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A Report on Islami Bank
Citation preview
2013
1.0 Introduction:
The Jews in Jerusalem introduced a kind of banking in the form of money lending before the
birth of Christ. The word 'bank' was probably derived from the word 'bench' as during ancient
time Jews used to do money -lending business sitting on long benches.
First modern banking was introduced in 1668 in Stockholm as 'Savings Pis Bank’, which
opened up a new era of banking activities throughout the European Mainland.
In the South Asian region, early banking system was introduced by the Afgan traders
popularly known as Kabuliwallas. Muslim businessmen from Kabul, Afganistan came to
India and started money-lending business in exchange of interest sometime in 1312 A.D.
They were known as 'Kabuliawallas'. The financial system of Bangladesh consists of
Bangladesh Bank (BB) as the central bank, 4 nationalized commercial banks (NCB), and 5
government owned specialized banks, 30 domestic private banks, 10 foreign banks and 28
non-bank financial institutions. The financial system also embraces insurance companies,
stock exchanges and co-operative banks
1.1 Brief scenario of Bangladesh:
With the rapid growing competition (due to free market economy) among nationalized,
foreign and private commercial banks as to how the banks operates its banking operation and
how customer service can be made more attractive, the expectation of the customers has
immensely Increased. Reciprocating the sentiment, commercial/private banks are trying to
elevate their traditional banking service to a better standard, to meet the challenging needs,
demands. Side by side these banks have now concentrated their attention towards
diversification of their products for better performances and existence. For the above
circumstances, it has become necessary for Social Islami Bank Ltd, one of the leading
commercial banks, to focus its attention towards the improvement of the customer service.
That’s why it is quite justified to make an in-depth study about its operation and evaluate the
service provided by this bank and scope for its improvement. The study may help formulating
policy regarding the ideas relating to the feelings of the customers and bankers. Further more,
Social Islami Bank Ltd executives who are actually executing the policies undertaken by the
top management will have a chance to communicate their feelings and will have the feedback
about their dealing from the customers.
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1.2 Significance of the Report:
The major motive of this study is to become familiar with the practical business world and to
attain practical knowledge about the overall Banking, which is so much essential for each and
every student to meet the extreme growing challenges in job market. This report finding’s
will be beneficial for the management in attempting to improve the overall service quality
and also to promote the company’s services to customers. So the study will be very useful for
the top management in improving the customer satisfaction. Besides, it would be a great
opportunity for me to attain practical knowledge on the various spheres of banking business.
So this study is very significant for both the company and me.
1.3 Origin Of The Report:
This report is one of the major parts of BBA Program offered by Presidency University
Bangladesh. In today’s world, education is not just limited to books and classrooms.
Education now-a-days is understanding the real world and applying knowledge and education
for the betterment of the society. So the Internship is such a way that helps to apply the
knowledge and understanding of the courses and to use them in a practical field. Social
Islami Bank Limited gives me this opportunity to be engaged there to gather practical
experience about the real business world and to observe different practical aspects of
education.
1.4 Objectives of the Report:
1. To understand the General Banking and Investment products used by the
Bashundhara Branch of Social Islami Bank Ltd.
2. To be acquainted with how bank perform its operation.
3. To focus on products, services and financial condition of SIBL.
4. To export strengths and weakness of SIBL in comparison with competitors.
5. To analysis general banking activities of Social Islami Bank Limited.
6. To analysis the financial performance of SIBL.
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1.5 Methodology:
A certain methodology was followed in order to fulfill the objectives of the report,
making maximum utilization of the scopes and to avoid the limitations as much as
possible to prepare the final outcome of this report.
Sources of Information
I have collected the information/data from the following sources, which has helped me to
make this report. The source is divided into two parts:
a) Primary Source.
b) Secondary Source.
1 The “Primary Sources” are as follows:
Data collected for the first time is called primary data. The methods used to collect such data
include:
Face-to-face conversation with the respective officers and staffs of the Branch.
Informal conversation with the clients.
Practical work exposures from the different desks of the departments of the
Branch covered.
2 The “Secondary Sources” of data and information are:
The secondary data sources are annual reports, manuals, and brochures of Social Islami Bank
limited and different publications of Bank. To identify the implementation, supervision,
monitoring and repayment practice- interview with the employee and extensive study of the
existing files.
Methods used to collect secondary data include:
Annual Report of Social Islami Bank Ltd and
Internet.
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Data Analysis and Reporting:
Data have been analyzed through proper quantitative and qualitative techniques and reported
from time to time to the concerned authority. After collecting data, they were coded and
processed, analyzed and graphically used MS word, MS Excel. Tables and graphs were used
to make the data meaningful and comparable.
1.6 Scope Of Study:
Internship experience plays a vital role for every student to implement their theoretical
knowledge and get a practical knowledge from any organization. A student can
implement this internship experience in his future work area. Social Islami Bank
Limited gives me the opportunity for gathering practical experience and preparation
of the report. Finally I prepared this report under the supervision Ms.Annesha Zeheen,
Lecturer, of Presidency University, Bangladesh
1.7 Limitation of the study
It is obvious that every study has some limitations. The study I have made is of great
importance and required me huge work. Those limiting factors that hampered my smooth
workings in bank and finally in preparing this report are as following:
Time Limitation: Within such a short period of time, it was not possible for me to study
everything about Social Islami Bank, Bashundhara Branch.
Confidentiality: In order to guard the secrecy of the bank, Social Islami Bank Ltd. is not
interested to disclose some certain information required for this report.
Lack of Co-operation: As the bank officials are so much busy that it difficult for them to co-
operate with me, which is also a constraint for this report.
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The organization maintains strict confidentiality about their financial and other
information. They are afraid of any type of information leakage to their competitors. So
there was always difficulty to have appropriate information from them.
Duration of the study was too short to have a sound understanding of the overall
banking.
Scope of my study is so wide that analytical and comprehensive study is not possible.
Lack of sufficient books, papers and journals etc.
Web site of the Organization isn’t up to date to gather valuable information.
