Chapter One: Introduction to General Banking Activities of SJIBL

Chapter One: Introduction
Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 1

1.1 Preamble:
The Word ‘Bank’ is derived from the word ‘Banco’ or ‘Banque’. Banco or Banque means a
bench. The early bankers transacted their money leading activities sitting on the benches in a
market place. According to others, the world ‘Bank’ is originally derived from the German
word ‘back’ meaning a joint stock fund. However, the term ‘Bank’ has been in use from the
Middle Ages in connection with the business of money lending.
Originally, ‘Banker’ or ‘Bank’ was defined as a person who carried on business of receiving
money, collecting of drafts, honoring cheque drawn upon it. Over the year of the banking
business has undergone many changes and now it covers a wide range of activities.
According to modern concept, banking is a business, which deals with borrowings, lending
and remittances of funds as well as much ancillary business.
Modern banks play an important part in promoting economic development of a country.

Banks provide necessary funds for executing various programs underway in the process of
economic development. They collect savings of large masses of people scattered through out
the country, which in the absence of banks would have remained idle and unproductive.
These scattered amounts are collected, pooled together and made available to commerce and
industry for meeting the requirements. Economy of Bangladesh is in the group of world’s
most underdeveloped economics. One of the reasons may be its underdeveloped banking
system. Government as well as different international organizations have also identified that
underdeveloped banking system causes some obstacles to the process of economic
development. So they have highly recommended for reforming financial sector. Since, 1990,
Bangladesh government has taken a lot of financial sector reform measurements for making
financial sector as well as banking sector more transparent formulation and implementation
of these reform activities has also been participated by different international organization
like world Bank, IMF etc.
Shahjalal Islami Bank Limited has a vision and mission to improve the financial sector of
Bangladesh i.e. economic condition of Bangladesh by providing effective and innovative

banking and financial product in financial market. However, in every economy of the world
financial sector is highly regulated sector. Therefore, financial products of every bank are
almost same as same law & regulations regulate them.
Commercial Banks, as the very name indicates, function primarily as deposit takers and
lenders to trade and commerce. But through a historical process, these Banks are now also
engaged in long medium and short term industrial lending, agricultural financing including
development financing. Commercial Banks are of three types Nationalized, Local Private and
Foreign Commercial Banks.
1.2 Origin of the study:
All over the world the dimension of banking has been altering rapidly due to deregulation,
technological modernism and globalization. Now bank must complete the market place both
with local institution as well as foreign ones. To survive in this competitive banking world
banks entail to develop appropriate financial structure, enlarge professionalism in the sense of
developing appropriate manpower structure and expertise and experience.
The MBA program (Comilla University) is designed to focus on theoretical and professional
development of people open to take up business as a profession as well as service as a career.
This internship provides the students to link up their theoretical knowledge into practical
fields. This report is prepared for the internship program consisting of a major in depth study
of the “General Banking activities of Shahjalal Islami Bank in comilla branch”. This
program enables a student to develop his analytical skill and scholastic aptitude.
1.3 Objective of the study:

 There are some objectives. They are given below:
1. To know about the SJIBL
2. To analyses the activities of SJIBL
3. To know the general banking activities of SJIBL
4. To find out the overall performance of SJIBL
5. To explain the procedure of overall general activities of SJIBL
1.4 Scope of the study:

An infrastructure of the organization has been detailed, accompanied by a global perspective
and look into the future. The scope of this report is limited to the overall description of the
company, its services, and its position in the market and its marketing strategy. The scope of
the study is limited to organizational setup, functions, and performances for customer
satisfaction.
The study would focus on the following areas:

 General Banking of Shahjalal Islami bank Ltd.
 Remittance and clearing section of SJIBL.
 Credit operation of Shahjalal Islami bank Ltd.
 Foreign Trade of Shahjalal Islami bank Ltd.
Each of the above areas would be critically analyzed in order to identify the service quality of
the bank.
1.5 Methodology of the study:
Different data and information are required to meet the goal of this report. Those data and
information were collected from various sources, such as, primary and secondary which is
showed below:
Primary sources of data:

 Personal observation.
 Face to face conversation of the officers.
 Face to face conversation of the client.
 Working at different desks of the bank.
Secondary sources of data:

 File study.
 Annual report of Shahjalal Islami Bank Ltd.
 Statement of affairs.
 Bank rate sheet.
 Internet.
 Progress report of the Bank.
 Bangladesh Bureau of statistics report.
 Several kinds of Academic test-book and training sheet.
 Different publications regarding banking function and foreign exchange operation.
1.6 Limitation of the study:
There is a certain boundary to cover this study. It was not possible due to shortage of time to
cover each and every activity performed by the bank. So the study has covered only the
General banking Activities of Shahjalal Islami bank Limited.
Like any other articles and theories, this study is not free from limitations. I have tried my
best to overcome these limitations through extensive study, hard and sincere devotion to the
assigned duty. The major limitations are:
 I complete my internship in a small branch, Comilla branch. So I don’t get the proper
information which I need.
 The bank personnel and officials were very busy with their occupational activities.
Hence it was little bit difficult for them to help within their high schedule.
 Relevant data and document collection were difficult due to the organization
confidentiality.
 Three months time is not enough for such an extensive study. It is very difficult to
collect all the required information in such a short period.
 Improper combination among various departments.
 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.

Chapter: Two
Overview of
Shahjalal Islami Bank Limited

2.1 Historical Background of Shahjalal Islami Bank Limited:
Shahjalal Islami Bank Limited is based on Islamic Shariah. SJIBL is named after the
name of a Saint Hajrat Shahjalal who dedicated his life for the cause of peace in this world
and hereafter and served the humanity. It was incorporated as a public limited company on 1 st
April, 2001 under companies Act 1991. It started its Banking operation on 10 May, 2001 with
the 1st branch (main branch) opened at 58, Dilkusha C/A, Dhaka, obtaining the license of
Bangladesh Bank, for enlistment of economic condition of its customers as well as to
contribute sustainable economic growth and development in trade and industry of the
country. Now Its corporate head quarter is situated at UDAY SANZ,Plot NO-SE(A),2/B
Gulshan South Avenue,Gulshan-1, Dhaka-1212, Bangladesh. Now it has 73 branches, 39
branches are in Dhaka, 18 branches are in Chittagong, 5 branches are in Sylhet 4 branches are
in Khulna,6 branches in Rajshahi, 2 branches in Barishal including SME centre & Off-Shore
Banking unit. The sponsors of SJIBL are leading business personalities and renowned
industrialist of the country.
2.2 Profile of Shahjalal Islami Bank Limited:

Shahjalal Bank Limited was established as a public limited company on April 01, 2001
under company act, 1994. The bank commenced its commercial operation in accordance with
Islamic Shahriah on the 10th May 2001 under the ambit of the bank companies Act, 1991. The
name of the bank was changed to Shahjalal Islami bank limited w.e.f 10 th May 2004. During
Last seven years SJIBL has increased its service coverage by opening new branches at
different strategically important locations across the country. In order to cover the shortfall in
capital adequacy and fulfill other requirements, the paid up capital has been increased to TK.
466.83 million by injecting TK. 236.20 million by the sponsors in 2004. the sponsors again
injected additional TK. 469.00 million by 15th May 2005 to make the sponsors contribution to
capital TK. 935.83 million. The bank has the plain to go for initial public offerings (IPO) of
share, which will assist the bank to raise its paid up capital to TK. 1871.65 million. The
bank was sponsored by the group of local businessmen having exposure in RMG, insurance,
electronics and education etc. Alhaj Anwer Hossain khan is the present chairmen of the bank
having business experiences of more than 26 years in the field of electronics, food and
education. SJIBL provides a wide range of shariah based commercial banking services.
 Shariah Council of the Bank:

Shariah Council of the Bank is playing a vital role in guiding and supervising the
implementation and compliance of Islamic Shariah principles in all activities of the Bank
since its very inception. The Council, which enjoys a high status in the structure of the Bank,
consists of prominent ulema, reputed banker, renowned lawyer and eminent economist.
2.3 An Introduction about SJIBL Comilla Branch:

This branch was established in November 03, 2009. It is situated at the 1 st & 2nd
Floor, Salahuddin Complex, Monohorpur, Laksam Road, Comilla-3500. This Bank is design
in one floor- General Banking operation and Investment operation. It has been provide well
Banking services for the customer of Comilla.
2.4 Objectives:
 To provide Banking service to the people within the commanding area.
 To expand business based on Islami Shariah.
 To keep position in the competitive market.
 To contribute in profitability of SJIBL.
 To contribute towards economic development and prosperity within the principles of
Islamic justice.
 To facilitate efficient allocation of resources.
 To help achieving stability in the economy.
2.5 Vision:
To be the unique modern Islami Bank in Bangladesh and to make significant
contribution to the national economy and enhance customers’ trust & wealth, quality
investment, employees’ value and rapid growth in shareholders equity.
 To provide quality services to customers.

 To set high standards of integrity.
 To extends customers innovation services acquiring state of the art technology
blended with Islamic principles, and being total satisfaction to our clients and
employees.

2.6 Mission:
 To extend Islamic Banking through welfare oriented Banking system.
 Ensure equity and justice in economic activities.
 Extend financial assistance to poorer section of the people.
 Achieve balance growth and equitable development.
 To make quality investment.
 To ensure sustainable growth in business.
 To ensure maximization of shareholders’ wealth.
 To ensure human resource development to meet the challenges of the time.
2.7 Strategies:
 To strive for customers best satisfaction & earn their confidence.
 To manage & operate the Bank in the most effective manner.
 To identify customers needs & monitor their perception towards meeting those
requirements.
 To review & update policies, procedures & practices to enhance the ability to extend
better services to the customers.
 To train & develop all employees & provide them adequate resources so that the
customers needs are reasonably addressed.
 To promote organizational efficiency by communicating company plans, policies &
procedures openly to the employees in a timely fashion.
 To cultivate a congenial working environment.
 To diversify portfolio both the retail & wholesale markets.
2.8 Goals of Shahjalal Islami Bank Bangladesh Limited:
1) To eliminate riba from all sectors of economy

2) To establish Baiya (Trade, Com. & Industry)
3) To mobilize savings for productive purposes.
4) To earn reasonable profit through Halal transaction.
5) To create more employment opportunities by increasing economic activities.
6) To ensure equitable distribution of resources.

7) To safeguard the excess money lying idle in the hands of customers.
8) To contribute towards economic development.
9) To establish balanced trade and welfare.
10) To develop human resources and self-assessment.
11) To prevent allowing of concentration of wealth.
12) To establish justice and humanity.
13) To serve all classes of people in general and specially to favor the weaker classes.
14) To establish good and eliminate evils.
2.9 Relationship with other bodies:
In the meantime Shahjalal Islami Bank Ltd has established relationship with the following
National Bodies:-
Bangladesh Institute of Bank Management (BIBM);
The Institute of Bankers, Bangladesh (IBB);
The Bangladesh Foreign Exchange Dealers’ Association (BAFEDA);
Bangladesh Association of Banks (BAB);
Central Sharia Board for Islamic Banks in Bangladesh;
Islami banks Consultative Forum (IBCF); and
Dhaka Chamber of Commerce & Industry (DCCI).
2.10 Shahjalal Islami Bank Limited at a glance:

Shahjalal Islami Bank Limited AT A GLANCE (as on 31 December, 2013)
Name of the Institution : Shahjalal Islami Bank Limited
Date of incorporation : April 1, 2001
Commencement of operation : May 10, 2001
Authorized Capital : Tk. 4000 million
Paid up Capital : Tk. 2246 million
: Committed to Cordial Service
Motto
Industry : Banking industry of Bangladesh
Target customers : Individuals and Corporate customers
Auditors : M/S. Syful Shamsul Alam & Co.
Legal Advisor : Hasan & Associates
Total Income (2011) : Tk 5285 Million
Net profit After Tax (2011) : TK.818 Million
Return on Asset (2011) : 2.22%
Number of branch (2011) : 84, also 2 SME centres
Total manpower : 1881
Chairman : Mr.A.K.Azad
: Alhaj Syed Nurul Arefien and
Vice Chairman
Mr. Mohammed Faruque
Managing director : MD.Abdur rahman sarker
Web address : www.shahjalalbank.com.bd
2.11 Corporate Social Responsibility:

As an Islamic bank, they are committed to serve the causes of humanities. In this course, they
expanded their helping hand to the flood affected; winter distressed and SIDR affected people
of various region of the country. They awarded scholarships to the poor meritorious students
of their country to carry forward their future education. they donated Relief Fund to help
flood affected people as well as the employees of the Bank can avail themselves of the
physical aid at a minimum cost.
2.12 Human Resource Development:

Our policy on human resource management is proactive. We believe that investment in
human resource development is the key to maintaining sound health of the Bank. The
employees of the bank attended training program/ seminar, workshop both at home and
abroad. The training center of the Bank has been arranging various courses, workshops
seminars on important aspects of Banking. We invite experts of banking sector for imparting
training to our employees to meet the above challenges. To keep the employees motivated,
incentives, performance reward, promotion and accelerated promotion etc. are giving on a

regular basis. Total number of manpower of Bank stood at 1881as on 31 st December 2013 as
against1216 of 31st December 2012. .
2.13 Feature of Shahjalal Islami Bank Limited:

There are so many reasons behind the better performance of Shahjalal Islami Bank Ltd.
than any other newly established banks:
Shahjalal Islami Bank Ltd. has established a core Research & Planning Division
comprising skilled person from the very inception of the bank.
Highly qualified and efficient professionals manage the bank.
The inner environments of the all branches of Shahjalal Islami Bank Ltd. are well
decorated.
Banking operations of the all branches of Shahjalal Islami Bank Ltd. have been
computerized to provide the promptly & frequently customers service.
The bank has established correspondent relationship with 102 countries of the world.
Shahjalal Islami Bank Ltd. provides attractive interest rate that the other financial
institutions.
The bank provides loan to the customers @ lower interest with easy & flexible
condition than the other do.
The bank frequent arranges customers meeting to achieve their valuable suggestions.
Letter of Credit (L/C) commissions and other charges are very lower than the other
banks.
Profit earning is not the main aim of the SJIBL. The bank is responsible to maintain
the social duties.
The bank is committed to provide the cheque amount within 30 seconds of

submission the cheque.
2.14 Performance Analysis of Shahjalal Islami Bank Limited:

Operational Performance:
During 2013 the bank through its73 branches mobilized deposit of Tk.83350million and
deployed Tk.80592 million in investment. Total income of the bank was Tk.12007 million
and total expenditure stood at Tk. 9009 million, resulting in operating profit of Tk.2998
million. The Bank handled total Foreign exchange business of Tk.166906 million in the year
2013.
Total operating performance at a glance:
Particulars Amount (in million)

Total Deposit 102177
Total Investment 96185
Total Income 17438.81
Total Expenditure 12991.73
Total Operating Profit 4447.08
Total Foreign Exchange Business 78396
2.15 Equity of the bank:

Authorized capital -------------------------------------Tk.4000million
Paid-up Capital --------------------------------------Tk.2246 million (as on 31.12.2013)
Total equity was ---------------------------------------Tk.4069 million
Comparative position of equity for the year 2013 & 2012 is given below:
SL. No. Particulars 2013 (million) 2012 (million)

1 Paid-up capital 5565.82 4452.66

2 Statutory reserve 2959.02 2252.10
3 Retained earnings 1121.48 1212.03
4 General Provision 1408.9 1266.48
Total 11055.22 9183.27
3.12 Capital Adequacy:

Total equity of the bank as on 31.12.2011 was Tk. 9183 million and the total equity stood
2.16 Capital Adequacy:

Total equity of the bank as on 31.12.2012 was Tk.3040.88 million and the total equity stood
at tk.4069.09 million on 31.12.2013, which was13.81% of the risk weighted Assets as against
the requirement of 10.00%.
The core capital was 12.24% of Risk weighted Assets as on 31 st December 2013 as against
requirement of 5
Capital Adequacy Position from 2013 to 2009
15.00%
Percentage
10.00% Actual
Requirement
5.00%
0.00%
2008 2009 2010 2011 2012
Year
2.17 Deposits:

Deposit is the “life- blood” of a bank. Bank has given utmost importance in mobilization of
deposit introducing a few popular and innovative schemes.
Total Deposit (as on 31.12.2012) ---------------------------------- Tk.102177 million
Total Deposit (as on 31.12.2011) ---------------------------------- Tk. 22, 618.19 million
So, growth rate is 61.31%
The deposit mix of the bank as on 31.12.2013 was as below:
Sl. No. Nature of Deposit Taka in Million Percentage of total

deposit
1 Al-Wadia Current Account 3352.52 3.28%
2 Mudaraba Savings Deposit 6136.65 6.01%
3 Mudaraba Short Notice Deposit 2480.15 2.43%
4 Mudaraba Term Deposit 62602.10 61.27%

5 Deposit in Scheme 20753.90 20.31%
6 Other Deposit 6851.56 6.71%
Total Deposit 102176.87 100%
Trend of Deposit from 2013 to 2009

In Million Taka
150000
100000
50000 Total Deposit
0
2009 2010 2011 2012 2013
Year
Deposit Mix of 2013
6.22% 3% 5% 3%
16.92%
Al-Wadia Current Account
Mudaraba Savings Deposit
Mudaraba Short Notice Deposit
Mudaraba Term Deposit
Deposit in Schem e
Other Deposits
Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited.

65.50% 15
2.18 Operating Result:
A) Income:
1) Investment Income: Total investment income of the bank as at 31 st December
2013was Tk.10107.77 million as against Tk.6416.78 million of the preceding year
registering 57.52% growth over last year, which was 84.18% of the total income
against 67.48% of 2012.
2) Non- Investment Income: Total Non investment income of the bank as at 31 st

December 2013 was Tk.1899.05 million as against Tk.3092.10 million of the
preceding year, which was 15.82% of the total income compared to 32.52% of 2012.
B) Expenditure:
1) Profit on Deposits: Bank distributed profit of Tk.7376.42.million among the
Mudaraba Depositors in the year 2013 against Tk.4657.92 million in the year 2012
which is 72.98% of the Investment income earned from deployment of Mudaraba
Fund and 81.88% of total expenditure of 2013 against 77.89% of 2012.
20000
In Million Taka
15000
10000 Line 1
5000
0
2003 2005 2007 2009 2011 2013
Overall Activities of General Banking:A Study
YearOf Shahjalal Islami Bank Limited. 16
2) Operating Expenses: total operating expenses as on 31.12.2013 was Tk.1632.50
million as against Tk1322.25 million of 2012, Which was 18.12% of the total
expenditure of the year 2013 against 22.11% of 2012.
3) Operating profit: During 2013, the bank earned an amount of Tk.12006.82 million
and spent an amount of Tk.9008.93 million, which resulting a total operating profit of
Tk.2997.89 million over last year i.e. 31.12.2012. From the operating profit tk.310.00
million was kept provision for investment, Tk.63.00million.
A summary of operating result of the bank as on December 2013 vis-à-vis the position of
December 2012 is shown below:
Particulars 2013 2012

Total Income 5285.39 3588.84
Less: Total Expenditure 3475.59 2273.83
Net profit before provision & Taxation 1809.80 1315.01
Less: Provision for investment, off Balance Sheets 244.00 98.70
& Others
Net Profit before Taxation 1565.80 1216.31
Less: Provision for taxation 748.09 569.32
Net Profit 817.71 646.99
Appr
opriation: 2013 2012
Statutory Reserve 313.16 243.26
Retained Earnings 504.55 403.73
2.19 Internal control and monitoring:

The bank gives utmost importance to supervision and monitoring of banking activities. The
Bank Branches are subject to the
Following Audit & Inspections every year:
 Bangladesh Bank Inspection;
 Internal Audit & Inspection;

 External Audit;
 Audit Committee’s Audit & Inspection.
2.20 Dividend:
The board of directors of the bank has recommended stock dividend @ 28% i.e. to issue 25
bonus shares as against 100 shares to its shareholders for the year 2013.
2.21 Organizational Structure of the Shahjalal Islami Bank

Limited:
 The objective of the organizational structure and corporate governance of Shahjalal
Islami Bank Limited is to establish a strong, customer-oriented and transparent
Management. SBL was structured with four corporate bodies, which are-
 1. Board of Directors.
 2. Board Committee
 3. Executive Committee.
 4. Policy Committee.
The functions of the corporate management are:
 Board of Directors: The Board of Directors consists of 24 members. The Board of
Directors is the apex or zenith body of the bank.
 Board Committees: The Board of Directors who also decides on the composition of
each committee determines the Board responsibility of each committee.
 Executive Committee: All routine matters beyond delegated powers of management
are decided upon by or routed through the Executive Committee, subject to
ratification by the Board of Directors.
 Policy Committee: All matters relating to the principles, policies, rules and
regulation, ethics etc. for operation and management of the Bank are recommended
by the Committee to the Board of Directors.
2.22 Management of SJIBL:

 The Board of Directors consists of eminent personalities from commerce and
industry of the country. Mr.Anwer Hossain Khan, the Chairman of the Board of
Directors, is a businessman besides being an eminent personality of the country.

 The Bank is manned and managed by highly qualified and efficient professionals.
The Managing Director of the Bank is MD.Abdur Rahman Sarker who has rich
experience of managing both the nationalized and the private sector banks as
Managing Director.
 Chairman
2.23 Board Committees of SJIBL:
 Board of Directors
Board of who also decides the composition of each committee determines
Sponsors
Directors
the responsibilities of each committee. EXECUTIVES COMMITTEES OF SJIBL: All
routine matters beyond delegated powers ofDirector
Managing management are decided by or routed
through the Executives Committee, subject to rectification by the Board of Directors.
Deputy Managing Deputy Managing
Director Director
GSD, CAD, A&I, GB, ID, IT, CREDIT, R&P
D&M
2.24 Organization Structure ofExecutive

ShahjalalVice
President/ Islami Bank Limited:
Company Secretary
Senior Vice Senior Vice Senior Vice

President President President
Vice President
Senior Asst.
Vice President
Asst. Vice
President
First Asst. Vice

President
Executive Officer
Abbreviations:
Senior Officer GSD – General Service

Division
CAD – Central Account
Trainee Senior Division
Officer
ASI – Audit and Inspect
Overall Activities of General Banking:A Study Of Officer CBLimited.
Shahjalal Islami Bank – Central Bank19
D&M – Developing and
Marketing
Trainee Officer
ID – International
R&P – Research &
Planning
2.25 Executive Committee:

All routine matters beyond delegated powers of management are decided upon by or routed
through the Executive Committee, subject to ratification by the Board of Directors.
2.26 Policy Committee:

All matters relating to the principles, policies, rules and regulation, ethics etc. for operation
and management of the Bank are recommended by the Committee to the Board of Directors.
2.27 Foreign Correspondent:

Shahjalal Islami Bank Limited has relationship has immensely increased Bank’s foreign trade
and foreign business and simultaneously, the clients of Shahjalal Islami Bank have been
receiving satisfactory service from all over the world.
2.28 Branch Network:

The Bank has been operating with a network of 73 branches all over the country. In the year
2013 the Bank has opened 10 (Ten) new branches in important business location of the
country will be opened soon subject to obtaining license from Bangladesh Bank.
.

Chapter Three
Islamic Banking System

3.1 An overview of Islamic Banking:
For an expanding economy, a developed and efficient banking system is indispensable.

Among others, it helps transfer of financial resources from surplus units to deficit units and,
hence, helps accelerate the pace of development by securing uninterrupted supply of financial
resources to people engaged in numerous economic activities. The tremendous development
that the world economy has experienced in the last few decades was contributed by several
factors among which, growing institutional supply of loan able funds must have played the
pivotal role. The role of banking is comparable to what an artery system does in the human
body. Both commercial banks and other development financial institutions provide short-
term, mid-term, and long-term credits to businesspersons and entrepreneurs who usually take
the lead in ventures of economic development.
Institutional supply of credit has been made possible by a system of financial inter-mediation
organized in a way where conventional banks collect small savings from the public by
offering them a fixed rate of interest and advancing the loan able funds out of the deposited
money to enterprising clients charging relatively higher rates of interest. The margin between
these two rates is the bank’s income. In addition, banks also provide many other services to
the public for which it receives service charges.

Despite the outstanding contribution of the conventional banking system (interest-based),
several ancient and modern economists are critical about its efficiency level. Some
economists consider the role of interest in the conventional banking mechanism as a major
negative factor that contributes to cyclical fluctuations in the economy. Specifically, the
ineffectiveness of interest rate as a stabilization tool during the period of the Great
Depression is a case to note. This eventually called for Keynesian prescription of government
intervention. Similar concern was expressed in a story published in Newsweek regarding
Henry Kissinger, the former Secretary of State of USA. To quote, “The instability has
persisted and the uncertainty has continued. After going through the throes of painfully high
levels of inflation, the world economy has experienced a deep recession and unprecedented
rate of unemployment, complicated further by high level of real interest rates and unhealthy
exchange rate fluctuations”. More recent concern over the potential instability of the world
monetary and financial system was expressed by Maurice Allais, a Nobel Laureate, who
called for an urgent reform of the World Economic Order. Others vehemently oppose the
argument for using rate of interest as a stabilizing tool in the economy. This called for the
emergence of a new system of banking capable of tackling new challenges that the present
world economy, particularly the financial sector, has been facing.
In response, though not exactly to that exigency but for quite a few other reasons, the second
half of the twentieth century witnessed a distinctly separate line of thinking on banking. This
was institutionalized at the end of third quarter and subsequently emerged as a new system of
banking called Islamic banking {also called Profit-Loss-Sharing Banking (PLS)}. The world
has now been experiencing operation of as many as 250 Islamic banks and financial institu-
tions in more than 50 countries, Muslim and non-Muslim. There are religious as well as
economic reasons, which have contributed to the emergence of PLS-banking as an alternative
to its conventional counterpart. It is the prohibition of Riba in the Quran that, according to the
proponents of the PLS-system, was the source of inspiration for establishing banks in line
with Islamic Shariah. The basic intention behind establishing Islamic banks was the desire of
Muslims to reorganize their financial activities in a way that do not contradict the principles
of Shariah and enable them to conduct their financial transactions without indulging into
Riba. These writers consider rate of interest in the conventional banking mechanism
synonymous to Riba, the term as used in the Quran. One of the reasons for this is that the
outcome of the productive effort is uncertain, and so interest necessarily involves an element
of Gharar, that is, uncertainty. On this religious ground, proponents of the PLS-system urge

the Islamic community to avoid all transactions with institutions those are interest-based.
The economic reason derived from a verse of the Quran providing inspiration to devise an
interest-free financial system has been substantiated in the way that interest, instead of
increasing wealth, reduces it. The primary reason of why the Quran has taken such a hard
approach towards interest is that Islam stands for establishing a just economic system free
from all kinds of exploitation. Further, Muslim economists consider depression and
stagflation very often found in the capitalist world as an outcome of the financial system
based on interest.
Thus, Islamic banking emerged as a response to both religious and economic exigencies.
While religious exigency calls for avoiding any transaction based on interest, economic
exigencies, on the other hand, provide a new outlook to the role of banking in promoting
investment/productive activities, influencing distribution of income and adding stability to
the economy. Islamic banking is thus perceived as an improved system in all dimensions.
3.2 What is Islamic Banking?
Islami banking has been defined in different ways. The definition of Islamic bank, as
approved by the Secretariat of the OIC, is stated in the following manner.
“An Islami bank is a financial institution whose statutes, rules and procedures expressly state
its commitment to the principle of Islamic Shariah And to the banning of the receipt and
payment of interest on any of its operations”.
Shawki Islami Shehta viewing the concept from the prospective of an Islamic Economy and
the prospective role to be played by an Islamic bank therein opines:
“It is, therefore, natural, and indeed, imperative for an Islamic bank to incorporate in its
functions and practices commercial investment and social activities, as an institution designed
to promote the civilized mission of an Islamic Economy”(Ibid).
It appears from the definition that Islamic banking is systems of financial intermediation that
avoids receipt and payment of interest in its transaction and conducts its operation in a way

that it helps achieve the objectives of an Islamic economy. Alternatively, this is a banking
system whose operation is based on Islamic principles of transaction of which profit and loss
sharing (PLS) is a major feature, ensuring justice and equity in the economy. That is why
Islamic banks are often known as PLS bank.
3.3 Objectives of Islamic Banking:
The primary objective of establishing Islamic banks all over the world is to promote,
foster and develop the application of Islamic principles in the business sector. More
specifically, the objectives of Islamic banking when viewed in the context of its role in the
economy are listed as following:
 To offer contemporary financial services in conformity with Islamic Shariah;

 To contribute towards economic development and prosperity within the principles of
Islamic justice;
 Optimum allocation of scarce financial resources; and
 To help ensure equitable distribution of income.
The objectives of Islamic banking are discussed below:

Offer Financial Services: Interest-based banking, which is considered a practice of Riba
in financial transactions, is unanimously identified as anti-Islamic. That means all
transactions made under conventional banking are unlawful according to Islamic Shariah.
Thus, the emergence of Islamic banking is clearly intended to provide for Shariah approved
financial transactions.

