General Banking Practice in Shahjalal Islami Bank Limited

Executive Summary

We are now in the fastest age of Business. So, as a business student I was asked to submit an internship report about the General Banking Practice in an organization of our country, by my supervisor Mosharof Hossain Directorand Exam Controler of Darul Ihsan University For this purpose, I have selected Shahjalal Islami Bank Limited.

 Like in many other emerging market economies, commercial banks in the Bangladesh economy are to face an increasing competition for their business in the coming days. Their business will no longer remain easy as they had earlier. The real change in the banking business has started to come with the govt.’s decision to allow the business in the private sector in the middle of the eighties. Between 1982 and 1985, six commercial banks were permitted in the private sector, and one more was allowed in late eighties. In this period two former NCBs were privatized, and in all banking business till nineties consisted of 9 private commercial banks, 4 nationalized commercial banks, 5 specialized commercial banks and 6 foreign banks. In the beginning of 1990’s, seven more private commercial banks were permitted, of which of course, two were reconstituted in new names after their collapse. These banks have become known in our economy as the second generation banks. In a third wave, a dozen more banks were permitted by the Bangladesh Bank and a number of new foreign banks entered into our economy. Now, we can say, our commercial banking business, which is an important segment of the financial sector, consists of two dozen private commercial banks, fourteen foreign banks, four NCBs. The other segment of the financial sector is represented by about two dozen insurance company, six non-banking financial institutions, few leasing companies and twenty newly permitted merchant banks.

SHAHJALAL ISLAMI BANK LIMITED is named after the name of a saint Hajrat Shahjalal ® who dedicated his life for the cause of peace in this world and hereafter and served the humanity. The prime objective of Shahjalal Islami Bank is to serve the people for attainment of their economic goal and success in life here and hereafter. SHAHJALAL ISLAMI BANK LIMITED stands not only for material well being but also for ethical development of its customers.

The Government of Bangladesh has licensed Shahjalal Islami Bank Ltd. (SJIBL) as a private commercial bank, which is focused on the established and emerging markets of Bangladesh.  The bank was incorporated in Bangladesh as a public limited company on April 01, 2001 under company Act 1994, and started banking operations through the Dhaka Main Branch at 58 Dilkusha C/A, Dhaka-1000 on May 10, 2001.

Shariah Council of the Bank is playing a vital role in guiding and supervising the implementation and compliance of Islamic Shariah principles in all activities of the Bank since its very inception. The Council, which enjoys a high status in the structure of the Bank, consists of prominent ulema, reputed banker, renowned lawyer and eminent economist.

Members of the Shariah Council meet frequently and deliberate on different issues confronting the Bank on Shariah matters. They also conduct Shariah inspection of branches regularly so as to ensure that the Shariah principles are implemented and complied with meticulously by the branches of the Bank.

In the report, at first I have given a general idea about the banking system in Bankladesh. Then I have focused on the general banking practice of Shahjalal Islami Bank Limited. Actually in the light of the company’s banking practice I have discussed the general banking system in Bangladesh. Here I have included a comprehensive assessment of the company’s banking system.

Though I have made up my report on the basis of the general banking practice of SJIBL, this may be helpful to all other banks.

 INTRODUCTION

Bangladesh is a developing country. The banking system today plays a very critical role in economic development. Shahjalal Islami Bank Ltd. is a financial institution that operates with the objective to implement and materialize the economic and financial principles of Islam in the banking area.

The report will ‘illustrate a basic reflection about the Shahjalal Islami Bank Ltd. The report will present the overall scenario of Shahjalal Islami Bank Ltd. The report will cover the information of the bank, present condition of the bank in private banking sector, market share, and various products schemes of SJBL, interest rate of the bank etc. The report will also include various activities done under general banking operation.

The activities of dispatch, the procedures of account opening, procedures of inland remittance, received and payment of cash, dealings with customers and provide better

customer services and others are explained in these report.

ORIGIN OF THE REPORT                

This report based on an internship program. SJIBL arranges internship program to gather practical knowledge about banking activities followed by SJIBL for university students as universities conducted with different organization after the completion of theoretical courses of program of Masters of Business Administration (MBA). Each intern must carry out a specific project which is assigned by the SJIBL. Consequently a report based on the projects is to be submitted to the authority of the SJIBL. I have selected Shahjalal Islami Bank Ltd for my internship and since then 1 have started my realistic orientation program in General Banking of SJIBL.

OBJECTIVE OF THE REPORT

  * General objective of the report:

The main objective of the report is fulfilling the practical requirements of the MBA program. In these report 1 have attempted to give an overview of Shahjalal Islami  Bank Ltd, in general.

* Specific objectives are presented as follows:

To know the general banking procedures of Shahjalal Islami Bank Ltd.

Relevant policy, system, theories and practices of banking.

To submitted the practical work as paper work that I have learned in my

To identify the strengths and weakness of SJIBL

To identify the problems faced by SJIBL

 Methodology of the study

This Internship Report has been prepared based on the information extracted from different sources collected by using a specific methodology. The methodology is mentioned below:

 Types of the Research: Exploratory research Design

Population:              All the branches of SJIBL located anywhere in Bangladesh..

Data Collection:      Sources of data of this report can be divided into two categories:

 (a)  Primary sources

(i)            Practical field work

(ii)          Face to face conversation with the officer

(iii)         Direct observations

(iv)         Face to face conversation with the client

  (v)       Consultation with the Following Persons

(b)  Secondary sources

(i)            Annual report of SJIBL.

(ii)          Files & Folders

(iii)         Memos & Circulars

(iv)         Daily diary (containing my activities of practical orientation) maintained by me,

(v)          Various publications on Bank,

(vi)         Websites,

Different circulars sent by Head Office and Bangladesh Bank.

Limitations of the Report

• Another Problem was time constraints. The duration of my internship Program was only three months. But this time is not enough for a complete and fruitful study.
• The Bank was a busy one having heavy rush of people, whom officers need to deal with. So allocation of time for an internee is very much tough for the officers of the bank.
• Sometimes I was assigned to do some jobs without explaining why this work is to be done. This situation has created a lot of problems to understand why a specific function is being performed.
• Background of Shahjalal Islami Bank Limited

 Shahjalal Islami Bank Limited is a private commercial Bank established under the bank Company Act, 1991 and incorporated as a Public Limited Company under Companies Act, 1994 on April 01, 2001. The bank commenced its operation as interest free shariah based commercial bank on the10th May 2001 with the permission of Bangladesh Bank. The name of the bank has been changed from “Shahjalal Bank Limited” to “Shahjalal Islami Bank Limited” on April 18, 2004 with the permission of Bangladesh Bank. During this short span of time the Bank had been successful to position itself as a progressive and dynamic financial institution in the country. The Bank had been widely acclaimed by the business community, from small entrepreneur to large traders and industrial conglomerates, including the top rated corporate borrowers for forward-looking business outlook and innovative financing solutions. Thus within this very short period of time it has been able to create an image for itself and has earned significant reputation in the country’s banking sector as a Bank with vision. Presently it has branches in operation.

Shahjalal Islami Bank Limited was starting their operation when Social Investment Bank Limited, First Security Bank Limited, Eastern Bank, Bank Asia, Jamuna Bank, Brac Bank Limited was also started their operation at the same time or earlier. These banks are known as the third generation banks because they bring a new concept in the banking sector such as ATM Card, Online Banking, SMS Banking and also retail Banking. Shahjalal Islami Bank Limited also brings with that a new concept which is “Interest free shariah banking”. So the performance of these banks are not the same, the Shahjalal Islami Bank Limited remained as one of the top performers among them. Shahjalal Islami Bank Limited has been licensed by the Government of Bangladesh as a Scheduled Bank in the private sector in pursuance of the policy of liberalization of banking and financial services and facilities in Bangladesh. In view of the above, the Bank within a period of 7 years of its operation achieved a remarkable success and met up capital adequacy requirement of Bangladesh bank.

Nature of business

The Bank is carrying out commercial, corporate, investment and retail banking related services as follows:

• Corporate Finance
• SME Finance
• Correspondence Banking
• Documentary Credits
• Foreign Exchange
• Guarantees
• Syndicated Finance
• Other related Business

 Vision:

“To build an institution that can stand the test of time and one day emerges as world class Bank by the year 2010”

Mission Statement

To establish and develop a market drives leadership and lays great emphasis on securing of quality business.

 Through pragmatic and market friendly policies to continue increase in volume of business.

 Product / Service expansion.

 Maintaining internal quality management through training to its employees.

Objectives:

Long-term objective:

• To be the market leader both in terms of deposits and good loans among private commercial banks by 2010.

Short-term objective:

• To increase current market shares at least 2% by 2008.
• To increase it’s number of branches to 20 by 2008.

Slogan: Committed to Cordial Service

 Values

• Customer focus
• Integrity
• Team Work
• Respect for individual
• Quality
• Responsible citizenship

 Branches

Shahjalal Islami Bank limited has 63 Branches in Bangladesh. Among total of 63 Branches, 35 branches are located in Dhaka Zone, 13 branches are located in Chittagong Zone, 5 branches are located in Sylhet, 3 Branche in Khulan,6 Branche in Rajshahi and 1 Branche in Barishal

The registered office (Head Office) of Shahjalal Islami Bank Limited is at Jiban Bima Bhaban (4^th Floor), 10, Dilkusha C/A, Dhaka 1000.

 Special Features of the Bank:

a)            It has been performing Islamic commercial banking activity and striving to introduce dynamic Banking functions.

b)           It is the pioneer in introducing and launching different customer friendly deposit schemes to create the savings from the people.

c)            The operations of the Bank are fully computerized so as to ensure quick, prompt flawless and services to the customers.

d)            The Bank has introduced camera monitor system (CCTV) to strengthen the security services inside the Bank premises.

e)            The Bank is committed to continuous research and development so as to keep pace with islamic banking.

 ORGANOGRAM OF THE ORGANIZATION

HIERARCHY OF SHAHJALAL ISLAMI BANK LIMITED

Performance Review of Shahjalal Islami Bank Limited

Performance at a Glance (amount in million TK.):

Equity of the Bank

Capital Adequacy

Financial Performance of SJIBL:

The Shahjalal Islami Bank Limited is one of the most successful private sector commercial bank in our country, though it started its operation only 7 years back. It has achieved the trust of the general people and made reasonable contribution to the economy of the country by helping the people investing allowing credit facility.

Profit:

Shahjalal Islami Bank Limited registered a operating profit of Tk. 1,248,067,711as of  September, 2010.Provision for tax for the year amounted to Tk. 27,178,923

with a net profit of Tk. 463,216,712 million.

