Investment Policy of Islami Bank Bangladesh Limited

Investment Policy of Islami Bank Bangladesh Limited

Main purpose of this report is to analysis Investment Policy of Islami Bank Bangladesh Limited. Report also focus on different Investment Modes and different investment  Schemes of Islami Bank Bangladesh. This report is an attempt to produce a constructive report performance of IBBL with special reference to the Rural  Development Scheme and Micro Investment.

Objectives of the study:

The main objective of education is to acquire knowledge. To acquired knowledge ultimately we must do some practical application in addition to theoretical knowledge. Through this report, we tried our level best to present our practical knowledge as well as to find out-

  • Investment Policy
  • Investment Modes
  • Different investment Schemes
  • Recovery of the Investment


Methodology of the study:

Mainly we have collected data from two sources.

These two sources are as following.

  • Primary source
  • Secondary

The primary sources of our information are as below:

  • Field observation
  • Investment opinion
  • Questioning the concerned persons.

The secondary sources of my information are as below-

  1. Annual RDS report of IBBL
  2. Desk report of the related department
  3. Other manual information
  4. Different reference books of the library
  5. Some of our course elements as related to this report.


Historical Background

In the early period of Islam, the financial transactions of that period were not at like as today. As such, the very word banking was not used in that period. But all the transactions in early period of Islam had been completed without resorting to interest. The Muslim world has been in a state of degeneration for a number of centuries. The Muslim world has been in a state of degeneration for a number of centuries. The social breakdown and weakness brought about by this degeneration paved the way for foreign domination which led to further disintegration and decline.

This decline is decline reflected in all aspects of Muslim life and has been accompanied by poverty, reflected in all aspects of income and wealth, socio-economic injustice, social disharmony and loss of creativity. Nevertheless, the undeniable fact is that the Muslim masses are intensely attached to Islam all over the Muslim world and sincerely crave for its revival and supremacy. The intelligentsia has been always for interest-fee economy. But political subjugation defeated them for long to succumb to interest-based economic system. However the struggle for restoration but the early period of the present century received as good manifestation for the cause of Islamic banking i.e. the Islamic economic system.

During the 1930s revival for Islamic banking has been noticed gradually since literatures on the interest-fee economy particularly interest fee banking have been developing. During the 1940s after political independence from the colonial, most of the Muslim countries faced the struggle for revival of Islamic economy particularly Islamic banking. And the 1970s took a new shape for practical materialization of Islamic banks and financial institutions.

The first attempt to establish an Islamic financial institution took in Pakistan in the 1950s. It was a local Islamic bank in a rural area of erstwhile Pakistan (Wilson, 1983) it was an experiment initiated by some pious landlords. They deposited found at no interest on the credit advanced, but they had to pay a small service charge to cover the banks operational expense. The charge was lower than the fate of interest.

Although the experience was encouraging but two main factors were responsible for its failure. First the deposits made were regarded by depositors (landlords) as once and for all deposits. With the increasing number of borrowers the gap between capital available and credit demanded was huge. Second, the bank staff did not have complete autonomy over the bank’s operation and depositors showed considerable interest in the way their money was lent out (Wilson, 1983).

The second attempt began in Egypt in 1963. It was established in a rural area of Nile Delta and was called Mit Ghamr Saving Bank. This attempt may be called the first modern experiment with Islamic banking without projecting an Islamic image, for fear of being seen as manifestation o Islamic fundamentalism which was anathema to the political regime. The pioneering effort, led by Ahmed EI Najjar, took the form of a saving’s bank based on profit sharing in the Egyptian town of Mit Ghamr in 1963. This experiment lasted until 1967 (Ready) 1981), by which time there were nine such banks in the country. These bank which neither charged nor paid interest, invested mostly by engaging in trade and industry, directly or in partnership with others and shared the profits with their deposits (Siddiqi 1988)

Thus they function essentially as saving investment institutions rather than as commercial banks. The experiment suffered by owing to changes the political atmosphere. Nevertheless, the project revived in 1971 under the name of Nasier Social Bank. The Nasir Social Bank was declared an interest-fee commercial bank, although its charter made no reference to Islam or shariah (Islamic Law). The bank offered a full range or normal banking services and wide range of investment activities through equity participation (Ashker-1987).

Islamic banking made its debut in Malaysia in 983, but not without antecedents. The first Islamic financial institution in Malaysia was the Muslim Pilgrims Savings Corporation set in 1963 to help people save for performing hajj. The reason for the establishment of this institution was the contention of the Malaysian Muslims that money spent on pilgrimage must be clean and untainted with Riba. Since this was not possible by putting money with the ordinary banks. And as such, this desire led to the establishment of a special financial institution.

In 1969, this body evolved into the Pilgrims Management and fund Board or the Tabung Hajj as it is now popularly known. The Tabung Hajj has been acting as a finance company that invests the savings of would be pilgrims in accordance with Shariah, but its role is rather limited, as it is a non-bank financial institution.  The success of the Tabung Hajj, however, provided the main impetus for establishing Bank Islam Malayasia Berhad (BIMB) which represents a full fledged Islamic commercial bank in Malaysia. The Tabung Hajj also contributes 12.8 percent of BIMB’s initial capital of M$80 million. BIMB has a complement of fourteen branches in several parts of the country.

