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1 Introduction
Banks are financial institutions engaged in boosting national savings and capital formation as
well as constituting infrastructure through the financing of various development projects. It
performs multi-dimensional activities like borrowing and lending of money, drawing, collecting
and discounting bills, transferring funds, safe deposit, vault/locker service, foreign exchange
transactions etc. The world of banking is undergoing a transformation. Banking today has
evolved into a highly competitive and sophisticated business in which technology increasingly
provides the edge. Today’s customers want service and information to be provided at all times
and places.

As Bangladesh is one of the largest Muslim countries in the world, the deep commitment of the
people of this country to the Islamic way of life according to the Holy Quran and the Sunnah.
Obviously, it remains a deep cry in their hearts to fashion and design their economic lives in
accordance with the precepts of Islam. The establishment of Islami Bank Bangladesh Limited on
March 13, 1983, is the exact reflection of this inner urge of its people. This Bank is the first of its
kind in Southeast Asia. The bank is devoted to conducting all banking activities on the basis of
interest free & profit and loss sharing system. To know deeply about the concept of different
modes of investment , I have chosen the topic "Different Modes of Investment: A Study on
Islami Bank Bangladesh Limited , Sylhet Branch “ as my project report.

1.2 Origin of the Study

This report titled "Different Modes of Investment: A Study on Islami Bank Bangladesh
Limited , Sylhet Branch " is prepared to fulfill the requirement of the project work of the MBA
(Masters of Business Administration) degree. It is mandatory requirement of the program that
require a student to work in a particular topic. I have prepared this report for the fulfillment of
my project work under the supervision of Professor Md. Nazrul Islam Head, Department of
Business Administration & Dean Faculty of Business Administration, Leading University Sylhet.

1.3 Objectives of the Study

The objective of the study is viewed as following:
1.3.1 General Objective
The main objective of the study is to evaluate the performance of the different modes of
investment offered by the Islami Bank Bangladesh limited and also fulfill the requirement of
MBA program.

1.3.2 Specific Objectives

 To familiar the history of Islamic Banking in Bangladesh.
 Understanding the differences between Islamic banking system and Commercial banking
 To get overall idea of Islamic banking investment mechanism and product offerings
under different investment modes and operational activities.
 To show the investment performances and which type of investments contribute most to
make profit of IBBL over the period.
 To make some recommendations and conclusion to further development of investment
management process of IBBL.

1.4 Scope of the Study

The study covers Islami Bank Bangladesh Limited, Sylhet Branch, the scope of the study is only
limited to this Branch. This project report is a descriptive study which incorporates an evaluation
of the different aspects of IBBL–The Organizational Structure, History of bank, Different modes
and scheme of Investment, Performance and Management. And analyze the internal strengths
and weaknesses as well as external opportunity and threats of IBBL. Here I also recommended
some action regarding investment facilities.

1.5 Methodology of the Study

The report was fully exploratory in nature. Data have been collected from both primary and
secondary sources.

Primary Sources of Data

Primary data are measured, observed and recorded as part of an original study. When the data
required for a particular study can be found neither in the internal records of the enterprise, nor
in published sources, may it become necessary to collect original data. For the completion of this
report, the primary sources of data are-
 Face-to-face conversation and direct observation with the respective officers and staffs of
Islami Bank Bangladesh Limited.
 Relevant field study as provided by the Officer concern
 Also, Informal conversation with respective clients of IBBL, Sylhet Branch.

Secondary Sources of Data

The data, which has already been collected by others, such data are called Secondary data. For
this internship report, the secondary data are collected from the below sources-
 Annual report of Islami Bank Bangladesh Limited.
 Some published data from the branch and also previous research paper.
 Official Website.
 Various prescribed forms of investment were analyzed.

1.6 Limitations of the Study

In spite of having the wholehearted effort, there were some limitations, which acted as a barrier
for doing an empirical research work. The limitations were:
 The main constraint of the study was insufficiency of information, which was required
for the study. There are various information the bank employee cannot provide due to
security and other corporate obligations.
 Due to the unavailability of information in annual reports, the sample of data analysis
only contains data of 5 years’ annual reports from 2012 to 2016 respectively.
 Another limitation of this report is the bank’s policy of not disclosing some data and
information for obvious reason, which might make the report more worthy.
 Because of the limitation of information some assumption was made. So there may be
some personal mistake in this report.
2.1. History of Islami Bank Bangladesh Ltd. (IBBL)

In the late seventies and early eighties, Muslim countries were awoken by the emergence of
Islami Bank which provided interest free banking facilities. There are currently more than 614
interest free institutions all over the world. Today Islami Bank not only operates in almost all
Muslim countries, but have extended their wings to the western world to serve both Muslim and
non-Muslim customers. In case of Islamic Banking, the establishment of Mitghamar Local
Savings Bank in 1963 is said to be a milestone for modern Islamic Banking.

In 1974, Bangladesh signed the Charter of Islamic Development Bank and committed itself to
reorganize its economic and financial system as per Islamic Shariah. In 1978, Bangladesh
recommended in Islamic Foreign Minister Conference in Senegal towards systematic efforts to
Islamic Banking. In 1980, Foreign Minister Conference in Pakistan where Bangladesh Foreign
Minister Prof. Shamsul Hoq, proposed for taking steps for Islamic Banking. Further, Bangladesh
Bank sent representation abroad to study Islamic Banking System.

In 1981, President of the Peoples Republic of Bangladesh addressed the 3rd Islamic Summit
Conference held at Makkah and Taif suggested, ''The Islamic countries should develop a separate
banking system of their own in order to facilitate their trade and commerce. ''In 1982, IDB
visited Bangladesh for study. They found contributions done by Islamic Economics Research
Bureau (IERB) and Bangladesh Islamic Bankers Association (BIBA); they mobilized the
seminars, public opinion through symposia & workshop. Professional activities reinforced by
Muslim Businessman Society (now reorganized as Industrialists and Businessman Association).
The body mobilized mainly equity capital for emerging Islamic Bank. Finally, in 1983 Islami
Bank Bangladesh Limited (IBBL) came out to take the challenge of doing banking business.

Islami Bank Bangladesh Limited (IBBL) is considered to be the first interest free bank in
Southeast Asia. It was incorporated on 13-03-1983 as a Public Company with limited liability
under the companies Act 1913. The bank began operations on March 30th, 1983, with major
share by the foreign entrepreneurs. IBBL is a joint venture multinational Bank with 63.92% of
equity being contributed by the Islamic Development Bank and financial institutions.

2.2 Definition and Concept of IBBL

Islamic banking is described as a system of financial intimidation that avoids receipt and
payment of “interest” in its transactions and concludes its operation in accordance with the
objectives of an Islamic economy. Islamic banking refers to a system of banking or banking
activity that is consistent with the principles of Islamic law ( Shariah ) and its practical
application through the development of Islamic economies . Shariah prohibits the payments of
fees for the renting of money ( Riba , usury ) for specific terms , as well as investing in
businesses that provide goods or services considered contrary to its principles ( Haraam ,
forbidden) . While these principles were used as the basis for a flourishing economy in earlier
times, it is only in the late 20th century that a number of Islamic banks were formed to apply
these principles to private or semi – private commercial institutions within the Muslim

Islamic banking is trying to develop the relationship between finance on one hand and industry
and commerce on the other. This new relationship is the basis of the Islamic economic system
being set up.

The definition of Islamic bank as approved by the General Secretariat of the Organization of
Islamic conference (OIC) is stated in the following manner, “An Islamic bank is a financial
institution whose status, rules and procedures expressly state its commitment to the
principle of Islamic Shariah and to the banning of the receipt and payment of interest of
any of its operations”.

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. The IBBL offer
contemporary financial services in conformity with Islamic Shariah. To optimum allocation of
scarce financial resources and help to ensuring equitable distribution of income.

2.3 Mission of IBBL

To establish Islamic Banking through the introduction of a welfare oriented banking system and
also ensure equity and justice in the field of all economic activities, achieve balanced growth and
equitable development in through diversified investment operations particularly in the priority

sectors and less developed areas of the country and to encourage socio-economic upliftment and
financial services to the low-income community particularly in the rural areas.

2.4 Vision of IBBL

The vision of IBBL is to always strive to achieve superior financial performance, be considered a
leading Islamic Bank by reputation and performance.

 To establish and maintain the modern banking techniques.

 To ensure soundness and development of the financial system based on Islamic


 To build up the strong and efficient organization with highly motivated professionals.

 To work for the benefit of people and encourage savings in the form of direct investment.

 To ensuring stability in financial systems with accountability, transparency and integrity.

2.5 Strategic Objectives of IBBL

 To ensure customers' satisfaction.
 To ensure welfare oriented banking.
 To establish a set of managerial succession and adopting technological changes to ensure
successful development of an Islamic Bank as a stable financial institution.
 To prioritize the clients’ welfare.
 To emerge as a healthier & stronger bank at the top of the banking sector and continue
stable positions in ratings, based on the volume of quality assets.
 To ensure diversification by Sector, Size, Economic purpose & geographical location
wise Investment and expansion need based Retail and SME/Women entrepreneur
 To invest in the thrust and priority sectors of the economy.
 To ensure development of devoted and satisfied human resources.
 To promote using solar energy and green banking culture and ecological balancing.

2.6 Core Values of IBBL
 Trust in Almighty Allah
 Strict observance of Islamic Shariah
 Highest standard of Honesty, Integrity & Morale
 Welfare Banking
 Equity and Justice
 Environmental Consciousness
 Personalized Service
 Adoption of Changed Technology
 Proper Delegation, Transparency & Accountability  

2.7 Commitments of IBBL

 To Shariah
 To the Regulators
 To the Shareholders
 To the community
 To the Customers
 To the employees
 To other stakeholders
 To the Environment

2.8 Functions of IBBL

The functions of Islami Bank Bangladesh Limited are as under:
 To maintain all types of deposit accounts
 To make investment
 To conduct foreign exchange business
 To extend other banking services

 To conduct social welfare activities through Islami Bank Foundation.

