April 12, 2016

Assignment on Islamic Bank part 3 of 3


*    To provide self employment for the poor and distressed by group/center formation.
*    To bring both male and female to provide employment under income generation activities and help them to attain self-reliance step by step.
*    To continue to support the self reliance drive of the poor in their search of capital formation from savings they make out of their increased income.
*    To help reduce and eventually stop, through enhancement of their income, the lending on thigh and exorbitant rates of interest by the village money lenders, the advance sale of crops, land and mortgage of land by the poor at the time when they are most in need.
*    To follow an approach of comprehensive development side by side will economic development and
*    To provide financing to develop housing in the area.
Selection of Ideal Village
For creating an ideal village, one/more villages to be selected within to km of each specified branches area. While doing this considers the following matters.
v  Easy transportation
v  Having agricultural /non-agricultural sectors.
v  Majority of low income holder
After primary selection, baseline survey will be done in that village.
Beneficiaries 
The RDS of IBBL is target group based. Beneficiaries of the plan are thus ladles, wage laborers and marginal farmers. Selection criteria for members of the target group are as follows.
a)   Famrmers owning up to 0.50 acres of land including sharecroppers;
b)   Persons engaged in non agricultural activities owning up to 0.50 acres land or landless;
c)   Permanent resident of the project area.
d)   Borrower or defaulters of any other bank or organization will by no means be the beneficiaries of the plan;
e)   Females belonging to the families of the serial 1 and 2 above, interested in income earning projects, but who unable to do so due to dearth of money, may form a group and get the financial support.
f)   Distressed people may undertake income generating schemes in non-agricultural sec tors such as cow/goat/chicken etc. For their self-employment; and
g)   Landless to be given priority in selecting target groups whose yearly family income must be below Tk. 15,000/-.



Investment Avenues, Higher Limits & Duration
Table-*** : Investment Avenues, Higher Limits and Duration
Investment Avenues
Higher Limit
Duration
Remarks
Crop production
Tk. 10,000/-
Highest 1 (one) year
Crops of 21 varieties
Fish cultivation in ponds
Tk. 25,000/-
Highest 3 (three) year
According to need
Irrigation
Tk. 5,000/-
Highest 1 (one) year

Agriculture irrigation implements
Tk. 25,000/-
Highest 3 (three) year
10% borrowers equity
All non agricultural sectors
Tk. 10,000/-
Highest 1 (one) year
For 343 nonagricultural items payable in weekly installment
Rickshaw, van and rural transports
Tk. 5,000/-
Highest 2 (two) year
Payable in weekly installment
Hand Tube well
Tk. 3,000/-
Highest 3 (three) year

House building materials
Tk. 15,000/-
Highest 3 (three) year


Mode of Investment
v  Bai Muajjle (TR)
v  Mudaraba (TR)
v  Bai-Murabaha (TR)
v  HPSM
v  Musharakah
v  Bai-Salam

Group Formation and Management
q        Activities of the RDS are organised by a group of 5 members. People with the same mentality, age and financial status who are trustful to each other are considered for group formation.
q        Group members elect one group leader and one deputy group leader from them.
q        Group leader works for selecting client, disbursement of investment and recovery. He also collect information about client’s  /member’s liability to any other bank /institute. And he also ensures the participation of group works of members who are worked in agricultural and non-agricultural sectors.
q        Group leader and Branche’s Frield supervisor, both have the power to entry and exit of group members.
q        A large group is formed by combing minimum 2 to maximum 6 small groups which is known as “Centre”. Each centre elects one group leader and one deputy leader.
q        A meeting is held weekly in each centre.
q        The working description of each centre’s meeting written properly which are signed by members.
q        Regular attendance in meeting is major responsibility of each client /member. Otherwise client /member is treated as exist from the group.
q        Bank’s field supervisors manager the meeting.
q        Detail discussion about scheme’s objectives, principles, limitations and prospects and members’ duties and responsibilities are held in meeting.
q        Collection of deposit and issue of Pass book of instalment of investment, personal savings, centre fund etc. are contained in meeting by Field supervisor and centre leader.
q        Selection of client and selected client’s investment application and other papers are provided in meeting.
q        Other members of group force for proper behaviour of group member who does not maintain the rules and regulation of the group /centre properly. Otherwise group members collect compensation themselves from him /her and get him/her out from the group for breaks down the rules and regulations of the group /centre and he /she fails to get benefits from the bank. If that number is a defaulter, then he/she returns the dues to bank.
q        Group’s each member gives guarantee for each other. Each member helps them to supervise their investment and recovery - in this regard each member signs each - other’s application and other documents.
Profit on Investment and other charges   
Clients should carry specific rate of profit on net investment of bank, supervision fee & risk fund.
Security
¦ For every member :  Personal guarantee from other member of his /her group should be provided for each investment scheme.
¦ For cultivation of  fish in pond and purchase of equipment for agriculture and irrigation : Assisted security is taken
Mudaraba Savings A/C
Opening a Mudaraba Savings A/C by each client /member is compulsory. In this A/C each member must deposit Tk. 5 weekly. No check book is issued for this A/C. Client can withdraw money from this A/C, if he /she has no any other types of liability.
Process of Recovery
It is believed that the banks best chance for successful recovery is dependent upon property structuring the installment payments. The amount and number of installment should be based on amines from the investment and the time interval it takes for one investment gestation return cycle. The following considerations are taken into account while determining the appropriate installment payment :
*   For the non agricultural sector installments may be made on a weekly/monthly/quarterly basis. weekly installments are preferred since the frequency of the short intervals often times lead to more successful recovery. Usually a payment schedule requiring 45 fixed installments of principal and profit are prescribed, allowing a two week gestation period, This payment schedule allows for up to three missed installments, two installments are not required during Eids and one installment may be missed in the event there is an accident.
*   Determination for the appropriated installment frequency in the agricultural sector depends on the cropping cycle. In case of vegetable and green curry production, weekly installments allowing a longer gestation period is suggested.
*          Generally all investments are repayable in weekly equal installments. In exceptional cases, with income generated beyond the date of the installment 

