Beruflich Dokumente
Kultur Dokumente
ON
Masuma Begum
Senior Principal Officer & Faculty Member
Islami Bank Training & Research Academy
And
Dr. Saleh Matin
Principal Officer & Faculty Member
Islami Bank Training & Research Academy
Submitted By:
GROUP NAME -Badhon
Name
Md. Iqbal Hossain
Roll
129005
129116
Abu Jahid
129055
Abdulla AL Mamun
129057
129058
129067
129093
129097
Batch-129th
Program: Internship
Islami Bank Training & Research Academy
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LETTER OF TRANSMITTAL
14th December, 2016
Masuma Begum
Senior Principal Officer & Faculty Member
Islami Bank Training & Research Academy
We have concentrated our best efforts to achieve the objective of the work and hope that our
endeavour will serve the purpose. We shall be highly grateful and obligated if you kindly accept
our report.
Sincerely Yours,
GROUP NAME: BADHON
Batch no-129th
Program: Internship
Islami Bank Training & Research Academy
ACKNOWLEDGEMENT
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At the very beginning, we would like to express our deepest gratitude to the almighty Allah for
giving us the strength & the composure to finish the task within the scheduled time. Internship
report is an essential part of BBA/MBA program as one can gather practical knowledge through
this process.
We are deeply indebted to our internship supervisor Masuma Begum (SPO, Faculty Member,
Islami Bank Training & Research Academy) for her whole-hearted guidance and supervision.
Her suggestions & comments to make the report a good one was really a great source of spirit for
us.
We also express our heartiest gratitude to honorable Dr. Saleh Matin (PO, Faculty Member,
Islami Bank Training & Research Academy) for his care, guidance and valuable suggestions to
prepare this report.
We would like to thank the authority of IBBL for providing us a good environment and facility to
complete this course.
EXECUTIVE SUMMARY
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A bank is a financial intermediary and creates money by lending money to a borrower, thereby
creating a corresponding deposit on the bank balance sheet. Lending activities can be performed
directly by loaning or indirectly through capital markets. Commercial banks are mainly
concerned with managing withdrawals and deposits as well as supplying loans to individuals and
small businesses. The main focus of this report is to analyze Investment Performance of Islami
Bank Bangladesh Limited(IBBL). This report gives an idea about the different Investment
Mechanism of IBBL. The study has been conducted mainly based on secondary data. The data
are collected for the period of five years from 2011-2015 from annual report of the bank. The
ratio analysis is used to analyze the Investment performance of IBBL in the form of trend
analysis. Some information has also been collected from the discussion with the officers in
Investment sector of IBBL. It was increased over the year. Growth rate of Investment was
decreased over the year, which indicates the Investment performance of IBBL is not enough.
IBBL provided major portion of Investment, in over the year of analysis, highest portion of
investment was made in Bai-Murabaha mode. The others mode of investment were more or less
fluctuating over the years of analysis. Trade Finance,industrial sector and the lowest volume of
investment were made to storage sector. Transport investment decreases in the last year. The
other sectors of investment are more or less fluctuating over the years of analysis. In urban areas
rather in rural areas which indicate that bank prefers urban areas in making investment because
of industrialization than that of rural areas. The bank should focus on other divisions broadly for
overall progress of the country. The bank should try to provide Investment worthy borrowers by
following the proper investment principles; proper monitoring and recovering system can also
help the bank to improve this situation.
TABLE OF CONTENTS
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Particulars
CHAPTER - 1: INTRODUCTION
1.1 Origin of The Report
1.2 Significance of the study
1.3 Scope of the study
1.4 Objectives of The Report
1.5 Methodology of The Study
1.6 Limitations of The Report
Page No.
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12
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13
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CHAPTER - 3: THEORITICAL
3.1 Introduction
3.2 Modes of Investment
3.3 Status of Investment:
3.4 Difference between Interest (Riba) & Profit:
CHAPTER-4: INVESTMENT MANAGEMENT of IBBL
4.1 Introduction:
4.2 Principles of Investment:
4.3 Steps in Investment Procedures
4.4 Steps in Investment Procedures
4.5. Bai-Mode:
4.6 Share Mode:
4.7 Ijara Mode:
4.8 Special Investment Scheme of IBBL
CHAPTER-5: INVESTMENT PERFORMANCE ANALYSIS
5.1 Year Wise Investment & Growth Rate
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20
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31
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36
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Bibliography
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Chapter-1
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Introduction
1.1 Origin of the Report:
With a view to acquiring an in-depth knowledge about the practical orientation and experience of
dynamic business world, it is obligatory to undertake an extensive study to prepare internship
report. The students of different departments are desirous to successfully complete their
BBA/MBA program. During the preparation of the internship report, students are guided and
supervised by the faculties of respective department with whom they are attached to. Each
student is required to work on a specific topic with the attachment of any respective organization.
As a part of the program, we are very proud to join in Islami Bank Bangladesh Limited as an
internee and very happy that our topic is Investment Mechanism of Islami Bank Bangladesh
Limited. Our workforce was in different Branches of Islami Bank Bangladesh Limited for a
period of two months. The internship is an orientation of entire working activities of Islami Bank
Bangladesh Limited. Although we worked there in several departments but we had to select an
area of study so that we can make a detail research and present our observation in the report.
