CHAPTER-1

INTRODUCTION

1.1. Introduction
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B
angladesh is one of the largest Muslim countries in the world. The people of
this country are deeply committed to Islamic way of life as enriched in the
Holy Quran and Sunnah. Naturally, it remains a deep cry in their hearts to
fashion and design their economic lives in accordance with the respect of Islam.
The Bank is the lifeblood of an economy to keep the wheels moving forward and
to play the vital role in the economic development of the economy. The present
economic state of Bangladesh demands immediate development of the financial
intuitions. Banking sector had lot of areas to improve upon. After participating in
internship program conducted program conducted to SIBL of Dhanmondi Branch.
I am assigned to submit a report on Investment Mechanism of Social Islami Bank
Limited at Dhamondi Branch. This report helps significantly to build a
perception about day to day affairs of the bank and some recommendation for
improvement and efficiently of those functions.

Faculty of Management Studies, Daffodil International University, Dhaka, has trained

BBA graduates for the business communication of Bangladesh. Rapid and large-scale
economic development is depending on the promotion of efficient business people in
country which acts as a strong catalyst agent for the purpose. Highly trained MBA
personnel are a must for the realization of this economic aspiration of the country.
Jagannath University, Dhaka, therefore, embanked this upon venture for realizing the
economic goal of the nation.
As a partial fulfillment of the MBA program, internship is a requirement of MBA students
at the end of the completion of all the credit courses. Under internship program students
are placed in an organization for undergoing an internship for a period of 3(three) months
in order to make the students familiar with the real world situation and practical
experience in a business firm.
As a MBA student and as per requirement of this situation, the author was also attached
with the organization to do her internship program for three months. I have been
completed my internship from Social Islamic Bank Limited, Nawabpur Road Branch-a
commercial and service oriented financial institution. During that time I worked in
various sectors and tried my best to obtain practical knowledge.

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1.2. Objective of the Report

The first objective of writing the report is fulfilling the particle requirements of the MBA
program. In this report, we have attempted to give an idea of Investment Mechanism of
Social Islamic Bank. Following are the main objectives:
To show the investment mechanism and product offerings in different modes of
SIBL of Nawabpur Road Branch.
To show overall investment proposal, appraisal procedures, documentation system
of SIBL.
To identify strength and weakness of investment of SIBL of Nawabpur Road
Branch.
To identity the problems related to investments faced by SIBL of Nawabpur Road
Branch.

1.3 scope of the study

The scope of the study is entire Social Islami Bank Bangladesh Limited. During these
three months internship program in Social Islami Bank Bangladesh Limited, Nawabpur
Road Branch, almost all the desks have been observed. This report is a descriptive study
which tries to focus on the theories and practices of investment mechanism in the context
of the financial institutions in Bangladesh. It will not focus on the comparable investment
practices of other banks. In connection with this effort, a case study has been conducted
on Social Islami Bank Bangladesh Limited giving more emphasis on the investment side
of the institution compared to the other sides.

1.4. Methodology of the Study:

This report is the reflection of three months internship program at the Social Islami Bank
Bangladesh Limited, Nawabpur Road branch. Banking sector is a fast growing sector in
Bangladesh. All banks specially the private sector banks are facing tremendous
competition from each other. So officers remain busy to provide prompt service to clients.
As an internee I had to collect data & information both primary and secondary sources
from that busy corporate environment.

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1.4.1 Primary Sources:
I discussed with the executives & officials of the SIBL and found the appropriate data,
which has been presented in the report. I also discussed with the officials of conventional
Banks regarding the issue and found necessary information, which has been presented in
the report.

Branch Manager & other Officers.

Face to face conversations with the employees and opportunities were given by the
management to work in relevant fields in SIBL.
Practical work experience.
Informal interview with the Borrowers of Social Islami Bank Ltd.
Face to face conversation with clients.
Observing various organizational procedures.
Various unstructured papers and weekly report of the bank.

1.4.2 Secondary Sources:

The finding part of the report has been also prepared on the basis of secondary data.
However, to find out the secondary data the following sources have been used:

Different circulars issued by the Bangladesh Bank & Social Islami Bank Limited
Head Office.
Annual report of Social Islami Bank Bangladesh Limited.
Relevant file study as provided by the concerned officer.
Some brochures and related articles of Social Islami Bank Bangladesh Limited.
Some hard copy form of data as given by my supervisor in Social Islami Bank Ltd.
Investment policy manual of Social Islami Bank Limited.
From different books and periodicals related to the banking sector.
From Newspapers and Internet.

1.5. Limitation of the study

The main problem faced in preparing the paper was the inadequacy and lack of
availability of required data. But there are some limitations for preparing this report.
These barriers, which hinder my work, are as follows:

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 1. Lack of time: The time period of this study is very short. I had only 1 month in
my hand to complete this report, which was not enough. So I could not go in depth
of the study. Most of the times, the officials were busy and were not able to give
me much time.
2. Insufficient data: some desired information could not be collected due to
confidentiality of business.
3. Lack of monitory support: Few officers sometime felt disturbed, as they were
busy in their job. Sometimes they didnt want to supervise us out of their official
work.
4. Other limitation: As we are newcomers, there is a lack of previous experience in
this concern. And many practical matters have been written from our own
observation that may vary from person to person.

With all of this limitation I tried my best to make this report as best as possible.

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 CHAPTER 2
Scenario Regarding the main
topic of the report in
Bangladesh

Page 6 of 67
2.01 Historical Background of Social Islami Bank Limited:

2.1 History of the Bank:

Social Islami Bank Limited (SIBL) started its operation on the 22 nd November, 1995 as on
Second Generation Islamic Bank in close co-operation and assistance of some renowned
personalities of the Islamic Worked. H.E. Dr. Hamid Al Gavid, Former secretary General
of OIC and Prime Minister of Niger, H.E. Dr. Abdullah Omar Nasseef, Deputy Speaker of
Saudi Shoura Council and Ex-Secretary General of Rabeta Al-Islami, H.E. Ahmed M.
Salah Jamjoom, Former Commerce Minister of Saudi Government, H.E. Prof. Dr. Ahmed
El-Naggar (Egypt) participated to this noble Endeavour as sponsor shareholders.
Targeting poverty, Social Islami Bank Limited is indeed a concept of 21 st century
participatory three sector banking model in one: in the formal sector, it works as an
Islamic participatory Commercial Bank with human face approach to credit and banking
on the profit and loss sharing. Second is a Non-formal banking with informal finance and
credit package that empowers and humanizes real poor family and create local income
opportunities and discourages internal migration; it is a Development Bank intended to
monetize the voluntary sector and management of Waqf, Mosque properties, Non-Muslim
Trust Properties in the Country. In the formal corporate sector, this Bank would, among
others, offer the most up to date banking services through opening of various types of
deposit and investment accounts, financing trade, providing letters of guarantee, opening
letters of credit, collecting of bills, effecting domestic and international transfer, leasing
of equipment and consumers durable, hire purchase and installment sale for capital goods.
Investment in low-cost housing and management of real estates, participatory investment
in various industrial, agricultural, transport, educational and health projects and so on.

In addition, SIBL offers special services for the Bangladeshi expatriates which include
managing their foreign currency accounts, providing express home remittance services,
introducing Cooperative Investment schemes, Foreign wages earners rehabilitation
scheme etc. At the operational level, all three sectors activities would be mutually

Page 7 of 67
interdependent through Social Fund, Social Assignment Schemes, thereby making all
these activities economically, socially and ethically transparent and revealed.
Islam provides us a complete lifestyle. Main objective of Islamic lifestyle is to be
successful both in our mortal and immortal life. Therefore in every aspect of our life we
should follow the doctrine of Al-Quran and lifestyle of Hazrat Muhammad (Sm.) for our
supreme sources.

2.2 Functions of the Bank:

The operation of Social Islami Bank Limited can be divided into three (3) major
categories;

(A). General Banking: Its includes-

i. Mobilization of Deposits.
ii. Receipts and Payments of Cash.
iii. Handling Transfer Transaction.
iv. Operations of Clearing House.
v. Maintenance of Accounts with Bangladesh Bank and Other Bank.
vi. Collection of Cheque and Bill.
vii. Issue and Payment of Demand Draft, Telegraphic Transfer and Payment
Order.
viii. Executing Customers Standing Instructions.
ix. Maintenance of Safe Deposit Lockers.
x. Maintenance of Internal Accounts of the Bank.

(B) Investment Mechanism of SIBL.

Development of productive resources in profitable venture contributing directly to
product is called Investment.
From banking perspective, Investment means development of Bank finance in
profitable ventures contributing directly to production is called Investment.