payment, a timely token payment is advisable followed by payment of the residual amount along with the next due installment.
Supervision
Enough number of supervisors are worked for accurate management of this scheme.
Procedure for application
Clients of selected ideal villages can apply in the prescribed form of the bank’s concerned branches through concerned group. If this application is accepted after proper checking their investment is granted and disbursed by bank.
Islami Bank Foundation’s Advanced Activities
Under Bank’s Rural Development Scheme, Islami Bank Foundation, a welfare institute of Islami Bank, takes some advanced activities on education (both primary and Islami base), medicare and healthcare sectors to create ideal villages.

AGRICULTURE IMPLEMENTS INVESTMENT SCHEME
Bangladesh is predominantly an agricultural country with vast majority of people living in rural areas. Most of our people for their living. are dependent on agriculture . Agriculture still contributes the lion share of the gross domestic product. But we could not as yet become self-sufficient in food production . We still import a bulk quantity of food grains from abroad to meet the deficit . This reliance on others. We  must modernise our agriculture and establish more and  more industries in order to minimise imports.

We can bring about revolutionary changes in the agricultural sector by adopting modern agricultural technology replacing the age-old traditional way of cultivation and increasing the use of fertilizer . This can only be done by collective efforts of both public and  private sectors.

Islami Bank Bangladesh Limited is a welfare oriented Bank. It can play positive and important role in the economic development , progress and uplift of the country by investing in the agricultural sector. The Bank has, therefore, introduced " Agriculture Implements Investment Scheme" to provide power tillers, power pumps, shallow tubewells, thrasher  machine etc. On easy terms to the unemployed youths for self-employment and to the farmers to help augment production in agricultural sector.
Objectives
·         To create opportunities for self-employment of un-employed rural youths.
·         To help farmers to  augment agricultural production.
·         To assist in the introduction and use of  modern technology in the agriculral sector.
·         To play auxiliary role in achieving self-sufficiency in food production.
Items of Agricultural Implements
·         Power tillers
·         Power pump
·         Thrasher Machine
·         Shallow Tubewell
·         Any other agricultural implements proposed by the branch and which has local demand.
These implements may be of any popular brand. Any locally manufactured brand, which has large demand is also acceptable. The choice of investment clients shall be given preference in this regard.

Investment Area
Investments  are allowed under this Scheme through all branches of he Bank except the branches located in the metropolitan areas. The command area of the concerned branch is within 15 miles radius from its location.
Beneficiaries
·         Educated or half-educated rural youths, educated or illiterate farmers and any person ready to accept agriculture as business may apply for investment facilities under this scheme. Preference shall be given to those applicants who have passed S.S.C or above.
·         The applicant farmer shoud person sound health and his age must be minimum 18 years and maximum 50 yeard. If the applicant is educated or  half educated yout than his age must be between 18 to35 years.
·         The applicant must be physically and mentally fit and willing to operate the machine himself .
·         Applicant must be a permanent resident of the concerned area and be willing to  stay and work there.
Period of Investment : 2 (Two) years
Mode of Investment : Hire Purchase Shirkatul Melk
Client Equity
Generally the investment client shall have to pay 20 % of the cost of agriculture implements/ equipment as equity. Equity shall be 10% if the Bank undertakes any special project under the supervision of any registered NGO approved by the Bank. The client shall have to bear the cost of installation of the agriculture implements\equipment and related expenses.


Security
·         The agricultural implements to be supplied to the investment client shall remain in the name of the bank till the repayment\adjustment of the dues to the bank.
·         Collateral security of immovable property equal to to the amount of bank's investment backed by irrecoverable general power of attorney.
·         Client, who is unable to offer collateral security of immovable property, shall have to provide personal guarantee of two respectable persons acceptable to the Bank. Guarantors should preferably be client's father/guardian or teacher.
Repayment of Procedure
Repayment Procedure The investment shall have to be repaid in 4 instalments within a year. The instalement shall be fixed on the basis of the sowing / transplantation and harvesting seasons of the crop. The branch Manager shall deiced both the amount and time of the repayment of instalment.
Risk Fund
Risk Fund Under this scheme a risk fund shall be created by debiting the concemed investment account an amount equal to 2%of the Bank's investment at a time at the  rate of 1% per annum for 2 years.
The risk fund will be utilized for the following purposes:
1.      For meeting the  cost of repair of the implements supplied if there is any damage of the implements due to accidents during operations.
2.     To cover the loss if any against the investment subject to approval from the head office.
Supervision
1.  The overall supervision of the investment shall be the responsibility of the concerned branch.
2      For supervision at the field level the Bank, may engage educated unemployed youths of the concerned area as per rules of the Bank. Supervision fee at the rate 2% over investment may be charged from the investment client for this purpose.
Bi-monthly Meeting
The concerned branch shall arrange bi-monthly meeting with investment clients and shall evaluate the success of  the scheme and discuss problems and take measures to solve them.
Procedure for Submission of Application and Sanction
Interested investment clients shall have to apply to apply to the concerned branch in prescribed form of the Bank for investment facility under the scheme. The bank shall consider the proposal in the light of aforementioned terms and conditions and if found viable then shall sanction and disburse the investment.
Micro Industries Investment Scheme
Bangladesh as a developing country has been trying for its overall economic growth. One of the major problems confronting its growth is lack of development of enterprises and potential entrepreneurs who can create more job opportunities by establishing new enterprises in the industrial sector. There are a number of educated unemployed youths and also skilled & semi skilled unemployed persons in the country. Besides, every year quite a good number of youths are coming out of the general/technical educational institutions to add to this already crisis ridden employment  market.

