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Title: Welcome to the Presentation


1
Welcome to thePresentation
2
Group E
SERIAL NO. NAME OF THE STUDENT ID No.
01. Mahmuda Mongur Diti 343
02. Mokerrama Najin 344
03. Md. Zahidul Islam 351
3
 
Topic Environmental forces of ABBL AIBL
4
Objectives of the report
5
We tried our best to force the role of AB Bank
Ltd. and Al-Arafah Islami Bank Ltd. in the social
development of Bangladesh.Our special focus was
on the problem of the environmental forces of the
company and our objective was to find out the
solution of this problem.Our additional focus
was on the analysis of the financial state of AB
Bank Ltd. and Al-Arafah Islami Bank Ltd.. So we
tried to make an analysis view of that
state. 1. Broad ObjectiveThe prime objective
of the report is to analyze Environmental Forces
of AB Bank Ltd. and Al-Arafah Islami Bank Ltd. 
6
2. Specific Objective - To present an over
view ABBL and AIBL. - To find out the objective
of ABBL and AIBL. - Analyzing the position in
bank sector of Bangladesh. - To examine the
formation of ABBL and AIBL. - To identify the
service they provide. - To find out their
existing and future programs. - To identify the
problems with their management. - Evaluate the
contribution in overall economic development. -
To have introduction to the functions of general
banking section. - To know about the profile of
ABBL and AIBL. - To know about performance of
the Bank. - To apply theoretical knowledge in
the practical field.  
7
Methodology of the report
8
1. Type of researchThis report is
a descriptive type of research, which briefly
reveals the overall activities performed by AB
Bank Ltd. and Al-Arafah Islami Bank Ltd. It has
also been administered by collecting secondary
data. Annual reports of AB Bank Ltd. and
Al-Arafah Islami Bank Ltd. were the major
secondary data sources in this regard.
Environmental forces of social force analysis
have also been used as major tools for the
financial performance analysis. The study is
performed based on the information extracted from
different sources collected by using a specific
methodology. This report is analytical in
nature.    
9
2. Sources of data Primary sources -
Officers - Customers Secondary data -
Annual Report of the organization. - Different
text book and journals. - Various reports and
articles related to study. - Some of my course
elements as related to this report. - Web base
support from the internet.
10
3. Data Collection Procedure Secondary
dataFor the Environmental Forces of AB Bank
Ltd. and Al-Arafah Islami Bank Ltd. We are
mainly used Secondary data. Primary
sources Besides this we are also collect some
information by taking expert opinion from the
officers and communicate with their customers.  
11
4. Sampling planPopulationAll the
customers and employees of AB Bank Ltd. and
Al-Arafah Islami Bank Ltd. Sample
elementIndividual customerSample frameThere
was no sample frame found. Sampling
procedureNon- probability convenience
sampling..       
12
Sample size
Area Number of Respondents.
Mirpur 5
Dhanmondi 2
Shahbag 3
Total 10
13
Limitation of the report
14
  - Access to data regarding different
performance indicators of ABBL and AIBL. - The
report is mainly based on the secondary data
which published by different organization as
annually, half-yearly, monthly, weekly or
daily. - Time constraints are another
limitation of this report. - Due to some legal
obligation and business secrecy banks are
reluctant to provide data. For this reason, the
study limits only on the available published data
and certain degree of formal and informal
interview.
15
- The bankers are very busy with their jobs,
which lead a little time to consult with. -
Finally, some recent data which were needed to
enrich this report but the unwillingness of
executives of the bank due to confidentiality was
made my report limited to data content. - Lack
of my experience and practical experience. 
16
Overview of ABBL
17
Vision of the ABBL "To be the trendsetter for
innovative banking with excellence
perfection"Mission of the ABBL"To be the best
performing bank in the country"  Goal of the
ABBLTo achieve the desired goal, it has the
intention to pursuit of excellence at all stages
with a climate of continuous improvement.
18
Organogram OF ABBL
President MD
Deputy managing Director Credit (CRM)
Deputy managing Director (Corporate)
Head of retail consumer banking
Deputy managing Director (operator)
Head of IT Mkt. Treasury Foreign Ram
CFO Head of Finance
Head of Int. Control Compliance
Regional Relationship Manager/ Head
Branch Manager Relationship Head
Concurrent Audit
Priority Banking
Head of Credit Admin Monitoring (CAM)
Operations Manager
Cluster Relationship Manager
Trade Finance
Financial Control
Admin Secu. IT Application
Relationship Officer (REATIL)
Relationship Officer (CORP)
Credit Admin Officer CAM
Relationship Officer (SME)
General Banking Services
Customer Services Desk
Cleaning allied Services
Import
Remittance
Export
Account opening Cheque Mgt
Cash operation
Local
Foreign
19
SWOT Analysis of the ABBL Strengths
- Several types of loans and advances with
unique features and facilities which are so
much helpful for enhancing the economic
growth. - Innovator of different new
products and services like they are the
innovator of ATM booth system. - They
demand a standard interest rate on the
loan and advances. - High geographic
coverage. - Availability of online
Banking facility. - Strong and
attractive promotional activities.