This report on Investment Mechanism of Islami Bank Bangladesh Limited has been prepared
to fulfill the partial environment of BBA/MBA program as a mean of internship program. While
preparing this report, we had a great opportunity to have sound knowledge of overall banking
activities of Islami Bank Bangladesh Limited.
The report is totally based on the mode wise investment of Islami Bank Bangladesh Limited. In
order to conduct the study on this issue, the following aspects have focused in the study:
An overview of Islami Bank Bangladesh Limited.
Mode wise investment.
Different investment procedures.
To understand the different modes of investment and mode wise investment procedures.
To analyze the mode wise investment and income of IBBL.
To evaluate the sector wise investment performance of BBL.
To analyze classified investment performance of IBBL.
1.5 Methodology
1.5.1 Research Design:
The study is descriptive in nature, which is mainly based on secondary data. The study focused
on investment performance of Islami Bank Bangladesh Limited.
1.5.2 Data used in the study:
As the study is mainly based on secondary data, annual report if the bank and website are the
major sources of data in this report. Though the use of primary data is very limited in this report,
some information has been collected by face to face conversation with officers. The secondary
data has been collected for the period of five years, from 2011 to 2015.
Chapter-2
Profile of IBBL
2.1 Definition of Islami Bank:
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Islami Banking is a banking activity that is consistent with the principles of Islamic Shariah and
its practical application through the development of Islamic economics. As such, a more correct
term for Islamic Banking is Shariah compliant finance.
The organization of Islamic conference (OIC) defined an Islami Bank as A financial institution
whose statutes, rules and procedures expressly state its commitment to the principles of Islamic
Shariah and to the banning of receipt and payment of interest on any its operations.
bank in South-East Asia launched on 30th March 1983 as a public limited company, started its
functioning informally on 30th March. The formal inauguration was made on 12 August 1983
when the first branch of the bank i.e. Local Office located at Motijheel, Dhaka started its fullFledged banking operations. As on 31 December 2015, after passing a long journey of
continuous success and glory in almost all business indices, the bank is now running with TK.
16,099.91 million paid up capital that was TK. 80.00 million at the date of establishment. The
aesthetically viewed 18 stories own building located at 410, Dilkusha Commercial Area, Dhaka
is the Corporate Headquarter of the Bank.
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Chapter-3
Theoretical Aspects
3.1 Introduction:
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In finance, investment means the purchase of financial products or other items of value with an
expectation of favorable future returns. In general terms, investment means the use money in the
hope making more money. In business, the purchase by a producer of a physical good, such as
durable equipment or inventory, in the hope of improving future. It is the commitment of money
or capital to purchase financial instruments or other assets in order to gain profitable returns in
the form of interest, income, or appreciation of the value of the instruments. Investment is related
to saving or deferring consumption.
Bai-Istishna: It is binding contract and no party is allowed to cancel the Bai-Istishna contract
after the price is paid and received in full or in part or the manufacturer starts the work. It
facilities the manufacturer sometimes to get the price of the goods in advance,which he may
use as capital for producing the goods.
Mudaraba: Most of investment of IBBL is formed under Murdaraba mode. It is a form of
partnership where one party provides the funds while the other provides the expertise and
management. Any profits generated are share between parties on a pre-agreed basis, while
capital loss is exclusively borne by the partner providing the capital. But IBBL is an expert
organization in business sector so they face less failure and if there is any loss they can
overcome it by other sector.
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Musharaka: The partners (entrepreneurs, banker) share both capital and management of a
project so that profit will be distributed among them as per ratio, where loss is shared
according to ratio of their equity participation.
Hire Purchase under Shirkatul Melk (HPSM): In case of Hire Purchase under Shirkatul
Melk, the asset/ property involved is jointly purchased by the Hire (Bank) and the Hire
(Client) with specified equity participation under a Shirkatul Melk Contract in which the
amount of equity and share in ownership of the asset of each partner (Hire Bank & Hirer
Client) are clearly mentioned. Under this agreement, the Hire and the Hirer becomes coowner of the asset under this transaction in portion to their respective equity participation.
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Special Mention Account: When investment installment first missed by the borrower, the
investment account is classified as Special Mention Account (SMA). The tenure of SMA
varies with the categories of loans.
Profit
1. Excess over the principal in a loan 1. Positive end result of business operation.
transaction.
2. Unearned income.
2.
capital.
3. No such surety.
amounts ensured.
4. Pre-determined.
4. Uncertain.
single transaction.
6. Prefixed cost of goods and services and
deal.
6. Profit is found after deduction of all
creates inflation.
money supply.
8. Risk of erosion of capital is there.
9. Declared as Haram.
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Chapter-4
Investment Management of
IBBL
4.1 Introduction:
Investment is the action of deploying funds with the intention and expectation that they will earn
a positive return for the owner. Funds may be invested in either real assets or financial assets.
When resources are used for purchasing fixed and current assets in production process or for a
trading purpose, then it can be termed as real investment. The establishment of a factory or the
purpose of raw materials and machinery for production purpose are examples in point. On the
other hand, the purchase of a legal right to receive income in the form of capital gains or
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Client
Client Application
Appraisal/Evaluation of the client
Proposal to Head Office
Sanction
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Documentation
Disbursement
Follow up & monitoring
Recovery
Legal steps
(If required)
4.3.1 Client Introduction: Here, investment taker (Client) approaches to any of the branch
of Islami Bank Bangladesh Limited (IBBL). Then, he talks with the manager or respective
officers (Investment).