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2.0 Introduction:
Social Islami Bank Limited was incorporated in Bangladesh in the year 1995 as a banking
company under the companies Act, 1994. Since its establishment, it has come forward as a
private commercial bank and very encourage has come forward as the stimulator of economic
activities in the country. The bank has been entrusted with the responsibility of undertaking
various steps related to the development of the country’s commercial, industrial and
agricultural sectors. The banking sector of a country is called the economic barometer of the
country. As a pioneer commercial bank in the private sector in Bangladesh, Social Islami
Bank provides considerable financial helps to the business sector that imports industrial
goods and/or exports excess production outside the country for profit. Thus for imports the
Social Islami Bank provides LIM (Loan against Import Merchandise) and LTR (Loan against
Trust Receipt) facility and for exports provides both pre shipment and post shipment
finances. Thus with these bank helps the prospects in the business sector has increased more
than ever before.
For coordinating my internship I have been place in Social Islami Bank Limited, Basundhara
Branch, Dhaka. There are 03 sections in Bashundhara Branch. They are: 1) General Banking,
2) Investment Department, 3) Cheque Clearance Department . I shall devote my utmost effort
and attention to learn banker’s functions. After completion of the internship, I will render my
all knowledge to present the report .
2.2 Historical Background of SIBL:
Social Islami Bank Limited (SIBL) is a banking company registered under the companies Act
1994 with its head office in 15 Dilkusha C/A, Dhaka-1000. The bank operates as a scheduled
bank under a banking license issued by the Bangladesh Bank, Central Bank of the country.
The Bank started its operation from 22, November 1995. SIBL is a capitalized new
generating Bank with an authorized capital and paid up capital of Taka 585 million in 2007
and also 585 million respectively as of December 2006. The bank under takes all types of
banking transaction to support the development of trade and commerce in the country. SIBL
services are also available for the entrepreneurs to set up new venture and BMRE of
industrial units. To provide clientele services in respect of international trade it has
established wide corresponded banking relationship with local and foreign bank stride and
financial interest home and abroad. Since the very inception, Social Islami Bank Ltd. is
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working with the philosophy of serving the nationals as an ideal and unique financial house.
Every organization has some objectives of its own. The prime objective of Social Islami
Bank Ltd. is to earn profit throw undertaking Social Islami Bank Limited Page 9
the responsibility of providing financial help for the development of the country’s
commercial and industrial sector. Now the year 2012 is envisaged as a golden year of SIBL.
Adopting new strategic Business Policy, SIBL will leave no stone unturned to boost business
in all areas of operation to achieve its corporate goals.
2.3 Overview Of The Bank:
Social Islami Bank Ltd. (SIBL) became operational on 22 November 1995 with a clear
manifesto to demonstrate the operational meanings of participatory economy, banking and
financial activities as an integrated part of an Islamic code of life. SIBL is operating three-
sector Banking, such as, Formal, Non-Formal and Voluntary sector, SIBL is beginning a new
area of Islamic Banking having social, ethical and moral dimension in each of its activities
ranging from credit to construction, trading to transport, farming to fishing, manufacturing to
mining and so on. Some renowned personalities and institutions are sponsors and directors of
this bank, specially, the Founder Chairman Prof. Dr. M. A Mannan, who is an internationally
reputed. Islamic thinker and Professional Economist. He served in different important
capacities in different International Organizations including Asian Development Bank and
Islamic Development Bank. With his heartiest efforts and inspiration Ex-Secretary General of
O.I.C Dr. Hamid AI-Gabid and Deputy Speaker of Saudi Arabia and former Secretary
General of Rabeta, Dr. Abdullah Omar Nasseef, and Ex-Commerce Minister of Saudi Arabia
Salah Jamjoom took part in the establishment of the Bank.
Social Islami Bank Limited (SIBL) is a banking company registered under the companies Act
1994 with its heads office 15 Dilkusha C/A, Dhaka-1000. The bank operates as a scheduled
bank under a banking license issued by the Bangladesh Bank. The Bank started its operation
from 22, November 1995. The final impact on capital at the year end 2011 stood at : a)
aid up capital 6393.93 million against taka 2987.81 million of 2010 and (b) total
capital (as per BASEL-ii) taka 9534.52 million against taka 4678.56 million of 2010.
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2.4 The Vision:
Social Islami Bank Limited started its journey with the concept of 21st Century Islamic
participatory three sector banking model: i) Formal Sector- Commercial banking with latest
technology; ii) Non-formal Sector-Family empowerment Micro-credit & Micro-enterprise
program and iii) Voluntary Sector- Social Capital mobilization through CASH WAQF and
others. Finally, “Reduction of Poverty Level” is the Vision, which is a prime object as started
in Memorandum of Association of the Bank with the commitment “Working Together for a
Caring Society.”
2.5 The Mission:
1. High quality financial services with the latest technology.
2. Fast, accurate and satisfactory customer service.
3. Balanced & sustainable growth strategy.
4. Optimum return on shareholders’ equity.
5. Introducing innovative Islamic banking products.
6. Attract and retain high quality human resource.
7. Empowering real poor families and create local income opportunities.
8. Providing support for social benefit organizations-by way of mobilizing funds and
social services.
2.6 Our Values:
1. Honesty .
2. Transparency.
3. Efficiency.
4. Accountability .
5. Reliability.
6. Innovation.
7. Flexibility.
8. Security.
9. Technology.
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2.7 Goal:
Social Islami Bank has efficient and experienced staff for giving better service to its clients
along with modern technology.
Non-formal sector
The Bank’s special program is directed mainly to up-lift the socio-economic conditions of
rural and urban poor. In order to achieve this objective, Social Islami Bank Ltd. is involved in
the mobilization and utilization of local resources and the surplus labor mainly from within
and provide employment opportunities to the unemployed and the landless besides investing
in N.G.O. activities, educational, health expansion activities etc. Social Fellowship Program
for Students has already been introduced; Family health service cheque is being introduced.
Investment voluntary sector:
This Bank has a special program of development of various religious and social service
oriented institutions. Within this program, Mosque, Maktab, Waqf, Charitable organizations
etc. All properties under this program will be utilized in productive activities on participation
basis. Besides, Hajj (pilgrimage) and Kurbani (sacrifice of animals according to dictates of
Islam) schemes are included in the program of Social Islami Bank Ltd Cash Waqf Certificate
has already been introduced for the first time in history.
