Internship Report on Shahjalal Islami Bank Ltd

Introduction of the Study 1. 1 Background Bachelor of Business Administration (BBA) program consists of integrated theoretical and practical method of teaching. In fact practical orientation with day-to-day activities of an organization is one of the most important requirements of BBA program. To fulfill this purpose I was sent to Shahjalal Islami Bank limited (SJIBL), Foreign Exchange Branch as an intern in this regard under the supervision of two supervisors one is internal form the institute and another is from the organization for three months.

The paper will deal with the “Banking Business Operation of Islamic Bank: A Study on Shahjalal Islami Bank Limited”. On the basis of working experience for this period I have prepared this report and I have tried my best to relate the theoretical knowledge with the practical work situation. 1. 2 Objective of the Study The primary objective of this report is to get acquainted with the banking business operation of Islamic Bank. The specific objectives of the report are: ? To study various desk works of the Shahjalal Islami Bank Limited. ?To know about the General Banking activities of the banks. To know about the Foreign Exchange system. ?To know the Investment policy of the Banks. ?To know about the remittance of funds. ?To acquire an in depth understanding of the functions of each department. ? Coordinating the functions of various departments. 1. 3 Scope of the study The focus of the report will be on various functional areas of Shahjalal Islami Bank Limited. I was assigned to Shahjalal Islami Bank Limited by the authority and found the following boundary of my study there: •Account opening department •Clearing department •Cash department •Export and import department Investment department 1. 4 Methodology of the Study: To meet the objectives of the study I realized that a single method would not be effective. Formal & oral discussion, direct observation, questioning clients & printed papers of the Bank were found useful. To collect the necessary and meaningful information the following methods were applied. Both primary and secondary sources were used in here. 1. 4. 1 Data Collection: The report was fully investigative in nature. Data have been collected from two sources: •Primary sources •Secondary sources 1. 4. 1. 1 Primary Sources are as follows: Face-to-face conversation with the respective officers and staffs of the Branch. ?Practical work experience in the different desks of the departments of the Branch covered. ?Relevant file study as provided by the officers concerned. 1. 4. 1. 2 Secondary Sources of data and information are: ?Annual Report of Shahjalal Islami Bank Limited. ?Web site of Shahjalal Islami Bank Limited. ?Different ‘Procedure Manual’, published by Shahjalal Islami Bank Limited. 1. 5 Organization of the Report This report divided into two major parts. One is organizational part and another is main assigned part.

Chapter 1&2 uncovers Organizational part, that mainly focuses on the reason why this report is done and also consist limitation, scope and overview of the organization that consist a comprehensive idea about SJIBL by covering the issues like; background of the bank, mission and vision of the SJIBL, corporate profile, organizational structure, function of SJIBL, branch network, performance and growth of SJIBL. The main part of the report contains Chapter 3, 4, & 5 (General Banking, Investment, & Foreign Trade Business operation of SJIBL). Finally Chapter 6 contains Findings, Recommendation & Conclusion. . 6 Limitation •Due to confidentiality the data available may not be accurate. •Supply of more practical and contemporary data is another shortcoming •The study may not be done very successfully due to inexperience. •On our schedule time we could not find the respondent. Because they were busy with their work on that time. CHAPTER 2: Organizational Profile 2. 1 Introduction: Shahjalal Islami bank limited is a commercial bank and its play a very important role in our economy; in fact it is difficult imaging how our economic system would function efficiently without the help of commercial bank.

They are heart of our financial structure since they have the ability, co-operation with the Bangladesh Bank to add to the money supply of the nation and thus create additional purchasing power. These characteristics set commercial banks apart from other financial institution. In addition to issuing deposits payable on demand they accept time deposit. By lending and investing these resources and by transferring funds throughout the nation and even between countries, they make possible a more complete utilization of resources of the nation. Although banks create no new wealth, their lending.

Investing and related activities facilitate the economic process of production, distribution and consumption. There are mainly three sections in SJIBL via General Banking Division, Investment Division and Foreign Trade Division. These Divisions have small departments or units under them. 2. 2 Overview of (Industry): At birth, Bangladesh inherited an interest based banking system, which was introduced here earlier when the country was a part of British Colony. Since its inception Bangladesh saw a new trend in banking both at home and abroad. Islamic banking was successfully tries in Egypt.

After the Mit Ghamar Model, Naser Social Bank was in the process of establishment. During the seventies, Islamic Development Bank (IDB) and a number of Islamic banks at national levels were established in the Islamic world. At home, the Islamic groups were vigorously working for adoption of Islam as the complete code of life. They found Islamic banking in ready form of immediate introduction. Two professional bodies “Islamic Economics Research Bureau” (IERB) and “Bangladesh Islamic Bankers Association” (BIBA) were taking practical steps for imparting training on Islamic Economics and banking to a group of bankers and arranging some national nd international seminars/workshops to mobilize local and foreign people and attract investors to come forward to establish Islamic bank in Bangladesh. Their professional and right-thought activities were reinforces by a number of Muslim entrepreneurs working under the aegis of Muslim Businessman Society (9MBS). The body concentrated mainly in mobilizing equity capital for the emerging Islamic bank. Due to continuous and dedicated work of the above groups and individuals and active support from the Government, Islamic banking could be established in early eighties.

Islamic banks have been operating in Bangladesh for about one and half decade alongside with the traditional banks. Out of over 39 banks only five banks (including one foreign Islamic bank) and two Islamic banking branches of a traditional bank, Prime Bank Limited (PBL) have been working on Islamic principles. Like any other traditional commercial banks, they do mobilize deposits and produce loans. But their modes of operation, based on shariah, are different from the other traditional commercial banks. 2. 2. 1 Role of Bangladesh Bank in Promoting Islamic Banking in Bangladesh

Though there is no complete Islamic Banking Act for controlling, guiding and supervising the Islamic banks in Bangladesh, some Islamic banking provisions have already been incorporated in the amended Banking Companies Act, 1991 (Act No. 14 of 1991). Bangladesh Bank did not set up any separate Department at its Head Office to control, guide and supervise the operation of the Islamic banks. Inspection and supervision of the Islamic banking operations are conducted by the Bangladesh Bank as per the general guidelines framed for the conventional banks.

So, ensuring implementation of Shariah principles in the Islamic banks are being conducted by their own Shariah Councils. The role of Bangladesh Bank in controlling, guiding and supervising the Islamic Banks in Bangladesh in accordance with Islamic Shariah is very minimal. In observing the Shariah implementation status of the Islamic banks, Bangladesh Bank examines only the report of the respective banks’ Shariah Councils. However, the inspectors and supervisors of Bangladesh Bank are not equally familiar with the technicalities of the different operational methodologies of the Islamic banking.

This is because of the fact that there is no separate Department to look into this important matter. International Journal of Islamic Financial Services Vol. 2 No. 1 A committee of experts set up by the Governors of Central Banks and Monetary Authorities of the OIC countries examined the whole range of relationships between the Central Banks and the Islamic Banks and submitted a report in 1981 on the “Promotion, Regulation and Supervision of Islamic Banks”. The report highlighted the need to provide for central bank assistance to the Islamic banks on a basis compatible with the Shariah.

The report also discussed many monetary aspects such as liquidity requirements, reserve requirements, supervision of Islamic banking activities, and fiscal treatment of income from participation, ownership, capital requirements, and the maintenance of sound relationships between capital, reserves and total assets. The report recommended the fostering of interest-free financial instruments to enable the Islamic banks to meet the statutory liquidity requirements of the central banks. 2. 2. 2 Theoretical Basis and Business Practice of Islamic Banking

From the viewpoint of Islamic Shariah, in order to be justified islamically the banking system has to avoid interest. Consequently, financial intermediation in Islamic banking between the bank and the client takes place as a partner rather than a debtor-creditor. The financial activities of modern conventional banks are based on a creditor-debtor relationship between depositors and bank on the one hand and between the borrower and the bank on the other. Interest is regarded by conventional banks as the price of credit reflecting the opportunity cost of money.

As interest is prohibited in Islam, commercial banking in an Islamic framework could not be based on the creditordebtor relationship. The other aspect of the theoretical basis of Islamic banking is that the interest free bank is not risk free. This principle is applicable to two main factors of production, i. e. labor and capital. According to this principle, as no payment is allowed to labor, unless it is applied to work, no reward for capital should be allowed, unless it is exposed to business risk. 2. 3 Organizational Overview: . 3. 1 Brief History Shahjalal Islami Bank Limited (SJIBL), a Shariah based commercial bank in Bangladesh, was incorporated as a public limited company on 1st April, 2001 under Companies Act 1994. The bank commenced commercial operation on 10th May, 2001 by opening it’s first branch i. e. Dhaka Main Branch at 58, Dilkusha, Dhaka obtaining the license from Bangladesh Bank, the Central Bank of Bangladesh. It’s corporate head office is situated at 10, Dilkusha C/A, Jibon Bima Bhaban, Dhaka-1000, Bangladesh.