Development programmes and efforts will bring no meaningful result unless and until income generating employment opportunities can be created for the growing number of unemployed people including the educated unemployed youths. Establishment and expansion of micro industries can play a vital  role in creating more employment opportunities as well as in the overall socio-economic development of the county .
Islami Bank Bangladesh Ltd. has been appreciably participating in this direction by financing industrial sector. With a view to creating wider base for industries, the Bank has decided to launch "Micro Industries Investment Scheme" through its Branches. This scheme has been devised to career to the investment needs of those persons who intend to set-up new micro industrial ventures or to restructure their old units by way of BMRE involving a total cost of Tk. 5.00 lac.
This is intended  mainly to create new jobs for the educated, skilled & semi unemployed and also to encourage those who remain outside the purview of investment due to  shortage of funds and insufficient collateral. The scheme has been prepared with easy terms and conditions to encourage the small entrepreneurs, educated unemployed youths and skilled/ semi skilled persons to come forward for establishment of micro industries commensurate with the local demand.
Objectives : The main objectives of the scheme are as follows:
To create income generating employment opportunities through establishment of new micro industries and BMRE of existing units by providing necessary investment facilities.
To encourage establishment of micro industries  in differnt areas of the counrty by potential entrepreneurs like educated unemployed youths, technically qualified and skilled / semi skilled persons.
To encourage wage-earners to utilise their hard-earmed money in the country by providing additionl investment needs for establishment of micro-industries.
To provide investment facilities for self-employment of the unemployed and under employed persons having education, knowledge ,skill, experience and initiative to undertake micro industrial enterprises.
Beneficiaries
The eligibility criteria for the selection of the entrepreneurs under the scheme will be as under :
]   Engineering diploma of degree holders, of persons having diploma or certificate from any Technical Notational Training Institutes and willing to set-up micro industries.
] Educated unemployed youths having initiative and knowledge regarding the proposed industry.
]   Skilled and semiskilled persons having practical knowledge and experience in industrial perations.
]   Persons already engaged in micro-industries as owners and willing for BMRE of their enterprises.
]   Wage Earners who want to establish micro industries having work experience/ training in the particular field of industry.
]   The proposed enterprise must be exclusively owned by Bangladeshi Nationals which use undigenons raw materials or imported raw materials not exceeding 25% of the total requirement of raw materials. (R. page 126)
]   Defaulters and persons/enterprises having outstanding liabilities with other Banks and Financial Institutions will not be eligible for availing investment under the scheme.


Ceiling of  investment by Bank
The extent of Bank's investment will depend upon the actual requirement of a particular industry/ enterprise , its nature of production, model & origin of machineries the working capital requirements etc. The Branch should ascertain the cost ot the project taking into account all the above issues.
Bank's investment shall not be more than 60% of the cost of machineries or 50% of the total cost of the project (both machinery & working capital), whichever is less, within the maximum total investment ceiling of Tk.5.00 lac per project/enterprise. The client's equity shall be calculated taking into account cash investment plus the cost of the project land & building if owned.
Security
·         To secure Bank's investment, collateral security of immovable properties backed by irrevocable General Power for Attorney shall have to be obtained.
·         In case of technically qualified persons and educated unemployed youths, the original educational certificates shall have to be deposited with the Bank.
·         The ownership of machineries/equipments shall remain in the name of the Bank till full adjustment of Bank's dues.
·         The stock (existing & future) shall remain hypothecated with the Bank  till full adjustment of Bank's investment.
·         In case of exceptionally deserving candidates, such as educated, experienced, sincere, hardworking young-men with good reputation who intend to set-up & run the  industries fulfilling all the terms & conditions except that of collaterals they may be allowed an investment up to a maximum ceiling of Tk. 2.00 lac without collateral but on personal guarantee  of 2(two) reputable persons having good financial means and social standing acceptable to the Bank.