2.8 Product and service:
Mudaraba Term Deposit
Mudaraba Savings Deposit
Al-Wadia Current Account
Mudaraba Notice Deposit
Mudaraba Scheme Deposit
Mudaraba Hajj Savings Deposit
Mudaraba Monthly Savings Scheme
Mudaraba Special Deposit Pension Scheme (5 Years)
Mudaraba Monthly Profit Deposit Scheme
Mudaraba Education Deposit Scheme
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Mudaraba Home Saving Scheme
Mudaraba Millinery Deposit Scheme
ATM Service
Locker Service
Online Banking
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3.0 GENERAL BANKING:
General banking department aids in taking deposits and simultaneously provides some
ancillaries services. General banking is the front side banking services department. It
provides those customers who come frequently and those customers who come one time in
banking for enjoying ancillary services. In some general banking activities, there is no
relation between banker and customers who will take only one service from bank. On the
other hand, there are some customers with who banks are doing its business frequently. SIBL
(Social Islami Bank Limited) General banking is divided into five sections.
1. Account Opening activities
2. Bills and Clearing activities
3. Cash activities
4. Remittance activities
5. Closing of an Account activities.
3.1 Account Opening Section:
Under this section, SIBL officer opens different types of account on the request of clients.
The procedure of opening account is given below.
Procedure and rules to open a new account:
Mudaraba Saving Account (Code No: 134)
Before opening of a savings Bank Account the following formalities must the completed by
the customers:
1. Account opening From: To be filled in and signed by each account holder.
2. Latest passport size photograph (2 copies) for each account holder attested by the
introducer.
3. Account payee cheque in favor of the account holder or cash deposit.
4. Copy of Voter identity card/Ward Commissioner Certificate.
5. Introduction of account holder (Mandatory): To be signed by introducer with ID and
account number.
6. 1 (One) copy of nominee’s photograph (attested by the account holder).
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7. Copy of voter identity card (nominee).
8. Initial deposit TK. 1000 (One thousand taka only)
After fulfilling above formalities, open an account for the client and provide the customer
with a deposit book and a checkbook.
Al-Wadiah Current account (Individual) – (Code No: 133)
1. Account opening From: To be filled in and signed by each account holder.
2. Latest passport size photograph (2 copies) for each account holder attested by the
introducer.
3. Attested copy of valid Trade license.
4. Attested copy of passport of the proprietor.
5. Company seal and TIN (Tax identification Number) Certificate.
6. Copy of Voter identity card.
7. Introduction of account holder (Mandatory): To be signed by introducer with ID and
account number.
8. 1 copy of nominee’s photograph (attested by the account holder).
Mudaraba Special Notice Account (Code No: 136)
1. Any company, business entity, debt of the govt. organization and trust or any person
can open this account.
2. This account is operated under Mudaraba principle.
3. Any amount can be withdrawn or transferred to al Wadiah current account or any
other accounts after placing a notice of seven days.
4. Cheque books are provided for these accounts.
5. The profit rate is comparatively lower.
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3.2 Deposits Account by SIBL:
Mudaraba Saving Deposits (MSD) (Code No: 134)
These are profit bearing deposit account. The drawings are restricted in respect of both the
amount of withdrawal and the frequency there of so the payment of interest does not become
any compensating for the banker. Some time the restrictions are ignored against the
depositor’s written confirmation to forgo his claim for interest on the total balance for the
whole month of withdrawal.
Some Special Saving Scheme
1. Mudaraba Hajj Saving Scheme
2. Mudaraba Education Scheme
3. Mudaraba Millionaire Scheme
People of Bangladesh are the followers of Islam. They are mostly interested to make interest
free deposits. Taking these facts into consideration SIBL a joint venture Islami bank
introduced a monthly installment based “Mudaraba Millionaire Scheme”
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Mudaraba Monthly Profit Deposit Scheme
The features of this scheme are as follows:
1. Tk. 1,00,000, 1,10,000, 1,20,000 or 1,25,000 or any amount multiple can be deposited
under this scheme.
2. The duration of the amount should be for Five years.
3. Profits shall be distributed under this scheme as follows:
1,00,000 Tk. 900 (Provisional)
1,10,000 Tk. 1000 (Provisional)
1,20,000 Tk. 1100 (Provisional )
1,25,000 Tk. 1150 (Provisional)
4. The payable profit will become due after 1 month of deposit. But the amount will be
deposited to account in the last week of the month.
5. Generally, a depositor cannot withdraw the amount before 5 years. But in unavoidable
circumstance the depositor can withdraw the amount and in that case the depositor
will have to submit the duly filled application form of the scheme.
Mudaraba Term Deposit
The term and condition Mudarabah is same as general Mudarabah excepting one that under
this arrangement the owner of the fund agrees keep the deposit remain with the Islami bank
for a particular time period (3 months/6 months/one year/two year/three year).
Al-Wadiah Current Deposit (Code No: 133)
I. AL WADIAH Current Deposit A/c’s are opened proper introduction with minimum
initial deposit fixed by the Bank.
II. AL WADIAH Deposit is accepted on AL WADIAH principles which mean al Amanat
with permission to use. According to this principle Bank can use the fund of the account
along with other funds as per Shariah at bank’s own risk. Account holders will not share any
profit/loss.
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III. The Law and regulation of Bangladesh, usual customs and procedures common to
banks in Bangladesh including Islamic Banking Principles shall apply to and govern the
conduct of account opened with the Bank.
Cash Waqf Certificate
i. In this case the waqf concept of Islam has been borrowed by the Islami bank for deposit
mobilization purpose.
ii. The nature of account is donation type.
iii. The accountholder operate the account for benevolent purposes.
iv. He can withdraw any amount from the account for personal use or consumption.
v. Highest weightage is given to this account in distributing profit.
3.3 Bills and Clearing Section
SIBL Local Office branch performs the bill clearing function through Local office. SIBL
Local office acts as the agent of all SIBL branches for the clearing house of the Bangladesh
Bank. There are two types of cheque which are-
1. Inward clearing cheque
2. Outward clearing cheque
A. Inward Cheque
Inward cheques are those ones drawn the respective branch which have been presented on
other banks and will be cleared/honored through the clearing house of Bangladesh Bank. For
example the cheque drawn on SIBL Local Office Branch then the cheque is called inward
cheque of SIBL Local Office Branch.
Account treatment:
Dr. Cr.
SL NO. Particular Amount SL. NO. Particular Amount
01 Customer’s A/C *** 01 SIBL General A/C ***
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B. Outward Cheques:
Outward cheques are those ones drawn on other bank branches which are presented on the
concerned branch for collection through clearing house of Bangladesh Bank. These cheques
are called outward cheques.