20
- Own training institutional which
arrange useful and distinctive training
program time to time. - Duties and
responsibilities of the employees in the RM
and CAM department are clearly define. -
Co-operative and skilled personal, who are
very much specialized in interacting with
clients. (Particularly in RM and CAM
department.) - ABBL employees are one of the
major assets of the company. The employees of
ABBL have a strong sense of commitment towards
organization and also feel proud and a sense of
deluging towards ABBL. The strong organizational
culture of ABBL is the main reason behind this
strength.
21
Weaknesses - Various complex requirements
demanded by the Bank to give the loan. -
This bank mainly provides services to
their big corporate clients. -
Variability of credit card facility for all
customer groups. It provides credit and
facility only for the selected customer
groups. - They have only one branch for
Islamic Banking but it has a great demand
in BD.
22
Opportunities - Possibility to generate
very high note of return as compared to
fixed rate of interest. - An industry
with an endless demand.Name of the
products are so easy to understand so
people easily their loan facilities. -
The use of latest technology in all
spheres of banking, which will increase the
banks efficiency and service quality more.
- Introduction of online banking facility
is ennobling the bank to offer its banking
service beyond its national border. -
Expansion of its existing product services
basket.   
23
Threats - Strong appetite for Islamic
financial services among the people of
Bangladesh, but AB Bank has only one branch of
Islamic Banking. - The upcoming private of
ABBL, it is expected that in the next few years
more commercial banks will emerge. If that
happens the intensity of competitor will rise
further and banks will have to develop strategies
to compete against and win the battle of banks.
- Unfavorable government rules and regulation
regarding banking business. - Now days
different foreign and private banks are also
offering similar type of product with an almost
similar profit margin. So, if all competitors
fight with the same weapon, the natural result is
declining profit.
24
Overview of AIBL
25
Vision of the AIBLTo be a pioneer in Islami
Banking in Bangladesh and contribute
significantly to the growth of the national
economy.  Mission of the AIBL - Achieving
the satisfaction of Almighty Allah both here
hereafter. - Proliferation of Shariah Based
Banking Practices. - Quality financial
services adopting the latest technology. -
financing.  
26
- Fast and efficient customer service. -
Maintaining high standard of business ethics.
- Balanced growth. - Steady competitive
return on shareholders' equity. - Innovative
banking at a competitive price. - Attract and
retain quality human resources. - Extending
competitive compensation packages to the
employees. -Firm commitment to the growth of
national economy. - Involving more in Micro
and SME
27
Goal of the AIBLAl-Arafah Islami Bank Limited
is Islamic Banking institutions that operates
with the objectives t implement and materialize
the economic and financial principles of Islamic
in the banking arena. The objectives of AIBL are
not only to earn profit, but also to do good and
welfare to the people. The main objectives of
AIBL are listed below- - To conduct interest
free banking - To establish participatory
banking instead of banking on debtor creditor
relationship - To invest through different
modes permitted under Islamic Shariah
28
- To accepts deposits on profit loss sharing
basis - To establish as welfare oriented
banking system - To extend co-operation to
the poor, the helpless and the low income group
for their economic up liftmen - To play a
vital role in human development and employment
generation - To contribute towards balances
growth and development of the country through
investment operations particularly in the less
developed areas - To contribute in achieving
the ultimate goal of Islamic economic System.  
29
Organogram OF AIBL
Board of Director
Managing Director
Deputy Managing Director
Executive Vice President
Senior Vice President
Vice President
Assistant Vice President
Investment
General banking
Foreign Exchange
Account
A/C opening
Cash
Clearing
Export
Import
30
SWOT Analysis of the AIBLLike other
organizations, AIBL also have its strength,
weakness, opportunities and threats. The
following stated the SWOT of the bankCore
strength(S) - AIBL was adjudged second among
the entire Islamic bank in the country in terms
of service and business. The customer service was
conducted by the general banking. - AIBL is
doing business under the direct supervision of
Bangladesh Bank. - Good asset quality -
Satisfactory business growth - Diversified
product lines - Experienced top management
- Good operating efficiency
31
The following are the core strength of the
Islamic bank for which it is now considered to be
the emerging sector for success If we drew the
differences between the normal banking and the
Islamic bank than it will be clear about the core
strength of Islamic bankOne of the key
strength of the Islamic bank is that it
distributes a significant amount of profit that
they earn by investing different areas. On the
other hand, in case of conventional banking they
provide a fixed amount of return which is called
RIBA or interest that may not be consistent
with the profit positioning of the banks
operations. So in case of conventional banking,
they either sacrifice by bearing losses or they
deprived the depositors by not paying them the
part of profit.