Secondly, bank considers five Cs of the client. After successful completion of the discussion
between the client and bank, bank selects the client for its proposed investment. It is to be noted
that the client/customer must agree with the banks rules & regulations before availing
investment.
Generally, bank analyses the following five Cs of the client:
Character, Capacity, Capital, Collateral & Conditions
4.3.2 Client
Application:At this stage, the bank will collect necessary information about the prospective
client. For this reason, bank informs the prospective client to provide and/or fill duly respective
information that is crucial for the information of investment proposal. Generally, here, all the
required documents for taking investment have to be prepared by the client himself.
Documents that are necessary for getting investment opportunity of IBBL are given below:
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4.3.3Appraisal Stage: At this stage, the bank evaluates the client and his/her business. It is the
most important stage. In this stage, bank usually goes for sanctioning the proposed investment
limit/proposal. If anything goes wrong here, the bank suddenly stops to make payment of
investment.
4.3.4 Sanctioning stage: At the stage, the bank officially approves the investment proposal of
the respective client. In this case,client receives banks sanction letter.
Sanction letter contains the following elements:
Investment limit
Mode & amount of investment.
Period of investment.
Rate of return.
Securities.
Cash/goods security.
In allowing Mudaraba investment, amount of cash security is generally realized from the client
(amount depends on the nature of goods, creditworthiness of the client, collateral security
obtained etc.) which is converted to goods security after goods purchased out of banks
investment and clients cash security is pledged to the bank, kept under banks custody before its
delivery to the client on payment. Example: if, for a Mudaraba investment, cash security is fixed
at 25% Banks investment stand at 75% on the total goods purchased. For example, if cost of
total goods purchased is Tk.100000 Banks investment will be Tk.75000 and clients cash
security will be Tk.25000
Bank(75%)
Client(25%)
Tk.75000
Tk.25000
Tk.100000
4.4.5 Documentation Stage: At this stage, usually the bank analyses whether required
documents are presented. Islami Bank Bangladesh Limited (IBBL) checks the following
documents of the client (all these documents are banks prescribed form):
Asset acknowledgement
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Cheque forwarding
Declaration & Undertaking
Letter of Authority
Demand Promissory Note
Demand Promissory Note Delivery Letter
Letter of Disbursement
Letter of Installments
Balance confirmation letter
Letter of continuity
Trust Receipt
Letter of Guarantee
Letter of Hypothecation
Pledge
4.4.6 Disbursement Stage: At this stage, bank decides to pay out money. Here, the client gets
his/her desired fund or goods.
4.4.7 Monitoring & Recovery Stage: At this stage of investment processing of Islami Bank
Bangladesh Limited (IBBL), bank will contract with the client continually. Bank can obtain
monthly stock report from the client in case of micro investment. Here, the bank will keep its
eyes on over feels that, anything is going wrong then it tries to recover its investment fund from
the client by telephonic communication or issuing letter. If the situation becomes very critical
then bank can take legal steps against the clients.
Bai-Mode
Bai-Murabaha
Bai-Muajjal
Bai-Salam
Bai-Istisna
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Share Mode
Mudaraba
Musharaka
Ijara Mode
HPSM (Hire
Purchase under
Shirkatul Melk)
4.5. Bai-Mode:
4.5.1 Bai-Murabaha:
4.5.1 (I) Definition: The term Bai-Murabaha has been derived from Arabic word Baiun and
Ribhun. The word Baiun means to purchase and sales and the word Ribhun means an agreed
upon profit. Bai-Murabaha means sale on agreed upon profit.
Bai-Murabaha may be defined as a contract between a buyer and a seller under which the seller
sells certain specific goods (permissible under Islamic Shariah and the Law of the land), to the
buyer at a cost plus agreed profit payable in cash or on any fixed future date in lump-sum or by
installments. The profit marked-up may be fixed in lump sum or in percentage of the cost price
of the goods.
In Brief:
defects, that means, if the goods are damaged, Bank is liable, if the goods are defective, (a
defect that is not include in the release) the Bank bears the responsibility.
The Bank must deliver the specified Goods to the Client on specified date and at specified
place of delivery as per Contract.
The Bank shall sell the goods at a higher price (Cost + Profit) to earn profit. The cost of
goods sold and profit make-up therewith shall separately and clearly be mentioned in the BaiMurabaha Agreement. The profit mark-up may be mentioned in lump sum or percentage of
the percentage of the purchase/cost price of the goods. But, under no circumstances, the
percentage of the profit shall have any relation with time or expressed in relation with time,
such as per month, per amount etc.
The price once fixed as per agreement and deferred cannot be further increased.
It is permissible for the bank to authorize any third party to buy and receive the goods on
Banks behalf. The authorization must be in a separate contract.
4.5.2 Bai-Muajjal:
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4.5.2 (I) Definition: The term Bai-Muajjal has been derived from Arabic words Baiun and
Ajalun. The word Baiun means purchase and sale and the word Ajalun means a fixed time or a
fixed period. Bai-Muajjal means sale for which payment is made at a future fixed date or
within a fixed period. In short, it is a sale on credit.
Bai-Muajjal may be defined as a contract between a Buyer and a Seller under which the Seller
sells certain specific goods (permissible under Islamic Shariah and Law of Land) to the buyer at
an agreed fixed price payable at a future date in lump sum or within a fixed period by fixed
installments. The seller may also sell the goods purchased by him as per order and specification
of the Buyer.
