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First Security Islami Bank Essay

Investment Schemes for First Security Islami Bank Limited, Saver- Branch

Date of submission: ………………………..

Investment Schemes for First Security Islami Bank Limited, Saver- Branch

Letter of Transmittal

February…………..

D.Mizanur Rahman
Dean
Department of Business Administration
Faculty of Business & Economics
Daffodil International University

Subject: Submission of Internship Report on “Investment Schemes for First SecurityIslami Bank Limited, Saver- Branch”.

Dear Sir,
I have much pleasure to present the report of the internship program “Investment Scheam on First SecurityIslami Bank Limited, Saver- Branch”. I would like to take this occasion to express to you my sincere gratitude for the placement to me in an organization like First Security Islami Bank Limited. And for support and encouragement you have always so generously extended to me in my work. I have tried my best to get an orientation to the practical work environment and to gather all related information, and have placed my hearty effort to prepare the report accordingly directed. I hope that my report will meet your expectation and serve its purpose.

Sincerely Yours,
……………………..
(Md. Abu Taher (Nabin)
IDNo:071-11-1496
Batch : 16th (Major in Marketing)
Program: BBA

Approval certificate

Letter of Authorization

Date……………………
Profecor d.mizanur rahman
Assitant Professor
Department of Business Administration
Faculty of Business & Economics
Daffodil International University

Subject: Declaration regarding the validity of the Internship Report.

Dear Sir,

This is my truthful declaration that the “Internship Report” I have prepared is not a copy of any “Internship Report” previously made by any other student.

I also express my honest confirmation in support of the fact that the said “Internship Report” has neither been used before to fulfill any other course related purpose nor it will be submitted to any other person or authority in future.

Yours truly,

(Md. Abu Taher (Nabin)
IDNo:071-11-1496
Batch : 16th (Major in Marketing)
Program: BBA

Perfect or forward

Ki korte hobe boje na?

Abstract (Summary)

First Security Bank Limited (FSBL) is one of the third generation private banks in Bangladesh. FSBL commenced its commercial operations October 1999 with authorised capital BDT 1500 million and paid up capital BDT 200 million. The Bank has not yet entered into IPO. By the end of 2007, Bank’s authorised capital and paid-up capital reached to BDT 3600 million and BDT 1000 million respectively. In 2007 paid-up capital grew by 11.11%.

r k eke add korte hobe?

Table of Contents

Topic

|Page No. |
|Title Page | | |Letter of Transmittal | | |Letter of Authorization | | |Letter of Approval | | |Acknowledgement | | |1. Introduction of the study | | |1.1. Statement of the Research Problem | | |1.2. Objectives of the study | | |1.3. Scope of the Study | | |1.4. Limitations of the Study | | |2. Methodology of the Study | | |3. Discussion of the Study | | |3.1. Meaning of Customer | | |3.2. Customer Services | | |3.3. Organ gram of the Mirpur-1 Branch | | |3.4. Characteristics of Services | | |3.5. Various Services provided by the Mirpur-1 Branch | | |3.6. Classification of Customer | | |3.7. The Banker Customer Relationship | | |3.7.1. Some of the conditions and practices | | |3.7.2. Rights of customers | | |3.7.3. Duties and Obligations of a Banker | | |3.8. Termination of Banker-Customer Relationship | | |4. Result and Discussion | | |5. Recommendations | | |6. Conclusion | | |7. References | | |8. Appendix | |

List of figures

Introduction

This report is prepared for fulfilling as a requirement of both the BBA and the internship program. On this regard I have been posted in First Security Islami Bank Limited (FSIB),Rangpur branch for 3-month duration from 21-06-2013 to 21-09-2013 and regular supervised &advised by the course teacher to submit my practical learning in written form through a report. My internship topic is “ How public relation adds value in banking industry in Bangladesh: A case study on FSIBL Rangpur Branch. In this initial chapter the report will be presented with meaning of public relation, importance of public relation in banking industry, rational for internship program, reason for chosen this topic. These help to clear about my topic properly.

PR Tools and Techniques

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Creation and maintenance of a good public reputation is a complex and ongoing process. Without an effective PR, it is very difficult to reach the attention of the target audience and much less to influence their opinion and decisions. But when the relationship with the target group is finally established, it needs to be maintained in order to keep it on a high level. The process works similar to the interpersonal relationships. When two people lose contact, they pretty much disappear from each other lives no matter how close they used to be. And the same happens with the target audience if the established relationship is not maintained.

Common PR Tools and Techniques

In order to build a relationship with the target audience and maintain it on a high level, PR specialists use a variety of tools and techniques. Some of the most common ones include: • Attendance at public events. In order to attract public attention and keep it engaged with a particular organisation or an individual, PR specialists take an advantage of every public event and the opportunity to speak publicly. This enables them to directly reach the public attending the event and indirectly, a much larger audience. • Press releases. Information that is communicated as a part of the regular TV or/and radio programme, newspapers, magazines and other types of mainstream media achieves a much bigger impact than advertisements. This is due to the fact that most people consider such information more trustworthy and meaningful than paid adds.

Press release is therefore one of the oldest and most effective PR tools. • Newsletters. Sending newsletters – relevant information about the organisation or/and its products/services – directly to the target audience is also a common method to create and maintain a strong relationship with the public. Newsletters are also a common marketing strategy but PR specialists use it to share news and general information that may be of interest to the target audience rather than merely promoting products/services. • Blogging.

To reach the online audience, PR specialists use the digital forms of press releases and newsletters but they also use a variety of other tools such as blogging and recently, microblogging. It allows them to create and maintain a relationship with the target audience as well as establish a two-way communication. • Social media marketing. Like its name suggests, it is used primarily by the marketing industry. Social media networks, however, are also utilised by a growing number of PR specialists to establish a direct communication with the public, consumers, investors and other target groups.

“Seven Cs of Communication”

The “7 C’s of Communication” is a much-quoted list, first provided by Cutlip and Center in 1952 in Effective Public Relations.[2] The original list was a follows: • Completeness
• conciseness
• consideration
• concreteness
• courtesy
• clearness
• correctness
Various versions of this list, often modified and unattributed, are listed in many business, communications, marketing and public relations books and courses.[3][4][5][6][7]

1. Credibility: Communication begins in a climate of belief. This climate is built by the performance of the sender who should reflect an earnest desire to serve the receiver.