Categories of Investment.
All Loans and advances will be group into four categories for the purpose of classification
is as follows;

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 Continuous Investment.
Demand Investment.
Fixed Term Investment.
Short Term Investment.

Types/Modes and Mechanism of Investment.

Bai-Muajjal
Bai-Murabaha.
Bai-Salam.
Mudaraba.
Musharaka.
Hire Purchase.
Ijara/Lease.
Direct Investment.
Quard-E-Hasana.

(C) Foreign Exchange Business.

Foreign Exchange Business plays a vital role in providing substantial revenue in the bank
income pool. Like all modern Banks SIBL operates in the area of the Foreign Exchange
Business. SIBL performs the following tasks:
a) Opening Letter of Credit (LC) against commission for importing Industrial,
Agricultural and Other permissible items under Islamic Shariah and Import policy.
b) Opening Letter of Credit (LC) on the principle of Mudaraba Sale, on the principle
of Musharaka sale and under wage earner scheme.
c) Handling of Export/Import document
d) Negotiation of Export/Import document when discrepancy occurs.
e) Financing in Import under MPI (Mudaraba Post Import)
f) Financing to Export of profit or loss sharing.
g) Handling Inward and Outward remittance.

(D) Other Activities.

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The SIBL Performs the following task for the Welfare of the Society such as;
Income generating Scheme for the Unemployed Youth of the Nation.
Education Scheme for assisting Poor scholar student to case and help them to
continue their study.
Health scheme for fulfillment of health needs of rural people.
Energy relief operations are provided to the people affected by natural calamities.
Assistance to mosque for Construction, Repair and Renovation.
The Bank has centralized its international trade finance through a focused
Centralized Trade Processing Unit (CTPU) for up gradation of service
distribution system in all the branches irrespective of being an AD or non- AD
branch. As a result, every SIBL branch has been authorized to facilitate LC
clearance to its clients.
The Bank also adopted other reform by establishing Central Remittance
Processing Unit (CRPU) in order to serve their clients more efficiently and
effectively.

2.3 Management of SIBL:

List of Directors of the Bank as of 31st December, 2011

1. Mr. Md. Anisul Haque Chairman
2. Mr. Mohmmad Azam Vice- Chairman
3. Mr. A. Jabbar Mollah Vice- Chairman
4. Major (Retd.) Dr. Rezaul Haque Director
5. Alhaj Sultan Mahmood Chowdhury Director
6. Mr.Abdul Awal Patwary Director
7. Alhaj Nasiruddin Director
8. Alhaj Sk. Mohammad Rabban Ali Director
9. Mr. Md. Sayedur Rahman Director
10. Mr.Noor-A-Alam Chowdhury Director
11. Dr.Mrs. Lily Amin Director
12. Mr. Faysal Ahmed Patwary Director
13. Ms. Sumana Alam Director
14. Mr. Tahsin Kamal Director

15. Ms.Tohura Akhtar Director

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 16. Ms. Shamima Baki Director

17. Mr. Muhammed Ali Managing Director

List of the Members of Shariah Board of SIBL as on 31st December, 2011

1. Principal Sayeed Kamaluddin Zafree Chairman
2. Prof. A.N.M. Rashid Ahmad Member Secretary

3. Prof. A.N.M. Rafiqur Rahman Vice-Chairman

4. A.Q.M. Abdul Hakim Madani Member
5. Barrister Faisal Ahmed Patwary Member
6. Muhammed Ali Member
7. Mr. Abu Sadek Md. Sohel Member

To run an organization very smoothly, the management plays a vital role and the strength
of an Organization depends on the strength of its management. The management of Social
Investment Bank Limited is very much capable to handle every challenge to achieve
Organizational goal by utilizing its human resources and organizational processes.
The name of various departments of SIBL Head Office is mentioned below:
International department (ID)
Financial administration department
Human resource department (HRD)
Information technology department (IT)
General service department
Branches development department
Internal control and compliance department
Board division

2.4 Performance of the bank at a Glance:

(Taka in Million)
SI Particulars 2004 2005 2006 2007 2008 2009 2010 2011
No.
1. Authorize Capital 1000 4000 4000 4000 4000 4000 10000 10000
2. Paid-Up Capital 585 585 585 1119.55 1309.88 2691.72 2987.81 6393.92
3. Total Shareholders 915.50 923.07 980.70 1665.29 1867.36 3555.75 4198.77 9412.21
Equity

Page 11 of 67
4. Capital Base (Tire- & 1023.87 1065.42 1128.03 1870.94 2168.22 3914.62 4678.56 9534.52
)
5. Total Deposits 19704.20 16862.58 16170.51 19753.94 24099.82 31588.16 44850.77 44850.77
6. Client Deposits 13460.73 14341.95 16.46.72 18706.54 22065.79 27663.62 39833.37 39833.37
7. Investments (Loans & 12887.30 15096.83 15312.90 16440.26 199511.30 26580.58 36680.28 36680.28
Advances)
8. Investments (Shares & 0.06 501.06 501.06 558.45 853.46 1310.66 3049.72 3049.72
Securities)
9. Foreign Exchange 18088.12 17438.07 23280 23903.8 33363.20 39110.00 61931.00 61931.00
Business
10. Operating Profit 414.99 213.57 295.89 480.78 787.37 1064.31 1638.63 1638.63
11. Profit before Tax 152.47 54.20 120.23 212.92 354.81 726.88 1136.69 1136.69
12. Fixed Assets 138.80 153.80 137.48 132.03 443.28 649.61 914.74 914.74
13. Total Assets 21546.96 20358.81 19691.53 24546.55 29808.88 39980.82 55168.54 55168.54
14. Stock Dividend - - - 17% 10% 11% 14% 14%
Cash Dividend - - - - - - - -
15. Investments as a % of 65.40% 89.53% 94.70% 83.23% 82.79% 84.15% 81.78% 81.78%
total Deposits
16. Investments as a % of 95.74% 105.26% 95.43% 87.89% 90.42% 96.08% 92.08% 92.08%
Client Deposits
17. Risk Weighted Capital 7.53% 6.77% 7.19% 10.71% 10.87% 14.97% 9.33% 9.33%
Adequacy Ratio
18. Ratio of Classified 11.36% 7.54% 4.92% 4.93% 4.38% 3.19% 4.76% 4.76%
Investments to Total
Investments
19. No. of Foreign 3575 3575 2366 2480 2200 2250 - -
Correspondents
20. Number of Employees 651 686 674 674 750 950 1252 1252

21. Number of Branches 24 24 24 24 28 52 64 64

22. Book Value Per Share 1000 1000 1000 100 100 100 10 10

23. Earning Per Share 143 24 9.85 17.60 17.20 18.39 2.15 2.15

24. Credit Rating By

CRISL: - - BBB- BBB+ A- A+ A+ A+
Long Term - - ST-3 ST-3 ST-2 ST-2 ST-2 ST-2
Short Term
Source: Annual Report of SIBL (2010)

2.5 Organizational Set-up of SIBL

Board of Director

Executive Committee

Page 12 of 67
 Managing Director

Additional Managing Director

Deputy Managing
Director

SEO FAV AVP SAVP VP SVP EVP

EO SO Officer JO

Source: Service Rule of SIBL

2.6 Head Office & Branches

The Head office of the bank is situated at 103, Motijheel Commercial Area, Dhaka-1000,
Bangladesh. There are 76 branches of the bank situated in different locations of
Bangladesh. The principal branch of the Bank is also situated at 15, Dilkusha C/A,
Dhaka-1000, Bangladesh.

2.7 Capital Structure of SIBL

The components of capital structure of SIBL are paid up Capital, Statutory Reserves,
Retained Earnings, and Provision on Investment, 1% provision on unclassified
investment.
The authorized capital of the Bank is TK.10,000 million , whereas paid-up capital of the
Bank stood at TK. 6393.93 million as at 31 December 2011 compared to TK. 2987.81
million of 2010.

Page 13 of 67
 Fig-1: Capital structure for the year 2011
[Appendix 3]

Table-1: INDEX SHOWING THE PAID-UP CAPITAL

Fig-2: Capital structure for the year 2004- 2011

Source: Annul report of SIBL 2004-2011
[Appendix 3]

2.8 Liquidity

Liquidity is maintained in the form of cash in hand and balance with Bangladesh Bank
and balance with Sonali Bank including foreign currency notes. Balance held with other
banks and financial institutions are also taken into consideration. At 31 December 2011
liquidity stood Tk. 5,667.50 million as against Tk. 4,451.59 million in last year to
maintain cash & statutory liquidity.