In this Bank, Bai-Muajjal is treated as a contract between the Bank and the Client under which
the Bank sells goods, purchased as per order and specification of the Client to the client at an
agreed price payable at any fixed future date in lump sum or within a fixed period by fixed
installments.
Thus it is a credit sale of goods by which ownership of the goods is transferred by the Bank to
the Client but the payment of sale price by the Client is deferred for a fixed period. It may be
noted here that in case of Bai-Muajjal, the Islami Bank is a financer to the Client not in the sense
that the Bank finances the purchase of goods by the Client, rather it is a financier by deferring
the receipt of the sale price of goods and it sells to the Client. If the bank does not purchase the
goods or does not directly purchased and received by the client from the seller under Bai-Muajjal
Agreement, that will be a remittance/payment of the amount on behalf of the client, which shall
be nothing but a loan to the Client and any excess on this amount shall be nothing but interest
(Riba)
Therefore, purchase of goods by the bank should be for and on behalf of the Bank and the
payment of price of goods by the Bank must be made for and on behalf of the Bank. If any way
the payment of price of goods is turned into for and on behalf of the Client or it is paid to the
Client, any excess on it will be Riba.
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Stock and available of goods is a basic condition for signing a Bai-Muajjal Agreement.
Therefore, the Bank must purchase the goods as per specification of the Client to acquire
ownership of the same before signing the Bai-Muajjal Agreement with the Client.
After purchase of goods the Bank must bear the risk of goods until those are actually
delivered the Client.
The Bank must deliver the specified Goods to the Client on specified date and at specified
place of delivery as per Contract.
The Bank may sell the goods at a higher price than the purchase price to earn profit.
The price once fixed as per agreement and deferred cannot be further increased.
The Bank may sell the goods at one agreed price which will include both the cost price and
the profit. Unlike Bai-Mudaraba the Bank may not disclose the cost price and the profit
mark-up separately to the Client.
4.5.2 (III) Procedure of investment under Bai-Muajjal Mode:
First Step: To offer an order by the client to the bank to purchase a specific good. The client
will promise to buy the goods from the bank.
Second Step: The client will an agreed fixed price payable at a certain fixed future date in lump
sum or within a period by fixed installments.
Third Step: The bank will take collateral to guarantee the implementation of promise. The
Bank and Client sign the agreement. Then Bank will purchase goods from the supplier
according to the Bai-Muajjjal Agreement.
Forth Step: Then Bank will deliver the goods to the client at the time and place specified in
agreement.
4.5.3Bai-Salam:
4.5.3 (I) Definition: The term Bai-Salam has been derived from Arabic words Baiun and
Salamun. The word Baiun means purchase and sale and the word Salamun means advance.
Bai-Salam means advance purchase and sale.
Bai-Salam may be defined as a contract between a Buyer & a Seller under which the seller sells
in advance the certain commodities or products permissible under Islamic Shariah and the law
of the land to the buyer at an agreed price payable on execution of the said contract and the
commodities / products are delivered as per specification, size quality, quantity at a future time
in a particular place.
In other words, Bai-Salam is a sale whereby the seller undertakes to supply some specific
Commodities / products to the buyer at a future time in exchange of an advanced price fully
paid on the spot.
Here, the price is paid in cash, but the delivery of the goods is deferred.
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3. The Sale Contract: The bank agrees to sell the commodity for cash or a deferred price,
which is higher than Salam purchase price. The buyer agrees to purchase and to pay the price
according to the agreement.
4.5.4 Bai-Istisna:
4.5.4 (I) Definition: Istisnaa is a contract between a manufacturer/seller and a buyer under
which the manufacturer/seller sells specific product (s) after having manufactured, permissible
under Islamic Shariah and Law of the Country after having manufactured at an agreed price
payable in advance or by installments within a fixed period or on/within a fixed future date on
the basis of the order placed by the buyer.
It gives the buyer opportunity to pay the price in some future dates or by installments
It is a binding contract and no party is allowed to cancel the Istisna contract after the price is
paid and received in full or in part or the manufacturer starts the work.
deferred is set in the agreement. The bank agrees to deliver the commodity to the buyer at
some agreed upon time in forth future.
Delivery and Receipt of the commodity: The seller in the parallel Istisnaa agreement,
delivers the commodity to the bank on the agreed upon date. The bank, in turn, delivers the
product to the buyer of the origin Istisnaa contract, in accordance with the original
agreement. In this way, all parties fulfill their obligations to the contract.
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Shahib al maal loses its capital and Mudarib loses his labor in case of actual loss incurred in
the business.
4.6.1 (III) Types of Mudaraba:
1. Mudaraba Mutlak: It is one kind of mudaraba contract where nature of business, location,
time and boundary are not fixed. The Mudarib can enjoy the freedom of taking decision in any
business related works in order to safe guard the business.
2. Mudaraba Muquyadah: It is one kind of Mudaraba contract where nature of business,
location, time and boundary are pre-specified. In this contract, the Mudarib is bound to run the
business exactly according to agreement.
