Assignment on Islamic Bank part 2 of 3

1.      The bank requires to retain 10% of its total deposit liability as Statutory Liquidity Ration (SLR) including 4% Cash Reserve Ration (CRR) with Central Bank. The Bank may go for investment upto 90% of its total deposit. The perspective Investment Plan is being formulated quantifying the allocation of investments size-wise, sector-wise, geographical area-wise, economic purpose-wise, security-wise and mode-wise keeping in vies 20% projected growth of deposit each year.

2.      Taking into consideration the broad objectives of the Bank, national priority, socio-economic need, growth level of the economy, the investment port-folio of the Bank may gradually be diversified and allocated in terms of size, sector, geographical area, economic purpose, security and mode.  

THE 5-YEAR PERSPECTIVE PLAN FROM 2003-2007

In accordance with the investment Policy, 5 year Perspective Plan from 2003 to 2007 is formulated. Deposit target of the Bank s on September 30, 2002 plus 10% has been taken as base and 90% of the year-wise estimated deposits have been as investable fund. Size-wise, sector-wise, geographical area-wise, economic purpose-wise, security-wise allocation of estimated investable funds are made in accordance with the weightage given in the Investment.   

Table-12  Distribution of investments by size of Accounts (in million Tk.)

Year	Estimated total deposit	Investable fund (90% of total deposit)	SIZE OF ACCOUNTS
			Upto Tk.0.50m		Above tk.0.50 m to Tk. 1.00m		Above Tk. 1.00m to Tk. 2.50m		Above tk.2.50m to Tk. 5.00m		Above Tk.5.00		Total
			%	Amount	%	Amount	%	Amount	%	Amount	%	Amount
2003	60094	54085	20	10817	11	5949	16	13	7031	7031	40	21634	54085
2004	72113	64902	20	12980	11	7139	16	13	8437	8437	40	25961	64902
2005	86535	77882	20	15576	11	8567	16	13	10125	1012	40	31153	77882
2006	103843	93458	20	19692	11	10280	16	13	12150	12150	40	37383	93458
2007	124611	112150	20	22423	11	12336	16	13	14579	14579	40	44860	112150

Table-13 :  Distribution of Investments by Sectors (Public & Private)

        (in million Tk.)

Year	Estimated total deposit	Investable Fund (90% of total deposit)	Public Sector		Private Sector		Total
			%	Amount	%	Amount
2003	60094	54085	5	2704	95	51380	54085
2004	72113	64902	5	3245	95	61657	64902
2005	86535	77882	5	3894	95	73988	77882
2006	103843	93458	5	4673	95	88785	93458
2007	124611	112150	5	5607	95	106542	112150

Table-14 : Distribution of  investments by areas (urban & rural) (in million Tk.)

Year	Estimated Total Deposit	Investable Fund (90% of total deposit)	Rural		Uraban		Total
			%	Amount	%	Amount
2003	60094	54085	6	3245	94	50140	54085
2004	72113	64902	7	4543	93	60358	64902
2005	86535	77882	8	6231	92	71651	77882
2006	103843	93458	9	8411	91	85047	93458
2007	124611	112150	10	11215	90	100935	112150

Table-15 (A)  : Distribution of investments by Economic Purpose (in million Tk.)

Year	Estimated total deposit	Investable (90% of total deposit)	ECONOMIC PURPOSE		ECONOMIC PURPOSE
			Agrculture, Fishing & Forestry			Industry		Working Capital		Construction & Real Estate		Electricity, Gas, Water & Sanitary Services
1	2	3	4	5		6	7	8	9	10	11	12	13
			%	Amount		%	Amount	%	Amount	%	Amount	%	Amount
2003	60094	54085	2	1082		18	9735	15	8113	10	5410	0.5	270
2004	72113	64902	2	1298		18	11682	15	9735	10	6490	0.5	325
2005	86535	77882	2	1558		18	14010	15	11682	10	7790	0.5	389
2006	103843	93458	2	1869		18	16822	15	14019	10	9346	0.5	467
2007	124611	112150	2	2243		18	20187	15	16823	10	11215	0.5	561

 (B) :

ECONOMIC  PURPOSE
Transport & Communication		Storage		Trade
14	15	16	17	18	19
%	Amount	%	Amount	%	Amount
5	2704	1	541	40	21634
5	3245	1	649	40	25960
5	3894	1	779	40	31152
5	4673	1	935	40	37383
5	5608	1	1121	40	44860

(C)

ECONOMIC PURPOSE
SPECIAL SCHEME
Household durable Scheme		Small business Investment Scheme		Doctors Investment Scheme		Poultry & Dairy Investment Scheme
20	21	22	23	24	25	26	27
%	Amount	%	Amount	%	Amount	%	Amount
1.5	811	1.5	811	0.5	270	0.5	270
1.5	974	1.5	974	0.5	325	0.5	325
1.5	1168	1.5	1168	0.5	389	0.5	389
1.5	1402	1.5	1402	0.5	467	0.5	467
1.5	1682	1.5	1682	0.5	561	0.5	561

(D)

ECONOMIC PURPOSE								Total
SPECIAL SCHEME						Miscellaneous
28	29	30	31	32	33	34	35	36
%	Amount	%	Amount	%	Amount	%	Amount
2	1082	0.5	270	1	541	1	541	54085
2	1298	0.5	325	1	649	1	649	64902
2	1558	0.5	389	1	779	1	779	77882
2	1869	0.5	467	1	935	1	935	93458
2	2243	0.5	561	1	1121	1	1121	112150

Investment Modes

There are three types of Investment Mechanism which are :

o  Bai Mechanism (Trading Mode)

            1.         Bai Murabaha

            2.         Bai Muaggle

            3.         Bai Salam

            4.         Bai Istishna’a

o Ijara Mechanism (Leasing Mode)

            1.         Hire purchase (Ijarah)

            2.         Hire purchase under Shirkatul Malk

o  Share Mechanisms

            1.         Mudaraba

            2.         Musharakah

Detailed description of Three Investment Mechanism :

Bai  Mechanism (Trading Mode)

1. Bai Murabaha

Meaning

The terms “Bai-Murabaha” have been derived from Arabic words   and    (Bai and Ribhun). Te word     means purchase and sale and the word      means an agreed upon profit    “Bai-Murabaha” means sale on agreed upon profit. 

Definition

Bai-Mudarabaha may be defined as a contract between a buyer and a seller under which the seller sells certain specific goods (permissible under Islamic Shariah and the Law of the land), to the buyer at a cost plus agreed profit payable in cash or on any fixed future date in lump-sum or by installments. The profit marked-up may be fixed in lump-sum or in percentage of the cost price of the goods.

Types of Murabaha

In respect of dealing parties Bai-Murabaha may be of two types.

Ordinary Bai-Murabaha

If there are only two parties, the seller and the buyer, where the seller as an ordinary trader purchases the goods from the market without depending on any order and promise to buy the same from him and sells those to a buyer for cost plus profit, then the sale is called Ordinary Bai-Murabaha.

Bai-Murabaha on Order and Promise 

If there are three parties, the buyer, the seller and the Bank as an intermediary trader between the buyer and the seller, where the Bank upon receipt order from the buyer with specification and a prior outstanding promise to buy the goods from the Bank, purchases the ordered goods and sells those to the ordering buyer at a cost plus agreed profit, the sale is called “Bai-Murabaha on Order or Promise”, generally known as Murabana.

This Murabaha upon order and promise is generally used by the Islami Banks, which undertake the purchase of commodities according to the specification requested by the Clients and sale on Bai-Murabaha to the one who ordered for the goods and promised to buy those for its cost price plus a marked-up profit agreed upon previously by the two parties, the Bank and the Clients

 Important feature

à    It is permissible for the Client to offer an order to purchase by the Bank agriculture goods deciding its specification and committing himself to buy the same from the Bank on Murabaha, i.e. cost plus agreed upon profit.

à    It is permissible to make the promise binding upon the Client to purchase from the Bank, that is, he is to either satisfy the promise or to indemnify the damages a caused by breaking the promise without excuse.

à    It is permissible to take cash/collateral security to guarantee the implementation of the promise or to indemnify the damages.

à    It is also permissible to document the debt resulting from Bai-Murabaha by a Guarantor, or a mortgage, or both lie any other debt. mortgage /Guarantee /Cash Security may be obtained prior to the signing of the Agreement or at the time of signing the Agreement.

à    Stock and availability of goods is a basic condition for signing a Bai-Murabaha Agreement. Therefore, the bank must purchase the goods as per specification of the Client to acquire ownership of the same before signing the Bai-Murabaha agreement with the Client.

à    After purchase of goods the Bank must bear the risk of goods until those are actually sold and delivered to the Client buyer, the Bank shall bear the consequences of any damages or defects, unless there is an agreement with the Client releasing the Bank of the defects, that means, if the goods are damaged, Bank is liable, if the goods are defective, (a defect that is not included in the release) the Bank bears the responsibility.

à    The bank must deliver the specified to the Client on specified date and at specified place of delivery as per Contract.

à    The Bank shall sell the goods at a higher price (Cost + Profit) to earn profit. The cost of goods sold and profit mark-up therewith shall separately and clearly be mentioned in the Bai-Murabaha Agreement. The profit mark-up may be mentioned in lump sum or in percentage of the purchase/cost price of the goods. But, under no circumstances, the percentage of the profit shall have any relation with time or expressed in relation with time, such as month, per annum etc.

à    The price once fixed as per agreement and deferred cannot be further increased. 

à    It is permissible for the Bank to authorize any third party to buy and receive the goods on Bank’s behalf. The authorized must be in a separate contract.

Operational Procedures of Investment Mechanism of IBBL

Ø  Induction of client

Ø  Application

Ø  Categorization (4 categories)

Ø  Processing and appraisal

Ø  Sanction

Ø  Documentation

Ø  Purchase of goods by the Bank

Ø  Taking delivery of goods by the Bank

Ø  Sales and delivery of goods to the client

Induction of Client

·         Hold preliminary discussion with the prospective client his investment needs, business experience, viability of the project and Shariah permissibility of the assets, the business and the uses of the asset.

·         Brief him on the salient features of Bai-Murabaha mode of investment.

·         Look to the past  performance of the client.

·         Check-up Head Office Current investment policy and Branch’s track record of bai-Murabaha Investment of thie items.

·         If the proposal is found permissible under Islamic principles and suitable, advise the client to submit formal Application, if not found suitable, regret politely.

·         Request potential client to open an Al-Wadia current Accont. Let him maintain the Current Account Satisfactorily for a reasonable period. This will generally mean six months).

Application

·         Obtain application in Duplicate from the cient on F-167A and record the same in the investment proposal Received and Disposal Register (B-55). Deal Application shall be obtained on F-136.

·         Obtain and affix attested photograph(s) of the Proprietor /Partners /Directors /Trustee /Administrator on the top right hand corner of the application.

·         Scrutinize the application of the client to see that :

A. All columns are properly filled in.

B. Particulars information given therein are complete and correct all respect.

C. All required Documents /Papers as listed inthe footnote of the application

     are submitted.

D. The client as per specimen signature with the Bank signs it.

Categorisation

Categorize the proposal as under

Bai-Murabaha Commercial

Investment for Purchase and sale goods to individual /Firm/Company for Commercial purpose shall be termed as Bai-Murabaha Commercial.

Bai-Murabaha Industrial

Investment to industrial undertakings in the Form of Land, Buildings, Machineries, Equipments, Raw Materials, etc. shall be termed as Bai-Murabaha Industrial.

Bai-Murabaha Agriculture

Investment to agriculture sector for supply of seeds, fertilizer etc. shall be termed as Bai-Murabaha Agriculture.

Bai-Murabaha Import

Investment for Import of goods from abroad shall be termed as Bai-Murabaha Import.

Enter the Application in the “Investment Proposal Received and Disposal Register (B-53) and allot a Serial Number to it.

Initate action for Processing and Appraisal immediately.

Processing and Appraisal

·         Examine  shariah permissibility of the goods. Reject the proposal outright, if not permitted by Islamic Sharah.

·         Check-up Credit Restriction Schedule of Bangladesh Bank and Head Office Current Investment Policy Guidelines.

·         Visit the Business establishment of the Client. Talk to the business and important personalities of the locality to ascertain the Honesty, Integrity and Business dealings of the Client.

·         Request for confidential report of the client from local Bank Branches. Confident Report from Credit Information Bureau (CIB) of Bangladesh Bank through Head Office Investment Divisioin as per Instruction Circular of Head Office in this Regard.

·         Optain Financial Statement/Balance Sheet of the Client for the last three consecutive years for Investment Proposals of Tk. 50.00 lac or above as per Head Office Instruction.

·         Inspect Land, Building, other Assets and Properties proposed to be Mortgaged or Hypothecated.

·         Forward Documents, Title Deeds and other relevant Papers to the approves Lawyer of the Bank for examination and furnishing his opinion.

·         Obtain Lawyer’s Opinion as per clause No. 8.02.

·         Please study the following carefully and note down the actual findings in the Appraisal Form against each item :

à    Effective demand, price of the goods, Short or long-term duration, quality and other specifications of the goods, availability, etc. of the said or projected goods.

·         Where sale price of the goods is payable by the client at specified future date in lump sum or installments as per proposal.

·         For Bai-Murabaha Commercial and Bai Murabaha Industrial Investment, prepare Appraisal Report on F-167B. For appraisal Bai-Murabaha agriculture and For Bai-Murabaha Import use special Appraisal Form devised for each of those, if any, otherwise F-167B providing the available/required supplementary information. In course of preparation of the appraisal report please ensure incorporation of all information of all information, particulars figures and statistics in Appraisal Form correctly with special attention to the following :

à    Composition of asset of the Client, extent and nature of liabilities of the Client, the value of Liquid Assets, Business Reputation of the Clientk experience of the Client, etc. 

·         Contact primarily with the producers/sellers/suppliers of the goods in the market, study the market price and work out the purchase and sale prices of the goods as per guidelines.

Sanction

·         On completion of Appraisal as provided herein above, of the Proposal is found viable, issue Sanction Advice (F-188) if it is within the business power of the Branch mentioning all the terms and condition is duplicate to the Client and endorse copies to Zonal and Head Offices retaining one copy in the Clien’ts file duly accepted by the Client.

·         If the proposal is not within the Discretionary Power of the Branch, the Branch shall with Appraisal Report on F-167A and F-167B to Zonal Office/Head Office.

·         If the proposal is within the Business Power of the Zonal Office, Zonal Office shall accord Approval /Regret the Proposal.

·         If the proposal is not within the Business of the Zonal Office shall forward the proposal to Head Office with their views and recommendations.

·         On receiving the proposal and the Appraisal Report along with supporting papers Head Office will either approve or Regret.

·         If the Branch/the Zonal Office /Head Office, the branch will issue the Sanction advice (F-188) with a copy to Zo/HO duly recorded in /Facility Sanctioned Register (B-119) with authority to the investment Client for the limit.