The bank opened two branches in 2001, six branches in 2002, two branches in 2003, two branches in 2004, and four branches in 2005, eleven branches in 2006, 2007 and 2008. Total number of branches stood at 32 in 2008 and some more branches are likely to open in important business locations of the country during 2008 subject to the approval of Bangladesh Bank. As per Article 30 of the Article of Association of the Bank, Shariah Council for the bank has been constituted.

The Shariah Council of the bank consists of prominent Ulamas, Bankers, Lawyers and Economists to advise and guide on the implementation of Islamic Shariah in business activities. The council enjoys a special status in the structure of the bank and playing a vital role to make the bank as Shariah compliant. In the year 2007, the total number of meeting of the Shariah Council was 3 and sub committee was 1. SJIBL offers a full range of banking services for the personal and corporate customers, covering all segment of society within the framework of Banking Company Act 1994 as well as rules and regulations laid down by central bank.

Diversification of products and services include corporate banking, retail banking and consumer banking right from industry to agriculture, real estate to software and is backed by the latest technology. The bank is being managed by a group of highly experienced professionals with diversified experience in finance and banking. The bank has already achieved tremendous progress in only five years. The bank has already ranked as one of the quality service providers and is known for its reputation. 2. 3. 2 Vision of SJIBL

To be the unique modern Islami Bank in Bangladesh and to make significant contribution to the national economy and enhance customer’s trust & wealth, quality investment, employees’ value and rapid growth in shareholders’ equity. 2. 3. 3 Mission of SJIBL ?To provide quality services to customers. ?To set high standard of integrity. ?To make quality investment. ?To ensure sustainable growth in business. ?To ensure maximization of shareholders’ equity. ?To extend our customers innovative services acquiring state-of-the-art technology blended Islamic principles. ?To ensure human resource development to meet the challenges of time. . 3. 4 Strategies of SJIBL ?To strive for customers best satisfaction & earn their confidence. ?To manage and operate the bank in the most effective manner. ?To identify customers’ needs and monitor their perception towards meeting those needs. ?To review and update policies, procedures and practices to enhance the ability to extend better services to the customer. ?To train and develop all employees and provide them adequate resource so that the customer needs are reasonably addressed. ?To promote organizational efficiency by communicating company plan, policies and procedures openly to the employees in a time fashion ?

To cultivate a congenial working environment. ?To diversify portfolio both the retail and wholesale market. 2. 3. 5 Nature of business Shahjalal Islami Bank Limited offers services for all banking needs of the customers, which include deposits, making loans & advances, discounting bills, conducting money transfer and foreign Trade transactions and performing other related services such as safe keeping, collections, issuing guarantees, acceptances and letters of credit. Nature and Legal status of SJIBL Name of the CompanyShahjalal Islami Bank Limited

Legal FormA public limited company incorporated in Bangladesh on 1st April 2001 under the Companies Act 1994 and listed in Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited. Registered OfficeJibon Bima Bhaban Front block (4th floor) 10 Dilkusha C/A, Dhaka-1000 Telephone No. 88-02-9570812, 7160591 Fax No. 88-02-9570809, 9553562 Websitewww. shahjalalbank. com. bd SWIFTSJBL BD DH E-mailsblho@shahjalalbank. com. bd ChairmanAlhaj Akkas Uddin Molla Managing DirectorMuhammad Ali AuditorsM/S Syful Shamsul Alam & Co. Chartered Accountants, 15 Dilkusha C/A (6th Floor), Dhaka-1000 Tax AdvisorM/S K.

M Hasan & Co. Chartered Accountants, 87 Eskaton Road, Dhaka Legal AdvisorLee Khan & Partners, Barristers Attorney and Advocates, City Heart 4th Floor, 67, Naya Paltan, Dhaka-1000 No of Branch32 No of Employees655 2. 3. 6 Objectives of SJIBL Twenty first century opened the predictable door of globalization. The whole world is being changed with a modern, extensive & technological revolution. Life style & status are widely changing to have a artistic, delightful & flourishing environment. Demand and attitude of the whole mankind escalating with time revolution. Everyone has a vision of such a life and status.

To fulfill such a vision, it needs possessions, prosperity, fortune, prudent deposit and consistent investments. Unfortunately, the Banks did a few to be a prosperous, service oriented, technology based banking. Shahjalal Islami Bank Limited is committed to fulfill the requirements of the mass people. Shahjalal Islami Bank Limited is patterned of Islamic norms & ethics with modern technology to achieve the goal in the new era. Humanitarian perfection, Economic progress, Assistance & service to the mass people are the basic objectives of Shahjalal Islami Bank Limited. 2. 3. 7 Organizational Structure:

There are different wings to consist the organizational structure of SJIBL. There are – ¦ Board of Directors ¦ Board Committees ¦ Executive Committees ¦ Policy Committees ¦ Management Team 2. 3. 8 Board of Directors There is a board of Directors of 13 members in the bank. The board of Directors is the apex body of the bank. It appears like this- 2. 3. 9 Name of The Board of Director ChairmanAlhaj Akkas Uddin Molla Vice ChairmanAlhaj Md. Hasan Vice ChairmanAlhaj syed Nurul Arefeen DirectorAlhaj Anwer Hossin Khan DirectorAlhaj Tofazal Hossain DirectorAlhaj Md. Faruque DirectorMr. Md. Masud DirectorAlhaj Md. Sanaullah Shahid DirectorAlhaj Md.

Abdul Barek DirectorAlhaj Md. Solaiman DirectorAlhaj Mohiuddin Ahmed DirectorAlhaj Khandoker Sakib Ahmed DirectorAlhaj Engr. Md. Towhidur Rahman DirectorNazmul Islam Nuru DirectorMrs. Dilara Jumma Managing DirectorMuhammad Ali SponsorsAlhaj Sajjatuz Jumma Alhaj Md. Harun Miah Alhaj Md. Farooq Alhaj Abdul Halim Alhaj Md. Abdul Mannan Alhaj A. K. AZad Alhaj MohammadYounus 2. 3. 10 Management hierarchy 2. 3. 11 Policy Committee Al matters relating to the principles, rules and regulation, ethics etc. for operation and management of the bank are recommended by the committee to the board of directors. 2. 3. 12 Management Team 2. PRODUCTS AND SERVICES OF SJBL The bank is managed by a team of professional executives and officials having profound banking knowledge and experience in different sectors management and operation of banking. During the short span of time SJIBL so far introduced a good number of attractive deposit products to broaden the resources base and also investment products to deploy the deposit products. SJIBL always try to introduce a wide verity of attractive deposit, investment and services for suiting taste and requirement of the client. 2. 4. 1 Products Bank means mobilizing fund from surplus unit and deployment of fund for deficit unit.

SJIBL mobilize its fund from surplus unit through different types of deposit schemes and deployment this fund for deficit unit through various investment schemes. So the main products of SJIBL are different kinds of deposits and investment schemes. 2. 4. 2 Deposit scheme Deposit is the “life-blood” of a bank. Bank has given utmost importance in mobilization of deposits introducing a few popular and innovative schemes. The mobilized deposits were ploughed back in economic activities through profitable and safe investment. This type of deposit schemes of SJIBL are: ?Mudaraba Monthly Income Scheme ?Mudaraba Double/Triple Benefit Scheme Mudaraba Monthly Deposit Scheme ?Mudaraba Millionaire Scheme ?Mudaraba Hajj Scheme ?Mudaraba Housing Deposit Scheme ?Mudaraba Cash Waqf Scheme Other than these deposits schemes SJIBL also operate some traditional deposit schemes these are: ? Al-Wadia Current Deposit ?Mudaraba Saving Deposit ?Mudaraba Short Notice Deposit ?Mudaraba Term Deposit ?Mudaraba Scheme Deposit The total deposit of SJBL stood at TK. 22618. 19 million as on 31Decembre, 2007 as against TK. 18090. 65 million of 31 December, 2006, registering increase of TK. 4527. 54 million and growth rate is 25. 03%. The deposit mix of the bank as on 31 December, 2007 is as bellow:

Sl. No. Nature of DepositTaka in Million% of Total Deposit 1Al-Wadia Current Deposit734. 713. 25 2Mudaraba Saving Deposit1,832. 758. 10 3Mudaraba Short Notice Deposit608. 752. 69 4Mudaraba Term Deposit11,341. 5150. 14 5Mudaraba Scheme Deposit6,869. 1330. 37 6Other Deposits1,231. 355. 44 Total22,618. 19100. 00% Table: Deposit Mix Of 2007 Fig: Deposit Mix Of 2007 Fig: Trend of Deposit from 2003 to 2007 2. 4. 3 Investment Schemes The special feature of the Investment policy of Shahjalal Islami Bank Limited is to invest on the basis of profit loss sharing system in accordance with the tenets and principles of Islamic Shariah.

Earning of profit is not only the motive and objective of the bank’s investment policy rather emphasize is given in attaining social good and in creating employment opportunities. The investment and credit department is very important department of a Bank. The money mobilized from ultimate surplus units are allocated through this department to the ultimate deficit unit (Borrower). The success of this department keeps a great influence over the profit of a bank. Failure of this department may lead the bank to huge losses or even to bankruptcy. So special care should be given to this department. Bank landing is important to the economy.