The receiver will then have high regard for the competency of the sender.

2. Context: An advertising/communications program must square with the realities of its environment. Your daily business activities must confirm, not contradict, the message.

3. Content: The message must have meaning and relevance for the receiver. Content determines the audience and vice versa.

4. Clarity: The message must be put in simple terms. Words used must have exactly the same meaning to the sender as they do to the receiver. Complex messages must be distilled into simpler terms, and the farther a message must travel, the simpler it should be.

5. Continuity and Consistency: Communication is an unending process. It requires repetition to achieve understanding. Repetition, with variation, contributes to learning both facts and attitudes.

6. Channels: Use established channels of communication—channels the receiver uses and respects. Creating new channels is difficult.

7. Capability of audience: Communication must take into account the capability of the audience. Communications are most effective when they require the least effort on the part of the recipient.[

The Importance of the Four Models of Public Relations

James E. Grunig, public relations expert and guru, has over 20 years of experience in the field of public relations. The early days of public relations knew no theories knew no theories, thus little to no thought was put into communication plans, tactics, strategies, or programs. With no theoretical foundation, public relations in many cases did more harm that good because legal ramifications, such as libel and fraud, were not considered.

This oversight and bad judgment had dire consequences (i.e.profit loss and a tarnished organizational image) that had to be alleviated and avoided in order to insure public relations’ survival. Grunig’s research has added many new theories to the body of knowledge that already exists. These theories have helped to improve the field of public relations in many ways. Public relations practitioners are better able to serve the organizational and public interest by using the best model or models listed below.

| |

|Grunig’s Four models of Public Relations | |Model Name |Type of Communication |Model Characteristics | |Press agentry/publicity model|One-way communication |Uses persuasion and manipulation to influence audience to behave as the | | | |organization desires | |Public Information model |One-way communication |Uses press releases and other one-way communication techniques to distribute | | | |organizational information. Public relations practitioner is often referred to| | | |as the “journalist in residence. | |One-way asymmetrical model |One-way communication |Uses persuasion and manipulation to influence audience to behave as the | | | |organization desires. Does not use research to find out how it public(s> feel | | | |about the organization. | |Two-way symmetrical model |Two-way communication |Uses communication to negotiate with publics,resolve conflict, and promote | | | |mutual understanding and respect between the organization and its public(s). |

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RATIONALE AND BENEFITS OF AN INTERNSHIP PROGRAM
There are many reasons to pursue an internship:

1. Opportunity for “hands-on” experience: While students may gather a great deal of information in their courses, there is no substitute for direct experience in a professional environment. Internships allow students to gain direct experience.

2. Opportunity to sample various career options: We encourage eligible students to do multiple internships for the purpose of sampling different career areas. This enables students to find out where they might fit best in a professional environment. 3. Preparation for job searches: Students prepare resumes, write cover letters, and go through interviews as if they were applying for a job. This gives students valuable experience in preparation for employment. 4. Compilation of a portfolio: Certain internships allow students to compile their work in a portfolio. This portfolio can later be shown to potential employers.

5. . This enhances the reputation of the University and increases the credibility of a student’s degree. 6. Internship program helps to observe practical job environment in selected job area. 7. Studies wants students to view the internship program as an incentive to perform well academically in all of their coursework.

8. Enhancement of the maturation process: Since internships require a great deal of personal responsibility, the experience provides an important step in an individual’s personal and professional maturation process.

9. Confidence building: Successful completion of an internship often provides students with professional confidence.

10. Professional learning experience: The internship allows opportunities for the development of practical skills in contexts where professional criticism is both immediate and constructive. It also furnishes students with opportunities to observe and understand connections between coursework and skills needed to perform effectively in a given profession. Finally, internships aid in the identification of knowledge and skills essential to doing well in a particular profession.

11. Potential employment opportunities and/or contacts: Occasionally internships lead directly into employment opportunities. Although this is more the exception than the rule, internships certainly provide a student entry into a professional network. Contacts made through the internship can be invaluable sources of information for securing eventual employment.

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Source: Fiorida Utlantic University( Arts & Letters)

Reason for choosing this topic
In ancient period Marketing and public relations were not necessities because competition wasn’t as fierce. Banks could not think about loyal customers. Bank perform activities by the personal interaction of bank employees to their customers. Though promotional mix( product, price, place, personal selling, public relation) of bank is important, Public relation is also very much important communicating, building long term sustainable relationship, creating loyal customers etc .Due to absent of its bank may & must lost the opportunity to provide a personal touch with customers To achieve this, banks are investing in marketing and public relations to promote their offerings and corporate brand. The following reasons for choosing this topic

To know about meaning & practices of public relation in banking service. To know about public relation practices in FSIBL.
To know about effectiveness of PR program for creating loyal customers. Source: By Rick Keating

First Security Islami Bank Limited (FSIB) was Establish in Bangladesh on August 29 1999 as a banking company under Companies Act 1994.On September 22, 1999. FSIB obtained permission from Bangladesh Bank to commence its business. The Bank offers a wide range of banking services through its 53 branches in the country, including accepting deposits, making loans, discounting bills, conducting money transfer and foreign exchange transactions, and performing other related services such as safe keeping, collections and issuing guarantees, acceptances and letter of credit.

At present, the bank has 66 branches of which 26 branches are in Dhaka Division, 25 branches are in Chittagong Division, 06 branches are in Sylet Division, 03 branches are in Rajshahi Division, 04 branches are in Khulna Division and 02 branches is in Barishal Division.

All the 66 branches are computerized under distributed server environment. Another few branches are planning to open within December 2010. FSIBL has already started their on-line, SMS and ATM banking facilities for their clients.

There were 52 employees in the initial stage of the bank. At present the number of employees has become approximately 856.

The bank was started with 500 core taka. Now its present capital is more then 2,000 core taka. The targeted depository money for savar branch was 20 lakh taka. But the branch was able to collect deposit about 18 lakh taka in a competitive market.

FSIB have set up Wide Area Network through Radio, Fiber-Optics & other available communication media systems to provide any branch banking to our customers.

Customer of one branch is now able to deposit and withdraw money at any of our branches. All Branches are included in our Wide Area Network. No TT/DD or cash carrying will be necessary.