·         If the client duly accepts the sanction terms and conditions, enter the particulars of the sanctioned proposal in the limit Register (B-117) allotting a Fixed Serial number for each Client as per Limit Register which shall remain permanent irrespective of the mode(s) so long the Client continues business with the Bank.

·         Open file Client-wise, affixing the Fixed Number allotted to him as per Limit Register (B-117) and Client’s  name, address, telephone number be recorded prominently in the inner side of the investment File for easy tracing in case of need.

·         In case of investment to the existing Client, obtain required papers, document with the past performance and outstanding liabilities of the Client, if any and process of sanction the propsal as per instruction laid down here-in-above after due evaluation or study.  

Documentation

Before purchasing the asset/property by the Bank, obtain sufficient collateral securities as mentioned in the sanction advice along with the following charges documents properly executed, i.e. duly filled in, sighed, stamped, verified and witnessed where necessary :

·         Bai-Murabaha Sanction Advice (F-188) deal-wise duly accepted by the Client.

·         Bai-Murabaha (Deal-Wise) (AF-1).

·         Joint and Several D.P. Note (CF-2).

·         Single party D.P. Note (CF-1), if there is no guarantor.

·         Double Party D.P. Note (CF-2), if there is guarantor(s) to be made by the Client in favor of the guarantor and endorsed by the later to the Bank.

·         D.P. Note Delivery Letter (CF-3).

·         Letter of Hypothecation (CF-5) for the asset(s) and Client’s stock in Trade /Work-in-Process.

·         Letter of  Disclaimer (CF-15), if the goods are stored in Client’s /party’ own/hired godown.

·         Agreement for Pledge of Goods (CF-4).

·         Insurance Policy (if stored in Client’s /Party’s Godown /Yard under Bank’s effective control duly recorded insurance Register (B-39).

·         Letter of Gurantee (CF-14).

·         Balance Confirmation Letter (CF-16)

·         Trust Receipt (CF-11).

·         Letter of Installments (CF-17).

If the Investment is made collaterally secured by Mortgage of property, obtain the following :

·         In case of Equitable Mortgage, Memorandum of Deposit of Title Deed (MDTD) signed by the owner of the property.

·         In case of Legal Mortgage, Registered Deed should be obtained.

·         Personal Guarantee of the onner(s) of the properly on CF-14.

·         Original title Deed(s) with CS, RS, SA, Mutation Parcha, DCR of the property and Mutatioin record.

·         Upto-date Rent Receipt.

·         Non-encumbrance Certificate along with Search Fee Paid Receipt of the concerned Registry Office.

·         Site Plan (Map-Naksha) of the Mortgaged Property.

·         Valuation Certificate issued by a competent Engineer and physically verified by the Branch Officials.

·         Lawyer’s Certificate

·         An affidavit sworn.

Where the Investment is secured by Hypothecation of Stock-in-trade, Machineries etc. also obtain the following Documents :

·         Letter of Hypothecation (CF-5).

·         Trust Receipt (CF-11).

·         Legal Mortgage of Machineries.

In case investment is collaterally secured by pledge of Shares of reputed Public Limited Company on bank’s approved list and quoted in the stock Exchange, the following additional document are to be obtained :

·         Agreement for Pledge of Shares.

·         Share Transfer Deed in Duplicate.

·         Share Delivery Letter

·         Letter to the concerned Company to register Lien in Bank’s Favor.

In case of investment to Partnership Firms, obtain the following Document :

·         Letter of Partnership

·         Copy of Partnership Deed

In case of investment to Private or Public Limited Company, obtain the following Document :

·         Certified copy of the Memorandum and Articles.

·         Resolution of the Board of Directors.

·         Personal Guarantee of all the Directors.

·         Certificated of Incorporation

·         Certificated of Commerncement

In case of investment to a Trust Organization, obtain the following Document :

·         Copy of Trust Deed.

·         Resolution of the Board of Trustees

·         Charge Document

·         Personal Guarantee of the Office Bearer

In case of investment to Co-operative Society, obtain the following Document :

·         Clearance from the Registrar

·         Letter to be issued to the concerned Registrar

·         Personal Guarantee of the Office Bearer

·         A copy of Bye-laws of the Society.

Signature of the Client

After completion  of Document, enter Document in Documents Execution Register (B-103).

Movement of Document, if any, should be duly recorded in the Document Ex-custody Register duly singed by the Custodians.

Purchase of Goods by The Bank

Remember that Bai-Murabaha is perfectly a ligitimate transaction according to the Shariah, provided :

v  That the goods desired by the Client is first purchased by the Bank and the ownership of  the Bank on the goods is established, i.e. Bank must transform its money into goods.

v  That after purchase of the goods, the risk of the goods is borne by the Bank until the possession of the Merchandise has been passed on the Client.

v  That the specification of the goods, delivery schedule and other terms of contract are fulfilled.

·         Obtain deal-wise application Order for Purchase on F-136 after due study.

·         Open investment account in Investment Account Opening Register (B-102).

·         Enter the Account Particulars in the Investment Ledger (B-105).

·         It should be carefully noted that purchase of goods shall be made only after completion of all the Documentation formalities, including Pre-Audit memo (F215).

·         In case purchase of Bai-Murabaha goods by the Bank on Ceredit/deffered payment basis, the Bank shall execute a Credit Purchase Agreement with the seller to that effect mentioning date of delivery of Goods to the bank and that of payment by the Bank.

·         If the goods are to be purchased from the local or outstation market and money is to be paid/remitted thereof and other expenses such s TA/DA, transportation etc, shall be borne by the Bank, which shall ultimately be loaded on the cost of Goods.

Taking Delivery of Goods by the Bank

·         After finalization of purchse of Bai-Murabaha Goods either by the Bank officials or through any Agent from the local or out station market the Bank shall request the seller to delivery the goods purchased to the Bank’s Authorized official /Agent or to the Bank godown against proper acknowledgement.

·         After taking delivery of the goods by the Bank or trough and Agent, the Bank shall make payment of the price of the goods to producers /sellers /supplier through DD/TT/PO against Cash memo which will exclusively be issued in the name of the Buying Agent.

·         The Bank shall not be invest in such cases where the allotting Authority will not accept the Letter of Authority and agree to deliver the goods to the Bank as per authorization of this Allottee.  

Sale and Delivery of Goods to the client

The Bank after receiving the goods shall finally calculate the Total Cost price and fix up the sale price by mutual discussion with Client (MANUAL, IBTRA).

2. Bai - Muajjal

Meaning

The terms “Bai” and “Muajjal” have been derived from Arabic words   and    . The word    means purchase and sale and the word   means a fixed time or a fixe period.

 “Bai-Muajjal” means sale for which payment is made at a future fixed date or within fixed period. In short, it is a sale on Credit.

Definition

Bai-Muajjal may be defined as a contract between a buyer and a seller under which the seller sells certain specific goods (permissible under Islamic Shariah and the Law of the Country), to the buyer at a cost plus agreed profit payable in cash or on any fixed future date in lump-sum or by installments. The seller may also sell the goods purchased by him as per order and specification of the Buyer. 

Induction of Client

·         Hold preliminary discussion with the prospective client his investment needs, business experience, viability of the project and Shariah permissibility of the assets, the business and the uses of the asset.

·         Brief him on the salient features of Bai-Murabaha mode of investment.

·         Look to the past  performance of the client.

·         Check-up Head Office Current investment policy and Branch’s track record of bai-Murabaha Investment of thie items.

·         If the proposal is found permissible under Islamic principles and suitable, advise the client to submit formal Application, if not found suitable, regret politely.

·         Request potential client to open an Al-Wadia current Accont. Let him maintain the Current Account Satisfactorily for a reasonable period. This will generally mean six months.

·         After purchase of goods the Bank must bear the risk of goods until those are acutally sold and delivered to the Client, i.e. after purchase ofthe goods by the Bank and before selling of those on “Bai-Muajjal” to the Client buyer, the Bank shall bear the consequences of any damages or defects, unless there is an agreement with the Client releasing the Bank of the defects.

Application

·         Head Office controlled Branches shall obtain application from the Client in Duplicate. Branches under Zone shall obtain application from the Client it Triplicate. For new Client and renewal cases, applciation shall be obtained on F-167A. Deal application shall be obtained on F-136.

·         Obtain and affix attested photograph.

·         Proprietor /Partners /Directors /Trustee /Administrator on the top right hand corner of the application.

·         Scrutinize the application of the client to see that :

A. All columns are properly filled in.

B. Particulars information given therein are complete and correct all respect.

C. All required Documents /Papers as listed inthe footnote of the application

     are submitted.

D. The client as per specimen signature with the Bank signs it.

Categorisation

Categorize the proposal as under

“Bai-Muajjal” Commercial

Investment for Purchase and sale goods to individual /Firm/Company for Commercial purpose shall be termed as Bai-Murabaha Commercial.

Bai-Muajjal Industrial

Investment to industrial undertakings in the Form of Land, Buildings, Machineries, Equipments, Raw Materials, etc. shall be termed as Bai-Murabaha Industrial.

Bai-Murabaha Agriculture

Investment to agriculture sector for supply of seeds, fertilizer etc. shall be termed as Bai-Muajjal Agriculture.

Bai-Muajjal Import 

Investment for Import of goods from abroad shall be termed as Bai-Muajjal Import.

Enter the Application in the “Investment Proposal Received and Disposal Register (B-53) and allot a Serial Number to it

Initate action for Processing and Appraisal immediately.

Processing and Appraisal

·         Examine  shariah permissibility of the goods. Reject the proposal outright, if not permitted by Islamic Sharah.

·         Check-up Credit Restriction Schedule of Bangladesh Bank and Head Office Current Investment Policy Guidelines.

·         Visit the Business establishment of the Client. Talk to the business and important personalities of the locality to ascertain the Honesty, Integrity and Business dealings of the Client.

·         Request for confidential report of the client from local Bank Branches. Confident Report from Credit Information Bureau (CIB) of Bangladesh Bank through Head Office Investment Divisioin as per Instruction Circular of Head Office in this Regard.

·         Optain Financial Statement/Balance Sheet of the Client for the last three consecutive years for Investment Proposals of Tk. 50.00 lac or above as per Head Office Instruction.

·         Inspect Land, Building, other Assets and Properties proposed to be Mortgaged or Hypothecated.

·         Forward Documents, Title Deeds and other relevant Papers to the approves Lawyer of the Bank for examination and furnishing his opinion.

·         Obtain Lawyer’s Opinion as per clause No. 8.02.

·         Please study the following carefully and note down the actual findings in the Appraisal Form against each item :

à    Effective demand, price of the goods, Short or long-term duration, quality and other specifications of the goods, availability, etc. of the said or projected goods.

·         Where sale price of the goods is payable by the client at specified future date in lump sum or installments as per proposal.

·         For Bai-Muajjal Commercial and Bai-Muajjal Industrial Investment, prepare Appraisal Report on F-167B. For appraisal Bai-Muajjal agriculture and For Bai-Muajjal Import use special Appraisal Form devised for each of those, if any, otherwise F-167B providing the available/required supplementary information. In course of preparation of the appraisal report please ensure incorporation of all information of all information, particulars figures and statistics in Appraisal Form correctly with special attention to the following :

à    Composition of asset of the Client, extent and nature of liabilities of the Client, the value of Liquid Assets, Business Reputation of the Clientk experience of the Client, etc. 

·         Contact primarily with the producers/sellers/suppliers of the goods in the market, study the market price and work out the purchase and sale prices of the goods as per guidelines.

Sanction

·         On completion of Appraisal as provided herein above, of the Proposal is found viable, issue Sanction Advice (F-191) duly recorded in the investment /Facility Sanction Register (B-119) with separate opening for investment /Facility.

·         If the proposal is not within the Discretionary Power of the Branch, the Branch shall with Appraisal Report on F-167A  to Zonal Office/Head Office.

·         If the proposal is within the Business Power of the Zonal Office, Zonal Office shall accord Approval /Regret the Proposal.

·         If the proposal is not within the Business of the Zonal Office shall forward the proposal to Head Office with their views and recommendations.

·         On receiving the proposal and the Appraisal Report along with supporting papers Head Office will either approve or Regret.

·         If the Branch/the Zonal Office /Head Office, the branch will issue the Sanction advice (F-197) with a copy to Zo/HO duly recorded in /Facility Sanctioned Register (B-119) with authority to the investment Client for the limit.

·         If the client duly accepts the sanction terms and conditions, enter the particulars of the sanctioned proposal in the limit Register (B-117) allotting a Fixed Serial number for each Client as per Limit Register which shall remain permanent irrespective of the mode(s) so long the Client continues business with the Bank.

·         Open file Client-wise, affixing the Fixed Number allotted to him as per Limit Register (B-117) and Client’s  name, address, telephone number be recorded prominently in the inner side of the investment File for easy tracing in case of need.

·         Branch/the Zonal Office /Head Office shall maintain Investment /Facility Sanctioned Register (B-119), authorit-wise, Branch/wise seperately for Investment /Facility (General) and scheme-wise. They shall also maintain investment /Facility Proposal Received & Disposal Register (B-53) & Limit Register (B-117).

·         Branch/Zonal Office /Head Office shall maintain Investment /Facility Santioned Register (B-119) Authorit-wise (BO/ZO/HO), Scheme-wise and for General Investment /facility on the basis of the Sanction Advice Issued /Received.

Documentation

Before purchasing the asset/property by the Bank, obtain sufficient collateral securities as m entioned in the sanction advice along with the following charges documents properly executed, i.e. duly filled in, sighed, stamped, verified and witnessed where necessary :

·         Bai-Muajjal Sanction Advice (F-191) deal-wise duly accepted by the Client.

·         Bai-Muajjal (Deal-Wise) (AF-2).

·         Joint and Several D.P. Note (CF-2).

·         Single party D.P. Note (CF-1), if there is no guarantor.

·         Double Party D.P. Note (CF-2), if there is guarantor(s) to be made by the Client in favor of the guarantor and endorsed by the later to the Bank.

·         D.P. Note Delivery Letter (CF-3).

·         Letter of Hypothecation (CF-5) for the asset(s) and Client’s stock in Trade /Work-in-Process.

·         Letter of  Disclaimer (CF-15), if the goods are stored in Client’s /party’ own/hired godown.

·         Agreement for Pledge of Goods (CF-4).

·         Insurance Policy (if stored in Client’s /Party’s Godown /Yard under Bank’s effective control duly recorded insurance Register (B-39).

·         Letter of Gurantee (CF-14).

·         Balance Confirmation Letter (CF-16)

·         Trust Receipt (CF-11).

·         Letter of Installments (CF-17).

·         Letter of Disbursement (CF-16).

If the Investment is made collaterally secured by Mortgage of property, obtain the following :

·         In case of Equitable Mortgage, Memorandum of Deposit of Title Deed (MDTD) signed by the owner of the property.

·         In case of Legal Mortgage, Registered Deed should be obtained.