4.6.2 Musharaka:
4.6.2 (I) Definition: The word musharaka has been derived from the Arabic word Shirkat or
Sharikat (Shirk). In Arabic, Shirkat or Sharikat or Shirk means partnership or sharing. Thus
the literal meaning of Musharaka is sharing through the connotation of this term is limited
than the term shirkat. The term Musharaka has been introduced recently in Islamic Banking
literature to mean a particular type of Shirkat.
In Islamic Fiqh literature, Shirkat,l in its primitive sense, signifies the conjunction of two or
more estates, in such a manner, that one of them is not distinguishable from the other. The term
Shirkat, however, is extended to contracts, although there be no actual conjunction of estates,
because a contract is the cause of such conjunction. In this language of the law it signifies the
union of two or more persons in one concern. It is the partnership between two or more persons
or institutions.
Musharaka may be defined as a contract of partnership between two or more individuals or
bodies in which all the partners contribute capital, particular in the management and share the
profit in proportion to their capital or as pre-agreed ratio and bear the loss, if any, in proportion
to their capital/equity ratio.
In Islami Bank Bangladesh Limited (IBBL), the Bank may take part in a business with its
Client(s), where both the Client(s) and the Bank provides capital in fixed proportions, take part
in the management of business and share the profit in proportion to their respective capital ratio
or at pre-agreed ratio and bear the loss, if any, in proportion to their respective capital/equity
ratio.
Hire purchase under ShirkatulMelk is a special type contract, which has been developed
through practice. Actually, it is synthesis of three contracts:
Shirkat
Ijarah
Sale
These may be defined as follows:
a. Shirkatul Melk: Shirkatul Melk means share in ownership. When two or more persons
supply equity, purchase an asset, own the same jointly, and share the benefit as per agreement
and bear the loss in proportion to their respective equity, the contract is called Shirkatul Melk
contract.
b. Ijarah: The term Ijarah has been derived from the Arabic words (Air) and (Ujrat) which
means consideration, return, wages or rent. This is really the exchange value or consideration,
return, wages, rent of service of an asset. Ijarah has been defined as a contract between two
parties, the Hire and the Hirer where the Hirer enjoys or reaps a specific service or benefit
against a specified consideration or rent from the asset owned by the Hire. It is a hire agreement
under which a certain asset is hired out by the Hire to a Hirer against fixed rent or rentals for a
specified period.
c. Sale: This is a sale contract between a buyer and a seller under which the ownership of
certain goods or asset is transferred by seller to the buyer against agreed upon price paid/to be
paid by the buyer.
Thus, in Hire Purchase under Shirkatul Melk mode both the bank and the Client supply equity
in equal or unequal proportion for purchase of an asset like land, building, machinery,
transports etc. Purchase the asset with that equity money, own the same jointly, share the
benefit as per agreement and bear the loss in proportion to their respective equity. The share,
part or portion of the asset owned by the bank is hired out to the Client partner for a fixed rent
per unit of time for a fixed period. Lastly the Bank sells and transfers the ownership of its
share/part/portion to the client against payment of price fixed for that part either gradually part
by part or in lump sum within the hire period or after the expiry of the hire agreement.
In case of Hire Purchase under Shirkatul Melk transaction the asset/property involved in
jointly purchased by the Hire (Bank) and the Hirer (Client) with specified equity
participation under a Shirkatul Melk Contract in which the amount of equity and share in
ownership of the asset of each partner (Hire Bank & Hirer Client) are clearly mentioned.
Under this agreement, the Hire and the Hirer becomes co-owner of the asset under
transaction in proportion to their respective equity participation.
In Hire Purchase under Shirkatul Melk Agreement, the exact ownership of both the Hire
(Bank) and Hirer (Client) must be recognized. However, if the partners agree and wish that
the asset purchased may be registered in the name of any one of them or in the name of any
third party, clearly mentioning the same in the Hire Purchase Shirkatul Melk Agreement.
However, in IBBL, no third party registration shall be allowed.
The share/part of the purchased asset owned by the Hire (Bank) is put at the
disposal/possession of the Hirer (Client) keeping the ownership with him (Bank) for a fixed
period under a hire agreement in which the amount of rent per unit of time and the benefit for
which rent to paid along with all other agreed upon stipulations are also to be clearly stated.
Under this agreement, the Hirer (Client) becomes the owner of the benefit of the asset but not
of the asset itself, in accordance with the specific provisions of the contract with entitles the
Hire (Bank)is entitled for the rentals.
As the ownership of hired portion of the asset lies with the Hire (Bank) and rent is paid by
the Hirer (Client) against the specific benefit, the rent is not considered as price or part of
price of the asset.
In the Hire Purchase under Shirkatul Melk Agreement the Hire (Bank) does not sell or the
Hirer (Client) does not purchase the asset but the Hire (Bank) promise to sell the asset to the
Hire (Client) part by part only, if the Hirer (Client) pays the cost price/equity/ agreed price as
fixed for the asset as per stipulations within agreed upon period on which the Hirer also gives
undertakings.
The promise to transfer legal title by the and undertakings given by the Hirer to purchase
ownership of the hired asset upon payment part by part as per stipulations are affected only
when it is actually done by a separate sale contract.
As soon as any part of Hires (Banks) ownership of the asset is transferred to the Hirer
(Client) that becomes the property of the Hirer and hire contract for that share/part and
entitlement for rent thereof lapses.
In Hire Purchase under Shirkatul Melk Agreement, the Shirkatul Melk contract is affected
from the day the equity of both parties deposited and the asset is purchased and continues up
to the day on which the full title of Hire (Bank0 is transferred to the Hirer (Client).