Adequate finance can maintain a stable output. But as liquidity and profitability are conflicting considerations, SJIBL, as a bank, while employing the funds pays due regard to both profitability and liquidity. The bank entertains good investment clients, having credit worthiness and good track record. The bank has different profitable investment projects these are: ? Mudarabaha ?Bi-Muajjal ?Hire Purchase and Ijara ?Investment Against L/C ?Bill Purchase/Discounted ?Investment Against Scheme Deposit ?Quard The bank has got a few investment schemes to provide financial assistance to comparatively less advantage group of people; which are: ?

Household Durable Scheme ?Small Business Investment Scheme ?Small entrepreneur Investment Program ?Medium Entrepreneur Program ?Housing Investment Scheme ?Rural Investment Program ?Car Investment Scheme ?Woman Entrepreneur Investment Scheme Total investment of the bank stood at TK. 20,616. 61 million as on 31 December, 2007 as against TK. 15,515. 79 million of 31 December, 2006 registering an increase of TK. 5100. 82 million and growth rate is 32. 88%. Mode wise investment portfolio of SJBL as on 31 December, 2007 is given below: Sl. No. Mode of InvestmentTaka in Million% of Total Investment 1Mudarabaha58,44. 8128. 35 Bi-Muajjal88,82. 6043. ,08 3Hire Purchase & Ijara35,81. 9217. 37 4Investment Against L/C19. 150. 09 5 Bill Purchase/Discounted1,588. 007. 70 6Investment Against Scheme Deposit17. 250. 08 7Quard29. 650. 14 8Others653. 233. 17 Total20,616. 613100. 00 Table: Investment Portfolio Of 2007 Fig: Investment Portfolio Of 2007 2. 4. 4 Services Shahjalal Islami Bank Limited is an industry standard, Islami Shariah and latest technology based modern bank. The bank is equipped with state-of-the-art technology and committed to provide technology based modern banking to its valuable customers. Services provided by SJIBL are: 2. 4. 5 On Line Banking

To provide better services to the valued customers using the latest technology and electronic media competing with other private banks to set the establish full automated, on-line, centralize banking systems interfacing with all delivery channels link, like ATM (Automated Teller Machine), POS (Point of Sale-Fund Transfer Machine for purchasing at any shop/service center. ), any branch banking, home banking, tele banking, internet banking etc. Online banking or any branch banking is a system where transactions, queries and statements of any client of a certain branch may be carried out from another branch of the bank . 4. 6 SJIBL VISA Card Card is considered as a new dimension of product resulting from technological development in the banking arena. In line with our affiliation with VISA International for VISA ATMs and POS, the following two products are launched broadening service product of the bank to the clients: i. VISA Electron (SJIBL VISA Debit Card – Local) ii. VISA Prepaid (SJIBL VISA Prepaid Card – Local and International) The important features of SJIBL VISA Card are given below: ?Sense of satisfaction of having an international brand. ?Any where any time banking. ?24 hours and 7 days a week banking. Directly linked with cardholders account. ?Convenient cash withdrawal at ATMs. ?Acceptability at huge number of Q-cash ATMs around Bangladesh. ?Accepted at all VISA terminals locally and globally. ?Local and international transaction with the same card (for duel card). ?Balance Inquiry. ?Mini statement. ?PIN change. ?Shopping at a large number of Q-cash POS terminals around Bangladesh. ?Payment of utility bill. ?Avoid pressure of at counter of bank. ?Minimizing risk of carrying cash. 2. 4. 7 SMS / Pull Push Service This is a service provided by the bank through mobile phone.

This new technology based service will helps the bank to attract new customer base. Through SMS or Pull Push service client will be facilitated with cell phone based banking service. This SMS service will help the bank to enhance and extend customer service levels on a collaborative basis and reduce teller queues. 2. 4. 8 SWIFT Society for Worldwide Inter-Bank Financial Telecommunication (SWIFT) is a bank owned co-operative serving the financial community worldwide. The SWIFT Transport Network (STN) is a dedicated global network for secure communication between SWIFT Customers.

SWIFT supports the financial data communication and processing needs of financial institutions, through a range of financial messaging services and value-added processing, as well as, access through the STN and interface and application software. In short SWIFT is a pioneer in the automation of the global financial industries. Shahjalal Islami Bank Limited has introduced this SWIFT alliance entry system firstly in October 2002 and introduced SWIFT alliance access in October 2003. 2. 5 CURRENT POSITION OF THE BANK

Despite changing macro economic condition and volatile money market and foreign exchange market SJBL was successfully in achieving much higher than national growth in deposit, investment (loan), export, and import and remittance business. The bank has maintained and achieved strong position in all key areas covering capital adequacy, asset quality, sound management, good earning and strong liquidity. Here shows current position of SJBL in different areas. 2. 5. 1 Equity Authorized capital of the bank is TK. 2,000 million and paid-up capital is TK. 1,872 million as on 31 December, 2007. Total equity was TK. 041 million as on 31 December, 2007. The bank has raised its paid up capital of TK. 936 million through Initial Public Offering (IPO) in the month January-February 2007. The competitive position of Equity for the year 2007 and 2006 is given below- Table: Equity Composition of 2007 SL. No. ParticularsY-2007 (million)Y-2006 (million) 1. Paid up capital1,871. 65935. 83 2. Statutory Reserve510. 39267. 13 3. Retained earning405. 691. 96 4. General Provision252. 98157. 48 5. Exchange Equalization 0. 170. 17 Total3,040881,362. 57 2. 5. 2 Capital Adequacy Total equity of the bank as on 31 December was TK. 1362. 7 million and total equity stood at TK. 3040. 88 on million at 31 December 2007, which was 16. 42% of the risk weighted assets as against the requirement of 10%. The core capital was 15. 05% of risk weighted assets as on 31 December 2007 as against requirement of 5%. 2. 5. 3 Basel II preparation Under the Basel II initiative, which is intended to ensure that banks have enough capital to cover their risk, a bank’s regulatory capital will be tied directly to it’s internal risk and it’s choices in managing them, the lower the risks and the better the risk management, the lower the regulatory capital requirement.

Moreover Basel II introduces an array of approaches to measuring credit and operational risk that enables bank’s to adopt methodologies that best suit their organization and risk profile. The Basel II framework describes a more comprehensive measure and minimum standard for capital adequacy that national supervisory authorities are now working to implement through domestic rule making and adoption procedures. It seeks to improve on the existing rule of aligning regulatory capital requirement more closely to the underlying risk that bank face.

Shahjslal Islami Bank Limited is aware of impact on capital requirement and has taken measures in this regard which are given below: ? A unit has been formed named “Basel 2 Implementation Unit” as per the guide line of Bangladesh Bank. ?Training was given to the executive/officers of the bank on the Basel 2 Capital Accord. ?Strong IT platform which will cover the entire operation is going to be implemented by the year 2008. ?Upgrading its internal rating system by 2008. ?Improving the capital adequacy ratio so as to cover the credit risk, operation risk, and market risk within the stipulated time mention by Bangladesh Bank. Continuous and consistent oversight by the Board of Executive and the Audit Committee in compliance with Basel 2 Capital Accord will ahead before adoption. 2. 5. 4 Branch Network The bank has been operatin with a network of 32 branches all over the country. In the year 2008 the bank has opened 6 new branches. Among these 3 is in Dhaka and rest of the three are in Rajshahi, Jessore and Sayedpur. Here shows zone wise branch distribution of SJIBL: Table: Zone-wise number of Branches OFFICE / ZONESNUMBER Dhaka21 Chittagong4 Sylhet4 Rajshahi1 Jessore1

Saidpur1 Fig: Number of Branches 2. 5. 5 Human Resources Development SJIBL’s policy on human resources management is proactive. SJBL believes that investment in human resource development is the key to maintaining sound health of the bank. The employees of the bank attend training program/ seminar, workshop both in home and abroad. The training center of the bank has been arranging various courses, workshop and seminars on important aspect of banking. This bank invites experts of banking sector for imparting training to it’s employees to meet the above challenges. To

Keep the employees motivated, incentives, performance award, promotion and accelerated promotion are given on a regular basis. 2. 6 Information Technology Main objective of the bank is to take care of different economic group of the society and meet their all type of banking requirements stretching it’s service to the door step of the people with the help of information technology gradually. SJBL is providing customer service through online facilities. SJIBL’s ultimate aim is to enable it’s respected and valued clients to shop under the same roof. In line with that JBL VISA DEBIT CARD, SMS/push pull services have already been introduced.

Besides clients are also being facilitated by the service of REUTERS, SWIFT, Western Union Money Transfer etc.. 2. 7 Corporate governance The Board of Directors of the bank consists of successful distinguish personalities emerging from area of trade, commerce and industries. The bank conducts it’s business and operations under the policy, directions and guidelines of the Board. The bank has also a Shariah Council consisting of prominent Faquih, Economists, Lawyers, Bankers to advise and guide the Board and the Management of Shariah matters relating to the business and operations.