First Security Islami Bank Ltd. has officially launched SMS banking service from December 17,2007.

For safekeeping of customer’s valuables like important documents and goods like jewelries and gold ornaments, FSIB Locker Service is available in most of the Branches in urban areas.

Background of the Study

This report has been prepared as a requirement of my internship program. The report is based upon First Security Islami Bank Limited. FSIBL banking division meets the needs of individual customers with various products and services. The FSIBL Banking division constantly faces challenges and meets
them by developing new products and services to fulfill the specific requirements of customers.

FSIBL delivers strong performance across the business and integrates recent acquisitions. FSIBL further consolidates its presence in key markets through significant investment in strengthening distribution, deepening product capability and lunching innovative products & service. In the past decade there has been a rapid change in the economy in the country for increasing the number of Islamic commercial bank. At the same time banking area is becoming competitive as well as services are becoming easier and faster.

With the progress of time competition among nationalized private commercial banks is increasing day by day. And banks are emphasizing on more innovative products and services to the respective customers. In order to survive in the competitive field of the banking sector all organizations are looking for better service opportunities to provide their fellow clients. So it has becoming essential for every person to have some idea on the bank and banking procedure. So FSIBL should ensure competitive products in Consumer Banking Division and measure the customer satisfaction

Scope of the Study:

The scope of the study will be limited to Public relation program practices on First Security Islami Bank Limited. This study in fact taken within its canvas of FSIBL as a whole though the internship was done at FSIBL, the research will deal with the different deposits scheme and different aspects of Consumer banking division as well as a competitive analysis. That is confined to the customers of First Security Islami Bank Limited.

Problems of the study
While nothing comes along without problem, I also had faced some problems, which were picked up below:

➢ It was very difficult to collect the information from various personnel for their job constraint.

➢ FSIBL is very conservative and strict in providing confidential data.

➢ Respondents were busy as well as reluctant to go through the process of questionnaire.

➢ The respondents sometimes did not agreeable in providing accurate statistics and information.

➢ The bankers are very busy with their jobs, which lead a little time consult with.

➢ The communication gap between the different personnel due to workload and unavailability of data, which were confidential and lack of sufficient co-operation from employees.

Despite these limitations, I have tried my level best to prepare the report.

• Lack of time: The time period of this study was very short. I had only 8 weeks in my hand to complete this report, which is not enough. So I could not go in depth of the study. Sometimes the officials were busy with their day-to-day work.

• Insufficient data: Some desired information could not be collected due to confidentially of business.

• Other limitations: As I am newcomer, there is a lack of previous experience in this concern. And many practical matters have been written from any own observation that may vary from person to person.

Methodology:

It is a exploratory Research Methodology

With a view to conducting a research study, what is necessary is to design the framework and select the appropriate research methodology. A research design is simply a framework or a plan for a study that may be used as a guide in collecting and analyzing data. On the other hand, the research methodology is a way to systematically solve the research problem. Methodology means the underlying principles and rules of organization of a philosophical system or inquiry procedure. There are various methods of conducting the research, such as- Interview Method, Observation Method, Historical Method, Statistical Method, Questionnaire Method and the like.

Given the nature of the present study, it is required to collect data/information from the primary and secondary sources.

Sampling Plan:

1. Population: The population of this research project is defined as fallow: a. Element : Existing Individual customers of SJIBL
b. Unit : Only those customers who have an account in SJIBL c. Extent: SJIBL Customers
d. Time: 8 September 09 – 7 December 09

2. Sample Frame: Individual customer those who come to SJIBL and have account or financial relation with the Bank.

3. Sample size: To conduct this research the sample size was calculated by the following formula: n = (Z2 * pq)/ e2
Here,n = sample size =?
Z = Value of confidence level (90%) from Z table = 1.65
P = 0.5 So, q = (1 – p)
pq = (p = 0.5, so q = 0.5) = precision = 0.5 * 0.5 = 0.25
e = level of significance (10% error) = 0.1
(1.65) 2 * 0.5 * 0.5
( n =
(0.1)2
= 68.06
= 68 (approximately)
Hence, required sample size for conducting this research project is 70(approx.) customers those who are account holder of SJIBL.

4. Sampling Procedure: For conducting this research the Save branch of SJIBL was taken into consideration to collect the data. Individual customers those who come to the Bank and have account or financial relation with the Bank were selected by systematic random sampling. For conducting this research project the probabilistic sampling procedure was followed in order to select the sample which is simple random sampling.

5. Data Sources: In order to meet the data requirement and collect the above mentioned information following sources has been used:

a. Primary Data Sources: Primary data has been collected from the individual account holder by questionnaire survey. Also oral conversation has been done with different customers of the bank.

b. Secondary Data Sources: Important sources of secondary data for conducting this research were:

➢ Different reports and journals of Shahjalal Islami Bank ➢ Brochures and leaflets of the bank
➢ Head office circulars
➢ Annual reports.
➢ Some unpublished information.
➢ Relevant business research books.
➢ Website of the bank

6. Data collection instruments: Data collection instrument is the questionnaire with mostly close-ended as well open-ended questions.

F. Data processing:

The data has been collected from the customers through structured questionnaire. After that, data has processed through the following ways.

➢ At first the questionnaires has given a serial number. ➢ Customers answers are categorized according to their personal information, present banking habit, experience, preference, attitude, behavior about SJIBL and so on. ➢ After that customers answer are recorded in numeric figure.

Limitations of the Study:

The internship report is not free from limitations. The study has been
conducted on the subject “Investment Scheam on First SecurityIslami Bank Limited, Saver- Branch”.

Key limitations of the study are as follows:

▪ Time was the most mentionable limitation in preparing of the internship report. Time was very short here that restricted the access to many a scopes for a comprehensive study. • Sufficient books, publications, facts and figures are not available; these constraints narrowed the path of analysis to accuracy. If those limitations were not there, the report would be more concise and more substantial. • It was really hard to collect data from such a big organization. My internship was at the Investment Scheam on First Security slami Bank Limited.Saver Brance For better interpretation I had to collect some information from the head office though due to some divisional secrecies and official confidentiality, I was not provided with enough information.