2.9 Corporate Information [As on 31 December, 2016]

Financial Information
Date of Incorporation 13th March, 1983

Starting of 1st branch 30th March, 1983

  BDT (Tk.) US Dollar ($)

Authorized Capital
20,000.00 Million

paid-up Capital
16,099.90 Million

50,556.47 Million

Reserve Fund
31,029.05 Million

681,352.25 Million

(including Investment in
676,747.80 Million

Foreign Exchange
BDT (Tk.) US Dollar ($)
339,954 Million

243,647 Million

279,980 million

Organizational Information:

Chairman, Board of
Director Mr. Arastoo Khan

Managing Director & CEO

Mr. Md. Abdul Hamid Miah

Company Secretary
J. Q. M. Habibullah, FCS

Number of Zones

Number of Branches

Number of AD Branches

Number of ATM Booth


Number of Shareholders

Number of Manpower 11,381

2.10 Organizational Structure of IBBL

The management of the organization is very much concerned about the development of the bank
and they control of all the resources of the organization. The top to bottom organizational
structure has been shown below:

2.11 Products and Services of IBBL
Under products and services Islami Bank Bangladesh Ltd has below categories:

 Deposit Schemes

 Al-Wadeah Current Account (AWCA)
 Mudaraba Savings Account (MSA)
 Mudaraba Term Deposit Account (MTDR)
 Mudaraba Special Notice Account (MSNA)
 Mudaraba Hajj Savings Account (MHSA)
 Mudaraba Special Savings (Pension) Account (MSSA)
 Mudaraba Savings Bond (MSB)
 Mudaraba Monthly Profit Deposit Account (MMPDA)
 Mudaraba Muhor Savings Account (MMSA)
 Mudaraba Waqf Cash Deposit Account (MWCDA)
 Mudaraba NRB Savings Bond (MNSB) Account
 Mudaraba Foreign Currency Deposit Account (MFCD)
 Students Mudaraba Savings Account (SMSA)
 Mudaraba Farmers Savings Account (MFSA)

 Investment Modes

 Bai Modes
 Bai-Murabaha
 Bai-Muajjal
 Bai-Salam
 Istisna’a

 Share Modes
 Bai-Murabaha
 Bai-Muajjal

 Ijara modes

 Hire Purchase Under Shirkatul Melk

 Welfare Oriented Investment Schemes

 House Hold Investment Scheme

 Investment Scheme for Doctors (ISD)
 Transport Investment Scheme (TIS)
 Car Investment Scheme (CIS)
 Small Business Investment Scheme (SBIS)
 Micro Industries Investment Scheme (MIIS)
 Agricultural Implement Investment Scheme (AIIS)
 Real Estate Investment Program (REIP)
 Real Estate Investment (Commercial & Working Capital)
 Agricultural Investment of IBBL
 NRB (Non Resident Bangladeshi) Entrepreneurs Investment Scheme(NEIS)
 Women Entrepreneurs Investment Scheme (WEIS)
 Rural Development Scheme ( RDS)

 Foreign Exchange Business Services

 Special Services
 Locker services
 ATM Services

2.12 Brief Summary of IBBL, Sylhet Branch

IBBL is one of the leading commercial private banks in our country. This bank was established

in 1983 based on Islamic Shariah. Their vision is strived to achieve superior financial
performance and be considered a leading Islamic bank by reputation and performance.

Especially, I want to say about IBBL, Sylhet Branch. This branch is one of the busiest Branches.
This branch was launched by November 10, 1983. It is located in Taltola, Sylhet, which is called
the residential area of Sylhet town. From the beginning it has been providing better services to its
clients with a better level of performance. In this branch, there are forty employees who are
doing their job gracefully. The bank has a good reputation over their customer.

The operation hour of the branch is 10:00 A.M. to 6:00 P.M. from Sunday to Thursday with
transaction hour from 10:00 A.M. to 4:00 P.M. The branch remains closed at Friday and
Saturday including government holidays. The bank has already ranked as one of the quality
service provider and is known for its reputation. Taken as a whole this branch is viewing
excellent performance and also a high profit earning branch.

3.1 Banking System of Bangladesh

Bank is a financial institution and intermediary, which collect deposits through its different
deposit mechanism and provide loans and advances among the loan Clients/ investors with the
view to earn profit. Thus, a bank is a financial intermediary and a dealer of loans and debts. In
financial concept, banking means safe custody of money and at the same time an institution for
money transaction.

Bangladesh has a mixed banking system comprising nationalized, private and foreign
commercial banks. Bangladesh Bank has been working as the central bank since the country’s
independence. The focus of banking is varied, the needs diverse and methods different. Deposit-
taking institutions take the form of commercial banks, which accept deposits and make
commercial, real estate, and other loans. There are also mutual savings banks, which accept
deposits and make mortgage and other types of loans. Another type is credit unions, which are
cooperative organizations that issue share certificates and make member (consumer) and other

The purpose of banking is to ensure transfer of money from surplus unit to deficit units. Bank is
all countries work as the repository of money. The owners look for safety and amount of interest
for their deposits with Banks. Entrepreneurs try to obtain money from the banks as working
capital and for long-term investment. These entrepreneurs welcome effective and forward-
looking advice for investment. Banking sector thus owe a great to the deposit holders on the
hand and the entrepreneurs on the other. They are expected to play the role of friend,
philosopher, and guide for the deposit holders and the entrepreneurs. Since liberation,
Bangladesh passed through fragile phases of development in the banking sector. The
nationalization of banks in the post liberation period was intended to safe the institutions and the
interest of the depositors. Those handling the banking sector have borne the burden of putting
banks on reliable footings. Despite all that was done, some elements of irregularities appeared.
With the assertion of the role of the Central bank, The Bangladesh bank started adopting
measures for putting banking institutions on right track. Yet the performance of public sector
management of banks left some negative effects in the money market in particular and the
economy in general.
3.2 Types of Banks

The banking industry can be divided into following sectors, based on the clientele served and
products and services offered:

 Retail Banks
Retail banks provide basic banking services to individual consumers. Examples include savings
banks, savings and loan associations, and recurring and fixed deposits. Products and services
include safe deposit boxes, checking and savings accounting.

 Commercial Banks
Commercial Banks provide financial services to businesses, including credit and debit cards,
bank accounts, deposits and loans, and secured and unsecured loans. Commercial banks in
modern capitalist societies act as financial intermediaries, raising funds from depositors and
lending the same funds to borrowers. There are two types of commercial banks, public sector and
private sector banks.

 Public Sector Banks

Public sectors banks are those in which the government has a major stake and they usually need
to emphasize on social objectives than on profitability. 

 Private sector banks

Private sector banks are owned, managed and controlled by private promoters and they are free
to operate as per market forces.

 Investment Banks
An investment bank is a financial institution that assists individuals, corporations and
governments in raising capital by underwriting and/or acting as the client's agent in the issuance
of securities.

 Cooperative Banks

Cooperative Banks are governed by the provisions of State Cooperative Societies Act and meant
essentially for providing cheap credit to their members.

 Specialized Banks
Specialized banks are foreign exchange banks, industrial banks, development banks, export-
import banks catering to specific needs of these unique activities. These banks provide financial
aid to industries, heavy turnkey projects and foreign trade.

 Central Banks
Central banks are bankers’ banks, and these banks trace their history from the Bank of England.
They guarantee stable monetary and financial policy from country to country and play an
important role in the economy of the country. Typical functions include implementing monetary
policy, managing foreign exchange and gold reserves.

3.3 Islamic Banking

A banking system that is based on the principles of Islamic law (also known Shariah) and guided
by Islamic economics. Two basic principles behind Islamic banking are the sharing of profit and
loss and, significantly, the prohibition of the collection and payment of interest. Collecting
interest is not permitted under Islamic law. Islam made clear distinction between profit and

Profit: Profit is the result of ownership transaction and risk following the four stages:
 Transformation through Bai /Buying Selling of goods.
 Risk of Transformation and Ownership.
 Other Condition of Shariah.
 Result-Profit on loss

Riba/Interest: Interest comes from loan, credit, advance of money. The word used by the Quran
concerning "Interest" is Riba. The literal meanings of Riba are money increase, increase of
anything or increment of anything from its original amount.

3.4 Distinguishing Features of the Conventional banking and Islamic banking

The distinguishing features of the conventional banking and Islamic banking are shown in terms
of a box diagram as shown below:

SL Conventional Banks Islamic Banks

1 The functions and operating modes of The functions and operating modes of
conventional banks are based on manmade
Islamic banks are based on the principles
of Islamic Shariah.
2 The investor is assured of a predetermined In contrast, it promotes risk sharing
Rate of interest.
between provider of the capital (investor)
and the user of the funds (entrepreneur).
3 It aims at maximizing profit without any It also aims at maximizing profit but
subject to Shariah restrictions.
4 It does not deal with zakat. In the modern Islamic banking system, it
has become one of the service oriented
functions of the Islamic banks to collect
and distribute zakat.
5 Lending money and getting it back with Participation in partnership business is the
interest is the fundamental function of the fundamental function of the Islamic banks.
Conventional banks.
6 Its scope of activities is narrower when Its scope of activities is wider when
compared with Islamic banks. compared with a conventional bank. It is
in effect a multipurpose institution.
7 It can charge additional money (compound The Islamic banks have no provision to
rate of interest) in case of defaulters. charge any extra money from the

8 Since income from the advances is fixed, Since it shares profit and loss, the Islamic
it gives little importance to developing banks pay greater attention to developing
expertise in project appraisal and project appraisal and evaluations.
9 The conventional banks give greater The Islamic banks, on the other hand give
emphasis on credit worthiness of the greater emphasis on the viability of the
client. projects.

