Investment Department of Social Islami Bank Limited

The main objective is that to prepare report on Investment (credit) department of Social Islami Bank Limited. Other objectives are loan process of a bank and briefly discuss ratio analysis through Credit Risk Grading (CRG), which is very important for any Investment Department proposal. Report also discuss some rules and regulation that is assigned by Bangladesh Bank and different Investment Policies of SIBL.

Objective of the Study

The main objective is that to prepare report on Investment (credit) department of Social Islami Bank Limited (SIBL). Moreover we can generate a liaison between our theoretical knowledge and practical knowledge.

Another objectives for preparing this report are given below:

• Loan process of a bank
• Real Estate Finance that is discouraged by Bangladesh bank
• Ratio analysis through Credit Risk Grading (CRG), which is very important for any Investment proposal.

• CIB process of Bangladesh Bank
• Artha Rin Adalat Ain process of Credit
• Islamic Shari a base loan or investment process that is not overall applicable in our country

• Different types of bank charge
• Some rules & regulation that is assigned by Bangladesh Bank
• Preparation of Classified Loan
• Rescheduling and waiver process
• General Banking activities
• Different Investment Policies of SIBL

Historical Background

Social Islami Bank Limited an interest-free Shariah bank in Bangladesh incorporated as a banking company on 5 July 1995 under the COMPANIES ACT 1994. It commenced banking operations on 22 November 1995 with an authorized capital of Tk. 1,000 million divided into 1 million ordinary shares of Tk. 1,000 each. The initial paid up capital was Tk. 118.36 million folly subscribed by its 38 sponsors including 3 Arab nationals. The paid up capital was enhanced several times and stood at Tk. 260 million on . 31 December 2000. The bank is listed with the Dhaka Stock Exchange. In 2000, total liabilities and shareholders equity of the bank stood at Tk. 5,671.99 million.

The bank provides all types of commercial banking services and it conducts business on the Islamic principles of musharaka, Murabaha, bai-muazzal and hire purchase transactions. The broad-spectrum operational aspects of the bank have been set out to encompass three sectors – formal, non-formal and voluntary – in a comprehensive programmed. In the formal corporate sector, the bank offers banking services through deposit and investment accounts, trade financing, collection of bills, money transfers, lease of equipment and consumers’ durable, hire purchase and installment sale of capital goods, investment in low-cost housing and real estate management, and financing projects in agriculture, transport, education and health sectors. In the non-formal non- corporate sector, it is involved in opening and introducing various savings and investment schemes for the unemployed poor and the educated. In the voluntary sector, it is involved in the development and management of WAQF and mosque properties, management of inheritance properties, and joint venture projects relating to religious affairs and charitable activities. Total deposits of the bank amounted to Tk. 4,863.21 million in 2000 compared to Tk. 124.73 million in 1995 and included currency and other deposits, bills payable, term deposits and savings deposits. On 31 December 2000, the loans and advances in various sectors stood at Tk. 3,522.24 million as against Tk. 0.22 million in 1995. On 31 December 2000, the classified investments (loans and investment) of the bank amounted to Tk. 173.1 million (4.91% of the total). Foreign exchange business handled by the bank in 2000 accounted for Tk. 4,250 million, which comprised export servicing, import financing and remittance facilities. That year the assets of the bank were valued at Tk. 5,672 million and the off-balance-sheet-items Tk. 1,060.04 million. The bank started having net profits since 1998 and the net profit after adjusting all provisions for taxation and classified loans amounted to Tk. 38.1 million. The profitability of the bank is severely affected by the fact that it has to maintain a substantial amount of provision for its classified loans each year.

The management of the bank is vested in a 27-member board of directors headed by a chairman. There is a 5-member Shariah Council of the bank to ensure the compliance of Islamic rules in its activities. The bank has also a 13-member honorary foreign members’ international advisory council to advice it on international business affairs, particularly in Islamic countries. In December 2000, the bank had 13 branches and in aU, 310 employees including executives of different cadres.

Mission & Vision

Mission:

• High quality financial services the latest technology.
• Fast, Accurate and Satisfactory customer service.
• Balanced & sustainable growth strategy.
• Optimum return on shareholders’ equity.
• Introducing innovative Islamic Banking products.
• Attract and retain high quality human resources.
• Empowering real poor families and create local income opportunities.
• Providing support for social benefit organizations- by way of mobilizing funds and social service.

Vision:

Social Islami Bank Ltd started its journey with the concept of 21 st Century Islamic participatory three sector banking model: I) Formal Sector- Commercial Banking with latest technology; ii) Non-Formal Sector – Family Empowerment Micro-Credit & Micro­enterprise program and iii) Voluntary Sector – Social Capital mobilization through CASH W AQF and others. Finally, “Reduction of Poverty Level” is our Vision, which is a prime object as stated in Memorendum of Association of the Bank with the commitment “Working Together for a Caring Society”.

Strategy:

1. Local resources at the grass-root level mainly from within.
2. Surplus labor wherever possible.
3. Human and money capital of beneficiaries of earlier programs.
4. Unemployed and underemployed in the informal sector.
5. Islamic voluntary sector and voluntary labor for social capital accumulation and welfare.

Social Responsibilities:

• SIBL has been responding spontaneously to its social commitment. As a part of Corporate Social Responsibility (CSR), welfare activities of Social Islami Bank Ltd (SIBL) are being done mainly from (1) Profit of Cash Waqf Fund (2) Compensation Fund (3) Doubtful Income and (4) Zakat Fund.

• Cash Waqf Program under Voluntary Sector of the Bank paves the way of doing welfare of mankind in various sectors such as (i) Family Rehabilitation (ii) Education & Culture (iii) Health & Sanitation and (iv) Social Utility and Others in conformity with Shariah.

• Meanwhile, financial support has been extended to different Mosques, Madrashas, Orphanages & Voluntary Social Organizations also. Center for Rehabilitation of the Paralyzed (CRP), Sight Savers International, Kidney Foundation, Bangladesh Cancer Foundation Hospital, Jatiya Ando Kalyan Samity, Comilla, Mosabbir Cancer Care Centre, Dhaka Community Hospital, East West Medical College Hospital, Dhaka are among the list of the several beneficiaries. Out of profit of Specific Cash Waqf(where waqf mentioned the name of beneficiary) thousands of beneficiaries are also getting the proceeds every year.

• SIBL Executives & Officers, out of their personal capacity, have been distributing spectacles among the poor patients suffering from cataract & low vision during Holy Ramadan SIBL’s Executives & Officers have been participating in the Voluntary Blood Donation Program jointly organized with Sandhani & Bangladesh Thalassaemia Hospital.

• Members of SIBL family donated one day’s salary to the victims of flood-affected people of the northern part of country along with other help in the form of both cash and kinds reaching their door-steps in the recent past. SIBL members also donated one day’s salary for the devastating SIDR affected people and distributed both cash and kinds in the remotest areas of the southern part of the country. With a view to standing besides the SIDR affected people of the southern part & flood-affected people of northern part of the country.