Islamic Banking for Development: Islamic banking is claimed to be more development-
oriented than its conventional counterpart. The concept of profit sharing is a built-in
development promoter since it establishes a direct relationship between the bank’s return on
investment and the successful operation of the business by the entrepreneurs.
Optimum Allocation of Resources: Another important objective of Islamic banking is the
optimum allocation of scarce resources. The foundation of the Islamic banking system is
that it promotes the investment of financial resources into those projects that are considered
to be the most profitable and beneficial to the economy.
Islamic Banking for Equitable Distribution of Resources: Perhaps the must important
objective of Islamic banking is to ensure equitable distribution of income and resources
among the participating parties: the bank, the depositors and the entrepreneurs.
3.4 Overall Banking Sector:
Financial sector reforms to strengthen the regulatory and supervisory framework for
banks made headway in 2013 although at a slower than expected pace. Overall health of the
banking system showed improvement since 2002 as the gross Non-performing Loans (NPL)
declined from 28 percent to 14 percent while net NPL (less Provision) reduced to 8 percent
from 21 percent. This led significant improvement in the profitability ratios. Although the
Private Commercial Banks (PCB) NPL ratio registered a record low of 6 percent, the four
Nationalized Commercial Banks (NCB) position are still weak and showed very high NPL at
25 percent. The NCBs have large capital shortfalls with a risk-weighted capital asset ratio of
just 0.5 percent (June 2013) as against the required 9 percent. For the PCBs risk-weighted
capital asset ratio stood at 10 percent.
Bangladesh Bank issued a good number of prudential guidelines during the year 2012 and the
first quarter of 2013 which among others relate to
(i) Rationalization of prudential norms for loan classification and provisioning,
(ii) Policy for rescheduling of loans,
(iii) Designing and enforcing an "integrated credit risk grading manual",

(iv) Credit rating of the banks, and
(v) Revisions to the make-up of Tier-2capital.
Besides, recent decision of the Government to corporatize the remaining three NCBs along
with the initiative to sale the Rupali Bank are bound to usher in changes in the banking sector
competitiveness aspect. Bangladesh Bank has also taken up the task of implementing the
Basel II capital accord. Further, the recent enactment of the Micro-credit Regulatory
Authority Act (MRAA) for the regulation of the Micro Finance Institutions (MFI) has been a
major development in the year 2013. Since 1998 CAMEL rating of banks gradually improved
and in 2013 Bangladesh Bank updated this rating model by incorporating the market risk and
the new model is known as CAMELS.
3.5 Banking System of Bangladesh:
The banking system at independence consisted of two branch offices of the former
State Bank of Pakistan and seventeen large commercial banks, two of which were controlled
by Bangladeshi interests and three by foreigners other than West Pakistanis. There were
fourteen smaller commercial banks. Virtually all banking services were concentrated in urban
areas. The newly independent government immediately designated the Dhaka branch of the
State Bank of Pakistan as the central bank and renamed it the Bangladesh Bank. The bank
was responsible for regulating currency, controlling credit and monetary policy, and
administering exchange control and the official foreign exchange reserves. The Bangladesh
government initially nationalized the entire domestic banking system and proceeded to
reorganize and rename the various banks. Foreign-owned banks were permitted to continue
doing business in Bangladesh. The insurance business was also nationalized and became a
source of potential investment funds. Cooperative credit systems and postal savings offices
handled service to small individual and rural accounts. The new banking system succeeded in
establishing reasonably efficient procedures for managing credit and foreign exchange. The
primary function of the credit system throughout the 1970s was to finance trade and the
public sector, which together absorbed 75 percent of total advances.

The transformation of finance priorities has brought with it problems in administration. No
sound project-appraisal system was in place to identify viable borrowers and projects.
Lending institutions did not have adequate autonomy to choose borrowers and projects and
were often instructed by the political authorities. In addition, the incentive system for the
banks stressed disbursements rather than recoveries, and the accounting and debt collection
systems were inadequate to deal with the problems of loan recovery. It became more common
for borrowers to default on loans than to repay them; the lending system was simply
disbursing grant assistance to private individuals who qualified for loans more for political
than for economic reasons. The rate of recovery on agricultural loans was only 27 percent in
FY 1986, and the rate on industrial loans was even worse. As a result of this poor showing,
major donors applied pressure to induce the government and banks to take firmer action to
strengthen.
3.6 Role of Bangladesh Bank in Promoting Islamic Banking in

Bangladesh:
Though there is no complete Islamic Banking Act for controlling, guiding and
supervising the Islamic banks in Bangladesh, some Islamic banking provisions have already
been incorporated in the amended Banking Companies Act, 1991 (Act No. 14 of 1991).
Bangladesh Bank did not set up any separate Department at its Head Office to control, guide
and supervise the operation of the Islamic banks. Inspection and supervision of the Islamic
banking operations are conducted by the Bangladesh Bank as per the general guidelines
framed for the conventional banks. So, ensuring implementation of Shariah principles in the
Islamic banks are being conducted by their own Shariah Councils. The role of Bangladesh
Bank in controlling, guiding and supervising the Islamic Banks in Bangladesh in accordance
with Islamic Shariah is very minimal. In observing the Shariah implementation status of the
Islamic banks, Bangladesh Bank examines only the report of the respective banks’ Shariah
Councils. However, the inspectors and supervisors of Bangladesh Bank are not equally
familiar with the technicalities of the different operational methodologies of the Islamic
banking. This is because of the fact that there is no separate Department to look into this
important matter. A committee of experts set up by the Governors of Central Banks and

Monetary Authorities of the OIC countries examined the whole range of relationships
between the
3.7 Difference between Islamic Banking and Conventional

Banking:
In Islamic Banking accounting the main difference with conventional Banking is that
Islamic Banking can not deal with interest transaction and also con not deal with Haram
Business.
Point wise differences between Islamic Banking and conventional Banking Particularly in
Accounting Transactions are Summarized below:-
Islamic Banking: Conventional Banking:

1. Islamic Banking are to follow Quaran, 1. Conventional Banking follows man
Sunnah, Ijma and Kias i.e. Shariah in all the made practice and rules.
business transactions including Accounting
Entries.
2. They can not engage in any interest in the 2. They conduct their Transactions on
transactions/ Haram(prohibited) business. interest basis and also engage in
Haram (prohibited) business.
3. If any interest is including/ entered in the 3. Interest is their main income.
operations of the banks it should be excluded
from the regular income if the bank.
4. If any income is earned violating Shariah 4. They do not follow Sharia rule and
principles that can not be included in the regulation.
distributable income of the bank.
5. In Musharaka investment, income can not be 5. In conventional banking there is no
accounted for on accrual basis. practice of Musharaka Investment.
6. For delay of investment, in case of Bai- 6. No such Bai- Mudraba and Bai-
Mudrabaha and Bai-Muazzal Investment Muazzal investment in conventional
further amount of profit can not be changed. Banks. They charge interest / penal
7. In case of over due Investment compensation interest for delay in payment.
may be charged if an independent committee 7. They charge interest / penal interest
like Review committee decided to impose the on over due investment.
compensation.
8. Islamic Bank is to pay Zakat on its reserves.
9. Islamic Banks are to pay a certain agreed 8. They do not pay any Zakat on
amount of investment Income (agreed in reserves.
percentage) to the Mudaraba Depositors. 9. They do not pay a certain amount
10. Mudaraba Depositors are to share the loss, to the depositor from their Investment
if any, incurred out of Investment market from income, rather they pay fixed rate of
Mudaraba deposits. interest irrespective of Investment
11. Islamic banks are to follow Accounting, Income.
auditing and Shariah standards developed by 10. Their depositors do not share any
Accounting and Auditing Organization for loss or profit.
Islamic financial Institutions (AAOIFI) for in 11. they only follow International
addition to international Accounting Standards Accounting Standards (IAS) and

(IAS) and international accounting standards of International Standards of Auditing
Auditing (ISA) developed by (ISA)
internationalFederation of Accountants.
Chapter: Four

Data Analysis and Financial Highlights of
SJIBL
4.1 General Banking Divisions:

There are three sections working together to fulfill the target of the organization.
 Account opening Department

 Remittance Department
 Account Department
4.2 Types of account in SJIBL:

A bank is essentially an intermediary of short-term investment/funds. It can carry out
extensive lending/investment operations only when it can effectively mobilize the savings of
the community. A good banker is one who effectively mobilizes the savings of the community
as well as makes such use of savings by making it available to productive and priority sectors
of the economy thereby fostering the growth and development of the nations’ economy.
Accounts are opened under the following two modes:
1. Al-Wadia ( Current Account)
2. Al-Mudaraba (Deposit Account)
1. Al-Wadia (Current Account): The word ‘Al-Wadia’ has been derived from the Arabic
word ‘Wada’ which means to keep/to deposit/to give up/Amanat. As per Shariah , Amanat
means to keep something (goods/money/others) to any reliable person/institution for safe and
secured preservation of the same keeping its ownership unchanged and which will be
returned to the owner of the fund on demand as it is/in original shape. In case of Amanat
Bank/any other institution cannot use, invest and amalgamate the funds without the prior
permission of the owner of the Amanat.
2. Al-Mudaraba (Deposit Account): The word Mudaraba derived from the Arabic word
‘Darb/Darabun’. Literally it means movement to earn profit (munafa). It is a form of
partnership where one of the parties called the ‘Shahib-al-mal’ provides a specified amount
of capital and acts like a sleeping or dormant partner, while the other party called the
Mudarib (entrepreneur), provides the entrepreneurship and management for carrying on any
venture, trade, industry or service with the objective of earning profit. The Mudarib is
required to work with honesty and sincerity and to exert the maximum possible care and
precaution in the exercise of the functions.
Mudaraba Deposit Products
 Mudaraba Savings Account (MS):

 Mudaraba Term Deposit Receipt (MTDR)
 Mudaraba Short Notice Deposit (MSND)
 Mudaraba Double /Triple Benefit Scheme
 Mudaraba milliner Deposit Scheme
 Mudaraba Monthly income Scheme
 Mudaraba Mohor Deposit Scheme(new)

 Mudaraba Waqf Cash Account (MWCA)
 Mudaraba Hajj Deposit Scheme
 Mudaraba Bibaho Deposit Scheme(new)
 Mudaraba Lac potty Deposit Scheme(new)
 Mudaraba Education Savings Scheme.
 Mudaraba Grehayan (Housing) Deposit Scheme.
 Mudaraba Small Business Deposit Scheme.
 Monthly Deposit Scheme
Al-Wadia Current Deposit Account (ACD)
Most businessmen maintain Al-wadia Current Accounts in order to make their daily business
activities. This account’s funds change most frequently than any other accounts because
customers use to withdraw and deposit funds in regular basis.
Mudaraba Savings Deposit
Mudaraba savings bank deposit is another popular account maintained in Banks. The
different matters relating MSD account are described in the following discussion:
Mudaraba Short Notice Deposits (MSND)
MSND account is essentially an interest bearing time deposit account. Notice is required to
be given to the bank at least 7 days before each withdrawal is made.
Different Types of MSND Account:

1. Individual MSND account
2. Proprietary MSND account
3. Partnership MSND account
4. Limited Company MSND Accounts: (a) Public limited, (b) Private Limited.
Mudaraba Savings A/c (MS A/c)

i. Nationality certificate from Ward Commissioner/ UP Chairman or Passport
(photocopy) of every signatories of the A/c
ii. KYC form for individual
iii. Introduction of any current account/ Savings account holder
iv. Two copies attested photographs of a/c operators
4.3 Procedure of Account opening in SJIBL:

This section opens account. It receives account opening application from the interested
applicants, examines and scrutinizes the applications and then selects final customers.
Selection of customers is very much important as the success and failure of the bank is
largely dependent on the valued customers. If the customer is found to be fraudulent or
create some sort of forgery, it will ultimately destroy the goodwill of the company.
The following formalities must be maintained by the customer for opening of different
types of account.
A: Individual
i. Genuine & acceptable introduction
ii. Attested photograph of the account operator’s/A/c holder’s
iii. Certificate from the Chairman/ Commissioner/ Gazette Officers or any
responsible person
iv. Verification of introducer’s signature
v. Admittance of the signature(s) of opener/ operator’s A/c
vi. Transaction profile
vii. Obtain KYC
viii. Declaration/Undertaking
ix. Letter of Thanks
(a) It must be sent to the A/c holder and introducer
(b) Office copy to be affixed with the AOF
(c) It will have to be dispatched under registered courier
(d) Courier /Postal receipt must be affixed to the AOF

(e) This receipt must contain the A/c number against which the letter has been
sent
(f) After receiving back of the acknowledgement, it must be affixed with
concerned AOF for easy location in case of need
(g) If the letter of thanks is returned back, without delivery for non-
availability of address or person, it must be marked on this letter and to be
informed to the computer department.
B: Joint Account
i. All item for individual account holder as stated above

ii. Two or more persons can open an account
iii. Authorized person can operate the account
iv. Authority is automatically revoked by death, insanity or bankruptcy
v. Stoppage of payment by any one of the account holders
vi. Special instruction regarding operation of the A/c in any of the following
forms:
(a) By any of the Joint account holder singly
(b) By either or survivor singly
(c) By either singly
(d)By any two or more joint account holding jointly
(e) By all the survivors jointly
vii. Accounts mandate-regarding drawing, survivorship, power to overdraw and
other matter, i.e. for withdrawal of goods kept for safe custody, separate
mandate from surviving persons, closing of debit a/c, stopping operation of
a/c after instantly of any person, obtain receipt made by survivors and
representatives of deceased persons.
viii. Role of survivorship in case of joint-account by husband and wife:
If the account is opened for convenience of husband, then the balance cannot
be claimed by the window but to be sent to the estate of the deceased person.
But, if the account is opened for the provision for wife, then the widow can
claim the balance in full.
C: Sole Proprietorship
In case of opening an account by a sole-proprietor of a firm, he/she should sign the account
opening form and furnish his specimen signature showing his representative character.
i. All items for individual account holder as stated above.

ii. Valid trade license or attested photocopy thereof issued by the competent
authority

iii. Membership certificate from local business association/Chamber of
Commerce
D: Partnership Firm
A banker should not open an account in the name of a partnership unless one or more of the
partners apply to him to do so. Except where the partner, making an application for the
opening of an
Account in the firm’s name, is deprived of the power, which fact is known to the banker,
there can be no legal objection to a banker opening an account in the name of the firm at
request. Failure, however, to make proper enquiries by referring to the partnership
agreement or any other record in writing which may be available before opening of account
on behalf of a firm in a partner’s name may lead a banker in trouble.
i. All items for individual account holder as stated above.

ii. Valid trade license or attested photocopy thereof issued by the competent
authority
iii. Two or more person can form a partnership firm by partnership deed.
(Registered notarized)
iv. Clear mandate for operating the a/c from the partners regarding name of the
persons to draw cheque and borrow money, to overdraw, to mortgage or to
sell properties owned by the firm
v. In case of insolvency of the firm: Operation should be stopped after
receiving notice of insolvency of the firm
vi. Insolvency of the partner: If the balance is in debit, the a/c must be closed
and the debt should be proved to the receiver. If the a/c is in credit the other
partners may continue the account. Any cheque previously drawn by the
partner’s maybe paid on the confirmation of the partners.
vii. Death of a partner: If the account is in credit, then other partners may be
allowed to continue the same but the bank should take fresh mandate from
other partner but if the account is in debit then the account must be closed to
determine the liability of the deceased’s estate.
E: Private Limited Company