Page 14 of 67
2.9 Assets

Assets of SIBL includes cash in hand, cash with Bangladesh Bank and Sonali Bank,
balance with other banks and financial institutions, money at call and short notice,
investments, fixed assets and other assets. Among of the above components of the assets;
Cash in hand, Cash with Bangladesh Bank, Fixed assets and other assets like Stationery,
Stamps, Profit receivables, Store rent, Insurance premium and corporate tax, Balance with
other banks and financial institutions, Money at call/ short notice, Investment on bills and
discounted and purchased are the elements of earning assets.
[Appendix-3, Index table: 2-Trends of the assets of the bank includes cash in hand,
balance with Bangladesh Bank and other banks and financial institutions, investments,
fixed assets and other assets]

INDEX SHOWING THE ASSETS POSITION

Fig-4: Assets position for the years 2004-2011

Source: Annual report of SIBL 2004-2011

Page 15 of 67
2.10 Mission & Vision of the bank:

Corporate Vision:
``Reduction of Poverty Level are their vision, which is a prime object as stated in
Memorandum of the bank with the commitment ``Working Together for a Caring
Society.
The bank believes in togetherness with its customers, in its march towards growth and
progress with services.

Corporate mission:
The missions of the Bank are given below:
High quality financial services with the latest technology.
Fast, accurate and satisfactory customer service.
Balanced & sustainable growth strategy.
Optimum return on shareholders equity.
Introducing innovative Islamic Banking Products.
Attract and retain high quality human resource.
Empowering real poor families and create local income opportunities.
Providing support for social benefit organizations by way of mobilizing
Funds and social services.

2.11 Analysis of Performance Indicators

The Bank has launched a number of financial products and services since its inception in
addition, to the scheme like Consumer Credit, ATM Card, and On-Line Banking.

Page 16 of 67
 CHAPTER 3
An overview of the social islami
bank ltd.

Page 17 of 67
3.1 Historical Background of Social Islami Bank Limited:
Social Islami Bank Limited (SIBL) started its operation on the 22 nd November, 1995 as on
Second Generation Islamic Bank in close co-operation and assistance of some renowned
personalities of the Islamic Worked. H.E. Dr. Hamid Al Gavid, Former secretary General
of OIC and Prime Minister of Niger, H.E. Dr. Abdullah Omar Nasseef, Deputy Speaker of
Saudi Shoura Council and Ex-Secretary General of Rabeta Al-Islami, H.E. Ahmed M.
Salah Jamjoom, Former Commerce Minister of Saudi Government, H.E. Prof. Dr. Ahmed
El-Naggar (Egypt) participated to this noble Endeavour as sponsor shareholders.
Targeting poverty, Social Islami Bank Limited is indeed a concept of 21 st century
participatory three sector banking model in one: in the formal sector, it works as an
Islamic participatory Commercial Bank with human face approach to credit and banking
on the profit and loss sharing. Second is a Non-formal banking with informal finance and
credit package that empowers and humanizes real poor family and create local income
opportunities and discourages internal migration; it is a Development Bank intended to
monetize the voluntary sector and management of Waqf, Mosque properties, Non-Muslim
Trust Properties in the Country. In the formal corporate sector, this Bank would, among
others, offer the most up to date banking services through opening of various types of
deposit and investment accounts, financing trade, providing letters of guarantee, opening
letters of credit, collecting of bills, effecting domestic and international transfer, leasing
of equipment and consumers durable, hire purchase and installment sale for capital goods.
Investment in low-cost housing and management of real estates, participatory investment
in various industrial, agricultural, transport, educational and health projects and so on.

In addition, SIBL offers special services for the Bangladeshi expatriates which include
managing their foreign currency accounts, providing express home remittance services,
introducing Cooperative Investment schemes, Foreign wages earners rehabilitation
scheme etc. At the operational level, all three sectors activities would be mutually
interdependent through Social Fund, Social Assignment Schemes, thereby making all
these activities economically, socially and ethically transparent and revealed.
Islam provides us a complete lifestyle. Main objective of Islamic lifestyle is to be
successful both in our mortal and immortal life. Therefore in every aspect of our life we

Page 18 of 67
should follow the doctrine of Al-Quran and lifestyle of Hazrat Muhammad (Sm.) for our
supreme sources.

3.2 Corporate Information :

Management Team

To achieve the mission, a set of different drivers are mandatory. Commercial banks in
Bangladesh are now in hard competition. This is because of the continuous growth of
similar service oriented local banks along with special service providing foreign bank due
to globalization. SIBL management team is sound experienced and enrich with excellent
academic background and the legislative body or Board of Directors are responsible for
selection of management team. The Board of Directors also sets objectives, policies and
strategies and management team is the instrumental device, who implements those sets by
the Board of Directors.
Present members of the Board of Directors are given in the followings
Table No: 02 Board of Directors

1. Alhaj Sultan Mahmood Chowdhury Chairman

2. Alhaj SK. Mohammad Rabban Ali Vice Chairman
3. Mrs. Nargis Mannan Vice Chairman
4. Major (Retd.) Dr. Md, Rezaul Haque Director
5. Alhaj Nasiruddin Director
6. Mr. Abdul Awal patwary Director
7. Hamdrad Laboratories(WAQF) Bangladesh Director
Represented by: Mr. Anisul Haque
8. Mr. Munshi Akhtaruzzaman Director
9. Mrs. Zohra Alam Director
10. Mr. kamaluddin Ahmed Director
11. Mr. Md. Sayedur Rahman Director
12. Mr. ,d. Humayun kabir Khan Director
13. Mr. A. jabbar Mollah Director
14. Mr. K. M. Ashaduzzaman Managing Director

Source: Annual Report 2010

Page 19 of 67
List of Members of Shariah Board of SIBL as on 31st December 2009 in the
followings
Table No: 03 Shariah Board

Principal Syeed Kamaluddin Zafree 1. Chairman

Mufti Sayed Ahmad 2. Vice Chairman
Prof. A. N. M. Rashid Ahmad 3. Member Secretary
Mufti Shamsuddin Zia 4. Member
Prof. A. N. M. Rafiqur Rahman 5. Member
Dr. Mahfuzur Rahman 6. Member
Muhaddis A. Q. M. Abdul Hakim 7. Member
Madani
Advocate Mujibur Rahman 8. Member
Prof. Md. Sharif Hussain 9. Member

Source: Annual Report 2010

3.2.1 Sources of Funds

There are various sources of funds of Social Investment Bank Limited. Basically SIBL
accumulate funds from following sources:
Figure: 02 Sources of Fund

Source: Organization website (www.siblbd.com)

3.2.2 Corporate Performance of SIBL at a glance

(As on 2010& December, 2011)

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The corporate performance of Social Islami Bank Limited is shown in the following;
Table No: 01 Corporate Performance

Sl. Particulars Year 2010 Year2011

No. Tk. in Million Tk. in Million
01 Authorized Capital 4000.00 10000.00
02 Paid-up Capital 2691.72 2987.81
03 Total Shareholders Equity 3555.75 4198.77
04 Capital Base(Tire 1&2) 3914.62 4678.56
05 Total Deposit 31588.16 44850.77
06 Client Deposit 27663.62 39833.37
07 Investment( Loans & Advances) 26580.58 36680.28
08 Investment as a % of total deposits 84.15% 81.78%
09 Investment as a % of client deposit 96.08% 92.08%
10 Risk weighted Capital Adequacy Ratio 14.97% 9.33%
11 Book Value per Share 100 10
12 Earning per Share 18.39 2.15
13 Credit Rating by CRISL :
Long Term A+ A+
Short Term ST-2 ST-2

14 Number of Branches 52 64

Page 21 of 67
Source: Annual Report 2007 to 2011

3.3 Organogram of the Organization

Figure: 01 Organ gram of the organization

Page 22 of 67
Source: Organization website (www.siblbd.com)

3.3.1 Organogram of Nawabpur Road Branch:

Page 23 of 67
 Figure 03: Organogram of Nawabpur Road Branch

Acronym
SVP Senior Vice Present
SVP AVP Acc. Vice Present
FAVP First Acc. Vice Present
PO Principal Officer
SEO Senior Executive Officer
AVP EO Executive Officer
SO Senior Officer
M.L.S.S Member of loyal Security and
FAVP Service.

PO PO PO

SEO SEO SEO SEO SEO

EO EO EO EO EO EO

SO SO SO SO SO SO SO

Officer Officer Officer Officer Officer Officer Officer Officer

Telephone Operator

Photocopy Operator

Driver Driver

M.L.S.S. M.L.S.S. M.L.S.S. M.L.S.S.