C. Outward bills for Collection (OBC):
By OBC, we mean that those cheques drawn on other which are not within the same clearing
house. Officer gives OBC seal on this type of cheques and later sends a letter to the manager
of the branch of the some bank located in the branch on which cheque has been drawn. After
collection of that bill branch advices the concerned branch in which cheques has been
presented to credit the customer account through Inter Branch Credit Advice (IBCA).
In absence of the branch of the same bank, officer sends letter to manager of the bank on
which the cheques is drawn. That bank will send pay order in the name of the branch. This is
the procedure of OBC mechanism.
D. Clearing:
The scheduled banks clear the cheques drawn upon one another through the clearing house.
SIBL is a scheduled Bank. According to the Article 37 (2) of Bangladesh Bank Order, 1972,
the banks which are the member of the clearinghouse are called as Scheduled Banks. This is
an arrangement by the central bank where everyday the representative of the member banks
gathers to clear the cheques. The place where the banks meet and settle their dues is called
the clearinghouse. The clearinghouse sits for two times a working day.
The SIBL Local office Br. sends the instruments through Inter Branch Debit Advice
(I.B.D.A). SIBL Local Office acts as an agent in this case. For this, Local Office branch gives
the following entries,
Account treatment:
Dr. Cr.
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SL NO. Particular Amount SL. NO. Particular Amount
01 SIBL General A/C *** 01 Customer’s A/C ***
If the instrument is dishonored, the instrument is returned to the Local Office branch through
I.B.D.A. along with the following entries,
Account treatment:
Dr. Cr.
SL NO. Particular Amount SL. NO. Particular Amount
01 Customer’s A/C *** 01 SIBL General A/C ***
E. Receiving Cheques for Collection:
In SIBL, cheques of its customers are received for collection from other banks. In case of
receiving cheques, following points should be checked very carefully.
1. The cheques should not carry a date older than the receiving date for more than 6
months. In that case it will be a ‘stale cheque’ and it will not be allowed for
collection. Again the date of the cheque should not be more than 1 day’s forward than
the receiving date.
2. The amount in figures and words in both sides of the pay-in-slip should be same and it
should also be same with the amount mentioned in figures and words in the cheque.
3. The name mentioned in the cheque should be some in both sildes of the pay-in-slip
and it should be the same with the name mentioned in the cheque.
4. The cheque must be crossed.
F. Cheque and Crossing
A “Cheque” is a bill of exchange drawn on a specified banker and not expressed to be
payable other wise than on demand. (According to section-6, Negotiable Instrument Act,
1881).
A cheque may be classified into:
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I. An open cheque which can be presented for payment by the holder at the counter of
the drawer’s bank.
II. A crossed cheque which can not be paid only through a collection banker.
Crossing cheque: A cheque is said to be crossed when two transverse parallel lines with or
without any words are drawn across the face.
Crossing may be general, special or restrictive.
Cash Section
The cash section of any branch plays very significant role in general banking department.
Because, it deals with most liquid assets the SIBL Local Office Branch has an equipped cash
section. This section receives cash from depositors and pay cash against cheque, draft, PO
and pay in slip over the counter.
1. Receiving Cash:
Any people who want to deposit money will fill up the deposit slip and give the form along
with the money to the cash officer over the counter. The cash officer counts the cash and
compares with the figure writer in the deposit slip. Then he put his signature on the slip along
with the ‘cash received’ seal and records in the cash receive register book against A/C
number.
At the end of the procedure, the cash officer passes the deposit slip to the counter section for
posting purpose and delivers the duplicate slip to the clients.
1. Account treatment:
Dr. Cr.
SL NO. Particular Amount SL. NO. Particular Amount
01 Cash A/C *** 01 Customer’s A/C ***
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2. Disbursing Cash
The drawn who wants’ to receive money against cheque to the payment counter and presents
his cheque to the officer. He verifies the following information:-
I. Date of the cheque
II. Signature of the A/C hold
III. Material alteration
IV. Whether the cheque is crossed or not
V. Whether the cheque is endorsed or not
VI. Whether the amount in figure and in word correspondent or not
Then he checks the cheque from computer for further verification. Here the following
information is checked:
I. Whether there is sufficient balance or not
II. Whether there is stop payment instruction or not
III. Whether there is any legal obstruction (Garnishee Order) or not
After checking everything, if all are in order the cash officer gives amount to the hold and
records in the paid register.
Account treatment:
Dr. Cr.
SL NO. Particular Amount SL. NO. Particular Amount
01 Customer’s A/C *** 01 Cash A/C ***
The cash section of SIBL deals with all types of negotiable instruments, cash and other
instruments and treated as a sensitive section of the bank. It includes the vault which is used
as the store of cash instruments the vault is insured up to TK. 60 laces. If the cash stock goes
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beyond this limit, the excess cash is then transferred to Head Office. When the excess cash is
transferred to SIBL Head Office the cash officer issues IBDA.
Account treatment:
Dr. Cr.
SL NO. Particular Amount SL. NO. Particular Amount
01 SIBL General A/C *** 01 Cash A/C ***
When cash is brought from SIBL Head Office then,
Account treatment:
Dr. Cr.
SL NO. Particular Amount SL. NO. Particular Amount
01 Cash A/C *** 01 SIBL General A/C ***
3.4 Remittance of Funds
Remittance of funds is ancillary services of SIBL. It aids to remit fund from one place to
another place on behalf of its customers as well as non-customers of bank .SIBL has its
branches in the major cities of the country and therefore, it serves as one of the best mediums
for remittance of funds from one place to another.
The main instruments used by SIBL, Local Office Branch for remittance of funds.
I. Pay Order/ Banker’s check.
II. Demand Draft.
III. Telegraphic Transfer.
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Pay Order/ Banker’s check
The pay order is an instrument issued by bank, instructing itself a certain amount of money
mentioned in the instrument taking amount of money and commission when it is presented in
bank. Only the branch of the bank that has issued it will make the payment of pay order. The
banker’s cheque must come the branch for payment wherever it is presented.
Issuing of Pay Order:
The procedures for issuing a Pay Order are as follows:
1. Deposit money by the customer along with application form.
2. Give necessary entry in the bills payable (Pay Order) register where payee’s name,
date, Po no, etc is mentioned.