A company registered under the Companies Act, 1913 has a legal entity apart from its
shareholder. Private Company means a company which by its articles:
 Restricts the right to transfer the shares if any;

 Limits the number of its members 2 to 50
 Prohibits any invitation to the public to subscribe for the shares, if any or debentures
of the company.
When a current account is to be opened for a private limited company the banker will have to
obtain the following requirements:
i. All terms for individual account holder as stated above

ii. Copy of memorandum and articles of association duly certified by the
Secretary/Director of the company
iii. Certificate of incorporation
iv. Certified copy of resolution of the board of Directors regarding opening of
a/c, the execution of papers and conduct of the account.
v. List of Directors under the signature of the Chairman
vi. Copies of latest financial statement/ Transaction profile.
F: Public Limited Company

Any seven or more persons associated for any lawful purpose, any subscribing their names to
a memorandum of association and otherwise complying with the requirements of the Act
(13A) in respect of registration, from an incorporated company. When an account is to be
opened in the name of a Public limited Company the following formalities are to be
observed:
i. All terms for individual account holder as stated above

ii. Certified copies of memorandum and article of association are to be
submitted
iii. Certificate of incorporation
iv. Certified copy of commencement of business for inspection and return in case
of a newly floated company
v. List of Directors under the signature of the Chairman to be furnished

vi. Certified copy of a resolution of the Board or Directors regarding opening of
the bank a/c execution of the papers and conduct of the account to be
furnished
4.4 Different Types of Products & Services:

Shahjalal Islami Bank is computerized and provides the following services some of these
services will be introduced soon. Different types of products and services of SJIBL included
such as balance inquiry, cheque book request, cheque leaf status, FC rate information, cheque
stop payment instruction, statement request by courier/post, statement request by e-mail, last
three transaction statement, help inquiry and PIN change. Shahjalal Islami Bank Limited
introduced a few products and services, which are very popular. These are given below:
 Online services
 Automation in Banking Operation
 ATM / POS Service
 SMS / Push Pull Services
 Personal Management Information System (PMIS)
 SWIFT
 REUTERS
 Signature Verification
 Any Branch Banking
 Other Delivery Channel Services (to be implemented)
4.5 Online services:

To provide better services to the valued customers using the latest technology and electronic
media competing with other private banks to set and establish full automated, on-line,
centralized banking systems interfacing (connecting software) with all delivery channels like:
ATMs (Automated Teller Machine), POS (Point of Sale – Fund transfer machine for
purchasing at any shop / service center etc), Any branch banking, Home banking, Tele
banking, Internet banking etc.

Online banking is a system where transactions, query and statements of any client of a certain
branch may be carried out from another branch of the bank.
4.6 Automation in Banking Operation:

The Shahjalal Islami Bank Limited is an Industry Standard, Islamic Shariah & latest
technology based Modern Bank. The Bank is equipped with state-of-the-art technology and
committed to provide technology based modern Banking solutions to its valued customers.
4.7 ATM and POS Service:

Card is considered as a new dimension of product resulting from technological development
in the banking arena. In line with our affiliation with VISA International for VISA ATMs and
POS, the following two products are launched broadening service products of the Bank to the
clients:
1. VISA Electron (SJIBL VISA Debit Card-local)
2. VISA Prepaid (SJIBL VISA Prepaid Card)
 SJIBL VISA Prepaid Card –Local
 SJIBL VISA Prepaid Card -International
 SJIBL VISA Prepaid Card-Dual
 SJIBL VISA Souvenir Card /Gift Card – Local
1. SJIBL VISA Debit Card:

To a customer, “My card, my money” concept is used for Debit Card. Any accountholder of
SJIBL can apply for a SJIBL VISA Debit Card against his/her Al-Wadiah Current Deposit
(AWCD), Mudaraba Savings Deposit (MSD) or Mudaraba Short Notice Deposit (MSND)
Account. He/she is fully authorized to enjoy the benefits of cash withdrawal from ATMs,
liberty of shopping, dining, paying utility bills and having access account information
through SMS, etc. round the clock.
2. SJIBL VISA Prepaid Card:
Different types of SJIBL VISA Prepaid Card are given below:
 SJIBL VISA Prepaid Card –Local
SJIBL VISA Prepaid Local Cards are open to the customers even having no account with
Shahjalal Islami Bank Limited. Cardholders can have the card against prepayment and have
access from anywhere in Bangladesh. SJIBL VISA Prepaid Local Cards are accepted locally
at all VISA labeled merchant outlets, ATMs, etc.

 SJIBL VISA Prepaid Card –International
SJIBL VISA Prepaid International Cards are also open to the customers even having no
account with Shahjalal Islami Bank Limited. Cardholders can have the card endorsing US
Dollar paying against Travel Quota, Exporters Retention Quota or marking Lien of his/her FC
Account. SJIBL VISA Prepaid International Cards are accepted world wide at all the VISA
labeled merchant outlets, ATMs, etc.
 SJIBL VISA Prepaid Card-Dual
The Dual Card is a hassle free product, no need to carry two separate plastic cards for local
and international card. Now, with one plastic card the Cardholders can enjoy all the benefits
and make transactions locally & globally from their Prepaid card account at all the VISA
labeled merchant outlets, ATMs, etc.
SJIBL VISA Souvenir Card /Gift Card – Local
SJIBL Souvenir Card is a very attractive and stylish product. Like a Gift Card, SJIBL
Souvenir Card can be used by anyone wishes to. The intending customer may have the card
instantly or may customize the card as required. The SJIBL Souvenir Cards are accepted
locally at all the VISA labeled merchant outlets, ATMs, etc.
Features:
 Sense of satisfaction of having an International brand
 Anywhere anytime banking
 24 hours and 7 days a week banking
 Directly linked to Cardholders Account
 Convenient cash withdrawal at ATMs
 Acceptability at huge number of Q-cash ATMs around Bangladesh
 Accepted at all VISA terminals locally and globally
 Local & International transactions with the same card (for Dual Cards)
 Balance Inquiry
 Mini Statement
 PIN Change
 Shopping at a large number of Q-cash POS terminals around Bangladesh
 Payment of Utility Bills

 Avoid pressure at counters of bank
 Minimizing risk of carrying cash
Usage Limit
Description Transaction Limit
Cash withdrawal limit (total) 4 times per day

Cash withdrawal limit (amount) Tk.20,000 per day
Balance checking 4 times per day
Mini statement printing 2 time per day
PIN change 2 times per day
Invalid PIN retry count 3 times per day
Card usage limit in ATMs (total) 10 times per day
Fees & Charges:

A. VISA Debit Card
Particulars Renewal Replacement PIN Transaction Charges (ATM)

Re- ON-US Q-Cash Others
issue (VISA)
General
1.Primary 500 400 200 Free 10 125
2.Supplementary 250 400 200 Free 10 125
B. VISA Prepaid Card

Particulars Issue Reload Replacement PIN Transaction Charges (ATM)
re- issue ON-US Q-Cash Others (VISA)
Local/Souvenir(Gift)
· Non-Customized 250 200 250 200 Free 10 125
· Customized 300 200 300 200 Free 10 125
International / Dual
· Non-Customized 1500 500 1500 500 Free 10 125
· Customized 2000 500 2000 500 Free 10 125
Conversion charge For International use, 2 % of withdrawal amount
Note: VAT charges will be added with all fees (other than Transaction charges)
4.8 SMS / Push Pull Services:
Shahjalal Islami Bank again fulfills the demand of time in the era of modern banking
technology by introducing the Mobile banking i.e. SMS / Push Pull Service. SJIBL offer a
range of ways for you to access and manage your money so that clients are always in control
of financial transactions; it is fast, secured and economical. Get real-time banking
information on customer’s handset. This automated SMS / Push Pull can be reached 24 hours
a day, 7 days a week. This service performs Balance query, Mini statement, Cheque Book
Request, Cheque Leaf Status, FC Rate Information, Cheque Stop Payment Instruction,
Statement Request by Courier/Post, Statement request by E-mail, Help inquiry, PIN Change
through SMS via a fixed mobile number given by customers. This service will soon include
utility bill and fund transfer facilities.
Benefits of SMS
 A new technology based service will attract new client base.
 Clients will be facilitated with Cell phone based banking service.
 Enhanced and extended customer services levels on a collaborative basis.
 It will reduce teller question.
4.9 Personal Management Information System (PMIS):

In Head Office PIMS system is going to be implemented in full phase with the following
features: Employees’ recruitment, Posting, Personal, Leave, Increment, Promotion, Training,
Retirement, Attendance, Payroll, PF, Tax etc should be controlled by PMIS.
This system should be run in LAN and WAN environment and centrally controlled data of all
employees. Employees ID, Biometric Image with Signature will remain be enrolled in the
software.
4.10 SWIFT:
The Bank has already become a member of Society for Worldwide Inter Bank Financial Tele-
Communication (SWIFT) to provide secured and accurate communication network for
financial transactions, i.e. L/C Remittance etc.

SWIFT is the industry-owned co-operative supplying secure, standardized messaging
services and interface software to nearly 8,100 financial institutions in 207 countries and
territories. SWIFT members include banks, broker-dealers and investment managers. The
broader SWIFT community also encompasses corporate as well as market infrastructures in
payments, securities, treasury and trade.
4.11 REUTERS:
The Bank has also established liaison the facility of REUTERS, through which the bank
received regular, latest information about the exchange rate, etc and other price sensitive
information to take prompt and correct decision.
4.12 Signature Verification:

The Bank always verify client Signature for payment money. Without verification of client
Signature the Bank does not give money to their customer. If there is occur some problem in
the Signature, the bank employee’s check this in several times. Biometric Image with
Signature will remain be enrolled in the software is very important for the bank to verify
customer Signature.
4.13 Any Branch Banking:

Any Branch Banking is a system where transactions, query and statements of any client of a
certain branch may be carried out from another branch of the bank. Account holder can
withdraw money any branch of the bank. It is easy for the customer to withdraw money. With
the help of any branch banking client can easily fulfills their demand.
4.13 Other Delivery Channel Services:

Other Delivery Channel Services includes balance inquiry, cheque book request, cheque leaf
status, FC rate information, cheque stop payment instruction, statement request by
courier/post, statement request by e-mail, last three transaction statement, help inquiry and
PIN change.
4.14 Cheque Book Issue:

Cheque book is a material to withdraw money from the bank. It is a very convenient way to
transact money from one place to another without any accident. If any one opens an account
then he/she will apply for a cheque book on requisition slip. After verifying the signature of
the account holder by the officer bank issues cheque. Then we will assign number to the
leaves of the cheque book and account number in the register book. The account number and
the branch seal will also be written on every leaf of the cheque book. Two officers initialize
the account number and leaf number the issuing officer will also check the register book and
initializes it also. Then the cheque book is delivered to party after taking the signature on the
register book from the party.
Duplicate Cheque Book Issue
When a party looses his/her cheque book, then he/she apply for duplicate cheque book. Bank
stop payment order for that lost cheque book series in the respective ledger. Then client’s
needs guarantor’s certificate and guarantor must be an account holder of that branch with
sufficient balance. In this case, the party will apply to the branch manager for duplicate
cheque book. The party must give indemnity bondage referring that he/she will be liable for
any fraud-forgery by the lost cheque. After the formalities, Bank issue of new cheque book
for client.
Return of the Cheque

A cheque may be returned by the following reason:
 Account closed.
 Insufficient funds.
 Payment stopped.
 Refer to drawer.
 Drawn against uncontrolled funds.
 Amount in words and figure.
 Drawer’s signature differs.
 Alternation requires draw’s full signature.
 Cheque postdated.
 Date incomplete or missing.

 Clearing house stamp missing.
Examined of the Cheque

The passing official must examine the following:
 Whether the instrument presented is related to the branch.

 The instrument is not undated / anti-dated / post-dated.
 The instrument is not crossed since crossed instrument are not payable over the
counter.
 The amount is words and figures are written and do not differ.
 There is no alternation anywhere on the instrument.
 In case of order cheque the proper identification of the payee ensured to the
satisfaction of the bank.
 The instrument bears the signature of the drawer.
 The number of the instrument along with preceding series, if any conform to the
number / series issued and recorded in the relative account particulars.
 The instrument bearing similar number was not been paid earlier.
4.15 Local Remittance:
Local Remittance means sending money from one place to another place for the customers
and it’s very important service system in our country. For this service, our country business
sectors are get facility by transfer funds from one place to another. Some of the instrument
that Shahjalal Islami Bank Limited, Foreign Exchange Branch provides are immense
beneficial to the clients. These are:
1. Demand Draft (DD)
2. Pay Order (PO)
3. Telegraphic Transfer (TT)
Demand Draft (DD):

Demand draft is an order of issuing bank in another branch of the same bank to pay specified
sum of money to the payee on demand. It is generally issued when customer wants remit
money in any place which is outside of the clearing house area of issuing branch payee can

be purchaser himself or another, bearing money may be risky. It is a negotiable instrument
and it can be crossed or not. For payment of Demand Draft, paying, branch first has to be
confirmed that the Demand Draft is not forged one.
First bank cheques the “Test Code” mentioned on the draft. If “Test Code” agrees then
believe that Demand Draft is not forged and makes payment. For further confirmation, the
issuing bank sends an advice about the Demand Draft to the paying branch. For Demand
draft, commission is taken in the following way:
Particulars Charges
Issuance @ 0.15% minimum TK.25

Telex Charge At actual / minimum Tk.50
Issuance of Duplicate Tk.150
Pay Order (PO):

This is very important instrument of the bank. Pay Order gives the payee the right to claim
payment from the issuing bank. It can be en-cashed from issuing bank only. Unlike cheque,
there is no possibility of dishonoring pay order because before issuing pay order bank takes
out the money of the pay order in advance. Pay order cannot be endorsed or crossed and so it
is not negotiable instrument. Pay Order commission is like this:
Pay Order Amount (Taka) Commission (Taka)

Up to 1,00,000 50
Up to 5,00,000 100
Above 5,00,000 150
Telegraphic Transfer (TT):

Telegraphic Transfer is the quick service system than others. By this method money is
transfer to another place being telegraphic message. Generally for such kind of transaction
payees should have account with the paying bank. Otherwise, it is very difficult for the
paying bank to recognize the exact payee. Test code is also furnished on the Telegraphic
Transfer message for the protection of it. When sending money is urgent, then the bank uses

telephone for remittance. This service is only provided for valued customers, who is very
reliable and have long-standing relationship with bank. Telegraphic Transfer commissions are
Particulars Charges
Issuance @ 0.15% or minimum Tk.25
Cancellation Tk.100
4.16 Foreign Remittance:

Foreign Remittance means sending money from one country to another country for the
customers and it’s very important service system in our country. Some of the instrument that
Shahjalal Islami Bank Limited, Bijoynagar Branch provides are immense beneficial to the
clients. These are:
1. Kushiara
2. Western Union.
4.16.1 Kushiara:
Kushiara Money Transfer’s a definition of safety and reliability and a popular
Money Transfer Company in United Kingdom (U.K.). Kushiara offers “Instant Cash” next
day collection from Bank counter at most cities in Bangladesh and “Quick Credit” to
beneficiary’s account in all over the Bangladesh.
Payment may be made by bank deposit (Kushiaras account at Barclys Bank) or cheque or
bank draft. Please do not send cash through post. Bank shall process the remittance request
and post the customer copy of the remittance form to customers given address after the fund
are cleared. The usual times for clearing of cheques require 3-5 working days
4.16.2 Western Union:
Western Union Financial Services Inc. U.S.A. is the number one and reliable money transfer
company in the world. This modern Electronic Technology based money transfer company
has earned world wide reputation in transferring money from one country to another country
within the shortest possible time.