Limitations of the Study:

From the beginning to the end, the study has been conducted with the intention of making it as a complete and truthful one. However, many problems appeared in the way of conducting the study. During the study it was not possible to visit the whole area covered by the bank although the financial statements and other information regarding the study have been considered. The study considers following limitations:

▪ The time period for this study was short.
▪ Banking law and Practice conflict few area.

▪ All the concerned personnel of the bank have not been interviewed. ▪ Lack of in-depth knowledge and analytical ability for writing such report. ▪ Lack of experience.
▪ Learning overall activities, whole mechanism of banking and performance of a bank within 3 months is really difficult. ▪ Employees are so much busy with their regular activities and cannot provide enough time for me.
▪ Bank has some policy for not disclosing some data and information for obvious reasons that could be very much essential.

Findings

➢ Most of the costumers do not know the regulations of the investment modes. ➢ Shortage of human resources in Investment Section.
➢ Deposit schemes favoring to the customers.
➢ Senior level executives should be more cooperative with the subordinates.

➢ Regarding security service of the bank, account opening and closing system, phone query, cash withdraw and deposit facility, credit profit rate, online banking, external and internal environment are satisfactory to the customers.

➢ Most of the customers are service holder and businessman; they like to come to FSIBL because near to residence / office / work place, better service, easier banking procedure. ➢ Employees of the bank are more cooperative with the customers.

➢ Employees of the bank have good knowledge to solve the queries of the customers.

➢ According to the customers opinion more ATM booths needed to be setup in different places. According to the data analysis customers feeling about banking in FSIBL are very satisfied.

Recommendations

➢ Different types of products and services are available in FSIBL but clients are not concerned about that so advertisement and promotional activities should be increased. ➢ Increasing more deposit schemes under consumer banking. ➢ Providing prompt service in account opening.

➢ Now a day, the online banking service is very much popular in all over the world, so the bank should try to develop in this side. ➢ FSIBL should increase Debit card & credit card facilities. ➢ SJIBL online service should be fast & accurate.

➢ The website of SJIBL is not good enough; most of the pages are under construction. The page should be constructed as soon as possible.

➢ Should increase the ATM Booths.
➢ More manpower is required to run the business smoothly.

➢ Employee trainings and workshops should be administered in order to give them knowledge and professionalism in customer interactions. They should be taught about how to deal with the problem of customers and problematic situations.

➢ Physical and technological facilities should be increased in evaluating credit proposals.

➢ Experienced and expert personnel should be kept within the bank, which will lead to a quality selection of clients ➢ SJIBL should more focus on customer needs. They need to concentrate more on their existing services and product innovation.

➢ A yearly conference with the employees should be arranged where they will exchange their views with the management about different aspects. This will help to increase the efficiency of the employees.

➢ Prompt service should be given to the customers. In this regard arranging job rotation regularly for employees to improve the skills in different types of service. This will increase the efficiency of the service.

➢ More emphasis should be given on the customers’ complaint. ➢ Informal training can be a way to improve the skills of the employee. Allocating job responsibility to the employees according to their profit. ➢ Try to create a good image to customers through different promotional tools

C. Conclusion

Shahjalal Islami Bank Limited is one of the leading Islamic sharah based commercial bank in Bangladesh. SJIBL is committed to provide excellent service to its valued customers. The management of SJIBL always gives special efforts to uphold the interest and trust of their customers. By providing excellence service and special effort Shahjalal Islami Bank has placed itself to a strong position among all the banks. The main focus of SJIBL is to concentrate on the consumer demand, which differentiates SJIBL with other banks. SJIBL has been successfully created a brand image Islamic sharah based in the market and is maintaining a strong position in the market. But still it has some weakness, which can be easily overcome. SJIBL has much more potential to explore the existing market. So, to be the number one forever they have to be very perfect in their business.

A bank cannot be able to reach the goal until it makes the customer satisfied by providing service as much as the customer needs. After preparing this report it becomes very evident to say that there should be a goal to make the customer always happy and satisfied with the service, only then a bank can run its business safe and soundly in this competitive era. In fine it can l said that Consumer Banking division is the department of Shahjalal Islami Bank which comes closure to the customers. SJIBL has an efficient & effective team with performances in an excellent manner. So, considering all the service of SJIBL should become more conscious to deal with its customers as the customers have now more choice to bank with others.

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Aims & objectives

• To conduct interest-free banking.

• To establish participatory banking instead of banking on debtor-creditor relationship.

• To invest on profit and risk sharing basis.

• To accept deposits on Mudaraba & Al-Wadeah basis.

• To establish a welfare-oriented banking system.

• To extend co-operation to the poor, the helpless and the low-income group for their economic enlistment.

• To play a vital role in human development and employment generation.

• To contribute towards balanced growth and development of the country through investment operations particularly in the less developed areas.

• To contribute in achieving the ultimate goal of Islamic economic system.

Islamic Banking in Bangladesh

There are currently seven commercial banks operating under Islamic principles. They are:

1. Islami Bank Bangladesh Limited,
2. Al-Arafah Bank Ltd.
3. Social Investment Bank Ltd,
4. Exim Bank Ltd,
5. Shahjalal Islami Bank Ltd.
6. Icb Islamic Bank Ltd
7. First security Islami Bank Ltd.

ISLAMIC MODES 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 rules. A complete definition for the term “Islamic Modes of
Finance”’ may be given as follows:

BAI-MURABAHA
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 an agreed upon profit payable today or on some date in the future in lump-sum or by installments. The profit may be either a fixed sum or based on a percentage of the price of the goods.

MUSHARAKA (PARTNERSHIP)
The word Musharaka is derived from the Arabic word Sharikah meaning partnership. Islamic jurists point out that the legality and permissibility of Musharaka is based on the injunctions of the Qura’n, Sunnah, and Ijma (consensus) of the scholars. It may be noted that Islamic banks are inclined to use various forms of Shariakt-al-Inan because of its built-in flexibility. At an Islamic bank, a typical Musharaka transaction may be conducted in the following manner.

One, two or more entrepreneurs approach an Islamic bank to request the financing required for a project. The bank, along with other partners, provides the necessary capital for the project. All partners, including the bank, have the right to participate in the project. They can also waive this right. The profits are to be distributed according to an agreed ratio, which need not be the same as the capital proportion. However, losses are shared in exactly the same proportion in which the different partners have provided the finance for the project.