Under the able guidance of the Board of Directors and the Shariah council, the professional management team carries out the business operation of the bank, ensuring good governance practicing sound, best corporate and risk management process. The result that was achieved by the bank so far is due to the constant guidance, cooperation and support of the Board and Shariah Council and devoted, dedicated and hard work of the management team and all functionaries of the bank. 2. 8 OPERATIONAL PERFORMANCE OF SJIBL

Despite challenging macro economic condition and volatile money market and foreign exchange market, SJIBL was successfully in achieve much higher than national growth of deposit, investment(loan), export, import and remittance business. As on 31 December, 2007 total deposit of the bank stood at TK. 22618 million, showing a growth rate of 25. 03%, total amount of investment is TK. 20617 million with a growth rate of 32. 88%. During the year, import volume stood at TK. 25490 million with a growth rate of 36. 43% compared to the previous year.

The growth of export business has significantly been increased by 3802 million. It stood at TK. 15084 million on 31 December, 2007 against TK. 11282 million of the previous year, which indicate 33. 70% growth rate over previous year. Foreign remittance of the bank stood at TK. 4295 million as of 31 December, 2007 as against TK. 3535 million of 2006 with growth rate of 21. 50% over previous year. The overall operating result of SJIBL derived from income, operating expense and operating profit analysis. Here sows the bank’s overall operating performance analysis for the year 2007.

HIGHLIGHTS OF PERFORMANCE (Amount in Taka) SL # PARTICULARS 2007 2006 1 Paid up Capital 1,871,650,000 935,825,000 2 Total Capital (Core + Supplementary) 3,040,882,802 1,362,565,111 3 Capital Surplus/(deficit) 1,189,432,802 182,217,959 4 Total Assets 28,346,996,395 21,342,554,938 5 Total Deposit 22,618,187,303 18,090,647,378 6 Total Investment (Loans & Advance) 20,616,605,335 15,515,789,683 7 Total Contingent Liabilities and Commitment 7,471,644,932 6,020,061,693 8 Investment Deposit Ratio ( % ) 91. 15% 85. 77% 9 Percentage of Classified Investment against total Investments 0. 62% 0. 9% 10 Profit after Tax and Provision 646,992,691 463,216,712 11 Amount of Classified Investment 128,246,000 30,420,000 12 Provisions kept against classified Investment 23,009,403 20,809,403 13 Provisions suplus/(deficit) 10,723,827 1,097,486 14 Cost of Fund 10. 40% 10. 83% 15 Profit Earning Assets 25,303,841,268 19,602,409,933 16 Non-Profit Earning Assets 3,043,155,127 1,740,145,005 17 Return on Investment in Securities (ROI) 13. 69% 3. 84% 18 Return on Assets (ROA) 2. 28% 2. 17% 19 Income from Investment in Securities 97,974,405 13,000,000 20 Earning Per Share 34. 57 49. 50 2. 8. Income Total income of SJIBL mainly derives from two important sources; investment income and non-investment income. ?Investment Income: Total investment income of the bank as at 31 December, 2007 was TK. 3071. 41 million against TK. 2158. 49 million of the preceding year registering 42. 29% growth over last year, which was 85. 58% of total income against 84. 20%of 2006. ?Non-Investment Income: Total non-investment i8ncome of the bank was TK. 517. 43 million at 31 December, 2007 against TK. 405. 14 million of the preceding year registering 27. 72% growth rate over last year, which was 14. 2% of the total income compared to 15. 80% of 2006. 2. 8. 2 Expenditure Total expenditure of SJIBL mainly derived from two important sources; profit paid on deposit and operating expense. ?Profit Paid on Deposit: Bank distributed profit of TK. 1960. 02 million among the Mudaraba depositors in the year 2007 against TK. 1491. 37 million in the year 2006 which is 65. 95 % of the investment income earned from deployment of Mudaraba fund and 86. 20% of total expenditure of 2007 against 86. 78%of 2006. ?Operating Expenses: Total operating expenses as on 31 December,2007 was TK. 313. 2 million against TK. 227. 21 million of 2006, which was 13. 80% of the total expenditure of the year 2007 against 13. 22% of 2006. 2. 8. 3 Operating Profit During the year 2007, the bank earned an amount of TK. 3588. 84 million and spent an amount of TK. 2273. 83 million, resulting total operating profit of TK. 1315. 01million, which incresded by TK. 469. 94 million over previous year. From the operating TK. 60. 20 million kept provision for investment, TK. 37. 50 million provisions kept for off-balance sheet, TK. 1. 00 million provisions kept for other assets and then profit before tax stood at TK. 216. 31 million and deducting income tax of TK. 569. 32 million net profit after taxation stood at TK. 646. 99 million. A summary of operating result of he bank as on December, 2007 vis-a-vis the position of December, 2006 is shown below: TK. In Million Particular20072006 Total Income35,88. 8425,63. 64 Less: Total Expenditure22,73. 8317,18. 57 Net Profit Before Provisions & Taxation13,51,01845. 07 Less: Provisions for Investment, Off-Balance Sheet & Others98. 057. 50 Net profit Before Taxation12,16. 31787. 57 Less: Provisions for Taxation569. 32324. 35 Net Profit646. 99463. 22 Appropriation: Statutory Reserve 243. 26157. 52 Retained Earning403. 73305. 70 Table: Operating Result of 2006 & 2007 2. 9 An Overview Of Foreign Exchange Branch Of SJIBL Foreign Exchange Branch started its operations as 5th branch of Shahjalal Islami Bank Limited in 2002. The branch is located at Modern Mansion (1st Floor), 53 Motijheel C/A, Dhaka-1000. Office floor is spacious that can accommodate good number of customers comfortably.

Branch has efficient human resources that can meet up customer’s needs. Order wise work load is distributed properly. Besides, interpersonal relationship is remarkable. Most noted strength is customer service. Prompt, cordial & enthusiastic service satisfies almost all customers. Flexible banking hour attracts more clients doing banking transactions with the branch. In some cases, customers, coming outside the banking hour can honour the cheque & others without delay. Now under the charge of Senior Vice President M. Samsul Arefin the branch has been performing very well.

Under his efficient handling, the branch has already been able to introduce itself as one of the best performers among all other branches of SJIBL. Last year (2007) Foreign Exchange Branch earned a net profit of Tk. 2013 lac. From this viewpoint the branch was in the second position among all other branches of SJIBL in the country. Even after it has an organized Foreign Exchange Department, the import and export businesses that are usually done in this branch make it a profitable one. The table below shows the performance of the branch: TK. In Lac YearDepositInvestmentProfit

TargetAchievementTargetAchievementTargetAchievement 2008 (up to June)2860926683368754302913951284 20073000025426350003227320002013 20062250021500225002890012001200 200520000147901750016088500578 Table: Operational performance of SJIBL FEx. Br. 2. 10 Future Out Look of SJIBL “Business policy and six years perspective plan” of the Bank from 2007 to 2012 has been formulated to attain the financial strength, sustainable growth and operational efficiency. To protect the interest of the stakeholders, bank has formulated the six years perspective plan for consolidation of the growth and profitability.

During the period of perspective plan, Bank has the main objective to attain the height operational excellence and consolidation to turn the bank into a dynamic Islamic Bank in the country. During the period from 2007 to 2012, The Bank has the plan to regain its excellence in all the core areas of operations and business. During this period, new and potential avenues of Business in all areas of operation to be explored and expanded through the network of existing 26 branches and more new branches to be opened gradually during the plan period subject to permission of Bangladesh Bank.

The Bank ensures optimum utilization of bank’s investible fund/deposit to be mobilized in future in an organized way to maximize Banks profit consolidating the financial stren2th 1 the Bank and to achieve the overall h mission & vision of the Bank as a whole. The financial position and overall achievement of the Bank shall be reviewed and evaluated in the light of the Annual Budget and Business plan on a quarterly basis in every year. Necessary change, adjustment, modification & re-allocation shall be made after periodical review keeping the real scenario in view.

All out efforts shall be made for promotion and improvement of quality-investment through effective supervision, control, follow-up and monitoring in order to lessen the quantum of over dues, to arrest further over dues and to recover, regularize the over dues and declassify the classified investments. Adequate care & caution to be exercised for compliance with 05 core risks as per Bangladesh Bank’s Policy/instructions during the planned period. Asset-Liability of the Bank shall be managed effectively through ALCO to avoid Liquidity Risk, profit rate risk, perational risk and other risks. Thus, Shahjalal Islami Bank Limited will be turned into a dynamic Islamic Bank in the country and will expand its Banking Business all over the Country to provide the Banking services to the groups including the deserving economic groups of the society who have no easy access to the banking channel. This will help for alleviation of the poverty, income generation, creation of employment opportunity, up-grading of the standard of living of the lower economic groups, which will also contribute to the emancipation of the national economy of the country.