A significant development in Islamic Banking took place when a license for an Islamic bank was issued by the Saudi Arabian government to the fifty-year old “Al-Rajhi Banking Investment Corporation” and has since developed active relationships with major manufacturing and trading companies in Europe and several US corporations.

Islamic Development Bank (IDB) was founded in 1975 as a multinational financial instruction by the several Muslim countries. The purpose of this bank is to support social and economic development in Muslim nations within an Islamic framework. The subscribers of the capital are the founder governments and as such it was established on government treaty.

More seven Islamic Bank and Financial institutions had been established within three years of establishment of IDB. These were (a) Dubai Islamic Bank (b) Kuwait Finance house, Kuwait (c) Faisal Islamic Bank, Egypt & (f) Islamic Development Co. Sarjah.

Islamic Development Bank.

Islamic Development Bank is an international financial institution which was set up in Jeddah in October, 1975 (1396H) by the member states of the Organization of Islamic Conference. Its purpose is to foster economic development and social progress of member countries and Muslim communities throughout the world. It started with 22 member countries but over the years it’s throughout the world. It started with 22 member countries but over the years its 2,000 million Islamic Dinars (equivalent to 2 billion Special Drawing Rights of the International Monitary Fund). The subscribed capital stands now at 1822.67 million Islamic Dinars.

The Bank has assisted in the establishment and growth of Islamic Bank in a number of member countries. It has set op a Research and Training Institute to conduct and promote research and impart training in the field of Islamic economics banking and finance.

The IDB introduced and Investment Deposit Scheme towards the end of 1400H to accept deposits from Islamic banks in order to absorb their surplus liquidity. These deposits were utilized in the foreign trade financing operating by IDB However; IDB has found it difficult to deploy all these funds and has, therefore, recently been refusing large deposits from the Islamic banks.


Business Philosophy of IBBL

The philosophy of IBBL is to the principles of Islamic Shariah. The organization of Islamic conference (OIC) defines an Islamic bank as “a financial institution whose status, rules and procedures expressly state its commitment to the principles of Islamic Shariah and to the banking of the receipt and payment of interest on any of its operations. The sponsor, perception is that IBBL should be quite different from other privately owned and managed commercial bank operating in Bangladesh, IBBL to grow as a leader in the industry rather than a follower. The leadership will be in the area of service, constant effort being made to add new dimensions so that clients can get “Additional” in the matter of services commensurate with the needs and requirements of the country’ growing society and developing economy.

Mission and objective

  • To conduct interest free banking.
  • To establish participatory banking instead of banking on debtor creditor
  • To invest through different modes permitted under Islamic Shariah.
  • To accept deposits on profit-loss sharing basis.
  • To establish a welfare-oriented banking system.
  • To extend co-operation to the poor, the helpless and the low-income group for their economic uplift.
  • To pay a vital role in human development and employment generation.
  • To contribute towards balanced growth and development of the country through investment operations particularly in the less developed area.
  • To contribute in achieving the ultimate goal of Islamic economic system.

Role and contribution of IBBL to Bangladesh Economy

Islami Bank Bangladesh Limited has many success stories of achievements. These are summarized below:

  • IBBL is the pioneer institution for introduction of Islamic Banking in Bangladesh.
  • The success of IBBL has imbibed other sponsors at home and abroad to establish Islamic Banking in Bangladesh. Four national, one international Islamic banks have since been established in the country. A private sector traditional bank has also established two full fledged Islamic Banking branches. Several other existing and proposed traditional banks hove also expressed their intention to introduce Islamic Banking.
  • a IBBL has successfully mobilized deposits from a section of people who hither-to-before did not make any deposit with interest based banks.
  • The Islamic Banking products which are offered by IBBL through its 167 branches located at important centers all over the country and spontaneous acceptance of those products by the people proves the superiority of Islamic banking.
  • IBBL’s market share of deposit investment and ancillary business is steadily increasing.
  • IBBL, though still a tiny bank, handles more than 10% of country’s export and import trade.
  • Among the contemporary commercial Banks IBBL’s position is first in respect of mobilization of deposit, deployment of fund and earning profit.
  • Investment in industrial sector occupies nearly 33% of IBBL’s investment portfolio. This is a unique example of industriaUinance by a commercial Bank.
  • More than 1.15,000 workers are employed in the industrial projects financed by IBBL. IBBL has thus made significant contribution to solving unemployment problem of the country.
  • Dhaka- the capital of Bangladesh being a Mega city- has acute transport problem. IBBL has joined hands with an enterprising group to introduce afleet of Premium Bus service, which has attracted the attention of all section of the people and mitigated transportation problem of the city to some extent.
  • IBBL has introduced several other welfare oriented Investment schemes, suchas Small Transport Investment Scheme, Small Business Investment Scheme, Agriculture Implements Investment Scheme, Poultry Investment Scheme, Household Durable Investment Scheme, Housing Investment Scheme etc.
  • IBBL launched a Rural Development Scheme for providing finance to drown-trodden section of the populace- an area where no other Commercial Bank has extended any finance. IBBL’s mission is to reach to all 68,000 villages of the country as early as possible.
  • a IBBL has contributed a remarkable amount million Tako as income tax to the Government Exchequer on its net profit over the last 18 years, a At the initiative and drive of IBBL, several Universities in Bangladesh, have introduced Courses on Islamic Banking and finance.
  • IBBL has organised a good number of national and international Seminars on Islamic Banking and Economics. Importantly, IBBL sponsored a Seminar at Dhaka with a view to forming an Islamic Common Market.
  • Due to constant pursuation of IBBL the Government has granted licence for establishment of an Islamic Insurance Company. By now two (2) islarrtic Insurance Companies have started business.
  • IBBL has earned reputation in the country as a corruption free institution.
  • IBBL is held in high esteem in the banking circle as a good managed bank.
  • Under the leadership of IBBL, Bangladesh Association of Banks (BAB) has been formed. This is a platform to ventilate the stand-points on banking issues of the private sector banks. a IBBL has taken initiative to form an Association of Islamic Banks in Bangladesh for furtherance of the causes of Islamic banking.
  • IBBL has established a foundation called Islami Bank Foundation1 for carrying out social welfare activities. The foundation has taken up a number of schemes covering the whole of Bangladesh.