Deposits:

The Bank mobilized a total deposit of Tk. 57,700,694,480as on September, 2011 . The combination of competitive interest rates that offered sustained deposit raising efforts of the Bank and confidence reposed by customers in the Bank resulted in this growth of deposits. Steps are being taken to further increase the deposit base continuously at a reduced average cost of funds.

 PRODUCTS AND SERVICES OF SJIBL

Since commencement of banking operation, City bank Limited has not yet only gained enormous popularity but also been successful in mobilizing deposit and loan products. The bank has made significant progress within a very short time period due to its dynamic management and introduction of various consumer-friendly loan and deposit products. All the products and services offered by the bank can be classified under two major heads:

 Deposits Accounts:

Shahjalal Islami Bank Limited accepts deposits on the basis of Mudaraba in the following types of accounts, and pays profit, like that of dividend in these accounts, except Alwadia Current Account. The relationship between banker and customer is not debtor-creditor relationship of conventional banks. The depositor is a partner in business with SHAHJALAL ISLAMI BANK.

Customers’ deposit their fund in the following types of Accounts:

1. 1.    Mudaraba Short Notice Deposit Account

   2.   Mudaraba Savings Account

   3.   Mudaraba Term Deposit Account

4.   Alwaladia Current Account

   5.   Other Scheme Deposit Accounts

Average 70% of profit earned by the bank is distributed proportionately among depositors annually.

Investments modes:

To provide interest-free Banking Shahjalal Islami Bank Limited has adopt the following modes of investment

1. Musharaka (equity participation on the basis of sharing profit and loss)

2. Mudaraba (sharing of profit and loss in business where one of the partnersprovides expertise and management and other partner provides capital remaining inactive)

3. Murabaha (buying and selling of commodities goods etc. with profit)

4. Bai-Muajjal (credit sale with profit)

5. Ijara (leasing for rent)

6. Hire purchase or Shirkatul Melk

7. Bi-Salam (purchasing of agricultural products while in production and providing   advance money to the producers)

8.  Istisna (purchasing of industrial products while in production and providing advance   money to the producers)

9. Quard

2.   14 Loan Schemes (Modes of Investment in Shariah concept)

Musharaka & Mudaraba

Bai-Muajjal

Bai-Murabaha

Bai-Salam

Ijara & Hire Purchase Shirkatul Meelk (HPSM)

Istisnaa

Muqawala

 Automation in Banking operation
•  Visa Debt Card Service

Card is considered as a new dimension of product resulting from technological development in the banking arena. In line with our affiliation with VISA International for VISA ATMs and POS, the following two products are launched broadening service products of the Bank to the clients’:

1.        VISA Electron (SJIBL VISA Debit Card – local)

2.        VISA Prepaid (SJIBL VISA Prepaid Card)

SJIBL VISA Debit Card: To a customer, “My card, my money” concept is used for Debit Card.  Any accountholder of SJIBL can apply for a SJIBL VISA Debit Card against his/her Al-Wadiah Current Deposit (AWCD), Mudaraba Savings Deposit (MSD) or Mudaraba Short Notice Deposit (MSND) Account. He/she is fully authorized to enjoy the benefits of cash withdrawal from ATMs, liberty of shopping, dining, paying utility bills and having access account information through SMS, etc. round the clock.

SJIBL VISA Prepaid Card (Local): SJIBL VISA Prepaid Local Cards are open to the customers even having no account with Shahjalal Islami Bank Limited. Cardholders can have the card against prepayment and have access from anywhere in Bangladesh. SJIBL VISA Prepaid Local Cards are accepted locally at all VISA labeled merchant outlets, ATMs, etc.

SJIBL VISA Prepaid Card (International): SJIBL VISA Prepaid International Cards are also open to the customers even having no account with Shahjalal Islami Bank Limited. Cardholders can have the card endorsing US Dollar paying against Travel Quota, Exporters Retention Quota or marking Lien of his/her FC Account. SJIBL VISA Prepaid International Cards are accepted world wide at all the VISA labeled merchant outlets, ATMs, etc.

SJIBL VISA Prepaid Card (Dual): The Dual Card is a hassle free product, no need to carry two separate plastic cards for local and international card. Now, with one plastic card the Cardholders can enjoy all the benefits and make transactions locally & globally from their Prepaid card account at all the VISA labeled merchant outlets, ATMs, etc.

SJIBL VISA Souvenir Card (Gift Card – Local): SJIBL Souvenir Card is a very attractive and stylish product. Like a Gift Card, SJIBL Souvenir Card can be used by anyone wishes to. The intending customer may have the card instantly or may customize the card as required. The SJIBL Souvenir Cards are accepted locally at all the VISA labeled merchant outlets, ATMs, etc.

Usage Limit

 • SMS Services

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

Mobile Banking is a secured & flexible solution that delivers the banking services to its customers through a range of mobile devices using SMS / Push Pull technology. It provides banking services to the registered clients access to account information and real-time transaction capabilities from the mobile phones at a true “Anywhere, Anytime, Anyhow” convenience.

It works using Shot Message Services (SMS) Technology. It works through a set of text message. With SMS, client can perform a wide range of query-based transactions from his/her mobile phone. It also provides pre-defined Alert Message Service. The Service is designed to serve the bank customers by informing the real-time data about their account such as current balance, recent transaction statement, cheque status etc. as SMS reply within about half a minute in response to their SMS query in a defined simple syntax. It can also serve the customers to stop a cheque, receiving statement request and other request / order at the branch for processing through SMS.

In today’s business environment, with so many deadlines to fulfill appointments to meet and meetings to attend, you are hard pressed for time. Don’t you wish you could do all your important activities while traveling from one place to another?

As a leading private sector bank in Bangladesh the Shahjalal Islami Bank Limited presents the Mobile banking i.e. SMS / Push Pull service.

Services:             

1. Balance Inquiry
2. Cheque Book Request
3. Cheque Leaf Status
4. FC Rate Information
5. Cheque Stop Payment Instruction
6. Statement Request by Courier/Post
7. Statement request by E-mail
8. Last Three Transaction Statement
9. Help inquiry
10. PIN Change

• On line Any Branch Banking:

The Shahjalal Islami Bank Limited is going to connect all its branches and Head Office under a Wide Area Network (WAN). Under this system the customer of a branch will be able to withdraw and deposit money from / to his / her account from any of the Shahjalal Islami Bank branches across the country. This will also provide our customer instant fund transfer facility to any account maintained with any branches of the Bank.

 The objective of an IT Department is to ensure that an efficient, secure and reliable computerized banking operation is running towards that end SJIBL is constantly striving to update and upgrade ourselves in all modern IT practices. SJIBL is committed to our clients to put all our efforts to adopt all modern concepts / technologies in order to cope with the constant changing environments of business. SJIBL’s ultimate aim is to make Shahjalal Islami Bank equipped with cutting-edge technologies in the financial sector of Bangladesh.

 Banking Operation:

All branches of the Bank including the Head Office have a PC Based Local Area Network   (LAN)   on   UNIX   platform,   which   is   a multi-user and most reliable and internationally recognized secured Operating System. Our banking program supports all

 Core banking facilities including: Current Accounts, Savings Accounts, Foreign Currency Accounts, term and Fixed Deposits, Loans and Advances, Special Schemes for Deposits and Advances etc. Besides the maintenance of various types of customer account, calculation and applications of interests, automatic deduction of various types of taxes on lives, the bank’s books of accounts are also fully automated and integrated in to the banking software thus the Balance Sheet, Statement of Affairs and other management reports and generated by the computer system under Bank’s Standard Chart of Accounts on daily basis.

 Back Office Automation:

Apart from the Front Office Automation and Automated book-keeping system of the bank, the bank has introduced computerized Provident Fund, management System, Inter Bank Reconciliation, Share Management System, MIS, Central Bank’s reporting such as CL, CIB etc. Our in-house software development team developed a L/C Management System, which covers the entire L/C operation starting from L/C opening, processing, vouchering, maintenance and retirement of L/C.

 Home Banking:

Shahjalal Islami Bank Limited is not only maintaining its Front-Office and Back-Office operation through modern computer system but also providing the home Banking Facilities to its Corporate Customers. With this facility SJIBL’s customer has access to his / her account for inquiry, checking the account balances, seeing the day’s transactions and taking print of Account Statement sitting at his / her office or residence. At present SJIBL is providing this facility to a limited number of customers which are going to be extended to other corporate customers gradually.

Bank’s Own Web-Page:

The internet has brought about a revolutionary change leading to convergence of communication and computing technologies. The global presence and impact of the Internet, has made it essential for most business to sit up and take notice of the power on internet technologies and devise ways to leverage it to gain competitive advantage…. The interactivity and flexibility of the Internet technologies has generated a number of creative options for addressing the business issues facing various industries – the banking industry is no exception to this. Starting of with providing mere static information on the Net, banks have evolved to having transactional web sites – a virtual delivery channel for their customers “

 E-mail:           sblho@aitlbd.net,sblho@shahjalalbank.com.bd,
shahjalalislami.bank@gmail.com)

 In order to provide instant access to bank’s information to anybody, at any time from any where of the world, Shahjalal Islami Bank Limited has launched it’s own Web Page developed by it’s IT Team soon.

 Introduction of SWIFT:

The Bank has become the member of the Society for Worldwide Inter-bank Financial Telecommunication (SWIFT). This will facilitate the bank as well as its customers the speedy and reliable communication system for trade messages and fund transfers.

 REUTERS System:

The Bank has set up a Reuters Monitor at its Head Office. With the implementation of this system the Bank has able to handle its foreign exchange business / deals more efficiently and keep itself updated with the developments of international money market instantly.