Shahjalal Islami Bank Limited is looking forward to see such a bright day in the years to come. 2. 11 Social Welfare Activities of SJIBL With a view to proving financial assistance to the poor and needy people of the society and also for the welfare of the community, Bank has established “Shahjalal Islami Bank Foundation” the foundation among others has also objective to provide health care, relief & rehabilitation, education, dawa, distribution of winter cloths during the winter etc. At present Shahjalal Islami Bank Foundation has a planning to establish the following projects soon: ?Shahjalal Islami Bank International School & College. Shahjalal Islami Bank Hospital. 2. 12 Manpower Position of SJIBL Foreign Exchange Branch 2. 13 Significant Accounting Policy ?Foreign Currency Translations The transactions in foreign currencies are converted into equivalent Taka currency using the ruling exchange rates on the dates of such transactions. At the balance sheet date related assets and liabilities are converted to Taka using exchange rates prevailing on that dare. ?Basic Earning Per Share This has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding during the period as per lAS 33 Earning per Share”.

Diluted Earning per Share is not required to be calculated for the year, as there exist no dilution possibilities during the year. ?Statement of liquidity The liquidity statement of assets and liabilities as on the reporting date has been prepared on residual maturity term as per following basis; a) Balance with other banks and financial institutions, investment in securities are on the basis of their maturity term. b) Investments (Loans & Advances) are on the basis of their residual maturity term. c) Fixed assets are on the basis of their useful life. d) Other assets are on the basis of their adjustment. ) Financing (borrowing from Bangladesh Bank as per their maturity Deposit and other accounts are on the basis of their maturity term & behavioral past trend. g) Other long-term liability on die basis of their maturity term. h) Provisions and other liabilities are on the basis of their settlement. BALANCE SHEET AS AT 31 DECEMBER 2007 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 DEC 2007 ?Off Balance Sheet Items Under general banking transactions, liabilities against acceptance, endorsement and other obligations and bills against which acceptances have been given and claims exist there against, have been shown as Off Balance Sheet items. Taxation Current Tax Being a financial institution the bank is in practice of keeping provision for income tax in accordance with income tax ordinance 1984 now in force in Bangladesh. For current year tax rate applicable for the bank is 45% on taxable income. ?Deferred tax The Bank has adopted deferred tax accounting policy as per Bangladesh Accounting Standard AS) 12. Accordingly deferred tax liability/asset is accounted for all temporary riming differences arising between the tax base of the assets and liabilities and their carrying value for financial reporting purpose.

Deferred lax is computed at the prevailing tax rate as per Finance Act 2007 ? Retirement benefits are: ?Provident Fund Provident fund benefits are given to the eligible staffs of the Bank in accordance with the rules of the provident fund. The Fund is administered by a Board of Trustees and is funded by fixed contributions equally from the employees and the bank. ?Gratuity Gratuity fund benefits are given to the staff of the bank in accordance with the approved Gratuity fund rules.

The gratuity fund is under process with National Board of Revenue (NBR) to he recognized gratuity fund. The fund is operated by a Board of trustees consisting of 3 (Five) members of the hank. The gratuity is calculated on the basis of last basic pay and payable at the rate of one month’s basic pay for every completed year of service, Gratuity so calculated are transfer to the fund and charged to expenses of the batik. ?Benevolent Fund The Benevolent Fund for the regular and confirmed employees of Shahjalal Islami Bank Limited was established in the ear 2007.

This fund is mainly used for payment of scholarship to the meritorious students among the children of SJIBL’s officers and sub-staff to allow short-term quard/grant for the unexpected and certain needs of the staff of SJIBL like accident, clinical treatment marriage ceremony of the sub-staff and their dependents. 2. 14 Functions and Responsibilities of the Branch The whole activities of the Foreign Exchange Branch of SJIBL are divided in to three major areas. These are: General Banking Investment Foreign Trade General banking is the starting point of all the banking operations.

This department does the most important and basic works of the bank. It is also the department, which provides day-to-day services to the customers. All other departments are linked with this department. It also pays a vital role in deposit mobilization of the branch. SJIBL provides different types of accounts, locker facilities and special types of saving scheme under general banking. The special feature of the Investment policy of Shahjalal Islami Bank Limited is to invest on the basis of profit loss sharing system in accordance with the tenets and principles of Islamic Shariah.

Earning of profit is not only the motive and objective of the bank’s investment policy rather emphasize is given in attaining social good and in creating employment opportunities. Foreign Exchange means foreign currency and it includes any instrument drawn, accepted, made or issued under clause (13), Article 16 of the Bangladesh Bank Order, 1972. All deposits, credits and balances payable in any foreign currency and draft, travelers cheque, letter of credit and bill of exchange expressed or drawn in Bangladeshi currency but payable in any foreign currencies. Chapter 3: Banking business Operation of SJIBL (General Banking) . 1 General Banking General banking is the starting point of all the banking operations. This department does the most important and basic works of the bank. It is also the department, which provides day-to-day services to the customers. All other departments are linked with this department. It also pays a vital role in deposit mobilization of the branch. SJIBL provides different types of accounts, locker facilities and special types of saving scheme under general banking. For proper functioning and excellent customer service this department is divided into various sections namely as follows. 3. . 1 Account opening section: Bankers and Customer relationship established through opening an account. It binds the banker and customer into a contractual relationship. There are two types of account i. e. deposit account and investment account. Generally account opening means to open a deposit account. Deposits are the lifeblood of a bank, which is invested, in a bank through opening an account. This section of general banking of the SJIBL deals with opening of different types of accounts. It is also deals with issuing of checkbooks and different deposits books to the different accounts openers.

A customer can open different types of accounts through this department. 3. 1. 2 Cash Section: Cash is the lifeblood of all financial activities. Cash section is a very sensitive point of the branch. This section deals with all types of negotiable instruments and it includes vault, used as the store of cash, instruments. The vault is insured up to TK. 20 LAC. Insured amount yet to be enhanced to Tk. 40 lac. Operation of this section begins when the banking hour starts. Cash officer begins his/her transaction with taking money from the vault, known as the opening cash balance. Vault is kept in a more secured place.

The amount of opening cash balance is entered into a register. After whole days’ transaction, the surplus money remains in the cash counter is put back in the vault and known as the closing balance. If the cash stock goes beyond this limit, the excess cash is then transferred to SJIBL Foreign Exchange branch. The main functions of this section are – ? Cash Receipt ?Cash Payment Cash department is the most vital department of a bank and it is call blood of a bank. It is a platform to communicate with customers. Cash department receives & pays cash directly. In the cash department there are following register: •Vault register Cash receive register •Cash payment register •Cash balance register •Rough cash balance book •Cash remittance register •Key register •Cash position memo There is a procedure of cash in and cash-out from the vault. Also a systematic procedure is maintained for receiving cash through different vouchers and payment against different cheques and vouchers. ?Cash Receive: Cash is the life of a bank. Different types of from are use for cash deposits for different types of accounts. Cash may be received by the following ways: •Current of Savings account pay-in-slip •Credit voucher •Different types of instrument remittance (TT, DO, PO etc. are received by respective forms. •Bills like National Life Insurance Co. Ltd. •Share collection •Different types of scheme ?Cash payment: Cash is paid in payment counter against the following instrument: •Cheques •Cash debit voucher •Pay-in-slip •Pay Order, DD etc. •Bank’s expense also paid to outsider through cash debit voucher. ?Procedure: Receive of the cheques with a signature behind it. 1. Scrutinize it by an authorized officer. 2. Submit to computer-to-computer section for checking the available balance. 3. Cancelled & seal up “Pay in Cash” and cancellation through sign up. 4.

Again submitted to computer section for debiting the party A/C and seal up “Posted”. 5. Send to cash counter – payment officer. 6. Cash officer checks the cancellation, seal and seal up “Cash Payment” 7. Entry the payments register. 8. Take another signature of payee behind the cheque and pay cash. ?Cash Balance: At the end of the transaction: •Sum of total received •Sum up total payment •Total receiving + Opening balance – Total payment = Closing balance for that day & opening balance for the next day. •Check it with computer sheet. •Counting cash. •Entry the cash balance register. Write cash position memo with denomination. 3. 1. 2. Sorting and Stitching: ?Sorting: At the end of the day, the amount of cash has to be sorted out in order to identify the different types of notes, say-500, 100,50,20,10,5 and so on. Hundred pieces of any type note create a packet and ten packets make a bundle. In this way, the cash is actually sorted out. ?Stitching: After sorting out the cash, packets are stitched along with a slip bearing the name of the bank, total number of notes and the signature of the cash-in-charge. Two round seals are given at both sides of the packet. 3. 1. 2. 2 Vault Opening: The vault opened with two different keys of two respective authorized officers.

The officers are: •Manager of the Branch •Cash – in – charge Officer Strong room has two keyholes opened by two officers respectively by two keys of cash. Generally sub-manager of the Branch bears authority absence of manager. Grill door one keyhole opened by – two keys of two officers and bring out following thing: Cash, Vault register, Receive register, Payment register, Balance Book, security station. Enter the amount of cash withdrawal from the vault register. ?Vault limit: Vault is the very secret place to keep money in the bank. Usually vault is made of very hard material like iron or steel, generally it is fireproof, damp-proof.