Period of Investment
Capital Machinery : 5 years (Exclude reasonable gestation period)
Raw Materials : 1 years (From date of disbursement of investment)
Risk Fund
The client will contribute in the risk fund @ 20% of the total Bank's investment for the project/ enterprise at the time of disbursement in order to meet any loss caused by genuine / and unforeseen risks  hazards.
Mode of Investment
Capital Machinery : Hire Purchase Shirkatul Melk
Raw Materials : Murabaha (TR)
Recovery of Investment
The mode of payment shall be determined considering the cash flow of the particular project enterprise within the investment period. The Branch in consultation with the client will determine the installment and payment period. However, the following may be considered in fixing the mode of payment.
a. Hire Purchase: In monthly/ fortnightly/ weekly installment basis.
b. Murabaha (TR) : In Lump sum at the end of the tenure of investment
In order to encourage regular payment of Bank's dues, branch should encourage installment payment in both the modes. This will reduce the risk of overdoes & diversion of funds.
Command Area
Investment under the Scheme shall be made within the 20 km. radius from the branch.
Supervision
Close supervision must be ensured by the branch for proper implementation of the project and recovery of installments in time. For this purpose supervisors (technical hands) shall have to be appointed for each of the designated branches Initially at the stage of implementation, the supervisor must visit the project weekly and after implementation at least once in a month keep the Branch Manager informed about the position of he project in detail.
Sanction & Disbursement
Project investment Department of Head office shall scrutinise the proposal on the basis of the information furnished and the recommendation of the Branch and Zonal Office. If the proposal is found suitable in all respect for making investment, Head Office will issue sanction advice to the Branch, Thereafter, necessary arrangements shall be made by the Branch for disbursement, only after completion of all the required formalities including documentation as per Bank's rules relations and normal.
Social Benefits
The educated unemployed, technically qualified persons skilled and semi skilled persons will be socially rehabilitated and will get better employment and income generating opportunities.
Unemployment and its consequent evils will be gradually eliminated from the society.
Wage eamers will get opportunity to utilize their hard earned money in productive & profitable enterprises & can settle them selves within the country in a peaceful environment with their family members.
Through formation of capital, Micro Industrial Enterprises will be self-operating units and will generate better and higher income for the target groups.
The quality of life of these entrepreneurs will improve and it will gradually develop the socioeconomic condition of the c country.
List of Micro Industries
Food and Agriculture Industries: Bakery & Confectionery, Mills, Oil Mill, Flour Mill, Dal Mill, Chira Mill, lce Factory, Farm, Beef Fattening, Dairy (small/ medium), poultry, Fish Farm/shrimp Culture, Hatchery (Shrimp and other fishes) poultry Feed/ Fish Feed, Food products, Lozenge, Chanachure etc, Food products (Jam, Jelly and other types of fruit processing / canning). Dried Fish, Coconut Products, Mill Processing & Pasteurization Plant.
Plastic & Rubber Industries: Polythene, Plastic & Rubber products, Rubber Tread, PVC products.
Forestry & Furniture Industries:  Furniture, wooden furniture, steel furniture, Cane Furniture, PVC Furniture, etc. Wood work, saw Mill, Nursery.
Engineering Workshop (Mech/Automobile workshop, welding etc.). Spare parts manufacturing, wire Nails/ Wire, Netting/ Nut-Bolts etc., Filter Aluminum products, Sanitary goods.
Leather Industries: Leather products, Footwear
Chemical Industries: Sop (Both washing & toilet soap), Chemical Products, Cosmetics industries.
Textile industries : Silk Yarn, Weaving (Power Loom/ Hand Loom), Ready-made Garments/ Garment Accessories etc. shoe, Lace, & Tape etc. Hosiery, Dyeing & Printing: Screen Printing, Specialized silk, Screen, Printing, Block Printing, Batik Printing, Handloom products.
Recycling Industries: Waste Cotton Refiner, Waste Plastic Recycling/ Sponge/ chapels, plastic toys etc. Waste Paper and Polyphone Recycling.
Service Industries: Service shop (Radio/ Two-in-One/T.V./Computer etc.).
Electrical Accessories industries: Electrical items (Fan, Bulb, Motor Parts etc.) Decoration Light shades.
Computer Technology: Computer Training centre, Development and assembling of Hard Ware/Soft ware technology.
Paper Products Industries:  Printing press, Packaging/ Board/ Packing Materials etc. Graphic Scan, Printing Process Studio etc. Handmade paper /Office Stationery.
Mirpur silk Weavers /Investment Scheme
The scheme has been taken up to assist the silk weavers of Mirpur area particularly in respect of requirement of working capital, BME of existing unit by adding further machinery's, to develop new entrepreneurs and to assist the workers for getting further training for producing products of various modern design and for modernization of the Silk sector.

We conduct our internship program at Local Office, Motijheel, of IBBL after getting 15 days training from IBTRA to gain knowledge based on observation and experiment, not on theory.




The first Branch of the Bank was Local Office, Motijheel, Dhaka, which started functioning on 30th March 1983. Later it become the main Branch of IBBL which earned net profit of Tk. 57.10 crore during the last year. In 31st December 2002, Local Branches’ total Deposit (including FC) was Tk. 5598.80 crore, total Foreign Exchange Business was Tk. 2379.06 crore and total investment was Tk. 877.12 crore. It has a total staffs of 266 during this period who are very much sincere and honest to perform their particular jobs. As a result it stood top of the Branches of IBBL’s Banking operations. The total investment of Local Office from 1998 as on 31.07.2003 are given below :



Different types of Investment incharge of local office’s  investment department

Murabaha Post Import
Murabaha post import is made against L/C in case of importing goods from aborad whether may be commercial goods any kind of commercial goods like rice, wheat, sugar, tays, etc.) or industrial goods (any kind industrial goods like chemical, machineries, equipment, thread etc.).
Purpose of MPI : To import various items commercial and industrial.
Beneficiaries :  Importer both commercial and industrial
Ceiling of MPI : There is no specification for ceiling of MPI amount which various client to client.     
Period of MPI : One year on revolving basis
Profit Charges : @ 5% p.a. on Bank’s MPI amount. But the rate is determined by the Bank from time to time.
Payment : Payment should be mode before receiving goods.
Schedule of charges for L/C’s :
For sight L/C : 1st quorter and 2nd quorter will be 0.50% and 0.30% respectively in L/C value.
For  Deferred L/C  : As same for sight L/C.
Security
Generally Bank guarantee is issued against 100% security of the client. But in case of report company, it may be 15% or above which is settled by the Bank.
a) Primary :     (i)  L/C : related documents
                        (ii) Pledge of MPI goods.
b) Cash /goods:i)   L/C : 10%, 15%, 25% cash security on the CFR (cost, freight, rent
                               value.
                        ii)   MPI, 25% or 100% cash security on the landed cost to be
       subsequently converted to goods security.
iii) Trust Receipt : Without cash security
c) Collaterals: i)    TDR or
                        ii)   Land mortgage
 d) Others :      i)  Personal Guarantee
                        ii) 1st charge to be created on all the fixed and floating Assets and book
     debts both present and future of the companies.
iii) Crossed (Account payee) post dated cheques.
Client selection  : 5 C’s inspection according to 167 (A)
Proposal processing
1.   Bio-data of client.
2.   Application with detail description of investment in prescribed form /letter head  pad.
3.   Liability showing in office pad letter.
4.   3 years Balance sheet.
5.   Report from credit information bureau through Bangladesh Bank.
6.   Two copies photographs.
7.   Collateral security against investment.
Appraisal : According to 167(B).     
Disbursement : If the proposed processing and appraisal reports are positive, the invested amount is adjusted to client’s current accounts. 
Charge Documents for MPI :
1.     D.P. Note Delivery Letter
2.     Demand Promissory (D.P.) Note
3.     Balance Confirmation Letter     
4.     Letter of Disbursement
5.     Murabaha Import Agreement
6.     Purchase Schedule
7.     D.O. Letter
8.     Sanction Advice
9.     Letter of authority
10.   Letter of continuity
11.   Application (for TR)
12.   Trust Receipt (TR)
13.   Post dated Cheque with forwarding letter (for TR)
14.   Letter of Disclaimer in case of party Godown.
Other’s related papers to be obtained in case of need /if necessary.