Conventional banking is essentially based on the debtor creditor relationship between the
depositors and the bank on the hand and between the borrowers and the bank on the other.
Interest is considered to be the price of credit, reflecting the opportunity cost of money. Islam on
the other hand, considers a loan to be given or taken, free or charges, to meet any contingency.
Thus, in Islamic banking, the creditors should not take advantage of the borrower. Savings
mobilization process is extension of credit facility to business and industry for return. Both types
of institutions (Islamic and Conventional) are providing financing to productive channels for
reward. The difference lies in financing agreement. Conventional banks are offering loan for a
fixed reward while IBBL cannot do that because they cannot charge interest. IBBL can charge
profit on investments but not interest on loans. In conventional banking, there are many types of
loans are issued to clients including Consumer credit scheme, overdrafts and long-term loans etc.
Islamic banks cannot issue loans except interest free loans for any requirement however they can
do business by providing the required asset to client.

A loan is a type of debt ad it entails the redistribution of financial assets over time between
lender and borrower. In a loan, the borrower initially receives or borrows an amount of money
from the lender and is obliged to pay back or repay an equal amount of money to the lender at a
later time. Typically, the money is paid back in regular installments or partial repayments in an
annuity; each installment is the same amount. The loan is generally provided at a cost, referred to
as interest on the debt, which provides an incentive for the lender to engage in the loan.

Types of Loans

 Working capital finance

This is a loan facility designed to meet day to day operation of business and manufacturing
 Overdraft
This is a demand credit facility designed to meet day to day operational requirments.
 Consumer credit scheme
Consumer loan means an amount of money lent to an individual for personal, family or
household purpose.
 Syndicated loan
Loan projects are financed through raising funds through participation of more than one banks by
joint financing against a set of common terms and conditions laid down in a loan agreement.
 Packing credit
Bank provides pre-shipment finance in the form of Export Packing Credit (PC) to assist cash
flows for manufacturing or packing goods of export from Bangladesh.

Bank credit means bank loans and advances. A bank keeps a certain proportion of its deposits as
minimum reserve for meeting the demand of the depositors and lends out the remaining excess
reserve to earn. Every bank loan creates am equivalent deposit in the bank Credit creation means
multiple expansions of bank deposits. The whole structure of commercial banking is based on
credit. Credit means getting the purchasing power now by a promise to pay at some time in
future. Commercial bank provides loans and advances to the businessman either through
overdraft or by discounting of bills of exchange. the difference between loans and advances that
the advances are for short period and loans are for relatively longer period. Loans and advances
earn high rate of interest, carry greater risk and are generally non-shift able.

3.5 Investment
An asset or item that is purchased with the hope that it will generate income or appreciate in the
future. In an economic sense, an investment is the purchase of goods that are not consumed today
but are used in the future to create wealth. In finance, an investment is a monetary asset

purchased with the idea that the asset will provide income in the future or appreciate and be sold
at a higher price.

3.6 Investment in Perspective of Islamic Banking

Islamic financing is working within the Shariah frame work following certain restrictions
including following. First, IBBL cannot provide finance for an activity which is prohibited by
Shariah (Islamic law) irrespective of its profitability and economic viability e.g. business of
liquor, pork and pornography. Second IBBL cannot lend any amount in cash for interest however
need is fulfilled either through supply of required asset or through profit and loss sharing.
Consequently, certain financial needs of some sections of the society are ignored in financing
including personal loans and working capital requirements of not for profit organizations. Third
under Islamic financial system when financing is provided under profit and loss sharing although
profit can be shared as per agreement between the parties involved however loss must be shared
according to capital contribution/ownership. Islamic banking is not as foreign to business world
as it is perceived by certain quarters. It is a business very much like conventional banking within
certain restrictions imposed by Islamic law.

IBBL invests its money in various sectors of the economy through different modes permitted by
Islamic Shariah and approved by the Bangladesh Bank. The Modes of Investment are Bai
Murabaha. Bai Mujjal , Bai Salam , Bai Istisna , Hire Purchase under Shirkatul Melk (HPSM),
Mudaraba and Musharaka.

Financial and real sector as IBBL cannot extend credit facility without having support from real
sector. Financing is either made through sharing risk and reward or must be asset backed. Second
a unique feature of Islamic financial system is in the form of Mudaraba which can play role of
catalyst for transforming society into prosperity by extending capital facility to skilful persons
lacking capital. Under Mudaraba mode of financing partnership between capital and skill is
formed hence it can be used to provide self-employment to jobless skilful citizens. Islamic
banking is not a mere copy of conventional banks as perceived by certain Muslims. It has its own
way of doing business and all operations are duly certified by Shariah experts ranging from
Shariah Advisor to Shariah boards and finally Islamic Fiqh Academy (IFA). Portfolios of IBBL

are dominated by Shariah compliant modes of financing and negligible investments are being
made under Musharaka and Mudaraba. Shariah based modes of financing which can create a real
difference in the society are not getting momentum in the operations of IFIs.

IBBL have identified the hindrances (e.g. profit manipulation, riskiness of financing under
sharing, lack of awareness, widespread conventional banking, lack of skilled human resources
etc.) in the way of popularity of Shariah based financing and concluded that existing accounting
and business frame work is not conducive for application of Musharaka and Mudaraba. Islamic
banks are doing business in a nonconductive environment which makes operations challenging.
IBBL cannot claim interest on their balances with other banks, on mandatory cash reserve
maintained with central bank, cannot invest in government securities, interest based bonds,
cannot claim time value of money from defaulters, bear risks in sale and lease transactions, can
only invest in Shariah compliant securities and not in all available equities and finally have to
compete with conventional banks in deposit servicing as well as in financing.

In order to maintain liquidity conventional banks, have many avenues including government
securities, shorter term loans and money at call and short notices, leasing companies’ bonds,
investment in shares etc. Interestingly mandatory reserve maintenance by conventional banks
with central banks is also rewarded in the form of interest. Conventional banks can also create
liquidity by issuing the bonds against their receivables. Commercial banks are also protected by
central bank by providing liquidity in rainy days for interest. Interbank deposits are also
rewarded in the form of interest by commercial banks. For IBBL avenues are very limited to
create required liquidity at the same time to earn some revenue by investing in short term and
liquid securities. IBBL cannot invest in government securities, short term loans, bonds and
money at call and short notices because of interest based transactions.

4. 1 Investment Activities of IBBL
Conventional and Islamic bank operate to earn profit but they differ in the way of operation.
Islami Bank emphasizes on the legitimate (Halal) business. On the other hand, traditional bank is
not operated by the following rules and regulations approved by Islam that is the most powerful
contradiction between them. Islamic bank does not invest in loans and fixed interest securities. It
can invest in ordinary share only while interest based bank can invest in loans and different kinds
of securities. Islami bank establishes and participate projects with its clients as a partner and
bears the risk along with the client on proportionate basis. The bank takes deposits and invests
the same based on the profit-loss sharing. Bank go for the investment mainly which are long
term and profitable in nature. IBBL also give high concentration on the investment that will
generate more employment. As investment is one of the most priority areas for the IBBL, so it
needs to cautions in investment decision. To ensure proper investment IBBL always go with in-
depth study before making the investment.

4.2 Objectives and Principles of Investment

The objectives and principles of investment operations of the Bank are:
 To invest fund strictly in accordance with the principles of Islamic Shariah.
 To diversify its investment portfolio by the size of investment, by sectors (public &
private), by economic purpose, by securities and by geographical area including
industrial, commercial and agriculture.
 To ensure mutual benefit both for the bank and the investment-client by professional
appraisal of investment proposals, judicious sanction of investment, close and constant
supervision and monitoring thereof.
 To make investment keeping the socio-economic requirement of the country in view.
 To increase the number of potential investors by making participatory and productive
 To finance various development schemes for poverty alleviation, income and
employment generation with a view to accelerating sustainable socio-economic growth
and uplift of the society.
 To encourage social enlistment enterprise

 To avoid even highly profitable investment in fields forbidden under Islamic shariah and
are harmful for the society.
 To invest in the form of goods and commodities rather than give out cash money to the
investment clients.

4.3 Investment Policy of IBBL

The investment policies of Islami Bank are follows:
 Strict observance of Islamic Shariah principles.
 Investment to national priority sectors.
 Preference to short term investments.
 Preference to investment of small size.
 To ensure safety and security of investments.
 To look profitability of investments.
 To give support to government denationalization industrial program.
 Investment to foreign trade ( Import and Export )

4.4 Investment Strategy of IBBL

The Investment strategies of Islami Bank are follows:
 To check exodus of investments clients.
 To induct new investment clients.
 To induct good investment clients of other banks.
 To enhance existing limits of good investment clients.
 Extension of investment transport sector.
 Extension of investment to backward as well as forward linkage industries
 Extension of investment to real Estate sector
 Extension of investment to jute sector particularly for trading and export purpose.
 Strengthening supervision, control and monitoring mechanism.

4.5 Investment Mechanism of IBBL
Investment is the action of deploying funds with the intention and expectation that they will earn
a positive return for the owner. Funds may be invested in either real assets or financial assets.
When resources are used for purchasing fixed and current assets in a production process or for a
trading purpose, then it can be termed as a real investment. The establishment of a factory or the
purchase of raw materials and machinery for production purposes are examples in point. On the
other hand, the purchase of a legal right to receive income in the form of capital gains or
dividends would be indicative of financial investments. Specific examples of financial
investments are: deposits of money in a bank account, the purchase of Mudaraba Savings Bonds
or stock in a company. Ultimately, the savings of investors in financial assets are invested by the
respective company into real assets in the form of the expansion of plant and equipment. Since
Islam condemns hoarding savings and a 2.5 percent annual tax (Zakat) is imposed on savings,
the owner of excess savings, if he is unable to invest in real assets, has no option but to invest his
savings in financial assets.