32
As the Islamic bank has to provide a significant
of profit so they have to investment in a proper
way to maximize the return. Because if a
investment becomes classified which will affect
the total profit position of the Bank, that will
become the impediments to the profit of the
depositors. Under conventional banking the
depositors can estimate the income from their
deposit that lead them to expand the area of his
expense which ultimately increase the inflation.
On the other hand, in Islamic bank the
depositors have to wait for the profit, so that
cant increase the tendency to expense
much.Islamic collect deposits by Murabaha Mode
whereas they invest by Murabaha, Mishawaka Mode
that increase the intimacy with the Bank and with
the depositors.
33
Meanwhile islami bank provide credit through
Murabaha, Bai-muajjal etc. Under these systems
banks have full regulatory power thats why it
develops good friendship relation with the
Bankers and the clients.Islami banks fulfill
its administration expenses from the profit of
its investment and from the service charges. So
bank ensures close observation to its investment
so that the investment profit doesnt come down
as well as its service charges goes up.Islami
bank works to the development the socio-economic
and value system of the people that is not seen
in case of normal banking.Islami bank does not
incur losses as it provide the return under the
scientific process where as the conventional
banks provide interest though they incur losses
that ultimately reduce the deposit of the clients.
34
Islami bank includes the profit suspense system
in its investment mode especially in Murabaha and
Bai-Muajjl system. Islami banks are following
this system prior to the Bangladesh Banks FSRP.
Islami banks ensure the utilization of credit
for which the client received the money. For this
reason people have a low scope to use it in other
purpose which ultimately ensures the recovery of
invested money. Beside observation Islami banks
find other sources of investment.Islami banks
invest in the human welfare sector. So Islamic
bank practices mainly welfare banking. These
banks invest only in those sectors where human
welfare can be ensured.
35
If needed islami provide Quard-a-hasana, which
means the way to provide credit without any
profit. So this system provides benefits to the
poor.Islami bank is free from the circle of
interest or Riba. Interest actually has some
bad impact on the society as well as on the
economy. A famous economist James Ken said if
banks dont provide any interest but the people
will deposit to bank. According him the only
reason is safety that the people want from banks.
So banking system without interest is the best
banking practices.The benefit of interest is
mainly upwarding. This means that the interest
that middle class people provide ultimately goes
to the hand of rich people.So it can be said
that the benefits that the Islami has it
significant which give the new era to the banking
sector around the world as well as the AIBL.
36
Major weaknessMIS at primary stageLimited
Branch networkLimited market share Islamic
banking is guided by some principles but it has
some weaknesses, some of the major weaknesses are
discussed in below Lack of profit and loss
sharingProfit Loss Sharing (PLS) dominates the
theoretical literature on Islamic finance.
Broadly, PLS is a contractual arrangement between
two or more transacting parties, which allows
them to pool their resources to invest in a
project to share in profit and loss. Most Islamic
economists contend that PLS based on two major
modes of financing, namely Mudaraba and
Musharaka, is desirable in an Islamic context
wherein reward-sharing is related to risk-sharing
between transacting parties..
37
Almost all theoretical models of Islamic banking
are either based on Mudaraba or Musharaka or
both, but to-date actual practice of Islamic
banking is far from these models. Nearly all
Islamic banks, investment companies, and
investment funds offer trade and project finance
on mark-up 3 , commissioned manufacturing, or on
leasing bases. PLS features marginally in the
practice of Islamic banking and finance.
38
Whatever is the degree of success of individual
Islamic banks, they have so far failed in
adopting PLS-based modes of financing in their
business. Even specialised Islamic firms, like
Mudaraba Companies (MCos) in Pakistan, which are
supposed to be functioning purely on a PLS basis,
have a negligible proportion of their funds
invested on a Mudaraba or Musharaka basis.
According to the International Association of
Islamic Banks, PLS covered less than 20 percent
of investments made by Islamic banks world-wide
(1996. Likewise, the Islamic Development Bank
(IDB) has so far not used PLS in its financial
business except in a few small projects.