·         Personal Guarantee of the onner(s) of the properly on CF-14.

·         Original title Deed(s) with CS, RS, SA, Mutation Parcha, DCR of the property and Mutatioin record.

·         Upto-date Rent Receipt.

·         Non-encumbrance Certificate along with Search Fee Paid Receipt of the concerned Registry Office.

·         Site Plan (Map-Naksha) of the Mortgaged Property.

·         Valuation Certificate issued by a competent Engineer and physically verified by the Branch Officials.

·         Lawyer’s Certificate

·         An affidavit sworn.

Where the Investment is secured by Hypothecation of Stock-in-trade, Machineries etc. also obtain the following Documents :

·         Letter of Hypothecation (CF-5).

·         Trust Receipt (CF-11).

·         Legal Mortgage of Machineries.

In case investment is collaterally secured by pledge of Shares of reputed Public Limited Company on bank’s approved list and quoted in the stock Exchange, the following additional document are to be obtained : 

·         Agreement for Pledge of Shares.

·         Share Transfer Deed in Duplicate.

·         Share Delivery Letter

·         Letter to the concerned Company to register Lien in Bank’s Favor.

In case of investment to Partnership Firms, obtain the following Document :

·         Letter of Partnership

·         Copy of Partnership Deed

In case of investment to Private or Public Limited Company, obtain the following Document :

·         Certified copy of the Memorandum and Articles.

·         Resolution of the Board of Directors.

·         Personal Guarantee of all the Directors.

·         Certificated of Incorporation

·         Certificated of Commerncement

In case of investment to a Trust Organization, obtain the following Document :

·         Copy of Trust Deed.

·         Resolution of the Board of Trustees

·         Charge Document

·         Personal Guarantee of the Office Bearer

In case of investment to Co-operative Society, obtain the following Document :

·         Clearance from the Registrar

·         Letter to be issued to the concerned Registrar

·         Personal Guarantee of the Office Bearer

·         A copy of Bye-laws of the Society.

Signature of the Client

After completion  of Document, enter Document in Documents Execution Register (B-103).

Movement of Document, if any, should be duly recorded in the Document Ex-custody Register duly singed by the Custodians.

Purchase of Goods by The Bank

Remember that Bai-Murabaha is perfectly a ligitimate transaction according to the Shariah, provided :

v  That the goods desired by the Client is first purchased by the Bank and the ownership of  the Bank on the goods is established, i.e. Bank must transform its money into goods.

v  That after purchase of the goods, the risk of the goods is borne by the Bank until the possession of the Merchandise has been passed on the Client.

v  That the specification of the goods, delivery schedule and other terms of contract are fulfilled.

·         Obtain deal-wise application Order for Purchase on F-136 after due study.

·         Open investment account in Investment Account Opening Register (B-102).

·         Enter the Account Particulars in the Investment Ledger (B-105).

·         It should be carefully noted that purchase of goods shall be made only after completion of all the Documentation formalities, including Pre-Audit memo (F215).

·         In case purchase of Bai-Murabaha goods by the Bank on Ceredit/deffered payment basis, the Bank shall execute a Credit Purchase Agreement with the seller to that effect mentioning date of delivery of Goods to the bank and that of payment by the Bank.

·         If the goods are to be purchased from the local or outstation market and money is to be paid/remitted thereof and other expenses such s TA/DA, transportation etc, shall be borne by the Bank, which shall ultimately be loaded on the cost of Goods.

Taking Delivery of Goods by the Bank

·         After finalization of purchse of Bai-Murabaha Goods either by the Bank officials or through any Agent from the local or out station market the Bank shall request the seller to delivery the goods purchased to the Bank’s Authorized official /Agent or to the Bank godown against proper acknowledgement.

·         After taking delivery of the goods by the Bank or trough and Agent, the Bank shall make payment of the price of the goods to producers /sellers /supplier through DD/TT/PO against Cash memo which will exclusively be issued in the name of the Buying Agent.

·         The Bank shall not be invest in such cases where the allotting Authority will not accept the Letter of Authority and agree to deliver the goods to the Bank as per authorization of this Allottee.  

Sale and Delivery of Goods to the client

The Bank after receiving the goods shall finally calculate the Total Cost price and fix up the sale price by mutual discussion with Client (MANUAL, IBTRA).

Important Features

i.        Bank is not bound to declare cost of goods and profit mark-up separately to the client.

ii.      Sport delivery of the item and payment is deferred.

iii.    Ownership and possession of the goods is transferred by the Bank to the client before receipt of sale price.

iv.    Client may offer an order to purchase by the Bank any specified goods and committing himself to buy the same from the Bank on Bai-Muajjal Mode.

v.      It is permissible to make the promise binding upon the client to purchase from the Bank. That is he is to either satisfy the promise or to indemnify the damage caused by breaking the promise.

vi.    Cash/Collateral Security should be obtained to guarantee the implementation of the promise or to indemnify the damages.

vii.  Mortgagee/Guarantee/Cash Security may be obtained before /at the time of signing the agreement.

viii.            Stock and availability of goods is a pre-condition for Bai-Muajjal agreement. The responsibility of the bank is to purchase the desired goods at the disposal of the client to acquire ownership of the same before signing the bai-Muajjal Agreement with the client.

ix.    The Bank after purchase of goods must bear the risk of goods until those are actually delivered place of  delivery as per contract.

x.      The bank must deliver the specified goods to the client on specified date and at specified place of delivery as per contract.

xi.    The Bank may sell the goods at one agreed price which will include both the cost price and the profit.

xii.  The price once fixed as per agreement and deferred can not be further increased.  

Operational procedures Mechanism of IBBL

V  Induction of client

V  Application

V  Categorization (4)

V  Processing and Appraisal

V  Sanction

V  Documentation

V  Purchase of goods by the bank

V  Taking delivery of Goods by the bank

V  Sale & delivery of goods to the client.

3. Bai  Salam

Under this mode Bank will executive purchase contract with the client and make payment against purchase of product, which is under process of production. Bai-Salam contract will be executed after making any investment showing price, quality, quantity, time, place and mode of delivery. The profit to be negotiated. It this mode the payment as the price of the goods is made at the time of Agreement and the delivery of the goods is deferred.

Important feature:

Bai-Salam is a mode of investment allowed by Islamic Sharia in which commodity(ies)/product(S) can be sod without having the said commodity (ies) /product(s) either in existence or physical /constructive possession of the seller. If the commodity(ies)/product(S) are ready for sale, Bai- Salam is not allowed in Shariah. Then the sale may be done either ill Bai-Murabaha or Bai-Muajjall mode of investment .

·         Generally, industrial and agricultural products are purchased/sold in advance under Bai-Salam mode of investment to infuse finance so that product is not hankered due to shortage fund/cash.

·         It is permissible to obtain collateral security from the seller client to secure the investment from any hazards viz non-supply/partial supply of commodity(ies)/product(S), supply of low quality commodity(ies) /product(S).

·         It is also permissible to obtain Mortgage and /or Personal Guarantee from a third party as security before the signing of the Agreement or at the time to signing the Agreement

·         Bai-Salam on a particular commodity(ies)/product(S) or on a product of a particular field or firm cannot be effected (for Agricultural Product(s)only).

·         The seller (manufacturer) client may be made agent of the Bank to sell the goods delivered to the Bank by hirn provided a separate agency agreement is executed between the Bank and the Client (Agent). (CLASS NOTES,Hussain, Abul).

Operational Procedures of Investment Mechanism In Ibbl

Rules And Condition

·         There must be a contract between the Buyer (Barlk) and Seler (Client), which shall be the principal instrument to govern the advance selling and buying .

·         The name, specification, brand, quantity, quality, size, etc. of the goods must clearly be specified in the Contract leaving no ambiguity.

·         Unit price and total price of the commodity /product must be fixed and mentioned in the Contract.

·         The exact time and place of delivery must be specific.

·         Mode of transportation, transportation cost, storage charge/godown rent, insurance etc. , if any must be specified in the contract.

·         The name of party who will bear the cost of transportation, charge/godown rent, insurance etc. also be mentioned in the contract.

·         Price shall be paid to the seller in full as mentioned in the contract at the time of signing the contract.

·         If mentioned in the contract, delivery of the commodity /products can be made/taken in installments or at a time within the contract period.

·         Quantity of the commodity /products shall be in unequivocal terms.

·         If the Seller/supplier (Client) fails to deliver the commodity /products in time as per specification i.e. in specified quality , quantity, the seller (Client) shall be bound to repay the price.

·         It is not necessary to mention cost of commodity /products and profit separately in the contract, only purchase price of the same may be mentioned.

·         After taking delivery of the commodity /product, the Buyer (Bank) shall be the owner & shall bear all risk until disposal /delivery of the same to the ultimate buyer.

·         Unit price and total price of the commodity (es)/products must be fixed and mentioned in the Contract.

Induction of Client

·         Hold preliminary discussion with the prospective client regarding his investment needs, business experience, viability of the project and Shariah permissibility of the asset, the business and the uses oft/le asset.

·         Brief him on the salient features of Bai-Salam mode of investment.

·         Look to the past performance of the client.

·         Check-up Head Office Current investment policy and Branch's track record of Bai-Salam Investment of the items

·         If the proposal is found permissible under Islamic principles and suitable, advise the client to submit formal Application. If not found suitable., regret politely.

·         Request potential client to open an AI-Wadia Current Account. Let him maintain the Current Account Satisfactorily for n reasonnble ,oeriod (This will generally mean six months).

Application

Obtain application in Duplicate from the client on F-136A for disbursement of Bai-Salam deal under composite limit sanctioned by the Bank.

Record received the investment proposal in the" Investment Proposal Received and  Disposal Register (B-55).

Obtain and affix attested photograph(s) of the Proprietor /Partners /Directors /Trustee /Administrator on the top right hand corner of the application.

Scrutinize the application of the client to see that:

A.    All columns are properly filled.

B.    Particulars and information given therein are complete and correct ill all respect.

C.    All required Documents/Papers as listed in the footnote of the application are submitted.

D. The client as per specimen signature with the Bank signs it.

Categorization

·         The proposal may be categorized as under:

·         Industrial (Including small and cottage)

·         Agricultural

·         Others, if any.

Processing and Appraisal

·         Examine Shariah permissibility of the goods. Reject the proposal outright, if not permitted by Islamic Shariah.

·         Check-up Credit Restriction Schedule of Bangladesh Bank and Head Office Current investment Policy Guidelines.

·         Study on the strength, weakness, opportunity and treat (SWOT) of concerned business, trade, products and deals in the Appraisal Report.

·         Separate Appraisal Report on F-167B is not required as the Client will avail Bai-Salam Investment under Composite limit sanctioned by the Bank.

·         Visit the Business establishment of the Client. Talk to the business and important personalities of the locality to ascertain the Honesty, Integrity and Business dealings of the Client.

·         Request for confidential report of the client from local Bank Branches. Confidential Report from Credit Information Bureau (CIB) of Bangladesh Bank through Head Office Investment Division as per Instruction Circular of Head Office in this Regard.

·         Obtain Financial Statement/Balance Sheet of the Client for the last three consecutive years for investment Proposals of TK.50.00 Lac or above as per Head Office Instruction.

·         Inspect Land, Building, other Assets and Properties proposed to be Mortgaged or Hypothecated.

·         Forward Documents, Title Deeds and other relevant Papers to the approves Lawyer of the Bank for examination and furnishing his opinion.

·         Please study the following carefully and note down the actual findings in the Appraisal Form against each item :

q        Effective demand, price of the goods, Short or long-term duration, quality and other specifications of the goods, availability, etc. of the said or projected goods.

·         Whether sale price of the goods is payable by the client at specified future date in lump sum or in installments as per proposal.

·         Particulars figures and statistics in Appraisal form correctly with special attention to the following :

q        Composition of assets of the Client, extent and nature of liabilities of the Client, the value of Liquid Assets, Business Reputation of the Client experience of the Client, etc.

Contact primarily with the producers/sellers/suppliers of the goods in the market, study the market price and work out the purchase and sale prices of the goods as per guidelines.

Sanction And Disbursement

·         On receiving Application (F-136) under Composite Facilities /Investment approved by the Competent Authority, Pre-Audit Memo to be prepared and got the same approved by the Branch Incumbent for issuing Sanction Advice. Sanction Advice to be issued as per prescribed format.

·         If the Sanction Advice is accepted by the Client, execute Bai-Salam Agreement (F-) immediately.

·         Collaterals and its legality, title to the property and all required Security Documents and the Charge Document are to be examine/obtained at time of execution of Bai-Saiam Agreement and all mortgage formalities are also to be completed at this stage, if not done earlier.

·         Open file client-wise and deal-wise.

·         Affix account number on each .file and on the related papers.

·         Transaction to be recorded in the Computer by the authorized official properly as per guidelines in this regard.

·         After execution of the Bai-Salam Agreement and completion of the mortgage formalities including Charge Document as provided herein above, disbursement may be made to the Client as per terms of Bai-Salam Agreement.

Documentation

Obtain the following charge documents executed properly i.e. duly filled in, signed, stamped witnessed where necessary:

·         A copy of Application Form F-136.

·         Single party D.P. Note (F-118), if there is no guarantor.

·         Double Patty DP .Note (F-119) , if there is guarantor(s) to be made by the client in favor of the guarantor and endorsed by the later to the Bank.

·         D.P. Note Delivery Letter (F-171).

·         Sanction Advice.

·         Bai-Salam Agreement.

·         Letter of Disbursement

·         Insurance Policy.

·         Letter of Disclaimer

If the Investment is made collaterally secured by Mortgage of property, obtain the following document:

·         In case of Equitable Mortgage, Memorandum of Deposit of Title Deed (MDTD) signed by the owner of the property .

·         In case of Legal Mortgage, Registered Deed should be obtained. .Personal Guarantee of the owner(s) of the property on CF-14.

·         Original Title Deed(s) with CS, RS, SA, Mutation Parcha, DCR of the property and Mutation record.

·         Upto-date Rent Receipt.

·         .Memorandum of deposit of Title Deed.

·         Non-encumbrance Certificate along with Search Fee Paid Receipt of the concerned Registry /Sub-Registry Office .

·         Site plan (Map/Naksha) of the Mortgaged Property.

·         Valuation Certificate issued by a competent Engineer and physically verified by the Branch Officials.

·         Lawyer's Certificate

·         An Affidavit sworn

Where the Investment is secured by Hypothecation of Stock-trade, Machineries etc. also obtain the following Documents:

·         Letter of Hypothecation(CF-5).

·         Trust Receipt(CF-11 ).

In case investment is collaterally/additionally secured by pledge of Shares of reputed Public Limited Company on bank's approved list and quoted in the stock Exchange, the following additional document are to be obtained:

·         Agreement for Pledge of Shares

·         Blank Share Transfer Deed in Duplicate

·         Share Delivery Letter

·         Letter to the Concemed Company to register Lien in Bank's Favor .