Source: Branch document

3.4 Number of Branches:

Page 24 of 67
Head Offices
SOCIAL ISLAMI BANK LIMITED
103, Motijheel Commercial Area
Dhaka-1000
Bangladesh
Phone : 09612001122
SWIFT : SOIVBDDH
E-mail : info@sibl-bd.com, ceo@sibl-bd.com
URL: www.siblbd.com
Webmail:mail.sibl-bd.com

SIBL now 76 branches all over the country with two subsidiary companies - SIBL
Securities Ltd. & SIBL Investment Ltd.

3.1 About the Branch:

Nawabpur Road is the ancient place of Dhaka city and now this is busiest place in Dhaka
city for business purpose. The largest machinary and electrical market present in
Nawabpur Road. In Nawabpur road, Social Islami Bank Limited launched its branch in
26th July, 2003.

3.2 Nawabpur Road Branch at a Glance:

Establishment Date : July 26, 2003.

Manager : Mr. Md. Shahriar Khan
Empolyee : 40

3.3 Location of Nawabpur Road Branch:

The location of my internship placement in SIBL has been completed to the following
branch.
82, Nawabpur Road (1st Floor),
Nawabpur Road, Dhaka -1000.
Phone: 02-7074921-22, 02-7174994-95.
Fax: 88-02-7174922
Email: sibl@siblbd.com
Web: www.siblbd.com SWIFT: SOIVBDDHFEX
Opening Date: 26.07.2003

Page 25 of 67
3.6 Vision of SIBL
Social Islami Bank Ltd started its journey with the concept of 21 st Century Islamic
participatory three sector banking model:

Formal Sector- Commercial Banking with latest technology;

Non-Formal Sector - Family Empowerment Micro-Credit & Micro-enterprise
program and
Voluntary Sector - Social Capital mobilization through CASH WAQF and
others.

Finally, "Reduction of Poverty Level" is our Vision, which is a prime object as stated in
Memorandum of Association of the Bank with the commitment "Working together for a
Caring Society.

3.7 Mission of SIBL

High quality financial services the latest technology.
Fast, Accurate and Satisfactory customer service.
Balanced & sustainable growth strategy.
Optimum return on shareholders' equity.
Introducing innovative Islamic Banking products.
Attract and retain high quality human resources.
Empowering real poor families and create local income opportunities.

Providing support for social benefit organizations - by way of mobilizing funds and social
services.

3.8 Product & Services offered by Social Islami Bank

Nawabpur Road Branch:

Different types of Investment Schemes.

Different types of Deposit Schemes.
Different types of Special Schemes.
Rural development Schemes.
Different types special services.

Page 26 of 67
 Foreign Exchange Business.
E-Business.
I-Business.
Online Banking.

3.9 Principal Activities

3.9.1 Investment of SIBL:
As social bank regulate their all activities by the following of Islamic Shariah and they
emphasize on legitimate (Halal) business so it can easily differ from the conventional
banking which is not follow Islamic rules & regulation. The most important difference
between the conventional and Islamic bank is that both the banks operate to earn profit
but they differ in the way of operation. Islamic bank does not invest loans in fixed interest
securities, it can invest only ordinary share. Islamic bank establishes and participate
projects with its client as a partner and bears the risk along with the client on a
proportionate basis. While conventional bank can invest loans in different kinds of
securities and also sometimes they do not bear risk with their client. Investment or
lending is one of the important functional business operations of a commercial bank.
Main part of banks asset management arrives from banks fund management, which is
nothing proper risk management. Main component of banks income also generate from
investment. So utmost analytical care required for selection and processing of viable
investment proposal to protect banks investment. SIBL also highly concentrate on the
investment that will to cautious in investment decision. To ensure proper investment SIBL
follows IRG (Investment Risk Grade) and CRG (Credit Risk Grade) and they always go
with in-depth study before making generate more new client.

3.9.2 Investment Portfolio of SIBL

Selection of Investment client/ Selection of Borrower are effectively.
Excess drawing is not allowed without Head Office approval.
Accuracy is found in the pledge goods.
Justify the mortgaged properties.
Application/ request letter is obtained from the clients against every disbursement.
Acceptance of the client is found in the sanction Advice issued by the Branch.
Renewal proposal of the limits is timely sent to Head Office submission of CIB Inquiry
form.
Disbursement is not allowed against specified limit without Head Office approval.

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 Service charge is properly charged on Quard (MTD) A/Cs.
Particulars of the financial instruments under lien of the branch are recorded properly.
The check received from the clients against the limit & installments are properly crossed
& record.
Bank Guarantee is issued after Head Office approval. Margin of Bank Guarantee is
obtained in the form of MTDR instead of cash when Head Office approve. Commissions
of the open Bank Guarantees are realized time to time.

3.9.3 Investment Mechanism:

SIBL, Nawabpur Road Branch has provided various types of Investment Mechanism for
her different types of customers according to their requirements. The Investment provided
by SIBL can be divided into two parts first. These two parts again are sub-classified into
various types which are given bellows:

Formal sector.
Non-Formal sector.

Figure 05: Types of investment

Investment

Formal Non-Formal

Source: Organization document

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3.9.4 FORMAL BANKING SECTOR

Figure 06: Formal Banking

Formal Banking

Bai-Muajjal HPSM Murabaha Musharaka Special Investment

3.9.5 Bai-Muajjal
Under Formal Banking banks are invested their money in some different way, such as:

Figure 07: Bai-Muajjal

Bai-Muajjal

Commercial House Hold Real Estate Trust Receipt

Meaning: The terms Bai- Mujjal comes from Arabic words. Bai Means Purchase and
sale the word Muajjul means a fixed time or a fixed period. Bai- Muajjal means sale for
which payments is made at a future fixed date of within a fixed period. In short, it is a
sale on Credit.

Definition: Bai-Muajjal may be defined as a contract between a Buyer and a Seller under
which the Seller sells certain special goods (permissible under Shariah and Law of the
country), to the Buyer at an agreed fixed price payable at a certain fixed future date in
lump sum or within a fixed period by fixed installments. The seller may also sell the
goods purchased by him as per order and specification of the Buyer. In this bank, Bai
Muajjal is treated as a contract between the Bank and the Client under which the Bank
Sells to the Client certain specified goods, purchased as per order and specification o the
Client at an agreed price payable within a fixed future date in lump sum or by fixed
installment.

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Important Features:
It is permissible for the Client to offer an order to purchase by the Bank particular goods
deciding its specification and committing him to buy the same from the Bank on Bai-
Muajjal i.e. deferred payment sale at fixed price.
Stock and availability of goods is a basic condition for signing a Bai-Muajjal
Agreement.
The Bank must purchase the goods as per specification of the Client to acquire
ownership of the same/goods before signing the Bai-Muajjal Agreement with the
client.
After purchase of goods the Bank must bear the risk of goods until those are
actually delivered to the client.
The Bank must deliver the specified goods to the Client on specified date and at
specified place of delivery as per contract.
The price once fixed as per agreement and deferred can not be further increase the
bank may sell the goods at one agreed price and here profit is not mentioned.

Categorization:
Categorize the proposal as under:

Bai-Muazzal > Commercial:

Bai-Muajjal is a contract between Buyer and Seller under which the seller sells certain
specific goods ( permissible under Shariah and Law of the country ), to the Buyer at an
agreed fixed price payable at a certain fixed future date in lump sum or within a fixed
period by fixed installments. The seller may also sell the goods purchased by him as per
order and specification of the Buyer. This mode is applicable for working capital finance.

Bai-Muazzal > House Hold:

Bai- Muazzal in house hold is a contract between Buyer and Seller
under which the seller sells certain specific goods ( permissible under
Shariah and Law of the country ), to the Buyer at an agreed fixed price
payable at a certain fixed future date in lump sum or within a fixed
period by fixed installments. For this purpose bank provide lone their
client.
Bai-Muazzal > Trust Receipt:
Bai-Muajjal in Trust Receipt is a contract between Buyer and Seller under which
the seller sells certain specific goods ( permissible under Shariah and Law of the
country ), to the Buyer at an agreed fixed price payable at a certain fixed future date

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 in lump sum or within a fixed period by fixed installments. The seller may also sell
the goods purchased by him as per order and specification of the Buyer. This mode
is applicable for working capital finance.