 Loan Products

• Consumers’ Credit Scheme
• Lease Finance
• Hire Purchase
• Small and Medium Enterprise Credit Scheme
• Loan Against Shares and Securities
• House Building Financing Scheme
• Financing Scheme For Contractors
• Computer Software Financing Scheme
• Working Capital Financing
• Import Financing
• Export Financing
• Ø Industrial Financing

Computer services:

Shahjalal Islami Bank Limited introduced a few schemes, which are very popular:

• 1. Online services
• 2. Automated Accounting
• 3. Integrated System
• 4. Signature Verification
• 5. Any Branch Banking

Other Service

PC BANK

The amazing and dazzling touch of the fastest banking practice of Shahjalal Islami Bank Limited is outcome of exciting banking software where I relished the expertise. PC Bank opened up the door of new horizon for the smarter, better and faster banking. The arenas covered by the PC BANK are as follows:

 Recent Performance at a glance of Satmasjid Road branch

Recovery of Classified Loans

Recovery of Classified Loans up to 31^st December 2000: TK.20.93 lac. After this year the year wise recovery position of classified accounts are given below:

 Recovery and defaulting installments and amount under consumer credit scheme for the month of September 2007:

1. No. of total borrowers      : 62

2. Total authorized loans    : TK. 4,466,710.00

3. Total amount disbursed  : TK. 4,466,710.00

4. Total amount recovered  : TK. 3,873,335.00

5. Total amount outstanding          : TK. 1,881,506.88

6. Total overdue amount     : TK. 509,300.00

Position of newly developed liability products (2007 Jan-Jun)

 At first I have been placed in the General Banking Department. General Banking department performs the majority functions of a bank. It is the core department.

In fact, bank operates with the people’s money. And this process starts with the General Banking department. The activities of the General Banking Department of SJIBL mainly divided into following categories:

   Account Opening Section,

  Local Remittance Section,

  Online Branch Banking Section,

  One Stop Utility Services Section,

  Deposit Schemes Section,

  Clearing Section,

  Collection Section,

  Cash Section,

 Accounts Section,

Account Opening Section:

To establish a Banker and customer relationship Account opening is the first step. Opening of an account binds the Banker and customer into contractual relationship. But selection of customer for opening an account is very crucial for a Bank. Indeed, fraud and forgery of all kinds start by opening account. So, the Bank takes extremely cautious measure in its selection of customers.

 Types of Account:

• Mudaraba Savings Account
• Mudaraba Short notes Deposit
• Alwaladia Current Account
• Mudaraba Term Deposit

 Procedure to open an Account:

• For opening an account, at first the prospective account holder will apply for opening an account by filling up account opening form. Account opening form consists of the name of the branch, type of account, name of the applicant(s), present address, permanent address, passport number (if any), date of birth, nationality, occupation, nominee(s), special instruction (if any), initial deposit, specimen signature(s) of the applicant(s), introducer’s information etc.
• The prospective customer should be properly introduced by the followings:

1. An existing customer of the bank.
2. Officials of the bank not below the rank of Assistant Officer.
3. A respectable person of the locality who is well known to the manager or authorized officer.

• Two copies of passport size photograph duly attested by the introducer.
• Signature of the prospective account holder in the account opening form and on the specimen signature card duly attested by the introducer.
• Then the concerned authority will allocate a number for the new account.
• The customer than deposit the “initial deposit” by filling up a deposit slips. Initial deposit to open a current account is Tk. 5500.00 and saving account is Tk. 5000.00.

After depositing the initial deposit, the account is considered to be opened. SJIBL maintains all of its accounts in computer. After depositing the initial deposit, SJIBL records it in the computer by giving new account number. Then it issues cheque book requisition slip by the customer. Then it distributes all relevant papers to respective department.

Activities and papers necessary for opening an account:

(A)         Joint Account:

If the account is a joint account, then the joint account holder should submit a declaration and operational instructions of the account along with their signature. The declaration is

“Any balance to the credit of the account is and shall be owned by us as joint depositors. Any liability whatsoever incurred in respect of this account shall be joint and several.”

(B)         Partnership firm:

The following documents have to be submitted for preparing an account of a partnership firm:

•  (a) If the partnership firm is a registered one, then one copy of registration forms.

            (b) If not, then a copy of certificate from the notary   public.

(C)         Limited Company:

For the opening of an account of a limited company, following documents have to be submitted:

• A copy of resolution of the company that the company decided to open an account in the SJIBL.
• Certified true copy of the Memorandum & Articles of Association of the Company.
• Certificate of Incorporation of the company for inspection and return along with a duly certified Photocopy for Bank’s records.
• Certificate from the Registrar of Joint Stock Companies that the company is entitled to commence business (in case of Public Ltd. Co.  for inspection and return) along with a duly certified Photocopy for Bank’s records.
• Latest copy of balance sheet.
• Extract of Resolution of the Board/General Meeting of the company for opening the account and authorization for its operation duly certified by the Chairman/Managing Director of the company.
• vii) List of Directors with address (a latest certified copy of Form-XII)

 (D)                 Club/Society:

Following documents have to be obtained in case of the account of the club or society:

• Up to date list of office bearers.
  • Certified copy of Resolution for opening and operation of   account.
  • Certified copy of Byelaw and Regulations/Constitution.
  • Copy of Government Approval (if registered).

 (E)                 Cooperative Society:

Following documents have to be obtained in case of the account of Cooperative Society:

• Copy of Byelaw duly certified by the Co-operative Officer.
• Up to date list of office bearers.
  • Resolution of the Executive Committee as regard of the account.
  • Certified copy of Certificate of Registration issued by the registrar, Co-operative societies.

 (F)          Non-Govt. College / School / Madrasha / Muktab:

Following documents have to be obtained in case of the account of non-govt. college / school / madrasha / muktab:

• Up-to-date list of Governing Body/Managing Committee.
  • Copy of Resolution of the Governing Body/Managing Committee authorising opening and operation of the account duly certified by Gazetted Officer.

(G)         Trustee Board:

Following documents have to be obtained in case of the account of trustee board:

• Prior approval of the Head Office of SJIBL.
  • Certified copy of Deed of Trust, up to date list of members of the Trustee Board and certified copy of the Resolution of Trustee Board to open and operate the account.

 (H)         Minor’s Account:

Following documents have to be obtained in case of the account of minor:

• Putting the word “MINOR” after the title of the account.
• Recording of the special instruction of operation of the account.
• The AOF is to be filled in and signed by either the parents or the legal guardian appointed by the court of law and not by the minor.

Local Remittance:

Local remittance is one of the main components of general banking.  The activities of local remittance are —

1. Telegraphic Transfer,
2. Demand Draft issue,
3. Pay order.
4. Pay slip.

Telegraphic Transfer (TT):

It is an order from the issuing branch to the drawee bank / branch for payment of a certain sum of money to the beneficiary. The payment instruction is sent by telex and funds are paid to the beneficiary through his account maintained with the drawee branch or through a pay order if no account is maintained with the drawee branch.

Procedure of issuing TT:

Following procedures are followed while issuing of TT:

• The applicant fills up the relevant parts of the prescribed application form in triplicate, duly signed the same and gives it to the GB.
• GB will fill up the commission part for bank’s use and request the applicant to deposit necessary cash or cheque at the cash booth.
• GB will prepare telex in appropriate form, sign it and send it to the telex operator for transmission of the message.
• GB will prepare necessary advice. Debit advice is sent to the client if client’s account is debited for the amount of T.T.
• T.T. Confirmation Advice is sent to the drawee branch.
  • Credit Ticket (second copy of the application form) is used to credit the SJIBL General Account.
  • The first copy of the application form will be treated as Debit Ticket while the second copy will be treated as Credit Ticket. The third copy will be handed over to the applicant as customer’s copy.

 Accounting Treatment:

For telegraphic transfer, PBL gives the following entries—

            Client’s Account                              Dr.

                        Shajalal Bank General Account               Cr.

                        Telex Account                                              Cr.

                        Commission Account                                               Cr.

 Payment of T.T.

On receipt of T.T. the drawee branch passes payment instructions the following entries if the T.T. is found to be correct on verification of the Test number—

              a) Shajalal Bank  Account           Dr.

                        DAD Account – TT Payable           Cr.

            b) DAD Account – TT Payable      Dr.

                        Client’s Account/Pay Order                       Cr.

In case the beneficiary does not maintain any account with the drawee branch a pay order will be issued in favor of the payee and sent to his banker / local address as the case may be.

Every branch maintains a prescribed T.T. Payable Register. All the particulars off T.T. are to be properly recorded in this register duly authenticated. A separate Type of T.T. confirmation advice is sent to the drawee branch on the same day. On receipt of T.T. confirmation advice, the particulars of T.T. are verified with reference to particulars already recorded in the T.T. payable register.

Demand Draft (DD):

Sometimes customers use demand draft for the transfer of money from one place to another. For getting a demand draft, customer has to fill up an application form. The form contains date, name and address of the applicant, signature of the applicant, cheque number (if cheque is given for issuing the DD), draft number, name of the payee, name of the branch on which the DD will be drawn and the amount of the DD. The form will be duly signed by the applicant and by the authorized officer.

Process of issuing Local Draft:

Followed procedures are followed while issuing local draft—

• Get the application form properly filled up and signed by the applicant.
• Complete the lower portion of the form for the bank’s use.
• Calculate the total amount including the bank’s commission.
• If the cheque is presented for of the local draft, the officer should get the cheque duly passed for payment by the authorized person and record the particulars of local draft on the back of the cheque.
• If the client wants to debit his account for the payment of the draft amount, the officer should get the account holder’s signature verified properly, from signature card on record of the branch and debit clients account for the total amount including commission.
• The first copy of the application form will be treated as Debit Ticket while the second copy will be treated as Credit Ticket and kept by the GB. The third copy is handed over to the applicant as customer’s copy.

Cancellation of Local Draft:

The followings are followed while canceling a L.D.—

• The purchaser should submit a written request for cancellation of the L.D. attaching therewith the original L.D.
• The signature of the purchaser will have to be verified from the original application form.
• Manager’s prior permission is to be obtained before refunding the amount of draft.
• Cancellation charge is to be recovered from the applicant and only the amount of the draft less cancellation charge should be refunded. Commission charge, posted charge etc. recovered for issuing the L.D. should not be refunded.
• The original entries are to be reversed giving proper narration. An IBDA for the cancelled L.D. should be issued on the drawee branch.
• Cancellation of L.D. should also be recorded in the L.D. Issue Register.

Payment of L.D.:

While payment of L.D. SJIBL performs the following functions—

i)             On receipt of Credit Advice (IBCA) from the issuing branch the following entries are to be passed –

SJIBL General Account      Dr.

            DAD Account                       Cr.

ii)            When L.D. is presented for payment at the paying branch, its details are to be carefully examined with reference to the following points—

a)        Whether the draft is drawn on the Local office.

b)        Whether the draft is crossed or not. Amount of crossed draft is not paid in cash to the payee but to be paid to his account with a bank.

c)        Draft must have to be signed by two authorized officers of the issuing branch. Their signatures are to be verified from the specimen signature book for being sure that draft that the draft is genuine. The verifier should put his initial.

d)        Endorsement on the back of the draft must be regular in case the draft is presented through clearing.

e)        The amount of the draft should not exceed the amount written in red ink at the top of the draft.

f)         The payee is to be properly identified in case of cash payment.

g)        The particulars of the draft i.e. the draft number, date, amount and the name of the payee should be verified from the L.D. Payable Register.

iii)           In case of payment, the draft should be cancelled with red ink. The date of payment should be recorded in the L.D. Payable Register.