Social-welfare activities of  Islam bank foundation

One of the distinguishing features of Islami Bank is that its overall activities are directed towards the welfare of the society. The Bank, since its inception, has dedicated itself for the upliftment and emancipation of the helpless and downtrodden people of the society. With this end in view, the Bank has created a separate fund, which was earlier known as Sadaqua Tahbil. In 1991, the Sadaqua Tahbil was reorganized and enlarged-under the new name of ‘Islami Bank Foundation’ with a fund of Taka 38.00 million in order to conduct social-welfare activities on a wider scale. As one of the leading non-government voluntary organisations of the country, the Foundation has been working with unique and special programmers for the welfare of distressed humanity and to make poor, down­trodden, landless and asset less people self-reliant.

The aims and objectives of the Foundation are to serve distressed humanity, promote people oriented mass education, extend health and Medicare facilities to the poverty-stricken people in urban and rural areas, create facilities for productive self-employment and develop human resources for improving economic condition and quality of life, assist healthy growth of art, culture and literature, science and technology, sports, research and propagation of Islamic teachings. The Foundation has taken up a number of schemes covering the whole of Bangladesh.

Income Generating Programs

Access to required finance and other related inputs may help many to become self employed. In absence of such opportunity the unemployed youths entangle themselves in various anti-social activities. Islami Bank Foundation has, therefore, taken up the following Self-employment projects:

  1. Rickshaw
  2. Sewing
  3. Poultry Keeping
  4. Rural Health Work
  5. Milch Cow/Goat rearing
  6. Small Trade

Educational Programmes

Education is the backbone of a nation. Awareness bulding, skill training, access to ^information-all depends on education. But it is regrettable that the rate of literacy is still very low in Bangladesh. Most of the children are deprived of the light of education due to poverty, lack of sufficient educational institutions, non-availability of text books and equipments etc. In a ward, the unfavourable socio-economic conditions are responsible for this chaotic situation.

The Foundation has, therefore, taken up the following programmes to improve the country’s educational scenario:

a) Support to Model Forqania Maktab

b) Scholarship/lump grant for poor and Meritorious Students

c) Financial support to Educational Institutions

Health and Medicare Programs

Health and medicare facilities are the basic and fundamental rights of each individual but most of the people of our country are still deprived of it. The Foundation has, therefore, taken up the following:
programmes to extend health, medicare and sanitation facilities to the urban and rural areas:-

a) Establishment of Medical Centres

b) Supporting Charitable dispensaries

c) Lump-sum help for medical treatment

d) Tubewell Installation

e) Sanitary Latrine construction etc.

Such Assistance is also extended to the members of Rural Development Scheme (RDS) of IBBL. Under Health and Medicare programmes preventive measures have also been taken. Special steps have been taken for construction of sanitary latrines and installation of tubewells in the villages covered under to whom Islami Bank Bangladesh Ltd. is providing finance for income generation activities.

Humanitarian Help Programmes

These programme aims at providing help to distressed people who are unable to meet their basic needs like food, clothing, shelter and medicine. The old widow and children without guardians get preference. Besides, the programme extends assistance to orphanages, provide fund for the marriage of poor girls, assist indebted people, help distressed wayfarers etc.

Relief and Rehabilitation Programs

Participation in relief and rehabilitation activities in natural disasters and in emergency forms an important programme of Islami Bank Foundation. During calamities like flood, tornado, tidal surge etc. the Foundation mobilises its own people as well as donates to the relief fund opened at the government level. The Foundation also tries its best to extend hands of assistance and co-operation to the Muslim brethren elsewhere in the world.