Shahjalal Islami Bank Limited has set up a Representation Agreement with Western Union
Financial Services Inc. U.S.A. Millions of people have confidence on Western Union for
sending money to their friends and family. Through Western Union Money Transfer Service,
Bangladeshi Wage Earners can send money quickly from over 280,000 Western Union Agent
Locations in over 200 countries and territories world wide- the world’s largest networks.
Shahjalal Islami Bank Limited branch in Bangladesh offer Western Union Money Transfer.
Then simply fill a form and collect money. Shahjalal Islami Bank Limited has 26 such
branches all over Bangladesh and Western Union has over 280,000 agent locations across 200
countries and territories.
4.16.3 SWIFT:
Shahjalal Islami Bank Limited is a member of the society for Worldwide Inter Bank Financial
Telecommunication (in abbreviation S.W.I.F.T). SWIFT is the industry-owned co-operative
supplying secure, standardised messaging services and interface software to nearly 8,100
financial institutions in 207 countries and territories. SWIFT members include banks, broker-
dealers and investment managers. The broader SWIFT community also encompasses
corporate as well as market infrastructures in payments, securities, treasury and trade.
4.17 Activities of Clearing Department :

On behalf of the customer bank receives their proceeds of instruments such as Drafts,
cheques, Pay Order and sends for collection through these methods:
1. Outward Bills for Collection (OBC)

2. Inward Bills for Collection (IBC)
1. Outward Bills for Collection (OBC)

When Motijheel branch’s sends cheque to other branch of Shahjalal Islami Bank Limited.
Accounting entries for this process:
Shahjalal Islami Bank Limited General A/C (sending branch) Dr.
Depositors A/C Cr.
2. Inward Bills for Collection (IBC)

There are two types of clearing, firstly cheque collection from other branch of Shahjalal
Islami Bank Limited. These cheques are settled by sending IBCA, i.e. debiting depositor’s
account crediting sender’s branch account.
Accounting entries for this process:
Depositors A/C Dr.
Shahjalal Islami Bank Limited General A/C (sending branch) Cr.
In secondly, cheque collection from another bank outside the clearinghouse. These cheques
are settled debiting depositors account and sending DD or TT in favor of sender’s bank.
Clearing Department works are classified in three ways:
A. Outward Clearing
B. Inward Clearing
C. Transfer Delivery
A. Outward Clearing:
The instruments drawn on other banks, within the clearing house area, deposited through our
clients are sent for collection is called outward clearing.
 Procedure for Outward Clearing

 Instrument received.
 Check these items in the instrument: a) date, b) branch, c) amount in words and
figure, d) signature.
 Special crossing seal, clearing seal, endorsement seal as “Payees A/C creditor”.
 Entry in the Outward Clearing Register.
 Preparation for Clearing House: a) schedule making, b) send to principal office.
The amount in party A/C in the clearing part is not in the available balance part of the
computer program. If the instrument is honored then the amount merges are available
balance. This is done by customized software prepared by SJIBL IT Department.
B. Inward Clearing:
We receive cheque drawn on our branches within the clearing house area presented by other
banks known as inward clearing.

 Procedure for Inward Clearing
 Instrument (DD/Cheque/PO) comes from principal office.

 Entry in “Inward Clearing”.
 Check in computer.
 Demand Draft payable.
 Pay Order respective register.
 Sign in the register by authorized officer.
 Cancellation of instrument.
 Send IBCA to Local Office for honored instrument.
 Send Return memo, showing cause to the Local Office for dishonored instrument.
C. Transfer Delivery:
Transfer Delivery is two types:
 Outward
 Inward
 Outward Transfer Delivery

Instrument send for collection to other branches is outward transfer delivery. Its procedure is
like this:
 Receive instrument.
 Special crossing seal, transfer delivery seal, endorsement as “Payees A/C will be
credited”.
 Entry in “Outward Transfer Delivery” registers.
 Schedule enclosed.
 Receive IBCA and credit the party A/C.

 Inward Transfer Delivery
When instrument come to our branch for collection then it is called inward transfer delivery.
Its procedure is as follows
 Receive instrument.
 Verification of following item is taken.
 Branch.
 Date.
 Amount in words and figure.
 Signature.
 Serial number.
4.18 Activities of Cash Department:

Cash department is the most vital department of a bank and it is called blood of a bank. It is a
platform to communicate with customers. Cash department receives and pays cash directly.
 Vault Opening.
 Cash Receive.
 Cash Payment.
 Cash Remittance.
 Cash Balance.
 Counter Limit.
 Vault Limit.
 Sorting and Stitching.
 Vault Closing.

There is a procedure of cash-in and cash-out from the vault. Also a systematic procedure is
maintained for receiving cash through different vouchers and payment against different
cheques and vouchers.
4.18.1: Vault Opening:
The Vault opened with two different keys of two respective authorized officers. The officers
are:
 Manager of the Branch.
 Cash-in-charge officer
Strong room has two keyholes opened by two officers respectively by two keys of cash.
Generally sub-manager of the Branch bears authority absence of manager. Grill door one
keyhole opened by two keys of two officers and bring out following thing: Cash, Vault
register, receive register, payment register, balance book, security stationary. Enter the
amount of cash withdrawal from the vault register.
4.18.2: Cash Receive:
Cash is the life of a bank. Different types of form are used for cash deposits for different
types of accounts. Cash may be received by the following ways:
 Current of savings account pay-in-slip.
 Credit voucher.
 Different types of instrument remittances (TT, DD, PO etc) are received by respective
forms.
 Bills like national life Insurance Company Limited.
 Share collection.
 Different types of scheme.
4.18.3: Cash Payment:

Cash is paid in payment counter against the following instrument:
 Cheques.
 Cash debit voucher.
 Pay-in-slip.
 Pay Order, Demand Draft etc.
 Bank’s expense also paid to outside through cash debit voucher
 Procedure

Receive of the cheques with a signature behind it.
 Scrutinize it by an authorized officer.
 Submit to computer section for checking the available balance.
 Cancelled and seal up “pay in cash” and cancellation through sign up.
 Again submitted to computer section for debiting the partly A/C and seal up “posted”.
 Send to cash counter-payment officer.
 Cash officer checks the cancellation, seal and seal up “Cash Payment”.
 Entry the payments register.
 Take another signature of payee behind the cheque and pay cash.
4.18.4: Cash Remittance:

Requisition letter, which must be authorized by the manager, is sent to the Principal office for
cash Remittance:
Inward Cash
 Counting the cash.
 Prepare simple credit voucher.
 Prepare IBCA.
 Entry in the cash receipt register.
Outward Cash
 Car requisition (call through phone).
 Taking counter part of forwarding (including name and specimen) signature of
authorized officer and guard.
 Remit the cash prepare simple debit voucher.
4.18.5: Cash Balance:

At the end of the transaction:
 Sum of total received.
 Sum up total payment.
 Total receiving + opening balance – total payment = closing balance for that day and
opening balance for the next day.

 Check it with computer sheet.
 Counting cash.
 Entry the cash balance register.
 Write cash position memo with denomination
Position of the Cash Department
The position of the cash department is very important. The cash department should be at a
safe place. It should be at the middle position of the branch. The cash position of the comilla
Branch is in the right side of the branch and its safe and vault is at the behind.
4.18.6: Counter Limit:

Everything has its limitation. Cash counter of a branch also has limitation. The cashier should
take cash within the limit of his counter. If the cash exceeds its counter limit, the cashier
should take the excess cash to safe. Counter limit of the Comilla Branch is Tk.50 Lac.
4.18.7: Vault Limit:

Vault is the very secret place to keep money is the bank. Usually vault is made of very hard
material like iron or steel, generally it is fire-proof, damp-proof. The vault has a fixed limit
too. The limitation depends on the regular transaction of the branch. If the amount exceeds its
limit, the extra money should be sent to the Bangladesh Bank. The vault limit of the Comilla
Branch is Tk.1.5 crore. If the amount exceeds its limitation and accident occur, then the
branch will be liable and Insurance Company will not compensate for that.
4.18.8: Sorting and Stitching:
 Sorting
At end of the day, the amount of cash has to be sorted out in order to identify the different
types of notes, say-500, 100, 50, 20, 10 and 5 and so on. Hundred pieces of any type note
create a packet and ten packets made a bundle. In this way, the cash is actually sorted out.
Stitching
After sorting out the cash, packets are stitched along with a slip bearing the name of the bank,
total number of notes and the signature of the cash-in-charge. Two round seals are given at
both sides of packet.

4.18.9: Vault Closing :
Before vault closing concern officer will:
 Check receive, payment, cash balance, vault register signature.

 Signature of computer sheet.
 Count physical cash.
 Keep cash in the safe.
 Bundle in safe.
 Loose peak of the tray.
 Loose cash notes and coins on the tray.
 Keep different registers.
 Keep security stationeries.
 Close safe.
 Check the rifle and entry in register.
 Close grill door and vault room’s door.
4.19 Foreign Exchange:

Foreign Exchange Department is a very important department of SJIBL, which deals
with import, export and foreign remittances. Foreign Exchange department is an
international department of the bank. It facilitates international trade through its various
modes of services. It bridges between importers and exporters. If the branch is an
authorized dealer in foreign exchange market, it can remit foreign exchange from local
country to foreign country. This department mainly deals in foreign currency, that’s why it is
called foreign exchange department.
Bank branch should be authorized dealer, with due approval from Bangladesh Bank to run
foreign exchange transactions. According to the Bangladesh Law, the payment must be
received within 120 days.

This department is playing an important role in enhancing export earning, which aids
economic growth and in turn it helps for the economic development. On the other hand, it
also helps to meet those goods and service which are more demandable and not adequate in
our country.
Foreign Exchange Department is dividend in to 3 sections.
Import Export Remittance
4.20 Export and Import Procedure:

Modern world depends upon foreign exchange to do trade with other countries. Foreign trade
refers to the trade between different sovereign nations or different countries. Smaller or large
all the country of the world now cannot goes without the help of other country. It can run
without keeping relation with any specific country but it is not possible to exist without
keeping relation with the any country of the world. No country in the world can produce
everything that she requires. So every country specializes in the production of commodities,
which she cans be producing at comparatively low cost. And she secures other production
exchange of their surplus from foreign which are in an advantage position to produce these
“other product”
CONTRACT

IMPORT EXPORT
ADVISING BANK
OPENING BANK Documents
NEGOTIATING BANK
REIMBURSING BANK
Reim.Claim
FLOW CHART OF EXPORT IMPORT PROCEDURE
. Source: Foreign Exchange Manual of SJIBL
4.21 Structure of Foreign Exchange Department:

Foreign Exchange Department of SJIBL,
L/C Foreign
operation Remittance
Import Export
operation operation

Foreign Inward Outward
Currency remittance remittance
A/C
Foreign exchange department of SJIBL, has been divided into two sections:
1. Foreign Remittance
2. L/C Operation
4.22: IMPORT:
4.22. 1: Meaning of Import:
Import means lawfully carrying out of anything from one country to county for Buying. It
will be occurred according to the Government law.
4.22.2. Import Policy Order:
Based on the needs of commodity and availability of finance, Government declares policy.
For import of goods for a particular period having approval from the National Assembly is
defined as Import policy order. Import policy is a guideline of a set of rules envisaged by
Government Authority i.e. the Ministry of Trade and commerce for the registered importer
for import of goods inside the country.

4.22.3.
4.22.3 Duration:
Earlier import policy has been formulated the five years. But present import policy order has
been formulated for 3 (three) years, Effect from the 14th June 2003 to 30th June 2006 and valid
till announce of new import policy order. If require Government can revise the policy in each
every years.
4.22. 4: General Rules in connection with import:

Restriction of Import:
a) Negative list of Merchandises.
b) Restricted list.
c) Footnote under Restricted List
d) Freely importable items.
ITC number is compulsory (H.S code 6 digit) to be mentioned in the L/C and LCAF to
identification the item to be imported.
1. Requirement Right of Refusal (ROR) for public sector agency from Ministry of
Industry or respective Ministry/department of both to Import item under Restricted
List.
2. Import cannot be Israel.
3. Pre-shipment inspection (PSI) for private sector normally PSI is not mandatory.
4. Shipment to be made through Bangladeshi ship some exemption
a) Single importer maximum 20 MT grow importer highest 100 MT

b) General waiver from department of shipping otherwise certificate of
Waive is to be obtained to ship through Foreign Cargo
c) Import of Raw materials export oriented Industries to be made on
Competitive rate.
4.22. 5: Regulations of Import:
Import of goods under this policy shall be regulated as under:

1. Control list:

Unless otherwise specified items which have been indicated as banned in this list shall no be
permissible for import. An item included in this list with specific conditions for import shall
be importable only on fulfillment of the conditions specified.
2. Freely Importable Items:

Unless otherwise specified an items the name of which does not appear in the control list
shall be freely importable.
3. Notwithstanding anything mentioned else where, all imports into Bangladesh shall be
subject to such general or specific conditions as many have been prescribed in this order.
4. In addition to the conditions mentioned in the control list the conditions. Restrictions and
procedures for import of various items mentioned in the test portion of this order, shall as
usual, apply in case of import of those items.
5. If, while determining the import status of an items mentioned in the control list the
description of goods does not conform to the H.S Code mentioned against item, or any
discrepancy arises between the H.S Code and the description of goods, in that case the
description of goods shall prevail, In other words, if the import of a particular item is shown
as banned in the control list, or is shown as importable as subject to fulfillment of conditions
in the list, the said ban or restriction as the case may be, shall equally apply to the import of
that item , even if such ban or restriction is mentioned else where and not against the
appropriate H.S Code, if any importer, taking , advantage of such discrepancy, import any
banned items or restricted items or restricted item without fulfilling the respective
conditions, such import shall be treated to have been made as in contravention of the
provisions of this order.
4.22. 6: The Documentary Letter of Credit:
1 Import L/C (Letter of Credit):
Letter of Credit is a credit contract where the Opening/Issuing Bank is committed to place an
agreed amount of money at the beneficiary’s disposal under some agreed conditions. In other
words letters of credit is a letter form the importer Bankers to the exporter that the bills if
drawn as per terms & conditions complied with will be honored on presentation.