In case of investment to Partnership Firms, obtain the following Document:

·         Letter of Partnership

·         Copy of Partnership Deed

In case of investment to Private or Public Limited Company, obtain the following Document:

·         Certified Copy of the Memorandum and Articles.

·         Resolution of the Board of Directors

·         Personal Guarantee of all the Directors

·         Certificated of Incorporation

·         Certificated of Commencement

In case of investment to a Trust Organization, obtain the following Document:

·         Copy of Trust Deed

·         Resolution of the Board of Trustees

·         Charge Document

·         Personal Guarantee of the Office Bearer

In case of investment to Co-operative Society, obtain the following Document

·         Clearance from the Registrar

·         Letter to be issued to the concerned Registrar

·         Personal Guarantee of the Office Bearer

·         A copy of Bye-laws of the Society

Rates of Stamp Duty

Signature of the Client

After Completion of Document, enter tl1e Document in Documebnts Execution Register.

Movement of Document, if any, should be duly recorded in the Document Ex-custody Register duly signed by the Custodians.

Clarification Regarding Ownership of Imported Raw Materials to Avoid Confusion of Buy Back

It may be mentioned here clearly that like all other import under cash/Barter/AID, the raw materials for manufacturing/processing/finishing of export products are also imported under Back to Back L/C for ultimate export under deferred payment through an undertaking of the Bank i.e. L/C. the import risks remain covered by insurance policies. The undertaking i.e. L/C of the Bank is obligatory on the issuing Bank for making payment of the documents are drawn strictly in accordance with the terms off the L/C. As such, the ownership of fabrics in fact lies with the Sank. Moreover, the Sill of lading and the Sill of Exchange are made to the order of the Bank. L/C Application and Agreement contains the clause regarding ownership of goods by the Bank. Still the Islami Bank opens the L/C/Back-to -Back L/C against the Letter of Authority (F-219)obtained from the importer to utilize his /their License /Authority for the import and undertake to purchase the goods so imported/purchased by the Bank for ultimate manufacturing /export of the products by the buyer (exporter).

Immediately after opening L/C, the consignment shall be sold by the Sank to the client under Bai-Murabaha /Bai-Muallal(import) Agreement and Trust Receipt (T/R) Mortgage Documents, if any, etc. Accounting effects on such Sai-Murabaha/Bai-Muajjal Investment shall be given as and when Bank's fund is actually involved. Rebate shall, however be allowed for early adjustment/adjustment of profit, if any, charged in excess as per calculated rate of profit.

Procedure of Bai-Salam Investment in Export Oriented Industries

Bai-Salam investment may be allowed after opening of the L./c, arrival of raw materials, shipment of raw materials etc.

The Bank may sell/export its goods through the seller/exporter (Client) under a separate agreement or this may be done duly incorporating in the Bai-Salam Agreement unless otherwise settled and prescribed.

The price of the Bai-Salam deal shall be fixed up keeping in view the Export/Sale Price mentioned in the relative Export L.C./Contract, the Bank shall fix up it's profit as per rate prescribed by Head Office from time to time.

 

Fixation of Purchase Price

Points to be considered at the time of bargaining with the client for fixation of price of the goods to be purchase under Bai-Salam.

The time for taking delivery of the goods.

Anticipated time from the date of date of of Bai-Salam price to final disposal of the goods.

Taking delivery and costs for marketing, transportation charges, and selling commission etc. Godown Guard's salary, insurance, godown rent etc.

Present market price and the anticipated sale price at the time of disposal of the goods. Expected rate of returns as per Head Office norms.

All areas of appraisal should be carefully studied and the Appraisal forms (167B ) should be completed properly.

Purchase price shall be fixed-up with due study keeping in view that after sale of the goods the Bank gets profit as per expected Rate of Return.

Taking Delivery

The client shall exclusively utilize the investment for the purpose for which he has taken it and shall deliver/export the goods as per Bai-Salam Agreement.

The Bank shall take delivery of the goods from the client either by itself or through its representative as per Bai-Salam Agreement and Delivery Schedule.

The bank shall not disburse the investment unless the client completes all necessary arrangements for the proposed production /manufacture.

In case the Client tails to produce and deliver/export the goods, he will immediately refund the money received from the Bank.

If necessary I Bank may authorize the Client in writing to sell/deliver/supply/export the Bai-Salam goods against his /their license /contract/sale agreement for and on behalf of the Bank as its agent at a price not lower than the price fixed by the Bank provided a separate agency agreement is executed between the bank and the Client (Agent).

Taking delivery of the goods after the due date of delivery as per schedule shall be at the absolute discretion of the Bank.

Sale of Bai-Salam Goods

After taking delivery of the goods by the Bank, the Bank shall sell out the goods expeditiously at the highest available price ensuring the expected profit at the lower side. In case of any diverse situation, the Branch shall immediately write to Head Office through Zonal Office for decision ..

The Bank shall arrange proper storing of the goods until disposal.

Bank may entrust the client to sell the goods as its agent at a price not lower than the price fixed by the Bank provided a separate agency agreement is executed between the Bank and the Client (Agent).

The Bank may authorize any official person/firm /companies to sell the goods at a price not lower than the price fixed by the Bank.

Compensation/Fine Penalty

In case of the Client's failure to deliver/sell /supply/export the goods as per Agreement, he will have to pay compensation/penalty/fine at a fixed rate per day from the fixed date of delivery of goods as mentioned in the contract.

Purchase Of Goods By The Bank

·         Remember that Bai-Murabaha is perfectly a legitimate transaction according to the Shariah, provided:

à    That the goods desired by the Client is first purchased by the Bank and the ownership of he Bank on the goods is established, i.e. Bank must transform its money into goods.

à    That after purchase of the goods, tile risk of the goods is  born by the bank until the possession of the Merchandise has been passed on the Client.

à    That the specification of the goods, delivery schedule and other terms of contract are fulfilled.

¨      Obtain deal-wise application Order for Purchase on F-136 after due study.

¨      Open investment account in Investment Account Opening Register (B-1 02)

¨      Enter the Account Particulars in the Investment Ledger(B-105)

¨      It should be carefully noted that purchase of goods shall be made only after completion of all the Documentation formalities, including Pre-Audit memo (F215).

¨      In case purchase of Bai-Murabaha goods by the Bank on Credit/deferred payment basis, the Bank shall execute a Credit Purchase Agreement with the seller to that effect mentioning date of delivery of Goods to the Bank and that of payment by the Bank.

¨      If the goods are to be purchased from the local or outstation market and money is to be paid/remitted through PO/TT/DO etc., the PO/TT/OD must be on behalf of the Bank and the commission thereof and other expenses such as TA/,DA, transportation etc, shall be borne by the Bank, which shall ultimately be loaded on the cost of Goods.

Taking Delivery Of Goods By The Bank

·         After finalization of purchase of Bai-Murabaha Goods either by the Bank officials or through any Agent from the local or out station market the Bank shall request the seller to deliver the goods purchased to the Bank's Authorized official/Agent or to the Bank godown against proper acknowledgement.

·         After taking delivery of the goods by the Bank or through and Agent, the Bank shall make payment of the price of the goods to producers /sellers /supplier through DD /TT /PO against Cash memo which will exclusively be issued in the name of the Bank.

·         DD/TT may also be issued in the name of the Buying Agent.

·         The Bank shall not be invest in such cases where the allotting Authority will not accept the Letter of Authority and agree to deliver the goods to the Bank as per authorization of this Allottee.

Sale And Delivery Of Goods To The Client

The Bank after receiving the goods shall finally calculate the Total Cost price and fix up the sale price by mutual discussion with Client (MANUAL, IBTRA).

4. ISTESHNA'A

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

Important feature :

·         Istisna’a is an exceptional mode of investment allowed by Islamic Shariah in which product(s) can be sold without having the same in existence. In the product(s) are ready for sale. Istisna'a is not allowed is Shariaf. Then the sale may be done either in Bai-Murabaha or Bai-Maajjal mode of investment. in this mode, deliveries of goods are deferred and payment of price may also be deferred.

·         It facilitates the manufacturer sometimes to get the price of the goods in advance, which he may use as capital for producing the goods.

·         It gives the buyer opportunity to pay the price in some future dales or by installments.

·         It is a binding contract and no party or is allowed to cancel the Istisna'a contract after the piece is paid and received in full or in part or the manufacturer starts the work.

·         Istina'a is specially practiced in manufacturing and industrial sectors, However, it can be practiced in agricultural and constructions sectors also (Class Note,  Abul Hussain).

Ijara Mechanism (Leasing Mode)

(1) Hire Purchase /Ijarah 

The term Ijarah has been derived from the Arabic works Ajr and Ujrat which means consideration, return, wages or rent. This is really the exchange value or consideration, return, wages, rent of service of an Asset. Ijarah has been defined as a contract between two parties, the Hiree and Hirer where the Hirer enjoys or reaps a specific service on benefit gainst a specified consideration or rent from the asset owned by the Hiree. It is a hire agreement under which a certain asset is hired out by the Hiree to a Hirer against fixed rent or rentals for a specified period.

(2) Hire Purchase Under shirkatul Melk

Hire purchase under shirkatul Melk is a special type of contract which has been developed through practice. Actually, It is a synthesis of three contracts : Shirkat, Izara and sale. Shirkat means partnership. sharikatul Melk means share an ownership. when two or more persons supply equity, purchase an asset, own the same jointly, and share the benefit as per agreement and bear the loss in proportion to their respective equity, the contract is called Shirkatul contract.

Stages of Hire Purchase Under Shirkatul Melk

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

·         Purchase under joint ownership.

·         Hire and

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

Types of sale contract in hire purchase under shirkatul melk

As per procedure of transfer of ownership and legal title of the part  owned by the Bank is transferred to the other partner, the sale contract may be of various, some of the major forms are mentioned below :

Hire Purchase Under Shirkatul Melk through gradually transfer (sale) of legal title/ownership of the hired asset/property

Under this type certain .asset / property' is purchased with equal or unequal equity participation and owned jointly by the to parties -the Bank and the Client. The Bank's share / portion of the asset is hired out to tIle Client partner against fixed rent/rentals per unit of time for a fixed period with a promise that the Hire Bank will sell or transfer the ownership of its portion to the Client Hirer gradually part by part in proportion to the consideration paid. So that the Hire's portion of the asset on payment of the total price at the end of the hire period.

Under this system the total price of the hired property / asset should be determined and divided over the period of hire contract (per unit of time) so that the Hirer in addition to the payment of fixed rent /rentals may pay gradually the proportionate consideration of the total price of the hired property or asset to acquire proportionate ownership of the same part by, part and become full owner of the hired asset at the end of the hire period.

It should be noted that there should be a separate sale contract for payment / acquisition of each share (per unit of time as per hire deal) / part of asset sold to the Hirer and the amount of rent should be decreased proportionately with decrease of Hire's ownership and increase of Hirer's ownership on the property/asset.

If, for any reason, the hire contract is revoked prior to the payment I transfer of full title to the Hirer, the Hirer will share that part of the title to the hired property which has been transferred to him against payment made by him and the remaining part will be shared by the Hire Bank. If any loss arises to the Bank after the sale of Bank's share to the property / asset that shall be recouped from the Client / Client's security. In our Bank, we shall be following this type of Sale Contract in Hire Purchase under Shirkalul Melk.

Hire Purchase Under Shirkatul Melk Through Transfer of legal title by gifts (for no consideration).

Under this type the portion of asset owned by the Hire partner is hired out to the Hirer partner with a prior promise that the Hire, upon settlement of all the rent / rentals / installments by the Hirer, will transfer his ownership I title to the property to the Hirer through gift without any further consideration.

After the expiry of the hire period and payment of all the rent /rentals installment, the title of property may be transferred by a separate gift deed executed by the Hire or, the title may be transferred by issuing a gift deed by the Hire making it conditional on the settlement of all rental installments. In the later case, the legal title is automatically transferred as soon as the hire period expires and the fixed rent installments for rent are settled. The working of the agreement would be: If the agreed upon rental installments are settled within the agreed upon period, ownership of the asset will be transferred to the Hirer as gift.

Under this mode the rentals fixed and agreed upon will be sufficient not only to amortize the capital outlay but also to yield an adequate amount of profit for the Hire. However, tile rent / rentals agreed upon shall not be considrered as price or part of price of the asset and the full ownership of the asset shall lie with the Hire till final settlement of the rent I rental installments.

Hire Purchase Under Shirkatul Melk Through transfer of legal title (sale) at the end of hire period for a token consideration

Under this contract the possession of the asset owned by the Hire is hired out to the hire for a fixed period against fixed rent / rentals and at the end of the hire period the title to the asset is transferred to the Hirer by a separate sale contract on payment of agreed upon token consideration. The consideration may be equal to the value of the asset or not and it would be sufficient if a mutual agreement is reached on the consideration.

Hire Purchase Under Shirkatul Melk through transfer of legal title (sale) at the end of Hire period for payment of a specified amount to the hire by the hirer

·         This agreement includes an Ijarah / hire contract and a sale contract. Under this agreement a specific asset is hired out for a fixed period against specific rent mentioning a specific consideration to be paid by the Hirer (buyer) after the expiry of the hire period and upon payment of the agreed upon consideration. The hired asset becomes sold and its title transferred to the Hirer (the buyer). Under the agreement, the hire contract becomes effective firstly sale contract will be effective only after the expiry of the hire contract.

·         Hire Purchase Under Shirkatul through transfer of legal title (sale) period to the end of the hire term for a price that is equivalent to the remaining Ijarah /rental instruction. This is an Ijarah J hire agreement which includes a promise made by the Hire that he will transfer the title of the hired property to the Hirer at any time during the hire period on payment of the remaining Ijarah /rental installments, if the Hirer wishes so. Under this system first, the Ijarah/hire contract becomes effective and remains so until the legal title is transferred to the Hirer. As soon as the title to the asset is transferred to the Hirer the ijarah/hire contract lapses for the remaining period, because both tile benefit and the hired property become the Hirer's property. This type of sale should be executed by a separate sale contract at the time of sale.

Important Feature :

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

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

·         The share / part of purchased asset owned by the Hire (Bank) is put at  disposal /possession of the Hirer (Client) keeping the ownership with him (Bank) for a fixed period under a hire agreement in which the amount of rent  per unit of tirne and the benefit for which rent to be paid along with all other agreed upon stipulations are also to be clearly stated. Under this agreement, the Hirer (Client) becomes the owner of the benefit of the asset but not of the asset itself, in accordance with the specific provisions of the contract which entitles the Hire (Bank) is entitled for the rentals.

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

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

·         The promise to transfer legal by the Hire undertakings given by the Hirer to purchase ownership of the hired asset upon payment part by part as per stipulations are effected only when it is actually done by a separate sale contract.

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

·         In Hire Purchase under Shirkatul Melk Agreement, the Shirkatul Melk contract is effected from the day the equity of both parties deposited and the asset is purchased and continue upto the day on which the full title of Hire (Bank) is transferred to the Hirer (Client).