MUDARABA
The term Mudaraba refers to a contract between two parties in which one party supplies capital to the other party for the purpose of engaging in a business activity with the understanding that any profits will be shared in a mutually agreed upon. Losses, on the other hand, are the sole responsibility of the provider of the capital. Mudaraba is also known a Qirad and Muqaradah.

Mudaraba is a contract of those who have capital with those who have expertise, where the first party provides capital and the other party provides the expertise with the purpose of earning Halal (lawful) profit which will be shared in a mutually agreed upon proportion. This type of business venture serves the interest of the capital owner and the Mudarib (agent).

BAI-SALAM
Bai-Salam is a term used to define a sale in which the buyer makes advance payment, but the delivery is delayed until some time in the future. Usually the seller is an individual or business and the buyer is the bank.

ISTISNA’A SALE

The Istisna’a sale is a contract in which the price is paid in advance at the time of the contract and the object of sale is manufactured and delivered later. The majority of the jurists consider Istisna’a as one of the divisions of Salam, Therefore, it is subsumed under the definition of Salam. But the Hanafie school of Jurisprudence classifies Istisna’a as an independent and distinct contract. The jurists of the Hanafie School have given various definitions to Istisna’a some of which are: “That it is a contract with a manufacturer to make something” and “It is a contract on a commodity on liability with the provision of work”. The Purchaser is called ‘Mustasnia’ contractor and the seller is called ‘Sania’ maker or manufacturer and the thing is called ‘Masnooa’, manufactured, built, made.

QARD HASAN (Benevolent loans)
Qard Hasan is a contract in which one of the parties (the lender) places into the ownership of the other party (the borrower) a definite parcel of his property, in exchange nothing more than the eventual return of something in the same value of the property loaned.

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 installments.

IJARAH
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).

Operational Techniques of Islamic Bank

SOURCES OF FUNDS
The financial resources of the Islamic banks consist of ordinary capital resources comprising paid-up capital and reserves, and funds rose through borrowings from the central bank and other banks (inter-bank borrowing), and issue of Islamic financial instruments. The major part of their operational funds is, however, derived from the different categories of deposits accepted on the Islamic principles of Al-Wadiah (safe custodianship) and Mudaraba (trust financing). For the sake of ease of understanding we call these two sources as ‘Primary’ and ‘Secondary’. These are discussed as under.

PRIMARY SOURCES

Paid-Up Capital
Islamic banks are public limited companies incorporated under the companies Act, which are listed on the Stock Exchange. Individuals and institutions, local and foreign, have subscribed their capital. For example, the First Islamic bank of Bangladesh – Islami Bank Bangladesh Limited (IBBL)- is a joint venture of Bangladesh and overseas capital in the ratio of 38:62. Its local capital is owned by the Government of Bangladesh and private individuals and institutions. Reserves

The central bank also requires that every Islamic bank shall maintain a reserve fund. Before any dividend is declared, an Islamic bank shall transfer to the reserve fund out of the net profits of each year, after due provision has been made for Zakat and taxation, a certain percentage of the net profits in order to build up adequate reserves. If the central bank is satisfied that the aggregate reserve fund of an Islamic bank is adequate for its business, it may by order in writing exempt the bank from this requirement for a period of one year. In Bangladesh, the IBBL besides maintaining the statutory reserve, has built up an Investment Loss Offsetting Reserve (ILOR) by appropriating 10 (ten) percent of the bank’s annual investment profits. Liquid Assets

Every Islamic bank is further required to keep at all times minimum amount of liquid assets against its deposit liabilities expressed as certain percentage of the deposits, as may be prescribed from time to time by notice in writing by the central bank. For this purpose, liquid assets mean (i) cash in bank, (ii) balances with the central bank/other designated banks, (iii) Government Investment Certificates, and (iv) such other assets as may be approved by the central bank. Failure to keep the minimum liquid assets invokes penalty for each day of deficiency. Borrowing From Central Bank

To tide over temporary liquidity shortages Islamic banks, as member banks, are entitled to borrow from the central bank, as the lender of last resort.

In such cases, IBBL does not pay interest like the conventional banks. Such borrowing from the central bank is treated as a PLS deposit with the Islamic banks and profit is paid at the rate payable on corresponding PLS deposit of the bank. Inter-Bank Borrowing

The Islamic banks have established interest-free fund arrangements with local and foreign banks on the basis of reciprocity. Normally, under prior arrangement, the Islamic banks keep surplus funds with selected banks. When needed, these banks also place interest-free compensating balance with the Islamic bank. If balances are not equal, then periods for which funds placed are adjusted.

SECONDARY SOURCES
Islamic banking is a response to such exigencies. It mobilizes savings of the common people in line with Islamic Shariah. Techniques employed by Islamic banks for saving mobilization are as follows.

Al-Wadiah Account
Islamic banks receive deposits in their Al-Wadiah account. This account is similar to the demand deposit account of interest-based banks. Conventional interest-based banks do not pay interest on this type of deposit account. In addition, depositors may withdraw all or a part of the funds deposited in this account without restriction. The term Al-Wadiah means deposit of money allowing somebody to claim the funds in the account. The bank as trustee preserves and safe keeps the funds deposited. Thus, depositors feel safe keeping their money with the bank because the bank provides assurance of returning their money on demand. General Mudaraba Account

The Mudaraba account of Islamic banks is different from the checking account of an interest-based bank. Mudaraba is a form of business contract where one party supplies money and the other manages the business by investing labor and time. Profits generated from the venture are shared by both in a proportion agreed upon at the time of contract. However, in this arrangement, the financier is solely responsible for any loss that may be incurred. The financier of the business is known as Sahib al Mal, Rabbul Mal or owner of the capital and the manager of the business is called Mudarib or entrepreneur.

Term Mudaraba Account
Islamic banks also receive term deposit from their clients. The term deposit is, of course, altogether different from that of the interest-based banks. Fixed term deposits received by Islamic banks are called “Term Mudaraba Deposits”. Generally an Islamic bank receives these types of deposits for a minimum period of 3 months to 3 years at the maximum.