The vault has a fixed limit too. The limitation depends on the regular transaction of the branch. If the amount exceeds its limit, the extra money should be sent to the Bangladesh Bank. The vault limit of the Foreign Trade Branch is Tk. 1. 5 (one and half) crore. If the amount exceeds its limitation and accident occur, then the branch will be liable and the insurance company will not compensate for that. ?Vault Closing: Before vault closing concern officer will – •Cheque receives, Payment, Cash balance, Vault register signature. •Signature of the computer sheet. •Count physical cash. •Keep cash in safe. •Bundle in safe. Loose peak of the tray. •Loose cash notes & coins on the tray. •Keep different registers. •Keep security stationeries. •Close Safe. •Check the rifle & cartage. •Count cartage & entry in register. •Close Grill door & Vault room’s door. 3. 1. 3 Clearing section: According to the Article 37(2) of Bangladesh Bank Order, 1972, the banks which are a member of the clearing house are called as Scheduled Banks. The scheduled banks clear the cheques drawn upon one another through the clearing house. This is an arrangement by the central bank where everyday the representative of the member banks sits to clear the cheques.

For clearing there is a department in every Bank. This department receives cheques, drafts and like instruments from its customers for the purpose of collection with a deposit slip over the counter crediting their accounts. Clearing of cheque is done through the clearing house in Bangladesh Bank. Everyday the first hour starts at 10:00 a. m. and returns house at 5:00 p. m.. Here sowes the types of cheque clearing: Inward Clearing Bills refers the instument drawn on SJIBL, FEx. Branch received from other banks in the clearing house by their representative(s). Settlement process is shown on the next page

Fig: Settlement Process of Inward Clearing Bills Outward Clearing Bills refers the instruments drawn on the other banks received by Shahjalal Islami Bank Ltd. Branch. They are of three kinds as follows – Fig: Settlement Process of Outward Clearing Bills 3. 2 Deposit Mobilization of SJIBL: Bank account is a contractual relationship between a bank and the customers. It is the best way for a customer to build relationship with the bank. Like interest-based conventional banks, the main function of Shahjalal Islami Bank Limited (SJIBL) is to mobilize saving and provide financial support to the entrepreneurs.

Depositors receive interest in a predetermined rate for their deposits make with an interest based banks, where SJIBL neither pay not receive interest and mobilizes saving of the common people in line with Islamic Shariah. Deposit account can take in a various forms such as: 3. 2. 1 Al – Wadiah Current Deposit (AC) 3. 2. 2 Mudarabah Savings Deposit (MSD) 3. 2. 3 Short – Notice Deposit (SND) 3. 2. 1 Al – Wadiah Current Deposit (ACD) Shahjalal Islami Bank Limited receives deposits in its Al – Wadia Current Account. It has some similarity with the current account of conventional bank.

The term Al – Wadiah Current Deposit means deposit of money allowing somebody to sue it. Banks being trustee preserves and keeps or in safe custody of what is deposited. Depositors feel safe in keeping their money with the bank and take transaction facilities. Bank provides assurance of returning money to the depositors on demand. In the process of opening Al-Wadiah Deposit, the bank gets approval of the depositors regarding the use of the deposited money and earns profit out of their development. Any losses incurred by way of such investment are totally borne by the bank.

Thus, the depositors don’t take the risk of losses with Al-Wadiah Current Deposit; they also don’t expect any profit from it. Depositors are provided with chequebook. They can withdraw or deposit any amount as and when they like. Bank may charge a fee in the account. Al-Wadiah Deposit are short terms and very uncertain, thus banks have to be very useful in the investment of money from this account. 3. 2. 2 Mudaraba saving Deposit (MSD): Mudaraba Saving Deposit (MSD) is open by the lower and middle people who wish to save a part of their incomes to meet their future need intend to earn an income from their savings.

It aims at encouraging savings of non-trading persons(s), institution(s), society, etc. by depositing small amount of money in the bank. Restriction on withdrawals and deposit: •The number of withdrawals over a period of time is limited. Two withdrawals per week are permitted. But more than that no interest will be paid on rest amount for that month. •The total amount of one or more withdrawal on any date should not exceed 25% of the in the accounts unless 7 (seven) days advance notice is given. •The customer may deposit any amount in the savings bank account subject to a minimum of Tk. 2000/- in the account.

Payment of Profit: Shahjalal Islami Bank Limited is proving 5. 5% profit on Mudaraba Saving Deposit. Opening a saving account: For Operating a Mudaraba Saving Deposit following documentation are required •Two copies of passport size photographs of accountholder and one copy passport size photo of nominee. •Introductory reference. •Commissioner’s/Chairman Certificate. General Precautions of opening an MSD Account: After opening an account and before issuing a Cheque book the authorized officer should check the account operating form for the complete information, which is given by the customers. Name of the account holder. •Photos of the account holder. •Date of opening •Types of account. •Present and permanent address •Name of the nominee and their address. •Initial deposit •Specimen signature in the form in the “Specimen signature card”. •Name, address and the account number of the introducer. 3. 2. 3Mudaraba Short Notice Deposit (MSND): Shahjalal Islami Bank Limited also receives term deposit from the clients. The SND account is different from the interest-based banks. It is also a Time Deposit account. The formalities for opening of this account are similar to those required for Al-Wadiah Current Account.

The only difference is that seven (7) days notice is required for withdrawal of any sum and profit is paid. The rate of profit for this account is 5%. If the withdrawal on demand is desired, it may be paid subject to the for-feature for the period of notice or the expired of notice. The Shahjalal Islami Bank Limited (SJIBL) is containing some Deposit Scheme, which are the really profitable for bank and customer. The Bank maintains Shariah –based transaction with their customer by different Scheme those are 3. 2. 4 Monthly Deposit Scheme (MDS) 3. 2. 5 Mudarah Term Deposit Receipt (MTDR) 3. 2. Monthly Income Scheme (MIS) 3. 2. 7 Double Profit Deposit Scheme (DPDS) 3. 2. 8 Millionaire Scheme (MS) 3. 2. 9 Hajj Palon Scheme (HS) 3. 2. 4 Monthly Deposit Scheme (MDS/DPS) This account open very easy and there are no fixed day to open. Account holders do not need any savings account if he/she directly pays their monthly installment. Account holders carefully complete the MDS form and attests two copies passport size photograph one nominee and other own with form. Account holders can pay advance to continue their installment or can give permanent instruction from his/her savings account.

In this term, the account holders are bound to pay Tk. 50 for transferred and Tk. 5/- for service charge. If the account is close before the maturity then profit will be calculate according to saving rates. If a depositor fails to pay calculate as Savings rate. But for the first six-month no profit will be calculate. Nominee will enjoy the profit will in absence of the accountholder. Depositor will get the profit after the matured according to following table: Install. periodTk. 1,000Tk. 2,000Tk. 5,000Tk. 10,000Tk. 25,000Tk. 50,000 5 years40125802501605004012508025002006250 years 7750015500031000077500015500003875000 10 years111000222000444000111000022200005550000 3. 2. 5 Mudaraba Term Deposit Receipt (MTDR) It is like a fixed deposit in the conventional banking system but it does not receive or accept interest father, this account give profit and collect deposits. In this mode less than that Tk. 1 crore or Tk. 1 crore and above can be deposited against client will get non-transferable instrument of equal amount. If a customer withdraw his/her money before one month than he/she will not get any kind of profit. On the other hand, after the atured if client don’t withdraw his/her money than it will be auto renewed with imposed profit for the next days. If a depositor would like to withdraw his profit after six months he/she will get the profit accordance with previous years profit rate. After the announced yearly profit or loss, if bank felt in loss posting then the depositor bound to incur the loss. In absence of account holder the selected nominee will get the money. Account holder bound to bear any kind of tax or excise duty according to government circular. The profit rates of this account are: Time of DepositUp to Tk. 1(one) crore Months11. 25% 6 Months11. 50% 1 Year11. 75% 3. 2. 6 Monthly Income Scheme (MIS) This scheme is very popular in our country, job retreat people opens this scheme. And which people are not able to do business than they are wanting to safe from risk and they open it. It is the scheme for profit earning. In this account depositor can deposit minimum of Tk. 50,000/- and above. Depositor will get Tk500/ against Tk. 50,000/-. And it is the fixed deposit for 3 (three) years. If the accountholder to want to close his/her account before maturity date than he/she will get profit accordance with savings rate that is 5. %. In the absence of accountholder, the specified nominee will get the whole benefit. The profit rates of this account are: Period of SchemeTaka Per monthProvisional RateRemarks 3 YearsTk. 1000/- for one lac12. 00%Credit Account Number is required 3. 2. 7 Double Profit Deposit Scheme (DPDS) The Shahjalal Islami Bank gives the facility to the client by the Islamic Shariah Mudaraba rules and regulations. In this scheme depositors can deposit more than Tk. 10, 000 for 6 years and after the maturity date accountholder will receive double than his/her deposited amount.

Depositor will get 80% investment facility by deposit the deposit receipt. Bank can invest this amount any sector by the Islamic Shariah rules and regulations. Accountholder are bound to pay any government tax. For opening this account applicant need recent one copy photograph and one copy photograph of nominee. The profit rates of this account are: Period of SchemeProvisional Rate 6 Years11. 61% 3. 2. 8 Millionaire Scheme: It maturity is long than other scheme. Generally this account is designed for children. Here, applicants are the selected people for operating the account on behalf of the accountholder.