Dawah Programs

One important objective of Islami Bank Foundation is to disseminate the true knowledge and teachings of Islam. The Foundation has, therefore, taken up various schemes to enlighten the common people as well as the elite and make them familiar with the concept of Islam. Islamic research magazines and other Islamic Literatures are being distributed among the Academicians, Journalists, Justices, Lawyers, High Officials, Bankers, Literatures and important Libraries and Institutions of the country. The Foundation is also working among the prisoners for their moral reforms.

Development of manpower, research, training and motivation

The principles and working procedures of Islamic banks are completely new and different from the conventional banks. There is an inevitable need for training of the employees of the banks to orient and attune them to the new system of Islami banking. To ca-ter to this need, Islami Bank training and Research Academy (IBTRA) was established in 1984, soon after the inception of the Bank.

The activities of IBTRA covers both training and research on various aspects of Islamic banking. The Academy developed a rich library of its own with a treasure of valuable books on different subjects including Islamic economics, banking, comparative philosophies and journals of home and abroad and research articles and documents. Employees of the Bank, learners and researchers have been taking full advantage of the library.

The Academy edited books on “Readings in Islamic Banking” and “Investment Operations”. It also edited and published a brochure on “Investment and Trade Opportunities in Bangladesh.”

Keeping in view the existing and future training requirement of the Bank and also to generally cater such needs of different Islamic banking & financial institutions of the region, the management of Islami Bank Training and Research Academy has been placed at the disposal of an Academic Council consisting of 3 Directors of the Board, Management Executives of the Bank, Shariah scholar, renowned academicians and representatives of reputed institutions engaged in the training of bank officials of the country.

The Academy conducts training courses, and workshops. The courses include Islamic Banking, Banking Law and Practice, Investment Operations and Management, Foreign Trade and Foreign Exchange, Shariah Based Audit and Inspection

Besides, orientation, induction, foundation and motivation courses on different subjects are also conducted round the year. In addition to conducting regular training courses, it arranges seminar on Islamic economics and banking and such other related topics of current interest.

Apart from this, an “Executive Development Programme” has been introduced at the Head Office of the Bank in Dhaka since 1988 for enriching knowledge and thought process and developing professional skill of the Executives. This programme has proved to be effective and now being extended outside Dhaka. The Academy conducts internship courses for the students of different Departments of various Universities of the country.

The Bank introduced annual award for the best three students of the Department of Banking and Finance of Dhaka University who secure 1st class 1st, 2nd and 3rd with ‘Islam! Banking’ as special subject from the year1994.

he Bank is also providing financial assistance for )publication of a textbook on ‘Islamic economics and banking’ for the university students.

Besides, a motivational programme has been itroduced since 1987 for the clients of the Bank. Client-orientation programme are arranged at different branches for disseminating the concept of Islamic economics and banking and to acquaint the :clients with the operations of Islamic banking system, ‘he Bank, in 1993, co-sponsored a 3-day nternational Seminar on ‘Islamic Common Market’ n which scholars, economists, bankers, industrialists’ 2nd representatives of trade bodies of 15 ;countries participated. The Bank, with the :ollaboration of International Association of Islamic Banks (IAIB), organised an International Seminar on Islamic Banking in!985 and another international Seminar on Islamic Banking and nsurance in 1989.

Islami Bank Training and Research Academy has introduced Diploma in Islamic Banking since 1998.

Publicity and public relations

The Bank, since its birth, has been relentlessly working to project and promote the lofty ideals of Islam in the fields of economics and banking and to reach the people of all walks of life and bring home to them the concept of Islamic banking.

Thus, it has been able to create a favorable image about Islamic banking among the people. The Bank releases advertisements through radio, television, magazines and newspapers to make urban and rural masses aware of the ever growing concept, modes of operation, schemes and services of the Bank and to focus on its progress and motivate traders, businessmen and industrialists to establish and broaden their business links with the Bank. To promote healthy growth of art and literature in the country, literary magazines are patronized.

The Bank has so far published a number of books, booklets, souvenirs and folders on different aspects of Islamic banking and Islamic economics. Attractive multi-colored posters were also published depicting the aims and objectives, people-oriented special investment schemes of the Bank.

National and international newspapers and magazines published features and in-depth reports on the progress of the Bank and made editorial comments praising the welfare activities of the Bank.

Bank’s quarterly research journal Islami Banking’ highlighting the concept of Islamic economy, banking, insurance, prospect of economic collaboration among the Muslim countries etc. started its publication in 1992 which has been widely acclaimed by all sections of people including academicians, economists, bankers, journalists, judges, intellectuals etc. A periodical house magazine named ‘Islami Bank Parikrama’ is being published regularly as the mouthpiece of the Bank. Discussion meetings, seminars, symposia, workshops are also being arranged to apprise the people of the Islamic banking system. Stalls and booths were opened in different national and international fairs for projecting the activities of the Bank.

Management and Internal Organization  Management of IBBl:

Islami Bank Bangladesh Limited is managed by a 24-member Board. Of the Directors, 8 are foreigners and 16 are local. The Board of Directors forms a 9 member Executive Committee for efficient operation of the Bank. Besides, a Management Committee looks after the affairs of the Bank.