39
OpportunitiesAIBL has some opportunities which
are given belowAbout 85 people are Muslims in
our country.Other Islami banks do not cover the
demand of customer as their requirements as
Muslim.People aware of their religious because
people dont know the concept of Islami banking
before.
40
Threat(S)First, PLS contracts are inherently
vulnerable to agency problems as entrepreneurs
have disincentives to put in effort and have
incentives to report less profit as compared to
the self-financing owner-manager. This argument
is based on the idea that parties to a business
transaction will shirk if they are compensated
less than their marginal contribution in the
production process, and as this happens in the
case of PLS, the capitalists hesitate to invest
on PLS basis. 
41
Second, PLS contracts require well-defined
property rights to function efficiently. As in
most Muslim countries property rights are not
properly defined or protected, PLS contracts are
deemed to be less attractive or to fail if
used.Third, Islamic banks and investment
companies have to offer relatively less risky
modes of financing as compared to Mudaraba or
Musharaka in the wake of severe competition from
conventional banks and other financial
institutions, which are already established and
hence more competitive.
42
Fourth, the restrictive role of shareholders
(investors) in management and, hence, the
dichotomous financial structure of PLS contracts
make them non-participatory in nature, which
allows a sleeping partnership. In this way, they
are not sharing contracts in a true sense the
transacting parties share financial resources
without participatory decision-making.Fifth,
equity financing is not feasible for funding
short-term projects due to the ensuing high
degree of risk (i.e., the time diversification
effect of equity). This makes Islamic banks and
other financial institutions rely on some other
debt-like modes, especially mark-up to ensure a
certain degree of liquidity.
43
Sixth, unfair treatment in taxation is also
considered to be a major obstacle in the use of
PLS. While profit is taxed, interest is exempted
on the grounds that it constitutes a cost item.
This legal discrimination and its associated
problem, tax evasion, make PLS less reliable as a
tool for reward sharing.Seventh, secondary
markets for trading in Islamic financial
instruments, particularly Mudaraba and Musharaka,
are non-existent. Consequently, they have so far
failed to effectively mobilise financial
resources.
44
Beside the above mentioned limitations of lack of
profit and loss sharing banks that are operating
as Islamic banking philosophy are also facing the
following limitations 1. Islamic
banks suffer from serious sort of liquidity
problem. Because they dont have specific Shariah
sector on which they can invest their liquid
money. The Bangladesh Bank has not yet introduced
any profit and loss basis bond, though BB is now
discussing to introduce Mudaraba Bond but it is
not yet implemented. The problem of this bond is
that the sector where it will invest is not said.

45
2. Islamic bank deposited 10 cash
amount against the BB requirement of SLR CRR,
on which the Islamic banks has no chance to earn
profit. On the other hand, the conventional
deposited only 4 of CRR on without profit basis.
From the observation it will be clear that
Islamic banks are not getting any profit on 6
on cash deposits. 3. Islamic bank dont
get any profit from the FC Clearing Account while
same is getting by the Islamic banks. It will be
beneficial to provide them on three, seven,
fifteen or one month basis that will recover them
from loss.     
46
Analysis and Findings of ABBL
47
Society influences to the Bank to developing
their activities and helps to grow the business.
After influence, Bank decides by providing
different kinds of new and potential products and
services to the society. At the same time, banks
grow faster and achieve some long range growth
and also society will be satisfied. These are -
48
Products Services of ABBLCorporate Banking
At AB Bank we provide complete range of
solutions to meet Corporate Customers'
requirement. Our Corporate Banking solutions
include a broad spectrum of products and services
backed by proven, modern technologies.  
49
Following are some of the products and financial
tools of Corporate Banking - Project Finance
- Working Capital Finance - Trade
Finance - Cash Management - Syndicated
Finance, both onshore off-shore - Equity
Finance, both onshore off-shore - Corporate
Advisory Services
50
SME Banking - SME LoanSME Sectors in which AB
Bank has participated so far - Agro machinery
- Poultry - Animal Feed - Dairy Product -
Fruit Preservation - Hotel Restaurants
-Garments Accessories
51
- Leather products - Plastic product -
Furniture Wooden Metal - Ink - Paint -
Printing Packaging - Wire Cable - Aluminum
- Cement and Lime Plaster - Clinics and
Hospitals - Engineering Scientific Instruments
52
 Large Loan Project Finance In order to
cater the demand of client AB Bank has segmented
its portfolio in terms of loan size. As per this
segmentation any loan over Tk. 10.00 Crore falls
under the purview of Large Loan Unit.In AB Bank,
there is also a separate Project Finance unit who
evaluate the business. The unit is entrusted to
handle the portfolio in a focused manner. AB Bank
is always in fore front to support  
establishment of new projects of diverse nature
which will help to broaden the manufacturing
arena vis-à-vis to generate to employment.At the
moment AB Bank s exposure in Large Loan
Project Finance portfolio is distributed in the
following  sectors
53
Non-Resident Bangladeshi (NRB) Banking
Facilities offered to NRBs -
Opening of Foreign Currency A/C -
Wage Earners Development Bond - USD
Premium Bond - USD Investment
BondMoney Transfer Foreign Remittance through
Exchange HouseFor Inward Remittance, AB Bank
established extensive drawing arrangement network
with Banks and Exchange Companies located in the
important countries of the world.