 Accounting Treatment:

 While payment:

DAD –L.D. Payable Account           Dr.

Client’s Account                              Cr.

Stop payment of Local Draft:

The payee or purchaser of the draft cannot give stop payment instruction to the drawee branch. If the paying branch receives a request from the purchaser of the draft for stopping payment of the draft, it will ask the purchaser to approach the issuing branch about the purpose.  The paying branch should however exercise necessary precaution in this regard. Only the issuing branch can issue instruction for stop payment of the draft under special circumstances.

Pay Order (PO):

 For issuing a pay order, the client is to submit an application to GB in the prescribed form. This form should be properly filled up and signed. For issuing pay order SJIBL charges commission on the following rate—

            # For Party TK 50 plus VAT 15%

 Other than Party:

            # For  Tk. 1 to 1,00,000, the commission is Tk.50 plus VAT 15%

            # For Tk. 1,00,001 and above, the commission s Tk. 100 plus VAT 15%

Payment of Pay Order:

The pay order is presented to the bank either through clearance or for credit to the client’s account.  While payment, relative entry is given in the pay order register with the date of payment.

Cancellation of Pay Order:

The following procedure should be followed for the cancellation of the pay order:

• The client should submit a written request for canceling the pay order attaching therewith the original pay order.
• The signature of the purchaser will have to be verified from the original application form.
• Manager’s prior permission is to be obtained before refunding the amount of the pay order.
• Cancellation charge is to be recovered from the applicant and only the amount of the pay order less cancellation charge should be refunded. Commission recorded for issuing of the original pay order should not be refunded.
• Then the officer should write “cancelled” on the pay order
• The original entries should be reversed with narration.
• Cancellation of the pay order should also be recorded in the register.

Deposit Schemes of Shahjalal Islami Bank Limited

Bank is the largest organization of mobilizing surplus domestic savings. For poverty alleviation, we need self-employment, for self-employment we need investment and for investment we need savings. In the other words, savings help capital formations and the capital formations help investments in the country. The investment in its turn helps industrialization leading towards creation of wealth of the country. And the wealth finally takes the country on road to progress and prosperity. As such, savings is considered the very basis of prosperity of the country. The more the growth of savings, the more will be the prosperity of the nation.

The savings rate in Bangladesh is one of the lowest in the world rate of domestic saving being 17.78 %. In order to improve the savings rate, Financial Institutions responsible for mobilization of savings should offer attractive Savings Schemes so that the marginal propensity to save increases. The savings do not, of course, depend only on the quantum of income but largely depend on the habit of savings of the people.

 SJIBL has formulated the following Savings Schemes:

• Monthly  Deposit Scheme,
• Mudaraba Term Deposit  Scheme,
• Mudaraba Millionaire Deposit Scheme,
• Double Benefit Savings Scheme
• Ø Triple Benefit Savings Scheme,

Monthly Deposit Scheme

This is a Deposit Scheme where the depositor gets a fixed amount of profit every month without disturbance to the principle. The Scheme is designed to attract:

1)    The retirement benefits of service holders.

2)    The investment of Wage Earners who want to pay a fixed amount monthly to their family’s dependents in Bangladesh from the profit of their investment.

3)    The deposit of those persons who intend to meet the monthly expense of their family from the income of their deposit.

4)    Investment of fund of Trusts and Foundations which award monthly Scholarships / Stipends to students.

5) Trusts and founders or other associations, which award monthly scholarship/stipends to students etc.

 Features

* Taxes if any, applicable.

Additional Benefit

These MBDS allows you to enjoy loan facility up to 90% of your deposit amount.

Terms & Conditions

• Payment of monthly profit shall start from the subsequent month after a clean minimum gap of 3 montfs from date of deposit.
• Normally, the deposit will not be encashable before maturity. But if any depositor intends to withdraw his deposit before maturity, the following rules will apply:

–          No benefit including interest shall be allowed for premature encashment within one year.

–          If the accounts/ deposits are closed/ encased after one year of its opening, benefit shall be allowed on the deposits at exiting savings deposits rate.

–          If the amount of monthly profit already paid exceeds the amount payable at exiting savings rate, the difference shall be realized from the principal deposit amount, if and when necessary.

–          If the client fails to deposit installment for consecutive 3 months, in this case the scheme will be closed for adjusting loan.

• In case of death of a depositor, the A/C shall cease to be operative and the amount deposited so far shall be paid to the nominee, as mentioned in the account opening form, and in absence of nominee, to the legal heirs of deceased as per rules in force.

Mudaraba Term Deposit Scheme:

This is a Deposit Scheme where the depositor gets a fixed amount of profit after a fixed period against a Single term deposit.

 Features

Mudaraba Millionaire Deposit Scheme

• The bank willl receive deposit under the Islami Shariah policy
• The accepted periods are:
  • 12Years
  • 15 Years
  • 20 Years
  • 25 Years

Features

3.3.2 Double & Triple benefit Scheme

For regular income people it is a good opportunity to deposit money for long term in high interest rate. Details are:

Term:                          6years/9 years

Facilities:                   Amount will be Double after 6 years,

                                    Amount will be Trtiple after 9 years,

Minimum Deposit     Tk.50,000

Example of total sum after maturity

UTILITY SERVICES SCHEME:

Like any other country of the world, the people living in the urban areas of our country lead a very busy life. Times are very valuable to them. Despite this, they are to waste their valuable time at the counter of.

Different Banks and other Institutions for payment of their monthly bills of different utility services like Electricity, Telephone etc. They, as such, face enormous difficulties for payment of their monthly bills in time. Such inconveniences of the urban people can be removed by making an arrangement to collect all the bills of various utility services at one Point.

Scope of Services:

The scheme is designed to provide all the required services to the customer in making payment of their following bills on their behalf from the counter of the Bank:

• To pay Electricity Bills
• To pay Telephone Bills
• To pay Gas Bills
• To pay WASA Bills
• To pay Insurance Premium
• To pay House Rent
• To collect House Rent
• To pay Municipal Taxes
• To collect Pension Money
• Issuance and Renewal of License of TV, Radio, etc.
• Any other like Services.

Objectives

• To help the customers in payment of their different utility Bills in time and thereby relieve them of their worries and save their valuable time.
• To help different corporations/ organizations in timely collection of their Bills.
• To help the senior citizens of the country in collecting their Pension Money every month.
• To extend financial assistance to the customers by way of overdraft in timely payment of their Bills.

Deposit Rate Offered by SJIBL

 Clearing Section

According to the Article 37(2) of Bangladesh Bank Order, 1972, the banks, which are the member of the clearinghouse, are called as Scheduled Banks. The scheduled banks clear the cheque drawn upon one another through the clearinghouse. This is an arrangement by the central bank where everyday the representative of the member banks gathers to clear the cheque. Banks for credit of the proceeds to the customers’ accounts accept Cheque and other similar instruments. The bank receives many such instruments during the day from account holders. Many of these instruments are drawn payable at other banks. If they were to be presented at the drawee banks to collect the proceeds, it would be necessary to employ many messengers for the purpose. Similarly, there would be many cheque drawn on this the messengers of other banks would present bank and them at the counter. The whole process of collection and payment would involve considerable labour, delay, risk and expenditure.

 All the labour, Risk, delay and expenditure are substantially reduced, by the representatives of all the banks meeting at a specified time, for exchanging the instruments and arriving at the net position regarding receipt or payment. The place where the banks meet and settle their dues is called the Clearinghouse.

Activities of the Section:

(a)       Preparation of Clearing Outward and Inward Lodgment and record maintenance            of the same.

(b)       Batch posting as and when required.

 On receipt of instruments, the same is endorsed here. Then clearing section will sent IBDA to head Office for clearing purpose and on receipt of IBCA from Head Office amount is credited to customers account and vice versa. If the instrument is return then the same is given back to the customer.

Collection Section:

Checks, drafts etc. are drown on bank located outside clearing house are sent for collection. K.B Branch collects its client’s above-mentioned instruments from other branches of SJIBL and branches other than SJIBL. In case of out ward bills for collection customers account is credited after finishing the collection processor. And in case of inward bills customers account is debited for this purpose. So it place dual role as follows:

i)             Collecting Banker

ii)            Paying Banker.

Activities of the Section:

 Preparing of Outward and Inward Collection Item.

 Inter-Branch Transfer.

 Batch posting and checking as and when required.

 Other works as and when require.

Collection is done when

 (i) Paying Bank is located out side Dhaka City.

(ii) Paying Bank is other branches of PBL situated inside Dhaka City.

 (i)           Paying Bank is outside Dhaka City:

SJIBL sends Outward Bills for Collection (OBC) to the concerned paying bank to get Inter Bank Credit Advice (IBCA) from paying Bank. If the paying bank dishonors the instrument, the same is returned to principal Branch.

 ii)         The Paying Bank of their own branches inside Dhaka City:

Collection Department sends transfer delivery item to other branches of same bank situated inside Dhaka City. Upon receiving IBCA customer’s a/c is credited.

Accounts Section:

In banking business transactions are done every day and these transactions are to be recorded properly and systematically as the banks deal with the depositors’ money. Any deviation in proper recording may hamper public confidence and the bank has to suffer a lot. Improper recording of transactions will lead to the mismatch in the debit side and credit side. To avoid these mishaps, the bank provides a separate department whose function is to check the mistakes in passing vouchers or wrong entries or fraud or forgery. This department is called Accounts Department.

 Functions of Accounting Department:

We can divide the functions of accounting department into two categories. One is day-to-day task and another is periodical task.

 a.            Day to day functions: Here day-to-day function refers to the everyday           tasks. Accounting department of SJIBL performs the following day to day functions:

  Recording of transaction in the cashbook, general and subsidiary ledger.

 Preparing the daily position of deposit and cash.

 Making the payment of the expense of the branch.

 Recordings of inter branch fund transfer.

 Checking whether all the vouchers are correctly passed.

 Recording the voucher in the voucher register.

 Packing and maintains the total debit and total credit vouchers.

 b.      Periodical functions: Periodical functions of accounts department include the preparation of different weekly, fortnightly, monthly, quarterly and annual statement. The accounts department prepares the following statements:

   Monthly statement of deposits, loans and advances, profit and loss etc.