Management Approach and leadership style

IBBL Eastern Bank Ltd. Follows participate leadership approach. Work accomplishment is from committed people with interdependence through a common stake in organization purposed with trust and respect. They are the managers who display in their actions the highest possible dedication both to people and to work. They are the real term managers’ who are able to mesh the service needs of the enterprise with the needs of the individuals.

Technology at Islam Bank Bangladesh (ltd.)

With rapid change in communication banking worldwide has experienced a tremendous transformation and it is continually being shaped to suit the changes of industrialization of the society. Unfortunately, Bangladesh have missed much of the excitement and we are virtually unaware of the improvements in banking services in other developed countries.

IBBL has now brought a part of that development made through improved computer and communication technology. Clients of IBBL Bank will now enjoy service quality that is quite upgraded and to some extent unique.

Personal policies

Personnel policy at IBBL Bank Ltd. Is not clearly defined in Dhaka. However the broad outlines of the policy are:

  • To establish contingency plants for local staff protection
  • To develop programs to cross train personnel for added flexibility

Corporate culture

Ideology, Values, Beliefs, Philosophy, etc.

They have a standard set of rules for ethical guidelines. The core idea of it is to “Do the right thing”. The right thing may not be obvious at all the time. They are to took after the community and serve them, avoid conflict of interest whenever possible. The idea at the Citicorp is to build a congenial atmosphere and encourage teamwork and progress collectively.

IBBL as a good corporate citizen abides by a set of core values. Some can be classified as traditional values such as security, trust worthiness, integrity and confidentiality. Others are perhaps more temporary. They reflect IBBL Bank Ltd’s commitment to its customers to be.

  • Responsive to their needs
  • Flexible in approach
  • Professional in manner
  • Always striving excellence.

The major corporate philosophy of IBBL Bank Ltd. Is to efficiently manage the risk involved and maintain the stability of the bank to the greatest extent possible.

Organizational practices

IBBL Bank Ltd. Is quite conservative in their organization polices. These policies are followed by Citicorp and are intended to protect the interest of stakeholders. They go through extensive market research before launching any new product. They try to minimize risk by acquiring as much information as possible.

Managing public affairs

They have a very definite view about public affairs management. The bank wants the name franchise to be a symbol of status. Retail bank is still not in operations and individual account is discouraged with high minimum balance requirements.

Press relations

They also have a clear view of press relations. They are not going for an advertisement in the national dailies. Their motto is to be focused to a target group. First they identify their target customers and they approach him / her directly. So they do not need any promotion to attract the customers.

Shariah Council: Shariah Supervision

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.

Opportunity & threats of IBBL

Problems and prospects of Islamic banking in Bangladesh

Despite tremendous popular support spectacular success in terms of mobilization of deposit and distribution of profit Islamic banking in Bangladeshi yet to achieve the desired level of success due to the absence of appropriate legal framework for carrying out Islamic Banking operations in the country. All the government-approved securities in Bangladesh are interest bearing. Besides, Islamic Money Market in Bangladesh is yet to develop. As a result the Islamic banks, which are committed to avoid interest, cannot invest the permissible part of their Statutory Liquidity Reserve and Short Term Liquidity in those securities.

Inspire of the present limitations, Islamic-banking system has tremendous potentiality and prospect in Bangladesh. Firstly, the successful launching and needs to an Islamic Money Market in the country. Thirdly Islamic banks have brought together many depositors and entrepreneurs Under their fold and coverage. These depositors and entrepreneurs so long avoided interest-based banking on grounds of religious injunctions.

The gradual and successful globalization of Islamic banking coupled with growing awareness of the people about its financial and social benefits makes it clear that the next century is going to be the century of Islamic banking.


About Rural Development Scheme:

The Bank, since its inception, has been working for the upliftment and emancipation of the under privileged, downtrodden and neglected sections of the populace and has taken up various schemes for their well being. The objectives of these schemes are to raise the standard of living of low-income group, development of human resources and creation of avenues for self–employment.

Development Rural Scheme:

Islami Bank Bangladesh limited (IBBL) envisages an economic system based on equity and justice. Taking into consideration that majority of the population below poverty line lives in rual Bangladesh, the Bank has devised a Rural Development Scheme (RDS) with a view to creating employment opportunity for them and alleviates their poverty through income generation activities.

The IBBL through its RDS project has been implementing integrated program

for the  landless poor, eage laborers and marginal farmers aimed at meeting their basic needs and promoting their comprehensive development. Consciousness among the poor needs to be enhanced so that they can firm ups their position in the socio-economic structure of the country. In order to consolidate their economic base, invested money should be used in income generating activities so the poorer section of the population can become self-reliant. RSD works for the realization of that objective.