• Mentionable that SIBL’s CSR Case Study was placed and praised in the book titled “Corporate Social Responsibility: An Awareness Guide for Companies Operating in Bangladesh” published by British High Commission, Dhaka, Bangladesh. The same Case Study was also reprinted in a well-renowned business magazine”The Executive Times” in its March, 2008 edition. In addition during the winter time SIBL staffs give warm clothes for distribution to the poor people. SIBL intends to continue with its welfare activities as part of its Corporate Social Responsibility.

• Social Islami Bank Ltd (SIBL) donated cheque to Sight Service International (SSI) to facilitate their Bangladesh Childhood Cataract Campaign (BCCC). SIBL Managing Dirctor K M Ashaduzzaman handed over the cheque to SSI Country Dicetor Dr, Wahidul Islam on Sept 15th, 2009 at a simple ceremony in Dhaka while Dr. Alamgir Hossain of Sight Savers, A F M Shamsuddoha, Executive Vice President & Shawket-UI-Amin, Assistant Vice President of SIBL were present on the occasion.

Different Investment Scheme

The bank extends Investments under the principals of

1. Mudaraba
2. Musharaka
3. Bai- Murabaha (Contract Sale)
4. Hire Purchase under Shirkatul Meelk (HPSM)
5. Bai-Muajjal (Sales under deferred payment)
6. Bai- Salam (Advanced Purchase)
7. Bai- Istisna

1) Mudaraba (The Hiring of Capital):

Mudaraba is one of the most well known investments. permissible under Islamic Shariah and widely used by all countries where Islamic systems of banking are functioning. Mudaraba finance combines financial experience with business experience. Mudaraba is a contract in profit sharing where one party provides capital! funds and the other labor/ work. Under this system, banks provide the capital and clients provide expertise and profit is shared according to agreed ratio. In case of loss, the bank bears the financial risk and the client loses only his labor! effort and his expected share of profit.

Important Features

• Mudaraba is generally limited to self-liquidating tran

• The assets of Mudaraba should be easily recognizable and must be realized and liquidate so that the proceeds can be easily distributed between the partners at the termination of operations, completion of deal, or the achievement of Mudaraba objectives.

• I f the partners want to renew the Mudaraba, a new contract must be negotiated, but only after the old one has been terminated and the rights and liabilities of the parties concerned have been recognized and settled.

• Mudaraba is generally limited to trading activiti

• The entrepreneur has no right to mix the Mudaraba funds with his own funds, unless he was permitted to do so by the bank.

• Before liquidation of distribution of profits, the Mudareb possesses an uncontested right not only to his share in profits but also to any gains or appreciation in the value of output or assets of the joint venture that might occur during the life of the Mudaraba contract.

• The Mudaraba accounts must be recorded properly and the books of accounts should be audi

2) Musharaka (Partnership Profit Sharing):

Musharaka is another type of financing mechanism used by Islamic Banks. This mode of finance is represented by two or more financiers in contributions of equal or unequal ratios of capital to establish a new project or to participate in an established one and all partners are entitled to share the total profits of the venture according to ratio as mutually agreed upon allowing for managerial skills to be remunerated; but the losses are shared exactly in proportion to capital proportion. Participation parties have the right to participate in the management of the project and at the same they may also waive this right in favor of any specific partner.

There are two types of Musharaka contracts:

• Constant (permanent)
• Decreasing (diminishing) Participation.

In the first case, the bank participates in the equity and receives share of profit on pro-rata basis annually and period of termination of the contract is not mentioned/ specified. So, the contract may continue as long as the parties concerned agree it to continue.

The diminishing partnership of Musharaka IS getting more popular In Islamic Banks because of its potentialities than permanent Muskaraka. In constant! permanent Musharaka funds are committed for a long period; but this is not so in the case of diminishing Musharaka. Decreasing Musharaka allows equity participation in the first place and share profit on pro-rata basis. This system also provides/ extends for future payments of money over and above the bank’s share in the profit as a repayment of the part of equity held by the bank. In this manner, the equity held by the bank is reduced progressively with the passage of time. After lapse of certain period of time, the bank will have zero equity and will cease to be a partner.

Important Features:

• The bank is not guaranteed a fixed return on its participation.

• Banks benefits in financing fixed assets or working capital or both lie in the profit sharing scheme between the banks and venture.

• Profits are shared pro-rata with equity and are calculated for this purpose,

after allowing for management fees and before depreciation and provisions, as non-cash- items.

3) Murabaha (Contract Sale):

Murabaha is one of the most widely used modes of finance undertaken by the Islamic Banks. About 70 to 80 percent of financial operations of the most Islamic Bank belong to this segment. It is suitable for investment for financing industry,. agriculture, trade or any other sectors. It enables the client! investor to obtain finished goods, raw materials, machinery or equipment from the local market or through import by opening letter of credit under Murabaha commercial.

Murabaha is one kid of sale transaction. Under this system of investment, a sale transaction is taken place between client and bank. The client requests the bank to purchase certain goods as prescribed by him/them with a price confirmed by. the client from a supplier! seller in the country or abroad. The bank, itself or through an agent (may be the client himself) collects all the information about the nature and specification of the goods, its price, terms of delivery etc.

Murabaha is also a double sale and bye. Under this technique, bank buys the goods upon the request of the client and then sells the goods to him/ them. The goods are purchased by the customer from the bank within a fixed period of time or by installment with a cost include cost of goods plus mark up profit. The profit mark up as fixed before the deal cannot be increased even if the client does not take the delivery within the scheduled time.

When Murabaha sale is made of deferred payment basis, this is called Murabaha -Bai­Muajjal. Under this sale. Bank sells the commodity to the client on the basis of deferred payment against an agreed price, which includes the price and mark up profit. Murabaha sale is also one kind of absolute sale, which is divided into four kinds in respect of price. These are given below:

•  Bargain Sale: Selling of commodity at a price already agreed upon irrespective of its purchased price.
• Tawlia Sale (respective Sale): Selling the commodity at purchased price without any additional or discount.
• Discount Sale: Selling the commodity at a purchased price allowing certain discount.
• Murabaha Sale: Selling a commodity at a purchased price plus certain profit as agreed upon. This profit margin may be determined on a percentage of the purchased price or a lump sum as agrees to. The last three sales are called: Amana (honesty) Sales”

4) Hire Purchase Under Shirkatul Meelk:

Hire purchase under Shirkatul Meelk is a special type of contract that has been developed through practice. Actually, it is a composition of three contracts:

Shirkat: Shirkat means partnershi Shirkatul Meelk means share in ownership. When two or more persons supply equity, purchase an asset, own the same jointly, and share the benefit as per agreement and bear the loss in proportion to their respective equity, the contract is called Shirkatul Meelk contract.