  Quarterly statement of deposits, loans and advances, profit and loss etc.

  Yearly statement of deposits, loans and advances, profit and loss etc.

  Yearly statement of classified Loans and Advances.

  Statement of Affairs.

  Yearly Budget of the Branch, etc

Cash Section:

Cash section is a very sensitive organ of the branch and handle with extra care.  Operation of this section begins at the start of the banking hour. Cash officer begins his/her transaction with taking money from the vault, known as the opening cash balance. Vault is kept in a much-secured room. Keys to the room are kept under control of cash officer and branch in charge. The amount of opening cash balance is entered into a register. After whole days’ transaction, the surplus money remain in the cash counter is put back in the vault and known as the closing balance. Money is received and paid in this section.

Cash Receipt:

 At first the depositor fills up the Deposit in Slip. For saving account and current account same Deposit in Slip is used in this Branch.

 After filling the required deposit in slip, depositor deposits the money.

 Officers at the cash counter receives the money, count it, enter the amount of money in the register kept at the counter, seal the deposit in slip and sign on it with date and keep the banks’ part of the slip. Other part is given to the depositor.

 In this branch, i.e., Satmasjid Road branch, two different officers maintain two different books for entering such entries. One officer and other accounts by another officer maintain all deposits of saving account.

 At the end of the day entries of both of these registers are cross checked with the register kept at the cash counter to see whether the transactions are correct or not.

Cash Payment:

• When a person comes to the bank to cash a cheque, he/she first gives it to the computer desk to know the position of the check and posting of the cheque. If the account has sufficient fund the computer in charge will post it into the computer, will sign it and seal it.
• This cheque is then sent to the concerned officer. There are two officers who verify the cheques – one for savings and similar types of account and another for current and similar types of account.
• After receiving the cheque respective officer first checks it very carefully for any kind of fraudulent activity. (S) He also checks the date of the cheque, amount in word, amount in figure and signature of the drawer.
• If the instrument is free of all kind of error the officer will ask the bearer to sign on the back of it.
• He will then put his/her initial beside the bearers’ signature. S/he will also sign it on its face; will write down the amount by red pen.
• Then the cheque will be sent to the cash counter. At the cash counter bearer will be asked again to sign on the back of the instrument.
• The cash officer will then enter the details of the cheque in his/her register and will pay the money to the bearer.
• At the end of the day these registers will be compared to ensure the correctness of the entries.

 Conclusion:

Bank is the largest organization of mobilizing surplus domestic savings. Attractive Savings Schemes are offered by SJIBL such as Contributory Savings Scheme, Monthly Savings Deposit Scheme, Mudaraba Term Deposit Scheme, Education Savings Scheme, Fixed Deposit Scheme, Millionaire Scheme, SJIBL Insured Fixed Deposit Scheme as well as different accounts to save money. Schemes are designed concentrating in different purposes to help the fixed income group people to help in need. Bank-Officials are also whole-hearted and dedicated to serve their customer with utmost care.

 Main features of Loan Classification:

In 1989 Bangladesh Bank introduced uniform rule for loan classification under BCD circular No.34. The rules were subsequently revised. At present the loans classification exercise is done on quarterly basis as per Bangladesh Bank’s circular BRPD 16 dated 06.12.98.

 Responsibility for classification:

In the past, loans were classified by Bangladesh Bank and sparingly by the banks themselves. Bangladesh Bank Circular requires that banks themselves carry out the classification of their loans. Bangladesh Bank will verify such loan classification and in the case of any difference in assessment, their (Bangladesh Bank) decision will be final.

 Loan Classified Rules:

For classification purpose all loans will be divided into four categories.

• Continuous Loan: the loans having a limit within which debit and credit transactions are made have to be repaid within the “expiry” date. Example- Cash Credit, Overdraft.
• Demand Loan: the loans which become payable on demand from the bank. Contingent or other liabilities, which are turned into “Forced loan”, will also be treated as demand loan. Example- forced Loan Against Imported Merchandise (LIM), Payment Against Documents (PAD), Foreign Bill Purchase (FBP), Local Bill Purchase (LBP), Loan Against Trust Receipt (LTR).
• Term Loan: The loan allowed for a define period having a repayment schedule. Example- Term loan to SSI and MSI, Loan (Gen).
• Short Term Agriculture Loan and Micro Credit: the loans allowed under Annual Agriculture Loan Scheme of Bangladesh Bank and micro credit upto Tk. 10,000.00 with repayment period within 12 months will be considered as short term loan.

 Basis for loan Classification:

 A. Objectives Criteria:

Continues Loan: Continues Loan if not renewed or repaid within expiry date will be treated as irregular advance and classified as under:

• Substandard: Loans irregular for 6 months and above but less than 9 months.
• Doubtful: Loans remain irregular for 9 months and above but less than 12 months.
• Bad and Loss: Irregular loan of above 12 months.

 Demand Loan: Demand loan will be classified as under:

• Substandard: If not paid within 6 months from the date pf demand/ creation of forced loan but less than 6 months.
• Doubtful: Loans remain unpaid for the period 6 moths and above but less then 12 months.
• Bad and Loss: Loan remains unadjusted for 12 months and above.

 Term Loan: If a loan installment is not paid within the due date the amount repayable will be treated as “default installment”

 (a) The term loan maximum repayment period of which is 5 years will be classified as under:

• Substandard: If “default installment” is equivalent to or more than the amount repayable in (6) six months period.
• Doubtful: If “default installment” is equivalent to or more than the amount repayable in (12) six months period.
• Bad and Loss: If “default installment” is equivalent to or more than the amount repayable in (18) six months period.

 (b) Term loans of 5 years and above will be classified as under:

• Substandard: If “default installment” is equivalent to or more than the amount repayable in (12) six months period.
• Doubtful: If “default installment” is equivalent to or more than the amount repayable in (18) six months period.
• Bad and Loss: If “default installment” is equivalent to or more than the amount repayable in (24) six months period.

 Explanation: if loan is repaid by monthly installment the amount repayable in 6 months will be equivalent to sum total of six monthly installments. Similarly in case of loan repayable be quarterly installment, sum total of two installments will be the amount in six months.

 B. Qualitative Judgment:

A demand loan continues loan or term loan whether or not classified under objective criteria will be classified under qualitative judgment if uncertainty or doubt arises in its realization due to changes in considerations under which the loan was allowed, loss in capital of the borrower, reduction in value of security of other adverse situation.

Loan recovery procedure

Loan Recovery Procedure: Supervision and Follow up at Branch level

 End-use of fund:

To see that the funds lent to the borrower are used for the purpose for which they have been given. Any diversion of funds and deviation by the borrowers from the terms and conditions stipulated by banks, have to be noticed and timely action to be taken. In case the funds lint are allowed to be directed for the purposes other than those stated in the loan application, the very purpose of providing finance to the borrower would be defeated. If end-use of funds is proper, there is good chance of the borrower’s operation being viable, other things being equal. As such, branch in-charges are instructed to be cautious and guard against any misuse of credit facilities.

 The funds may be lent either in the form of term loan or working capital advance. In order to ensure end- use of term loan funds, it will appropriate to disburse the money directly to the dealer who has supplied the fixed asset and not to the borrower. On the other hand in case of working capital objective to acquire current assets; supervision of end-use of fund is comparatively difficult and possibility of diversion of funds in case of cash credit hypothecation is more.

 Monitoring of borrowers account:

All branches have to keep the borrower’s account under close watch, as it is helpful for effective credit management. Branches should obtain in advance a list of usual suppliers of good’s of the borrower. This will help in ensuring that payments to the parties from cash credit or overdraft account are made directly to the supplier for approved purposes. All movements in stocks should be reflected in borrowers ledger account by keeping a watch over the utilization of limits and inventory build- up; the purpose of credit management would be served to a large extent.

 In case of term finance, value of current asset of a unit should always be more than the quantum of current liabilities including cash credits borrowings from banks. Bankers are not fully backed by current assets at all times, the concerned enterprise would face liquidity trap which could ultimately threaten the very existence of the unit. So, the deal solution would be for the business to have adequate cash at all times to meet fully current liabilities.

 Security:

Though the banks are now expected to lay greater emphasis purpose for which the borrower needs money rather than security he/she can afford to give, security continues to be one of the most important factors that determine to a significant extent the bank’s willingness to lend money. As such, the branches are needed to see that the security offered in safe and continues to remain available for repayment of loan. Security may be in the form of i). Fixed assets ii) Goods iii) Bills etc.

 Loan recovery procedure: Steps to be taken at Head office level

 Head office effectively monitors all loans and advances through inspection to the branch (including surprise visit), examine different periodical statements (weekly, monthly, quarterly and half-yearly).

 Periodical inspection:

Branches are periodically inspected by internal auditors/inspectors by Head office and external auditors. During each inspection, the inspector makes a comprehensive and detailed examination of all advances including documents; security and turnover of the account and conditions of the sanction have been compiled with. Vigilant team from Head Office also conducts spot inspection by a surprise visit when the management needs specific and urgent information. This report will be short and cover specific area.

 Periodical statement:

All branches are instructed to submit different statements relating to loans and advances in weekly, monthly, quarterly, half- yearly basis. These statements provide information to identify whether the branch has allowed drawings excess over limit and whether any loan has been disbursed/ sanctioned without approval of proper authority. If anything found adverse against any branch, Head office instantly asked the branch to clarify its position. Head office takes necessary measures against the branch, which found committed irregularities and damaged bank’s interest.

 Arranging meeting with branch in-charge:

Besides regular meetings of the branch manager with Head office for overall review of loans and advances of each branch is arranged under the chairmanship of Managing Director of the bank for guidance in reducing overdue loans and recovering classified loans and sanction of new loans.

Recovery procedure of classified loan

If a borrower fails to repayment of dues the bank has to consider what steps need to be taken to recover the debt. Banker will eventually have to take the following steps to recover the stuck up advances.

 Exerting moral pressure:

The banker will visit the borrower’s place of business and find out the cases of non- payment of the bank’s dues. The banker may also visit some influential customers /personalities of the area to exert pressure on the borrower to clear bank’s dues. If there is a guarantor, he is also called upon to adjust the account or have it adjusted by the principal. In case the borrower does not adjust the account as desired, the only course left open to the bank would be to send a notice by registered post to the last know address of the borrower and guarantor, if any, preferably lawyer. In that notice it has to state the undesirable character of the advance and recall it and ask the party to liquidate it within a stipulated period, say 30 days.