54
Islami Banking The goals and objectives of
Islamic banking Wing are as under - To
facilitate the Islamic banking system in the
country - To create new entrepreneurs and to
arrange required finance for them - To play
effective role for socio economic development of
the country - To give assistance in launching
welfare oriented economic system under Islamic
values Under this wing AB Bank extends the
following Islamic banking services -
Deposit services - Investment services
55
Under Deposit services the following services are
being rendered - Mudaraba Savings Account
- Mudaraba Short Noticed Account - Mudaraba
Term Deposit Account (with different terms) -
Mudaraba Monthly Profit Account - Al-Wadiah
Current Deposit Account - Mudaraba Deposit
Pension Scheme - Besides Mudaraba Hajj
Deposit Scheme and some other schemes are under
process. 
56
Investment ServicesAB Bank Islmic Banking Wing
provides investment facilities for project
finance, working capital finance, SME finance,
consumer / retail baking finance etc. under
following modes - Hire-Purchase under
Shirkatul Melk (HPSM) - Ijara or Leasing -
Bai-Muajjal / Bai-Murabaha - Musharaka -
Mudaraba.  
57
Sector of InvestmentIslamic Banking Wing of the
bank finances in all sectors i.e., Industry,
business, Agriculture, Real Estate etc. if
purpose of the investment  is permissible under
Islamic Shariah. Limit of InvestmentInvestment
is offered to the extent of single borrower
exposure limit as fixed by the Bangladesh Bank
from time to time.  
58
Foreign TradeIslamic Banking Wing provides the
following services at its foreign trade desks
- Opening of LCs - Post -Import Finance -
Export bill purchase and negotiation -
Pre-shipment financing etc.AB Bank Islamic
Banking Wing has been continuously trying to
expand its service horizon keeping the necessity
of valued clients in view and upholding the
principle of Islamic Shariah.
59
Investment bankingAB Investment Limited, a
subsidiary of AB Bank Limited incorporated under
the companies act 1994 and running its Merchant
Banking operations being licensed by the
securities and exchange commission.Custodial
Service CustomersInvestors Who Are Interested
to Invest In the Bangladesh Capital Market   
Non Resident Bangladeshi (NRBs)    Foreign
Institutional and individual clients    Local
Institutions    Sponsors' group and High net
worth client
60
Services    Safe custody of client
securities    Foreign Trade Execution and
Settlement    Share transfer in the name of
client    Complete the Dematerialization
process as per client request    IPO, Private
Placement Right share subscription as per
client instruction with deposit    All types of
corporate action that includes cash dividend,
bonus share and right share collection    Open
BO account     Instant information regarding
client securities position as per their
request    Quarterly reporting to the client by
Custodial Department
61
Brokerage Service IntroductionAB Securities
Limited (ABSL) is a subsidiary company of AB Bank
Limited having holding 99.60 shares of the ABSL.
Earlier, AB Bank Limited provided stock broking
services through Arab Bangladesh Bank Foundation
(ABBF) since 2006. Incompliance with Bangladesh
Banks directives, AB Bank Limited formed
separate subsidiary company under Company Act
1994 in name of AB Securities Limited (ABSL) and
shifted its stock broking services from ABBF to
ABSL. ABSL started its new journey on 2nd August,
2010 with improved customer service, highly
skilled professionals and state of art
technologies. Memberships of both Dhaka Stock
Exchange Limited and Chittagong Stock Exchange
Limited has been transferred in name of ABSL to
provide more efficient and professional broking
services to the capital market investors.
62
Brokerage Services We provide broking services
under following categoriesa) Individual Joint
Account (Local, NRB Foreign)b) Institution
Investment Account (Local and Foreign)Margin
Loan Facilities We also provide margin loan
facility to our valued clients as per desecration
of management of ABSL.Stock Dealer Service ABSL
also has the stock dealer license to manage own
portfolio as well as can manage reputed
institutions portfolio accounts.