Ijarah (Leasing): The Ijarah financing under Islamic Shariah is akin to the western concept of l In Ijarah financing, Islamic banks finance capital goods to industrial project against payment of a rent by installment. In Arabic the Leasing is defined as contract between a leasing company (called as the     lessor) of one part and the user of the equipment asset (called the lessee) of other party whereby the lessee/ loanee agrees to pay the lessor an agreed amount of money as rentals over a specified/ obligatory period of time in consideration for the use of capital equipment owned by the lessor.  The lessor retains ownership of the equipment and seeks to receive the capital cost of the equipment plus a profit margin out of the lease rentals payable during the period of the lease. There are two types of leases recognized under this system of investment. These are-

1. Operational Lease: Under this system of finance, Islamic Banks hold a number of various assets to respond to the needs of different customers. These assets have usually high degree of marketability. The bank rents these assets to its client who is desirous to utilize the same for a team to be agreed upon on payment of rental. After expiry of the lease period, the assets are returned to the bank. The bank then looks for new lessee.
2. Lease Purchase: The lease purchase or lease out that ends with possession is a new technique of investment innovated By the Islamic Banks. Under this system, bank does not hold the assets; but purchases the assets in response to an emphatic request from one of the customers to own the assets through lease that ends with possession. Therefore, the assets will not remain as the property of the bank at the end of the lease period as is the case in the operation lease. As soon as the purchase amount of household goods along with rental is paid off with in the lease period, the ownership of the leasehold item transfers to the lessee automatically as per contract.

• Sale: This is a sale contract between the buyer and a seller under which seller transfers the ownership of certain goods or assets to buyer against agreed upon price paid/ to be paid by the buyer.

Thus, in Hire Purchase under shirkatul Meelk both the bank and the client supply equity in equal or unequal proportion for purpose of an asset like land, building, machinery, transport etc, purchase the asset with that equity money, own the same jointly, share the benefit as per agreement and bear the loss in proportion to their respective equity. The share, part or proportion of asset owned by the bank, is hired out to the client partner for a fixed rent per unit of time for a fixed period. Lastly, the bank sells and transfer the ownership of its share/ part! portion to the client against payment of price fixed for that part either gradually part by part or in lump sum within the hire period or after the expiry of the hire agreement.

Hire Purchase under shirkatul Meelk Agreement has got three stages:

• Purchase under joint ownership
• Hire
• Sale and /or Transfer of ownership to the other partner Hirer.

5) Bai- Muajjal:

Bai- Muajjal means sale for which payment is made at a future fixed date or within a fixed period. Bai-Muajjal may be defined as contract between a buyer and a seller under which the seller sells certain specific goods to the buyer at an agreed fixed price payable at a certain fixed future date in lump sum or within a fixed period by fixed installments.

In bank, Bai- Muajjal is treated as a contract between the bank and the client under which the bank sells to the client certain specific goods, purchased as per order and specification of the client at an agreed price payable within a fixed future date lump sum or by installment.

6) Bai-Salam (Advance Sale And Purchase):

Bai-Salam may be defined as a contract between a Buyer and a Seller under which the seller sells in advance the certain commodities/ products permissible under Islamic Shariah to the Buyer at an agreed price payable on execution of the said contract and the commodities/products are delivered as per specification, size, quality, quantity at a future time in a particular place. Under this transaction the cost of commodity is advanced in cash to the seller who agrees to believer the commodity on a definite due date. The delivery of the commodity sold is deferred but the payment of the price is immediate.

Important Features

• Bai-Salam is a mode of investment allows by Islamic Shariah in which commodities/ products can be sold without having the said commodities/ products either in existence or physical! constructive possession of the seller.

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

• Bai-Salam investment may also be allowed in export-oriented industri This can be allowed after opening of the Lie, arrival of raw materials, shipment of raw materials etc. the bank may sell! export its goods through the seller/ exporter under a separate agreement or this may be done duly incorporating in the Bai-Salam agreement unless otherwise settled and prescribed.

• It is permissible to obtain collateral security from the seller client to secured the investment from any hazards vi, non-supply/ partial supply of commodities/ products, supply of low quality commodities/ products etc.

• It is permissible to obtain mortgage and / or personal guarantee from a third party as security before signing of the agreement or at the time of signing the agreement.

• The seller client may be made agent of the bank to sell the goods delivered to the bank by him provided a separate agency agreement is executed between the bank and the client.

 7) Bai Istisna:

The majority of the juries consider as one of the division of Bai- Salam. Therefore, it should be treated under the definition of Bai- Salam. But the Hanafi School Fiqh declares Istisna an independent and separate contract. The jurists of the Hanafi School have given various definitions to Istisna, some. of which are:

” It is a contract with a manufacturer to make something and it is a contract on a commodity on liability with the stipulation of work i.”

Under this contract the first party agrees to contract! manufacturer a particular products and deliver it to second party against a predetermined price. The price may not be required to pay in advance. It may be paid in installments, or can even be deferred until the desired product is delivered.

Welfare Oriented Investment Special Scheme

The bank has been working for the upliftment and emancipation of the underprivileged, downtrodden and neglected sections of the society and has taken up various schemes for their well- being these are.

1. Household Durable Scheme: For purchase of household articles like furniture, electrical equipments etc.

2. Housing Investment Scheme: For making arrangement for comfortable accommodation of the fixed income group.

3. Transport Investment Scheme: Investment IS made to existing successful businessman and potential entrepreneurs, companies and established business house to buy road and water transport like bus, minibus, and truck. Launch, cargo- vessel, baby taxi, tempo etc. in order to ease the existing transportation problem.

4. Car Investment Scheme: This investment is made on easy terms and conditions to officials, business executives and established professionals in order to enable them to discharge their duties and responsibilities punctually.

5. Investment Scheme for Doctors: This scheme has been taken up to help unemployed qualified doctors to go for self- employment and to provide latest medical equipment to specialist doctors.

6. Small Business Investment Scheme: This scheme has been taken for self-employment of educated unemployed youths of rural and urban areas and to provide investment to small businessmen and entrepreneurs.

7. Agricultural Implement Investment Scheme: This scheme has been introduced to provide power tillers, power pumps, shallow tube wells etc. on easy terms to unemployed youths for self- employment and to the farmers.

8. Rural Development Scheme: This scheme has been taken up to re-activities se the rural economy and develop model villages the rural economy and develop model villages through integrated approach and thereby to create income generating and productive self-employment opportunities through extension of investment.

9. Silk weavers Investment Scheme: This scheme has been taken up to assist the silk weavers of Mirpur area particularly in respect of requirement of working capital.

10. Micro- Industries Investment Scheme: To create wider base for

industries as well as to encourage establishment of micro-industries in different areas of the country by the potential entrepreneurs and for diversification of the Banks investment portfolio, the bank introduced Micro Industries Investment Scheme.