Investment on Transport 
Transportation is one kind of profitable and risky business. It is very much profitable for well experienced business. It is very much profitable for well experienced business in this line. On the other hand, it is very much risky for those who have knowledge, no experience in this regard and whose drivers are not sincere.
Purpose of Investment : Investment is made to helps business interested people to accommodate their requirements for running a profitable transport business.
Beneficiaries :            à Transportation businessmen
                                    à Personal use
Mode of Investment  : Hire purchase under Shirkatul Melk.
Period of Investment : 3 years.
Ceiling of Investment and Client’s equity
For Cab : Bank’s and client’s equity are 50 : 50 respectively.
For private care : Bank’s equity and client’s equity are 70 : 30 respectively.
For Bus /Truck /Minibus / Bank’s equity and Clients Cargo : Equity are 60 : 40
Ownership of the Vehicle in Bank’s name
For Cargo : Minimum 4/5 years upto invested period
For others : Minimum 3 years upto invested period.
Bank’s Rent : Bank’s rank includes principal amount invested by the bank multiplying 15% rent on monthly basis dividing 365 days into 100. the formula is :
Cost : All particular costs against transportation (life registration, fitness, tax token, route permit. by BRTA and insurance premium) are paid by clients.
Procedure fort Application, disbursement and recovery
1.     Application with prescribed form.
2.     Appraisal study by Bank.
3.     If appraisal report is positive, then driving client’s equity.
4.     Accepted quotation (supplied by the reputed supplies).
5.     Security.
6.     Purchasing vehicle.
7.     Registration in Bank’s name.
8.     Instalment payment by client.
9.     Transfer of ownership from Bank’s name to client’s name through BRTA after adjusting Bank’s dues.
Bank Guarantee
Bank guarantee is one bind of security giving by Bank on behalf of its clients to pay dues (if the clients are failed to pay dues). There are three parties in Bank guarantee such as the Bank, Client and other institution.
Beneficiaries : Business people such as suppliers, Importers, exporters, tender holders etc.
Period of B.G. :  Per quarter
Rate of commission :
à Per Quarter : 0.50% on Bank quarantine amount.
à Commission in realising Tk. 250 in case of 100% cash margine
Security :  Generally Bank guarantee is issued against 100% security of the client. But in case of reputed company, it may be 15% or above which is settled by the Bank.
Categories of Security
à Cash margine
à Pledge of Fixed Deposit /TDR /MSD /MSP
à Mortgage of properties
Vat :  15% on Bank’s commission for ultimate payment to Govt. Fund.
Procedure for application
à      Client must have an account in the bank.
à      Application with details information in prescribed form.
Charge Documents
à    Promissory Note
à      Demand promissory note delivery letter
à      Letter of guarantee (personal)
à      Counter guarantee (Official)
à      Pledge of TDR /MSB /MSP /Mortgage properties.
Quard
Quard is given to the accountholders of Mudaraba Term Deposit Receipt A/C and Mudaraba Savings Bond A/C by lining these accounts.
Purpose of Quard  : to meet emergency needing /necessities of the accountholders.
Beneficiaries  :  Accountholders of MTDR A/C & MSB A/C
Period of quard :  1 year
Ceiling of quard :  80% of MTDR A/C or MSB A/C
Bank’s Commission : For any kind of amount, Tk. 200 is given as commission to the Bank.
Procedure for gaining quard
V      Application with details in prescribed form.
V      Demand promissory note delivery /letter.
V      Pledge of the MTDR /MSB.
Withdraw of lienced A/C : After adjusting Bank’s dues, the lien withdraw  form is filled up by the Bank to continue the lien accounts.
Quard-E-Hasana
Quard-E-Hasana is given to the staffs against President Fund, Benevolent Fund and other people for general purpose.
Purpose of Quard-E-Hasana
à Meet emergency and general needigs /necessities
à To meet general purpose
Beneficiaries
à Permanent staffs
à Others people
Period of Quard-E-Hasana :  Maximum 3 years
Ceiling of Quard-E-Hasana
à For staffs : 80% of their Benevolent Fund and Provident Fund.
à For others : To be given from IBBL’s Foundation.
Commission  : No commission is changed
Procedure for gaining Guard-E-Hasana
à Application with details in prescribed form.
à Copy of pay advice salary for staff.