63
CDBL Services as full service Depository
Participant (DP) As a full service depository
participant, ABSL provides following
servicesa) BO (Beneficial Owner) accounts
opening and maintenance.b) Dematerialization
c) Rematerializationc) Freeze (freeze request
and release request) and suspensionsd) Pledging,
unpledging and confiscatione) BO ISIN balances
and master maintenance enquiry
64
Future Products ExpansionNew BusinessIn
addition, AB Bank will also expand its operations
in the investment banking in the following
areas
Business Area Status
Islamic Capital Market Products Supporting infrastructure going to be prepared
Processing Asset Management / Mutual Fund
Derivatives Products We are planning to launch and manage Mutual Fund in future.
65
Cards - Debit Cards - Credit Cards -
ATM Locations - Merchant Outlets - FAQ
- Future Plans 
66
Safe Deposit Locker Advantages / Key Benefits
- Wide Availability. - Lockers available
in various sizes. i.e. Small, Medium and Large
with varying rents. - Lockers are rented out
for a minimum period of one year. Rent is payable
in advance. - The rent may be conveniently
paid from your deposit account with us. -
Direct debits for locker rentals from your
account rid you of the hassles in writing out
cheques.EligibilityAn individual (not minor),
firms, limited company, associations, clubs,
trusts, societies, etc may hire a locker.
67
Accounts - Individual and Joint Account
- Sole Proprietorship Account - Limited
Company Account - Partnership Account
Retail Banking Personal Banking Loan Products
- Personal Loan - Auto Loan -
Education Loan (disbursed to parents/guardian)
- Education Loan (for executive) - Home
Loan
68
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71
Analysis and Findings of AIBL
72
Society influences to the Bank to developing
their activities and helps to grow the business.
After influence, Bank decides by providing
different kinds of new and potential products and
services to the society. At the same time, banks
grow faster and achieve some long range growth
and also society will be satisfied. These are
73
Product of AIBL Bank Ltd. as an Islamic
BankNeed based deposit productThe AIBL
(Al-Arafah Islami Bank) offers their customers
genera banking facilities, which ensures the
safety of their money as well as the fair and
smart return of their money. Following are the
ways through which Banks collects their deposits
from the clients - AL-WADIA CURRENT DEPOSIT
- MUDARABA SAVINGS DEPOSIT - MUDARABA
SHORT TERM DEPOSIT - MUDARABA TERM DEPOSIT
- MUDARABA SUNDRY DEPOSIT - MUDARABA
DEPOSIT UNDER SCHEMES - BAI MUAZZAL
SPL.DEPOSIT (CCH) - FOREING CURRENCY
DEPOSITS - BAI MRAJJAL DEPOSIT (CCH)
- MURABHAHA DEPOSIT (CCP)
74
B. MUDARABA SAVINGS DEPOSITMudaraba Saving
Deposit (MSD) is open by the lower and middle
classer people who wish to save a part of their
incomes to meet their future need intend to earn
an income from their savings. It aims at
encouraging savings of non-trading person(s),
institution(s), society, etc. by depositing small
amount of money in the bank.
75
Under this MUDARABA SAVINGS DEPOSIT, the bank has
a number of financial deposits scheme which are-
- One time Hajj deposits scheme - Hajj
Account scheme - Monthly profit based turn
deposit scheme - Savings investment Scheme
- Monthly Deposits Saving Scheme - Marriage
Deposit and Investment Scheme - Lakhapati
deposit scheme
76
Modes of InvestmentBai- MurabahaBai-
MuajjalIjara Bil-Bie (Hire Purchase)MudarabaMus
harakaBai-SalamOther special Investment
SchemeMasque Based Investment SchemeVetches
Investment SchemeConsumer Investment
SchemeSmall investment Scheme
77
 Grameen small investment schemeAn investment
product Grameen small investment is in
operation. The objective of this project is to
introduce Shariah based banking system in rural
and village area, creating employment through
financing to low income group, build up savings
attitude, improvement of living standard of rural
low income mass people, creating opportunity to
carry out Islamic lifestyle by way of alleviating
poverty and at the same time to make other
financially established by investing in small
investment projects. Initially this scheme was
introduced in three branches of AIDL i.e Gallai,
Comilla Ruposhpur Srimongal and Companion
Comilla. There is a plan to expand this project
gradually in other rural branches.
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Within the scope of Grameen and Small investment
schame, Investment has been made in the following
sectors1. Fisheries2. Poultry Rearing 3.
Cattle Rearing4. Goat Rearing 5. Beef
fattening6. Poultry Firm7. Procesing of
muree8. Processing of Sweets9. Sationary
business
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10.Vegetables business11. Tailorin Business12.