 Definition of L/C:
A letter of Credit is a conditional bank undertaking of payment. In other words letters of

credit is a letter form the importer bankers to the exporter that the bills if drawn as per terms
and conditions are compiled with will be honored on presentation
As per UCPDC 500 a credit may be either:
i) Revocable.
ii) Irrevocable.
The Credit, therefore, should clearly indicate whether it is revocable or irrevocable. In the
absence or such indication the credit shall be deemed to be irrevocable.
2 Types of L/C:
1. Revocable Credit:
As per Article no. 8 (a) A revocable credit is a credit which can be amended or canceled by
the issuing bank at any time without prior notification to the seller since to offers little
security to the seller.
2. Irrevocable Credit:
As per Article no 9 an irrevocable credit constitutes a definite undertaking of the issuing
Bank. A credit cannot be amended or cancelled without the agreement of all parties. It gives
the seller grater assurance of payment. An irrevocable credit can be either confirms or
unconfirmed dependant on the desire of the seller.
4.22.7 Classification of Importer:

Importers are those who ate authorized by the import Trade authority i.e. & CCI & E for
import of goods essential for consumption or for production purposes.
There are mainly three types of importers.

1. Commercial Importer
2. Industrial Importer
3. Importers under Wage Earner Scheme
1. Commercial Importer:
It means an importer registered under the importers, exporters and indention
registration order 1981 who import goods from sale, when issued to commercial

importers, given the category held by him with ITC classification and public notice
against which they are admitted into import trade.
2. Industrial importers:
When issued to an industrial consumer, gives the items of import as raw materials and
packing materials and spare parts, the value of entitlement and ITC classification.
3. Importers under WES:

It means registration importers who import only under the WES. In this scheme, the
foreign exchange required for import of goods is met out of the remittance made. By
Bangladeshi citizen earning wage abroad. WES importers can be importing all
permissible items a declared by the importer also can import under WES.
4.22.8 Registration of Importer:
As per import & Export control Act. 1950 no person can indent, import or export any goods
into Bangladesh except kin case of exemption issued by the Government of the peoples
Republic of Bangladesh. Violation of this order is punishable with fine under the provisions
of Sea Customs Act 1878 as applied by sub section (3) of Section 3 of this Act.
3 Procedure for obtaining, IRC (Import Registration Certificate):

Through public notice or import policy the chief controller of imports & Exports invites
applications usually for registration of importers. The following papers/ documents are
required for submission to CCI&E or area office of CCI & for import registration certificate:
1. Application form.
2. Nationality Certificate.
3. Income Tax registration Certificate with GIR.
4. Trade License from the municipal or local Authority.
5. Membership Certificate.
6. Partnership deed (for partnership firm)
7. Certificate of Registration with the register of joint Stock Co. & Articles and
Memorandum of Association in case of Limited Co.
8. Bank Certificate.
9. Documentary evidence for business existence.
10. Original copy of Treasury Chalan being payment of registration fees.
11. Original copy Chaplin for passbook.
12. Other documents if any required by the CCI & E.
13. Ownership’s documents or Rent receipts of the place of Business.
14. Survey clearance from the relevant Authority.
The nominated bank of the application will examine the papers/documents s& verity the
signature of the applicant and forward the same to the concerned office of the CCI & E with
forwarding schedule in duplicate through bank’s representative. The duplicate copy of the
same bearing the acknowledgement of CCI & E office of the receipt of the documents is back
by the bank and is preserved.
If the documents are found in order and the CCI & E is satisfied the IRC is issued to the
applicant and sent direct to the nominated bank. The passbook is also issued by the CCI & E
simultaneously to the importer and sent direct to the nominated bank.
4.22.9: Some Important terms of Letter of Credit:
Amendment of Credit: Sometimes the importer may require amendment to be made in the
L/C, but this amendment must be made with the consent of the exporter, otherwise
amendment will have no validity.
Adding Confirmation: Sometimes the exporter may not rely on the L/C issuing bank.
Exporter requires the L/C to be confirmed by another bank situated in his country. Then on
request of issuing bank, any bank in exporter’s country gives guarantee about the payment.
This is called Confirming Bank. By adding such confirmation, confirming banks undertakes
the liability to honor the bill of exchange of exporter.
Validity and Expiry of Credit: All L/C must mention the expiry date of L/C within which
the documents for payment/acceptance must be presented. This date must exceed the date of

issuance of the bill of lading or other shipping documents, during which presentation of
documents for payment/acceptance must be made.
Free On Board (FOB): Under FOB basis, the exporter quotes the price covering all his
expenses until the goods duty packed are delivered “on board”, the carrying vessel named
and arranged by the buyer with the freight and the insurance being paid by the buyer. The
importer bears any costs incurred and all risks from the time the goods are placed on board
inclusive of those arising out of the ship’s failure on berth.
Cost and Freight (C & F): In this case the exporter quotes the FOB price plus insurance
cost. The responsibilities of carrying out all formalities for shipment of the goods develop
upon the seller.
Cost, Insurance and Freight (CIF): Under CIF, the exporter quotes C&F price plus the
insurance cost. The responsibility of carrying out all formalities for shipment of the goods
develop upon the seller.
Free alongside Ship (FAS): Under FAS, the seller quotes the price covering all his charges
until such time as goods are loaded on train at the specified railway station. The buyer is
responsible for all charges from the time he takes delivery of all goods from the exporter’s
yard.
EX-Factory: The seller quotes the price of the goods ex-factory on the date agrees. The
importer is responsible for all further necessary arrangements and charges.
4.22.10 Parties to Letter of Credit:
1. Importer (Buyer)/Applicant
2. The Issuing Bank (Opening Bank)
3. The Advising Bank (Notifying Bank)
4. Exporter/Seller (Beneficiary)
5. Confirming Bank
6. Negotiating Bank
7. The Paying/Reimbursing/Accepting/Remitting Bank
Applicant: The person/body who requests the bank (opening bank) to issue letter of credit. As
per instruction and on behalf of the applicant, the bank opens L/C in line with the terms and
conditions of the seller contract between the buyer and the seller.

Opening bank/Issuing Bank: The bank which open/issue letter of credit on behalf of the
applicant/ importer. Issuing bank’s obligation is to make payment against presentation of
documents drawn strictly as per terms of the L/C.
Advising/Notifying Bank: The bank through which the L/C is advised/forward to the
beneficiary (exporter). The responsibility of advising bank is to communicate the L.C to the
beneficiary after checking the authenticity of the credit. It acts as an agent of the issuing bank
without having any engagement on their part.
Beneficiary: Beneficiary of the L/C is the party in whose favor the letter of credit is issued.
Usually they are the seller or exporter.
Confirming Bank: The bank which under instruction in the letter of credit adds confirmation of
making payment in addition to the issuing bank. It is done at the request of the issuing bank
having arrangement with them. This confirmation constitutes a definite undertaking on the part
of confirming bank in addition to that of issuing bank.
Reimbursing/Paying Bank: the bank nominated in the letter of credit by the issuing bank to
make payments stipulated in the document, complying with reimbursing bank.
Beneficiary 1. Contract Applicant
SELLER BUYER
2. Doc .Credit
Application
4. Advise of
Doc .Credit
3. Documentary Credit
ADVISING BANK ISSUING BANK
The Canadian Advising Bank The Bangladeshi Issuing Bank

Figure 20: The Documentary Credit Cycle
4.22.11. Documents submitted by the importer before opening of the L/C:

a. Trade License (Valid).
b. Import Registration certificate (Must be kept in the bank custody).
c. Passbook import.
d. Income Tax declaration.
e. Membership certificate.
f. Memorandum of Articles (In case of Ltd. Co.)
g. Registrar deed (In case of partnership firm)
h. Resolution.
i. Photo one copy.
 Bank will supply the following papers/documents before opening of the
L/C
a) L/C application form.
b) LCAF Form.
c) IMP Form
d) Murabaha agreement.
e) Charge documents paper.
The above paper must be completed duly filled and signed by the party and verified the
signature.
4.22.12 Import Procedure under SJIBL:

1. Selection of Clients On the basis of
a. Credit Report.
b. Credibility.
c. CIB Report.
(To association of liability if any with other bank.)
2. Induction of client as Importer.
3. L/C
a. Conditional Undertakings of bank payments.
b. .Processing to open
C. Permissibility and marketability of the item.
d. Price competitiveness.

e. Credit report of the supplier.
f. Fixation of the cash security.
g. Documentation.
h. Preparation of vouchers.
i. Realizations of the cash security, commission and other charge.
4. Thronging of L/C
a. SWIFT is a worldwide community. It has over 7500 financial
institution over 199 Countries as its member.
b. Air mail/Telex through advising Bank.

5. Lodgment
a. Checking of import documents upon receipt from negotiating or
collecting banks.
B. Entry the bills register.
c. Passing the voucher.
d. Purchase of FC. Fund for payment of the bills.
6. Retirement
a. Preparation of cost memo.
b. Intimation to importer regarding arrival of shipping document.
c. Asking the bill paying bank’s dues showing in the cost memo.
d. Delivery of the documents against receipt of payment
Endorsement.
7. Post Import Finance
a. At the request of importer bank undertakes clearing of the imported
goods paying duty. VAT and other relevant charges stores the same
under control
b. Delivers to importer against payment as per prior arrangement.
8. Enlistment of C&F agent

a. For C&F purpose. C&F agents are enlisted under different
categories.
9. Reporting

a. To Bangladesh Bank
b. Monthly returns statement to the Head office.
4.23 EXPORT:
4.23.1 Meaning of Export:

Export means lawful carrying out of anything from one country to another country for sale.
4.23.2 Definition of Exporter:
The importers and exports trade of the country is regulated by the Imports Exports Control
Act 1950. No person /firm is allowed to export any thing from Bangladesh unless he is
registered with CCI and E under the registration order (Importer and Exporter) 1952. To
become an exporter an ERC (export Registration Certificate) must be obtained from the
office of CCI & E.
4.23.3 Procedure for obtaining Export Registration Certificate (ERC):
For obtaining Export Registration Certificate (ERC), intending Bangladesh Exporters are
required to apply to the CCI & E authority in the prescribed from along with the following
documents:
a) Nationality Certificate.
b) Copy of valid Trade License.
c) Income Tax Certificate.
d) Bank Certificate.
e) Copy of rent receipt of the business firm.
f) Registered Partnership Deed in case of partnership concerns.
g) Memorandum of Articles & Association and Incorporation certificate in
Case of Limited Company.
On satisfaction of the CCI & E the potential exporter is advised to deposit export registration
fee of Tk. 1,000/- through Treasury Chelan to Bangladesh Bank/ Sonali Bank for enabling
them to issue ERC. The ERC may be renewed every year on payment of renewal fee of Tk.
1,000/- through Treasury Chelan as started.

4.23.4: Different types of Export:
A. Export under L/C
Exporters are allowed to export the commodity under irrevocable letter of credit. Under this
type of export, exporter will ship the goods as pr terms of the credit and will get payment as
per arrangement of the credit.
b. Consignment basis export:
Exports are allowed against firm contract. As per contract, importer will ship the goods and
the buyer will make payment after selling the consignment.
c. Export against advancement payment:
Sometimes exporter receives payment in advance. In that case Authorized Dealer should
obtain a declaration from the exporter on the “Advance receipt voucher” certifying the
purpose of the remittance. Then the exporter will export the goods against the advance
payment.
4.23.5: General Rules for Export:

There are some rules, which are mandatory for export of any goods form Bangladesh. The
rules are as under:
(1) No Person can export any goods from Bangladesh, unless he is duly registered as an
exporter with the CCI & E.
(2) All export must be declared on the EXP form, which is consisting of 4 copies.
(3) Export mush is against any of the following:
a) Export L/C.
b) Firm Contract.
c) Advance Payment.
(4) Transport documents related to land route or sea and any other Author8ized Dealer. The
Airway Bill and any other documents of title to car4go may be drawn to the order of a Bank
in the country of import. However in case of advance payment, transport document may be
drawn to the order of Foreign Importer Bank endorsement of transport documents is
prohibited. Directions under Sl. No. shall not apply in the following cases:

a) Export of Trade sample.
b) Personal Effects.
c) Goods shipped under the order of Govt.
d) Export of fresh fish, vegetable and fruits.
e) Gift package for less than Tk. 50/-.
(5) ‘EXP’ must be submitted to the Bank by the exported and Bank will submit the Duplicate
Copy to the Bangladesh Bank within 14 days from the date of shipment.
(6) Payment for goods exported should be received through an authorized dealer in freely
convertible currency.
(7) Export proceeds must be received by the exporters within 4 months.
(8) Overdue export bills statement to Bangladesh Bank should be submitted by the 15th of the
month, following quarter to which it relates.
(9) In case of short shipment, exporter should give a notice of short shipment of\n the
prescribed from in duplicate, the prescribed from in duplicate, the customs, who will forward
a Certified copy of the notice, to the Bangladesh Bank.
4.23.6: Issuance of EXP Forms and Number:
Bank will certify EXP Form only after confirming the following:
a) Arrangements have been made for realization of Export proceeds.
b) Bona-fides of the importer/ consignees abroad.
c) Arrangements have been made for receipt by Authorized dealer of documents of
title to goods.
d) The EXP has been signed by the exporter
4.23.7: Stages & Mechanism of Export:

1) Exporter will make the goods ready for shipment.
2) Arrangements have to be taken for inspection of the goods by the competent authority as
per credit terms.
3) Exporter will declare on EXP form against export L/C/Firm Contract/ Advance payment.

4) Exporter have to arrange approval for export from custom authority on EXP from by
submitting Export L/C, Export permission from CCI & E, Quota clearance from EPB, U.D.
in case of garments, invoice, packing list along with shipping bill prepared by C&F agent.
5) After completion of custom formalities, shipping company will receive the goods and will
issue B.L.
6) Exporter will collect visa/ license and certificate of origin for final documentation.
7) Exporter will submit the full set of documents to the negotiating bank for negotiation.
8) Negotiation bank will dispatch the documents to the issuing bank for clearance of the
goods from destination against payment as per credit terms.
4.23.8: Export Documents Checking:

After submissions of export documents by the exporter, Bank must check, whether the entire
required document submitted or not. Bank must examine all documents stipulated in the
credit with reasonable care to ascertain whether or not they appear, on their face to be in
compliance with the terms and conditions of the credit. The Banks will not examine
documents not stipulated in the credit. To examine documents Bank must follow the L.C
terms and international standard banking practice. Automated or computerized carbon copies
to be treated as original documents if it is marked ‘original’ Copy documents need not be
signed. Multiple documents means one original and remaining copies, Signature, Mark,
Stamp or label is sufficient for authentication of document. Bank will accept a prohibited in
the L/C.
4.23.9: Export Financing:

To meet up the cost of the goods to be exported, the exporter, the exporter may require Bank
finance. Besides, he may require finance for go down rent, freight etc. Event after shipment
of the goods, exporter may require Bank finance to meet-up his current expenditure up to
repatriation of the export proceeds.
There are two types of export finance:
(I) Pre-shipment finance.
(ii) Post shipment finance
1. Pre-shipment finance:

Pre-shipment investment is finance, allowed by a Bank to an exporter, to meet the cost up to
the shipment of the goods t overseas buyer. The purpose of the investment is to purchase raw
materials or finished goods or manufacturing processing, packing and transporting the goods.
2. Post shipment finance:

There is a time gap between export of the goods and realization of the proceeds. So exporter
may require finance in that period to continue his business. So Bank may finance against
export documents ensuring the following:
1) Export documents comply the credit terms.