Household Durable Scheme
Household Durable Scheme is made for limited incomeholder to urchase household articles like refrigerator television, almirah, pressure cooker, sewing machine etc.   
Purpose of investment : The help limited income people to purchase household durables permanent
Beneficiaries 
·         Permanent staffs of the Branch   
·         Others who may be professionals of Govt, Seni-Govt, or private organisation like Baximco  Square, Ibne sina etc. If 50% of each installment covers ones salary, then this investment in given him/her.
·         All other categories than service holders like Doctors, Engineers, Students, Lawyers etc can purchase goods from The Branch against liening  the same balance in their any types of accounts.
Equity :   Banks equity and  Client's equity are 75:25.
Ceiling of Investment
·         For Branch's Principal Officer to above : Tk 75,000
·         For the Beneficiaries : Tk 1,00,000
Period of Investment 
·         For  staffs : 3 years
·         For Others : 2 years
Made of Investment : Bai Muajjle
Profit charges :
·         For Staffs : @11% p.a. on Bank's investment.
·         For others : @ 19.5% p.a. on Bank's investment including Profit 13.5 % Supervising 4 % Risk fund 2%
Down payment
·         For staffs : 10% of the total purchase value of the goods.
·         For others : 25% of the total purchase value of the goods
Guarantee
·         For staff : No personal guarantee in required
·         For others : Two guarantee should place
- One from the Boss / Some level or upper  level collecue 
- One from wife / husband, parents, brother ect.
Instalment 
·         For staff : with in 36 instalments, the dues should be adjusted
·         For others : with in 24 instalments,  The dues must be recoverd.
Procedure  & Documentation
1.    Application for investment scheme with accepting the terms and conditions of the Head Office.
2.    Promissory Note
3.    Demand promissory Note Delivery letter
4.    Balance Conformation letter
5.    Letter of hypothecation
6.    Sanction advice (Bai-Muajjle)
7.    Agreement
8.    Letter of guarantee
9.    Purchase Schedule
10.Undertaking. (24 checks are given by client)
11.Letter of Authority.

Industrial Working Capital Disbursement
This type of investment scheme is mode to helps industrialists to their working capital requirements for running business profitable.
Beneficiaries : Industrialists
Purpose of Investment : To meet working capital requirement mainly purchasing raw materials.
Security : Row materials or cash or mortgage or all of these.
Mode of Investment
·         Bai Muajjle
·         Bai- Murabaha.
Limits : Limits of investment by Bank are varied client to client.
Period of Investment :  One year.
Sanction and Disbursement  
1.      After client's application, Providing for wording letter to Head Office through Branch.
2.      Sanction Notice from Head Office
3.      Quotation of goods with proper address
4.      After accepting the application and quotation
à   Writing a short note by Branch in –charge of following particulars
à        Clients Name & address & Date
à        Limits : Both Murabaha limit & Group limit
à        Principal balances : Both Murabaha & Group.
à        Proposed investment : Both Murabaha overdue & total overdue
5.  If the short note is positive, then it is approved by AVP, SVP & EVP of Branch and made disbursement.
Charge Documents 
1.      Requesting letter for purchasing goods
2.      Promissory Note
3.      Demand Promissory Note Delivery letter
4.      Balance Conformation letter
5.      Trust Receipt
6.      Acceptance letter to client / sanction letter
7.      Purchase schedule
Profit charge : Profit charge in determined by bargaining between Bank & client. But generally @ 13.5 % or 14% or 14.5% p.a on Bank's investment. The Bank will be determined  the rate time to time.
Compensation : Same rate according to profit charge.
Rebate : If the dues of the Bank are returned before due date, then for the remaining period's profit is termed as rebate for the client.