The followings are the important objective of IBBL’s Rural Development scheme:

  • To bring the poorer populating within an organizational framework by setting up certain rules and regulations with a view to free them from the curse of poverty and make them self reliant, thereby converting RDS into a self reliant sustainable programs.
  • To extend bank investment to agricultural and non-agricultureal sectors in the rural areas.
  • To invest on employment and income generation activities of the rural population.
  • To provide self-employment for distressed people.
  • To provide self-employment for the poor and distressed by group/center formation.
  • To bring both male and female to provide employment under income generation activities and help them to attain self-reliance step by step.
  • To continue to support the self-reliance drive of the poor in their search of capital formation from savings they make out of their increased income.
  • To help reduce and eventually stop, through enhancement of their income, the lending on thigh and exorbitant rates of interest by the village money lenders, the advance sale of crops, land and mortgage of land by the poor at the time when they are most in need.
  • To follow an approach of comprehensive development side by side will economic development and
  • To provide financing to develop housing in the area.


Selection of Ideal Village

For creating an ideal village, one/more villages to be selected within to km of each specified branches area. While doing this considers the following matters.

  • Easy transportation
  • Having agricultural /non-agricultural sectors.
  • Majority of low income holder

After primary selection, baseline survey will be done in that village.


The RDS of IBBL is target group based. Beneficiaries of the plan are thus ladles, wage laborers and marginal farmers. Selection criteria for members of the target group are as follows.

a) Famrmers owning up to 0.50 acres of land including sharecroppers;

b) Persons engaged in non-agricultural activities owning up to 0.50 acres land or landless;

c) Permanent resident of the project area.

d) Borrower or defaulters of any other bank or organization will by no means be the beneficiaries of the plan;

e) Females belonging to the families of the serial 1 and 2 above, interested in income earning projects, but who unable to do so due to dearth of money, may form a group and get the financial support.

f) Distressed people may undertake income-generating schemes in non-agricultural sec tors such as cow/goat/chicken etc. For their self-employment; and

g) Landless to be given priority in selecting target groups whose yearly family income must be below Tk. 15,000/-.


Target Area:

Initially the Scheme was started as a Pilot Scheme in rural areas of certain districts under the direct supervision of the nearby Branches of Islami Bank Bangladesh Limited. The Scheme is being gradually extended to other districts/areas through different Branches of the Bank.

Command Area and Baseline Survey:                                           

Each designated Branch will select villages initially within a radius of 10 kilometres of the Branch. The criteria to be followed in selecting a village should be the following:

  1. Easy communication;
  2. Availability of agriculture and other off-farm activities;
  3. Abundance of low-income people;
  4. Predominance of Islamic values and ideas.

After initial selection of the area, Branch will conduct detailed Baseline Survey to identify the various economic activities and types of people residing in the command area. Besides in selecting villages the concerned Branch should ensure that at least 250 clients are available in 5 clustered villages and the investment will be financially viable.

Target Group:

  • Farmers having land holding of maximum 0.50 acres.
  • Sharecroppers with consent from the landowners.
  • Persons engaged in off-farm activities having no land or land up-to-maximum 0.50 acres.
  • Persons/farmers permanently residing in the selected villages.
  • Persons having derelict pond will be eligible for investment for re-excavation and fish cultivation.
  • Destitute women and distressed people will be provided investment for milch cows/poultry birds/ducks/goats etc. and other suitable off-farm activities for raising their supplementary income.
  • Persons having liabilities with other banks/institutions including defaulters will not be eligible for the investment under the Scheme.

Purpose, Reppayment Period and Ceiling:

Purpose Period Maximum Ceiling
Production Need:

Production of 21 types of crops


1 year



Pond Fishing

(Maximum 3 years. But the period

of investment will be decided on the

basis of the nature of fish cultivated)

3 yearsTk.25,000.00
343 kinds of
off- farm activities
General1 yearTk.20,000.00
Irrigation charges1 yearTk.5,000.00 Depending upon the requirement.
Agricultural and irrigation equipment3 yearsTk.25,000.00 Net investment of the Bank (minimum 10% down payment to be paid by the client)
Rickshaw / Rickshaw-van and other  rural transport2 yearsActual price to maximum

Tk. 5,000.00

Other Needs:

Hand tube-well for pure drinking water

3 years


Tk.  3,000.00

Construction materials for house3 yearsTk.15,000.00

Investment as aforestated will be allowed to an individual client in phased manner. Those clients only who are successfully utilizing the investment for production purposes will be eligible to avail investment for housing and pure drinking water needs. Their past performance in respect of instalment payment, Group activities, savings plan and fund raising as per stipulation of the Scheme shall be considered while recommending for investment in other needs. The phasing should be done in the following manner:

  1.          Production Needs                – 1st year
  2. Hand Tube-wells for           – 2nd year
    pure drinking water
  3. Housing Needs     – 3rd year

Group Formation & Management:

Activities of the RDS are organised by a group of 5 members. People with the same mentality, age and financial status who are trustful to each other are considered for group formation.