3.9.6 HPSM (Hire Purchase Shirkatul Melk) :

Hire Purchase defined as a contract between two parties; the Hiree and Hirer enjoys a
specific service on benefit gains a specified consideration or rent from the asset owner by
the Hiree.
Hire Purchase (Participatory Ownership) is a Special type of contract which has been
developed through practice. Actually, it is a synthesis of three contracts:

Figure 08: Hire Purchase Shirkatul Melk

HPSM

Shirkatul Melk Ijarah Sale

1. Shirkatul Melk
2. Ijarah and
3. Sale

1. Shirkatul Melk:
Shirkat means partnership. Shirkatul Melk means participation in ownership. When two
or more persons supply equity, purchase an asset; own the same jointly, and share the
benefit as per agreement and bear the loss in proportion to their respective equity, the
contract is called Shirkatul Melk contract.
2. Ijarah:
Ijarah means lease, rent or wage. Generally, Ijarah concept means selling the benefit of
use or service for a fixed price or wage. Under this concept, the Bank makes available to
the customer the use of service of assets / equipments such as plant, office automation,
motor vehicle for a fixed period and price.

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Advantages of Ijarah
Ijarah provides the following advantages to the Lessee

Ijarah conserves the Lessee' capital since it allows up to 100% financing.

Ijarah gives the Lessee the right to access the equipment on payment of the first
installment. This is important as it is the access and use (and not ownership) of
equipment that generates income.

Ijarah arrangements aid corporate planning and budgeting by allowing the

negotiation of flexible terms.

Ijarah is not considered Debt Financing so it does not appear on the Lessee'
Balance Sheet as a Liability. This method of "off-balance-sheet" financing means
that it is not included in the Debt Ratios used by bankers to determine financing
limits. This allows the Lessee to enter into other lease financing arrangements
without impacting his overall debt rating.

All payments towards Ijarah contracts are treated as operating expenses and are
theSourceore fully tax-deductible. Leasing thus offers tax-advantages to for-profit
operations.

Ijarah contracts allow the transfer of risk from the Lesse to the Lessor in exchange
for a higher lease rate. This higher rate can be viewed as insurance against
obsolescence

3. Sale:
This is a sale contract between a Buyer and a seller under which the ownership of certain
goods or asset is transferred by seller to the buyer against agreed upon price paid / to be
paid by the buyer.

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Thus in Hire Purchase (participatory ownership) mode both the Bank and the client
supply equity in equal or unequal proportion for purchase of an asset like land, building,
machinery, transport 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 portion of the asset owned by the Bank is hired out to the client
partner for a fixed rent per unit of time for a fixed period. Lastly the Bank sells and
transfers the ownership of it's share / part / portion to the client against payment of price
fixed for that part either gradually part by part or in lump sum within the hired period
after the expiry of the hire agreement.

3.9.7 Murabaha:

Meaning: The terms Murabaha comes from Arabic words. The word Murabaha means
an agreed upon profit. Sale on agreed upon profit.

Definition: Murabaha may be described as a contract between a Buyer and a Seller

under which the Seller sells certain specific goods permissible under Islamic Shariah and
the Law of the land to the Buyer at a cost plus agreed profit payable in cash or on any
fixed future date in lump sum or by installments. The profit marked-up may be fixed in
lump sum or in percentage of the cost price of the goods.
This concept Sourceers to the sale of goods at a price, which includes a profit margin
agreed to by both parties. The purchase and selling price, other costs, and the profit
margin must be clearly stated at the time of the sale agreement. The bank is compensated
for the time value of its money in the form of the profit margin. This is a fixed-income
loan for the purchase of a real asset (such as real estate or a vehicle), with a fixed rate of
profit determined by the profit margin.

Figure 09: Murabaha

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 Murabaha

Bill of exchange Post Import Commercial

1. Bill of Exchange
In case of Bai-Murabaha Banks procure the goods as per indent of the customer, retain it
in its custody and sell the same part by part or at a time to the client who gave indent for
the goods. This mode is applicable for working capital finance. In conventional Banks,
they allow Loan against pledge of goods against fixed rate of interest.

2 Post Import
Bai-Murabaha is a contract between a Buyer and Seller under which the Seller sells
certain specific goods permissible under Islamic Shariah and Law of the land to the
Buyer at a cost plus agreed profit payable in cash on any fixed future date in lump sum or
by installments. The profit marked-up may be Bai-Murabaha is a contract between a
Buyer and Seller under which the Seller sells certain specific goods permissible under
Islamic Shariah and Law of the land to the Buyer at a cost plus agreed profit payable in
cash on any fixed future date in lump sum or by installments. The profit marked-up may
be fixed in lump-sum or in percentage of the cost price of the goods.

In case of Bai-Murabaha Banks procure the goods as per indent of the customer, retain it
in its custody and sell the same part by part or at a time to the client who gave indent for
the goods. This mode is applicable for working capital finance. In conventional Banks,
they allow Loan against pledge of goods against fixed rate of interest.

Important Feature:
It is Permissible foe the Client to offer an order to purchase be the Bank particular goods
deciding its specification and committing him to buy the same from the Bank on
Murabaha cost plus agreed upon profit
It is permissible to take cash/collateral security t guarantee the implementation of
the promise or to indemnify the damages.

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 Stock and availability of goods is a basic condition for singing s Murabaha
Agreement.
The Bank must purchase the as per specification of the Client to acpuire
ownership of the same/goods before singing the Murabaha agreement with the
Client.
The Bank must deliver the specified goods to the Client of specified date and at
specified place of delivery as per Contract.
The price once fixed as per agreement and deferred cannot be future increase.

3.9.8 Musharaka:

Meaning of Musharaka:
The word Misharaka is derived from the Arabic word Shirkat meaning partnership of
sharing.

Definition:
Its Islamic financial technique that involves different types of profit and loss sharing
partnership. Share both in the capital and management of a project so that profit will be
distributed among them as per ratios, where loss is shared according to ratios of their
equity participation. In this case both the bank and the Client provide capital at an agreed
upon ratio and manage the business jointly. Share the cent as per agreed upon ration and
bear the loss, If any, in proportion to their respective equity. Bank may move itself with
the selected client for conducting any Shariah permissible business under Musharaka
mode
.Important feature:
The investment client will normally run and manage the business.
The Bank shall take part in the policy and decision making as well as overseeing
(supervision and monitoring) the operations of the business of the client. The Bank
may appoint suitable person(s) to run the business and to maintain books of
accounts of the business property.
As the investment client shall manage the enterprise, the Bank may pay more
share of profit to him than that of his proportionate capital contribution.
Loss, if any, share be shared on capital ratio.

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Concluding Remark:
Financing through a Musharaka partnership is investment-based. The capital provider has
full control in the management of the business. In addition, he shares proportionately in
both the profit and losses of the business. TheSourceore, the rate of return is uncertain
and can be either positive or negative. The cost of capital is also uncertain and there exists
perfect correlation between the relationship of cost of capital and rate of return of capital.

3.9.9 Mudaraba:
Meaning Of Mudaraba:
The term Mudaraba come from Arabic word Travel means for undertaking business.

Definition of Mudaraba:
"Mudarabah" is a special kind of partnership where one partner gives money to another
for investing it in a commercial enterprise. The investment comes from the first partner
who is called "rabb-ul-mal", while the management and work is an exclusive
responsibility of the other, who is called "mudarib".
The Mudarabah (Profit Sharing) is a contract, with one party providing 100 percent of the
capital and the other party providing its specialist knowledge to invest the capital and
manage the investment project. Profits generated are shared between the parties according
to a pre-agreed ratio. Compared to Musharaka, in a Mudaraba only the lender of the
money has to take losses.

Importer features:
Bank supplies capital as Sahib-AI-Mall and the client invest if in the business with
his experience.
The client maintains administration and management.
Profit is divided as per management.
Client cannot take another investment for that specific business without the
permission of the Bank.

3.9.10 Special investment:

In the formal investment banking SIBL also operate some other special investment. These
are:

Page 36 of 67
 1. First Home Owner Scheme (FHOS)
2. Quard
3. EEF

1. First Home Owner Scheme (FHOS):

First home owner scheme investment procedure only applicable for the organization staff.
SIBL is committed to contribute to this end to provide a peaceful and happy living. The
bank has introduced First Home Owner Scheme with the objective to ease and
minimize the housing problem and assist service holders and professionals with limited
income in materializing their dream of becoming owner of houses. The maximum period
of investment shall be generally 15 years. However, the period of investment shall be
determined on the basis of the proposal of the client, the amount of investment (for which
the client has applied) and the ability of the project or client to repay the dues.

Security:
Personal guarantee of the clients, his/her spouse, adult son(s) and daughter(s) shall have to
be obtained.
Mortgage of land and building to be constructed thereon, apartment/flat/house in favor of
the bank till the full payment of dues to the bank.
An undertaking from the client as well as from the dependants (nominees) to the effect
that the retirement benefits including provident fund will be appropriated towards
adjustment of the house building investment liability of the client prior to any other
appropriation, if the liability relating thereto or any part of it remains unadjusted at the
time of getting the retirement benefits.