Cultivation of Betle Lealf13. Woek of baboo and
cane14. Cultivation of pinaapple15. Cultivation
of lemon16. Processing of Crockeries17.
Purchaseing of Rickshaw 18. Small business i.e
Paddy,Rice19. Medicine shop and shoe stores20.
Library business
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Alternative delivery channel - ATM - POS
- Internet Banking - Phone Banking -
Mobile Banking - SMS Banking - Islamic
Banking Window - Customize consumer lending
-Student service - Merchant banking service
for investor
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Corporate Social Responsibilities Al-Arafah
Islami Bank Foundation The Bank has a
Foundation launching philanthropic activities.
Al-Arafah English Medium Madrasah and Al-Arafah
Islami Bank Library are major two wings for
launching philanthropic activities.
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Al-Arafah English Medium Madrasah Al-Arafah
English Medium Madrasah has been established by
the Al-Arafah Bank Foundation with a view to
building next generation according to the ideals
of peace and equality of Islam and to
establishing banking and other aspects of life in
the way of Islam. The prime aim of this madrasah
is to contribute towards building human resource
and in the broader sense to ensure human welfare.
With the view Al-Arafah Islami Bank Foundation
has established an English medium madrasah at
Dhanmondi in 1999. Such institution upto O level
of its kind is for the first time in Bangladesh.
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Al-Arafah Islami Bank Library Library is the
carrier reservoir of knowledge. Al-Arafah
Islami Bank has shown that other than generating
profit, it can also contribute significantly in
the field of providing good source of knowledge
by establishing a public library at 32, Topkhana
Road, Chittagong Bhaban (1st floor), Dhaka, thus
strengthening social development. It is situated
in a sound, healthy surroundings. It harbors
23,000 books of reference for the researchers,
students, professionals, bankers, physicians,
engineers, politicians, writers or journalists,
even for the kids.
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It is open to all from the year 2000 and well
located accessible to everybody. It procured
some exceptional collection of books on religion,
economics, banking, computer science, business
administration, sociology, English Arabic
language and juvenile literature in Bangla,
English, Urdu Arabic, which are very rare. 
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Trends of Performance ParametersThe main
function of AIBL are to collect deposits,
mobilization funds, select projects for funding,
provide investment (loan advances) and recover
the same for reinvestment. In order to asses the
overall performance of AIBl, there are some
indicators are measured. General BusinessIn
assessing the performance dynamics in respect of
general business, as many such as total business,
total deposits, total investment (loan
advances) and foreign exchange performance have
been used. They are analyzed below.
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Total BusinessAIBL is one of the new entrants of
the 3rd generation banks having only 50 branches
currently. With in short time period, AIBL has
been to create an image as a progressive and
dynamic financial institution for itself and has
earned significant reputation in the countrys
banking sector. Despite of stiff competition in
banking sector, AIBL witness a considerable
improvement in its overall business performance
during 31 December, which contributed to
consolidate the position of the bank.
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At the end of last year, the number of depositors
stood at 253273 and the amount deposit has
accumulated to Tk. 29690.12 million. The total
numbers investors are 14213 and total investment
extended to them was a sum of taka 29723.79
million.The bank has earned Tk. 4387.26 million
and incurred an expense of Tk 2859.16 million in
the last year. At the end of the year the profit
before tax has stood Tk. 1528.09 million, which
is 88.97 more than Tk. 590.66 million pre-tax
income of the last year.
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Major Findings of AIBL
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AB has taken the following measure to create,
sustain deliver value which are as
followsMaintaining Adequate CapitalCapital
Adequacy Ratio (CAR) determines the capacity of
the bank in terms of meeting the time liabilities
and other risks such as credit risks, market
risks etc. At the end of 2010, banks total
capital reached at taka 1,079.02 crore as against
taka 743.98 crore on 31 December 2009.
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Risk ManagementAB Bank risk management system
has been designed and implemented to ensure
quality and value of assets and smooth banking
operations and services in a sustainable way to
protect interest of shareholders, depositors and
all the stakeholders.Sustainable Dividend
Policy AB bank paid 15 stock dividend and 15
cash dividend in 2009 while for 2010 the
proposition is stock dividend 25 and cash
dividend 20 respectively.
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Maintenance of liquidityBanks maintains liquid
assets to carry out the day to day operations and
fulfill the statutory requirements in relation to
business. Assets liabilities committee (ALCO)
of the Bank monitors the evolving business
situation and provides direction to maintain an
optimum trade-off between liquidity and
profitability.Utilization of resourcesBank
follows the overall limit of credit-Deposit ratio
to ensure resource utilization. This has
contributed towards improvement of assets quality
in the overall.Contribution to the National
ExchequerAB Bank contributed tk.220 crore into
the national exchequer in the form of VAT, Income
Tax and Excise duty.