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The hire contract becomes effective from the day on which the Hire transfers the possession
of the hired asset in good order and usable condition to the Hirer, so that the Hirer may make
use of the same as per provisions of the agreement.
Effectiveness of the sale contract depends on the actual sale and transfer of ownership of the
asset by the Hire to the Hirer. It is sold and transferred part by part, it will become effective
part by part and with the sale and transfer of ownership of every share/part. The hire contract
for that share/part will lapse and the rent will be reduced proportionately.
Sl. No.
Schemes Name
01
02
03
04
05
06
07
08
09
33 | P a g e
10
11
34 | P a g e
Chapter-5
35 | P a g e
Analysis
2011
322,772
2012
399,931
2013
474,016
2014
564,332
2015
629,631
Growth Rate
23.91%
23.91%
18.52%
19.05%
11.57%
(Source:
IBBL
Annual
Report
2011 to
2015)
700000
600000
500000
400000
322772
300000
200000
100000
0
2011
564332
399931
2012
474016
2013
2014
36 | P a g e
629631
2015
30.00%
25.00% 23.91%
20.00%
15.00%
10.00%
5.00%
0.00%
2011
23.91%
19.05%
18.52%
2012
2013
11.57%
2014
2015
Interpretation: The graph shows year wise investment of IBBL from 2011 to 2015. Gradually
the amount of investment is increasing. In 2011, total investment was Tk. 322,772 million and in
2015, it was tk. 629,631 million. However, the growth rate is fluctuating over the years.
2014
560,696
18.51%
2015
615,359
9.75%
Amount of Deposit
800000
600000
400000
341854
417844
473141
560696
615359
200000
0
2011
2012
37 | P a g e
2013
2014
2015
22.23%
18.51%
13.23%
2012
2013
9.75%
2014
2015
Ratio
87.29%
85.18%
82.35%
79.88%
86.20%
(Source: IBBL Annual Report 2011 to 2015)
Table 5.3: Investment to Deposits Ratio of IBBL
Investment to Deposits Ratio
88.00%
86.00%
87.29%
84.00%
86.20%
85.18%
82.35%
82.00%
80.00%
79.88%
78.00%
76.00%
2011
2012
2013
2014
2015
100000
50000
39 | P a g e
M
ud
ar
ab
a
Q
ua
rd
Ba
i-M
ua
jja
l
Ba
i-M
ur
ab
ah
a
Bai-Muajjal
Quard
Mudaraba
2011
177,136
2012
221,632
2013
225,876
2014
281,556
2015
331,239
Growth Rate
57.92%
59.43%
55.52%
60.75%
62.48%
40 | P a g e
Amount of Investment
400000
300000
177136
200000
221632
225876
2012
2013
281556
331239
100000
0
2011
2014
2015
Growth Rate
64.00%
62.00%
60.00%
57.93%
58.00%
56.00%
54.00%
52.00%
2011
60.75%
59.43%
62.48%
55.52%
2012
2013
2014
2015
2011
2012
2013
2014
18,635
25,626
28,495
29,474
60.77%
62.53%
67.14%
62.07%
(Source: IBBL Annual Report 2011 to 2015)
41 | P a g e
2015
28,199
59.95%
30000
18635
20000
28495
29474
28199
10000
0
2011
2012
2013
2014
2015
Percentage of Income
70.00%
67.14%
62.53%
65.00%
60.77%
62.07%
60.00%
59.95%
55.00%
2011
2012
2013
2014
2015
Interpretation: The graph shows income from Bai-Murabaha mode. From 2011 to 2015 the
amount of income is increasing. In 2011, the amount was tk. 18,635 million and in 2015, it was
Tk. 28,199 million. The income in Bai-Murabaha mode as a % of total income is gradually
decreasing.