The bank invests the money, and shares any profits with the depositor based upon a percentage agreed upon at the time of contract. In the event a loss in incurred, depositors share the loss in proportion to the deposit in their account. At the end of the term the contract terminates and the depositors withdraw their money, plus or minus any gains or losses. The depositors, if they like, can again deposit their money for a new term under a new contract. No checkbook is issued against a Term Mudaraba Deposit, however, Term Mudaraba Certificate is provided to the depositor.

Term Mudaraba Account
Islamic banks also receive term deposit from their clients. The term deposit is, of course, altogether different from that of the interest-based banks. Fixed term deposits received by Islamic banks are called “Term Mudaraba Deposits”. Generally an Islamic bank receives these types of deposits for a minimum period of 3 months to 3 years at the maximum.

The bank invests the money, and shares any profits with the depositor based upon a percentage agreed upon at the time of contract. In the event a loss in incurred, depositors share the loss in proportion to the deposit in their account. At the end of the term the contract terminates and the depositors withdraw their money, plus or minus any gains or losses. The depositors, if they like, can again deposit their money for a new term under a new contract. No checkbook is issued against a Term Mudaraba Deposit, however, Term Mudaraba Certificate is provided to the depositor. Special Mudaraba Account

When an Islamic bank receives a Mudaraba deposit for investment in some specific business, sector, or project, the deposit is called a “Special Mudaraba Deposit”. In this case, an Islamic bank, while receiving deposits, comes to an agreement with the depositors that the money to be received will be invested in some specific business such as the fertilizer or salt business; or in some specific sector like the industrial sector, textile sector, export-import sector; or in some specific investment sector of the bank such as real estate, shipping or a special project. Profits earned from these types of specific projects are distributed between the bank and the Special Mudaraba depositors based a previously agreed to percentage. As before, in the event of a loss, the depositors share the loss in an amount proportional to their deposits in the account.

Central Banking in Islamic Framework
Introduction
The central bank has the sole authority to issue money (currency) and the responsibility to regulate the banking system in order to secure the value of money and realize the other objectives of monetary policy. Money serves as the medium of exchange and the commonly accepted means of payment, and as such as a measure of value. Excessive fluctuations in the value of money lead to economic distortions and causes social inequities. Inflation gives windfall gains to the rich and the business people but causes hardship to the fixed and low-income groups by eroding their purchasing power.

Worse still, deflation often deprives the latter of their employment and means of livelihood. The phenomena of inflation and deflation are characteristic of the financial system based on the institution of interest, which is prohibited in Islam.

Objectives of monetary policy in Islam

Consistent with the Islamic ideals of social justice, equity, fairness and balance, there are three major objectives of monetary policy in an Islamic economy, which discards interest. These objectives are: • Stability in the value of money;

• Economic well-being with full employment and optimum rate of economic growth; and • Distributive justice.
For a proper appreciation of the above-mentioned objectives of monetary policy and how these may be realized, they are explained below.

Stability in the value of money

In an Islamic economy, it is almost mandatory on the central bank to preserve the value of money. Thus, the central bank should allow expansion of money supply to the extent it is justified by a possible contribution to growth in real balances. The stability in the value of money should be accorded high priority because of the unequivocal stress of Islam on honesty and fairness in all human dealings, and because of the negative impact of inflation on socio-economic justice and general welfare.

But, rather than absolute, this objective would mean relative stability in the general price level. Absolute price stability is neither feasible nor desirable as it may conflict with the optimum growth and full employment objective of the monetary policy.

Economic Growth and Employment

While inflation is incompatible with the goals of an Islamic economy, prolonged recession and unemployment that cause human sufferings are also unacceptable. Monetary policy has, therefore, to aim at a high rate of economic growth with full employment and utilization of productive resources. However, maximization of economic growth per se and at all costs is not the objective of monetary policy in an Islamic economy. Material prosperity is to be attained within the framework of Islamic values.

It should not be attained through the production of essential and morally – questionable goods and services. It should not lead to an excessive and overly-rapid use of Allah-given resources at the expense of future generations, and it should not be harmful to present or future generations by degenerating the moral and physical environment.

Environmental degeneration with degradation and depletion of land, water and forest resources and serious air and water pollution are already matters of great concern around the world. Hence the concept of “sustainable development”, which means meeting the needs of the present generation without compromising the needs of future generations.

Economic development and sound environmental management are complementary aspects of the same agenda. Without adequate environmental protection, development will be undermined; without development, environmental protection will fail.

Distributive Justice

Monetary policy should be used actively to promote the goal of distributive justice and prevent concentration of wealth and economic power in an Islamic economy. However, too much concern with distributive justice in formulating and implementing monetary policy may adversely affect its overall efficiency and effectiveness in attaining the other goals of monetary policy. e.g. growth, employment and development. Reduction in income inequalities and necessary redistribution should be an important policy objective of an Islamic state and hence the domain, mainly, of its fiscal policy. Monetary policy can contribute to this objective.

Problems and Challenges of Islamic Banking in Bangladesh
1. Nature of the Problem and Challenges

The Islamic banks in the world have been facing a number of challenges. Side by side, the Islamic banking in Bangladesh is also facing numerous problems of challenges. First, they have not yet been successful in devising an interest-free mechanism to place their funds on a short-term basis. They face the same problem in financing consumer loans and government deficits. Second, the risk involved in profit-sharing seems to be so high that almost all of the Islamic banks in Bangladesh have resorted to those techniques of financing which bring them a fixed assured return. As a result, there is a lot of genuine criticism that these banks have not abolished interest but, they have, in fact, only changed the nomenclature of their transactions.

Third, the Islamic banks do not have the legal support of the Central bank in Bangladesh, do not have the necessary expertise and trained manpower to appraise, monitor, evaluate an audit the projects that are required to finance. As a result, they can not expand despite having huge excess financial liquidity. The implementation of an interest-free banking in Banking raises a number of questions and potential problems which can be seen from the macro and micro operational point of view. A partial list of the issues confronting Islamic banks in Bangladesh includes.