4.6 Islamic Modes of Finance

At the beginning, it is better to give a clear definition of "Islamic Modes of Finance". The word
"Modes" literally means "methods", or in other words, it refers to systematic and detailed rules,
stipulations and steps to be followed for accomplishing a specific thing. The thing that needs to
be accomplished in this context is, however, the subject matter of each of the said modes, i.e. any
of the different types of investment activities (trade, leasing, real estate, manufacturing,
agriculture, agriculture production etc or using Shariah expressions Murabaha, Mudaraba,
Musharaka, Ijarah, Istisna, etc.). The word "Finance" in one of its different meanings refers to
the supply of money capital or credit, provided by either a person (household), or an organization
(private or public - financial or non-financial). The word "Islamic" is inserted in the above
expression to restrict the type of rules that can govern different modes of finance to the Shariah

Investment Modes

Bai Mode Share Mode Ijara Mode

Bai Murabaha Musaraka HPSM (Commercial) Oriented
HPSM (Industrial) Schemes
Bai Muajjal Mudaraba
HPSM (Agriculture)
Bai Salam
HPSM (Transport)
Bai Istisna

Figure: Different Modes of Investment of Islami Bank Bangladesh Limited

4.7 Different Modes of Investment of IBBL

Islami Bank Bangladesh Limited follows different modes or techniques while investing their
funds. Modes of finance followed by Islami bank exercised under three principles.

4.7.1 Bai Mechanism

Under Bai mechanism Islami Bank Bangladesh limited practiced different kinds of investment
modes.these are given below- Bai-Murabaha (Contract Sale on Profit)

The terms "Bai-Murabaha" have been derived from Arabic words Bai and Ribhun. The word
'Bai' means purchase and sale and the word 'Ribhun' means an agreed upon profit."Bai-
Murabaha" means sale for an agreed upon profit. Bai-Murabaha may be defined as a contract
between a buyer and a seller under which the seller sells certain specific goods (permissible
under Islamic Shariah and the Law of the land), to the buyer at a cost plus agreed profit payable

in cash or on any fixed future date in lump-sum or by installments. The profit marked-up may be
fixed in lump-sum or in percentage of the cost price of the goods.. Usual duration 1-2 year(s) .
Rebate may be given on Early Adjustment.

Types of Murabaha
In respect of dealing parties Bai-Murabaha have two types:

 Ordinary Bai-Murabaha
Ordinary Bai-Murabaha is a direct transaction between a buyer and a seller.  Here, the seller is
an ordinary trader who purchases goods from the market in the hope of selling these goods to
another party for a profit.  In this case, the seller undertakes the entire risk of his capital
investment in the goods purchased. Whether or not he earns a profit depends on his ability to find
a buyer for the merchandise he has acquired. 
 Bai-Murabaha Order on and Promise
Bai-Murabaha order on and Promise involves three parties - the buyer, the seller and the bank.
Under this arrangement, the bank acts as an intermediary trader between the buyer and the seller.
In other words, upon receipt of an order and agreement to purchase a certain product from the
buyer, the bank will purchase the product from the seller to fulfill the order.

 It is permissible for the Client to offer an order to purchase by the Bank particular goods
deciding its specification and committing himself to buy the same from the Bank on
Murabaha, i.e. cost plus agreed upon profit.
 It is permissible to make the promise binding upon the Client to purchase from the Bank,
that is, he is to either satisfy the promise or to indemnify the damages caused by breaking
the promise without excuse.
 It is also permissible to document the debt resulting from Bai-Murabaha by a Guarantor,
or a mortgage, or both like any other debt.  Mortgage / Guarantee/ Cash Security may be
obtained prior to the signing of the Agreement or at the time of signing the Agreement.

 The Bank must purchase the goods as per specification of the Client to acquire ownership
of the same before signing the Bai-Murabaha agreement with the Client.
 After purchase of goods the Bank must bear the risk of goods until those are actually sold
and delivered to the Client, i.e., after purchase of the goods by the Bank and before
selling of those on Bai-Murabaha to the Client buyer, the Bank shall bear the
consequences of any damages or defects, unless there is an agreement with the Client.
The Bank must deliver the specified Goods to the Client on specified date and at
specified place of delivery as per Contract.
 The Bank shall sell the goods at a higher price (Cost + Profit) to earn profit. The cost of
goods sold and profit mark-up therewith shall separately and clearly be mentioned in the
Bai-Murabaha Agreement. The price once fixed as per agreement and deferred cannot be
further increased. Bai-Muajjal (Deferred Sale)

The terms "Bai" and "Muajjal" are derived from the Arabic words 'Bai' and 'Ajal'. The word 'Bai'
means purchase and sale and the word 'Ajal' means a fixed time or a fixed period. "Bai-Muajjal"
is a sale for which payment is made at a future fixed date or within a fixed period. In short, it is a
sale on credit. The Bai-Muajjal may be defined as a contract between a buyer and a seller under
which the seller sells certain specific goods, permissible under Shariah and law of the country, to
the buyer at an agreed fixed price payable at a certain fixed future date in lump sum or in fixed

 It is permissible for the Client to offer an order to purchase by the Bank particular goods
deciding its specification and committing himself to buy the same from the Bank on Bai-
Muajjal i.e. deferred payment sale at fixed price.
 It is permissible to make the promise binding upon the Client to purchase from the Bank,
that is, he is to either satisfy the promise or to indemnify the damages caused by breaking
the promise without excuse.
 It is permissible to take cash / collateral security to guarantee the implementation of the
promise or to indemnify the damages.

 It is also permissible to document the debt resulting from Bai-Muajjal by a Guarantor, or
a mortgage. Or both like any other debt. Mortgage / Guarantee / Cash security may be
obtained prior to the signing of the Agreement or at the time of signing the Agreement.
 The Bank must purchase the goods as per specification of the Client to acquire ownership
of the same before signing the Bai-Muajjal Agreement with the Client. After purchase of
goods the Bank must bear the risk of goods until those are actually delivered to the
 The Bank must deliver the specified Goods to the Client on specified date and at
specified place of delivery as per Contract. The price once fixed as per agreement and
deferred cannot be further increased. The Bank may sell the goods at one agreed price
which will include both the cost price and the profit. Unlike Bai-Murabaha, the Bank may
not disclose the cost price and the profit mark-up separately to the Client. Bai-Salam (Advance Payment)

Bai-Salam may be defined as a contract between a Buyer and a Seller under which the Seller
sells in advance the certain commodity (ies)/product(s) permissible under Islamic Shari‘ah and
the law of the land to the Buyer at an agreed price payable on execution of the said contract and
the commodity (ies)/product(s) is/are delivered as per specification, size, quality, quantity at a
future time in a particular place. In other words, Bai-Salam is a sale whereby the seller
undertakes to supply some specific Commodity (ies) /Product(s) to the buyer at a future time in
exchange of an advanced price fully paid on the spot. Here the price is paid in cash, but the
delivery of the goods is deferred.


 Bai-Salam is a mode of investment allowed by Islamic Shari‘ah in which commodity

(ies)/product(s) can be sold without having the said commodity (ies)/ product(s) either in
existence or physical/constructive possession of the seller. If the commodity (ies) /
product(s) are ready for sale, Bai-Salam is not allowed in Shari‘ah. Then the sale may be
done either in Bai-Murabaha or Bai-Muajjal mode of investment.

 Generally, Industrial and Agricultural products are purchased/ sold in advance under Bai-
Salam mode of Investment to infuse finance so that production is not hindered due to
shortage of fund/cash.
 It is permissible to obtain collateral security from the seller client to secure the
investment from any hazards viz. non-supply/partial supply of commodity
(ies)/product(s), supply of low quality commodity (ies)/Product(s) etc.
 It is also permissible to obtain Mortgage and/or Personal Guarantee from a third party as
security before the signing of the Agreement or at the time of signing the Agreement.
 Bai-Salam on a particular commodity (ies)/product(s) or on a product of a particular field
or farm cannot be affected. [For Agricultural Product(s) only].
 The seller (manufacturer/producer) client may be made agent of the Bank to sell the
goods delivered to the Bank by him provided a separate agency agreement is executed
between the Bank and the Client (Agent). Istisna'a Sale

Istisna'a is a contract between a manufacturer/seller and a buyer under which the
manufacturer/seller sells specific product(s) after having manufactured, permissible under
Islamic Shariah and Law of the Country after having manufactured at an agreed price payable in
advance or by installments within a fixed period or on/within a fixed future date on the basis of
the order placed by the buyer.


 Istisna'a is an exceptional mode of investment allowed by Islamic Shariah in which

product(s) can be sold without having the same in existence. If the product(s) are ready
for sale, Istisna'a is not allowed in Shariah. Then the sale may be done either in Bai-
Murabaha or Bai-Muajjal mode of investment. In this mode, deliveries of goods are
deferred and payment of price may also be deferred.
 It facilitates the manufacturer sometimes to get the price of the goods in advance, which
he may use as capital for producing the goods
 It gives the buyer opportunity to pay the price in some future dates or by installments

 It is a binding contract and no party is allowed to cancel the Istisna'a contract after the
price is paid and received in full or in part or the manufacturer starts the work
 Istisna'a is specially practiced in Manufacturing and Industrial sectors. However, it can be
practiced in agricultural and constructions sectors.

4.7.2 Share Mechanism

Under Share mechanism Islami Bank Bangladesh limited practiced different kinds of investment
modes. These are given below- Mudaraba (Investment Made by the Entrepreneur)

It refers to a contact between two parties in which one party supplies capital to the other party for
the carrying on of some trade on the condition that the resulting profits are distributed in a
mutually agreed proportion while all loss is borne by the provider of the capital. Mudaraba is
also known as Qurad and Muqaradah. Mudaraba is a contract of those who have capital with
those who have expertise where earring “Halal” (Lawful) profit which will be devised between
them in ration agreed upon. This mode serves the business interest of the capital owner and the
Mudarib (agent).


 Bank supplies capital as Sahib-Al-Mall and the client invest if in the business with his
 Administration and management is maintained by the client.
 Profit is divided as per management.
 Bank bears the actual loss alone.
 Client cannot take another investment for that specific business without the permission of
the bank.