Investment Process

Required Papers/ Documents

• Application
• CIB Declaration Form
• Trade License.
• TIN certificate
• Break Down of Repayment Schedule.
• Mortgage permission from competent authority.
• Expected rate f profit.
• Project profile.
• Certificate of Environment Ministry (In case of project finance).
•  Declaration of Liabilities of the proprietor.
• List of immovable assets of the properitor.
• List of movable assets of the business.
• List of machineries.
• Profit and Loss AIC of last year.
• Stock report.
• Monthly Sales.
• Monthly Purchase.
• List of Sundry Debtors.
• List of Sundry Creditors.
• Photograph of the proprietor (two copy of each)
• How long in the business.
• Of official staff.
• Area of office.
• Legal opinion on collateral security.
• Valuation certificate on collateral security.
• Approval from Rajuk.
• Soil test certificate.
• Letter of consent along with photograph.
• Bio-data of the proprietor.

Charging Security

Third party collateral should not be encouraged. As per existing law no equitable mortgage is permitted. So the collateral security, if it is land and building, should be registered mortgaged with the Bank.

In case of limited company 1 st charge should be created on all the fixed and floating assets of the company with Registrar ef Joint Stock Companies and Firms (RJSC). In case of syndicated financing pari-passu charge should be created with RJSC.

In case of taking FDR ITDR of other Bank as security optimum care should be taken. Lien Marketing of FDR must be ensured from the issuing Branch. Lien marketing must be confirmed from Area Office/ Regional Office/ Zonal Office/ Head Office of the issuing Branch of the concerned FDR lTDR. In this case Bangladesh Bank letter No. Ma Lo Pro Bi-26712004-3937 dated 19.10.2004 should be followed.

The common methods of charging securities are:

• Lien: Lien is the right of one person to certain goods and securities in his possession belonging to another until certain legal debts due to the person retaining the goods are satisfied. In other words, it is the right of the creditor to retain the goods and securities in his possession, belonging to a debtor, until the debt due is paid. Lien dose not give the power of sale but only to retain property.

• Hypothecation: The mortgage of movable property is called hypothecation. But hypothecation differs from mortgage in two aspects. Firstly, mortgage relates to immovable property whereas hypothecation relates to movables. Secondly, in a mortgage, there is transfer of interest in the property to the creditor but in hypothecation there is only obligation to repay money and no transfer of interest.

• Pledge: The usual method of obligation a title to goods offered as security is by way of pledge. In pledge the ownership remains with the pledger. It is only a qualified property that passes to the pledgee who acquires a special priority and lien that is not of ordinary nature and, so long as his loan is not repaid, no other creditor or authority can take away the goods or its price. In case of default the pledgee has the power to sell the goods after giving due notice.

• Assignment: An Assignment means transfer of an existing or future right, property or debt by one person to another person. The person who assigns the right, property or debt is called the assignor. The person to whom the right etc is transferred is called the assignee. It is same as mortgage with the only difference that in a mortsage there is always a right of redemption but in an assignment it is provided by a separate agreement.

• Mortgage: Mortgage is another method of charging. This type of charging is done in case of immovable property. Immovable property includes land and things attached to the earth like trees, building and fixed machinery. In SIBL, they mainly consider two types mortgage. These are given below

~ Simple Mortgage

~ Register Mortgage

Guideline to Prepare Investment Proposal

To prepare and sending the proposal at IRM at Head Office, RM should follow following instructions:

• Application of the client (in A4 size white paper in case of individual and in letter Head pad in case of business concern) with original photograph(s) duly attested by the Branch Incumbent. An authorized Official of the Branch also must verify applicant’s signature.

• IF-48& IF-49 form (duly filled in) along with supporting papers.

• Copy of valid Trade License of the business concern and TIN certificate duly authenticated by an authorization Officer of the Branch.

• Copy of registered Partnership deed is required in case of partnership concern.

• Visit report of the business concern stating the overall conditions of the business of the applicant. This report should contain, among others, following information (at least for one year): a. Sales b. Purchase c. Stock Position d. Go down Position e. Profitability and f. Staff Position.

• Up to date stock statement showing items wise quality and value duly signed with date. Old and obsolete stock to be discarded. A declaration to be furnished in this respect that the stocks are free from any encumbrances and not charged anywhere. If charged, the name and address of financial institution/ Bank, extend of charge to be mentioned.

• CIB inquiry form (duly filled in) for onward submission to Bangladesh Bank.

Branches are advised to send the CIB inquiry form at least 15 (fifteen)  days before sending the proposal to Head Office.

• Current Account statement of the client preferably for one year but at least for six months.

• In case of private Limited Company, copy of company’s memorandum and articles of association, certificate of incorporation duly attested by an authorized officer (RO) of the Branch and a resolution of the company’s Board of Directors regarding obtaining investment facilities from SIBL to be furnished. For a public limited company, certificate of commencement of business is to be furnished in addition to the requirement as in case of private limited company. Latest shareholding certificate issued by Registrar of Joint Stock Companies and Firms and any changes thereafter to be submitted.

• Copy of audited income statement and balance sheet preferably for last 3 years duly attested by an authorized officer of the branch is to be submitted. In case of new company projected balance sheet for next three years is to be submitted

• LRA in full format for investment facilities for tk.50.00 lac and above is a must.

• A declaration of assets (immovable and movable) giving detail description of the property/ partner/ directors to be furnished. If there is any charge on any of the property by any bank! DFI, that is to be clearly mention. Similarly declaration of liability to be submitted mentioning therein the name 0 the bank, nature of investment/ credit limit being enjoyed, and extent of outstanding, overdue or classified amount, if any. In case of no liability ‘NIL’ liability statement to be given.

For mortgage able property, copy of Title Deed, BIA Deed, mutation   parcha,   up to date rent receipt, DCR etc. of the property to be submitted along with clear-cut Mouzamap.

Legal opinion and Non-Encumbrance Certificate (NEC) of the proposal   collateral security. Legal opinion must be based on original documents.

In case of 3^rd party collateral letter of consent along with photograph of       the owner of the property offered for mortgage to be submitted. Letter of consent must incorporate the schedule of the property.

Valuation certificate is to be submitted in the Banks format. Where a survyor firm makes valuation, separate valuation is also to be made by the Branch on the basis of their own findings and judgment.

Where survey firm makes valuation, the surveyor must put comment in their report about the possession and ownership of the land on the basis of their discussion with the owners of the property offered for mortgage and discussion with local people. If feasible, they may take photograph of the owner of the property and submit the same with the report.

A declaration to be given if the applicant! client have any sister concern or business firm  having interest therein. If so, the client of interest or shareholding and liabilities of the concern with name of Bank/ DFI to be mentioned.