3. Prepared the instrument.
4. After scrutinizing and approval of the instrument by the authority, it is delivered to
customer. Signature of customer is taken on the counterpart.
Cancellation of a Pay Order:
If a buyer wants to cancel it, he should submit a letter of instrument in this regard and also
return the instrument.
Bank Draft:
The person intending to remit the money through a pay order has to deposit the money to be
remitted with the commission which the banker charges for its services. The amount of
commission depends on the amount to be remitted. On issue of the pay order, the remitter
does not remain a party to the instrument 1) Drawer branch 2) Drawer branch 3) Payee. This
is treated as the current liability of the bank as the banker on the presentation of the
instrument should pay the money. The banker event on receiving instructions from the
remitter cannot stop the payment of the instrument. Stop payment can be done in the
following cases:
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a) Loss of draft before endorsement in this case, “Draft reported to be lost payee’s
endorsement requires verification” is marked.
b) Loss of draft after endorsement: In this case, the branch first satisfies itself about the
claimant and the endorsement in his favor.
Charges:
A commission of 0.15% is taken on the draft value & Tk.50 is taken as postal charge.
3.5 Closing of an Account
For two reasons, one can be closed. One is by banker and other is by the customer.
1. By banker: If any customer doesn’t maintain any transaction within six years and the
A/C balance becomes lower than the minimum balance, banker has the right to close
an a/C.
2. By customer: If the customer wants to close his A/C, he writes an application to the
manager urging him to close his close his A/C.
Different procedures are followed in cash of different types of A/C to close. Fixed deposit
A/C is closed after the termination of the period.
Closing process for current & saving A/C:
1. After receiving customer’s application the officer verifies the balance of the A/C.
2. He then calculates interest and other charges accumulated on the A/C.
3. If it bears a credit balance, the officer writes advice voucher. He gives necessary
accounting entries post to accounts section.
4. The balance is returned to the customer. And lastly the A/C is closed.
But in practice, normally the customers don’t close A/C willingly. At times, customers don’t
maintain any transaction for long time. Is this situation at first, the A/C becomes dormant and
ultimately it is closed by the bank.
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4.1 Organ gram of SIBL
Managing Director
Additional Managing Director
Deputy Managing Director
Senior Executive Vice President
Executive Vice President
Senior Vice President
Vice President
Senior Assistant Vice President
Assistant Vice President
First Assistant Vice President
Senior Executive Officer
Executive Officer
Probationary Officer
Senior Officer
Officer
Junior officer
Assistant officer
Attendant officer
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4.2 SIBL SWOT Analysis:
Strength:
Strength means the positive internal factor that a company can use to accomplish it
mission, goals, & objectives. They might include:
Good banker-customer relationship.
Online banking system.
Islami Shariah based banking system.
Energetic as well as smart work force.
Competitive profit provider comparing with other Islamic bank.
Strong financial position.
Efficient administration
Customer satisfaction
Service quality
Weakness:
Weakness means the negative internal factors that inhibit or restrict the
accomplishment of company’s mission goal & objectives. They might include:
Market share
Shortage of skill work force.
SIBL has lack of ATM booth.
Opportunity:
Opportunities are the external option that a firm can exploit to accomplish its mission. They might include:
Huge business area.
Introducing consumer credit scheme.
Growth of sales volume.
Introducing branch banking through online.
Develop relations and correspondence with foreign banks.
More concentrated Banking based on Islamic Shariah.
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Threat:
Threats are negative external forces that restrict a company’s ability to achieve its
mission, goal, & objectives. Threat to the business can take variety type of forms
such as:
Entrance of new private commercial banks.
Bangladesh Bank has no well established Islami Banking Rules.
Govt. imposes high rate of taxes and VAT.
Political unrest and economic recession.
Technological advantages
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5.0 The Financial Performance of the Bank :
The performances of the total Banking sector of the year 2011 could be evaluated in
the backdrop of ups and downs of the domestic and global economic trend. Volatile
money market paused as the big challenge for Bangladesh economy. The economy of
Bangladesh seemed a bit stable with persistent price hike of number of essential
commodities causing high inflation rate. The performance of SOCIAL ISLAMI
BANK LTD. for the year 2011was specially featured by lowering the classified
investment of 3.93% , increase of deposit by Tk. 2200.14 core . The management of
the bank was more conscious in proper assets liability management. Moreover, we
were able to find some well known corporate business houses and individual of the
country as our business partner. As a result, investment growth of the 2011 was
46.97%, much higher than the investment growth of 2010. As I will note from the
director’s Report, the Bank successfully completed the year of 2011 and tremendously
strengthened the financial indicator of the bank despite global financial crises. The
year 2011 was very eventful for us with opening of new 12 branches . In shah Allah ,
they will be ultimately able to reach at the desired level so that shareholder
expectation could be optimized.
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5.2 SIBL Business Success 2011 :
SIBL maintained and achieved strong position in all key areas of operation despite
challenges in 2011. Capital of the Bank was Tk. 12.60 core at the very inception, and
by the year 2011 it has increased to Tk. 953.45 core.
Total deposits of the bank stood at Tk. 6685.25 core and total assets stood at tk.
8440.62 core as an 31 December, 2011 which indicate a growth of 49.05% and
53.00% respectively over that of the previous year.
The Bank achieved 46.97% growth in investment with a total investment portfolio of
tk. 5390.86 core in 2011 compared to tk. 3668.03 core in 2010.
Import business of the Bank stood at Tk 6819.85 core in 2011 with 72.83% growth
over that of the previous year . Total foreign remittance stood at tk. 513.49 core in
2011 with 367% growth over that of the previous year.
Total foreign Exchange business of the bank was tk. 10830.84 core in 2011 with
74.89% growth over that of the previous year.
The Classified investment was 3.93% of total investment. The Bank registered an
opening profit of tk 276.88 in the year 2011 with remarkable growth of 68.97%
compared to tk. 163.86 core in 2010.