2011
57.92%
2012
59.43%
2013
55.52%
2014
60.75%
2015
62.48%
% of Income
60.77%
62.53%
67.14%
62.07%
59.95%
42 | P a g e
80.00%
70.00%
60.77%
57.92%
60.00%
67.14%
62.53%
59.43%
62.07%
60.75%
55.52%
62.48%
59.95%
50.00%
% of Investment
40.00%
% of income
30.00%
20.00%
10.00%
0.00%
2011
2012
2013
2014
2015
2011
9,571
2012
13,719
2013
13,838
Percentage of 3.13%
3.68%
3.40%
Investment
(Source: IBBL Annual Report 2011 to 2015)
2014
2825
2015
393
0.61%
0.07%
43 | P a g e
Investment
13719
15000
13838
9571
10000
5000
2825
393
0
2011
2012
2013
2014
2015
Percentage of Investment
3.68%
4.00%
3.13%
3.00%
3.40%
2.00%
0.61%
1.00%
0.00%
2011
2012
2013
0.07%
2015
2014
2011
1,609
2012
1,651
2013
2,013
2014
1,463
2015
1,134
% of Income
5.25%
4.03%
4.74%
3.08%
2.41%
44 | P a g e
Income
2500
2000
1609
2013
1651
1463
1500
1134
1000
500
0
2011
2012
2013
2014
2015
Percentage of Income
5.25%
6.00%
4.74%
4.03%
3.08%
4.00%
2.41%
2.00%
0.00%
2011
2012
2013
2014
2015
2011
3.13%
2012
3.68%
2013
3.40%
2014
0.61%
2015
0.07%
% of Income
5.25%
4.03%
4.74%
3.08%
2.41%
45 | P a g e
6.00%
5.25%
4.74%
5.00%
4.00%
4.03%
3.68%
3.13%
3.40%
3.08%
% of investment
3.00%
2.41%
% of income
2.00%
1.00%
0.00%
2011
0.61%
0.07%
2012
2013
2014
2015
2011
2012
2013
2014
2015
Investment
15,912
18,259
23,103
15,443
34,818
% of Investment
5.20%
4.91%
5.68%
3.33%
6.57%
46 | P a g e
Investment
40000
30000
18259
15912
20000
34818
23103
15443
10000
0
2011
2012
2013
2014
2015
5.20%
6.00%
4.19%
6.57%
3.33%
4.00%
2.00%
0.00%
2011
2012
2013
2014
2015
2011
1,638
2012
2,342
2013
3,256
2014
4,477
2015
4,508
% of Income
5.34%
5.72%
7.61%
9.43%
9.58%
47 | P a g e
Income
4477
5000
4000
4508
3256
3000
1638
2000
2342
1000
0
2011
2012
2013
2014
2015
Percentage of Income
12.00%
10.00%
8.00%
5.34%
6.00%
4.00%
2.00%
0.00%
2011
9.43%
9.58%
7.61%
5.72%
2012
2013
2014
2015
2011
5.20%
2012
4.91%
2013
5.68%
2014
3.33%
2015
6.57%
% of Income
5.34%
5.72%
0.01%
9.43%
9.58%
48 | P a g e
Interpretation: The graph shows that the percentage of investment from Bai-Muajjal mode
was fluctuating from 2011 to 2015. The percentage significantly increased in 2015.The
percentage of income from Bai-Muajjal mode increased 2015. In 2013, % of income
decreased to 0.01%. In 2015, it increased to 9.58% against 6.57% of investment.
2011
2012
2013
2014
2015
Investment
89,070
96,056
95,481
109,941
123,856
25.76%
23.47%
23.72%
23.36%
%
Investment
of 29.12%
Investment
150000
89070
100000
96056
95481
2012
2013
109941
123856
50000
0
2011
2014
2015
Percentage of investment
40.00%
29.12%
25.76%
23.47%
20.00%
0.00%
2011
2012
2013
23.72%
2014
23.36%
2015
49 | P a g e
2011
8,563
2012
11,000
2013
11,621
2014
11,755
2015
11,484
% of Income
27.92%
26.84%
27.38%
24.76%
24.41%
11000
11621
2012
2013
11755
11484
8563
10000
5000
0
2011
2014
2015
Percentage of Income
30.00%
27.92%
28.00%
26.00%
24.00%
22.00%
2011
26.84%
27.38%
24.76%
24.41%
2012
2013
2014
2015
50 | P a g e
2011
24.76%
2012
25.76%
2013
23.47%
2014
23.72%
2015
23.36%
% of Income
27.92%
26.84%
27.38%
24.76%
24.41%
(Million Taka)
(Source: IBBL Annual Report 2011 to 2015)
Table 5.16: Percentage Investment of IBBL in HPSM Mode & Percentage of Income
35.00%
29.12%
30.00%
27.92%
26.84%
25.76%
27.38%
23.47%
25.00%
24.76%
23.72%
24.41%
23.36%
20.00%
% of investment
% of income
15.00%
10.00%
5.00%
0.00%
2011
2012
2013
2014
2015
51 | P a g e
2014
Million
Taka
155,432
%
33.54
2015
Million
Taka
172,591
%
32.55
Commercial
Real Estate
Agriculture
Transport
SME
42,352
37,680
11,354
6,435
181,918
9.14
8.13
2.45
1.39
39.25
36,854
41,778
10,638
6,820
229,864
6.95
7.88
2.01
1.29
43.35
Others
28,304
6.11
31,649
5.97
Total
463,475
100
530,194
100
155432
172591
150000
130000
113974
122270
110000
90000
70000
50000
2011
52861
2012
2013
2014
52 | P a g e
2015
Percentage of Investment
40.00%
27.92%
30.00%
33.54%
26.84%
27.38%
2012
2013
32.55%
20.00%
10.00%
0.00%
2011
2014
2015
125788
120000
100000
80000
60000
46142
40000
Investment
38234
42352
36854
20000
0
2011
2012
2013
2014
2015
35%
31%
30%
25%
20%
15%
15%
13%
Percentage of investment
10%
9%
5%
0%
2011
2012
2013
2014
7%
2015
40,000
41,778
27,126
30,000
20,000
11,336
10,000
0
2011
16,966
Investment
2012
2013
2014
2015
10%
8%
6%
6%
4%
4%
7%
8%
8%
Percentage of investment
2%
0%
2011
2012
2013
2014
2015
20,923
20,385
20,000
14,252
15,000
Investment
10,000
11,354
10,638
5,000
0
2011
2012
2013
2014
54 | P a g e
2015
8%
7%
6%
5%
5%
4%
3%
2%
1%
0%
2011
7%
5%
Percentage of investment
2%
2012
2013
2014
2%
2015
Transport Sector
8,000
7,000
6,457
6,679
6,435
6,000
4,583
5,000
4,000
6,820
Investment
3,000
2,000
1,000
0
2011
2012
2013
2014
2015
3%
2%
2%
2%
2%
1%
1%
Percentage of investment
1%
1%
1%
0%
2011
2012
2013
2014
55 | P a g e
2015
SME Sector
250,000
229,864
200,000
170,356
181,918
150,000
100,991
Investment
2012
2013
100,000
72,933
50,000
0
2011
2014
2015
42%
39%
33%
43%
Percentage of investment
2012
2013
2014
2015
56 | P a g e
2013
305,841
14,941.9
3.71%
2014
372,921
22,807.24
4.92%
2015
629,631.27
22,541.24
3.58%
3.81%
4.92%
3.71%
3.58%
2.00%
1.00%
0.00%