·         The hire contract becomes effective from the day on which the Hire transfer the possession of the hired asset in good order and usable condition to the Hirer, so that the Hirer may make the agreement.

·         Effectiveness of the sale contract depends on the actual sale and transfer of ownership of the asset by the Hire to the Hirer. It is sold and transferred part by part, it will become effective part by part and with the sale and transfer of ownership of every share / part. The hire contract for that share / part will lapse and the rent will be reduced proportionately. At the end of the hire period when the full title of the asset will be sold out and transferred to the Hirer (Client), the Hirer will become the owner of both the benefit and the asset consequently the hire contract will fully end.

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

·         Under this agreement the Bank acts as a partner, as a Hire and at last as a seller ;on the other hand the Client acts as a partner, as a Hirer and lastly as a purchaser.

·         Ownership risk is borne by both the Hire and Hirer in proportion to their retained ownership equity.

·         Under this agreement the role of Hirer is one that of a trustee, the hired asset being a trust property in his hands: he will manage, maintain the asset in favour of the interest of the Hire at his own cost as the exact subject of hirer except in cases of any accident due to any event entirely beyond control of the hirer and natural calamity/disaster (acts of Allah) to be determined by the Bank after proper investigation within the knowledge of the hirer.

·         The Hirer is responsible for keeping the hired asset(s) in good condition throughout the whole period of hire and if the asset is damaged 01- destroyed due to mismanagement, corruption, negligence, transgressions, default, etc. of the Hirer, he shall be responsible to compensate the Hire (Bank) for that. Of course, such mismanagement, corruption, negligence, transgressions, default, etc. of the hirer shall be management, corruption, negligence, transgressions, default, etc. of the hirer shall be determined by the Hire (Bank) after proper investigation within the knowledge of the hirer.

·         The Hirer cannot, without obtaining prior written permission of the Hire (Bank) make any changes in the exact item of the hire, and / or remove it from its place of installation and transfer it to another location.

·         In a Hire Purchase under Shirkatul Melk agreement any stipulation may be made, provided it is not against the nature and requirements of the contract itself, nor does it violate the /this may be the last one devine laws of Islam and is also acceptable to both the parties.

·         Hire Purchase under S'nirkalul Melk facilities may be for medium-term or long-term period which may be utilised for the expansion of production and services, as well as housing activities. The duration of Hire Purchase under Shirkatul Melk contract shall not exceed the useful  life of the subject / asset of the transaction. The Bank should not normally enter a Hire Purchase under Shirkatul Melk transaction for items with useful life of less than two years.

·         Hire Purchase under Shirkatul Melk transaction facilitates the Client (Hirer) to get benefit from the hired asset in exchange of rental and also to become full owner of the asset by purchasing it part by part.

·         If, for any reason, the hire contract is revoked prior to the transfer of full title of the asset to the Hirer, then the title of the asset will be shared by both Hire and Hirer the Hirer will share that part of title which has been transferred to him against payment and the Hire will share the remaining part.

·         The Hirer to secure the Bank (the Hire) will pledge / hypothecate / mortgage his portion / part / share in the asset (acquired / to be acquired) and or any other asset / property of his own / third party guarantor to the Bank to fulfil his all liabilities /commitments including the accrued rental, if any.

Rules For Hire Purchase Under Shirkatul Melk

1.     It is a condition that the subject (benefit/service )of the contract and the asset should be known comprehensive.

2.     It is a condition that the asset to be hired must be a fungible one which can not be used more than once or in other words, the asset must be a non-fungible than which can be utilized more than once or the use/benefit of which can be separated from the asset itself.

3.     It is a condition that the subject (benefit/service )of the contract must actually and legally be attainable/derivable.

4.     It is a condition that the Hirer shall ensure that he will make use of the asset as per provisions of the agreement or as per customs/norms/practice, if there is no expressed provision .

5.     The hire contract is permissible only when the asset and the benefit /services It is within the category of 'Halal' or at least 'MOBAH' as per Islamic Shariah.

6.     The Hire is under obligation to enable the hirer to the benefit from tt1e asset by putting the possession of the asset at his disposal in useable condition at the commencement of the hire period.

7.     In a hire contract, the period of hire and the rental to be paid per unit of lime be clearly stated.

8.     Everything that suitable to be considered a price, in a sale, can be suitable to be considered rental in a hire contract.

9.     It is a condition that the rental falls due from the date of handing-over of the asset to hirer and not from the date of contract or use of the asset.

10.   It is permissible to advance, defer or install the rental in accordance with the agreement.

11. It is permissible to review the hire period or the rental or the both, if the hire and the hirer mutually agree to do so.

12. The hired asset is a trust in the hands of the hirer.

13. The hiree/owner bears all the costs of legally binding basic repairs and maintenance. 14. It is permissible to make the hirer to bear the cost of ordinary routine maintenance.

15. The hire contract is binding and on one party shall unilaterally rescind except reasons that abrogate binding contract such as damage or  destruction.

16.   It is also permissible to sell the hired asset by the hiree to the hirer during the tenure of the hire period either part by part or in full at a time.

17.   Under Hire Purchase under Shirkahll Melk Agreement, both the Hiree and the Hirer must any their respective equity as agreed upon to purchase the demised asset under joint ownership.

18. Ownership of the asset of both the hiree and hirer should be recognized ass per law of the land.

19. In a Hire Purchase under Shirkatul Melk contract, it is permissible to divide the sale/cost price of the asset or ownership of the hiree to the asset into several parts and to sell each part of ownership on payment of proportionate sale/cost price of the hiree.

Operational procedures of investment" mechanism in ibbl

Induction of client

·         Hold preliminary discussion with the prospective client regarding his investment needs, business experience, viability of the project and Shariah permissibility of the asset, the business and the uses of the asset.

·         Brief him on the salient features of Hire Purchase under Shirkatul Melk mode of investment.

·         Look to the past performance of the client,.

·         Check-up Head Oft Ice Current investment policy and Branch's track record of Hire Purchase under Shirkatul Melk investment of the items

·         If the proposal is found permissible under Islamic principles and suitable, advise the client to submit formal Application. If not found suitable, regret politely.

·         Request potential client to open an Al-Wadia Current Account. Let him maintain the Current Account Satisfactorily for a reasonable period. This will generally mean six months.

Application

Obtain application in triplicate from the client on F-167A and record the same in the investment proposal Received and Disposal Register (8-55).

Obtain and affix attested photograph of the Proprietor /Partners /Directors /Trustee /Administrator on the top right hand corner of the application .

Scrutinize the application of the client to see that:

A.     All columns are properly filled in,

B.     Particulars and information given therein are complete and correct in all respect.

C.     All required Documents/Papers as listed in the footnote of the application are submitted .

D.    It is signed by the client as per specimen signature with the Bank.

Categorisation

Categorize the proposal as under :

Hire Purchase under Shirkatul Melk Commercial

Investment on Hire Purchase under Shirkatul Melk mode to individual /Firm /Company /Society for Commercial purposes shall be termed as Hire Purchase under Shirkatul Melk Commercial.

Hire Purchase under Shirkatul rJlelk Industrial

Hire Purchase under Shirkatul Melk investment to industrial undertakings in the Form of Land, Buildings, Machineries, Equipments, Transport, etc. shall be termed as Hire Purchase under Shirkatul Melk Industrial.

Hire Purchase under Shirkatul Melk Agriculture

Hire purchase under Shirkatul Melk Investment to agriculture sector in the form of Agricultural Equipment, Machineries Shallow Tube-Well, Deep Tube-Well, Tractor, Trailers, Transport etc. shall be termed as Hire Purchase under Shirkatul Melk Agriculture.

Hire Purchase under Shirkatul Melk Transport

Hire Purchase under Shirkatul Melk investment in the form of Transport -Bus, Truckm Car, Taxi, Launch, Steamer, Cargo Vessel, Air Transport etc, shall be termed as Hire Purchase under Shtrkatu! Melk Transport.

Hire Purchase under Shirkatul Melk Real Estate

Hire Purchase under Shirkatul Melk investment in the form of Land, Building, Market, Apartments, for use/rental shall be termed as Hire Purchase under Shirkatul Melk Real Estate.

Hire Purchase under Shirkatul Melk Real Estate

Hire Purchase under Shirkatul Melk investment in the form of asset for use/rental under any scheme all be termed as Hire Purchase under Shirkatul Melk cheme.

Enter the Application in the "Investment Proposal Received and Disposal Register (8-53) and allot a Serial Number to it.

Initiate action for Processing and Appraisal immediately.

Processing And Appraisal

·         Examine Shariah permissibility of the goods. Reject the proposal outright, if not permitted by Islamic Shariah.

·         Check-up Credit Restriction Schedule of Bangladesh Bank and Head Office Current Investment Policy Guidelines.

·         Visit the Business establishment of the Client. Talk to the business and important personalities of the locality to ascertain the Honesty , Integrity and Business dealings of the Client.

·         Request for confidential report of the client from local Bank Branches. Confidential Report from Credit Information Bureau (CIB) of Bangladesh Bank through Head Office Investment Division as per Instruction Circular of  Head Office in this Regard.

·         Obtain Financial Statemen/Balance Sheet of the Client for the last three consecutive years for Investment Proposals of Tk. 50.00 Lac or above as per Head Office Instruction.

·         Inspect Land, Building, other Assets and Properties proposed to be Mortgaged or Hypothecated.

·         Forward Documents, Title Deeds and other relevant Papers to the approves Lawyer of the Bank for examination and furnishing his opinion.

·         Obtain Lawyer's Opinion as per clause No. 7.18.2(i).

·         Please study the following carefully and note down the actual findings in the Appraisal Form against each item:

à Effective demand, price of the goods, Short or long-term duration, quality and other specifications of the goods, availability , etc. of the said or projected goods .

·         Whether sale price of the goods is payable by the client at specified future date in lump sum or in installments as per proposal.

·         For Hire Purchase under Shirkatul Melk Investment (other than the Scheme), prepare Appraisal Report on F-167B. For appraisal Hire Purchase under Shirkatul Melk Industrial /Agriculture............Scheme use specific Appraisal form devised for each of those, if any, otherwise F-167/B. In course of preparation of the appraisal report please ensure incorporation of all information, particulars figures and statistics in Appraisal Form correctly with special attention to the following :

à    Composition of assets of the Client, extent and nature of liabilities of the Client, the value of Liquid Assets, Business Reputation of the Client experience of the Client, etc.

·         Contact primarily with the producers/sellers/suppliers of the goods in the market, study the market price and work out the purchase and sale prices of the goods as per guidelines.

·         Whether Client & Bank's equity ratio is fixed to cover the price/cost of the asset.

·         Whether rental and sale price of the assets are payable by the Client at the agreed specified future date lump sum or by installments as per proposal.

·         Experience of the Client in the business, management capability etc.

·         Guideline for working out the cost price of the asset.

·         Cost Price of the Assets -1. Purchase price of tile asset expenditures concerning the purchase i.e. Transportation, storage, costs of construction, cost of installation, making etc. before hire of the asset to the Hirer partner. 2. Conveyance- TA/DA of Bank's Official or the Agent, if any, 3. Commission paid to the Agent, if any, 4. Cost of remittance of fund, 5. Transportation cost upto Bank's Godown/Client Project Site. 6. Other expenses except interesi incurred, if any, interest element, if any is to be paid by the Hirer partner, 7. Godown rent and godown staff Salary, if any, incurred before delivery/handing over the asset to the Hirer in good and usable condition, 8. Income loss sustained during the gestation period. 9. it far any reason the client after handing  over the asset to him in good and usable condition uses Bank's godown, the godown, the godown rent and god own staff salary will be borne by him (Hirer partner).

·         Fixation of Rental and the sale price of  Asset.

Sanction

·         On completion of Appraisal as provided herein above, of the Proposal is found viable, get it approved by the Investment Officer, 2nd Officer and the Manager and sanctioned by the Manager if it is within his business power.

·         If the proposal is not within the Discretionary Power of the Branch, forward the proposal (F-167A) with Appraisal Report on F-167/BF-136 to Zonal Office/Head Office.

·         If the proposal is within the Business Power of the Zonal Office, Zonal Office shall accord Approval/Regret the Proposal duly recorded in the Investment proposal Received & Disposal Register (B-33) & Investment /Facility Sanctioned Register (B-119).

·         If the proposal is within the Business Power of the Zonal Office, Zonal Office shall accord Approval/Regret the Proposal duly recorded in the Investment proposal Received & Disposal Register(B-53) & Investment /Facility Sanctioned Register (B-119).

·         If the proposal is not within the Business Power of the Zonal Office shall forward the proposal to Head Office with their views and recommendations.

·         On receiving the proposal and the Appraisal Report along with supporting papers Head Office will either approved or regret duly recorded in the Investment proposal Received & Disposal Register (B-53) & Investment /Facility Sanctioned Register(B-119).

·         If the Branch/ the Zonal Office/ Head Office, the branch will issue the Sanction advice(F- 197) with a copy to ZO/HO duly recorded in /Facility Sanctioned Register(B-119) with authority wise separate opening (Branch/ZO/HO) mentioning all the terms and conditions in duplicate to the investment Client for the limit.

·         It the Client duly accepts the sanction terms and conditions, enter the particulars of the sanctioned proposal in the limit Register (6-117) allotting a Fixed Serial number for each Client as per Limit Register which shall remain permanent irrespective of the mode(s) so long the Client continues business wit the Bank. 

·         Open file Client-wise, affixing the Fixed Number allotted to him as per Limit Register (B- 117) and Client's name, address, telephone number be recorded prominently in the inner side of the investment File for easy tracing in case of need.

·         Branch/ the Zonal Office/ Head Office shall maintain Investment/Facility Sanctioned Register(B-119), authority-wise, Branch-wise separately for Investment /Facility (General ) and Scheme-wise. They shall also maintain Investment/facility Proposal Received & Disposal Register (B-53) & Limit Register (B-117).

Documentation

Before purchasing the asset/property by the Bank, obtain sufficient collateral securities as mentioned in the sanction advice along with the following charge documents properly executed, i.e. duly filled in, sighed, stamped, verified and witnessed where necessary"

·         Hire Purchase under Shirkatul Melk Sanction Advice(F-192) deal-wise duly accepted by the Client.

·         Hire Purchase under Shirkatui Melk Agreement (Deal-Wise) (AF-4).

·         Letter of Pledge (CF-4) (Deal-Wise)/Mortgage Deed.

·         Single party D.P. Note (CF-1), if there is no guarantor.

·         Double Party D.P. Note(CF-2), if there is guarantor(s) to be made by the Client in favor of the guarantor endorsed by the later to the Bank. 

·         Letter of Disclaimer (CF)-15 , if stored in Client's /party' own/hired godown.

·         Insurance Policy (if stored in Client's /Party's Godown/Yard under Bank's effective control) duly  recorded in  Insurance Register (B-39).

·         Letter of Guarantee (CF-14).