Types of Mudaraba
Mudaraba Contracts may be divided into two types:

 Restricted Mudaraba (Al-Mudaraba Al-Muqayyadah)
A restricted Mudaraba (Al-Mudaraba Al-Muqayyadah) is a contract in which the Shahib al-maal
impose any restrictions on the actions of the Mudarib but not in a manner that would unduly
constrain the Mudarib in his operations. Restricted Mudaraba may further be divided into three
a) Restriction in respect of time or period: In this type of Mudaraba, the Mudaraba
contract includes a clause on duration of the business. After expiry of such period, the
Mudaraba shall become void.
b) Restriction in respect of place or location: In this type of Mudaraba, the Mudaraba
contract includes a clause on place or location of the business. The Mudarib shall bind to
do the business within the area of such place or location.
c) Restriction in respect of business: In this type of Mudaraba, the Shahib al-maal restricts
the actions of the Mudarib to a particular type of business as he (Shahib al-maal)
considers appropriate.

 Unrestricted Mudaraba (Al Mudaraba Al Mutlaqah)

An unrestricted Mudaraba (Al Mudaraba Al Mutlaqah) is a contract in which Shahib al-maal
permits the Mudarib to administer the Mudaraba capital without any restrictions. In this case, the
Mudarib has a wide range of trade or business freedom on the basis of trust and the business
expertise he has acquired. Such unrestricted business freedom must be exercised only in
accordance with the interests of the parties and the objectives of the Mudaraba contract. Musharaka (Partnership based Investment)

The word Musharaka has been derived from the Arabic word ‘Shirkat’ or 'Sharikat' (Shirk). In
Arabic, Shirkat or Sharikat or Shirk means partnership or sharing. Thus the literal meaning of
'Musharaka' is sharing though the connotation of this term is limited than the term Shirkat. The
term Musharaka has been introduced recently in Islamic Banking literature to mean a particular
type of Shirkat.

In Islamic Fiqh literature, Shirkat, in its primitive sense, signifies the conjunction of two or more
estates, in such a manner, that one of them is not distinguishable from the other. The term

Shirkat, however, is extended to contracts, although there is no actual conjunction of estates,
because a contract is the cause of such conjunction. In the language of the law it signifies the
union of two or more persons in one concern. It is the partnership between two or more persons
or institutions.

Musharaka may be defined as a contract of partnership between two or more individuals or

bodies in which all the partners contribute capital, participate in the management, and share the
profit in proportion to their capital or as per pre-agreed ratio and bear the loss, if any, in
proportion to their capital/equity ratio.

In Islami Bank Bangladesh Limited (IBBL), the Bank may take part in a business with its
Client(s), where both the Client(s) and the Bank provide capital in fixed proportions, take part in
the management of business and share the profit in proportion to their respective capital ratio or
at pre-agreed ratio and bear the loss, if any, in proportion to their respective capital/equity ratio.

4.7.3 Ijarah Mechanism

Fuqaha (jurists) have defined Ijaraha as ownership of a benefit for consideration. This is also
known as lease or Hire contract. Al-Ijarah is an Arabic term. This has been derived from the
Arabic term "Ujr" or "Ujrat" which means 'consideration' or 'return' or 'wages' . According to
Islamic Shariah (jurisprudence), Ijarah is a contract between two parties - the lessor and the
lessee, where the lessees (Hirer or Mustajir) have the right to enjoy/reap a specific benefit against
a specified consideration/rent/wages from the lessor- the owner (Muajjir). Hire Purchase Under Shirkatul Melk (HPSM)

Under this mode Bank may supply implements/ equipment/goods on rental basis. The ownership
of the implements/equipment/goods will be with the Bank and the client jointly and the portion
of the client will remain to the Bank as mortgage until the closure of the investment account, but
the client will be authorized to possess the equipment for certain period. The client, after
completion of the installments, will be the owner of the implements/ equipment/goods.

Hire Purchase under Shirkatul Melk is a Special type of contract which has been developed
through practice. Actually, it is a synthesis of three contracts:

 Shirkatul Melk
Shirkat means partnership. Shirkatul Melk means share in ownership. When two or more persons
supply equity, purchase an asset, own the same jointly, and share the benefit as per agreement
and bear the loss in proportion to their respective equity, the contract is called Shirkatul Melk

 Ijarah
The term Ijarah has been derived from the Arabic works (Air) and (Ujrat) which means
consideration, return, wages or rent. This is really the exchange value or consideration, return,
wages, rent of service of an asset. Ijarah has been defined as a contract between two parties, the
Hire and Hirer where the Hirer enjoys or reaps a specific service or benefit against a specified
consideration or rent from the asset owned by the Hire.

 Sale
This is a sale contract between a buyer and a seller under which the ownership of certain goods
or asset is transferred by seller to the buyer against agreed upon price paid / to be paid by the
buyer. Thus, in Hire Purchase under Shirkatul Melk mode both the Bank and the Client supply
equity in equal or unequal proportion for purchase of an asset like land, building, machinery,
transports etc. Purchase the asset with that equity money, own the same jointly; share the benefit
as per agreement and bear the loss in proportion to their respective equity. The share, part or
portion of the asset owned by the Bank is hired out to the Client partner for a fixed rent per unit
of time for a fixed period. Lastly the Bank sells and transfers the ownership of its share / part /
portion to the Client against payment of price fixed for that part either gradually part by part or in
lump sum within the hire period or after the expiry of the hire agreement.

Stages of Hire Purchase Under Shirkatul Melk

Thus, Hire Purchase under Shirkatul Melk Agreement has three stages:

 Purchase under joint ownership.

 Hire and

 Sale and /or transfer of ownership to the other partner Hirer.


 In case of Hire Purchase under Shirkatul Melk transaction the asset / property involved is
jointly purchased by the Hire (Bank) and the Hirer (Client) with specified equity
participation under a Shirkatul Melk Contract in which the amount of equity and share in
ownership of the asset of each partner (Hire Bank & Hirer Client) are clearly mentioned.
Under this agreement, the Hire and the Hirer becomes co-owner of the asset under
transaction in proportion to their respective equity participation.

 In Hire Purchase under Shirkatul Melk Agreement, the exact ownership of both the Hire
(Bank) and Hirer (Client) must be recognized. However, if the partners agree and wish
that the asset purchased may be registered in the name of any one of them or in the name
of any third party, clearly mentioning the same in the Hire Purchase Shirkatul Melk
Agreement. However, in IBBL, no third party registration shall be allowed.

 As the ownership of hired portion of the asset lies with the Hire (Bank) and rent is paid
by the Hirer (Client) against the specific benefit, the rent is not considered as price or part
of price of the asset.

 In the Hire Purchase under Shirkatul Melk Agreement the Hire (Bank) does not sell or
the Hirer (Client) does not purchase the asset but the Hire (Bank) promise to sell the asset
to the Hirer (Client) part by part only, if the Hirer (Client) pays the cost price / equity /
agreed price as fixed for the asset as per stipulations within agreed upon period on which
the Hirer also gives undertakings.

 As soon as any part of Hire’s (Bank’s) ownership of the asset is transferred to the Hirer
(Client) that becomes the property of the Hirer and hire contract for that share / part and
entitlement for rent thereof lapses.

 In Hire Purchase under Shirkatul Melk Agreement, the Shirkatul Melk contract is
affected from the day the equity of both parties deposited and the asset is purchased and
continues up to the day on which the full title of Hire (Bank) is transferred to the Hirer

 Hire Purchase under Shirkatul Melk is a binding contract for the parties to it - the Bank
and the Client who are committed to fulfill / meet their undertakings / obligations in
accordance with the relevant agreement.

 Under this agreement the Bank acts as a partner, as a Hire and at last as a seller ;on the
other hand the Client acts as a partner, as a Hirer and lastly as a purchaser. Ownership
risk is borne by both the Hire and Hirer in proportion to their retained ownership / equity.

Under consumer financing, the Bank finances to the individuals for meeting their family and
household needs. The Bank has taken up various welfare oriented investment Schemes –

4.8 Welfare Oriented Investment Scheme

In addition to the usual investment operations, IBBL has some Special Investment Schemes for
different groups of people. The schemes as part of Bank’s welfare mission aim at fulfilling
finance needs of different segments of people particularly the under privileged downtrodden and
neglected segments of population of the country.

4.8.1 House Hold Investment Scheme

In a developing country like Bangladeshi people of middle and lower class especially service
holders with limited income find it difficult to purchase articles like refrigerator, television,
wardrobe, sofa-set, pressure-cooker, sewing machine etc. which are part of modern and decent
living. They cannot enhance the standard and quality of life to the desired level due to constrain
of their limited income. IBBL has introduced “House Hold Investment Scheme” that has
already created great enthusiasm among the people and received tremendous from them.
Investment permanent officials like Government, Semi-Government, Armed Forces, BDR, Police
and Ansar’s.  Teachers of Universities etc. organization may apply for investment. The Bank's

investments and profit thereon shall be recovered in 24 monthly installments within a period of 2
(two) years.

4.8.2 Housing Investment Scheme

One of the basic human needs is to have a house to live in. A house is an abode of peace and
happiness. Housing has now become an acute problem in the country, especially in the towns,
cities and metropolis. With their limited income, it has become almost impossible on the part of
the lower middle class, middle class and sometimes, even for upper middle class to solve their
housing problem. To meet this basic human need, Islami Bank Bangladesh Limited has
introduced 'Housing Investment Scheme' with the objective to ease and minimize the housing
problem and assist service holders and professionals with limited income in materializing their
dream of becoming owner of houses. Officials of the Defense Forces, Permanent Officials of
Government, Semi-Government and Autonomous Organization, Donor Agencies, Foreign
Embassies etc. organization may apply for investment. The maximum period of investment shall
be generally 15 years.

4.8.3 Real Estate Investment Scheme

Professionals, Service-holders, Businessmen, Real Estate Developer and other categories of
people who are not entitled for availing investment facilities under Housing Investment Scheme,
shall be eligible under this program. Investment is to be extended to build new houses and for
extension/completion of the house already constructed, commercial building, shopping complex,
flat/apartment etc.