2) Buyer is bona-fide.
3) Party’s past performance is satisfactory.
4) Any other security in case of export under contract.
4.23.10 Security of Pre-shipment Investment:

1) Bank will mark loin on the related export L/C.
2) Bank will finance against a L/C having sufficient time to procure the goods for export.
3) Finance to be done after arrival of the imported raw materials under back-to-back L/C.
4) Bank will supervise the production from time to time to ensure export of the goods in time.
5) If finance is applied for a particular purpose Bank will ensure the proper use of the money
for the purpose only.
6) Change documents to be signed by the exporter before disbursement of the PSI.
7) In case of Quota finance, Quota allocation letters to be kept lien with the Bank.
8) Bank will adjust the liability proportionately from related export documents.
 Types of Pre-shipment Finance:

1) Cash finance for purchase of raw materials/finish goods.
2) Cash finance for factory rent, wages & salaries and all other factory expenses.
3) Finance for payment of freight.
4) Purchase of Quota to export the goods to Quota countries.
 Limit of Pre-shipment finance:

1. As. per existing rule Banks can extend pre-shipment facility up to 90% of Export L/C
value (FOB value)
2. Bank will finance with in the Head Office sanction limit for the concerned client.
3. Other liabilities of the client with the Bank also to be considered for extending pre-
shipment facility.
4.23.11 Issuance PRC:

Sometimes exporters are required to submit to the Govt. Agency evidence of goods and
realization of their proceeds. In such cases proceeds realization certificate (PRC) may be
issued.
Negotiation/ Purchase of Bill without L/C:

In our country exports are also made on the basis of contract between the buyer and the seller
with out the cover of L/C. In such case document are delivered to the buyer through the
intermediary of foreign correspondent of the A.D against payment. Limit (post shipment
finance) is usually sanctioned from Head Office to such exporters to boost up export of the
Country.
Document sent on Collection Basis:

When the bank refuses to negotiate the document due to major discrepancies, the bill is sent
by bank on collection basis under written instruction from the beneficiary. To handle such
transaction as per ICC Publication No. 322 named “Uniform Rules for Collection”
Export Requirement:
All export from Bangladesh must be declared by the shipper on EXP form to the Bank
enabling them to submit the duplicate within 14 days from the date of shipment.
The shipper is required to repatriate the export proceeds within 4 months from the date of
shipment otherwise penalty is imposed upon them. A careful watch is to be dept to ensure that
the sale proceeds are received on due date. A due date diary must be maintained to pursue the
individual case.
4.23.12: Papers are requirement in regard to export of goods subject to L/C
stipulation:
1. Commercial Invoice.
2. Certificate of origin.

3. Negotiable bill of lading.
4. Pre-shipment inspection certificate.
5. Quantity & quality certificate.
6. Fumigation certificate depending o the nature of cargo.
7. Phytosanitary certificate depending on the nature of cargo.
8. Gross revenue proceeds (GFP), export price check (EPC)/ Incase of jute shipment
etc.
4.23.13 Export procedure under SJIBL at a glance:
1. Selection of Clients On the basis of
a. Export Registration Certificate. (ERC)
b. Membership of an authorized trade association.
c. Credit report.
d. Export L/C.
e. Checking and Advising.
f. EXP certification.
g. Pre shipment facility.
h. Processing for Export
i. Execution
j. Submission of Export documents.
k. Checking: Preparation of offering sheets for negotiation or
Collection.
2. Negotiation and Collection.
a. Purchasing documents.
b. Sending documents to L/C opening banks or correspondent for
collection of proceeds .After collection adjustment of negotiation value.
3. Reporting
a. Duplicate EXP to Bangladesh Bank.
b. Triplicate EXP after relation of proceeds to Bangladesh Bank.
c. Monthly statement to Head office.
4. Export Under Back to Back System.
a. Export L/C advising.
B .Proposal for BB L/C
c. Checking.

d. Process to open BB L/C
e. Formalities time gap between Import and Export credit.
f. Report Buyer and Supplier.
5. Thronging of BB L/C
a. Advising bank or Foreign correspondent add confirmation

6. Lodgment of BB Bills
a. Shipping documents.
b. Evidencing dispatch.
c. Goods acceptance of import bills.
d. Conveying of due date to negotiating bank.
e. Clearance of Raw materials.
f. Storing in Bonded Warehouse.
g. Manufacturing of the product.
h. Pre shipment Extension
7. Negotiation of Export Bill.
a. Execution of Export
b. Submission of Export Documents.
c. Checking.
d. Negotiation.
e. Disbursement of funds to different heads of A/C including F/C
held account for payment of BB Bill.
8. Relation of Proceeds and Reporting
a. Crediting NOSTRO A/C.
b. Adjustment of negotiation value.
c. Payments of BB Bills.
d. Export Incentives
e. Reporting of Export.
f. Settlement of any other claims
4.23.14 Back-to-Back L/C:
Back -to -back L/C means one credit backs another. It is new credit in favor of another
beneficiary. Sometimes beneficiary seller of a credit himself is unable to supply goods
specified in the L/C and required to purchase from another supplier by opening second

credit. Besides, the formalities and requirements for (L/C opening) the following formalities
and documents are also required for opening back-to-back L/C
1. Master L/C
2. Valid bonded ware house license
3. Quota allocation for quota items
4. ERC in addition to IRC
5. Indemnity/Undertaking
6. NO objection form previous banker
7. Factory inspection certificate
8. BGMEA Membership
 Problems of Back to back L/C:
1. Shipment time gap: Sometime time is shorted for exporting against import
L/C, kit may be caused.
2. Terms and rules violations: SJIBL cannot violate the rules & term of Shariah
council.
3. Selling violation: Out of agreement SJIBL cannot receive excess wanted.
4. Payment of back to back L/C bill: No stock bills are supported against
Shariah.
5. Gaps of International rules & regulations.
4.24 Foreign Remittance:

‘Foreign remittance’ means purchase and sale of freely convertible foreign currencies as
admissible under Exchange Control Regulations of the country. Purchase of foreign
currencies constitutes inward foreign remittance and sale of foreign currencies constitutes
outward foreign remittance.
Personal observations:
I have observed the following things:
Inward Foreign Remittance:
Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D., bills,
T.C. etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign
exchange is to be reported to Exchange Control Department of’ Bangladeshi Bank.
Outward Foreign Remittance:

Outward remittance covers sales of foreign currency through issuing foreign TT, Drafts,
Travelers Check etc. as well as sell of foreign exchange under L/C and against import bills
retired. Sale of foreign exchange is reported to Exchange Control Department of Bangladesh
Bank.
We see that there arc two types of Foreign Remittance:
a. Foreign Inward Remittance.
b. Foreign Outward Remittance.
The Foreign Remittance department of SJIBL is equipped with a
Number of foreign remittance facilities:
a) Issuance of Foreign Demand Draft (F.D.D)
b) Issuance of Travelers Cheques (T.C)
c) Endorsement of US$ in Passport
Foreign Demand Draft (FDD):

SJIBL accepts the charges for TOEFL, SAT, GMAT etc. through Foreign Demand Draft.
SJIBL opens Student Files to issue Foreign Demand Draft following the permission of
Bangladesh Bank. SJIBL has more than 200 Student Files. Before issuance of FDD, SJIBL
asks the students to fill up the TM form which contains the following particulars:
a) Name of the student

b) Full address of the student
c) Amount of FDD in Foreign Currency
d) Purpose of Remittance
e) Address of the institution to which the FDD will be favored

f) Country receiving payment
g) Passport no. of the student with date of issue

h) Signature of the student
4.25 Investment:
Investment is the action of developing funded with intension and expectation that they will
earn a return for their owner. When resources are spent to purchase fixed and current assets
for use in a production process or for trading process, then it can be termed as real

investment. On the other hand purchase of a legal right to receive an income in the form of
profit and dividend may be called as financial investment.
 Function of Investment Division

 Preparing the proposal.
 Issuance of Sanction Letter.
 Disbursing the Payment.
 Prepare and Posting Voucher.
4.26 Islamic Mode of Investment:

Money is deposited with an Islamic Bank; the Bank makes investment under different modes
approved by Islamic Shariah with a view to earn profit. Not only a bank but also an
individual or organization can use Islamic modes of investment to earn profit for wealth
maximization. To provide interest-free Banking Shahjalal Islami Bank has adopted the
following modes of investment:
 Musharaka (equity participation on the basis of sharing profit and loss).

 Mudaraba (sharing of profit and loss in business where one of the partners provides
expertise and management and other partner provides capital remaining inactive).
 Bai-Murabaha (buying and selling of commodities goods etc. with profit).
 Bai-Muajjal (credit sale with profit).
 Hire purchase or Shirkatul Melk.
 Bai-Salam (purchasing of agricultural products while in production and providing
advance only to the producers).
 Bai-Istisna (purchasing of industrial products while in production and providing
advance money to the producers).
 Quard.
4.27 Investment mechanism of SJIBL:

Profit & Loss Bai Mode (Buying Rent Sharing
Sharing Mode & Selling Mode) Mode
(Buying & Selling0
Selling)
a) Bai-Mudaraba a) Bai-Murabaha a) Hire Purchase

b) Bai-Muajjal
Overall Activities of General Banking:A b) Hire
Study Of Shahjalal Islami Purchase
Bank Limited. 79
b) Bai-Musharaka c) Bai-Salam Under shirkatul Melk
d) Istishna’a
e) Quard-E-Hasana
SJIBL invests its money in various sectors of the economy through different modes
permitted by Sharia and approved by the Bangladesh Bank. The modes of investment
are as follows:
A. Profit &Loss Sharing Mode:
** Musharaka
**Mudaraba
B.Bai Mode (Buying &Selling):
**Bai-Murabaha
**Bai- Muajjal
**Bai-Salam
**Bai- Istishna etc
C. Rent Sharing Mode:
** Ijarah (Lease)
** Ijarah wa Iqtina (Hire Purchase)
A. Profit & Loss Sharing Mode
1.Mudaraba: It is a form of partnership where one party provides the fund while the other
provide the expertise, labor and the letter referred to at the Mudaraba any profits accrued are
shared between the two parties on a per –agreed basis, while capital loss in exclusively born
by the partner providing the capital.
Important Features:
Bank supplies capital as Sahib- al –Mall and client invest if in the business with his
experience.

The client maintains administration and management.
Profit is divided as per agreement.
Bank bears the actual loss alone.
2. Musharakah: The term Shirkat and Musharaka have been derived from Arabic words
“Shairkah” and “Sharika.” The word shirkah means a partnership between more than one
partner. Thus the ward “Musharaka” and “Shirkat” means a partnership established between
two or more partners for purpose of a commercial venture participate both in the capital and
management where the profit may be shared between the partners as per agreed upon ratio
and the loss. If any incurred, is to be borne by the partners as per capital ratio. In case of
investment “Musharaka” meaning a partnership between the bank and the client for a
particular business in which both the bank and client provide capital at an agreed upon ratio
and bear the loss, if any in proportion to their respective equity. Bank may move itself with
the selected client for conducting any Shariah permissible business under Musharaka mode.
6.4. There are two other modes of investment which have limited impact in
our country:
I. Quard
The word "Quard" is Arabic word which means loan or credit on advance. The literal
meaning of Quard is giving "Fungible goods" for use without any extra value returning those
goods. It must follow the principle of equal for equal return with homogeneous goods.
Fungible goods may be rice, oil, salt, money etc. In banking sector, money is used as quard.
Quard is Halal by Islam for not to pay any extra or interest in return.
II. Quard-E-Hasana
Quard-E-Hasana is also one kind of Quard which is given with the expectation of return or
not.
4.28. Investment policy of SJIBL:

Investment policy of Islamic Bank and non-Islamic bank is fully different. The
investment policies of Islamic bank are
 Strict observance of Islamic Sharia principles.
 Investment to national priority sectors.
 Diversified investment portfolio: Diversification by size, sector,

geographical area, economic purpose, securities and mode of investment.
 Preference to short-term Investments.
 Preference to investment of small size.
 To ensure safety & security of investments
 To look profitability of investments.
 To give support to government denationalization industrial program.
4.29 Problems regarding investment of SJIBL:
 Most of the people in our country have a bad impression of SJIBL’s operations regarding
indirect generation of interest which meaning no difference between investment of SJIBL
loan / Credit / advance of conventional banks for this reason, they are not too much
interested to make investment with SJIBL.
 Because of improper insufficient application of Islamic Banking rule in our country. The
investment operations of SJIBL can't run smoothly.
 SJIBL, which is committed to avoid interest, can’t invest the permissible part of its
statutory liquidity Reserve and short Term liquidity surplus in those securities.
 This Bank can't invest in all economic sectors, which are prohibited by the law of Islam.
 Profitable investment portfolio of SJIBL requires clear investment knowledge according

to Islamic Sharia. But sometimes SJIBL can't invest its assets in proper
 Portfolio due to insufficient and unskilled manpower in these regards .As a result, there is
a large amount of money being idle and thus potential profit is not increasing.