 Filling a suit:

If the advance is not fully secured and where there is a shortfall to adjust the advance after disposal of securities, the decision has to be taken by the bank whether to keep the borrower in business or file a suit against him for recovery of bank’s dues.

 A financial institution shall file against principal debtor along with third party mortgagor and/or third party guarantor, if any. The court shall fist recover loan from principal debtor- defendant, accordingly the third party mortgagor or third party guarantor. If the claim is settled or paid by third party mortgagor or guarantor they (third party mortgagor or guarantor) can apply or execute it against principal debtor.

Lending Risk Analysis (LRA): An Overview

Lending Risk Analysis (LRA) involves in assessing likelihood of non-repayment of loans (mainly lending risk) from the borrowers as per loan agreement by analyzing some analyzing some sort of risks associated with borrower’s business and security. LRA gives focus mainly two types of risk viz. Business Risk and Security Risk. Business Risk, the prime component of lending risk, can be viewed from two angles viz. Industry Risk and Company Risk.

 Industry Risk covers two types of risks viz. Supplies Risk and sales Risk.

 Supplies Risk:

The risk of failure to repay the loans due to disruption of supply of inputs is called supplies risk. The assessment of supplies risk mainly involves analyzing the price, quantity and quality of inputs.

• Price: Removal of price control, imposition of import tariffs, adverse fluctuation of foreign exchange rates, etc. may increase the cost of supplies and reduce the margins.
• Quantity: Scarcity of supplies or unreliability of deliveries due to labor unrest, erratic power supply, imposition of price control makes supplies scarce, transport difficulties, suppliers of critical raw materials may go out of business, etc. may cause production loss.
• Quality: Difficulty in obtaining right quality of supplies due to lack of skilled labor, shortage of right quality raw materials, etc. may result in inferior product.

 Analysis:

• Review recent changes in Govt. regulation, policies, etc.
• Discuss with industry experts in bank and industry participants to determine      likelihood and nature of any future changes, which may affect supplies.

 Sales Risk:

The risk of failure due to disruption to sales is called sales risk. Sales risk may be      Disrupted/dropped by changes in market size, increase in competition, changes in regulations. Loses a single large customers etc.

• Total market size may drop due to innovation of close substitute products; seasonal and cyclical affects the market, etc.
• Competition may be increased due to removal of monopoly policy by the Govt., Introducing new production technology by the competitors (giving lower costs or better quality, or both), easy entry of new competitors (because of low investment, low skilled required, low regulatory barriers, etc.).

                                                                                          Analysis:

• Analyze industry turnover for at least 3 years (Search Govt. statistics, contact industry groups, obtain data for largest players and extrapolate for whole industry).
• Determine if the product is obsolete, seasonal or cyclical or none of these
• Predict growth or decline in market turnover over next few years.
• Determine how company differentiates itself from its competitors regarding better quality, lower price, more responsive, better distribution etc.
• Determine how company’s production technology compares with those competitors.

Company position Risk:

Actually, company position risk is the outcomes of two types of external conditions

 (a) Expected external conditions, which is measured by the performance risk, and

(b) Unexpected external condition, which is measured by the resilience risk.

Performance Risk:

Assessment of performance risk involves validating the company’s performance expectations because performance assumptions may be incorrect or analysis may be faulty or non-existent.

 Analysis:

• Analyze recent performance history.
• Analyze competitive position
• Assess company’s strategy
• Analyze cash flow forecasts.

Resilience Risk:

The resilience of a company depends on its leverage, its liquidity and the strength of its connection.

  Leverage: Company has insufficient equity to avoid bankruptcy due to overvalue (assets overvalued or liabilities undervalued /omitted), shareholders may withdraw support, etc.

 Analysis:

• Analyze debt to ratio (assess quality and value of assets and assess value and completeness of liabilities.
• Obtain CIB reports
• Assess shareholders reports in respect of willingness to guarantee and to inject additional capital.

  Liquidity: Company has insufficient cash flow to meet repayment due to increase in cost (interest rates, labor and material costs etc) combined with difficulty in raising prices, sales fall combined with high unavoidable costs, creditors withdraw support combined with illiquid assets.

 Analysis:

• Analyze financial ratios say, current, quick, receivable turnover, inventory turnover, accounts payable turnover, debt service coverage etc.
• Analyze flexibility of production. .

 Management Risk:

a. Management competence Risk:

The management competence risk depends on its ability of management and level of teamwork.

   Ability: Owners /board members’ don’t have the necessary abilities and experience to manage key areas of operations say finance, operation, administration etc and unable to manage people due to autocratic style, failure to communicate with employees etc.

 Analysis:

• Obtain key manager’s bio-data and determine education, experience, relevant skills etc.
• Interview individuals familiar with management say, branch/region manager, Govt. Officers, Managers themselves etc.

  Level of Teamwork: Managers don’t work well together due to poor organization structure (unclear responsibility, key functions missing, span of control too wide/narrow) and poor decision making (important decisions are made arbitrarily without proper analysis, difficult decisions are not made, frequent change in directions).

b. Management Integrity Risk:

Management integrity is the combination of honesty and dependability.

  Honesty: Bank may unable to assess risk properly due to unreliable or misleading information or even inadequate data.

 Analysis:

• Review credit files and note down missing information/documents, inconsistencies in information supplied and determine frequency and nature of communication.
• Interview management for checking openness.
• Interview individuals say, auditors, Govt. Officials etc. who are familiar with management
• Make site visit to assess inventory and quality of fixed assets.

 Security Risk:

Security risk is that realized value of the security does not cover the loan exposure (i.e. Principal+interest). There are two main aspects of security.

    Security Control Risk

It is the risk that bank fails to realize the security due to lack of bank’s control over the security executed/transferred by the borrowers. The risk of failing to control the security depends on two factors:

  Difficulty in obtaining a favorable judgment legal rights compromised mortgage not taken, bank has second priority or is subordinated, documentation inadequate (lacking notary, missing signature, incorrect references, lacking stamp duty, outdated, past due, etc) fraud, inadequate insurance coverage, customer able to influence judgment (say, customer has strong lobbying power, judge may sympathetic towards customer).

   Difficulty in taking possession of security due to security transferred / missing, security immobile, problem in evicting squatters.

 Analysis:

• Verify documentation to ensure security perfection, documentation completeness, documentation integrity, insurance coverage etc.
• Assess customer’s lobbing power with legal authorities.
• Review quality, quantity and market demand.
• Review recent cases for difference between assessed value realized at sale
• Review economic conditions.

b)  Security cover risk

Security cover risk is the risk that the realized value of the security is less than the exposure. It depends on speed of realization and liquidation value.

Analysis    

• Review recent cases to estimate speed of realization
• Assess power of borrow to prolong legal process
• Analyze market demand for security.

Securities:

To make the loan secured, charging sufficient security on the credit facilities is very important. The banker cannot afford to take the risk of non-recovery of the money lent. SJIBL charges the following two types of security:

 Primary security: These are the security taken by the ownership of the items for which bank provides the facility.

• Collateral security: Collateral securities refer to the securities deposited by the third party to secure the advance for the borrower in narrow sense. In wider sense, it denotes any type of security on which the bank has a personal right of action on the debtor in respect of the advance.

Small and Medium Enterprise Credit scheme:

It is the prime concern for the nation to generate income through creation of job opportunity and employment. Creation of job opportunity in large scale is not a easy task. What can be done is to help self-employment through financial support. For this Reason City Bank has chosen the scheme SME to boost up entrepreneurs with innovative idea, spirit and potentiality.

   Objectives of the Scheme:

To Provide credit Facilities to the Small and Medium size entrepreneurs in urban and sub-urban areas.

• To flow credit for creation of employment and generation of income
• To assist potential entrepreneurs.
• To assist dependence on moneylender.
• To make the small and medium enterprise self-reliant.

• To develop saving habit and making acquaintance with banking facilities.

• To inspire for undertaking small projects for creation of employment.

 Securities

1. Registered mortgage of loan and building (if available).
2. Mortgage / Assignment of possession right.
3. Assignment of security money, advance rent, if any.

1. Assignment of trade receivable not older than 90 days.
2. Hypothecation of machineries, equipment, vehicles, stock-in-trade, raw materials, work-in-process and finished good.

6. Personal Guarantee from person acceptable to the bank.
7. Post dated cheque.
8. Lien on deposits/saving certificates/financial certificates.
9. Any other securities to be deemed suitable by the bank depending on the situation like insurance guarantee, assignment of contract, security money etc.

House Building / Apartment Loan Scheme

Loans allowed to individual/enterprises for construction of house (residential or commercial) fall under this type of advance. The amount is repayable by monthly installment within a specified period. Such advances are known as Loan (HBL-GEN).

Loans allowed to our Bank Employees for purchase /construction of house shall be headed Staff Loan (HBL-STAFF).

Conclusion

Credit Management policies and techniques used in SJIBL at present is comparable to international standards. The officials follow the Shariah policy very strictly. They are choosy and conservative in sanctioning loan. The proposal is thoroughly scrutinized by the loan sanctioning authority. The total function of the credit division is monitored periodically. The bank’s classified loan to the total Advance is very low. Management and others related to Shajalal  Bank are trying to formulate new services and products.

Chapter-5

Findings and Analysis

  PREFORMANCE OF THE BANK

 Analysis from the balance sheet:

 The financial data’s of the year 2007 and second half have been taken from the auditors  report as 2007. The Key points of the balance sheet are follows;

 Table: 9 Analysis from the balance sheet

 Source: Auditors Report of Shahjalal Islami Bank Limited as at 2007.

Analysis of financial condition of Shalljalal Islami Bank takes from the auditor’s report 0f SJIBL bahuice sheet at 2007. It shows the comparison between the Year 2006 and 2007. Except authorized capital and paid-up capital there is a significant difference between the two years. Statuary reserve, Share holder’s equity, fixed assets, Total assets, ‘Total deposits, Total liabilities, and Total investments, Total Income, Total Expenditure,  Total Import, Total Export in all sectors SJIBL has been increase in 2007 from 2006.

Income and Expenditure Comparison:

To assess the financial performance of SJIBL here are the analysis of income and expenditure from 2005 to 2007. These are given below in the diagram

Table: 10; Comparison of Income

 Source: Auditors Report of Shahjalal Islami Bank Limited as at 2007.

From the above table and Graph it is obvious that the total operating income of the bank in 2005 was very little and in 2006 it was increasing very significantly but in 2007 it was decreasing then 2006, through these amount was counting for the year 2007 so it can be say that the number of operating income was income was increased by the rest of six months in 2007.