2. Quard:
This is a loan extended on a goodwill basis, and the debtor is only required to repay the
amount borrowed. However, the debtor may, at his or her discretion, pay an extra amount
beyond the principal amount of the loan (without promising it) as a token of appreciation
to the creditor. In the case that the debtor does not pay an extra amount to the creditor,
this transaction is a true interest-free loan. Some Muslims consider this to be the only type
of loan that does not violate the prohibition on riba, since it is the one type of loan that
truly does not compensate the creditor for the time value of money.

Page 37 of 67
 Documents for Quard:
Before sanction quard bank justify some documents which will be provide from the
client. These are:
Promissory note
Delivery letter
Letter of disbursement
Balance confirmation letter
Letter of Authority
Letter of gurantee
Letter of arrangement
Letter of continuity.

3. NON FORMAL BANKING SECTOR

Figure 10: Non Formal Banking

Non Formal Banking

Micro Investment Micro Enterprise Joint Development & ILO,

Scheme Investment Scheme Rehabilitation Unicef
Scheme Scheme

Source: Organization documents

Page 38 of 67
Documents:
Documents are required for investment in business

Business:
Photographs of client/ all directors ( for limited company)
Clients Application on pad
Application form IF-48
Board Resolution regading seeking investment facility from SIBL( for limited
company)
Certified copy Memorandum of Articles of Association ( for limited company)
Certificate of incorporation ( for limited company)
Project Appraisal (for limited company)
Balance Sheet
Cash flow statement
Clearance certificate from the directorate of Environment & Establishment (for
project investment)
Clearance Certificate from Gas Transmission Company (for project investment)
Clearance Certificate from the Local Authority ( for project investment)
Legal opinion from bank panel Lawyer
Valuation Report from Banks nominated Surveyor
Site Visit Report of the Branch
Valuation Certificate of the Branch
Statement of Accounts

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 Copy of Trade License
Copy of TIN certificate
Copy of VAT certificate
Copy of IRC
Permission of BOI ( for project investment )
Stock Reports
Statement of Sundry Debtors & Creditors
CIB Inquiry Report
Personal profile of own

Land:
Documents are required for investments in land

Orginal Title Deed/ Original Sale Deed/ Certified copy of sale deed with SRO
receipt if it is newly purchased
Related all Bia Deed
CS, RS& SA parcha
DP parcha ( printed)
Mutation Certificate with DCR
Mouja Map
Rajuk approval plan for building
NEC from Sub- register Office
Up to date Rent Receipt
Rajuk Clearing Certificate for Govt. plot
Up to date utility bills if required

Page 40 of 67
3.9.11 Operational Procedures of Investment Mechanism
in SIBL:
Rules and Condition:
There must be a contract between the Buyer (Bank) and Seller (Client), which
shall be the principal instrument to govern the advance selling and buying.
The name, specification, brand, quantity, quality, size, etc. of the goods must
clearly be specified in the Contract leaving no ambiguity.
Unit price and total price of the commodity /product must be fixed and mentioned
in the contract.
The exact time and place of delivery must be specific.
Mode of transportation, transportation cost, storage charge/ godown rent,
insurance etc., if any must be specified in the contract.
The name of party who will bear the cost of transportation, charge! godown rent,
insurance etc. also be mentioned in the contract.
Price shall be paid to the seller in full as mentioned in the contract at the time of
signing the contract.
If mentioned in the contract, delivery of the commodity /products can be made
taken in installments or at a time within the contract period.
Quantity of the commodity, products shall be in unequivocal term.
If the Seller/supplier (Client) fails to deliver the commodity /products in time as
per specification i.e. in specified quality, quantity, the seller (Client) shall be
bound to repay the price.
It is not necessary to mention cost of commodity /products and profit separately in
the contract, only purchase price of the same may be mentioned.
After taking delivery of the commodity /product, the Buyer (Bank) shall be the
owner & shall bear all risk until disposal /delivery of the same to the ultimate
buyer.

Page 41 of 67
 Unit price and total price of the commodity (es)/products must be fixed and
mentioned in the Contract.

3.9.12 Processing and Appraisal:

Examine Shariah permissibility of the goods. Reject the proposal outright, if not
permitted by Islamic Shariah.
Check-up Credit Restriction Schedule of Bangladesh Bank and Head Office
Current investment Policy Guidelines.
Study on the strength, weakness, opportunity and treat (SWOT) of concerned
business, trade, products and deals in the Appraisal Report.
Separate Appraisal Report on F-167b is not required as the Client will avail Bai-
Salam Investment under Composite limit sanctioned by the Bank.
Visit the Business establishment of the Client. Talk to the business and important
personalities of the locality to ascertain the Honesty, Integrity, and Business
dealings of the Client.
Request for confidential report of the client from local Bank Branches.
Confidential report from Credit Information Bureau (CIB) of Bangladesh Bank
through Head Office Investment Division as per Instruction Circular of Head
Office in this Regard.
Obtain Financial Statement/Balance Sheet of the Client for the last three consecutive
years for investment Proposals of TK.50.00 Lac or above as per Head Office Instruction.
Inspect Land, Building, other Assets Properties proposed to be Mortgaged or
Hypothecated.
Forward Documents, Title Deeds and other relevant Papers to the approves Lawyer of
the Bank for examination and furnishing his opinion.
Please study the following caSourceully and note down the actual findings in the
Appraisal Form each item.
Whether sale price of the goods is payable by the client at specified future date in lump
sum or in installments as per proposal.

Page 42 of 67
 3.9.13 Sanction and Disbursement:

On receiving Application (F-136) under Composite Faculties/Investment approved

by the Competent Authority, Pre-Audit Memo to be prepared and got the same
approved by Branch Incumbent for Issuing Sanction Advice. Sanction Advice to
be issued as per prescribed format.
If the Sanction Advice is accepted by the Client, execute Bai-salam Agreement
(f-) immediately.
Collaterals and its legality, little to the property and all required security
Documents and the Charge Document are to be examine/obtained at time of
execution of Bai-Salam Agreement and all mortgage formalities are also to be
completed at this stage, if not done earlier.
Open file client-wise and deal-wise
Affix account number on each file and on the related papers.
Transaction to be recorded in the Computer by the authorized official property as
per guidelines in this regard.
After execution of the Bai-Salam Agreement and completion of the mortgage
formalities Including Charge Document as provided herein above, disbursement
may be made to the Client as per terms of Bai-Salam Agreement.

3.10 SWOT Analysis

Not surprisingly, in the competitive arena of marketing, SOWT analysis is a must based
on product, price, place and promotion of financial institutes like private bank. From the
SWOT analysis we can figure out ongoing scenario of the Bank. So, to have a better view
of the present banking practices of Social Islami Bank Limited, SWOT analysis was
found to be very necessary.

In SWOT Analysis Two Factors act as prime movers

Internal factors which prevail inside the concern which include strengths and
weaknesses.
On the other hand another factor is external factor which act as opportunity and threat.

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1. Strengths
The main strengths, as observed during the study include the following:

Usage of faster PC Bank Software, Leads Foreign Exchange module

Efficient Administration
Cooperation with each other
On-Line Banking, ATM Card, Credit Card and Debit Card service
Membership with swift
Good Banker - customer relationship
Strong financial position
Energetic as well as smart work force

2. Weaknesses
Based on observation and analysis, the following weaknesses were observed:

Reluctance to Advertising campaign

Existing manual vouchering system
Shortage of Branch
Lack of Consumer Credit Scheme.
People are discouraged to deposit as SIBL is listed as a problem bank by
Bangladesh Bank.
SIBL, which is committed to avoid interest, can't invest the permissible part of its
statutory liquidity Reserve and short Term liquidity surplus in the inter bank
money market.
This Bank can not invest in all those economic sectors, which are prohibited by
the law of Islam.

3. Opportunities
The opportunities for the bank, as opined by concerned peoples are stated below:

Huge Business Area

Page 44 of 67
 Growth of Sales Volume
Introducing any Branch Banking through Online
A large portion of our population is Muslim and they prefer Islamic Banking
rather than Conventional Banking.

4. Threats
The possible threats that this bank may encounter are the following:

Different services of Phone Banking /Home Banking by other banks

Default loan
Entrance of new Private Commercial Banks
Higher competition among the banks
Political unrest.