4.8.4 Transport Investment Scheme

The role of modern communication is most vital for the socio-economic growth and uplift of a
developing country like Bangladesh. A sound and efficient communication network is the pre-
requisite for sustained development through the expansion of trade, commerce and industry. In
this backdrop the demand for road and water transports has increased manifold throughout the
country. Moreover, the use of modern transports has increased keeping pace with the rise of the
standard of living of the professionals. Considering all these facts, Islami Bank Bangladesh

Limited has introduced 'Transport Investment Scheme'. Maximum 3 years from the date of
delivery of the vehicle.

4.8.5 Car Investment Scheme

Car is considered as on essential mode of transport in the modern society, particularly by a
section of the officials, business houses and business executives and established professionals for
movement in discharging their duties and responsibilities punctually and efficiently. Many of
these categories of people cannot purchase a car on payment of entire purchase value at a time
out of their own sources. To meet this need Islami Bank has introduced the 'Car Investment
Scheme' for the mid and high ranking officials of government and semi-government
organizations, corporations, executives and directors of big business houses and companies and
also for persons of different professional groups on easy payment terms and conditions. Period of
investment is maximum 4 (four) years from the date of disbursement or delivery of the vehicle to
the client, whichever is earlier.

4.8.6 Investment Scheme for Doctors

One of the fundamental rights of every man is to receive necessary Medicare facilities. Islami
Bank Bangladesh Limited has taken the initiative an introduced the "Doctors Investment
Scheme" to ensure modern treatment and medical facilities available to the people through
extension of Bank's investment facilities for self-employment of newly graduated doctors and at
the same time extending investment facilities to the established medical practitioners to procure
modern and sophisticated medical equipment.

4.8.7 Small Business Investment Scheme

Bangladesh, a third-world developing country, is rich in natural and human resources. In spite of
vast possibilities, the majority people of the country live in hardship-below poverty line as these
resources are not being properly tapped, explored and exploited. Physical labor is their only
means of earning. Islami Bank, as welfare oriented financial institution, is committed to generate
employment and bring about an overall improvement in the socio-economic condition of the
people and the quality of their life. The Bank, to make effective contribution in this respect, has
taken-up a special programme and introduced 'Small Business Investment Scheme' to make the

small traders, entrepreneurs and neglected unemployed youths of urban and rural areas self-
reliant by providing them required financial support. Investment clients must be permanent
residents of the command area of the branch through which they intend to avail investment
facilities and they must have valid trade license and shops or selling centers. Period of
investment is maximum 24 months the date of disbursement.

4.8.8 Agriculture Implements Investment Scheme

Islami Bank Bangladesh Limited is a welfare oriented Bank. It can play positive and important
role in the economic development, progress and uplift of the country by investing in the
agricultural sector. The Bank has, therefore, introduced "Agriculture Implements Investment
Scheme" to provide power tillers, power pumps, shallow tube wells, thrasher machine etc. on
easy terms to the unemployed youths for self-employment and to the farmers to help augment
production in agricultural sector. Educated or half-educated rural youths, educated or illiterate
farmers and any person ready to accept agriculture as business may apply for investment
facilities under this scheme. Preference shall be given to those applicants who have passed S.S.C.
or above. The applicant farmer should posse’s sound health and his age must be minimum 18
years and maximum 50 years.Period of Investment maximum two years.

4.8.9 Micro Industries Investment Scheme

Micro Industries investment Scheme aims at creating a wider base for industries and to
encourage establishment of micro-industries in different areas of the country by the potential
entrepreneurs and to diversify the Bank’s investment portfolio. Maximum 1-year for Bai-
Murabaha & Maximum 3-years for HPSM (excluding gestation period) .Food & agriculture /
plastic & rubber/ forestry & furniture / dairy product processing / engineering/ leather /
chemicals / textiles / recycling / service electrical accessories / paper product / handicrafts
industries / computer technology industries /manufacturing of garments / sewing and other
machines for tailoring etc.

4.8.10 NRB (Non Resident Bangladeshi) Entrepreneurs Investment Scheme
Islami Bank Bangladesh Limited (IBBL) being a welfare oriented financial institution has been
offering a broad spectrum financial facilities to the business houses and individual clients from
the very beginning. It has introduced several investment schemes for different strata and cross
sections of people for their socio-economic uplift and improvement of their quality of living
standard. With a view to encouraging the NRBs to invest their hard earned money in the
productive sectors/areas for their own benefit as well as for the benefit of the nation as a whole,
the authority has been pleased to introduce the subject Investment Scheme. Non Resident
Bangladeshi within age limit of 18 to 60 years. Bangladeshi citizens resided in abroad for long
time, remitted foreign currencies through IBBL channel and now in Bangladesh. Maximum 10
years depending on the nature/need of investment client/business.

4.8.11 Women Entrepreneurs Investment scheme

Islami Bank has always given priority to develop the women entrepreneurs. Under ‘Women
Entrepreneurs Investment Scheme (WEIS)’ IBBL offers lower rate of return i.e. 12% only and
collateral free investment up to 0.50 million with some other flexible terms & conditions to the
women entrepreneurs. Up to December 2014, IBBL disbursed Tk.4, 790 million favoring the
women entrepreneurs.

4.8.12 Micro-Investment Activities

Islami Bank Bangladesh Limited launched its microfinance program for the rural poor under the
name and style of “Rural Development Scheme (RDS)” in the year 1995 to cater to the
investment needs of the agriculture and rural sector to create opportunity for generation of
employment and raising income of the rural people with a view to alleviate poverty. 221
branches of the Bank have been operating RDS activities across the country. The Bank launched
another microfinance program namely “Urban Poor Development Scheme (UPDS)” in May
2012 for extending micro-investment facilities among the urban poor. At present, the Scheme is
being operated through 23 urban branches under Dhaka, Chittagong & Sylhet metropolitan cities.

4.8.13 Rural Development Schemes
Islami Bank Bangladesh Limited was founded with the major objective of establishing Islamic
economy for balanced economic growth by ensuring reduction of rural-urban disparity and
equitable distribution of income. Accordingly, a Scheme in the name and style of 'Rural
Development Scheme' has been introduced in 1995 to cater to the investment needs of the
agriculture and rural sector to create opportunity for generation of employment and raising
income of the rural people with a view to alleviate poverty. It is treated as first Islamic
Microfinance Model in the Country & abroad. To extend investment facilities to agricultural,
other farming and off-farming activities in the rural areas .To finance self-employment and
income generating activities of the rural people, particularly the rural unemployed youths and the
rural poor. To extend investment facilities for hand tube-wells and rural housing, keeping in view
the needs of safe drinking water and housing facilities of the rural dwellers.

Sector-wise Investment of RDS

 Graduation Program
In order to ensure gradual and sustainable development of the target group, apart from
investment, the clients are provided with skill development training and various support services
like medical support, education support, relief & rehabilitation support etc. It is found that there
are 71,426 graduated clients under the Scheme who have been availing investment for the last
five years and their present investment is Tk.50,000/- or above starting from Tk.10,000/-only.

 Non-financial (welfare) Programs under the Schemes

Since poverty alleviation needs a combination of financial and non-financial programs, different
non-financial welfare services are extended under the Schemes in the areas of (1) Education, (2)
Training, (3) Health, (4) Relief & Rehabilitation and (5) Environment.

1. Education Program
Under Education Program there are three types of activities like (1) Scholarship (for the children
of the beneficiaries secured GPA-5 in the SSC & HSC examination), (2) Academic Award (to
the meritorious children of the members from class I to class IX) and (3) Establishment of pre-
primary school, maqtab & adult education centre in the project areas.

2. Training Program
There are three types of training activities under the Program like (a) Skill Development Training
(b) Self-employment Training and (c) Centre Leaders’ Training. At a glance, activities under
Training Program.

3. Health Program
Under Health Program, there are four types of activities like (1) Installation of Tube-well &
Sanitary Latrine, (2) Conducting medical camps (general, eye & circumcision), (3) Medical
Assistance and (4) Assistance to Mother & Neonatal.

4. Relief & Rehabilitation Program

Under the program, 3 types of assistance are being provided to the poor and distressed members
like (a) Waiver of Bank’s dues, (b) Relief & Donations and (c) Rehabilitation Quard. Activities
under Relief & Rehabilitation Program.

5. Environment
The Bank has been observing Plantation Program during the rainy season every year since 2003.
Each of the RDS members are given one sapling free of cost and encouraged to implant another
two. Since 2003, the Bank has distributed about 4,160,022 saplings at a cost of Tk.59.39 million
out of which 723,672 sapling were implanted at a cost of Tk.20.53 million during in 2014.

4.8.14 Urban Poor Development Scheme (UPDS)

As Islami Bank Bangladesh Limited established with a view to develop welfare oriented banking
system and to ensure equity and justice in the field of all economic activities, the Board of
Directors in its emergent meeting held on 19.02.2012 approved a new Scheme under the name &
style of “Urban Poor Development Scheme (UPDS)”. The Scheme activities started formally
from 14.05.2012 through Gandaria Branch, Dhaka. To alleviate urban poverty through

Investment in income generating activities .To improve the Health, sanitation & education status
of urban poor specially the children & women. Reduce the level of crime & violence thorough
the development of ethical and religious values. To improve the livelihood of urban poor
specially the slum dwellers

4.8.15 SME Investment

SME has become a familiar slogan today around the world including Bangladesh. SME plays
important role in socio-economic development of the country, increasing employment and
creating entrepreneurs. This sector is labor intensive and productive with short gestation period.
The Present government has given importance for improving SMEs for reduction of poverty and
employment generation and introduced a separate department in Bangladesh Bank named SME
& Special Programmed Department.