In case of applicant for investment facility relates to working capital for industries . the following to be submitted:

1. Assessment of working capital requirement based on installment present working capacity of production, requirement in quantity and value of imported and local raw materials at 100% capacity and the volume of cash! credit purchase and sale.
2. List of machinery and equipments with year of purchase, cost price, written down value and present working efficiency.

In case of application for real estate financing, the followings are to be submitted:

1. Copy of approval layout plan along with approval letter of concerned authority
2. Approved site plan.
3. Detailed cost estimation of construction.
4. Sources of fund to cover the construction cost.
5. Sources of repayment of Investment Amount with rentIProfit.
6. Present monthly income and expenditure statement of the individual! business concern and expected monthly income from the project.

In case of project investment, the following additional papers/  documents to be  submitted:

1. Project profile/ feasibility report!
2. Copy of appraisal containing marketing, management, commercial, technical and financial aspect of the investment project.
3. Approval! permission of relevant authority as may be required.
4. Clearance from the Department of Environment is required.
5. No objection certificate from the local authority as to setting up of the proposed industry.
6. Building and machinery layout.
7. 3 sets of competitive price quotation from 3 different suppliers for the selected machinery and equipments monitoring which one is accepted.
8. For BMRE proposal, detailed particulars of existing machinery and equipments, year of purchase and value, present written down value and present working capacity along with audited Balance Sheet.

In case of large loan, the following papers to be submitted:

1. Latest Audited Balance Sheet and Profit & Loss Account
2. Cash Flow Statement
3. Fund Flow Statement
4. LRA in complete form
5. Declaration of Repayment Ability
6. For new cases projection of Profit & Loss for next 3 years.

Sending Proposal to Head Office

Branch than send the investment proposal to the Head Office for approval. The Manager, Managing Director, and Board of Director analyze of all the positive and negative part of the investment proposal. If the project is favorable than the Bank approve the proposal and send it to the Branch.

Investment Approval

The approval process must reinforce the segregation of Relationship management / Marketing from the approving authority. The responsibility for preparing the investment Proposal is rest with the RM of the Branch as well as the Corporate Banking Department (for project! syndicated financing or large investment) at head office. Investment proposals should be recommended for approval by the RM team in the Branch and Corporate Banking (for project! syndicated financing or large investment) department and to be forwarded to the approval team within the IRM at Head Office and to be approved by authority as delegated by the Board of Directors. IRM approval team will take necessary steps to get approval of the proposal from the competent authority. Total approval process is classified into two ways as under:

Proposal for other than Project and Syndicated Finance:

In this case RM (Relationship Management) team at Branch level will recommend and forward the proposal to Head Office IRM (Investment Relationship Management) Division for approval. IRM approval team after proper analysis of the proposal will prepare relevant note/ memo for approval of Managing Director directly or through recommendation of the management Committee. If the proposal is beyond the discretionary power of Managing Director, the Managing Director will place to the Executive Committee (EC) of the Board or to the Board of Director (BOD) the proposal. ECI BOD wills advice the decision regarding the proposal to IRM. After getting approval from the competent authority IRM approval team will communicate the branch about the decision of the authority. Branch will then take necessary steps according to the communication! sanction letter of the Head Office.

Proposal for other than Project and Large Finance:

Proposal under project or syndicated finance or large loan/ investment categories will be prepared, recommended and forward by RM at Branch to Corporate Banking at Head Office. Corporate Banking at Head Office also may prepare the investment proposal under large loan/ investment, project! syndicated Finance. In both the cases, Corporate Banking will send the proposal to IRMD at Head Office with their recommendation for approval. Approval Department of IRMD after proper checking, risk analysis will prepare notel memo for getting approval from concerned authority. If the proposal is beyond the discretionary power of Managing Director the proposal will be placed before the Executive Committee of the Board or before the Board of Director by the Managing Director, EC/ BOD will advice the decision regarding the proposal to IRMD. After getting decision from the authority IRM approval Department will communicate the same to Corporate Banking. Corporate Banking will communicate the same to the respective Branch to take necessary action.

Follow up & Communication With the Client

Supervision and follow-up of advances are the direct responsibilities of the branch. Branch is the unit wherefrom the proposal is made for any advance, disbursements are made. The borrower maintains his account with the branch, operations are submitted through the account, and the borrower to the branch submits reports and returns.

In conducting follow-up branches have to follow the under noted common methods:

• Keep a watch over the ledgers and accounts to ensure that operations are regular and as per procedure. Particular care should be taken when the balance in the account remains very near or goes beyond the drawing limit or there is no good turnover.

• Keep watch over the inflow and outflow of fund.

• Collect periodical reports, returns and information about the borrower and examine the activities of the project! enterprise financed.

• Ensure that security / collaterals have been obtained as per terms of sanction and valuation has been assessed correctly and the security is maintained properly.

• Ensure that the security has been properly insured where required as per policy, procedure and practices,

• Ensure that the documents have been obtained as per terms of sanction and as per procedure for such type of advance. If not, get the documents regularized.

• Keep regular contact with the borrower both formally and informally and pay regular  visits to the project! enterprise financed.

• Ensure that appropriate actions are taken in time to regularize the irregularities and recover the loan as per schedule.

• Obtain periodical balance confirmation from the borrower and where necessary fresh documents are obtained as per procedure/

• Keep watch over the repayment trend and see that the advance does not turn up as irregular or stuck up and becomes time-barr

Task Related to CIB

The credit information that has so far been collected by Bangladesh Bank from scheduled banks and other financial institutions are not broad- based and systematized to be used by Bangladesh Bank, scheduled banks, and financial institutions. Government of Bangladesh and other agencies for credit policy and other purposes.

The Credit Information Bureau (CIB) of Bangladesh Bank has undertaken the task of collating and storing detailed credit information from scheduled banks and other financial institution in its proper prospective so that these can be exchanged among the scheduled banks, financial institutions and Bangladesh Bank for quick processing of new loan proposals and re-scheduling of existing loans.

The CIB has also been supplying credit information to be Government and other national and international organizations that are engaged in the formulation of monetary, economic and credit policy. The information so far collected by CIB are:

1. Debtor’s / Borrower’s Information (Segment-l )
2. Owner’s Information (Segment-2)
3. Group/ Affiliations Information (Segment-3)
4. Credit! Exposure Matrix or Financial Information (Segment-4)
5. Third Party Guarantors Information (Segment-5)

Inspection of Security

In order to ensure an effective supervision, it is necessary for the banker to take care of the following factors:

• End-use of Fund: The banker has to see that the funds lent to the funds lent to 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 deviation by the borrowers from the terms and conditions stipulated by banks has to be noticed and timely action has to be taken.

• Monitoring of Borrowers Accounts: Careful monitoring often result in heading off trouble before it arises. For effective credit management, it would be adequate if borrower’s accounts are kept under a close watch. Bank should obtain in advance a list of usual suppliers of goods to the borrower. This will help in ensuring that all payment to parties from cash credit or overdue account are made directly to the supplier for approved purpose.