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Total Investment
305,841
372,921
406,805
430,652
462,072
Unclassified Investment
295,749
358,708
391,863
415,225
430,025
500,000
400,000
295,749
300,000
415,225
391,863
358,708
430,025
Unclassified Investment
200,000
100,000
0
2011
2012
2013
2014
2015
98.00%
97.29%
97.50%
97.75%
97.25%
97.00%
96.50%
96.33%
96.19%
96.00%
95.50%
95.00%
2011
2012
2013
2014
2015
2012
14,212.80
2013
2014
14,941.90 22,807.24
2015
24978.25
10,820
12,416.13 19,059.02
21055.6
Bad/Loss as % of 1.41%
Total
Classified
Investment
2.90%
3.05%
3.39%
3.28%
4.00%
3.50%
3.00%
3.28%
2.90%
3.39%
3.05%
2.50%
2.00%
1.41%
1.50%
1.00%
0.50%
0.00%
2011
2012
2013
2014
2015
59 | P a g e
Chapter-6
Findings, Recommendations &
Conclusion
6.1 Findings:
The study, investment performance of Islami Bank Bangladesh Limited, reveals the following
majors findings:
The amount of deposit was increasing year by year. In 2010, total deposit was Tk. 291,934
million and in 2015, the amount was 615,359.21 million. However, the growth rate was
fluctuating over the year.
The amount of investment was increasing gradually. In 2010, total investment was Tk.
275,494 million and in 2015, it was tk. 629,631 million. However, the growth rate was
fluctuating over the years.
IBBL invested more in Bai-Murabaha mode, which was 62.48% of total investment in 2015.
IBBL invested only 0.07% under Musharaka Mode in 2015.
IBBL earned higher income from Bai-Murabaha mode, which was 59.48% of total income in
2015.
IBBL invested more in SME sector and less in transport sector in 2015.
Classified investment of IBBL has increased over the last four years.
6.2 Recommendations:
The following recommendations can be suggested from the analysis of mode of investment of
Islami Bank Bangladesh Limited:
Since the growth rate of deposit of Islami Bank has fluctuated year by year, the bank should
take step for reducing the fluctuating trend of growth rate of deposit by introducing new
deposit product likes as Mudaraba Shirkatul Deposit.
Since the growth rate of investment of Islami Bank has fluctuated over the years, bank should
try to improve this trend of growth rate of investment.
In our country more than 70% people are surviving by producing and selling agricultural
products. But IBBL does not make sufficient investment to this sector. In 2015, they make
only 2% of total investment in this sector. IBBL should give more concentration in this sector
for balance development of our economy.
In order to reduce classified investment, the bank should asses the borrower properly before
making investment by collecting and screening the information.
IBBL should properly monitor the behavior of borrower to ensure the use of fund for the
specified purpose.
60 | P a g e
6.3 Conclusion
IBBL is trying to develop banking sector through welfare and servicing to the people. Islami
econoour and banking are bound together. IBBL has emerged facing the obstacles yet. This
bank is trying to operate their activity according to law of Islam. Most of the people in our
country have a bad impression about IBBLs operations regarding indirect generation of
interest, which means no difference between investments of IBBL loan/credit/advance of
conventional banks for this reason. They are not much interested to investment with IBBL
because majority of our people have no proper knowledge about the activities of Islami banking
as well as its investment mechanisms. IBBL through its steady progress and continuous success
has, by how, earned the reputation of being one of the leading private sector banks of the
country. The bank has shown steady progress in this important sector. IBBLs capital adequacy,
deposits, reserves, earnings per share, export, import and remittances are increasing day by day.
So, no doubt IBBL is a growing profitable financial institution. Interest free banking system is
no more a concept. It is now a reality, a dynamic system, embodying a setoff superior banking
mechanism. More than 300 Islamic bank and financial institutions are operating in different
countries throughout the world with a marked success from this inception in our country in
1983. The significant growing of IBBL has encouraged the traditional banks to open Islamic
banking window, like HSBC, Dhaka Bank Ltd., prime Bank Ltd., The City Bank Ltd. Though
IBBL has reached the top position among the PCBs in our country, it has to more concentrate
its customers service to survive in the long run by facing the competitors strong strategies in
banking era. In our study we have found that IBBL has reached this position by its
commitment, peoples love and dedicated human resources. Islami Bank has been shown its
supremacy in all kinds of banking operations in our country. To conclude we must say that,
Islami Bank Bangladesh Limited (IBBL) has immense potential in Bangladesh. It can play vital
role in bringing revolutionary changes in our life with both material and moral world and in
individual and collective level.
61 | P a g e
Bibliography
62 | P a g e