Page 45 of 67
 CHAPTER 4
Practical Experiences gathered
through doing internship

4.1 Internship position and duties:

I have started my internship program in SIBL on August 05, 2011. I joined the Social Islami Bank

Page 46 of 67
Limited (SIBL), Nawabpur Road Branch on August 05, 2011. I got three months for gather practical
knowledge from this branch. My office hour was 10am to 6pm. My practical working area and
responsibilities that schedule were given by bank manager as follows-

First 1.5 months I worked general banking department, here I worked in various
department of Nawabpur Branch of SIBL. Such as information section, account
opening section, clearing section, DD and TT section, in a long time I worked in
clearing section.
Second 20 days I was transferred to the investment department with a limited
scope of activities. The following activities have been performed by me- how
arranging the documents, how fulfill there investment document and knowing
about MPI. How the Bai Mechanism, Ijjara Mechanism & Share Mechanism. To
gather the knowledge about their processing and appraisal. I am informed how the
roles of investment applied. At the last day of second 20 days I faced a viva with
AVP Sir.
Finally I worked Foreign Exchange Department; Here I have worked there
documentation and worked at Foreign Exchange knew about like L/C, How to
open this. I worked at remittance and I also face here a viva with FAVP sir.

4.2 Learning points from my internship work at different departments:

Basically I have learned about the investment division and something I have tried to
gather from the several sector about the banking their banking activities. Now, it is clear
to me how Nawabpur Road Branch operates their operation. Through internship work I
have learned about:-
Maintaining the clearing register.
Entry in the In-ward and Out- ward register.
Receiving check.
Registering and providing AWCD and MSD Check books.
Writing letters in order to accelerate the frequency of transaction to the account
holders having low transaction.
Posting new accounts through the "ABABIL" Software which is currently used as
the database of the bank.
Processing Supplementary after closing transactions with customers and clients.

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 Writing Pay Order.
The investment procedures of the Nawabpur Road Branch.
Types of investment Mechanism of the Nawabpur Road Branch.
Investment division services toward their client.
The application of their investment rules.
Collection procedure of their principals and the profits.
There foreign exchange dealing procedure and requirements of foreign exchange.

Page 48 of 67
 CHAPTER 5
Findings and Analysis

Page 49 of 67
5.1 Analysis

5.1.1 Four Years Investment Position of SIBL

The following chart shows that the total Investment Position in SIBL

Table : Investment Position

Year of Investment Taka in Million Average Growth

16440.26
2008 24913.1 0%
19951.3 24913.1
2009 21%
26580.5 24913.1
2010 33.27%
36680.28 24913.1
2011 38%

Source: Annual Report 2008 to 2011

Figure : Investment Position

Source: Annual Report 2008 to 2011

Page 50 of 67
 Figure: Investment Growth

Source: Annual Report 2008 to 2011

Interpretation:

The total investment happened in four years were Tk. 99652.34 million which average
investment of a year was Tk. 24913.09. In the figure , it is observed that the investment
positions of SIBL were going up. In the year 2008, investment position was Tk. 16440.26
million, which in the year 2011 it was Tk. 36680.28 million, the investment was increased
by 38%. So investment was increase.

5.1.2 Four Years Investment Income of SIBL

Table: Investment Incomes

Year of Investment Taka in Million Average Growth

2008 2092.95 2947.59 0%

2009 2732.25 2947.59 31%

2010 3078.98 2947.59 12.70%

2011 3886.18 2947.59 26.22%

Source: Annual Report 2008 to 2011

Page 51 of 67
 Figure: Investment Income

Source: Annual Report 2008 to 2011

Figure: Income Growth

Source: Annual Report 2008 to 2011

Interpretation:

The total investment income happened in four years were Tk. 11790.36 million which
average investment income of a year was Tk. 2947.59 million. In the figure, it was
observed that the investment income of SIBL were upward trend. In the year 2008,
investment income was Tk. 2092.95 million, which in the year 2011 it was Tk. 3886.18
million, through there were little bit fluctuation in the year 2009 & 2010. So investment
income was fluctuated.

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 Branch Investment Activities

5.1.3 Three months Investment position of Murabaha at Nawabpur Road

Branch.
Table : Murabaha

Month of Investment Taka in Million Average Growth

January 403.38 413.35 0%

February 409.43 413.35 1.50%
March 427.25 413.35 4.40%
Source: Investment Affairs January to March 2012

Figure : Investment of Murabaha

Source: Investment Affairs January to March 2012

Figure : Investment of Murabaha

Source: Investment Affairs January to March 2012

Page 53 of 67
 Interpretation:

The total Murabaha investment happened in three months were Tk. 1240.06 million
which average Murabaha investment of three months was Tk. 413.35million. In the figure
, it observed that the Murabaha Investment of SIBL were upward trend. In the year 2012,
31 January, investment position was Tk. 403.38 million, which in the year 2012, 31
March 2012 it was Tk. 427.24 million. So Murabaha investment was increased.

5.1.4 Three months Investment Position of Bai Muajjal at Nawabpur Road

Branch.

Table : Bai Muajjal

Month of Investment Taka in Million Average Growth

January 516.80 531.84 0%

February 504.21 531.84 -2.45%

March 574.51 531.84 13.94%
Source: Investment Affairs January to March 2011

Figure: Investment of Bai Muajjal

Source: Investment Affairs January to March 2012

Figure: Investment of Bai Muajjal

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Source: Investment Affairs January to March 2012

Interpretation:

The total Bai Muajjal investment happened in three months was Tk. 1595.52 million
which average Bai Muajjal investment of three months was Tk. 531.84million. In the
figure , it was observed that the Bai Muajjal Investment of SIBL was upward trend. In the
year 2012, 31 January, investment position was Tk. 516.80million, though there is little
bit fluctuation in February, which in the month 31 March 2012. it was Tk. 574.51million,
so investment of Bai Muajjal were increased.

5.1.5 Three months Investment position of HPSM at Nawabpur Road Branch.

Table : HPSM (Hire Purchase Shirkatul Melk)

Month of Investment Taka in Million Average Growth

January 294.71 294.93 0%

February 293.42 294.93 -0.44%

March 296.67 294.93 1.12%

Source: Investment Affairs January to March 2012

Figure: Investment of HPSM

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Source: Investment Affairs January to March 2012

Figure: Investment of HPSM

Source: Investment Affairs January to March 2012

Interpretation:

The total HPSM investment happened in three months were Tk. 884.8 million which
average HPSM investment of three month were Tk. 294.93 million. In the figure , it was
observed that the HPSM Investment of SIBL was upward trend. In the month of February
2012, investment was decreased by Tk 293.42 million but again in the month of march
bank was recovered its position, In the 31 March 2012 it was TK. 296.67million. So
investment income was increase.
5.1.6 Three months Investment position of Quard at Nawabpur Road
Branch.

Table : Quard

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Month of Investment Taka in Million Average Growth

January 56.96 42.95 0%

February 36.62 42.95 -35.71%

March 35.27 42.95 3.68%

Source: Investment Affairs January to March 2012

Figure: Investment of Quard

Source: Investment Affairs January to March 2012

Figure: Investment of Quard

Source: Investment Affairs January to March 2012

Interpretation:

The total Quard investment happened in three months were Tk. 128.85 million which
average Quard investment of three month was Tk. 42.95 million. In the figure , it was
observed that the Quard Investmwnt of SIBL were upward trend. In the month, 31
January, investment position was TK. 56.96 million, in the month of February 2012,
investment was decreased by Tk 36.62 million, which in the month of 31 March 2012 it

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was Tk. 35.27 million. So it can be concluded that Quard investment were decreasing in
gradually.

5.1.7 Outstanding of Different in Nawabpur Road Branch.

Table : Outstanding of Different investment

Month Murabaha Bai-Muzzal HPSM

January 403.38 516.80 294.71
February 409.43 504.21 293.42
March 427.25 574.51 296.67

Source: Investment Affairs January to March 2012

Figure: Outstanding position

Source: Investment Affairs January to March 2012

Interpretation:

This figure shows the investment outstanding position of SIBL at Nawabpur Road Branch
from the month of January to March 2012, Murabahas average were Tk. 413.35 million,
growth was 4.40%, so it was a stable in three months. Bai-Muzzal shows her average was
Tk. 531.84 Million it is fluctuated and HPSM shows her average was Tk. 294.93 million,
growth were 1.12% it was fluctuated in month to month.

