Internship Report

on

Perception on Investment of Al-Arafah Islami Bank Limited: A

Study on Bhagyakul Branch

Submitted to the Department of Accounting & Information Systems

Jagannath University as the partial fulfillment for the

Requirement of BBA Degree Major in AIS

Prepared by:

Aysha Siddika
ID: B140201010; BBA, 10th Batch
Section: A; Session: 2014-2015
Department of Accounting and Information Systems
Jagannath University, Dhaka.

Supervised by:

Professor Dr. Md. Sawkat Jahangir

Department of Accounting and Information Systems
Jagannath University, Dhaka.

Date of Submission: February 20, 2019

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 Letter of Transmittal
January 20, 2019

Dr. Md. Sawkat Jahangir

Professor

Department of Accounting & Information Systems,

Jagannath University.

Subject: Report on Perception on Investment of Al-Arafah Islami Bank Limited.

Sir,

With due respect I would like to state you that this is my pleasure to provide you with the final
internship report of my graduation. I have prepared the report entirely on the investment functions of
Al-Arafah Islami Bank entitled "Perception on Investment of Al-Arafah Islami Bank Limited." The
report is prepared after completion of my internship at Al-Arafah Islami Bank Limited, Bhagyakul
Branch under close supervision and guidance from active Manager Operation and investment Officer
of the branch.
Therefore, I hope that you accept the final report and provide me with guidance to do a better job
next time.

Thank you,
Sincerely yours,

---------------------
Aysha Siddika
ID: B140201010
BBA, 10th Batch,
Section: A; Session: 2014-15
Department of Accounting & Information Systems,
Jagannath University, Dhaka.

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 Declaration

This report has been prepared as a partial fulfillment of BBA program of Jagannath University.
The concerned report has been prepared entirely on the investment functions of Al-Arafah Islami
Bank entitled "Perception on Investment of Al-Arafah Islami Bank Limited". The report is
prepared after completion of my internship at Al-Arafah Islami Bank Limited, Bhagyakul Branch
(Bhagyakul, Sreenagar, Munshiganj) under close supervision and guidance from Manager
Operation and investment Officer of the branch. Meanwhile supervision of Dr. Md. Sawkat
Jahangir, Professor, Jagannath University guided through completion of the report.
It is to declare that this is not a copy from any other sources and this report was not submitted to
any other organization or any institution for any purpose.

Thank you,
Sincerely yours,

------------------
Aysha Siddika
ID: B140201010
BBA, 10th Batch,
Section: A; Session: 2014-15
Department of Accounting & Information Systems,
Jagannath University, Dhaka.

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 Letter of Endorsement by Supervisor

This is to certify that Aysha Siddika, ID of B140201010, BBA 10th Batch, student of Jagannath
University, Bachelor of Business Administration (BBA) has completed the internship report
successfully titled "Perception on Investment of Al-Arafah Islami Bank Limited: A Study on
Bhagyakul Branch", under my supervision. This report is prepared after performing internship at
Al-Arafah Islami Bank Ltd, Bhagyakul Branch as requirement for obtaining BBA degree.
To the best of my knowledge and as per her declaration the report is an authentic work on the issue
and has not been submitted to anywhere for awarding any degree. I think this program will help
her in the future to build up her career.
I wish her every success in life.

-------------------------------------------
Dr. Md. Sawkat Jahangir
Professor,
Department of Accounting and Department
Jagannath University, Dhaka.

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 Acknowledgement

First and foremost I would like to express gratitude to Almighty Allah for such great opportunity.
I would like to put my heartened feelings and gratitude to my Family, my father and mother for
the kindness that was provided to me to complete entire education till current date and for future
as well.
I would like to thank my internship supervisor Dr. Md. Sawkat Jahangir, Professor, Department
of Accounting and Information Systems, Jagannath University. For his helpful guidance and
instructions that enabled me to accomplish the internship report successfully. I would like to thank
him wholeheartedly for being a cooperative and helpful advisor, providing me with proper
guidance in completing my internship report.
I am very much thankful to Md. Rabiul Bashar, Manager, Al-Arafah Islami Bank Limited,
Bhagyakul Branch, to allow me to continue my internship at AIBL.
I would like to thank Amir Hossain, Manager Operation (Investment In charge) and Md.Faruk
Hossain (Investment Officer) of AIBL, Bhagyakul Branch for providing me an opportunity to
work in the bank as an intern to execute my internship program under their supervision in the
investment department of Al-Arafah Islami Bank Ltd.
Last but not the least I would like to thank all the staffs and members of Bhagyakul branch from
all categories who helped me and made me learn and experience the work environment directly
and indirectly throughout the months of my internship period.

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 Executive Summary

This report is prepared as requirement of the internship of BBA program of Jagannath University.
This report focuses on Three months working experiences in Bhagyakul Branch of Al-Arafah
Islami Bank Limited. This report will give a clear idea about activities and operational strategies
of (AIBL). This report focuses on “Perception on Investment” of AIBL. Especially this report
focuses on mode of investment, investment and non-performing investment of AIBL.

Al-Arafah Islami Bank Limited (AIBL) was established in September’27, 1995 with a clear
manifesto of demonstrating the operational meanings of participatory economy, banking and
financial activities as an integral part of an Islamic code of life. It followed what it takes to establish
as Haram free business based on the proper Islamic principle of social justice, equity and business.
In order to establish goal of haram free business Al-Arafah Islami Bank Limited initiated different
steps to cut interest and fixed interest on various loans or deposits.