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5.3 Investment Income:
The bank has registered an income from investment of Taka 6922.20 million under
different modes of investment accounts in the year under review compared to Taka
3886.18 million of 2010 which is an increase of 78.12 from the previous year. A
comparative position on income received from different modes of investment in the
year 2011 and 2010 is given below:
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5.4 Income from investment in share & securities:
Throughout the year , the country observed the capital market as unsupported , faded
and less confident to the investors irrespective of corporate and individual. SIBL had
an investment outstanding of taka 5241.36 million in Quoted and unquoted shares,
preference share, bond & Govt. security against taka 3049.72 million of 2010. Year
earning from this segment has been recorded at taka 171.11 million against taka
341.63 million of 2010. Despite massive fall of capital market, the bank saved its
portfolios successfully, however, an amount of taka 577.10 million has been provided
due to fall of market value on the closing date of 2011.
5.5 Capital Management :
The bank started journey in the year 1995 with a paid up capital of taka 118.36 million
and thereafter within 16 years it has built a total capital of taka 9534.52 million using
the external and internal sources. The table given below is the last 5 years history of
SIBL’s Capital journey efforts:
to comply with the international and to make the banks capital more stock absorbent ,
SIBL is compliant of risk based capital adequacy framework . The bank uses
standardized approach for assessing evaluation and calculating risk weighted assets
w.e.f. 2010. SIBL is always concerned about its capital and its due maintained and
accordingly, while forecasting the business growth and regularity capital requirement,
internal and external source of capital are considered in detail after capital impact
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study. with success of the year 2009 and 2010and projected business growth in the
year 2011and ahead, the bank issued 1:1 Right shares among its share holders which
infected a fresh capital of taka 2987.81 million during the year under report. The final
impact on capital at the year end 2011 stood at : a) paid up capital 6393.93 million
against taka 2987.81 million of 2010 and (b) total capital (as per BASEL-ii) taka
9534.52 million against taka 4678.56 million of 2010.
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5.6 Foreign Exchange Business :
Foreign Exchange Business stood at tk. 108308.30 million in 2011 against Tk.
61931.00 million in 2010 which is a sharp increases of 74.59% . the break-up of this
foreign exchange business is as under :
International Trade Financing (Export & Import):
One of the core activities of the bank is to facility international trade through export
and import financing. Over the last few years the foreign trade financing of the bank
has gained a stable expansion . The bank has been achieving significant growth in
both export and import financing despite global financial turmoil and worldwide
economic slowdown. During the year of 2011, the foreign trade businesses of the bank
has recorded a significant growth of 72%. Imported business increased by 73% of
which real value was taka 68198.50 million in 2011 against taka 39459.50 million in
2010. on the other hand , export business grew to taka 34975.00 million in 2011 which
is 64 percent higher than the export of taka 21372.20 million in 2010. The bank has 14
Authorized Dealer branches well equipped with highly trained professional to meet
different requirement of import and export based client :
The bank was involved in financing import business in the field capital machiery,
industrial raw materials , food grains ( Rice , wheat, sugar, pulses, garlic, onion,
spices), oil (soyaben, palm, lubricant ), motor vehicles , spare parts, garment
accessories, sports items, perfumery items, chemical, milk food etc.
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in order to facilitate trade finance , establishing of “ Centralized Trade Processing Unit
was a timely decisions and has changed the total process of foreign exchange business
through speeding up the service and business potential of SIBL. we have centralized
Trade processing facilities based in Dhaka and Chittgong .
Financial Highlights Fig in million Taka
Year Deposits Investment FX_BusinessTotal Income
Total Expenses
Operating Profit
Profit after Tax
1995 124.73 0.21 0 1.73 6.15 (4.42) (4.42)
1996 417.81 211.50 342.95 19.3 38.23 (18.93) (18.93)
1997 645.51 368.31 699.48 51.37 56.84 (5.46) (5.47)
1998 2068.85 1171.40 1442.25 173.97 134.73 50.50 35.07
1999 3899.72 2192.03 1914.10 440.63 378.98 74.02 36.99
2000 4863.21 3522.25 3547.40 641.38 405.39 105.71 38.16
2001 10569.67 5499.25 6195.30 1214.25 613.29 302.00 144.39
2002 15141.34 7504.03 13520.07 1775.43 953.12 420.02 203.52
2003 19709.31 10059.11 19065.10 2385.84 1470.67 500.54 193.67
2004 19704.20 12887.30 18088.12 2458.25 1620.89 414.99 83.85
2005 16862.58 15096.83 17438.07 2199.65 1708.69 213.57 13.94
2006 16170.51 15312.90 23280.00 2530.90 1932.95 295.89 57.63
2007 19753.94 16440.26 23903.80 2995.45 2126.77 480.78 150.04
2008 24099.82 19951.30 33363.20 3363.08 2575.72 787.37 202.07
2009 31588.16 26580.58 39110.00 3781.26 2716.96 1064.31 431.52
2010 44850.77 36680.28 61931.00 5068.10 3429.47 1638.63 643.01
2011 66853.59 53908.57 105037.00 8512.22 5914.78 2597.43 1265.11
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Credit Rating :
Year Long Term
Short Term
Outlook Rated by
2009 A+ ST-2 StableCRISL (Credit Rating Information Services Ltd.)
2010 A+ ST-2 StableCRISL (Credit Rating Information Services Ltd.)
2011 A+ ST-2 PositiveCRISL (Credit Rating Information Services Ltd.)
Profit Rates :
Sl No Name of Scheme Deposits Profit Rate (%)
Group A: Mudaraba Monthly Profit Scheme
01. Shachanda Protidin 13.50%
02. Shuborno Lata 13.50%
03. Shobuj Chaya 13.50%
Group B: Mudaraba Deposit Pension Scheme
01. Sonali Din 13.50%
02. Shukher Thikana 13.50%
03. Suborno Rekha 13.50%
04. Shobuj Shayanho 13.50%
Group C: Mudaraba Double Benefit Scheme (Shall be Double by 5 years 6 months)
01. Shamridhir Shopan 13.43%
Group D: Mudaraba Hajj Scheme
01. Kafela 13.50%
Group E: Mudaraba Cash Waqf Accounts
01. Cash Waqf Deposit Scheme 14.00%
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5.7 SIBL 2012- A GOLDEN YEAR :
The year 2012 was envisaged as a golden year for SIBL. Adopting new strategic
business policy, SIBL will leave no stone unturned to boost business in all areas of
operation to achieve its corporate goals.
The Bank’s continuous effort has been to increase the shareholder’s value and be
valued as a compliant organization . SIBL emphasis on employment generation and
environment friendly and green banking for equitable distribution of resource over
geographical territory for sustainable growth of macro economy of the country. the
pro-active management team of SIBL with there talent and skill has been working to
continuously at success in the performance of the bank.