• Security: Through the banks are now expected to lay greater emphasis on the purpose for which the borrower needs money rather than security he can afford to give, security continues to be one of the most important factors which determines to a significant extent the banks willingness to lend money. So the bank has to see that the security offered is safe and continues to remain available for repayment of loan.

THER ACTIVITIES OF SIBL

General Banking Department

General Banking is the starting point of all the banking operating. General Banking department aids in taking deposits and simultaneously provides some ancillaries services. It provides those customers who come frequently and those customers who come one time in banking for enjoying ancillary services. In some general banking activities, there is no relation between banker and customers who will take only one service form bank. On the other hand, there are some customers with who bank are doing its business frequently. It is the department, which provides day-to-day services to the customers. Every day it receives deposits from the customers and meets their demand for cash by honoring cheques. It opens new accounts, demit funds, issue bank drafts and pay orders etc. since bank in confined to provide the service everyday general banking is also known as retail banking.

A/C Opening of SIBL:

By deposit mobilization, we mean bringing of potential deposit or idle savings of the people to the banking channel in a wider sense, it may also mean bringing potential savings of the people to the banking channel. Deposit is money kept by the customers, which are repayable on demand and withdraw able by cheques, drafts, pay order or using other acceptable instrument. Bank gives profit to depositor for keeping the money in the bank, it also cut service charge from client. From this deposits bank invests and earns profit from borrower. As more and more deposits are mobilized by a bank its entire activity enlarges and bank starts making higher returns making profitable returns.

Under this department, SIBL officer opens different types of account on the request of clients. The procedure of opening account is given bellow:

Types of Account:

AI Wadiah Current Deposit

AL WADIAH Current Deposit A/cs are opened on proper introduction with minimum initial deposit fixed by the Bank. AL WADIAH Deposit is accepted on AL W ADIAH principles, which mean al Amanah with permission to use. According to this principle Bank can use the fund of the account along with other funds as per Shariah at bank’s own risk. Account holder(s) will not share any profit/loss. The Law and regulation of Bangladesh, usual customs and procedures common to banks in Bangladesh including Islamic Banking Principles shall apply to and govern the conduct of account opened with the Bank. Withdrawal can be made only through cheques issued by the bank. The Alc. holder(s) shall preserve the chequebook with utmost care so that it might not be lost or stolen. For any misappropriation taken place through any such stolen or lost cheque, the Bank shall not be held responsible. The depositor shall take back the pay-in-slip after deposit of any money or cheques etc. clearly specifying the number and title of account in the slip. All cheques, DD/PO etc shall be crossed before deposit. Bankers shall note “Stop payment” of the account holder with due care. Payment of any such cheque, the Bank shall not be held responsible.

Profit Rate 0.00%

• Individual Account
• Joint Account
• Proprietor Ship Account
• Limited Company Account

Mudaraba Savings Deposit

Deposit of one party and on the basis of operation by another party this deposit is taken. By providing Introducer of the account as required by the bank and by depositing a minimum amount any depositor or multiple depositor can open single or joint account. Any educational institute, Club, Association or Social institutes can open this account. The bank may merge amount collected through this deposit and may invest in any shariah allowed investments. After determining the annual profit/loss the depositor will get his part of profit. In case of balance declining below bank stipulated margin in any month

profit shall not be provided for that month. Any amount can be deposited in any working hour but for applying profit the lowest amount from 6th day till the last day of the month will be taken as the deposit of that month. Amount must be withdrawn only by bank issued instruments like cheques. Amount can be withdrawn twice a week but highest 4 times a month. One fourth of the deposited amount or Tk. 2000/-, the lowest can be withdrawn without notice. If any amount exceeding the above is withdrawn without providing 07 days prior notice then no profit will be applied for that month. If an account is closed before the declaration of current years profit rate

then the depositor will have to take profit as per previous years declared profit rate. The Bank has the right to deny opening any account or can close down any existing with showing any reason.

Mudaraba Term Deposit

Mudaraba Term Deposits are accepted by the bank with a sum of Tk. 5000. or above (multiple of 1000) from individuals (single and joint), firms (propietorship/partnership), limited companies, autonomous bodies, charitable institutions, association, educational institution, local bodies, trusts, etc, against issuance of non transferable receipts in acknowledgement of MTD account may be opened in the names of minors jointly with their guardians, for example:

Received from Mr. X Guardian of Mister/Miss (Minor) The mudaraba term deposits are accepted for periods of 12, 24, 36 months. Weightage on the rate of return is given to deposits of longer maturity. The Bank reserves the right to invest the funds received in mudaraba term deposit accounts, in its sole judgement, in any interest­free “Halal” business it deems fit. Mudaraba term deposit account holder will share the profit of investment with Social Investment Bank Ltd, at the rate declared by the bank from time to time. Any loss, which cannot be covered by the investment loss offsetting reserve, will be adjusted from Mudaraba fund and in that case the bank shall not take any remuneration for the service rendered in managing the fund. The account holder is not allowed to withdraw the amount before maturity date. But on obtaining the Bank’s prior consent the depositor(s) may withdraw the deposit before maturity without any profit i.e. no profit no loss basis. MTD account holder may withdraw the profit amount annually if he so desires on condition the final adjustment. If needed, will be made at the end of the year. MTD account holder will give an undertaking to that effect. If the profit amount is not withdrawn it will automatically be added to the principal amount annually and the entire amount will earn profit/loss. MTDR is not transferable instrument & as such it cannot be endorsed in favor of others.

Mudaraba Short Notes Account:

• Any company, business entity, dept of the govt. organization and trust or any person can open this account.
• This account is operated under Mudaraba principle.
• Any amount can be withdrawn or transferred to Al-Wadiah current account or any other accounts after placing a notice of seven days.

Fixed Deposits:

Fixed deposit is one, which is repayable after the expiry of a predetermined period fixed by him. The period varies from 1 month to 12 months. These deposits are not repayable on demand but they are withdraw able subject to a period of notice. Hence, it is a popularly known as ‘Time Deposit’ or ‘Time Liabilities”. Normally the money on a fixed deposit is not repayable before the expiry of a fixed period.

Before opening a Fixed Deposit Account a customer has to fill up an application form which contains the followings:

• Amount in figures
• Beneficiary’s name and address
• Period
• Rate of Profit
• Date of issue
• Date of maturity
• Special instruction
• How the account will be operated (singly or jointly)
• Signature (s)
• FDR no.

Micro Enterprise Investment Scheme

Family Empowerment Micro-Enterprise Program:

Family Empowerment Micro-Enterprise program is introduced to enhance the Socio­economic condition of the potential entrepreneur, small and medium Businessmen, successful Micro-Credit graduates through income generating activities. Ceiling of investment is from Tk.50, 000/= to Tk.5, 00,000/= @ 10% return per annum at flat rate for maximum three years. Investment up to Tk.50, 000/= is provided without collateral. In case of investment of above Tk.50, 000/= minimum collateral security is required.

