBL Pallabi branch is basically in the industrial sector and housing sector for
the last couple of years. In the graph, it is clear that from 2015 to 2017 investment in
industrial sector is rising along with housing investment sector. Individuals come to bank for
investment to build up their houses. In the year 2017 investment in industrial sector was
36.97% of total investment which is equal to 487.89 million. In housing investment sector,
the amount of investment was 371.53 million which 28.15% of total investment is.
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5.5 Mode wise Investment in 2017

Mode wise investment of the year 2017 is shown in pie chart to have a clear idea about in
what percentage investment was made in different modes.

Investment 2017
MPI
0%

Murabaha
22%

Others
39%

Muajjal
6%

QTDR HPSM
4% 28%

Salam
1%

Figure-12: Mode wise investment in 2017

In the last year 22% investment was made by Bai Murabaha mode while 28% in HPSM and
39% in other modes of IBBL investment mechanism. Murabaha investment helps the
management to recover the investment easily as it is cash based and installment is to be paid
in shorter period of time.

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5.6 Mode wise investment in 2016

Mode wise investment in 2016 is shown in the following pie chart. It shows about the
portfolio management of the branch by investing in different modes.

Investment 2016
Salam
QTDR 1%
3%
Others
5%

Murabaha TR
21%

Muajjal
5%

HPSM
65%

Figure-13: Mode wise investment in 2016

In 2016, almost 65% of the total investment was made in HPSM mode and 21% by
Murabaha TR mode. Bai Muajjal mode was used for 5% of the total investment. HPSM
investment was the biggest portion as garments industry was raising rapidly and investment
in purchasing machinery of garments was rising.

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5.7 Sector wise investment in 2017

Investment in different sectors was made and the sector wise investment is shown in the
following pie chart which shows the percentage of investment in many sectors.

Sector wise investment in 2017

Others
10%

SHBIS Industrial
15% 37%

Housing
28%

Commercial
10%

Figure-14: Sector wise investment in 2017

In the year 2017, investment portfolio of IBBL Pallabi branch was diversified. 15% of the
total investment was made in staff house building investment scheme. 37% of the total
investment was made in industrial sector while 28% in housing sector.

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5.8 Classified investment

Classified investment of IBBL Pallabi branch refers to the amount of investment remained
outstanding and was filed to the court for settlement. Classified investment of the last five
years is as flows;

2013 2014
0 .14

Classified 2015
Investment
(in million) 5.91

2017 2016
16.90 10.83

Figure-15: Classified investment of IBBL Pallabi Branch.

In the year 2013 no investment client were absent in paying their installment fully. But in
2014 ten clients could not paid their installment which is equal to .14 million taka. 12 clients
had 2.21 million overdue but the management could recover the amount except .14 million.
In 2015, this amount increased to 5.91 million where total overdue was 4.44 million. In that
year the management could not recover the outstanding amount of investment rather this
amount increased to 5.91 million as classified investment. In 2016, the amount increased to
10.83 million. 52.02 Million was overdue and the management could successfully managed
to recover the amount from the clients except 10.83 million. The management had
successfully managed to recover the investment unless the willful default by some of the
clients who 36 in number. In the last year classified amount of investment was 16.90 million
which is higher than that of 2016. 16.90 million was classified out of 1319.61 million which
is relatively lower but higher in total amount than that of 2016. Although the amount of
classified investment is on the increase but it is relatively lowering year by year. It is a good
sign of management of this particular branch.

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5.9 Major Findings of the Study

1. IBBL is a fully Islamic Bank but the operations are not fully Islamic as the officials
are not concerned about that every time. IBBL officials recruited recently are not very
much careful about the Shariah compliance which makes customers about the
involvement interest in the system.
2. IBBL is interest free but it charges amount of money if the installments remain
overdue. Charging against any default is not permissible in Islamic Shariah but IBBL
charges against default of installment but it doesn’t charge in installments of term
deposits.
3. IBBL follows the micro credit formula of Grameen bank in its RDS and UPDS which
is doubtful of mixing with interest. Although it is little bit different, it is a micro
credit model where any credit is not permissible in terms of interest in the Islamic
Banking system.
4. Account opening in IBBL is troublesome as it requires so many documents.
Customers get annoyed sometimes to bring so many documents those are
troublesome to collect.
5. Investment disbursement in IBBL is long process.
6. IBBL doesn’t provide cash money which sometimes hampers the need of the clients.
7. Clients need to specify the source of buying the goods and specify the exact price.
8. IBBL investment requires extra collateral and securities. In car scheme IBBL requires
double security which makes an obstacle in investing in car scheme. For this reason
Pallabi Branch has only two investments in car scheme.
9. Investment process in IBBL is very long and the disbursement is sometimes so long
that clients cannot utilize it.
10. IBBL investment portfolio is not very diversified. Only couple of sectors is
concentrated in terms of investment.
11. IBBL is a profitable organization but competition in the banking industry is rapidly
increasing and the number of Islamic banks is also increasing.

Page | 58
 Chapter 06

Recommendations and conclusion

Page | 59
6.1 Recommendations on major findings

1. IBBL may concentrate on making the officials concerned of the basic Islami
banking system. IBBL training period and training method may be helpful
regarding this.
2. IBBL may accept charges from clients against overdue but this amount may
not be included in the works of bank rather using in social welfare without any
interest. If anything is possible other than charging will be good for Islamic
banking system
3. IBBL is currently following the micro credit model of Grameen Bank which is
an interest based system and it may develop a new system with the help of its
shariah council.
4. IBBL may make account opening flexible. Most of the customers claim that
the process is lengthy and troublesome. Many documents like income
certificate, utility bill copy make customers bored to open account in this
bank.
5. IBBL may develop a system to quickly deliver the disbursed amount through
pay order.
6. IBBL may provide pay order quickly to the investment clients.
7. Investment process can be minimized and processing time can be made short
through increasing efficiency in documentation process.
8. IBBL requires extra collateral and securities. It may lessen it as the assets or
goods bought are under the ownership of IBBL.
9. IBBL may not specify the buying source of goods which will make the clients
happy to choose their own source.
10. IBBL may diversify their investment portfolio to reduce the risk of classified
investment.
11. As the competition in the industry is increasing rapidly, IBBL needs to
develop and make services smooth and fast to get competitive advantage.

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6.2 Conclusion

IBBL is a bank based on shariah and the do ethical banking which helps them to be the
market leader in the banking arena. The bank is optimistic that the volume of business will be
on the increase through it pragmatic and market friendly policies. IBBL is a financial
institution which makes profit every year and expanding its branches throughout the country.
IBBL schemes for the rural and urban poor people are really praiseworthy. The schemes help
to reduce poverty and enable the people to be self-reliant and to start small businesses.
Adoption of new technology and some echo friendly policy will help IBBL to exist in the
market as a market leader in the future. IBBL needs to more competitive as the number of
Islamic Banks is on the increase. In the future days, the number of Islamic Banks will
increase because of its asset backing system. So, the coming days will be little bit
challenging for IBBL and IBBL is looking forward to addressing those.

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 Annexes
Annex 01. Supplementary information for chapter 03

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Annex 02. Supplementary information for chapter 03

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Annex 03. Supplementary information for chapter 03

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Annex 04. Supplementary information for chapter 05

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Annex 05. Supplementary information for chapter 05

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Annex 06. Information for chapter 05

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Annex 07. Information for chapter 05

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References
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