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6.0 Analysis of the Findings :
Nature of customers:
Figure 1: Accounts preference of the SIBL customers
Interpretation: 23% customers have Mudaraba Savings Deposit, 47% customers have Al-
Wadia Current Deposit, 13% customers have Mudaraba Notice Deposit, and 7% customers
have Mudaraba Term Deposit and 10% customers have others. Here I have seen that most of
the customers prefer savings and current deposits than other accounts.
2. Customer Opinion about brand name “Social Islami Bank Limited”:
Figure 2: Customer opinion about Brand name
3. Reason for opening an account:
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47%
23%
13%
7%
10%
Al-Wadia current Deposit Mudaraba saving Deposit Mudaraba notice Deposit Mudaraba Term Deposit Others
30%
57%
13%
Fully Satisfaction Moderate Dissatisfaction
40%
10%7%
23%
7%
13%Superior ServiceAttractive ServiceType of account offer ConvenientReputation Others
36
2013
Figure 3: Reason for choice the SIIBL
Interpretation: around 7% with (2) respondents said that they have chosen the bank because
it is has a good reputation in the community such as “Shariah-based Islami Bank”. 40% (12)
respondents have said that it is a reliable bank and provide better service and 23% said they
prefer for convenient place. 13% and 1 0% respondents choose the bank because of attractive
rate and types of accounts offered respectively.
4. Respondent opinion about fees and service charges:
Figure 4: Customer opinion about fees and service charges.
Interpretation: Product and service charge is a sensitive issue in banking sector. 60%
respondents said this bank charge moderate value toward the customers. Moreover 33%
respondents were against the arguments because they felt that bank charge little bit higher.
Majority was medium value which they are able to pay to get the product or service and rest
of 7% respondents experienced that SIBL demand lower charges.
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60%
33%
7%
High ModerateLow
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5. Employee opinion about research and development:
Figure 5: Employee opinion about research and development
Interpretation: 50% of respondents of this branch said SIBL do not introduce new product for the actual and potential customers because they don’t have R&D department and about 17% respondents found some scheme of loan product against the assets.33% respondents have no reaction about the arguments.
6. Customer Opinion about their SLBL promotional Activity:
Figure 6: Customer Opinion about their SLBL promotional activity
Interpretation: 36% respondents expressed fully dissatisfaction about the promotional
program of SIBL. Opinion came from 33% respondents who are satisfied their current
advertisement activity and 17% respondent who are fully satisfied too. 7% respondents were
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Very good10%
Good7%
Average 33%
Poor50%
Very goodGoodAverage Poor
Fully Satisfied15%
satisfied30%
Neutral6%
Fuly dissatisfied34%
Dissatisfied 15%
Fully SatisfiedsatisfiedNeutralFuly dissatisfiedDissatisfied
38
2013
neutral about the question. 7% respondent expressed dissatisfaction about promotional
activity.
7. Customer opinion about their attention:
Figure 7: Customer opinion about their attention
Interpretation: Despite of their fewer advertisements, they have reached to its target customers quite successfully. By the analysis almost 66% (20) respondents knew about the bank through its current client. And rest 34% respondents have seen the different media advertisements and billboards.
8. Customer opinion about SIBL place:
Figure 8: Customer opinion about SIBL place
Interpretation: 36% respondents said SIBL have good with the locations. May be this is because it is a foreign exchange and Investment based site as well as a Shariah-based bank. That’s the reason people are happy with having transaction over here. They are having class services and up to date facilities, good communication facilities. On the other hand, 54% respondents said against with this issue and 10% respondents said no comments.
6.1 Customer Satisfaction
Customer satisfaction is the extent to which a product or service’s perceived performance
matches a buyer’s expectations. If the product or service’s performance falls short of
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expectations, the buyer is dissatisfied. If performance matches or exceeds expectations, the
buyer is satisfied or delighted.
Expectations are based on customers past buying experiences, the opinion of friends and
associates, and marketer and competitor information and promises. Marketer must be careful
to set the right level of expectations. If they set expectations too low, they may satisfy those
who buy but fail to attract enough buyers. In contrast, if they raise expectations too high
buyers are likely to be disappointed. Dissatisfaction can arise either from a decrease in
product and service quality or from an increase in customer expectations. In either case, it
presents an opportunity for companies that can deliver superior customer value and
satisfaction.
Today’s most successful companies are rising expectations—and delivering quality product.
Such companies track their customers’ expectations, perceived company performance, and
customer satisfaction. Highly satisfied customers produce several benefits for the company.
Satisfied customers are fewer prices sensitive, remain customers for a longer period, and talk
favorably to others about the company and its products & services.
6.2 Findings on general banking activities:
Social Islami Bank is entirely a new banking system which is adopting for a better change in social economics condition and to make the banking function dynamic.
By the construction of capital production employment opportunities Investment and strong economical structure this branch I performing major role to meet up the demand of sociality.
1. The Clients of SIBL prefer to maintain Savings Account.
2. Social Islami Bank Limited has very good traditional documentation process for general
banking.
3. Customers like the brand name of Social Islami Bank Ltd. And fully satisfied with this.
4. Customers like for the superior service.
5. Customers like for the moderate service charge.
6.3 Major Findings on the research in client satisfaction:
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1. Social Islami Bank Ltd. has very good traditional documentation process. Although they
are not following any high technology or so but they having a very good record of the
documents and filing system also the serial is been properly maintained too.
2. Majority of customers are an account holder of this bank because they have the opportunity
to choose various types of Shariah based Accounts. In this branch customers prefer savings
and current deposits and other accounts.
3. Customers like the brand name of Social Islami Bank Ltd. and fully satisfied with this.
4. This bank charges moderate value toward the customers. Majority are found to be medium
value which they are able to pay to get the product or service. Moreover credit card charge
also reasonable and has some clear conditions.
5. People are satisfied about the location of this branch and this place is suitable for financial
transaction.
6. Social Islami Bank Ltd. is not creative on their exterior design. Majority of respondent said
that bank is not good in terms of it’s the exterior decoration.
7. The bank is good in terms of its interior design. But there is no enough space inside the
bank to move freely. GB (general banking) has such small space that it is not enough for
attracting the customers.