The depositor should to deposit the account within first 15 days of the month; neither will he/she be designated as debtor to the bank. If 15th date is the off day then the next working day will be schedule date. Accountholder can open more one account this Branch. Depositor will get 80% loan facility against the deposit money. No chequebook will be issued for this account, but the bank will provide deposit book. The profit rate based on different amount and time are given below: TimeAmount Per monthTotal Amount And Profit Rate 12 yearsTk. 3280/=Tk. 10 Lac 15 YearsTk. 2120/=Tk. 0 Lac 20 YearsTk. 1080/=Tk. 10 Lac 25 YearsTk. 575/=Tk. 10 Lac 3. 2. 9 Hajj scheme: Hajj is compulsory for all who are the ability to hajj at that cause Hajj is important for all. Hajj is the important way for the Islam but many people have the interest but there have no ability. Many people create the ability but at that time they are physically weak. At that cause Shahjalal Islami Bank open this scheme. Requirements for this scheme: ?Must be age above 18. ?Account holder must be citizen of the Bangladesh. ?Account holder must be need the attested photo with introducer. Gradient can maintain their account for the child. Duration of the scheme: ?This account is duration time is 1 year to 25 year. ?12 monthly scheme within one year. Amount of scheme: Duration (Year)Monthly scheme (In Taka)Given after duration (In Taka) 110200129950 25100137465 33325142350 42450148240 51925154475 61570160570 71310166170 81120172780 9965178390 10840183950 11740190230 12655196210 13585202970 14520207920 15465213370 16420220375 17380227300 18340231240 19310239180 20280244600 21255251790 22230256315 23210263780 24190268700 25175278350 The way of the payment:

Scheme must pay at 25 date every month if this date is holiday at that time it will pay at next working day. If scheme pay in cheque at that time cheque clearing must at 25 date everymonth. If the accountholder is give the permanent paying order at that time charge 50 taka and per scheme is 5 taka. 3. 2. 10 There have new deposit scheme: ?Mudaraba Lakhpoti Deposit Scheme ?Mudaraba Education Deposit Scheme ?Mudaraba Marriage deposit Scheme ?Mudaraba Mohor Deposit Scheme ?Special MTDR Scheme 3. 3 Others general banking related issues 3. 3. 1 General Documentation requires for opening an account: a) For an Individual Customer: Copy the passport, if available or Employer’s Certificate or Commissioner’s Certificate or Letter of Introduction by a person accepted to the Bank. •TIN Certificate, if applicable. •Two recent passport size photographs duly attested by the Introducer. b) For Sole Proprietorship: •Copy of Trade License. •Two recent passport size photographs of the proprietor/Signatory duly attested by the Introducer. •Copy of the passport the proprietor/Signatory, if available Commissioner’s/Chairman’s Certificate or Letter of Introduction by a person accepted to the Bank. •TIN certificate. c) For Partnership: •Copy of Partnership Deed of the Firm. List of Partners with their address and phone number. •Copy of Trade License. •Extract of Resolution of the Partners of the Firm for opening the account and authorization for its operation duly certified by the managing Partner of the Firm. •For Registered Partnership, Certificate of Registration of the Firm along with duly certified copy of the Partnership Deed. •Two recent passport size photographs of each Partner/Signatory duly attested by the Introducer. •Copy of Passport of each Partner/Signatory, if available or Commissioner’s/Chairman’s Certificate or Letter of Introduction by a person acceptable to the Bank. TIN Certificate. d) Private & Public Limited Company: •Certified true copy of the Memorandum and Article Association of the Company. •Certified true copy of Certificate of Incorporation of the Company. •Certificate true copy of Certificate of Commencement of Business of the Company in case of Public Limited Company. •Latest list of Directors with address and phone number along with Form XII. •Extracts of duly adopted Resolution of the Board of Directors of the Company for opening the Account and authorization for its operation duly certified by the Chairman/Managing Director of the Company. Copy of Trade License. •Two recent size photographs of each signatory duly attested by the introducer. •Copy of the passport of each signatory, if available or Commissioner’s/Chairman’s •Certificate or Letter of Introduction by a person acceptable to the Bank. •TIN Certificate. 3. 3. 2 Computer services Shahjalal Islami Bank is computerized and provides the following services some of these services will be introduced soon. Shahjalal Islami Bank Limited introduced a few schemes, which are very popular: Online services 1. Automated Accounting 2. Integrated System 3. Signature Verification 4. Any Branch Banking . ATM Services 6. POS Services 7. SMS Push Pull Services 8. Other Delivery Channel Services (to be implemented) 3. 3. 2. 1 SJIBL VISA Card: Card is considered as a new dimension of product resulting from technological development in the banking arena. In line with our affiliation with VISA International for VISA ATMs and POS, the following two products are launched broadening service products of the Bank to the clients’: 1. VISA Electron (SJIBL VISA Debit Card – local) 2. VISA Prepaid (SJIBL VISA Prepaid Card) SJIBL VISA Debit Card: To a customer, “My card, my money” concept is used for Debit Card.

Any accountholder of SJIBL can apply for a SJIBL VISA Debit Card against his/her Al-Wadiah Current Deposit (AWCD), Mudaraba Savings Deposit (MSD) or Mudaraba Short Notice Deposit (MSND) Account. He/she is fully authorized to enjoy the benefits of cash withdrawal from ATMs, liberty of shopping, dining, paying utility bills and having access account information through SMS, etc. round the clock Usage Limit DescriptionTransaction Limit Cash withdrawal limit (total)4 times per day Cash withdrawal limit (amount)Tk. 20,000 per day Balance checking4 times per day Mini statement printing2 time per day

PIN change2 times per day Invalid PIN retry count3 times per day Card usage limit in ATMs (total)10 times per day Fees & Charges: A. VISA Debit Card ParticularsRenewalReplacementPIN re-issueTransaction Charges (ATM) ON-US Q-Cash Others (VISA) General • Primary • Supplementary 500 250 400 400 200 200 Free Free 10 10 125 125 3. 3. 2. 2 Gp bill: Grameen Phone subscribers availing the service to pay their bills, advances, security deposit and other related charges through all branches of Shahjalal Islami Bank Limited. 3. 3. 2. 3 SMS Service:

Welcome to the convenience of accessing your banking needs from anywhere anytime. Shahjalal Islami Bank again fulfilled the demand of time in the era of modern banking technology by introducing the Mobile banking i. e. SMS / Push Pull Service. We offer a range of ways for you to access and manage your money. So, that you are always in control of your financial transactions, it is fast, secure and economical. Get real-time banking information on your handset. Mobile Banking is a secured & flexible solution that delivers the banking services to its customers through a range of mobile devices using SMS / Push Pull technology.

It provides banking services to the registered clients access to account information and real-time transaction capabilities from the mobile phones at a true “Anywhere, Anytime, Anyhow” convenience. It works using Shot Message Services (SMS) Technology. It works through a set of text message. With SMS, client can perform a wide range of query-based transactions from his/her mobile phone. It also provides pre-defined Alert Message Service. The Service is designed to serve the bank customers by informing the real-time data about their account such as current balance, recent transaction statement, cheque status etc. s SMS reply within about half a minute in response to their SMS query in a defined simple syntax. It can also serve the customers to stop a cheque, receiving statement request and other request / order at the branch for processing through SMS. In today’s business environment, with so many deadlines to fulfill appointments to meet and meetings to attend, you are hard pressed for time. Don’t you wish you could do all your important activities while traveling from one place to another? As a leading private sector bank in Bangladesh the Shahjalal Islami Bank Limited presents the Mobile banking i. e.

SMS / Push Pull service. Services: •Balance Inquiry •Cheque Book Request •Cheque Leaf Status •FC Rate Information •Cheque Stop Payment Instruction •Statement Request by Courier/Post •Statement request by E-mail •Last Three Transaction Statement •Help inquiry •PIN Change 3. 3. 3 Cheque Book Issue Cheque Book is a material to withdraw money from the bank. It is a very convenient way to transact money from one place to another without any accident. If any one opens an account then she/he will apply for a Chequebook on requisition slip. After verifying the signature of the account holder by the officer issues Cheque.

Then we will assign numbers to the leaves of the Chequebook and account number in the register book. The account number and branch seal will also be written on every leaf of the Chequebook. Two officers initialize the account number and leaf numbers the issuing officer will also check the register book and initializes it also. Then the Chequebook is delivered to the party after taking the signature on the register book from the party. 3. 3. 4 Duplicate Cheque Book issue: When a party looses his/her Chequebook, then he/she applies for duplicate Chequebook.