  1. Group members elect one group leader and one deputy group leader from them.
  2. Group leader works for selecting client, disbursement of investment and recovery. He also collect information about client’s /member’s liability to any other bank /institute. And he also ensures the participation of group works of members who are worked in agricultural and non-agricultural sectors.
  3. Group leader and Branche’s Frield supervisor, both have the power to entry and exit of group members.
  4. A large group is formed by combing minimum 2 to maximum 6 small groups, which is known as “Centre”. Each centre elects one group leader and one deputy leader.
  5. A meeting is held weekly in each centre.
  6. The working description of each centre’s meeting written properly which members sign?
  7. Regular attendance in meeting is major responsibility of each client /member. Otherwise client /member is treated as exist from the group.
  8. Banks field supervisors’ manager the meeting.
  9. Detail discussion about scheme’s objectives, principles, limitations and prospects and members’ duties and responsibilities are held in meeting.
  10. Collection of deposit and issue of Pass book of instalment of investment, personal savings, centre fund etc. are contained in meeting by Field supervisor and centre leader.
  11. Selection of client and selected client’s investment application and other papers are provided in meeting.
  12. Other members of group force for proper behaviour of group member who does not maintain the rules and regulation of the group /centre properly. Otherwise group members collect compensation themselves from him /her and get him/her out from the group for breaks down the rules and regulations of the group /centre and he /she fails to get benefits from the bank. If that number is a defaulter, then he/she returns the dues to bank.
  13. Group’s each member gives guarantee for each other. Each member helps them to supervise their investment and recovery – in this regard each member signs each – other’s application and other documents.


Agriculture Implement Investment Scheme:

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

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

Islami Bank Bangladesh Limited is a welfare oriented Bank. It can play positive and important role in the economic development, progress and uplift of the country by investing in the agricultural sector. The Bank has, therefore, introduced ” Agriculture Implements Investment Scheme” to provide power tillers, power pumps, shallow tubewells, thrasher machine etc. On easy terms to the unemployed youths for self-employment and to the farmers to help augment production in agricultural sector.


  1. To create opportunities for self-employment of un-employed rural youths.
  2. To help farmers to augment agricultural production.
  3. To assist in the introduction and use of modern technology in the agriculral sector.
  4. To play auxiliary role in achieving self-sufficiency in food production.

Items of Agricultural Implements:

  • Power tillers
  • Power pump
  • Thrasher Machine
  • Shallow Tubewell
  • Any other agricultural implements proposed by the branch and which has local demand.
  • These implements may be of any popular brand. Any locally manufactured brand, which has large demand, is also acceptable. The choice of investment clients shall be given preference in this regard.

Investment Area

Investments are allowed under this Scheme through all branches of he Bank except the branches located in the metropolitan areas. The command area of the concerned branch is within 15 miles radius from its location.


  • Educated or half-educated rural youths, educated or illiterate farmers and any person ready to accept agriculture as business may apply for investment facilities under this scheme. Preference shall be given to those applicants who have passed S.S.C or above.
  • The applicant farmer shoud person sound health and his age must be minimum 18 years and maximum 50 yeard. If the applicant is educated or half educated yout than his age must be between 18 to35 years.
  • The applicant must be physically and mentally fit and willing to operate the machine himself.
  • Applicant must be a permanent resident of the concerned area and be willing to stay and work there.

Period of Investment: 2 (Two) years

Mode of Investment: Hire Purchase Shirkatul Melk

Client Equity:

Generally the investment client shall have to pay 20 % of the cost of agriculture implements/ equipment as equity. Equity shall be 10% if the Bank undertakes any special project under the supervision of any registered NGO approved by the Bank. The client shall have to bear the cost of installation of the agriculture implements\equipment and related expenses.


  • The agricultural implements to be supplied to the investment client shall remain in the name of the bank till the repayment\adjustment of the dues to the bank.
  • Collateral security of immovable property equal to to the amount of bank’s investment backed by irrecoverable general power of attorney.
  • Client, who is unable to offer collateral security of immovable property, shall have to provide personal guarantee of two respectable persons acceptable to the Bank. Guarantors should preferably be client’s father/guardian or teacher.

Repayment of Procedure:

Repayment Procedure The investment shall have to be repaid in 4 instalments within a year. The instalement shall be fixed on the basis of the sowing / transplantation and harvesting seasons of the crop. The branch Manager shall deiced both the amount and time of the repayment of instalment.


Risk Fund

Risk Fund Under this scheme a risk fund shall be created by debiting the concemed investment account an amount equal to 2%of the Bank’s investment at a time at the rate of 1% per annum for 2 years.

The risk fund will be utilized for the following purposes:

  1.  For meeting the cost of repair of the implements supplied if there is any damage of the implements due to accidents during operations.
  2. To cover the loss if any against the investment subject to approval from the head office.


  1. The overall supervision of the investment shall be the responsibility of the concerned branch.
  2. For supervision at the field level the Bank, may engage educated unemployed youths of the concerned area as per rules of the Bank. Supervision fee at the rate 2% over investment may be charged from the investment client for this purpose.

Bi-monthly Meeting

The concerned branch shall arrange bi-monthly meeting with investment clients and shall evaluate the success of the scheme and discuss problems and take measures to solve them.

Procedure for Submission of Application and Sanction:

Interested investment clients shall have to apply to apply to the concerned branch in prescribed form of the Bank for investment facility under the scheme. The bank shall consider the proposal in the light of aforementioned terms and conditions and if found viable then shall sanction and disburse the investment.