Family Empowerment Micro-Enterprise Program (SMES):

Considering the potentiality of SMEs sector, SIBL has launched Family Empowerment Micro-enterprise program (SMEs) to fulfill the diversified need of SMEs clients. Investment ceiling under this program is from Tk.2, 50,000/= to Tk.5, OO,OOO/=@ 14% return per annum for one year on revolving basis.

Small, Medium and Micro-Enterprise Development Program jointly with JOBS project, USAID:

On the basis of Memorandum of Understanding (MoU) signed in 2001 between Social Investment Bank Ltd. and Job Opportunity and Business Support (JOBS), collaborative efforts are being made to create easy access to business capital for the Small Medium and Micro-Enterprises (SMEs) through enhancing the capacity and performance of the entrepreneurs with available technical assistance from JOBS to be financed through Social Investment Bank Ltd. (SIBL) under Family Empowerment Micro-Credit and Micro-Enterprise Program.

Others:

• Mudaraba Hajj Savings Deposit
• Mudaraba Bashsthan Savings Scheme
• Mudaraba Special Deposit Pension Scheme (5 Years)
• Mudaraba Monthly Profit Deposit Scheme
• Mudaraba Millionaire Savings Scheme
• Mudaraba Education Deposit Scheme
• Mudaraba Special Deposit Pension Scheme (10 Years)
• Mudaraba Double Benefit Deposit Scheme
• Mudaraba Double Benefit Deposit Scheme
• Mudaraba Mohorana Savings A/C (5 Years)
• Mudaraba Mohorana Savings A/C (10 Years)

Accounts Department:

Accounts Department is play most vital role in Banking. Accounts Department is a department with which each and every department is related. It records the profit & loss A/C and statement of assets and liabilities by applying “Golden Rules” of book-keeping. The functions of it are theoretical & computerized based. SIBL Mirpur Branch records its accounts daily, weekly, and monthly every record.

This entire executive’s helps me a lot in my internship program at MTBL. They didn’t guide me as an Internee; they guide me as a training officer of MTBL to gather practical knowledge about Banking. They tried there best to inform me everything about accounts department. I hope I knew everything that gave me as a new comer in banking sector.

Basically Accounts Department is not alone. Accounts department is a mix of as follows:

1. Cash
2. Transfer
3. Clearing

CASH

The cash section of any branch plays very significant role in Accounts Department. Because, it deals with most liquid assets the SIBL Mirpur Branch has an equipped cash section. This section receives cash from depositors and pay cash against cheque, draft, PO, and pay in slip over the counter. Every bank must have a cash counter where customer withdrawn and deposit there money. When the valued client’s deposit their money at the cash counter they must have to full fill the deposit slip his/her own, then they sing as the depositor option’s then they deposit their money through cash officer at the cash counter.

RECEIVING CASH:

Any people who want to deposit money will fill up the deposit slip and give the form along with the money to the cash officer over the counter. The cash officer counts the cash and compares with the figure written in the deposit slip. Then he put his signature on the slip along with the ‘cash received’ seal and records in the cash receive register book against A/C number.

DISBURSING CASH:

The drawn who wants to receive money against cheque comes to the payment counter and presents his cheque to the officer. He verifies the following information:

• Date of the cheque
• Signature of the A/C holder
• Material alteration
• Whether the cheque is crossed or not
• Whether the cheque is endorsed or not
• Whether the amount in figure and in word correspondent or not

TRANSFER

Transfer is not a critical sector in banking but it is very important. Transfers play a vital role in banking sector. So now we have to know what transfer is: basically transfer is a type of register maintaining matter. In this register officer write down every day transactions in Debit and Credit side then the officer calculate both the side of the register if both side shown same amount, it means that the total day’s transaction is completely okay.

CLEARING

Clearing is one of the magical parts of banking. I really enjoyed this part of the accounts department and banking sector.

Clearing House Process:

Every bank has an officer of clearinghouse who is work with Bangladesh Bank clearing house. Acutally most of major client deposit their account in different kinds of bank cheques. Clearing officer check all the cheques and deposit slip very carefully and then he received the cheque. After that the clearing officer posting all the cheques in computer software which is recognized through Bankgladesh bank computer department. Then clearing officer seal all the cheques in advance date after that the officer endorsement all the cheques and sign all the cheques. All the cheques are posted in the computer by branch wise, then officer print the entire document and staple all the cheques by branch wise this is called schedule of clearing house. It is a very difficult job to staple all the cheques, because some time’s the cheques are huge in quantity, it may be 250 to 400, this is very vital job because every cheque must have to staple very carefully, it means cheque amount and the print sheet amount and cheque branch must have to be same. If the cheques staple in wrong direction, the cheque may be return from another bank, that’s why SIBL not to be able to credited party account.

Then the clearinghouse officer copying all the document in two floppy disc as per Bangladesh Bank requirement. When the clearing officers enter the clearinghouse, his first job is that the floppy delivered to the Bangladesh Bank computer department.

All of the procedure the clearing in charge goes to the Bangladesh Bank clearing house before 10 am in the morning. The clearing officer check all the bank’s cheque and he put all the cheques in bank wise, like as this another bank’s delivered there cheques in SIBL desk. Then the officers of SIBL have to calculate all the cheques by using calculator machine, Staple pin remover, and then he divided all the cheques as SIBL Branch wise.

Types of Clearing Cheque:

SIBL Principal Branch performs the bill clearing function through Bangladesh Bank. SIBL Principal Branch acts as the agent of all SIBL branches for the clearing house of the Bangladesh Bank. There are two types of cheque which are-

1. Inward clearing cheque
2. Outward clearing cheque.

Profit Rate On Deposit Scheme

Foreign Exchange Department

Export Finance:

Foreign Exchange Trade of SIBL is dealt with its 09 AD branches out of which 4 branches are in Dhaka and the remaining 05 are in Chittagong, Khulna, Sylhet, Rajshahi and Bogra. We as a 21 st Century Bank, providing our services in foreign trade through import and export finance and also playing significant role in the area of foreign remittance. To facilitate the import obligation of our Bank as well as considering the requirement of foreign currency of our country we encourage potential exporters to do their export business with us. We provide working capital on their requirement. Presently our export finance is extended for RMG and for non-traditional item that is handled by a number of experienced bankers. We offer competitive exchange rate for foreign currency to our valued exporters. In the last 03 years our export business performance is significant.

To enable the exporter to make shipment of goods to the foreign buyers, they need finance in the following stages:

• Pre-shipment Finance: when an exporter seeks financial assistant before loading the goods on shipment for export, it is called Per-shipment finance. such credit is granted to the exporter for procurement and processing of raw materials, manufacture of finished products, packing and transporting goods meant for export.