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5.1.8 Profits on Investment

Table : Profits on Investment

Month of Investment Taka in Million Average Growth

January 22.37 22.33 0%
February 21.06 22.33 -5.86%
March 23.57 22.33 11.92%
Source: Investment Affairs January to March 2012

Figure: Profit from Investment

Source: Investment Affairs January to March 2012

Figure: Profit of Investment

Source: Investment Affairs January 2012 to March 2012

Interpretation:

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The total profit on investment happened in 3 for months are Tk. 67 million which average
profit on investment were Tk. 22.33 million. Where the graph shows there was gradual
rise in the month of January to March Tk 22.37 to Tk 23.57 million. After that there was
gradual fall from the month of February 21.06 million. The highest profit was made in the
month of March and the lowest profit was made in the month of February.

5.2 Findings of the Study:

Findings of the basis of previous analysis and practical experience of 90 days internship
program, the following findings are observed during the internship period.

5.2.1 Specific Findings

Investment position of this bank was increasing. The bank situated in Commercial
area that is why its commercial investment is very high in every mode.
HPSM investment position is slightly lower in previous months but Bai-Muajjal &
Murabaha investments were increasing month by month.
Nawabpur Road Branch has export import and remittance facilities. Export
achievements in last month of this bank are higher than previous two months.
Quard Investment Mechanism amount in 31 January 2012 was 56.96 Million but
in 31 March 2012 the amount was 35.27 Million.
In the month of February, 2012 Investment decrease by 1.84%.
In the month of March, 2012 Investment increase by 6.78%.
Profit in the month of February of SIBL Nawabpur Road was lowest profit TK.
21.06 Million.

5.2.3 General Finding:

Banks employees are very friendly and helpful but for overcrowded customer
traffic with the banks employees do not provide their highest level service to their
clients.
Customer have some complain about this branch, such as:

a. Insufficient manpower.
b. Working Environment.
c. AC problem.
ATM service of this bank is not sufficient.

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 An online banking facility of this branch is not standard.
The decoration of this branch is old fashioned.
Customers are not treated equally.
Some times clients are really dissatisfied about the employees behavior.

5.3 SWOT Analysis of SIBL

Strengths, Weaknesses, Opportunities and Threats (SWOT). SWOT analysis is a tool for
auditing an organization and its environment. It is the first stage of planning and helps
marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities,
and threats. Strengths and weaknesses are internal factors. Opportunities and threats are
external factors. As a company, SIBL also has its strength, weakness, opportunities, and
threats which are pointed below sequentially.

5.3.1 Strengths of SIBL

Social Investment Bank Limited (SIBL) was newly established Bank in the
Banking Sector but it builds strong reputation in short time.
SIBL has strong network throughout the country and provide quality services to
every level of Customers.
Communication with all Branches reduces excessive paper-works waste of time
for valued Customer Transaction.
ATM Cards of SIBL give the Customers 24-hour Banking facilities from his / her
accounts.
Phone Banking of SIBL gives the Customers, opportunity to make enquiries and
service request over the telephone.
Its investment and Customer Deposit Quality is better than most of other Private
Commercial Banks in Bangladesh.

5.3.2 Weaknesses of SIBL

One of the greatest weaknesses of Social Investment Bank Limited is the shortage
of manpower in almost each and every division. During the working hours of the

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 Banks, the employees have to be fatigued and can not provide proper attention
that type of services, which create dissatisfaction of the customers.
Higher Service Charge in some areas of Banking operations than that of the
Nationalized Commercial Banks discourage the customers for opening and
maintaining accounts with SIBL.
Growth in assets of a Bank depends on how fast its deposits grow. But in the total
deposit side SIBL is facing some problems from its competitors.
There is very little practice for increasing motivation in the employees by the
management of Social Investment Bank Limited, which discourages them to provide the
best service to the customers. This is another weakness of the Bank.
.

5.3.3 Opportunities of SIBL

A developing market such as Internet facilities can make them different from the
other commercial banks.
Micro credit system is newly fast growing movement, it can efficiently use this for
them and also for the society.
Increasing their remittances, they could adopt new strategies.
They must have to increase their branches.
Like some commercial bank, they can take initiative to increase their A/C holder.
Giving preference in on-line base banking system.
Increase customer service opportunities by creating new and innovative facilities.

5.3.4Threats of SIBL
Already all commercial banks in the country have taken their stone eye on
customer services which is hardly noticeable in SIBL.
Various service charges of the competitor bank are comparatively lower than this
bank.
Attractive schemes and highly convenient services offered by other banks
Appearance of new and potential banks.
Visionary and committed human resource in competitor banks.

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 CHAPTER 6
Conclusion and recommendation

6.1 Conclusion

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Social Islami Bank Ltd. is a new generation bank. This bank is committed to provide high
quality financial service of product to contribute to the growth of GDP of the country
through stimulating accelerating the place of industrialization, creating employment
opportunity for the youth, poverty alleviation, raising standard of living of limited of
income group and overall sustainable socio economic development of the country.

The study based on the trend analysis with particular reference to the deposits,
investment, overdue, recovery, profitability and liquidity. The analysis reveals that
investment of SIBL is sound and it can improve day by day. SIBLs capital adequacy,
deposits, reserves, earning per share, export, import and remittances are also increasing.
Investment mechanism of SIBL and conventional bank is different but procedure is all
most the same. Conventional banks deal with money and loans and advance but SIBL
deals with selling and buying the goods. SIBL is like a selling and buying agent. Mode of
investment of conventional, like Cash Credit (CC), Hire Purchase and Call Money
investment is fully difference. SIBL never provides cash to the clients and call money
investment. So called general principle of Hire Purchase is not permitted as per shariah.
As a result SIBL follows the Hire Purchase under Sirkatul Meelk (HPSM) instead of Hire
Purchase. Ownership is gradually transferred to the client after payment of each
installment in the HPSM system but it is fully ignored under traditional Hire Purchase
system. SIBL does not invest its money to the call market due to violation of Islami
Shariah. So, the investment mechanism of SIBL differs from that of conventional banks.

Finally, it may be said that the banks in Bangladesh, an equal treatment is being followed
for all banks including the Islamic ones by the Bangladesh Bank. In some cases,
Bangladesh Bank has given some special provision for the Islamic banks. Yet, for the
smooth development and operation of the Islamic banking, Bangladesh Bank should
devise the separate regulatory and supervisory guidelines for the Islamic banks and non-
bank Islamic financial institutions. Islamic banks can provide efficient banking services to
the nation if they are supported with appropriate banking laws, and regulations.

6.2 Recommendations

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It is unexpected to have many problems in any organization. I have found some of the
problems of investment section of SIBL. To solve these problems, I can suggest following
recommendations:

Bank increases its HPSM position and needs to take quick steps to improve this
position.
Bank should try to increase the Quard investment and needs to take some steps to
improve this position.
In opening an investment account, customer facing some employ harassments it
should be redeemable, because satisfies of client.
When more clients come on one disk. Another employee should be handle to the
overcrowded customer.
Bank should develop their Tele Banking/Mobile Banking facilities.
SIBL should increase their salary structure to appoint skilled manpower so that
they can provide more innovative and modern customer services.
Employ should be more trained up their employees, by which they can ensure the
competent workforce.
ATM service must be increase within short time.

I believe that if the bank authority accepted the above mentioned recommendations.
That would be better for their bank and betterment for establishing a well reputed
modern bank in Bangladesh.

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References:
Books:
Brigham Eugene F, Houston, Joel F, (2004), Fundamentals of
Financial Management 10th edition, Ohio, Thomson, South Western,
P-5.
Gitman, Lawrence J. (2004), Principals of Managerial Finance,
(Singapore:Person Education), 10th ed,P-4.
Hossain Mr. Kabir (2003), Islamic Banking, Management of Funds by
Islamic Banking Islamic Investment Mechanism, Dhaka Chowkash
Printers Limited, Pp-123-142.
Khan A.R, (1993), Investment of Islamic Banking System Dhaka
University Journal of Business Studies, Vol 12 (2).
Periodicals
Annual Report of Social Islami Bank Ltd. 2011 to 2008.

Websites:
http://www.siblbd.com
http://www.thefreedictionary.com/finance
http://www.investorglossary.com/investment.htm
http://www.answers.com/topic /finance

Appendix:
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SIBL : Social Islami Bank Limited
A/C : Account
AWCA : Al-wadeeah Current Account
DD : Demand Draft
IPO : Initial Public Offering
L/C : Letter of Credit
DPS : Deposit Pension Scheme
MMPDS : Mudaraba Monthly Profit Distribution Scheme
MSA : Mudaraba Saving Account
MTDR : Mudaraba Term Deposit Receipt
PO : Pay Order
SME : Small and Medium Enterprise
TT : Telegraphic Transfer
MPI : Mudaraba Post Income
HPSM : Hire Purchase Shirkatul Melk
WA : Waqf Account

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