 This Bank re-values its investment operations within limited number of investment modes
and does not initiate investment modes according to changing |diverse needs of people
 Sometimes investment operations of SJIBL are hampered due to increase, dishonest,

indiscreet, hypocritical nature of people.
 SJIBL has no strong promotional activities to increase motivate its present and potential
investment client
 SJIBL does not grant investment portfolio for new entrepreneurs new businessmen new
companies etc., which ultimately create "Class Banking
4.30 Performance Analysis of SJIBL:

Despite changing macro-economic condition and volatile money market and foreign
exchange market, Shahjalal Islami Bank Limited was successful in achieving much higher
than national growth in deposit, investment (loans), remittance, and export and import
business. As on 31st December 2011 total deposit of the Bank stood at Tk.83350 million
showing a growth rate of 32.38%, total amount of investment of the Bank stood at Tk.80592
million with growth rate of 31.17% compared to that of the previous year. Foreign exchange
business of the Bank handled during the year 2011 wasTk.166906 million as of December 31,
2011 as against Tk.115079 million of 2010 with a growth of 45.04% over previous year.
4.30.1 Ratio Analysis of SJIBL:(Calculation Of different Financial

ratios)
Bank profitability ratios(2011)
I. Return on Asset (ROA) =Net Income/Average Total asset

=1168/93014.5
=1.2557% or
=1.26%
II. Return on Equity(ROE}=Net Income/Average stockholders equity

=1168/8465
=13.7979% or

=13.80%
III. Profit Margin(PM)=Net Income/Operating Income

=1168/2998
=38.959% or
=38.96%
IV. Return on Shareholder Capital(ROSC)= net income/ shareholder

contributed capital
=1168/7917
=14.753%
Bank efficiency ratios
I. Operating Expense to Assets(OEA)=Operating expenses/ average total
assets
=9009/93014.5
= 0.09686%
II. Operating Expenses to Revenue(OER)=operating expenses/ operating

income (revenue)
=9009/12007
=0.75031%
III. Liquidity ratio = Current Assets / current Liabilities

=tk.6165170989/tk. 4586172312
=1.3443%
IV. Quick Ratio = Current Assets- Inventory/ Current Liabilities

= tk.6165170989-0/ tk. 4586172312
=1.3443%
Interpretation of Calculated Ratios of Shahjalal Islami Bank Limited

On the basis of all above ratios, for loan decision, investment decision & for all other
financial profitable projects, the position of Shahjalal Islami Bank is better because of its
good profitability ratios & strong efficiency.
4.30.2 Trend analysis:

Trend analysis of Profit:
Shahjalal Islami Bank Limited registered an operating profit of TK.2998 million as of 31 st
December 2013. After all provision including 1% General provision on unclassified Loans
profit before tax stood at Tk.2387 million. Provision for after tax for the year amounted to
Tk.1219 million with a net profit of Tk.1168 million compared to the previous year.
Trend of Profit from 2006 to 2013
Trend analysis of Deposit:

As of December 2013 total deposits of the bank stood at Tk.83350.05 million excluding
call/overnight as against Tk.62965 million excluding call/overnight of the previous year. In
the year 2013 we emphasized on lowering the rate of interest on deposits to achieve a
lowering the rate of interest on deposits to achieve a lower cost of fund. The initiative is
intended to encourage investment at lower rate of interest. The focus will continue in future
as a part of our support towards economic developments.

Trend analysis of Foreign Exchange:

The important value of import stood at Tk.166906 million in 2013 compared with the volume
of Tk.115079 million in 2012. Export however, increased Tk.79225 million in the year 2013
compared with the volume of Tk.48857 million in 2012. Total foreign remittance volume of
the bank amounted to Tk.5340 million during the year under review compared to Tk.6156
million in the previous year.
Trend of Foreign Exchange from 2006 to 2013:
Trend analysis of Investment:

Our emphasis on maintaining the quality of assets has rendered us a diversified and well-
designed advances portfolio. The bank recorded a 31.17% growth in investment with
compared with the previous year .Total investment of Tk.80592.46 million at the end of
December31, 2013 compared to Tk. 61440.08 million in 2012.

Trend of Investment from 2006 to 2013
From the Trend analysis ,We see that trend of profit is decrease due to Economic
recession, down share market & other unavoidable uncertainities.But in spite of this the tend
of Deposit, Investment & foreign Exchange business is in better situation of SJIBL.
5. SWOT Analysis:
Not surprisingly, in the competitive arena of marketing era SWOT analysis is a must based on
Product, Price, Place and Promotion of a financial institute like private bank. From the
SWOT analysis we can figure out ongoing scenario of the bank. So to have a better view of
the present banking practices of SJIBL I did the SWOT analysis.
SWOT Analysis
Error: Reference source not found
In SWOT analysis two factors act as prime movers

 Internal factors which are prevailing inside the concern which include Strength and
weakness.
 On the other hand another factor is external factors which act as opportunity and
threat.
SWOT Analysis of SJIBL:
The Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis of SJIBL is

described in the following table:
Table: SWOT Analysis of SJIBL:
Sound profitability and growth with good internal capital generation.

Larger corporate client base.
Experienced and efficient management team and human resource.
Quaity products and services.
S Better infrastructural facilities.

Company reputation and goodwill.
Small market share.

Limited branch network.
High concentration on fixed deposits and largescale loans.
W Lack of full scale automation.

Scope of market penetration through diversified products.
Automation of transaction processes and online branch banking.
Government’s policy of encouraging heavy inflow of foreign
investment.
Regulatory environment favoring private sector development.
Value addition in products and services.
O Increasing purchasing power of people.
Increasing trend in international business.
Increased competition for market share in the industry.

Frequent changes of banking rules by the Central Bank.
Market pressure for lowering of lending rate.
T National and global political unrest.
Default culture of credit.
Findings from SWOT :

Some suggestions to SJIBL for achieving the goal of higher
customer satisfaction along with sustained growth of profitability:
 Receive the customer’s with smile.

 Improve office atmosphere to give customer friendly feeling.
 Provide intimate attention to your customer’s needs.
 Customer’s convenience will receive priority.
 Evaluate customer’s needs in proper perspective and shortcomings
be explained logically.
 Time consumed in servicing customers should be minimized.
 Deeply familiarize customers with benefits of offered financial
services.

 Use modern tools and techniques and evaluate customer’s credit
needs professionally.
 Decision making process should be free of ambiguity and be time
conscious.
 Alternative solutions should be explored and evaluated.
 Develop communication skills.
 Develop effective management information systems (MIS).
 Help new entrepreneurs to formulate business plan.
 Fresh entrepreneurs should be provided with counseling.
 Understand customer’s funding needs and create ‘Total Solution’.
 Attractive enthusiastic scheme for exporter and importer.
 Ensure reasonable spread and return on assets.
 Build good value for sponsors and shareholders.
 Employee’s moral and emotional needs are associated with their
performances and therefore cannot be ignored in overall
improvement of the quality of services. The following may be
considered:
 Attend problems of subordinates with proper care.
 Inter-personnel relationship should be cordial.
 Display positive attitude to problem solving.
 Practice group participation in problem solving.
 Innovative ideas should be encouraged.
 Organization goals should be comprehensive and visible.
 Update banking knowledge by organizing training programs and
seminars.
 Motivate subordinates through leadership skills.
With a view to ensuring the vision of Shahjalal Islami Bank Ltd. some initiatives should be
executed on the emergency basis like:

 Sending the assistant officers to BIBM for better view over pragmatic knowledge they
know what they are doing but they don’t know how and why they are adopting
different banking practices.
 Most of the officers lack in communication skill and computer skill they should be
trained up.
6: Practical Experiances as an Intern:

I joined at Shahjalal Islami Bank Limited, Comilla Branch at 2 nd of October, 2014
for completion of my three months internship period. I had a great opportunity
to work with sincere and knowledgeable persons from whom I have gather
various banking knowledge.
My learning experiences from the various departments are given in the following table. A
short summary of my duties and responsibilities are also stated below:
Placement Area Working Days

Cash section 12 days
Accounting section 13 days
Loan and advance section 15 days
Clearing section 13 days
Remittance section 20 days
Accounting section:
 Sorting the debts and credit voucher.
 Arrange that voucher according to its code.
 Checking that voucher with daily supply.
General Banking section:
 Issue of check book.
 Recording the issuance cheque book in the recording paper.
 Put seat in the different types of checque books.
 Recording the DD, PO.
Credit section:
 Accept customer loan offer.
 Process that offer in the form of credit.
 Lean of customer loan account.
 Sorting the loan form and put that form in according to customers file.
 Fill up the limit form, sanction letter.

 Preparing credit proposal.
 Take signature in charged documents from the customers.
Remittance section:
 Writing of payment voucher.
 Scrolling of posting payments.
Take signature of the customers.

Chapter Seven: Findings,
Recommendations & Conclusion
7.1 Findings: There are some matters that I have found during the internship period:

 SJIBL is the pioneer of private sector banking business in Bangladesh. As a
result it has a huge branch operation with branches and manpower causing
large employment opportunity.
 The fund management system is very effective. For keeping these systems
effective, necessary changes in credit policy, loan and advance policy, and
provision for provisionary made continuously.
 The Officers engaged in loan management is very much aware in choosing

right person to provide loan to ensure its recovery.
 The top management is more conscious about the liquidity of bank.
 The strength of the Bank lies on the top management of the company and the
financial soundness of the sponsors, as they are all well reputed personalities
in the Bangladesh.
 This impressive lay of SJIBL helps to have a good image.
 The top management gives its highest attention in the operation of fund
Management.
 The customer service is very much impressive than other financial institution.
Remittances, both local and foreign are effective manner of customers.
 The top management recently has to decide to start online banking system.
 This decision will motivate the employees who are very effective in computer
skills.
 Top management guidance to its subordinates is very much friendly.
 The overall working environment of the office is very nice.
 Lack of professional data entry operators, Not a proper skilled human resource
in every department.
 Lack of proper coordination among different departments.
 In adequate facilities in maintaining the operation of ATM card, Master card,

Visa card etc.
5.1 Recommendations:

Banking is service-oriented marketing. Its business profit depends on its service quality.
That’s why the authority always should be aware about their service quality.
I have the practical experience in SJIBL for only three months, with my experience in the
bank with vast and complex banking system, it is very difficult for me to recommend. I have
observed some shortcomings regarding operational activities of the bank. On the basis of my
observation I would like to recommend the following suggestions:
 To provide quality service to the customer it is necessary to have a trained team of an

organization or an institution. For this reason the bank should recruit fresher, bright,
energetic persons such as MBA, BBA and MBM etc.
 Bank should offer more facilities to the customer such as Credit Card, Visa Card,
Master Card, ATM machine etc.
 As soon as possible the bank should start more branches in Comilla City as well as in
other cities of the country.
 The bank should take attempt to enter into the share market by issuing shares to
capitalize more money and invest thereafter by expanding the number of branches
around the city.
 One of the business strategies is promotion. Successful business depends on how they
can promote their products or services to the customer. In this connection to improve
the business status bank should introduce more promotional programs.
 As the clients are not in favor of introducing system, if possible the rule of
introducing to open an account should be changed. Because they face in many
problem to arrange an introducer at the time of opening accounts.
 Though the performance of general customer service is good, but their employees are
not well trained. The department needs to recruit expert human resources to provide
good customer service, which will bring effectiveness of the bank’s operation.
 The employees are given deposit target, which creates extra pressure to them for that
reason they cannot freely provide customer service. They had to spend most of their
time to marketing to fill up their target. If the bank can reduce the pressure then they
could be able to provide good service.
 In many cases, the foreign banks choose for a confirmation from other foreign banks,
which is dishonor for the local bank. It proves the poor financial condition of our
country. Bank should try to improve this situation.

 To communication with the Negotiation Bank, Advising Bank, Reimbursing Bank the
branch uses Telex and SWIFT. As well as these media the Bank could use the Email,
which is cheaper and faster than those media.
5.2 Conclusion:
From the practical implementation of customer dealing procedures during the whole period of
my practical orientation in Shahjalal Islami Bank Limited, I have reached a firm and concrete
conclusion in a very confident way. I believe that my realization will be in harmony with
most of the banking thinkers. It is quite evident that to build up an effective and efficient
considered as soon as possible. Besides, every bank has to survive amidst of a large number
of banks including local and foreign. That’s why to keep pace with expected profit margin of
the time being and for the future every bank should try heart and soul to please the customers
in a smart and trusty way. But quite regretful to mention that most of our bank face
decreasing profit trend due to switch over of their present customers to those foreign with
higher customer service facilities. So, timely decision for introducing sophisticated banking
instruments should be taken as early as possible. After taking effective and time defeating
measures regarding efficient employees and instruments will help the local office of Shahjalal
Islami Bank Limited to reach the pinnacle of success with high profit and productivity. A new
bank they should be stronger in financial side because there is too much competition and new
banks are growing up. If Shahjalal Islami Bank Limited adopts professionalism within the
framework of Shahriah, they will be able to earn handsome “Halal” profit and pay higher
return to the depositors and share holders, ultimately public will get more confidence on this
type of banking. Now the time for Shahjalal Islami Bank Limited to fabricate in success they
have achieved and go on with its operation. The Shahjalal Islami Bank Limited have an
illusion to their customers, this statement is given below:
“Our Goal is to be
The Bank You Choose
To Bank with.
Today, Tomorrow, Everyday

Always Working For You.”

So, the Economic Development is not only facilitated but its swiftness is quickened by the
appropriate development of the Investment Management system of financial mediators in the
country.
Bibliography
1. Annual Report of SJIBL-2011-2012

2. A.A.M. Habibur Raman; Islami Banking.
3. Md. Haider Ali; A Hand Book of Islami Banking & Foreign Exchange Operation.
4. Bangladesh Bank; Guide lines for Foreign Exchange Transactions.
5. Howard R. Goldsmith; Import / Export(A Guide to Growth, Profits and Market Share).
6. Sayed Ashraf Ali; Foreign Exchange & International Finance.
7. A.K. Chatterjee ; Principles of Foreign Exchange.
8. M. Omar Chapra; Review of Islami Economics.
Web site:
www.shahjalalbank.com.bd
www.business.com.bd.

Chapter One: Introduction to General Banking Activities of SJIBL

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Chapter One: Introduction

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 1

Modern banks play an important part in promoting economic development of a country.

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 2

1.2 Origin of the study:

1.3 Objective of the study:

1.4 Scope of the study:

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 3

The study would focus on the following areas:

1.5 Methodology of the study:

Primary sources of data:

Secondary sources of data:

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 4

1.6 Limitation of the study:

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 5

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 6

2.2 Profile of Shahjalal Islami Bank Limited:

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 7

2.3 An Introduction about SJIBL Comilla Branch:

 To provide quality services to customers.

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 8

2.8 Goals of Shahjalal Islami Bank Bangladesh Limited:

1) To eliminate riba from all sectors of economy

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 9

2.9 Relationship with other bodies:

2.10 Shahjalal Islami Bank Limited at a glance:

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 10

2.11 Corporate Social Responsibility:

2.12 Human Resource Development:

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 11

2.13 Feature of Shahjalal Islami Bank Limited:

Highly qualified and efficient professionals manage the bank.

The bank is committed to provide the cheque amount within 30 seconds of

2.14 Performance Analysis of Shahjalal Islami Bank Limited:

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 12

Total operating performance at a glance:

Particulars Amount (in million)

2.15 Equity of the bank:

Paid-up Capital --------------------------------------Tk.2246 million (as on 31.12.2013)

Total equity was ---------------------------------------Tk.4069 million

SL. No. Particulars 2013 (million) 2012 (million)

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 13

3.12 Capital Adequacy:

2.16 Capital Adequacy:

Capital Adequacy Position from 2013 to 2009

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 14

The deposit mix of the bank as on 31.12.2013 was as below:

Sl. No. Nature of Deposit Taka in Million Percentage of total

3 Mudaraba Short Notice Deposit 2480.15 2.43%

4 Mudaraba Term Deposit 62602.10 61.27%

Trend of Deposit from 2013 to 2009

Deposit Mix of 2013

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited.

2) Non- Investment Income: Total Non investment income of the bank as at 31 st

Trend of Deposit from 2003 to 2013

Particulars 2013 2012

2.19 Internal control and monitoring:

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 17

2.21 Organizational Structure of the Shahjalal Islami Bank

2.22 Management of SJIBL:

Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 18

2.24 Organization Structure ofExecutive

Senior Vice Senior Vice Senior Vice