·         Balance Confirmation Letter (CF-16 .

·         Letter of Disbursement(CF-16).

·         Letter of Installment (CF-17).

If the Investment is made collaterally secured by Mortgage ot property, obtain the following document:

·         In case of Equitable Mortgage, Memorandum of Deposit of Title Deed (MDTD) signed by the owner of the property.

·         In case of Legal Mortgage, Registered Deed should be obtained.

·         Personal Guarantee of the owner(s) of the property on CG-14.

·         Original Title Deed(s) with CS,RS,SA, Mutation Parcha, DCR of the property and Mutation record.

·         Upto-date Rent Receipt.

·         Non encumbrance Certificate along with Search Fee Paid Receipt of the concerned Registry /Sub-registry Officer.

·         Site plan (Map/Naksha) of the Mortgaged Property.

·         Valuation Certificate issued by a competent Engineer and physically verified by the Branch Officials.

Purchase of Asset/Property by the Bank

Remember that Hire Purchase under Shirkatul Melk is perfectly a legitimate transaction according to the Shariah, provided:

·         That the asset/property desired by tile Client (Hirer)- is first purchased by the Bank and the Client (Hirer) jointly. The ownership to the asset/property shall be as per equity participation of the Bank and the Client. Rent will accrue only after delivery of the asset/property to the Hirer in usable condition/good order.

·         That after purchase of  the asset /property, the risk of the asset/property is bome by the owners.  

·         That the specification of the asset, delivery schedule and other terms of contract are fulfilled.

In case of purchase of the asset/property under Hire Purchase under Shirkatul Melk transaction the following procedures shall have to be followed:

Obtain deal-wise Request from the Client for purchasing the asset/property detailing therein the specification such as Name, Description, Quality, Quantity, Design, etc. of the asset.

The Bank will examine the specification of the asset/property and verify the price  from the market. Maintain Investment Account Opening Register (8-102).

Inter the particulars of the Account in the Investment Ledger(B-72).

It should be carefully noted that purchase /installation /construction /establishment of the asset shall be made only after completion of all the Documentation formalities including Pre-Audit Memo (F- 215/F-218).

Hire Purchase under Shirkatul Melk asset/property may be purchased and delivery of the same may be taken directly be the Bank or the Client on behalf of the Bank and for his own behalf from the Market/Genuine producers /Seller/Suppliers through any authorized official/agent or by them selves on cash or credit basis.

Hire Purchase under Shirkatul Melk asset by the bank on credit/deferred payment basis, the bank and the Client shall execute a purchase agreement with the seller to that effect mentioning the date of delivery of the asset to the bank and that of payment of price by the Bank.

Agency commission, if any, paid by the Bank shall be added to the cost of the asset/property.

If the asset/property are to be purchased from the local/outstation market and price is to be paid/remitted through P.O./T.T/DD, etc. the P.O./DD/T.T must be purchased on behalf of the Bank and the commission thereof and other expenses such as T.A. , D.A, transportation etc. shall be borne by the Bank, which shall ultimately be loaded on the cost of the asset/property.

Taking delivery of asset by the bank (hree ) and the (client) hirer :

After finalization of purchase of the Hire Purchase under Shirkatul Melk asset/property either by the Bank officials or through any Agent or the Client Agent from the local or outstation market, the Bank shall request the seller/suppliers to delivery the asset/property purchase to the Bank’s Authorized Official/Agent/Representative/Client/Bank’s Godown against proper acknowledgement Accordingly the authorized official /Agent /Representative /Client shall receive delivery of the asset/property on behalf of the Bank by signing the Delivery Challan or the Cash Memo/purchase Schedule which will be in the name of the Bank and the Client.

Hire,Delivery,Sale And Transfer Of Title Of Asset To The Client

On receipt of the asset, calculate the total cost price of en same as per proforma mentioning clearly the Banks & the client’s equity and their respective ownership ration to the asset (MANUAL, IBTRA). 

Share Mechanism

1. Mudarabah

It is a form of partnership where one party provides the funds while the other provides the expertise and management. The first party is called the Sahib-Al-Maal and the latter is referred to as the Mudarib. Any profit accrued are shared between the two parties on a pre-agreed basis, while capital loss is exclusively borne by the partner providing the capital.

Importer features :

·         Bank supplies capital as Sahib-Al-Mall and the client invest if in the business with his experience.

·         Administration and management is maintained by the client.

·         Profit is divided as per management.

·         Bank bears the actual loss alone.

·         Client can not take another investment for that specific business without the permission of the Bank (Class, Notes, Hussain, Abul).

2.  Musharaka

An Islamic financial technique that adopts “equity sharing” as a means of financing projects. Thus, it embraces different types of profit and loss sharing partnership. The partners (entrepreneurs, bankers) etc.) share both capital and management of a project so that profits will be distributed among them as per rations, where loss is shared according to ratios of their equity participation.

 Important feature:

·         The investment client will normally run and manage the  business.

·         The Bank shall take part in the policy and decision making as well as overseeing (supervision and monitoring) the operations of the business of the client. The Bank may appoint suitable person(s) to run the manage the business and to maintain books of accounts of the business property.

·         As the investment client shall manage the enterprise, the Bank may pay more share of profit to him than that of his proportionate capital contribution.

·         Loss, if any, sha/r be shared on the basis of capital ratio (Class Notes, Abul Hussain). 

Operational Procedures of Investment Mechanism In Ibbl

Bai-Musharaka

Induction of Client

·         Hold preliminary discussion with the prospective client regarding his investment needs, business experience, viability of the project and Shariah permissibility of the asset the uses business and the uses of the asset.

·         Brief him on the salient features of Bai-Musharaka mode of investment.

·         Look to the past performance of the client.

·         Ceck-up Head Office Current investment  policy and Branch’s track record of Bai-Musharaka Investmentof the items

·         If the proposal is found permissible under Islamic principles and suitable, advise the client to submit formal Application (F-167 A). If not found suitable, regret politely.

·         Request potential client to open an AI-Wadia Current Account. Let him maintain the Current Account Satisfactorily for a reasonable period. (This will generally mean six months).

Application

·         Head Office Controlled Branches shall obtain Application from the Client in duplicate.

·         Branches under Zone shall obtain Application from the clients in Triplicate.

·         Application shall be Obtained on F-167A as per specimen at page .... Deal Application shall be obtained on F-136.

·         Obtain and ajfix attested photograph(s) of the Proprietor /Partners /Directors /Trustee /Administrator on the top right hand corner of the application .

·         Scrutinize the application of the client to see that:

A.    All columns are properly filled in.

B.    Particulars and information given therein are complete and correct in all respect.

C.    All required Documents/Papers as listed in the footnote of the application are submitted.

D.    The client as per specimen signature with the Bank signs it.

·         Enter the application in the "Investment Proposal Received and Disposal

·         Register"(B53) as per specimen at page... ...and allot a Serial Number to it. Initiate action for Processing and Appraisal.

 

Categorization

·         Categorize the proposal as under :

·         Bai-Musharaka Commercial

·         Bai-Musharaka Industrial

·         Enter the Application in the "Investment Proposal Received and Disposal Register (B-53) and allot a Serial Number to it.

Initiate action for Processing and Appraisal Immediately

Processing and Appraisal

·         Examine Shariah permissibility of the goods. Reject the proposal outright, if not permitted by Islamic Shariah.

·         Check-up Credit Restriction Schedule of Bangladesh Bank and Head Office Current Investment Policy Guidelines.

·         Visit the Business establishment of the Client. Talk to the business and important personalities of the locality to ascertain the Honesty, Integrity and Business dealings of the Client.

·         Request for confidential report of the client from local Bank Branches. Confidential Report from Credit Information Bureau (CIB) of Bangladesh Bank through Head Office Investment Division as per Instruction Circular of  Head Office In this Regard.

·         Obtain Financial Statement/Balance Sheet of the Client for the last three consecutive years for Investment Proposals of TK.50 .00 Lac or above as per Head Office Instruction.

·         Inspect Land, Building, other Assets and Properties proposed to be Mortgaged or Hypothecated.

·         Forward Documents, Title Deeds and other relevant Papers to the approves Lawyer of the Bank for examination and furnishing his opinion.

·         Obtain Lawyer's Opinion as per clause No. 5.07.

·         Please study the following carefully and note down the actual findings in the Appraisal Form against each item:

à `Effective demand, price of the goods, Short or long-term duration, quality and other specifications of the goods, availability, etc. of the said or projected goods .

·         Whether sale price of the goods is payable by the client at specified future date in lump sum or in installments as per proposal.

·         For Bai-Musharaka Commercial and Bai-Musharaka Indusirial Investment, prepare Appraisal Report on F-167B. For appraisal Bai-Musharaka agriculture and For Bai-Musharaka Import use special Appraisal Form devised for each of those, if any, otherwise F-167B providing the available/required supplementary information. In course of preparation of the report please ensure incorporation of all information, particulars figures and statistics in Appraisal Form correctly with special attention to the following:

à    Composition of assets of the Client, extent and nature of liabilities of the Client, the value of Liquid Assets, Business Reputation of the Client experience of the Client, etc.

Contact primarily with the producers/sellers/suppliers of the goods in the market, study the market price and work out the purchase and sale prices of the goods as per guidelines.

Sanction

·         On completion of Appraisal as provided herein above, of the Proposal is found viable, issue Sanction Advice (F-) if it is within the business power of the Branch mentioning all the terms and condition in duplicate to the Client and endorse copies to Zonal and Head Offices retaining one copy in the Client's file duly accepted by the Client.

·         If the proposal is not within the Discretionary Power of the Branch, the Branch shall with Appraisal Report on F-167 A and F-167B to Zonal Office/Head Office.

·         If the proposal is within Business Power of the Zonal Office, Zonal Office shall accord Approval/Regret the Proposal.

·         If the proposal is not within the Business Power of the Zonal Office shall forward the proposal to Head Office with their views and recommendations.

·         If the Branch/ the Zonal Office /Head Office, the branch will issue the Sanction advice (F- 188) with a copy to ZO/HO liuly recorded in 'Facility Sanction Register (B-119) with authority wise separate opening (Branch/ZO/HO) mentioning all the terms and conditions in duplicate to the investment Client for the limit.

·         It the Client duly accepts the sanction terms arld conditions, enter the particulars of the sanctioned proposal in the limit Register (8-117) allotting a Fixed Serial number for each Client as per Limit Register which shall remain permanent irrespective of the mode(s) so long the Client continues business with the Bank.

·         Open file Client-wise, affixing the Fixed Number allotted to him as per Limit Register (8- 117) and Client's name, address, telephone number be recorded prominently in the inner side of the investment File for easy tracing in case of need.

·         In case of Investment to the existing Client, obtain required papers, document with the past performance and outstanding liabilities of the Client, if any and process or  sanction the proposal as per instruction laid down here-in-above after due evaluation or study. 

Documentation

Before purchasing the asset/property by the Bank, obtain sufficient collateral securities as mentioned in the sanction advice along with the following charge documents properly executed, i.e. duly filled in, sighed, stamped, verified and witnessed where necessary:

·         Bai-Musharaka Sanction Advice (F-) deal-wise duly accepted by the Client.

·         Bai-Musharaka Agreement (as per specimen at page).

·         Joint and Several D.P. Note (CF-2).

·         Single party D.P. Note (CF-1), if there is no guarantor.

·         Double Party D.P. Note (CF-2), if there is guarantor(s) to be made by the Client in favor of the gurantor and endorsed  by the later to the Bank.

·         D.P. Note Delivery Letter (CF-3).

·         Letter of Hypothecation (CF-5) for the asset(s) and client’s stock in Trade/Work-in-Process.

·         Legal Mortgage.

·         Letter of Disclaimer (CF-15), if the goods are stored in Client’s/parry’ own /hired godown.

·         Agreement for Pledge of Goods (CF-4).

·         Insurance Policy (if stored in Client’s /Party’s Godown /Yard under Bank’s effective control) duly recorded in Insurance Register(B-39).

·         Letter of Guarantee (CF-14).

·         Balance confirmation Letter (CF-16).

·         Trust Receipt (CF-11).

·         Letter of Installments (CF-17).

If the Investment is made collaterally secured by Mortage of property, obtain the following document :

In case of Equitable Mortgage, Memorandum of Deposit of Title Deed (MDTD) signed by the owner of the property.

·         In case of Equitable Mortgage, Memorandum of Deposit of Title Deed (MDTD) signed by the owner of the property.

·         In case of Legal Mortgage, Registered Deed should be obtained.

·         Personal Guarantee of the owner(s) of the property on CF-14.

·         Original Title Deed(s) with CS, RS, SA, Mutation Parcha, DCR of the property and Mutation record.

·         Upto-date Rent Receipt.

·         Non-encumbrance Certificate along with Search Fee Paid Receipt of the concerned Registry/Sub-Registry Office.

·         Site plan (Map-Naksha) of the Mortgaged Property.

·         Valuation Certificate issued by a competent Engineer and physically verified by the Branch Officials.

·         Lawyer’s Certificate.

·         All Affidavit sworn.

Where Hypothecation of Stock-in-trade secures the Investment, Machineries etc. also obtain the following Documents :

·         Letter of Hypothecation (CF-5).

·         Trust Receipt (CF-11).

·         Legal Mortagage of Machineries.

In case investment is collaterally secured by pledge of Shares of reputed Public Limited Company on bank’s approved list and quoted in the stock Exchange, the following additional document are to be obtained :

·         Agreement for Pledge of Shares

·         Share Transfer Deed in Duplicate

·         Share Delivery Letter

·         Letter to the Concerned Company to register Lien in Bank’s Favor.

In case in investment to Partnership Firms, obtain the following Document :

·         Letter of Partnership

·         Copy of Partnership Deed

In case of investment to Private or Public Limited Company, obtain the following Document :

·         Certified copy of the Memorandum and Articles.

·         Resolution of the Board of Directors.

·         Personal Guarantee of the Directors

·         Certificated of Incorporation

·         Certificated of Commencement

In case of investment to a Trust Organization, obtain the following Document :

·         Copy of Trust Deed

·         Resolution of the Board of Trustees

·         Charge Document

·         Personal Guarantee of the Office Bearer

In case of investment to C-operative society, obtain the following :

·         Clearance from the Registrar.

·         Letter to be issued to the concerned Registrar

·         Personal Guarantee of the Officer Bearer

·         A copy of Bye-laws of the Society.

Rates of Stamp Duty.

Signature of the Client

After Completion of Document, enter the Document in Documents Execution Register (B-103).

Movement of Document, if any, should be duly recorded in the Document Ex-custody Register duly signed by the Custodians.

Purchase of Goods by the Bank

·         Remember that Bai-Musharaka is perfectly a legitimate transaction according  tot he Shariah, provided.

Taking Delivery of Goods/Assets by the Bank

·         After finalization of purchase of Bai-Musharaka Goods/ASSET either by the Bank officials on through any Agent from the local or out station market the Bank shall request the seller to deliver the goods purchased to the Bank’s Autorized official /Agent or to the Bank godown against proper acknowledgement.