Industry Investment scheme
Industry investment is a more complex and board financing morale  than any other trading mode. Financing is made by the demand and supply mechanism of market.
Objective  
·         To encourage entreprencurship
·         To decrease unemployment problems of the country
·         To increase GDP in industry sector.
Target Group : All types of industries except those which are prohibited by the law of the land and Islami shoriah. But mainly Garments and Textile mills oriented.
Ceiling of Investment : There is no fixed amount for industry investment scheme – But it must be remembered that the Bank can't sanction more than 50% of its equity against any single client.
Equity : Bank's equity and clients equity are 60:40 respectively.
Mode of Investment : For working capital : Bai muajjle or Bai Murabaha.
For factory / building / machinerees / Transpiration Hire purchase under slirkatul  melk
Period of investment  : Minimum 3 years maximum 7  years.
Profit Charge :
·         For Bai-Majjle or BaiMirabaha : @ 14.5% p.a of  Bank's  investment.
·         For HPSM : @ 14.5% p.a. rent including gestation period of Bank’s investment.
Client Induction :
·         5 -C's inspection of client such as character, capital, capacity, collateral and conditions. 
·         CIB report against Client
·         Inspect trading  experience of client
Detail inspection in case of public/private Ltd.
à        Management Aspect
à        Technical Aspect  
à        Marketing Aspect
à        Economic Aspect
à        Financial viability aspects
à        Land inspection including infrastructures
Sanction and Disbursement
After satisfying all types of inspection reports which are conducted by Branch, these reports are sent to Head office for further evaluation. Head Office then analyses these reports in detail as much as possible and collects CIB reports from Bangladesh Bank. If the reports are positive, then Head office provides Sanction advice to Branch. After sanction, Branch initiates investment disbursement against particular clients.
CIB report to Bangladesh Bank through Head Office
For below Tk 1 crore  : after every 3 months
For above Tk 1 crore : after every 1 month
Investment on Real Estate 
Investment in the from of land, Building, Market, Apartments for personal / rental shall be termed as Real Estate investment.
Purpose of Investment : To extend to build new houses and for extension / completion of the house already constructed, commercial building, shopping complex, flat / apartment etc.
Mode  of Investment : Hire purchase under shirkatnl Melk
Beneficiaries :
à        Permanent staff : Staff House building Investment scheme (SHBIS) (after 10 years job continue)
à        Others : (1) Real state Investment program (REIP) (any person with       
  age limit 50 year up to 60 years)
                    (2) Housing Investment scheme (HIS) (any professionals,         
                          Doctors, Engineers, teachers etc with out age limit)
Ceiling of Investment and equity
For Land : 100% Bank's equity only for staff (each installment should cover
                   minimum 30% of staff's take on salary)
For Building : Bank's equity and client's equity are 60:40 respectively.
For Apartment : Bank's equity & client's equity are 50:50 respectively.
For Market : Bank's equity & Client's equity are 50:50 respectively.
Rate of Return
For SHBIS : @ 7.5% P.a on Bank's investment
For REIP : @ 14.5 % P.a on Bank's investment
For HIS   : @ 15.5% P.a on Bank's investment
The rate is determined by the Bank time to time
Instalment payment by client :  Each instalment includes principal amount, rent & Gestation period rent.
Calculation of Principal :
Calculation of  Realising :
Calculation of Gestation Period Rent :
(if gestation period is 6 months)
Rebate : Bank allows @ 2% P.a rebate on the rent for those clients who repay the in time or before the stipulated time by way of payment of all due instalments regularly.
Period of Investment   
à        The maximum period of investment will be 15 years. The period is determined by the Bank on the basis of proposal of the client, amount of Investment and the ability of the project or client to repay the dues.
à        Reasonable gestation period in allowed considering the size of the construction  & Bank's investment.
Stages of Investment
1.      Purchase : Purchase an asset jointly both the Bank and client and shore the benefits as per agreement and bear the loss in proportion to their respective equity.
2.      Hire : Clients enjoy the service or benefit against specified rent from the asset owned by the Bank.
3.      Sale : Ownership of the asset is transferred by the Bank to the client after repaying the Bank's dues.
Procedure for sanction of Investment
1. Primary discussion about client
ð  Family status
ð  Social status
ð  Position
ð  Age limit
ð  Pay scheme (Service holder)
ð  Trade license (Businessmen)
ð  Location of Land
ð  Approved road
ð  Approved plant (by RAJWK)
2. Valuation and Inspection : (Vital point)
If primary discussion is positive, then the client applies  in prescribed form in details including all particular papers in two rets to the Branch. The Branch then sends a for working letter with one set of papers after evaluation to the Head Office for further evaluation. If Head Office's evaluation is positive, then it provides. Sanction advice to the Branch against the client. There should have 6 copies of sanction advice for -
·         Two acceptance copies
·         One Office copy
·         One Master copy
·         One Head Office copy
Security 
For staff : Lien the Provident Fund & Benevolent Fund.
For others :
1.      Personal guarantee of the clients, his/her spouse, adult son(s) and daughter(s)
2.      Mortgage of land and building to be constructed thereon, apartment / flat house in favour  of  the Bank.
Documentation
ð  Registered Mortgage deeds (8 deeds) on
ð  Registered Irrevocable power of Attorney
ð  Memorandum of deposit of Tittle Deed
ð   Further charge
ð  Affidavit by 1st  class Guagated officer
ð  Undertaking
ð  HPSM agreement
ð  Irrevocable power for rent collection
Charge Documents
·         Promissory Note
·         Demand promissory Note Delivery Letter
·         Letter of Undertaking
·         Letter of guarantee
·         Letter of hypothecation
·         Letter of Instalment
·         Letter of disbursement
·         Balance confirmation letter
Disbursement : After conducting 5 times inspections, Branch  makes disbursement against clients.
For staffs : 2 disbursement are made with equal amount of  total Bank’s investment
For others : 3 disbursement are made as the ratio of 30:30:40 of total Bank’s investment.
Finding of Problems  regarding Investment of iBBL
For IBBL -
à        Islamic Banking is a new  phenomenon in our country during last two decades. So majority of our people have no proper knowledge about the activities of Islamic Banking as well as its investment mechanism hamper large scope of investment of IBBL.
à        Most of the people in our country have a bad impression of IBBL,s operations regarding indirect generation of interest which meaning no difference between investment of IBBL loan / Credit / advance of conventional banks for this reason, they are not too much interested to make investment with IBBL.
à        Because of improper insufficient application of Islamic Banking rule in our country. The investment operations of IBBL can't run smoothly.
à        IBBL which is committed to avoid interest, can’t invest the permissible part of its statutory liquidity Reserve and short Term liquidity surplus in those securities.
à        This Bank can't invest in all economic sectors which are prohibited by the law of Islam.
à        Profitable investment portfolio of IBBL requires forsightment and clear investment knowledge according to Islamic shariah . But sometimes IBBL can't invest its assets in proper portfolio due to insufficient and unskilled manpower in these regards .As a result, there is a large amount of money being idle and thus potential profit is not increasing .
à        This Bank revalues its investment operations within limited number of investment modes and does not initiate investment modes according to changing |diverse needs of people
à        Sometimes  investment operations of IBBL are hampered due to increase, dishonest, indiscreet, hypocritical nature of people .
à        IBBL has no strong promotional activities to increase motivate its present and potential investment client
In general -
q        IBBL does not grant investment portfolio for new entrepreneurs new businessmen new companies etc . which ultimately create "Class Banking" .
q        There are limited scopes to deal women entrepreneurs and professionals for making investment by women interpreters .

q        In rural areas for low income community, this Bank grants investment an group  not individual .as a result, the mission, using invested money in income generating activities so the poor needy population can become self reliant - is failed . Moreover, it enhances group dependence .


q        In some sectors like housing , real estate, project (industry) etc ,this Bank disburses total invested money in times according to Banks pre-determined proportion Asa result, Clients are failed to gain full benefits of investment disbursement at once .