Table: 11: Comparison of Expenditure

 Source: Auditors Report of Shahjalal Islami Bank Limited as at 2007.

From the above graph it is clear that the total operating expenditure of the bank in 2005 was little and in 2006 it was increasing but in 2007 it was increasing then 2006,though these amount was counting for half of the year 2007 so it can be say that the number of operating expenditure was increased by the rest of six months in 2007.

Comparison of Profit/Loss:

 Table: 12: Comparison of Profit/Loss

 Source: Auditors Report of Shahjalal Islami Bank Limited as at 2007

From the above graph and table it is obvious that the bank faced a huge net loss in 2005 but in 2006 bank overcame the loss and earned a net profit. Net profit was increasing very significantly in 2006, but in 2007 it was increasing than 2006, through these amount was counting for half of the year 2007 so it can be say that the number of net profit was increased by the rest of six months in 2007

Deposit and investment position of SJIBL:

Deposit and Investment position of SJIBL are given in the following table:

Table: 13: Deposit and Investment position of SJIBL are given in the following table:

Table: 13: Deposit and Investment Position

 Source: Auditors Report of Shahjalal Islami Bank Limited as at 2007

The Deposit and Investment position of SJIBL for the year 2009 and 2010 shows that it increase its position gradually, as the graph shows that investment and deposits are much higher than 2009 to 2010.

FOREIGN EXCHANCE POSITION ANALYSIS:

Total Foreign Enhance business handled during the year during the year 2005 was Tk. 44,868.60 million as against Tk. 33,500.96 million of 2006 registering an increase of Tk. 11,367.64 million, i.e. 33.93% growth. The particulars of Foreign Exchange Business are given below:

 Table: 14; Composition of Foreign Exchange Business of 2008, June

OTHER MAJOR FINDINGS:

 Shahjsial Islami Bank Limited is becoming a leading and well accepted bank in private banking sector as well as Islami Slianah oriented banking sector.

 All branches of SJIBL have online facilities for transaction, so it is very helpful for the clients to deal with the bank easily.

 Marketing activities of this branch is not so effective through the branch head tries to make it more effective using delicate attachment to the clients or organization.

 Sometimes on the request of valued customers through branch head, staffs have to I  do pen, ding work. This is mainly happened when different types of accounts and I schemes are opened.

 Deposit of Mirpur branch of SJIBL is very good but the investment sectors !    schemes are not so popular than deposit schemes.

 As the time passes the number of borrowers and organizations are increasing for

the investment.

Though tlie branch lias lots of possibilities to increasing their position but it has limitations of employees then the work.

After observing all these things the overall performance of Mirpur Branch of SJIBL is satisfactory.

Chapter-6

Internship Position, duties and Learning Points

IN THE INTERNSHIP PERIOD  

THE JOB DESCRIPTION

[As an intern I engaged myself in different types of works which are given below:

Manage and maintain Daily Clean cash report

Perform Account opening activities

Different types of scheme opening

Data entry, cheque issue, cheque posting, account and schemes posting.

Clearing house register

CIB report Processing ,

During my internship program at SJIBI, I worked mainly in the General Banking section Ibtit with this short time of period I tried my best to work in different sections like in the leash department and Investment division.

THE DAILY ROUTINE

My Daily work was divided into two parts, one is in the office hour and another one is after office hour. With these two periods I engaged my self in different types of works which I mentioned below.

 My working hour starts at 9:15 AM in the morning as banking hour starts and which ends normally in the 5:30 PM or more. In this phrase after reaching in the office first i start my work with clean cash report. After that I opened different accounts and schemes and also issue cheque books. In these periods I also maintain the procedures of Western Union and Kushiarcr Service. In this mid time I also receive cheques from the clients. When it is at 12 then I wrote the cheques in the clearing house register.

 Aftcr2:30 PM I was busy my self forNIKASH (NIK.ASH is the process where the received cheques arc posted in the Different Banks mentioned branches by using the banks code.) when all the cheques arc posted then it was printed. After completing all the procedures then I separate printed copies where one is for cheque number and another is for Branch name. Cheques are attached with the cheque number copies and then finally it was send to the Main Branch. I

 In the period of 4:00 PM I posted all the accounts and schemes which were opened on that day. Finally it was the time to leave the office at 5:30 or sometimes more.

 WORKING IN TEAMS

When I was attending my internship at SJ1BL, Satmasjid Road branch, five other students from different universities were doing their internship on their. Whenever the bank had the opportunity to receive the IPO applications then groups were formed for posting the applicants name in die computer.

 TECHNICL FEATURES SN THE INTERNSHIP PROGRAM   

 In the Internship program 1 did some technical work as an internee. The technical functions are:

Posting of Different accounts, cheques and schemes by using the PcBank 2000 software. Data entry of IPO application in the computer.

Using the PcBank software with the authorization of an employee of the bank for account inquiry, checking the balance of the account.

 ANALYSIS OF DATA USED IN THE OFFICE:

A Bank has different types of statements where i analyzed some of the documents like list of statements of General Banking Division; Statements of affaires, clean cash report, Bank statement for client’s etc. description of the documents are given below:

Statements of General Banking Division:

These is a kind of statement, which must be produced from the general banking division on a regular basis such as Daily position Statement, Statement of affaires, income tax on profit, vat on banking services, vat on LC etc. these statements are generally produced on daily, monthly, weekly basis.

Statements of Affairs:

This is a kind of statement where all the facts of a bank arc included such as deposits, total advances, demand deposits, time deposits, profit or loss, liabilities of the bank, assets of the bank etc. List and number of account holders in different schemes are also included in the statement of affairs. Besides these the total amount of deposit in the bank in, different deposit schemes arc also mentioned in this statement.

 Clean Cash Report:

Clean Cash report is a kind of statement where all the daily transactions arc listed with their respective cash amount and number of debit and credit vouchers. Clean Cash report includes list of current accounts, savings account, General Account, SND, MTDR, expenses, incomes, investment items and other vouchers. Among there Dr. and Cr. Should be calculated and finally sum of the Dr. and Cr. is included in the clean cash report.

Bank Statement for clients

These statements were prepared on demand for the clients or account holders with a certain amount of charge. Although the bank produces the statement twice a year free of cost for the clients. The bank statement gives a detailed idea about the transaction happened during a period by the client with the amount of money. Profits and benefits are also mentioned in the statements.

 Learning Points:

During my internship program I have learned different documents which areistated below:

 •   General banking products of the organization and its features:

1 have learned the products or schemes eligibility and how to present the product features and how to open accounts and also to open different types of schemes.

  •   Posting of the accounts:

At the end of the period all the accounts arc posted in the computer to save the record in long time. For posting an account:

First, I put the account number then the client’s personal information like name, fathers name! mothers name, address, phone number.

Second, Nominees information like name, address, age, relation with the client, and share of the percentage.

Third, amount of the money, if it is a savings or current account then the introducer’s information also necessary. Finally, sector code like if the account holders are service holder (911000), Businessman (903000), other types of professionals (915050).

• Issue of the Cheque book:

The issuance of a cheque book has many steps, first verity the signature of the, client then after collecting the cheque book first write down the serial number of the book in the requisition slip then it also write down in the cheque register and finally when, all the procedures arc completed then clients give a signature on the cheque register.

•   Posting of the cheque books:

At the end of the period all the cheque books are posted in the computer. For posting the cheque book first I have to put the account number of the client then type of the account like ACD, MSD. Alter that serial number of the book then save.

KYC form competition:

KYC stands for Know Your Customers. In that form the clients full information’s are given like Earning source, which documents they submitted for their identification, amount of money deposited / Withdraw in a month.

Clearing House Register:

Clearing House Register is a very important part of general banking. In that book received cheques are written. The basic things are given:

Client name and account number, clearing date, name of the bank, branch of that bank, amount of money, cheque number, and again amount of money.

CIB report processing (Consumer Identification Bureau):

Before loan processing customer loan status or behavior have to for that reason bank send written CIB form to Bangladesh Bank .Bangladesh Bank maintains data of all borrowers’ loan information and their address .So it helps credit analyst to make decision. CIB report can be two types: For individual and for company.

•   Issuance of Pay Order:

Pay order issued for companies or for individuals also. In a Pay order first the pay order form should be fill up where include: to whom it issued, amount of the money, the client name. After that according to their amount the commission and vat included. When cash received in the cash counter then the pay order block prepared where in the front of the page in block letter “NOT OVER….TK ONLY” was written,

SOWT Analysis

From my practical observation, I get the following Strength opportunity, weakness and threat (SOWT).

 Strength:

• It has well reputation in the market
• Not engaged in unfair business practice.
• Concentrated market.
• Officers are highly educated.
• Executives are highly qualified and experienced.
• Bank has many attractive deposit schemes.
• Well-furnished and Air-conditioned Bank.
• Efficient management practice in the Bank.

Weakness:

• Deposit is lower than advance.
• Short time experience of the Bank.
• Officer has limited experience and not enough trained.
• Long-term credit is not sufficient.
• Small market shares in Banking-business.

Opportunities:

  Can increase the credit scheme.

  Can increase the advertising of the Bank.

  Private Banks becomes more reliable to local public.

 Govt. has banned some ‘Jatiya Sanchaya patra’.

Threat:

• There are many competitors in the market.
• Competitors have more deposit.
• Ruling Government is not conducive in the viewpoint of the Bank.
• Govt. imposes tax and VAT on profile.
• Govt. pressures to reduce interest rate.

Problem Analysis:

Since the problems are interrelated I am not categorizing them into strategic, financial, and operating problems. The main problems for Shahjalal Islami Bank Limited are as follows:

Major Problems

     Absence of strategic planning

To arrest / exploit the potentiality most of the financial institution does not have any strategic planning in terms of human resources, business policy, market segmentation, and application of technology. Shajalal Islami Bank is no exception of that.

       Highly centralized lending authority :

One of the major problem of Shahjalal Islami Bank Limited is its highly centralized lending authority. Market environment is becoming highly competitive as well as volatile which requires instant decision making to exploit business potentiality. Inspite of globalization of economy, business opportunity on region basis also has been created which demands decentralized making process.

      Interference of the sponsors in the daily affairs

Most of the Banks under private sectors are run by private sponsor’s directors. They frequently make undue interference which hampers day to day operation of business.  The sponsors’ directors of Shahjalal Islami Bank Limited also make undue interference in the day to day operation of the Bank.

      Absence of structured marketing and credit policy

The increasingly competitive and fast changing business environment requires a clear policy guidelines; structured marketing and credit policy. But the banks do not have such policy. Banks are run by thumb rule which may ultimately leads to wrong decision.