2. Problems Related to Macro Operation of the Islamic Banks

• Liquidity and Capital
• Valuation of bank Assets
• Financial Stability
• The Ownership of Banks
• Lack of Capital Market and Interest-free Financial Instruments • Insufficient Legal protection
• Controlling and Supervision by the Central bank on the Basis of Islamic Shariah • Lack of Unified Shariah Rulings
• Absence of Islamic Inter-Bank Money Market
• New Banking Regulations
• Accounting principles and Procedures
• Shortage of Supportive and Link Institutions
• Shortage of Skilled and Trained Manpower in Islamic Shariah banking • Lack of Co-operation among the Islamic Banks
• Lack of Familiarity by International Financial and Non-financial Sector with Islamic Products and procedures. • Severe Competition in the Financial Sector
• Economics slowdown and Political Situation of the Country • Inadequate Track Record of Islamic Banking
• Absence of Infrastructure for International Islamic Trade Financing • Defaulting Culture of the Borrowers
• Short-term Asset Concentration in the Islamic Banks
• Lack of Course or paper on Islamic Economics, Banking and Finance at the Educational Institutions. • Lack of Uniform Operational procedure of Islamic Banking • Lack of Specialised Islamic Banks and Non-Bank financial Institutions • Lack of Consortium or Syndication of the Islamic Banks • Lack of Harmonization of Islamic financial Practices • Lack of Inter-country Study on the practical Operations of Islamic Banking • Lack of Secondary Securitisation Market

• Lack of Coordinated Research Work on Islamic Economics, Banking and
finance • Lack of Apex Training Institute for the Islamic Banks.

Problem Related to Micro Operation of the Islamic Banks :

• Increased Cost of Information
• Control over Cost of Funds.
• Mark-up Financing and Corrupted Mark-up
• Excess Resort to the Murabaha Mode of Financing
• Utilization of Interest Rate of fixing the Profit Margin in Bai-Modes • Financing Social Concerns.
• Lack of Positive Response to the Requirement of government Financing. • Failure of Islamic Banks to Finance High Return Projects. • Sacrifice of allocative Efficiency
• Loss of Distributive Efficiency.
• Depression of Profit.
• Lack of Full-fledged Shariah Audit.
• Fraud-Forgery or corruption in Islamic Banks.
• Minimum Budget for Research and Development.
• Working Environment.
• Issuance of Letter of Guarantee (L/G)
• Minimum Budget for Research and Development.
• Lack of Shariah Manual or Guidelines.
• Islamic Investment Risk Analysis and measurement Methodology. • Non-exemption of Stamp Duty for Purchasing Property by Banks. • Lack of Co-operation between Islamic Banks and Islamic NGOs for extending Microcredit. • Lack of Establishment of Links with other Training Institutes and Shariah Supervisory Bodies. • Lack of Intention of the Management to be strict with Shariah Guidelines. • The above problems are some of the burning problems confronting the Islamic banks in Bangladesh. However it is felt that much operational work and in-depth research work has to be undertaken to allow the Islamic banks to flourish with highest quality and strength.

The Future of Islamic Banking in Bangladesh
1. Need for Re-organization of the Whole financial System
Review of the problems of Islamic banking in general and Islamic banks of Bangladesh in particular poses a challenging feature for the promotion and survival of Islamic banks in Bangladesh. The policy implication is not that Islamic banks should never be floated within the conventional banking framework.

Rather it is the conventional banking system whose operational mechanism needs to be re-examined and converted into PLS system considering beneficial impact of the latter on the economy. However, as long as Islamic banks are to operate within theconventional banking framework, the recommendations under the following heads may be taken note of.

2. New banking philosophy for the Islamic Banks
There seems to be a gap between the ideals and actual practice of Islamic banks in Bangladesh. In their reports, booklets, bulletins and posters there banks express their commitment to striving for establishing a just society free from exploitation. Study shows that a little progress has been achieved so far in that direction. Though this failure is attributed mainly to the pervasive influence of conventional banking system itself, lack of vigilance of the promoters of Islamic banking in realizing the objective is no less to blame. There should be a through review of policies that have been pursued by these banks for about a decade and points of departure have to be identified to redesign their of action.

3. Future Policy and Strategy
The first action that deserves immediate attention is the promotion of the image of Islamic banks as PLS banks. Strategies have to be carefully devised so that the image of Islamic character and solvency as a bank is simultaneously promoted. To this end, Pilot schemes in some very selected areas should be started to test innovative ideas with profit-loss-sharing modes of financing as major component.

Islamic banks should clearly demonstrate by their actions that their banking practices are guided by profitability criterion thereby establishing that only Islamic banking practices ensures efficient allocation of resources and provide true market signals through PLS modes. Islamic banks should continuously monitor and disseminate through various means the impact of their operations on the distribution of income primarily between the bank and the other two parties: the depositors and the entrepreneurs, and then on different income groups of the society. These presuppose establishment of a fully equipped research academy in each Islamic bank.

4. Stepping for Distributional Efficiency.
The task is more challenging for Islamic banks, as they have toe promote their distributional efficiency from all dimensions together with profitability, Islamic banks, step by step, have to be converted into profit-loss-sharing banks by increasing their percentage share of investment financing though PLS modes. The Islamic banks, to do that, can be selective in choosing clients for financing under PLS modes. They should establish direct functional relationship between the income of the depositors and between the income the income of the bank and that of the entrepreneurs. The relationship improves with share of bank financing under PLS modes increases.

5. Promotion of Allocate Efficiency
The Islamic banks can improve their allocate efficiency be satisfying social welfare conditions in the following manner. First, they should allocate a reasonable portion of their investible funds in social priority sectors such as agriculture (including poultry and fishery), small and cottage industries and export-led industries like garment, shrimp cultivation. Secondly, when the percentage shares of allocation of investible funds are determined among the sectors of investment financing, profitability of projects should be the criterion for allocating investment funds. The criterion would be best satisfied if more and more projects were financed under PLS modes.

6.Modern banking Policies and practices

Islamic banks, with a view to facing the growing competition either fellow-Islamic banks or the conventional banks which have launched Islamic banking practices, will have to adapts their functioning in line with modern business practices, though improvement and expansion of the range of dealing in the banking sector. Thus, it is necessary for them to provide comprehensive banking and investment services to clients and simultaneously to take advantage of modern technological breakthroughs in areas such as electronic communication, computerization etc.

7. Government and Central bank Responsibilities
Government should think actively for the promotion of Islamic banking in Bangladesh considering its pro-development role. It should amend existing financial laws, acts and regulations to create favorable environment conducive to smooth operation of Islamic banks. The bank Reforms Committee may be entrusted to draft an Islamic Banking Act.