Along with Corporate Banking IBBL always prefer to walk in different avenues keeping in mind
the concurrent socioeconomic development. IBBL values the role of Microfinance, Small and
Medium Enterprise that can play in building the nation. By way of illustration, in 2016, IBBL
disbursed SME investment of Tk. 322,270 million, which is 22% more than the previous year.
During the year, approximately 8,500 new SME investment clients have been added to the
portfolio. IBBL is holding highest position in !financing SMEs among the Banks in the country
having 27% market share. At present SME Investment of IBBL creates about more than one
million employments in the country. To expand the unexplored SME Market, IBBL is
continuously improving efficiency standards.

In line with Bangladesh Bank’s guidelines, IBBL has started Women Entrepreneur Development
Unit (WEDU) for functioning to deal with the affairs of Women Entrepreneurs. Besides this,
women entrepreneurs are properly addressed by IBBL with the diversified Investment scheme
named Women Entrepreneur Investment Scheme (WEIS). Women Entrepreneurs can enjoy this

scheme at a low rate i.e. @ 10% only up to the ceiling of 4.00 million and collateral free
investment facility up to 0.50 million. Most of our Branches have disbursed minimum 01(one)
fresh women entrepreneur to follow Bangladesh Bank’s guidelines. In 2016, IBBL has disbursed
investment of Tk. 17,680 million and outstanding balance as on 31.12.2016 is Tk. 7,730 million
among nearly 3,100 clients. IBBL has achieved 118% of annual target of Tk. 15,000 million.

Bangladesh Bank has urged all Banks and NBFIs to adopt a cluster-based approach for financing
Small and Medium Enterprise (SMEs). IBBL is an active participant in these sectors and
considers that a cluster-based approach and acknowledged groups, As such IBBL has given
importance in Cluster Approach Method for developing CMSMEs and has disbursed Tk.13,639
million in 39 clusters among 7,374 clients in the year 2016.

As such IBBL has given importance in Cluster Approach Method for developing CMSMEs and
has disbursed Tk.13,639 million in 39 clusters among 7,374 clients in the year 2016.Besides,
IBBL provides various Non-Financial Services (NFS) to the SMEs. IBBL participates/sponsors
in various meetings, seminars, symposiums, fairs for developing SMEs. During this year IBBL
participated and organized the following programs:

 Banker- Entrepreneur exchange views & Open loan/Investment distribution meeting held
at Chatak.

 Declaration of “Footwear” as a model cluster of IBBL, at Bhairab under IBBL Bhairab

Branch in collaboration with Bangladesh Bank.

 “Women Entrepreneurs Conference & Product Exhibition 2016” organized by

Bangladesh Bank at Bangladesh Bank Training Academy, Mirpur, Dhaka where IBBL
Women Entrepreneurs participated.

 “Alleviating poverty in the ethnic Rakhaine society and protecting social degradation”
organized by “Alo Aro Alo Foundation” with the help of Bangladesh Bank in Kuakata,
Patuakhali. This program focused on the issue of access to !inance of the Rakhain people

in order to upgrade their standard of living. In the program all branches from different
banks in Kuakata area disbursed credit/investment openly to minimum 2(two)
entrepreneurs where at least 1(one) was Rakhain entrepreneur.

4.9 Investment Processing of IBBL

Generally a bank takes certain steps to deliver its proposed investment to the client. But the
process takes deep analysis. Because banks invest depositors fund, not banks‟ own fund. If the
bank fails to meet depositors demand, then it must collapse. So, each bank should take strong
concentration on investment proposal. However, Islami Bank Bangladesh Limited makes its
investment decision through successfully passing the following crucial steps:

Figure: Investment Process of IBBL

1. Selection of the clients

Here, investment taker (client) approaches to any of the branch of Islami Bank Bangladesh
Limited (IBBL). Then, he talks with the manager or respective officer (Investment). Secondly,
bank considers five C’s of the client. After successful completion of the discussion between the
client and the bank, bank selects the client for its proposed investment. It is to be noted that the
client/customer must agree with the bank’s rules & regulations before availing investment.
Generally, bank analyses the following five C’s of the client:

 Character
 Capacity
 Capital
 Collateral and
 Condition

2. Application Stage
At this stage, the bank will collect necessary information about the prospective client. For this
reason, bank informs the prospective client to provide and/or fill duly respective information
which is crucial for the initiation of investment proposal. Generally, here, all the required
documents for taking investment have to prepare by the client himself. Documents that are
necessary for getting investment of IBBL are prescribed below:

 Trade License photocopy (for proprietorship)

 Attested copy of partnership deed (for partnership business)
 Prior three (03) years’ audited balance sheet (for joint stock company)
 Prior three (03) years’ business transactions statement for the musharaka/mudaraba
 Attested copy of the Memorandum of Association (MOA) & Articles of Association
(AOA) for the joint stock company;
 Attested copy of the Tax Identification Number (TIN)- including final assessment

3. Appraisal Stage

At this stage, the bank evaluates the client and his/her business. It is the most important stage.
Because in this stage, bank usually goes for sanctioning the proposed investment limit/proposal .
If anything goes wrong here, the bank suddenly stops to make payment of investment. In order
to appraise the client, Islami Bank Bangladesh Limited (IBBL) provides a standard F-167B Form
(Appraisal Report) to the client for gathering all the information. The original copy of the
appraisal report is enclosed in the appendix chapter. However, the following contents are
presented from that appraisal report:

 Company’s/Client’s and owner’s Information.

 List of Partners/Directors.
 Purpose of Investment/Facilities.
 Details of Proposed Facilities/Investment.
 Break up of Present Outstanding.
 Other Liabilities of the Client/Group.
 Previous Banker’s Information.
 Business/Industry Analysis.
 Asset-Liability position of the client as per Audited Balance Sheet.
 Working Capital Assessment.
 Risk Grade.
 Security Analysis.

4. Sanctioning Stage
At this stage, the bank officially approves the investment proposal of the respective client. In
this case client receives bank’s sanction letter. Islami Bank Bangladesh Limited (IBBL)’s
sanction letter contains the following elements:

 Investment Limit in million

 Mode & amount of investment
 Purpose & Period of investment

 Rate of return and Securities

5. Documentation Stage
At this stage, usually the bank analyses whether required documents are in order. In the
documentation stage, Islami Bank Bangladesh Limited (IBBL) checks the following documents
of the client:

 Tax Payment Certificate, Stock Report, Trade License (renewal), and

 VAT certificate
 Liability statement and receivable from different parties
 Outstanding liability position of the bank.
 Three (03) years net income & business transactions.
 Other assets statement
 Aungykar nama and Ghosona potro
 Performance report and account statement with the bank
 CIB (Credit Information Bureau) Report

6. Disbursement Stage
At this stage, bank decides to pay out money. Here, the client gets his/her desired fund or goods.
It is to be noted that before disbursement a “site plan” showing the exact location of each
mortgage property needs to be physically verified.

7. Monitoring & Recovery Stage

At this final stage of investment processing of the Islami Bank Bangladesh Limited (IBBL),
bank will contact with the client continually, for example- bank can obtain monthly stock report
from the client in case of micro investment. Here, the bank will keep his eye on over the
investment taker. If needed, bank will physically verify the client’s operations. Also if bank
feels that anything is going wrong then it tries to recover its investment fund from the client.

5.1 Scenario of Investment of Whole IBBL

Table: Scenario of Investment of Whole IBBL

Year Amount(BDT in Millions)

2013 403,195
2014 463,475
2015 530,194
2016 611,418
2017 627,670

Amount of Investment ( BDT in Millions)

2013 2014 2015 2016 2017

2013 2014 2015 2016 2017

Interpretation: From the above table and graph we can see that in 2013, the total investment
amount of IBBL was TK.403,195 million. The amount rose to TK.463,475 million in 2014.
However, it started to increasing consequently and it is a positive increasing rate of total
investments of IBBL.

5.2 Scenario of Investment of IBBL, Sylhet Branch

Table: Scenario of Investment of IBBL, Sylhet Branch

Year Amount(BDT in millions)

2013 1570.39
2014 1670.00
2015 2373.00
2016 3252.00
2017 3984.00

Interpretation: By evaluating the investment data of different financial year of IBBL, Sylhet
Branch, I have identified that the quality of investment has improved significantly over the
periods (Financial years).The bank is performing increasing trend for investment of IBBL, Sylhet
branch. However, Average investments are high for Islami Bank Bangladesh Ltd. but not stable.

5.3 Comparison between Investment of Whole IBBL and IBBL, Sylhet Branch

Table: Percentage of Investment of IBBL, Sylhet Branch on IBBL’s whole investments

Investments of IBBL as Investments of IBBL

Year Percentage
whole Sylhet Branch
(BDT in Millions) ( BDT in Millions)
2013 403,195 1570.39 0.39%
2014 463,475 1670.00 0.36%
2015 530,194 2373.00 0.44%
2016 611,418 3252.00 0.53%
2017 627,670 3984.00 0.63%

Interpretation: The income generated mainly from investments, which remained the main
contributor for the Bank. The above table and diagram reveals that the percentage of investments
of IBBL, Sylhet Branch on IBBL’s whole investments was high in 2013 and there is a slight
decrease in 2014 . In addition, it also illustrate that the investments of IBBL increased
considerably from 2015 to 2017.

5.4 Mode-wise Investment Performance of IBBL, Sylhet Branch

The bank arranges investments in different modes based on Islamic Shariah. Year wise
investments of IBBL are:

Table: Mode-wise Investment Performance over last three years

As on As on As on
Mode Dec 31, 2015 Dec 31,2016 June 30,2017
(BDT in Millions) (BDT in Millions) (BDT in Millions)

Bai Murabaha 1020.00 1370.25 1550.25

Bai Muajjal 290.30 395.75 480.50

HPSM 390.25 480.75 560.75

QTDR (Quard Term Deposit 470.43 619.21 790.21

MPI ( Mudaraba Post 90.37 165.75 230.50
Murabaha TR 104.10 210.25 360.25

QBF (Quard against 2.15 2.54 2.84

Benevolent Fund)
QPF (Quard against 5.40 7.50 8.70
Provident Fund )
QMSS (Quard against - - -
Mudaraba Special Savings
account )
Grand total 2373.00 3252.00 3984.00

Interpretation: From the above table and pie chart we can see that The IBBL, Sylhet Branch
shows its upward trend. In 2015, the total Mode-wise investment was Tk.2373.00 million. Then
In 2016, the total Mode-wise investment was Tk.3252.00 million and again the amount of all
types of modes are increasing in 2017 and it also indicates that People are very interested about
Bai Murabaha , because among the all types of modes, Bai Murabaha is increasing rapidly.