In this report I have highlighted my learning into six chapters.

First Chapter is the introduction of my study; where the background, objectives, methodology,
scope and limitations of the study is stated.

Second Chapter is about Overview of Al-Arafah Islami Bank Limited which contains mission,
vision, goals of AIBL.

Third Chapter is Conceptual Framework, which includes theoretical knowledge I have gained from
this program about islami banking.

Fourth Chapter is Investment, which provides the general idea about investment activities of AIBL.

Fifth Chapter is Experience at the Branch, which explains my experience in AIBL about three
months.

At the end of the report is the Conclusion where major findings and recommendations are provided.

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 Table of Contents
Title page ................................................................................................................................ i
Letter of transmittal ................................................................................................................ ii
Declaration ........................................................................................................................... iii
Letter of Endorsement by the Supervisor ................................................................................ iv
Acknowledgement ....................................................................................................................v
Executive summary ................................................................................................................ vi
Table of Contents.............................................................................................................. vii-ix
Chapter 1: Introduction
1.1 Background of the Report ...............................................................................................2
1.2 Objective of the Study......................................................................................................2
1.2.1 General Objective ................................................................................................................... 2
1.2.2 Specific Objective ................................................................................................................... 2
1.3 Scope of the Report ..........................................................................................................3
1.4 Methodology.....................................................................................................................3
1.5 Sources of Data ................................................................................................................3
1.5.1 Primary Sources .............................................................................................................3
1.5.2 Secondary Sources ..........................................................................................................3
1.6 Limitations of the Report ................................................................................................4
Chapter 02: Al-Arafah Islami Bank: An Overview of Bhagyakul Branch
2.1 Background of the Company...........................................................................................6
2.2 As Al-Arafah Islami Bank Different from Other Bank (Conventional bank) ...............6
2.3 Vision of AIBL .................................................................................................................7
2.4 Mission of AIBL ...............................................................................................................7
2.5 Commitments of AIBL ....................................................................................................7
2.6 Objective of AIBL ............................................................................................................8
2.7 Special Features of AIBL .................................................................................................8
2.8 Division of AIBL (Bhagyakul Branch) ............................................................................9
Chapter 03: Islami Banking: Conceptual Framework
3.1 Islami Banking ............................................................................................................... 11
3.1.1 Overview of Islami Banking .................................................................................................. 11
3.1.2 Differences between Commercial and Islami Bank ................................................................ 11

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 3.1.3 Differences between Riba and Profit...................................................................................... 12
3.2 Deposit Principles .......................................................................................................... 13
3.2.1 Al-Wadia Principle ............................................................................................................... 13
3.2.2 Mudaraba Principle ............................................................................................................... 13
3.3 Investment Modes of Islami Bank ................................................................................. 14
3.3.1 Bai or Trading Mechanism .................................................................................................... 14
3.3.2 Partnership or Share Mechanism ........................................................................................... 16
3.3.3 Hire Purchase under Shirkatul Melk ...................................................................................... 16
Chapter 04: Findings and Analysis
4.1 Overview of Investment in AIBL .................................................................................. 20
4.1.1 Investment of AIBL (Bhagyakul Branch) .............................................................................. 20
4.1.2 Investment Mix (Portfolio) in AIBL ...................................................................................... 21
4.2 Investment Risk ............................................................................................................. 27
4.2.1 Forms of Investment Risk...................................................................................................... 27
4.2.2 Objectives of Investment Risk Management .......................................................................... 27
4.2.3 Investment Risk Assessment ................................................................................................. 28
4.2.4 Investment Risk Grading ....................................................................................................... 28
4.2.5 Uses of Investment Risk Grading .......................................................................................... 30
4.2.6 Investment Risk Grading Process .......................................................................................... 30
4.3 Investment Strategies of AIBL ...................................................................................... 31
4.4 Investment Procedure .................................................................................................... 32
4.4.1 Eligibility of Client ............................................................................................................... 32
4.4.2 Process of Investment Sanction ............................................................................................. 33
4.5 Idea about Investment ................................................................................................... 34
4.5.1 Non-performing Investment .................................................................................................. 35
4.5.2 Reasons for Non-Performing Investment ............................................................................... 35
4.5.3 Effect of NPI ......................................................................................................................... 35
4.6 Management of Non-performing Investment ............................................................... 36
4.6.1 Early Alert System ................................................................................................................ 36
4.6.2 Non-Performing Account Management ................................................................................. 36
4.6.3 Transfer of Non-Performing Account to recovery department ................................................ 37
4.6.4 Non performing Investment Provisioning policy .................................................................... 38
4.6.5 Non-performing write off policy............................................................................................ 38

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 4.6.6 Rescheduling Of Non-Performing Investment ....................................................................... 38
Chapter 05: Experience at the Branch
5.1 Joining at the Branch ..................................................................................................... 40
5.2 Experience in Investment department .......................................................................... 40
5.3 Completion of Internship .............................................................................................. 41
Chapter 06: Conclusion
6.1 Major Findings .............................................................................................................. 43
6.2 Recommendations .......................................................................................................... 44
6.3 Conclusion ...................................................................................................................... 45

Bibliography ........................................................................................................................ 46

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