Government should also allow establishment of Islamic insurance and other subsidiary companies in order to facilitate their operation. Bangladesh Bank should develop some Islamic Monetary and saving instruments and create separate window for transactions with the Islamic banks and a full-fledged Islamic banking Department for analyzing, supervising, monitoring and guiding purpose, thereby facilitating Islamic banks for their smooth development in Bangladesh.

8. Inter-Islamic Bank Co-operation and Perspective Plan
All Islamic banks should come forward to help each others and adopt a perspective plan say for 20 years for Islamization of the banking system of Bangladesh. To actualize this mission, they should set-up immediately and Apex Research Academy and Training Institute designed with modern tools. Books and other accessories.

Prospects of Islamic Banking in Bangladesh
In my understanding the prospect of Islamic Banking is very bright. Muslim people everywhere want Islamic Banking. In Bangladesh, to give an example, 15 conventional Banks have opened separate Islamic branches recently. Five hundred applications are pending with Islamic Bank Bangladesh Ltd. for opening of new braches. IBBL has already 132 branches in the country. The position may not be same in all countries. But if Islamic Banking succeeds in any country, the positions will same in every Muslim country in my judgment.

This means, that first Islamic Bank in any country should be well managed and successful so that people have faith in this system. Established Islamic Banks should co-operate by lending competent officials in setting up new Islamic Banks. The problems mentioned in the preceding pages are not insurmountable. Most of them can be solved with more research and dedicated efforts.

IDB, OIC Fiqh Academy, International Islamic Banking organizations and individual Islamic banks should put more resources in research in Islamic Banking, Finance and Economic issues. Cooperation of Central Banks and the Governments will be needed in some areas. I have no doubt in mind that Islamic banking will expand more and more in the entire world.

Performance of the Islamic Banking System
Comparative position of the Islamic Banking sector in
Bangladesh, 2007
(In million TK.)

|Group Banks |Deposit |Investment |Excess liquidity|Manpower |Branches | | | | |asset | | | |Islamic Banking |288557 |284547.2 |7742.4 |8220 |308 | |sector | | | | | | |All private Banks |912240.4 |787575.2 |41863.1 |32576 |1573 | |All Banks Total |1463163.6 |1220912.2 |98126 |108451 |6336 |

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The growth of Islamic banking in Bangladesh is progressing day by day. The remarkable shift or conversion of the conventional banks and their branches into Islamic lines gives the signal of high acceptance of the interest-free banking by the public in general. The Islamic banking industry continued to show strong growth in 2007 in tandem with the growth in the economy, as reflected in the increased market share of the Islamic banking industry in terms of assets, financing, and deposits of the total banking system.

The Islamic banks in Bangladesh started from a very limited resource base.

But with the passage of time, they have shown strong performance in respect of mobilization of deposits. Total deposits of the Islamic banks and Islamic banking branches of conventional banks stood at Taka 188557.4 million in September, 2007. This was 27.6% of the deposits of all private banks and 12.9% of the deposits of the total banking system. Total investment of the Islamic banks and the Islamic banking branches of the conventional banks stood at Taka 184547.2 million at the end of September, 2007. This was 31.4% of all private banks and 15.1% of the total banking system of the country.

The Statutory Liquidity Requirement (SLR) for the Islamic banks is fixed at 10% since the inception of the first Islamic Bank in 1983. This remains unchanged till date while SLR for the traditional commercial banks has been changed many times, which presently is fixed at 18%. It is evident from Table 1 that almost all of the Islamic banks have been facing excess liquidity problem while only one bank, the Oriental Bank Limited, is maintaining liquidity position below the required level.

However, the excess liquidity of the Islamic banks and Islamic banking branches of conventional banks as of September 2007 was to the tune of Taka 7742.4 million (18.5% of private banks and 7.9% of all banks), which originated mainly due to the non-responsiveness of good borrowers for credit demand and the absence of adequate interest-free financial instruments in the country.

Islamic banks and the Islamic banking branches of the conventional banks have created enough employment opportunities in the banking sector by providing a good number of jobs to the people. The total persons employed in the Islamic banking system were 8220 as on September, 2007. This was 25.2% of the private sector banks’ total employment and 7.6% of all banks.

The total number of branches of the Islamic banks, including the Islamic banking branches of the conventional banks, in the country stood at 308 in September, 2007, of which 236 were urban and 72 were rural. The number of Islamic bank branches was 19.6% of all private banks and 4.9% of the banking system of the country.

SWOT analysis

Strength
�� Diversified ownership pattern
�� Strong market share
�� Good Financial performance
�� Good investment portfolio
�� Comfortable Liquidity position
�� Experienced management team
�� Sound HR development programmes
�� Improvement in automation
�� Wide branch network
�� Significant involvement in corporate social responsibility

Weakness:
�� Unmatched asset versus capital growth
�� Limited delegation of power
�� Limited modern customer service facilities
�� Moderate recovery of rescheduled investments
�� High large investment exposures
�� Initial stage of system based internal control procedures

Opportunities:
�� Investment in SME and Agro based industry
�� Real time online banking
�� Credit card in dual currency
�� Creation of Islamic Money market product
�� Introduce above 5 years Islamic bond

Threats:
�� Market pressure for increasing the SLR
�� Overall liquidity crisis in money market
�� Government pressure to reduce investment rate
�� Increase the capital adequacy position

Conclusion:
The banking system of Bangladesh is composed of a variety of banks working as
Nationalized CommercialBanks (NCBs), Private Banks, Foreign Banks, Specialised Banks and Development Banks. However, 28 outof 50 banks in Bangladesh are private, of which only 7, namely Islami Bank Bangladesh Limited, ICB Islamic Bank, Al-Arafah Islami Bank Limited, Social Investment Bank Limited,Exim Bank,Shahjalal Bank and First security Bank Ltd have been operating as Islamic banks. Besides these full-fledged Islamic banks, 10 conventional banks in the private sector have opened 25 full-fledged Islamic banking branches and Islamic Banking Counter respectively to deal with the Islamic banking business parallel to their conventional operations.

References:

01. www.dsebd.org
02. www.islamibankbd.com
03. Bank Fund Management by A.R Khan


Essay Topics:


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