5.5 Sector-wise Investment Performance of IBBL, Sylhet Branch

Table: Sector-wise Investment Performance of IBBL, Sylhet Branch

(BDT in Millions)
Sector As on As on
Dec 31,2016 June 31,2017
Amount % of total Amount % of total
investment investment
Commercial 1480.91 45.54% 1680.00 42.17%
Agriculture Implements 45.75 1.40% 75.45 %
Investment Scheme
Household Durable 5.8 0.18% 7.3 %
Scheme for Staffs
Household Durable 75.91 2.33% 91.35 %
Palli Griha Nirman 45.92 1.41% 65.91 %
Industrial 140.85 4.33% 210.00 %
House Building Investment 82.52 2.54% 153.45 %
Scheme for Staffs

House Building 1.90 0.06% 3.25 %

Investment Scheme
Car Investment Scheme 7.50 0.23% 10.91 %
Women Entrepreneurs 85.35 2.62% 120.35 %

Investment Scheme
Dairy Investment 0 0 0 0
Small Business Investment 42 1.29% 85 %
Housing Investment 379.16 11.66% 500.20 %
Transport Investment 7.52 0.23% 8.25 %
Others 850.91 26.17% 972.58 %
Total 3252.00 100% 3984.00 100%

Sector-wise Investment Performance as on Agriculture Implements
Dec 31,2016 Household Durable Scheme for Staffs

Household Durable

Palli Griha Nirman

7.52 850.91 Industrial

House Building Investment Scheme for

1480.91 Staffs
House Building Investment Scheme

379.16 Car Investment Scheme

85.35 Women Entrepreneurs

Dairy Investment
Small Business
1.9 0 Housing
82.52 45.92
140.85 75.91 5.8 45.75

Sector-wise Investment Performance as on Agriculture Implements

June 30,2017 Household Durable Scheme for Staffs

8.25 Household Durable

Palli Griha Nirman

972.58 Industrial
1680 House Building Investment Scheme for
House Building Investment Scheme
Car Investment Scheme
85 Women Entrepreneurs

10.91 Dairy Investment

3.25 0 Small Business

65.91 Housing
91.35 75.45 Transport
210 7.3

Interpretation: The IBBL invests in various sectors to contribute the economic development of
the country. By evaluating the investment data of last two financial years, we can see that the
amount of all types of sector are decreasing or increasing very slowly and it also reveals that the
major investment sector of IBBL, Sylhet Branch is commercial Sector where branch is also
investing its money. This branch is also financing on staff scheme which has an influence on its
total investment.

5. 6 Ratio Analysis of Investment on Deposit of IBBL, Sylhet Branch

Table: Percentage of Investment on deposit

(BDT in Millions)
Year As on As on As on As on As on
Dec 31, 2013 Dec 31, 2014 Dec 31, 2015 Dec 31, 2016 June 31, 2017

Deposit 8065.91 8861.00 9148.00 9612.00 9023.00

Investmen 1570.39 1670.00 2373.00 3252.00 3984.00

Inv.% on
Deposit 19.47% 18.85% 25.94% 33.83% 44.15%

Inv.% on Deposit
40.00% 33.83%
30.00% 25.94%

25.00% 19.47% 18.85%

2013 2014 2015 2016 2017

2013 2014 2015 2016 2017

Interpretation: The percentage of investment on deposits is calculated by (Total

investment/Total deposit) X 100. In the year 2013 the total investment was 19.47%. In 2014 the
percentage decreased to 18.85% from the previous year rate 19.47%. In the year 2015 , 2016 and
2017 the total investment was 25.94% , 33.83% and 44.15% consequently.

5.7 SWOT Analysis of Investment Operation of IBBL

SWOT Analysis is the critical analysis about an organization, where the Strengths, Weaknesses,
Opportunities and Threats to that organization are analyzed. It includes all internal and external
aspects of the organization. It can be therefore defined as the analysis of external and internal
environments. The major objective of doing the SWOT Analysis is to find out the internal
strengths that is, in which areas it is more forward than its competitors and weaknesses that in
which areas it has lacked. At the same time, the organization can know the opportunities that are
available in the market for it and the threats ahead from its competitors or other regulatory
bodies. Now showing the SWOT figure:

Figure: SWOT Analysis

Strengths Weaknesses

 Adequate internal fund.  Lengthy investment procedure.
 Goodwill and market reputation.  Lack of diversification.
 Confidence of common people of our  Insufficient IT sector.
country.  Poor logistic support.
 Corporate culture and good governance.  Lack of specialized employees.
 Sovereignty in policy making.  Unethical influence.
 Collective efforts of the management in
any situation of the bank.
 Experienced management team.
 Honest, sincere and reliable manpower.
 Banking software.

Opportunities Threats

 Emergence of e-banking.  High inflation view.

 Favorable environment for Islamic  Economic recession.
banking.  Lack of financial stability.
 Increasing importance for Islamic banking.  Instability in capital market.
 To introduce new Islamic instruments.  Absence of Islamic money
 Accommodation of low income group to market.
the banking industry.  Islamic banking by competitors.
 Decentralization of business

5.8 Findings

IBBL is one of the fast growing and committed private commercial bank in the country. It
conducts business activities efficiently around the country to achieve its objectives and gradually
forwarding towards its mission and vision. Apart from these, on the basis of analysis of this
study following findings are found through careful investigation:

 The bank has different modes of investment and well-developed investment policy that is
different from the conventional bank’s credit operation.
 The bank invests in different rising sectors like Commercial, Industrial and Specially
Staff Scheme etc.
 The bank invests from the deposit collected under different deposit product.
 In the year 2016, the total investment was 33.83% of total deposits. The percentage
increased to 44.15% in 2017.
 Most of the people in our country have a bad impression of IBBL‟s operations regarding
indirect generation of interest which meaning no difference between investment of IBBL
and loan /Credit / advance of conventional banks .For this reason, they are not too much
interested to make investment with IBBL.
 Because of improper insufficient application of Islamic Banking rule in our country, the
investment operations of IBBL can't run smoothly.
 This Bank can't invest in all economic sectors, which are prohibited by the law of Islam.
 IBBL has no strong promotional activities to increase motivate its present and potential
investment client.
 The bank is performing increasing trend for investment of IBBL, Sylhet branch. The
Investment amount Up to June 30,2017 is TK.3984 million.
 Among the different modes of investment, Bai Murabaha is mostly used investment
mode in IBBL, Sylhet branch.
 The employees of the bank are not satisfied because of late promotion and late increment.
The ultimate result is reduction in productivity.
 Exploring for new type of investment is another efficient way to improve the investment

6.1 Recommendations

The findings from the analysis can offer some recommendation or supporting directives whose
application or quick implementation will improve the different modes of investment of IBBL
along with increase in profitability, sustainability and reputation of business.

 First of all IBBL should make its service prompt so that people need not to give more
time in the banking activities and fell easy to perform all respective activities. Moreover,
they have to come up with new facilities and offer which will attract more client and help
to ensure their premium as well as loyal customer forever.
 The investment sanction procedure should be made quicker, because today in the banking
industry competition is very high, so hope it can be done through the creation of sub-
department of investment which will only be liable for sanctioning investment.
 Inclusion of more subjects based on the Quran and Sunnah in the Training courses of the
Islami Bank Training & Research Academy in order to develop human resources having
 IBBL should introduce new schemes like Education loan, M cash, Shop Financing
scheme, personal loan for women and so on to cope with the competitive market.
 IBBL should appoint a sufficient number of women employees to deal women
entrepreneurs and professionals and understand their needs and thus create demand for
 To create better client the bank should increase the amount of special investment scheme
in a short-term basis.
 IBBL must prepare an organized set of plan regarding the advertising and promotional
activities which should include billboard, media, internet advertising and dealing with
classes of potential and existing customers.
 Even though IBBL is running online business very successfully they should open more
ATM booths to meet customer needs and to meet the competitions.

6.2 Conclusion

Islam is a complete code of life where the detailed regulation for maintaining a proper economic
life is given. IBBL is trying to develop banking sector through welfare and servicing to the
people. IBBL has emerged facing the many obstacles yet. This bank is trying to operate their
activities according to Islam.

Today the performance of a bank will be strong in the competitive banking business, because it
is important. Just few years ago the number of bank was very small. So the competition was not
strong as it is today. Things have changed with the emergence of many new banks, now the
customers have option to take the one that the best, so the current banking business scenario is
simply highly competitive. The report refers to the fact that people are aware of investment
facilities in our country according to Islamic Shariah but they are not fully aware of the services
or features of the investment management process and its rules and regulations especially in case
of individual. From the study it seems that Islamic Bank within a short period of just few years
has made good progress in terms of profitability and growth rate of deposits and investment
operations despite tremendous competition in the industry and world economic crisis. Over the
periods the bank highlighted itself as the prudent banker by obtaining a continuous growth over
deposits and investments. The bank has to keep updating its investment operation to achieve the
bank’s corporate goal.

More than 300 Islamic bank and financial institutions are operating in different countries
throughout the world with a marked success from this inception in our country in 1983. IBBL
has been operating with real and confidence in corporation with other conventional banks. Here,
all the employees are very much cooperative with their customers, colleagues and simply

To conclude I must say that IBBL has immense potential in Bangladesh, it can play a vital role in
bringing revolutionary changes in our life with both material and moral world and in individual
and collective level.