·         After taking delivery of the goods by the Bank or through and Agent, the Bank shall make payment of the goods to producers /sellers /supplier through DD /TT /PO against Cash Memo which  will exclusively be issued in the name of  the Bank.

·         DD/TT may also be issued in the name of the Buying Agent.

·         The Bank shall not be invest in such cases where the allotting Authority will not accept the Letter of Authority and agree to deliver the goods to the Bank as per authorization of this Allottee.  

Sale and Delivery of Goods /Assets to the Client

The Bank after receiving the goods shall finally calculate the Total Cost price and fix up the sale price by mutual discussion with Client (MANUAL, IBTRA).

There are two other modes of investment which have limited impact in our country

(i) Quard

The word "Quard" is an Arabic word"         which means loan or credit on advance. The literal meaning of Quard is giving "Fungible goods" for use without any extra value returining those goods. It must follow the principle of equal for equal return with homogenious goods. Fungible goods may be rice, oil, salt, money etc. In Banking sector, money is used as quard. Quard is Halal by Islam for not to pay any extra or interest in return.

There characteristics of Fungible goods           

- Goods which are vanished /converted for one time use.

- No flow of service.

- Service can't be seperated from the actual goods.

Characteristics of Quard

- There should have fungible goods.

- Goods must be returned equally.

- There is no extra payment.

- Specific period for returning goods.

2. Quard-E-Hasana

Quard-E-Hasana is also one kind of Quard which is given with the expectation of return or not.

Special Schemes Under Investment Modes

Household Durable Scheme

In a developing country like Bangladesh people of middle and lower middle class specially service holders with limited income find it difficult to purchase articles like refrigerator, television, cot, almirah, wardrobe, sofa-set, pressure cooker, sewing machine etc. which are part of modern and decent living. They can not enhance the standard and quality of life to the desired level due to the constrain of their limited income.

Is Bank Bangladesh Limited has, therefore, introduced Household Durables Investment Scheme which has already created great enthusiasm among the people and received tremendous response from them. 

Objectives :

·         To assist the service holders with limited income in purchasing household durables.

·         Increase standard of living and quality of life of the fixed income group.

·         Creating service-holders way of life happy and honest. 

Household articles

·         Furniture like Almirah, Sufa set, wardrobe, etc.

·         Electric & electrical equipment like television, refrigerator, gas cooker, air conditioner PC, washing machine, electric generator IPS, UPS, etc.

·         Construction of dwelling house like corrugated iron sheet, cement, rod, wood etc.

·         Motor cycle/By-cycle, Sewing machine etc.

·         Power generator, motor pump/power pump etc.

·         Gold ornaments

·         Tube-wells.

·         Mobile Phone set.

·         Medical /Engineering Equipment /Machinery.

·         Educational equipment /machinery, books etc.

·         Any other items considered by the bank suitable.

Beneficiaries

·         Interested  permanent officials of the following organizations may apply for investment.

            (a)  Government Organizations.

            (b) Semi-Government Organizations and Autonomous Bodies.

            (c) Banks and Financial Institutions

(d) Armed Forces, BDR, Police and Ansars.

(e) Teachers of Universities, Government Colleges and Schools and

      Senior Madrashas.

(f) Officers of International Financial & Relief Organization. 

(g) Officers of the multinational companies.

(h) Officer of the local established and renowned public limited

     companies.

(i) Permanent Teachers & Officers of established & prominent Private

    Universities, Medical Colleges & University Colleges.

·         House Owners.

·         Doctors, Engineers, Architects, Chartered Accountants/FCMA and other important professionals.

·         Investment Client of IBBL.

·         Deposit Clients of IBBL.

·         Shopkeepers and businessman.

·         Wage earners, Panel lawyers of IBBL, C&F Agents enlisted in IBBl etc.

·         Graduate & Post-Graduate Students of Universities, Medical Colleges, Engineering Colleges, University Colleges for purchase of PC, Medical/Engineering Equipment/machinery, Books etc.

·         In case of Government, Semi-Government and Autonomous Organizations the age of the investment clients must be 25 and above with at least three years of service and he must have at least three years of service prior to his retirement. In case of private organisations, teachers of school, collage and madrashas the age of investment clients must be in between 30-50, with at least five years of service and he must have five years of confirm service prior to his retirement in the same organisation.

·         In case of others except service holders the age limit must be within 27-60 years.

·         In case of students the minimum age must be 18 years and maximum 25 years.

  Ceiling of investment

Amount

·         For doctors, Engineers, Architects, Chartered Accountants, FCMAs the Ceiling of the investment of the Bank will be –

a.       Dhaka City : Maximum Tk. 3,00,000.00

b.      Other Metropolitan Cities : Maximum Tk. 2,00,000.00

c.       Other Municipal Areas : Maximum Tk. 1,00,000.00

·         For depositors of Mudaraba Term Deposit & Mudaraba Savings A/C : Maximum Tk. 2,00,000 by liening their a/cs.

·         For others : Tk. 1,00,000.00

·         NCOs of Bangladesh Armed Forces, Teachers of Primary Schools, Private School & Colleges and other professionals : Maximum Tk. 35,000.00

·         For students : Maximum Tk. 40,000

·         For personnel of IBBL : Maximum Tk. 75,000

Maturity of investment

·         Maximum 2 years for beneficiaries except bank's personnel

·         Maximum 3 years for Bank's personnel.

Mode of Investment : Bai - Muaggl

Equity

·         Minimum 25% of the total value of the articles. The client shall have to deposit the amount of equity in his Mudaraba Savings /Investment Account with the concerned branch before the disbursement of investment. 

·         Minimum 10% of the total value of the articles for Bank's personnel.

Guarantors 

·         For beneficiaries except Bank's personnel, there shold have two gurantors, one may be the Boss /colleague in the same level or upper level and the another gurantor may be husband /wifes parents, brothers etc.

·         For Bank's personnel, no needs of quarantor.

Charges : 

·         For beneficiaries except Bank's personnel, charges are included as

            Profit charge               -          13.5%

            Supervising                 -           4.00%

            Risk charge                 -           2.00%

                                    Total    -          19.5%

·         For Bank's poersonnel, profit charge is 11% only.

Disbursement

·         After sanction of investment and deposit of required equity by the client, the Branch shall supply to the concerned investment client the desired articles within seven days by procuring them by way of pay-order/cheque/draft etc. favouring the supplier. 

·         For ensuring the ownership of the Bank over the goods, all papers and documents related to the procurement of the goods shall remain in the name of the Bank and Bank’s sticker shall remain affixed over the same. The ownership shall be transferred in favour of the client after full adjustment of the dues to the Bank.

Mode of Recovery

·         The Bank’s investments and profit thereon shall be recovered in 24 monthly installment within a period of 2 (two) years.

·         The  monthly installment shall be payable by the first week of every month. The first installment shall be due for payment in the first week of the subsequent month of the disbursement /delivery of goods /articles.

·         Dues payable to the Bank shall be recovered in the following manner depending on the nature of the organization and the status of the client :

i.        On request of the employee, the employer shall product the monthly installment from the salary and remit the amount to the Bank, in this connection, the client shall have to furnish a letter of consent from the employer.

ii.      Before the delivery of goods, the client shall deposit to the Bank 24 post-dated cheques giving specific dates against each month installment. The cheques shall be presented to the concerned bank on due dates for encashment and adjustment of proceeds towards repayment of installment.  

Security

The investment client shall execute/provide the following documents in order to secure the investment.

·         All required charge documents as per rules of the Bank.

·         A written undertaking to the effect that the monthly installments shall be paid regularly.

·         Personal guarantee of an official of the same rank or of superior rank. The guarantee shall have to be duly authenticated by the competent authority of the concerned organization.

·         Personal guarantee of another person, preferably family member. 

Procedure for Application

Interested clients shall apply in prescribed form to the concerned Branch. The application shall have to be duly recommended by the Divisional Chief of the organisation where the applicant serves. Form and booklet outlining the rules and procedures of the Scheme may be obtained from the selected Branches of the Bank on payment of Tk. 25.00 only.

Supervision of Investment

Under this Scheme, the Bank, at the initial stage, has engaged M/s. Anudip Services Private Ltd., Ibn Sina Group Investment Company Ltd., Faisal Investment Foundation and Crescent Consultants on commission basis for selection of client, disbursement and recovery of investment and for overall supervision of the Scheme. The concerned investment client shall pay the commission of the supervising agency at the rate of 2% per annum over the investment.

Risk Fund

A risk fund shall be created under this Scheme by charging the investment account @ 2% at a time against total investment at the rate of 1% per annum for 2 years. In case of any genuine damage or if the concerned client totally incapable to the Bank, then the amount shall be covered or adjusted from the risk fund.

Other Terms & Conditions

·         The concerned Branch of the bank shall take possession of the goods supplied to the client in case of his  failure to repay 3 (three) instalments consecutively.

·         The client shall bear all necessary expenses relating to lilcense, registration, insurance etc. of the goods supplied.

·         The client shall bear cost of all maintenance, repair and preservation.

·         The client shall bear cost of all maintenance, repair and preservation.

·         The client shall use and handle the goods with utmost care and he will be liable to pay for any damage of the articles in his possession due to his negligence, carelessness and inefficient use. In case of total damage and destruction of the goods or if it becomes irreparable, the client shall be liable to pay immediately the balance amount of Bank’s investment including profit.

·         The client shall use the goods supplied to him personally and under no circumstances he shall let-out or transfer the possession of the goods to others without prior written permission from the Bank.

·         The client shall be bound to allow the Bank’s Authorized agent and representative to inspect the goods as and when require.

·         The client, before availing the investment facility, shall execute Bai-Muajjal agreement and other documents as per investment rules and procedure of the Bank.

·         The client must keep the Branch abreast and informed about any change in his official and residential address.   

INVESTMENT SCHEME FOR DOCTORS

One of the fundamental rights of every man is to receive necessaty medicare facilities. Majority of our people are denied and  deprived of this right and a large number of our children are illfed and suffer from malnutrition and ill health. Subsequently they become victims of various diseases due to lack of education and knowledge about health care and preventive measures. Medicare facilities as  a whole are very limited in the country. Although medical facilities are available to some extent in the cities

and towns, majority of the people of the rural area die without medicare and treatment after prolong sufferings from various disease.

A  good number or newly graduated doctors from Medical Colleges are unemployed . Many of the medical graduates are waiting for job because the opportunity for Government service is limited . If these young doctors could be self-employed by extending investment facilities, they could make modern facilities available at the door-steps of rural people.

Besides, experienced and specialist physicians who are providing Medicare facilities to the people in different towns with their limited and outdated  medical equipment will be able to improve the standard of their techniques of treatment and also make the modern treatment facilities available to more people, if investment facilities are extended to them for procurement of modern and improved medical equipment . The constitution of Bangladesh had made it obligatory to ensure  good health for all and the movement is also committed to ensure good health for all by 2000 years.

In view of  the above facts, Islami Bank Bangladesh Limited has taken the initiative an introduced the " Doctors Investment Scheme" to ensure modern treatment and medical facilities available to the people through extension of Bank's  investment facilities for self-employment of newly graduated doctors and at the same time extending investment facilities to the established medical practitioners to procure modern and sophisticated medical equipment.

Objectives  

1. To provide investment facilities for establishment of chambers, clinics, pharmacies and procurement of medical equipment by the unemployed medical graduates and thus to provide self-employment.

2. To assist newly passed unemployed medical graduates  to establish clinics by way of formation of groups by 5 doctors.

3. To assist experienced and established physicians to procure improved and modern medical equipment and thus to improve the standard and techniques of treatment.

4. To assist specialists and consultant physicians to procure specialized medical equipment for extending improved treatment to the people.

Beneficiaries

1.   Newly passed medical graduates who are willing to establish chambers, Pharmacies and small clinics in district and Thana level towns.

2.   Experienced and established doctors who are settled in district and other towns but can not procure modern medical equipment to improve their techniques of treatment .

3.   Specialised and consultant physicians who are willing to procure latest and specialised type of medical equipment.

4.   Newly passed medical graduates who are willing to form groups in order to establish clinic.

5.   Priority is given to specialists and consultant physicians like dentists , child specialists, ophthalmologists etc.

Areas of Investment

1.   Establishment cost of Chambers, Pharmacies & Clinics. Procurement of medical equipment and purchase of Motor Cycle for visiting patients in rural areas in case of newly passed medical graduates willing to settle in district and Thana towns under self-employment.

2.   Procurement of modern medical equipment by experienced and established doctors.

3.   Procurement of modern and sophisticated medical equipment and appliances by specialists and consultant physicians.

4.   Cost of estabilshment of clinics, purchase of machinery, equipment, accessories and other goods in case of establishment of clinics by a group of doctors.

Ceiling of Investment and duration

Category	Maximum Amount (in Tk.)	Maximum Period
1.   Self employed doctors in district town	5.00 lacs	5 years
2.   Self employed doctors in Thana town	5.00 lacs	5 years
3.   Specialists /consultant physicians for modern and sophisticated medical equipment	10.00 lacs	5 years
4.   Newly graduatge unemployed doctors group for establishment of clinics /diagnostic laboratory, machineries, equipments, accessoress and other goods	25 lacs for a group of 5 doctors (each 5.00 lacs)	5 years

Established clinics run by experienced doctors, willing to expand and improve the standard of their existing medicare facilities by way of procurement of modern medical equipment, machinery, accessories etc. are allowed investment facilities on easy terms and conditions. In such cases, the amount on investment is ascertained considering the location of the clinic, its reputation, efficiency of the entrepreneurs. The maximum period of investment is 4 years.

In case of specialists and consultant physicians like Dentists, Ophthalmologists, Child Specialists etc. The amount of investment will be double of the normal ceiling. In case of self-employment of newly passed unemployed medical graduates, special rebate

will be allowed if the Bank’s investment and other payables thereof are paid within the due period or earlier. 

Investment Mode

·         Hire purchase Shirkatul Melk: For purchasing of medical equipment and accessories, motro-cycle and other goods.

·         Bai-Muaggle: For purchasing chamber, establishment of clinic and Medicines.

Equity

·         New doctors (under self employment scheme: maximum 10%

·         Established specialised doctors: minimum 20%

·         Established clinic /diagnositc centre : minimum 30%

Mode of Recovery

·        Investment of the Bank is to be repaid on monthly instalment basis.

·        Re-payment of  the 1^st instalment will start after three months from the date of investment.

·        If any investment client under the scheme fails to pay back three consecutive instalments without satisfactory reasons acceptable to the bank for such failure, the bank may take possession and control of the machinery and equipment etc. Supplied by the Bank .

Security  

1.   The ownership of the medical equipment, appliances etc. and the motor cycle supplied by the bank on Hire Purchase-Shirkatul Melk basis, shall remain with the bank.