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There are many internal strengths and weaknesses
of ABBL. These causes are - Innovator
of different new products and services
like they are the innovator of ATM booth
system. ABBL employees are one of the major
assets of the company. - They demand
a standard interest rate on the loan and
advances. High geographic coverage. Availability
of online Banking facility.Strong and attractive
promotional activities. - The employees
of ABBL have a strong sense of commitment towards
organization and also feel proud and a sense of
deluging towards ABBL.
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- Reputation of being a provider of
superior quality financial services among its
customers, particularly the RM and CAM department
has obtained most of the clients reliability in
providing different loans and advances. -
Various complex requirements demanded by
the Bank to give the loan. This bank
mainly provides services to their big
corporate clients. - Variability of
credit card facility for all customer groups. It
provides credit and facility only for the
selected customer groups. They have only one
branch for Islamic Banking.
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Major Findings of AIBL
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Understanding Customer and BankerThere is a
gap between the customers and bankers. Customers
are unwired about the moral of Islamic banking
system. Sometimes they are not familiars with the
rules of Islamic banking.Management ProblemThe
management of AIBL takes no risk when they give
loans to their clients. They are very slow in
decision making. They sometimes fail to take the
current opportunities for this slow decision
makings process.
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CentralizationThe Al-Arafah Islami bank is too
much centralized. For each and every work branch
office has to get permission from the head
office. The head office tightly controls each and
every branch. Advertising and
PromotionAdvertising and promotion are the weak
points of Al-Arafah Islami Bank Ltd. AIBL do not
have any effective marketing activities. Others
banks have betters marketing strategy. 
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Employees Dissatisfaction Lack of Promotion
longer probationary period is the main causes of
dissatisfaction among the employees.Lengthy
Investment processIn Islamic Banking System Lone
is very lengthy process. But it is lengthier in
AIBL, because branch managers do not have the
power to give lone. For every lone manager have
send proposal to head office. Management does not
want to take risk.Lack of State-of-artTechnology
that AIBL is using for their banking system is
not updated. Now there is some international bank
in Bangladesh, they are very fact and very up
dated. AIBL is their clients because of technology
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Causes of Poor PerformanceThere are many causes
for Poor Performance of AIBL. These causes are
- Head office of AIBL based operating
decision is one of the major cause of poor
operating performance. In the todays competitive
environment continuous monitoring and instant
response to the market demand are the keys to
success, As the management of the AIBL can not
exercise any financial and decisional power
without the prior approval of the head office, it
sometimes lags behind the competitors in terms of
instant market response.
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- The bank is interested to invest in the
trading and shop keeper based not to more willing
to invest in the small and cottage industries and
medium and big industries for risk. - Its
advertisement is not target based and adequate.
- Management information System (MIS) AIBL is
not adequate Management information system is
also poor. Accounting and Information System is
newly introducing in on line banking .All these
are preventing the Management of the factory to
take appropriate operating decision. -
AIBLs products are not diversified such ATM
card, Visa Card, Credit Card are not introduced.
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- Investment Procedure comparatively
difficult than other banks. - Each
branch employees are less as there require.
- Top level managements decision making is
very weak of Al- Arafah Islami Bank Ltd
- AIBL has a lack of right experienced personnel
in the right position. - Planning and
controlling system not properly executed.
- Lack of competitiveness.

  
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Recommendation of ABBL
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  We would like to put the following
recommendation  - Maximizing diverse
business platform reach. - Reap benefit with
expansion of corporate business base through
nurturing of existing clients while propagating
the growth strategy. - Diversification of
business into SME and retail while aligning with
regulatory priorities. - Re-emphasizing on
service delivery. - Enhance ABs image as a
corporate citizen through compliance and focus on
value driven CSR. - Ensuring Shareholders
value creation.   
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Recommendation of AIBL
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 Recommendation to Improve Performance of
AIBL  - Al- Arafah Islami Bank Limited should
delegate authority and responsibility to the
branch so that they can take some decision in
some cases. - The authorities must keep it
mind that No risk No gain is the main
philosophy of a business. So they should
investment in the small and cottage industries
even in the medium and large scale business. -
Its advertisement must set up on the target based
and adequate.
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- As the management Information System is new,
they should provide proper training the
employees. - Al- Arafah Islami Bank should
introducing multidimensional service products to
compete with other competitors. - Skilled
employees must be recruited to provide better
services. - Top level management should take
proper decision. - The authorities of AIBL
should set up right personnel to the right place
at the right time.
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END
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