8. SIBL customers could known about the bank through its current clients because lack of
advertisement they could not get enough information about the bank. Social Islami Bank Ltd.
invests little bit for promotional program.
9. Social Islami Bank Ltd. is operating the business in a very expert style with energetic and
well behave employees. They are very respectful to the Bangladesh Bank’s policies and very
much serious to fulfill customer satisfaction. Again, they are very cooperative to their
customers as well. They always try to help the customers at their best.
10. Social Islami Bank Ltd. is a reliable bank and provides better service to its customers.The
main objectives of the world famous and successful banking organizations are making of
profit through addressing the clients time to time with new paces of service instruments.
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However my little experience carnal the through this internship. I had several thank
discussions with the clients and officials, which has helped me to know about the findings
and draw and the followings recommendations:
To make the Shariah inspection strengthens regarding all Investment of the bank. Official at
branch level should inspection strengthen regarding all Investment of the bank.
This branch provides advances towards the true entrepreneur with reconsidering
conventional system of security and collateral, moreover, the whole process should be
completed within an acceptable time.
Always should monitor the performance of its competitors.
Evaluate customers need from their perspective and explain logically the shortcomings.
Use of effective management information systems.
Investment decision make faster.
The management should consider revise the remuneration package in order to attract
quality human resource.
SIBL is running successfully and for its good deposit performance the bank occupies 2nd
position in the Investment Banking Sector. Taken all in all, it can be safely said that SIBL
action program is directed towards development of an authentic participatory economy
beyond market economy. The family empowerment credit program of Social Islami Bank is
gaining ground at the grass root field level in Bangladesh. Family empowerment micro credit
and micro enterprises program must be designed in a manner so as to make a) finance b)
production c) marketing d) trading e) local specific survey and research as well as moral
integrity in one package.
In SIBL approach, credit conveys the totality in life and clearly linked to social context and
cultural setting in conformity with Shariah. There is a better chance in provision for social
subsidy. De-secularizing credit may lead to rewriting new economics.
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7.0 Recommendation:
Through my work experience at the Bashundhara Branch, Social Islami Bank Ltd., I
came across a few operational drawbacks – for which the following suggestions can be
put forward.
The internal decoration of the branch has scope for much improvement.
More employees should be appointed to manage the increasing customer pressure.
Leaflets containing SIBL’s product description should be made available at the
branches. This will help the prospective customers to be informed about existing and
new products, and reduce the hassle of counter staffs to describe new products. This
will eventually result in increased employee productivity.
Ensure high level customer service.
Bank should increase ATM Booth .
Bank should introduce consumer credit scheme.
More meetings, seminars, symposiums and get-together should be organized by the
Branches to develop the awareness among the clients of the Bank about Islamic
Banking and its advantages.
The employee of the branch should be trained continuously.
Furthermore, the customers also provided their own suggestions:
Provision of car loans.
Individual counters to provide one-stop service for cheque payments.
More social involvement by SIBL such as providing student scholarship, creating
more employment opportunities, rehabilitating the poor.
If the stated recommendations are carried out and the government pays attention to
the policy framework of the entire system, then that day would not be far when
Bangladesh can proudly focus more on the Islamic banking system than the
conventional banking.
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7.1 Learning point:
In the Bashundhara Branch, Social Islami Bank Ltd. I have many things and got practical
experience about general banking and investment sector. Here I learned how to issue a
cheque to an account holder. Thus, I learn how to open current account and saving account,
required documents and papers for different types of account. I did work with clearing
department where I have learned how to clear the cheques through clearing house of
Bangladesh Bank, OBC etc.
At the end, I would like to say that in my internship period; I have learned official manners,
corporate environment and behavior, customer service, how to deal with customer and earned
satisfaction.
I think this is my main learning point to get a job in good organization and apply the
experience for better outcome.
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7.2 Concluding Remark :
Islamic banking is now a reality in Bangladesh. It is functioning efficiently, smoothly and
satisfactorily despite facing various internal and external threats. The economics of the
country may be geared towards Islamic Principles and Teachings in order to realize the full
potential of Islamic banks in the long run. However, in the short run, the Islamic banks can
take a number of concrete steps to facilitate the Islamic banking in Bangladesh. This report
will give a clear idea about the activities, General banking, financial performance of SIBL.
Social Islami Bank ltd. is a non government commercial Bank in Bangladesh, which started
its business from 1995.It is a unique combination of Shariah & Islamic banking. Among non
government commercial banks, Social Islami Bank Ltd. is a milestone for economic
development. It has been playing an important role to eradicate the unemployment problem in
Bangladesh. But most of the people in our country have misconception about Islamic banking
specially Social Islami Bank Ltd. & other Islamic banks. They can not find any difference in
its operation between conventional commercial Banks and Islamic Banks because they have
no clear idea about the activities as well as investment mechanism of Islamic banks.
The Bank is committed to run its activities as per Islamic Shariah and thus it has different
investment(credit) modes, different repayment schedules, different disbursement procedure,
different mark up system. and also has a different Credit(Investment) policy. ‘Mark up’
means adding some additional value after purchasing the goods but before to sell the same to
another people. This system is accepted in Islamic Shariah because here money is converted
to goods.’ Money begets money’ is prohibited in Islamic Shariah. People is getting more
benefit from the dealings of Islamic banking because here quarterly interest is not charged
and there is no possibility of interest to be converted into principal. But it needs to mention
here that Islamic Banks like Social incurred huge loss in case of default cases. Islamic Banks
can’t charge extra amount on the residual principal of the overdue accounts like other
conventional banks but some compensation is imposed on the accounts to protect huge
accounts to be overdue/classified. It cannot take part in call money market. Mudaraba,
Musharaka are another mode of investment in Islamic Banking. But here honesty is the only
pre-requisite. For ensuring more benefit, more facility from Islamic banks like Social we
have to be honest and more sincere to repay the taken money from these banks in time.
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7.3 Reference:
Statement of Affairs, Basundhara Branch, Social Islami Bank Ltd., as on 31/12/2012.
http://www.siblbd.com
http://www.siblbd.com/home/annual_reports
Annual Report of Social Islami Bank Ltd., Year 2010.
Annual Report of Social Islami Bank Ltd., Year 2011.
http://www.assignmentpoint.com/business/finance/a-report-on-social-islami-bank-
limited-part-1.html
http://www.siblbd.com/home/profile/product& service
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