      Highly subjective judgment in lending decision making

Another major problem of Southeast Bank Limited is using highly subjective judgment in lending decision making. Due to lack of forward looking structuring policy banks resort to subject to judgment based on current situation.

      Poor Human resource management

In order to cope with the fast changing scenario and technology human resource should be treated as best asset, but Shahjalal Islami Bank Limited do not have forward looking policy guidelines to recruit, develop and trained their manpower.

      Poor fund management

Globalization is creating enormous opportunity for worldwide free flow of fund, to ensure economization of fund, but Shahjalal Islami Bank Limited does not have such policy guidelines.

      Lack of co ordination among the branches and Head Office

Another major problem of Shahjalal Islami Bank Limited is lack of co- ordination among the branches and Head Office. Coordinated approach has to be developed among the branches as well as Head office for ensuring proper utilization of fund, business opportunity and avoiding threats.

         Limited branch network:

Shahjalal Islami Bank Limited covers only five districts out of sixty-four districts of Bangladesh with 21 branches. Of them 11 branches are in Dhaka city. Limited geographic coverage gives limited return.

      Concentration of loans:

Shahjalal Islami Bank Limited provides sophisticated services to their big corporate clients mainly.

They need to introduce many innovative and enterprising schemes to support small investors and budding entrepreneurs.

Recommendations:

 Formulation of MMP: Model Marketing Plan

 Management of the Bank is to work for creation of conceptual framework covering core elements of developed “Model Marketing Plan – (MMP)” of Shahjalal Islami Bank Limited to face the competition a changes in the banking industry into the new millennium for sustained growth of business / profitability of the bank. To accomplish the tasks of formulation of “MMP” focus should be made on the following issues:

1.  The marketing plan to be designed to perform tasks of stimulating demands for Bank’s products and services to influence the level timing and composition of demand help customers’ consummate their business objectives.

1. Ideas of satisfying the customers’ needs by means of products and the entire cluster of action as associated with creation / delivering and finally consuming the products and services.

1. Process to be employed to interpret markets, customers’ needs and transformation: defining mission / objectives and goals, portfolio plans and new business plans. The plans were structured in 3 (three) operational levels: corporate level, business level and product level. The marketing mission was converted into specific objectives for each level targeted at: profitability, market-share, positioning, risk-diversification and innovation. The objectives to be made

1. Selection of target markets including dividing the markets into major market segments sharing common properties, evaluation, selecting and targeting segments and deciding on ways of positioning in each market.

1. Identification of market opportunities through analysis of subjective issues, concepts, strategies and techniques of penetration to create market along with efforts to integrate actions based on marketing plan  “Model Marketing Plan – (MMP)” of Shahjalal Islami Bank Limited.
2. The techniques those are pursued for transforming of strategies into action through “Model Marketing Plan – (MMP)” to achieving the goal of higher customer satisfaction along with sustained growth of profitability for the Bank are

• Proper grooming of employees through classroom and hands on training.
• Receive the customers with smile
• Improve office atmosphere to give customer friendly feeling
• Provide intimate attention to your customers’ needs
• Customers’ convenience will receive priority
• Evaluate customers’ needs in proper perspective and shortcomings be explained logically.
• Time consumed in servicing customers is minimized.
• Deeply familiarize customers with benefits of offered financial services.
• Use modern tools and techniques and evaluate customers’ credit needs professionally.
• Decision making process should be free of ambiguity and be time conscious
• Alternative solutions should be explored and evaluated
• Develop communication skills
• Develop effective management information systems (MIS)
• Diagnose macro and micro environment niches and explore the prospects.
• Help new entrepreneurs to formulate business plans.
• Fresh entrepreneurs should be provided with counseling.
• Understand customers’ funding needs and create ‘Total Solution’.
• Monitoring of disbursement and need based use of loans.
• Recycling of credit ensuring recovery as per repayment schedule.
• Ensure reasonable spread and return on assets.
• Build good value for sponsors and shareholders.

Improvement of the HRD

The HR department of the bank is one of the weakest areas and many of the human resource development policies and practices are not being followed or implemented. Though, there has been performance appraisal for the employees but still it is lying idle and no action has been taken. The management should immediately apply the performance appraisal system and take appropriate actions on the basis of that appraisal. All sorts of promotions or other benefits should be based on the report of the performance appraisal. The traditional method of considering years of work experience as the criteria should be changed and rather the new method of looking at the output, productivity and quality of the work should be considered. The HR wing has to be more active rather than maintaining administrative duties. Other than the head of this division, the staffs in this wing are incompetent for this position. More qualified and skilled HR professional should be recruited for this department for the future growth of the HR in SJIBL. The HR department should be gradually extended at the branch level as the bank is expanding so that each branch has a HR official.

Formulation of Recruitment / remuneration policy

a.       Better recruitment

SJIBL must pursue a strong and an effective recruitment system so that the right people are recruited at the right job. As already mentioned earlier, other than the Probationary Officers and Management Trainees there are major flaws in the recruitment of the staffs from other banks during the embryonic stage.

 b.       Stop Reference Appointment

SJIBL management and particularly the Board of Directors must change the system of appointing people by giving their reference. It has been deeply observed that most of the reference appointees are not up to the standard and have a poor performance. For the sake of the bank’s future and further strengthening the quality of work force, this tendency to appoint people on reference must be stopped.

 c.       Disguised Employment

 Currently this has become a major problem at SJIBL. The situation of too many heads but few hands must be eliminated for the future of the bank. In order to enhance the productivity of the work force at SJIBL, the management must consider the appropriate amount of work force requires and must assess the productivity of each employee. It must ensure that the right jobs are being carried out at the right time.

 d.    Enhancement of remuneration package

 Many skilled and devoted officers of the bank are depressed with their compensation package. Currently, the management is trying to attract more MBA’s in future. Bit the bank must redesign its compensation package to attract quality human resources particularly qualified MBA’s for the bank.

 Improvement of quality of service 

 Like in many other emerging market economies, commercial banks in the Bangladesh economy are to face an increasing competition for their business in the coming days. Their business will no longer remain easy as they had earlier. The real change in the banking business has started to come with the govt.’s decision to allow the business in the private sector in the middle of the eighties.

Branch Expansion

 For expanding geographically the bank should open up new branches in strategically important places. The bank can open branch in , Malibag, Kakrail, New Elephant Road, New Eskaton of Dhaka City,  Savar, Barisal, Bogra, Kumilla and Dianajpur. Some of its rivals already entered in some of these regions and some are on the way.

Delegation of authority

 As a part of introducing participate management system in the organization, there should be gradual delegation of authority in order to develop future leaders within the organization. Authority should be delegated gradually to a certain extent at the branch level for speedy disposal of financial matters and providing faster services. Moreover, in a decentralized organization there will be both top down and bottom up communication and therefore the communication channel within the company becomes stronger.

Implementation Plan

 Implementing strategy entails converting the organization’s strategic plan into action and then into results. And thus this is the most difficult task of strategic management.

 Role of every manager in implementing and executing the strategic plan:

The top management of Shahjalal Islami Bank Limited should formulate a well-designed strategy for widening the business line. As we know that successful strategy implementation is closely related with its formulation. So, everybody should be made involved in the strategy formulation. At least seeking suggestion is a must. If followed this way, it will be whole-hearted effort from everybody in the bank to make the formulated strategy a success. The Managing Director himself should initiate the culture of involving everybody.

 Identify the tasks to be completed:

  For reducing GAP management the research division should identify new products.

  Allocating resources for opening new branches, and expand marketing program.

 Persons responsible for the tasks:

  The Managing Director should call a formal meeting to inform every employee that efficiency & competence will play key roles in advancement in the bank and also explain the reason behind why the strategy was formulated, and what it is expected to achieve for the bank. Once every body is informed then Managing Director should invite employees to give their recommendation to make the whole plan into reality.

  To increase productivity of the officers of the bank, branch manager has to take the responsibility. Management by Walking Around may be a good way to ensure the higher productivity in addition to rigorous training. Branch manager has to make sure that both the deposit and advance targets are achieved on a monthly basis.

  Management should make the environment like “a place for Champions”. Employees have to give room to think openly to come up with innovative ideas to accelerate the bank’s progress. Rewards for better ideas should be introduced.

 Budgetary and staffing requirements:

The recommendations I have made would require substantial budget. For doing so the bank can issue bonus shares.

 Conclusion

Notwithstanding some limitations The Shahjalal Islami Bank Ltd. is doing better and holding a good percentages of market share in banking sector. SJIBL, the 3rd generation bank in Bangladesh in the country. Established with the objective of bringing about a qualitative change in the sphere of banking and financial management based on Islami Shariah, the bank today serves its customers spread across 21 branches within Bangladesh and 300 overseas connections.

SJIBL provides services tailored to the specific needs of the customers in the area of trade, comers and industry, besides the domestic network. While services like Debit Cards, ATMs and SWIFT payment systems are already in place, the bank plans to introduce Real Time Online Integrated Banking System with all modern delivery channels in the future.

 SHIBL has earned recognition at the national and international level. It was one of the 12 banks in Bangladesh to be evaluated by ASIA WEEK for Asset, Deposit and Profit and was ranked among the top 500 banks in Asia.

Bibliography:

• Brochures of Shahjalal Islami Bank Limited
• Shahjalal Islami Bank’s Website- www.Shahjalalbank.com.bd
• Shahjalal Islami Bank Annual Report
• Journals, Magazines and published articles
• Newspapers
• Naresh K. Malhotra, Marketing Research (4^th edition).
• George H. Hempel and Donald G. Simonson (1998), Bank Management: Test and Cases, 5^th Edition, New York: South-Western Pub.
• Joel Bessis (2001) Risk Management in Banking, 3^rd Edition, New York:  John Wiley & Sons Ins.
• Peter S. Rose (2001), Commercial Bank Management, 5^th Edition, New York: Irwin Professional Pub.
• Peter S. Rose and Sylvia Conway Hudgins (2003), Bank Management & Financial Services, 5^th Edition, New York: McGraw-Hill.
• Reading Materials on General Banking & Credit Department.
• Radhaswami, M. and S. V. Vasudevan (2000), Text Book of Banking, 3^rd Edition, New Delhi: S. Chand & Company Limited.
• Timothy W. Koch and Steven Scott Macdonald (2002), Bank Management, 5^th Edition, New York: South- Western Pub.
• Woelfel, Charles J. (1994), Encyclopedia of Banking and Finance – 10^th Edition, New Delhi: S. Chand & Company Limited.