Recommendation
1.   IBBL can diffuse its scope of investment through focusing shariah concept regarding investment among the Bank officers, employer and the Clients by strong training, workshops and Clients get  - together .
2.   This Bank should arrange a wide varieties of regular programs like "ISLAMIC JALSA" "OAAZ MAHFIL"   "SEMINAR"  "MOSQUE -BASED DISCUSSION" etc. about Islamic Banking Function countrywide to remove the negative impression about IBBL .
3.   The authority of IBBL should Conveyance pressure on Government bodies to run proper and sufficient application of Islamic banking law in Bangladesh .
4.   Practice amount of doubtful income declined substantially during the year as compared to the past few years, indicating more carefulness of the Management in complying with Shariah. As a result, idle money will be invested to increase potential profit of this Bank.
5.   Inclusion of more subjects based on the Quran and Sunnah in the Training courses of the Islami Bank Training & Research Academy in order  to develop human resources having morally.
6.   Arrangement of monthly /quarterly training courses /workshops for the clients selected by the Branches in order to promote Investment clients of the desired level.
7.   IBBL should initiates different investment modes according to changing /diverse needs of  clients by conducting huge Research and study.
8.   IBBL should utilizes "Internship Program" as one kind of promotion policy to encourages its present and potential investment clients. Because, young generation is the vital post of our economy. To do so this Bank should provides facilities to the internees through proper placement and practical operations as well as job certainty to those who bring introduce themselves the best performers in doing their particulars.
9.   IBBL should appoints a sufficient number of women employees to deal women entrepreneurs and professionals and understand their needs and thus create  demand for  investment.
10. To fulfill the vision of "mass banking" this Bank should grants investment portfolio to new entrepreneurs /new businessmen new companies etc.
11. To gain success in the programs like "Poverty Alleviation and "Self Reliant" specially in rural areas, this bank should provides investment facilities on the basis of individual.
12. The Bank should disburses total invested money at once to the clients to achieve full benefits of invested money.












References

Books
q        Ali, M and Sarkar, A.A. (1995). “Islamic Banking : Principles and Operational Methodology”. Thoughts on Economics, Vol. 5 No. 3 & 4 July-December 1995. Dhaka: Islamic Economics Research Bureau.
q        Chapra, M.U, (1995). Towards a Just Monetary System. Leicester: The Islamic Foundation.
q        Khan, W.M. (1985). Towards an Interest-Free Islamic Ecomic System.Leicester, Islamabad: The Islamic Foundation, The International Association of Islamic Economics.
q        Maududi, Syed Abul Ala (1979). Sud and Adhunic Banking. Adhunik Prokashani, Dhaka.
q        Ahmed, A (1993). Contemporary Practices Islamic Financing Techniques. Jeddah: Islamic Research and Training Institute, Islamic Development Bank.
q        Allais, M. (1993). The Monetary Conditions of an Economy of Markets, Jeddah : Islamic Research and Training Institute.
q        Iqbal, Z. and Mirakhor, A. (1987). “Islamic Banking”. Al-Tawhid, Vol.4, No.3 : A Journal of Islamic Thought and Culture.
q        Khan M.S., and Mirakhor, A. (1989). Islamic Banking : Experiences in the Islamic Republic of Iran and Pakistan. (IMF Working Paper No. wp/89/12). Washington DC : International Monetary Fund. (JEL Classification Nos. 3116, 3120; 314). p. 1.See also Mangla, I.Y. & Uppal, J.Y. (1990) Islamic Banking : A Survey and Some Operational Issues. Research in Financial Service, Vol. 2.
q        Mangla, I.U., Uppal J.Y. and Swamy, C.R.K. (1988).”Interest-free Banking-A Financial Innovation : Some Conceptual Issues”, Journal of Midwest Finance Association.
q        Minsky, H.P. (1982). “Can it Happen Again”, in M.E. Sharpe (ed.) Essays on Instability and Fiannce.
q        Saud, M.A. (1986). Contemporary Economic Issues - Usury and Interest, Ohio : Zakah and Research Foundation.
q        Wilson, R. (1983). Banking and Finance in Arab Middleast. London: Macmillan Publisher Ltd.
Circular :
q        Instruction Circular No. IW/IPPD/772
Class Notes
q        Jebal, Ahmed Asheque, Vice President & Faculty Member, IBTRA
q        Hussain, Md. Abul, SVP & FM, IBTRA.
Manual
q        Bai-Murabaha
q        Hire Purchase Under Shirkatul Melk
q        Bai-Salam
q        Musharaka
q        Bai-Muajjal
Web Site
·         http://www.islamibankbd.com/Page/ih­_2.htm
·         http://www.islamibankbd.com/Page/ih­_1.htm
·         http://www.islamibankbd.com/Page/Glance.htm
·         http://www.islamibankbd.com/Page/Shariah.htm
·         http://www.islamibankbd.com/Page/Achieve.htm
·         http://www.islamibankbd.com/Page/ih­_8.htm
·         http://www.islamibankbd.com/Page/OperAct_#investm
·         http://www.islamibankbd.com/Page/SpScheme.htm#HouDS
·         http://www.islamibankbd.com/Page/InvMode.htm#Baimurab
·         http://www.islamibankbd.com/Page/OperAct.htm
·         http://www.islamibankbd.com/Page/ih­_12.htm
·         http://www.islamibankbd.com/Page/ih­_8.htm



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