Bank stop payment order for that lost Cheque book series in the respective ledger. Then client needs guarantor’s certificate and guarantor must be an account holder of that branch with sufficient balance. In this case, the party will apply to the branch manager for duplicate Chequebook. The party must give indemnity bondage referring that he/she will liable for any fraud-forgery by the lost Cheque. After the formalities Bank issue of new Chequebook for client. 3. 3. 5 Return of the Cheque: A Cheque may be returned by the following reason: •Account Closed. •Insufficient funds. •Payment stopped. •Refer to drawer. Drawn against uncollected funds. •Amount in words and figure differ. •Drawer’s signature differs. •Alternation requires draw’s full signature. •Cheque postdated. •Date incomplete/missing. •Clearing house stamp missing. ?Examined of the Cheque: The Passing official must examine the followings: •Whether the instrument presented is related to the branch. •The instrument is not undated/anti-dated/post-dated. •The instrument is not crossed since crossed instruments are not payable over the counter. •The amounts is words and figures are written and do not differ. •There is no alternation anywhere on the instrument. Incase of order Cheque the proper identification of the payee ensure to the satisfaction of the Bank. •The instrument bears the signature of the drawer. •The number of the instrument along with preceding series if any, conform to the number/series issued and recorded in the relative account particulars. •The instrument bearing similar number was not been paid earlier. 3. 4 Remittance Local Remittance Department: Cash remitting from one place to another is risky. So, Banks remit funds on behalf of the customer(s) to save them from any awkward happening through network of their branches.

There are three modes of remitting funds. These are – ?Pay Order (PO): PO Working Procedure, shows in a Flow Chart Fig: Pay Order Issuing Process ?Demand Draft : DD is called ‘Banker’s Draft’. It is an instrument, issued by a particularbranch, drawn on another branch of the same bank, instructing to pay a certain sum of money. It is very popular instrument for remitting fund from one corner of a country to another. DD is issued in favor of a customer who maintains an a/c with SJIBL Dhaka Main Branch. It can be issued against Cash or Cheque. If DD amount is more than Tk. 50,000/=, a test code is given on IBCA.

The a/c treatments will be – after giving these entries an Inter Bank Credit Advice (IBCA) is prepared which contains the controlling number, depicted that the branch is credited to whom it is issued. An IBCA implies the following entries – a. H/O A/C Issuing Branch Dr. b. Drawn on Branch Cr. Fig: DD Working Procedure: Shows In A Flow Chart ?Telegraphic Transfer (TT): Sometimes the remitter of the funds requires fund immediately. In that case, the banker is requested to remit the funds telegraphically. Different modes are Telegram, Telephone, Telex, Fax. Telegraphic Transfer is the most rapid and convenient but expensive method.

The drawer and the payee should have accounts with Shahjalal Islami Bank Ltd. TT is issued against cash, cheque, and letter of instruction. Fig: Flow Chart of TT (Out Word) Working Process 3. 5 Accounts Section: Accounts department maintains all records of transactions and all types of statement. At the end of transaction hour all concerned section sends vouchers of transactions to this department. Accounts department compares all figures/ amount, contents of transactions with supplementary statement prepared by computer. If any discrepancy arises regarding any transaction then this department reports to the concerned department.

Following are the activities of accounts department: ? To record all transaction in the cash book. ?To prepare daily, weekly, monthly, half-yearly and yearly fund position. ?To prepare all kinds of statements related to Bangladesh Bank, Head office and National Board of Revenue (NBR). ?To prepare monthly salary statement, provident fund statement and administrative expenditure statement. ?To make charges for different types of duty. 3. 6 Position of Individual account in respect of Total account: Shahjalal Islami Bank always emphasis on the customer satisfaction. That’s why they offer number of accounts.

This section I tried to show the ratios of individual accounts in respect of total account. ApplicationNumber of Account ACD142 DPMSS136 Hajj18 HDS11 INV515 MBMSS17 MCWDS2 MDS1100 MIS-3248 MS-12110 MS-I551` MS-2040 MS-2580 MSD1139 MTDR816 SND30 Ratios of Individual Accounts in Total Account 3. 7 Analysis Provisional profit Rate of deposits: The following Table shows the provisional profit rates that are distributed to each of the individual deposit. This table also analyzes the change in profit rate. SLDeposit ProductPrevious Provisional RateRevised provisional RateRemarks 1.

Mudaraba Saving Deposit5. 50%5. 50%No Change 2. Mudaraba Short Notice Deposit5. 00%5. 00%No Change 3. Mudaraba Term Deposit a) 1 Month8. 00%8. 50% b) 2 months8. 50%9. 50% c) 3 months11. 25%12% d) 6 months11. 50%12% e) 1 years11. 75%12% 4Mudaraba Scheme Deposits: a) Monthly income SchemeNo Change i) 3 years 12. 00% (Tk 1000 per month per lac)12. 00% (Tk 1000 per month per lac) b) Multiple Benefit Scheme: i) Double Benefit11. 61% ( Will be doubled in 6 year)11. 61% ( Will be doubled in 6 year)No Change` ii) Triple Benefit11. 62% ( Will be triple in 9. 5 years)11. 62% ( Will be triple in 9. years)No Change SLDeposit ProductPrevious Provisional RateRevised provisional RateRemarks c). Millionaire Scheme;No Change i)12 Years ( TK 3280/= per month)11. 25%11. 25% ii)15 Years ( TK 2120/= per month)11. 30%11. 30% iii)20 years ( TK 1080/= per month)11. 45%11. 45% iv)25 years ( TK 575/= Per Month)11. 51%11. 51% d) Monthly Deposit SchemeNo Change i) 5 years11. 00%11. 00%Installment and payable amount as per enclosed table ii) 10 Years11. 10%11. 10% iii) 10 Years 11. 20%11. 20% e) Hajj Scheme i) Up to 10 years11. 25%11. 25%Installment amount as per enclosed table ii) Above 10 Years11. 50%11. 0% 3. Mudaraba Term DepositPrevious Provisional RateRevised provisional RateRemarks a) 1 Month8. 00%8. 50% b) 2 months8. 50%9. 50% c) 3 months11. 25%12% d) 6 months11. 50%12% e) 1 years11. 75%12% Based on the Table, only one change is observed on “Mudaraba Term Deposit” . and the change on that deposit has been shown by the following Figure. 3. 8 Risk Management Shahjalal Islami Bank has 7 years Perspective Plan up to 2010 aiming ac diversification of Investment by Size, Sector, Geographical Area, Economic Purpose and Securities mid development of a balanced Investment portfolio of the Bank.

Investment (Lending) is the principal function of a Bank. At the same time, there is an underlying/inherent risk in any investment (credit). Investment comprises a very large portion of a Bank’s total cttvat1cs s such, due diligence and prudential. As such, due diligence and prudential judgment / decision is a precondition for a sound Investment practice arid therefore, is very important for profitability and success of a Bank. The Bank has established control mechanisms to identify, measure and monitor the exposure to investment 1endin®, market and liquidity risks.

In this context, to have a brief idea on the quality of assets of the bank a calculation is given here under: Total Assets BDT 28,347 million Total Investments BDT 20, 67 million Classified Investments BDT 128 million Percentage of Investment to total Asset 72T3 % Percentage of Classified to total Investments 0. 62% 3. 8. 1 Investment Risk

The Management of specific investment risk is developed according to individual business units. The investment risk management function ensures that appropriate policies are established and ensures compliance with the related sanction monitoring procedures and controls at the business unit level. Investment exposures are aggregated from individual business units and are monitored on a regular basis. Investment involved risks may be summarized as under: – ?Difficulty in choosing core business. ?Failure in business of the customer. ?Encompassing a blend of banking and non-banking service. Investment either too liquid or of questionable quality ?Competition from other commercial banks. ?Security Control Risk. Portfolio monitoring is carried out b asset quality background of the customer, soundness and viability of his business and cash flow etc sector of the economy and country cost of long-term financing to march with the return on long-term investment. The Bank pays adequate emphasis on business risk than analysis of security risk because the security reduces the risk hut does not always improve the quality of investment.

Besides, the Bank addresses the Investment (Credit) risk guideline cited by the Bangladesh Bank. As regards to other parts of the banking business, the control staffs follow a pragmatic program of regular monitoring and follow-up. 3. 8. 2 Market risk Expert opinion to choosing core business area, finding out new business sector, arranging low cost fund to invest at lower rate, steps to avoid undue and unfair competition with the commercial banks etc. are effective measure to reduce the market risk. 3. 8. 3 Liquidity risk

Liquidity risk is more important area to think by the banking company to match with the financing and Investment (Lending) Long term and stable financings is required for long-term investment. Beside, inflow of cash through collection of dues against Investment in time is also essential. Effective monitoring and follow-up is the important tools to ensure the required collection. 3. 8. 4 Foreign Exchange Risk Management The financial Institutions’ performance is directly related to Foreign Exchange Market.

To ensure effective Foreign Exchange Risk Management, the bank has wide scope in establishing organizational structure and formulating Manual as per Guidelines of Bangladesh Bank. However, the bank has already formulated a comprehensive manual. Bank maintains various nostro accounts in order to conduct operations in different currencies including BDT. The senior management of the bank set limits for handling nostro accounts transactions that include time & amount limits, lip to 3lst December 2007 the bank does not have any unrcconciled entry, which exceeds 3 months.