• Post-shipment Finance: The advance made against the shipping documents till the export proceeds are realized falls under the category of post­ shipment finance. The need for post shipment finance arises because exporters who sell goods abroad have to wait for a long time before payment is received from overseas buyers.

Import Finance:

They also deal in import business and our import business is extended to commercial importers (traders) for import of various shariah approved items and industrial importers (Users) for import of raw cotton, yam, clinker, pharmaceutical raw materials, TV parts, Computer parts etc raw materials for their industries.

We also provide post import finance such as MPI (LIM), LTR an HPSM

(Lease financing). Our post import finance is also provided for importing of capital machinery. While opening letter of credit at the request of buyer, bank normally examines:

• Buyers creditworthiness
• Import Trade Regulations
• Exchanges Control Regulations
• Supplier’s Creditworthiness report
• Marketability of goods

Foreign Remittance:

We are playing important role In the Foreign Remittance sector also. We have correspondent relationship with almost all major 122 Banks of 109 countries of the world like Standard Chartered Bank, American Express Bank Limited, HSBC, HBZ Finance, Mashreq Bank PSC, Dresdner Bank AG and with local banks in Pakistan, India, Nepal and Bhutan etc with whom we have advising, reimbursing and add confirming

SWIFT:

SIBL is the member of SWIFT and we have 09 SWIFT workstations in all of our 09 AD branches. Besides our 24 branches are equipped with online banking. We are trying to keep all the SWIFT workstations under online system. Inward remittances are credited to the beneficiary ‘s account on the same day of receipt if the beneficiary maintains AIC with them or within next 24 hours on receipt of the same from our overseas correspondents. All correspondences of foreign trade both export and import are communicated through SWIFT. As a result foreign exchange trade become expeditious and instant.

Overall Evaluation of Investment Policies of SIBL

Islam is our religion and all our banking activities are not away from Islamic Principles. Social Investment Bank Ltd. started its journey based upon the basic concept of Islamic Shariah. Shariah Council is active and vigilant over the day-to-day activities of the Bank being conducted strictly in line with the Islamic Principles.

Strategies:

Risk is the investments and returns thereon are interrelated. An investment Policy that emphasizes a high return must accept relatively high risk. Conversely, an Investment Policy that will tolerate only small amount of risk must be prepared to accept a relatively low return.

As such, it is really difficult whether to select a high return portfolio with high risk or low risk portfolio with a low return.

Nevertheless, considering all aspects following guidelines shall be followed as strategy for Bank’s Investment:

1. If two portfolios have the same risk but different returns, the portfolio having higher return shall be preferred.
2. II. If the two portfolios have the same expected returns, but different returns, but different degree of risk, the portfolio having lower degree of risk shall be preferred.
3. If one portfolio has both higher return and low risk than another, the first  portfolio shall be preferred.
4. I Keeping in view the risk factor, the Bank shall maintain flexibility In determination of rate of return on investments on case to case basis In consideration of the risk element involving in the respective investments i.e., higher rate of return or taking higher degree of risk a comparatively low rate of return for asking lower degree of risk.

Discouraged Business Types:

SIBL will discourage following business types:

• The type, which is prohibited by Shariah.
• Directly of indirectly affect social/normal values.
• Military Equipment! Weapons Finance Highly Leveraged Transactions.
• Finance of Speculative Investments
• Logging, Mineral Extraction! Mining, or other activity that is ethically or environmentally sensitive.
• Lending to companies listed on CIB black list or known defaulters.
• Counter parties in countries subject to UN sanctions.
• Share lending
• Taking an Equity Stake in Borrowers.
• Lending to holding companies
• Bridge loans/ investment relying on equity/ debt issuance as a source of repayment.

Investment Pricing:

The pricing of investment products shall be judiciously and appropriately made taking in view the Bank Rate, cost of fund, risk factor involved, current investment prices of the banking sector, demand/ supply interaction of the investment products, socio-economic impact of investment products and national priority. Flexibility and competitiveness shall also be taken into consideration to ensure that the pricing is appropriate and competitive for easy marketing of the products, to yield fair rate of return on investments as well as uphold the social welfare objectives of the Special Investment Schemes. The pricing shall be reviewed and evaluated from time to time and be adjusted as per prevailing situation and experience.

• Bank Issue Different type of guarantee. These are given below:

• Tender guarantee
• Performance guarantee
• Shipping Guarantee
• Customs & Accessory guarantee
• Investment guarantee

In Investment Process five-core risks are

1. Credit Risk
2. Asset & Liability / Balance Sheet Risk
3. Foreign Exchange Risk
4. Internal Control & Compliance Risk
5. Money Laundering Risk

Branch’s Investment Administration Department will be comprised of four unit or cell:

• Disbursement
• Custodian Cell
• Monitoring! Recovery Cell
• Compliance Cell

The Branch manager will act as coordinator of total investment procedures. He will look after works of the relationship management department as well as investment administration department of the branch.

Conclusion

In short, Social Islami Bank Ltd. is such a Commercial Bank which is rendering all commercial banking services to the customers in addition to make available Micro-Credit & SME finance to the millions of needy people of the country. As part of a Corporate Social Responsibility, it is playing a remarkable role to help the distressed people of the society in different welfare related activities.

They focus on dignified, prompt and personalized services being rendered to their customers. They believe in developing strong interpersonal relationship with each other. As such, they are morally bound to provide high quality banking services with the latest technology to obtain optimum return on shareholder’s equity ensuring safety of depositor’s money and making all out efforts to introduce their innovative Islamic Banking products to their existing and prospective customers. They are really happy that they have given enough emphasis to empower poor families to create income opportunity by providing financial support to make them self-reliant. They consider their services no less important towards improvement of the fate of deserving people in the society.

Recommendation

People have no way but to come to the Banks for higher financing, so the operations and way of getting loans need to be very sharpened. If the private banks provide a huge banking facilities and offers in less expensive condition for lower class people, they can be more advanced and independent which with help our country to go for more progress. The ways can be recommended as:

• They should follow accurate Shariah based investment policy. In our country it is quite difficult, but they should overcome it.
• Smoothing service and reducing time consumption.
• Improve customer service and consequently satisfactory operational result.
• SIBL should improve the branch facilities.
• They should invest at minimum possible risk because of the current economic condition of the whole world.
• They should maintain Bangladesh Bank circular & ensure compliance.
• Before investment they should analysis these: Market analysis, Technical analysis, Financial analysis, Management analysis, and Economic analysis.
• According to current Economic condition they should invest more safely, otherwise they should not overcome this problem .

SIBL should invest in agricultural sector because it is more profitable project than others .

SIBL now act as market follower but they should be market leader like other bank.

SIBL should enlarge their operation over the whole country.

They can build a strong security system against any terrorism activities that will give safety to people’s life and wealth in the present crime prone world. Because bombing as terrorism is spreading all over the country and has made a big phobia among the people.