2.   Against Bank’s investment, the clients shall have to mortgage property at least equal to the value of investment by the Bank. However, in case of investment (other than clinic) for self-employment of the newly graduated doctors the condition of mortgage of property may be relaxed, if they are unable to offer mortgage of property as security against investment. The investment clients shall have to provide personal guarantee of person(s) acceptable to the bank, in such cases.

3.   Original copy of the graduation and post-graduation certificates shall have to be deposited with the bank, in case of investments for self-employment of unemployed doctors. 

Procedure for Application and Sanction

Interested medical graduates shall have to apply in prescribed form through the nearest branch of the Bank . Bank will accord Sanction of the investment if the proposal is found viable and acceptable to the bank after examination if its feasibility.

SMALL BUSINESS INVESTMENT SCHEME

Bangladesh a third-wood developing country is rich in natural and human resources. Inspite of vast possibilities, the majority people of the country livein hardship-below poverty tapped, explored and exploited. Physical labour is their only means of earning. A large segment of this populace is active youth force. Many of them are efficient, intelligent and energetic with initiative & drive and have courage to tale risks. But they can not uplift their socio-economic condition due to poverty , lack of financial support and other required facilities. Lack of capital compelled many small traders to leave their profession. As a result in our country not only unemployment problem increased but also the young  generation is involved in anti-social activities; thus creating threat to the social life.

Aims and objects

·         To expand investment facilities for the small traders entrepreneurs in urban and rural areas with a view to rasie their level  of income and to improve their quality  of life.

·         To inspire and encourage unemployed youths to establish  small business enterprises and thereby to create opportunities for self-employment for ensuring social justice and welfare of the people in large scale.

·         To extend investment facilities to those small entrepreneurs who could not  avail credit or investment facilities from any bank or financial institutions or otherwise depried of from such investment facilities.

Eligibility of the Clients

·         Investment clients must be permanent residents of the command area of the branch through which they intend to avail investment facilities and they must have valid trade licence and shops or selling centres.

·         Small business and entrepreneurs who are already engaged in trade and business but can not run their operations smoothly for shortage of fund/ capital valid to avail investment facilities under the Scheme.

·         In vestment shall also be extended to those poor and asset-less unemployed who are honest, efficient, physically and mentally capable   with drive and initiative, specially those who have ability to run business.

·         Besides the above categories, investment facilities under this Scheme shall also be extended to small and cottage industries and service sector.

Investment Area

All branches of the Bank are eligible to extend investment facilities under this scheme within 10 (ten) kilometres radious of the respective branch.

However, for the deserving and justifiable cases the Management may extend the command area upto a raious of 20 (twenty) kilometres.

Sectors of Investment

a ) Livestock Rearing of milichcow, beef fattening , raising and rearing of goats and sheep, poultry, ducks and pigeons.

b) Fishery Fish cultivation : excavation, re-excavation and leasing of pouds for cultivation of fish.

c) Agro-processing : Cane bamboo and choir products, just bags and jute products, spices, ghee, molasses, flour making ; oil extraction, sugarcane crushing, paddy and pulses husking, bee-keeping and honey collection and  processing and handicrafts etc.

d) Manufacturing Garments making, various typess of workshops, container making ( plastic, metal, glass etc), and repairing of rickshaw van and hood of rickshaw, furniture making , quilt and related products making, boat buildign and repairing blacksmith works bobbin making (plastic, metal etc) manufacturing of spare parts for handloom, candle making, oil seed crushing machine making, basket making, household steet iron implements making  maufactring of various iron products (wire nail, wire net etc) rope making , cap making ; chanachur preparation, adhesive making , making and repairing of bullock-baffalo cart, tanga, ice-eream, school and other vans.

e) Trading/shop keeping Rice-paddy, pulse, salt, pepper, vegetables, molasses, firewood, timber, chicken, fish, dry fish, cattle, banana, onion, betel-nut, seasonal fruits, bamboo, milk, fertilizer, tea, potato, coconut, spices, stationary, goods, grocery items, lungi, clothes, saree, mustard seeds and oil, brick, spareparts, ginger, oil, cake, leather, just products, second-hand clothes, cotton, peanut, cottonbags, yarn, choir, bamboo made products , slippers and shoes, seeds and plants, pottery products, seasonal agriculture products, utensils, wheat, coconut oil, restaurant and hotel honey sugarcane, stove, silver, fish feed, cattle feed, garlic, various food items, crockery, medicine, hardware, iron and steel items, sweetmeat , bicycle/ rickshaw/ rickshaw van parts, glass, watch, electrical goods, books under wears, gamsa, towel, shocks, handkerchief, leather goods, aluminium and other household items, homeo-medicine, optical, bakery item etc.

f) Transport Purchase of rickshaw, rickshaw van, bullock cart, tanga, country boat and  motorised boat.

g) Services Laundry, flour mill, repairing shop and workshop, pumping shop, spice grinding, mill, paddy-pulse husking mill, saw mill, dying and printing, signboard shop, yarn twisting factory, watch repairing shop, television, radio and other electronics repairing shop, refrigerator repairing shop; mustered oil processing shop.

h) Agriculture Implements and Forestry purchase of hand tubewells, farming and plantation; vegetable garden, sugarcane, litchi garden, mango and jack-fruit, betelnut, guava, pineapple and fruit garden; purchase of seed and sapling , silk cocoons, bee-keeping, honey collection and processing.

i) Miscellaneous Computer for printing, packing, training and other purposes (except trading), Photostat machine, graphic camera & contact machine for graphic printing, machineries of repairing & manufacturing, any other machines for tailoring shop, machineries for ball pen industry, any other machineries or equipments deemed suitable by the Branch for income generating activities.

Ceiling of Investment

·         For Dhaka and Chittagong city Branches : Maximum Tk. 1,00,000

·         For other Division /District Branches Maximum Tk. 75,000

·         For branches other than Division /District : Maximum Tk. 50,000

Mode of Investment

A. Hire Purchase Shirkatul Meelk : For all kinds of machineries i.e equimpments & transport sector.

B. Bai-muajjal-TR : For trading shop keeping, agro-processing and raw materials for manufacturing purposes.

Maturity of Investment

·         For HPSM : Maximum 24 months

·         For Bai-Muajjle : Maximum 12 months

Equity

·         For HPSM : Maximum 20% on the total value of equipment /transport

·         Bai-Muajjle (Tk) : Not applicable

Security

For Investment upto Tk. 30,000.00

·         Hypothecation of existing and future stock of goods . Ownership of machines & equipments shall remain in Bank's name.

·         Personal guarantee of financially sound respectable 2 (two) persons/ prominent businessmen acceptable to the Bank shall have to be given.

·         Collateral security may relaxed considering the feasibility of investment and client's ability and sincerity.

For Investment over Ik. 30,000.00

·         Hypothecation of existing/ future stock of goods. Ownership of machines & equipments shall remain in the Bank's name.

·         The client shall have to give mortgage of immovable properties to the Bank.

Group Guarantee

The investment clients shall be encouraged to form groups. Each group shall consist of minimum 5 members. Each member of the group will give guarantee for the investment of other members of the same group. Thus the members jointly and severally will remain liable and responsible for the payment of investment.

Procedure for Recovery

·         For HPSM : Monthly instalment

·         For Bai-Muojjle (TR) : Monthly /Quartarly /Half Yearly /One payment within maturity period.

·         For Investment upto Tk. 30,000 : Monthly instalment for personal guarantee.

·         Post dated check : Port dated check to be signed by client should be provided to bank indicating monthly instalment each time for whole period of investment.

Risk Fund

A risk fund is made by bank yearly at a fixed rate on total value of this type of investment. In case of default of client, this fund is used for adjustment. 

Mudaraba Savings Account

It is compulsory that every client must open a Mudaraba Savings account. Each client should built savings by way of deposit in this account a sum of Tk. 10.00 each month for every Tk. 1,000.00 of investment . No cheque book shall be issued against this account. Money can be withdrawn from this account if there is no liability against the client.

Supervision

Supervision For effective supervision and smooth operation of the scheme, required number of supervisors shall be engaged at the field level. For this purpose the investment client shall have to pay at the time of investment a sum at the rate of 2% per annum of investment as supervision fee. In case of investment for 2 years , supervision charge shall be 4% i.e. 2% per year.

Review and Evaluation

Review and Evaluation The concerned branch shall arrange meetings of the investment clients occasionally and evaluate the performance of the scheme and discuss problems and take steps to solve those problems.

Procedure for Application

Procedure of application For availing investment facilities, investment clients can contact the  nearest branch of the Bank and submit application in prescribed form of the Bank. The applicant must open two accounts Al Wadea Current Account to deposit the sale proceeds of the day and a Mudaraba Savings Account to build-up compulsory savings. The Branch shall taka appropriate steps after thorough appraisal of the client's investment application.

HOUSING INVESTMENT SCHEME

One of the basic human needs is to have a house to live in. A house in an abode of peace and happiness. Housing has now become an acute problem in the country, specially in the towns, cities and metropolis. With their limited income, it has become almost impossible on the part of the lower middle class, middle class and sometimes, even for upper middle class to solve their housing problem. to meet this basic human need, Islami Bank Bangladesh Limited is committed to contribute to this end to provide a peaceful and happy.

Objectives

·         To extend the benefits of the investment of the Bank under the Scheme to different sections of the people.

·         To assist in solving the existing housing problem of the country.

·         To assist the service holder of professionals with fixed income to arrange for house of their own.

·         To extend and investment facilities of the Bank to every nook and corner of the country, by size of investment, by sector of investment and on the basis of geographical area.

·         To make investment facilities easily available under Islamic Shariah to those people who do not want to avail investment facilities from interest-based financial institutions.  

Beneficiaries

Initially  the following categories of people shall be eligible to apply for; availing  investment facilities under this Scheme:

1.     Officials of the Defense Forces.

2.     Permanent Officials of Government, Semi-Government and Autonomous Organizations.

3.     Teachers of the established Universities, University Colleges & Medical Colleges.

4.     Graduate Engineers, Doctors and established professionals.

5.     Bangladeshi Officials of reputed Multinational Companies, International Financial Organizations., Donor Agencies., Foreign Embassies etc.., Officials of local established & reputed Public Limited Companies

6.     Wage earner professionals like Doctors, Engineers, Accountants, Teachers and any other profession doing good job abroad with hand-some pay-package.

7.     The client must have exclusive and undisputed possession and ownership title over the land on which the proposed house will be constructed. The leased property must be on lease for 99 years and must be legally acceptable for mortgage to the Bank.

8.     If the investment client is a service holder then he must have at least 5 years un-expired service prior to retirement.

9.     Bank will select the client on the basis of the following criteria: Percentage of Bank's investment is less than the clients investment: amount of Bank's investment is comparatively smaller in size, quality of construction & value of the property; constructed house/apartment is in good location & the price is reasonable; return from the property (rented income) & other known sources of income of the applicant; investment servicing capacity of the client is quite satisfactory.

Target Area

At the initial stage, the Scheme is being implemented in:

·         Dhaka metropolitan area.

·         Chittagong metropolitan area.

·         Rajshahi metropolitan area.

·         Khufna metropofitan area.

·         Sylhet metropolitan area.

Later on the Scheme will be implemented in other district headquarters and business areas in phases.

Scope of Investment

·         Investment is to be extended to build new houses on the client’s own land, to purchase built houses /apartments /flats and for extension/ completion of the house constructed/under construction.

·         The building to be constructed on the land must be as per approved plan of the competent authority of that area, viz. RAZUK, COA, ROA, KOA etc.

·         The amount of investment will be limited to the following :

a) For construction of new building on clients own land : Maximum 60% of the total investment will be mode by bank which do not exceed Tk. 30,00,000

b) For purchase of apartment /ftat/ready-made house: maximum 50% of the total investment will be made by bank which exceed Tk. 20,00,000.

·         If any client intends to provide the following securities to the Bank duly discharged/ completing necessary formalities by him, Bank may allow further or additional investment in excess of the aforesaid ceiling to the extent of 100% of the value of the securities: TOR & Mudaraba Savings Bond of Islami Bank Bangladesh Limited, TOR/Fixed Deposit of any scheduled Bank, Wage Earners Bond, ICB Unit Certificates, National/Defence Savings Bonds/ Sanchaypatra etc., Sank Guarantee from any scheduled Bank.

Mode of Investment  : HPSM

Period of Investment

·         The maximum period of investment shall be generally 15 years. However, the period of investment shall be determined on the basis of the proposal of the client, the amount of investment (for which the client has applied) and the ability of the project or client to repay the dues.

·         Reasonable gestation period for construction be allowed considering the size of construction and  Bank's investment.

Rent for Bank

Bank's Rent The Bank, in accordance with its normal practice shall decide rent on the investment. The clients, who will repay the entire dues in time or before the stipulated time by way of payment of all due instalments regularly, they will be allowed rebate on the rent.

Disbursement of Investment

Bank will pay the sanctioned money through Pay-order directly or through investment client to the supplier of construction materials/owner of the apartment/owner of the built. house. However, the following points shall be taken into consideration in disbursing the investment:

·         In case of purchase of apartment/flat/built house, the client shall have to deposit the equity money in the Branch or produce documentary evidence in support of his investment upto the satisfaction of the concerned Branch.

·         In case of construction of house on the client's own land or for extension of the existing house, the valuation of the Bank as regards client’s investment shall be considered final.

·         The client shall have to submit to the Bank, the construction plan approved by the competent authority and also the required permission to mortgage the property, where necessary.

·         The client must execute all necessary documents including mortgage deed and complete all necessary documentation formalities to a\/ail the investment. Related documents of mortgage, agreement of sale and other documents must be vetted by the penal lawyer of the Bank.

Procedure for Recovery

·         The client shall have to pay the Bank's dues by installment immediately after the expiry of the period of construction. To ensure payment as per stipulation of sanction the client, shall have to deposit post-dated cheques to the Bank for the amount of each monthly instalments covering the entire period of investment. The Bank shall realise the amount of monthly instalment by depositing the cheque of a particular month on the first week of every month .

·         The client shall have to execute irrevocable power of attorney in favour of the Bank authorising the Bank to collect monthly rent from the tenants incase of failure of the client to pay the monthly in instalment.

Security

·         Personal guarantee of the clients, his/her spouse, adult son(s) and daughter(s) shall have to be obtained.

·         Mortgage of land and building to be constructed thereon, apartment /flat/house in favour of the Bank.

·         An undertaking from tile client as well as from the dependants (nominees) to the effect that tile retirement benefits including Provident Fund will be appropriated towards adjustment of the house building investment liability of the client prior to any other appropriation, if the liability relating thereto or any part of it remains unadjusted at the time of getting the retirement benefits.

Procedure for Application

Interested persons shall have to apply in prescribed form of the Bank through the Branch of the concerned area. The Bank shall sanction investment if the proposal is found acceptable after examination of its viability and profitability- The Bank reserves the right to sanction or reject any investment proposal.

Real state Investment Program

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