Rate of Return, Supervision Charge and Risk Fund:         

Bank’s rate of return will be @ 11% per annum (approximate).

Risk Fund contribution of the client will be @ 1% per annum, on the net disbursement.


Security Requirements:

Generally, security will not be required against investment under the Scheme as entire Scheme has been drawn taking into account the social welfare objective of the Bank for upliftment of the socially down-trodden and economically backward and weaker section of the population of the society. However, Group discipline should be strictly followed and complied with so that only the right persons are selected and included as member of the Group.

In case of investment for purpose of pond fishery, special ceiling in off-farm activities and agricultural and irrigation implements, Branch should obtain after due verification, of land documents of the clients and keep their documents as collateral by way of simple deposit of title deeds through a memorandum of deposit executed by the client / owner.

Besides, in all cases, each member of the Group will give personal guarantee for the other members of the same Group and the members will be jointly and severally liable and responsible for payment of investment.

Sanction and Disbursement:

On the basis of the list submitted by the field officer, the Investment Committee of the Branch will carefully scrutinise the applications and sanction the investment at the Branch level. The members of the Committee will consist of Manager, Project Officer and the field officer. After sanction of the investment the Branch will complete documentation formalities and then disburse the amount with the help of the Investment Officer and field officers. In all the cases Branch must ensure strict adherence to the banking and Shariah norms.


Modes of Investment:

The Branch will select any of the following modes depending upon the sector and purpose of investment :

Bai-Muajjal TR

Under this mode Branch will sell goods to the client under deferred payment basis. The payment will be made in instalment/ lump sum on predetermined future date.

 Hire-Purchase Shirkatul Meelk (HPSM) or Leasing

Under this mode Branch may supply implements/equipments on rental basis. The ownership of the equipment will be with the Bank but the client will be authorised to possess the equipment for certain period. Under HPSM the client will have to contribute minimum 10% of the cost price of the equipment as his equity and the rest will be invested by the Bank towards payment of the purchase price to the supplier. Under leasing system 100% cost price of the equipment will be paid by the Bank while the client deposits down-payment of equipment equivalent to 2 instalments prior to availing the investment which will be kept as his equity and will be refunded at the expiry of lease term.


Under this mode Branch will supply capital to the Mudarib (agent) for conducting business, purchase of inputs, commodities etc. to be repaid on future date. The profit is to be negotiated and will be determined so as to ensure minimum 12% rate of return.


Under this mode the Bank will extend investment on profit and loss sharing basis. In this case, Branch should receive investment proposal on a very selective basis with prior discussion with the Zonal Head. The capital sharing ratio will be maximum 80 : 20 between Bank and the client. The profit is to be negotiated and will be determined so as to ensure minimum 12% rate of return.


Under this mode Branch will execute advance purchase contract with the client and make payment against purchase of product, which is under process of production. A Bai-Salam contract will be executed before making any investment showing price, quality, quantity, time, place and mode of delivery. The profit is to be negotiated and will be determined so as to ensure minimum 12% rate of return.

Murabaha TR

Under this sale contract the Bank purchases a certain commodity for the client as requested and specified by him which are deliverable to him on payment at a pre-determined price. Under this mode client will provide minimum cash security 20% of the cost price.

While considering the investment proposal under Musharaka, Mudaraba and Bai-Salam modes Branch must ensure not to exceed 20% of the total investment under the Scheme. Branch should also be very selective in considering proposals under the above modes and confer with the Zonal Head before sanction.

Process of Recovery:

It is believed that the banks best chance for successful recovery is dependent upon property structuring the installment payments. The amount and number of installment should be based on amines from the investment and the time interval it takes for one investment gestation return cycle. The following considerations are taken into account while determining the appropriate installment payment:

  • For the non-agricultural sector installments may be made on a weekly/monthly/quarterly basis. Weekly installments are preferred since the frequency of the short intervals often times lead to more successful recovery. Usually a payment schedule requiring 45 fixed installments of principal and profit are prescribed, allowing a two week gestation period, This payment schedule allows for up to three missed installments, two installments are not required during Eids and one installment may be missed in the event there is an accident.
  • Determination for the appropriated installment frequency in the agricultural sector depends on the cropping cycle. In case of vegetable and green curry production, weekly installments allowing a longer gestation period is suggested.
  • Generally all investments are repayable in weekly equal installments. In exceptional cases, with income generated beyond the date of the installment payment, a timely token payment is advisable followed by payment of the residual amount along with the next due installment.

24 years perspective plan regarding expansion of RDS:

YearNo. of Villages to be includedTotal No. of Villages included



Savings Plan:

  • The members of the Group will have to open Mudaraba Savings Account in their individual names with the   Branch from the very inception of the Group activity.
  • This Mudaraba Savings Account will be non-chequing. This will induce the clients to make a habit of compulsory savings.
  • This savings may, however, be withdrawn by the member if he does not have any other liability with the Branch in any way.
  • The weekly compulsory savings will be minimum Tk.5.00 per member.

Center Fund                                                                                                                                                                                    
Each member of the Group will deposit minimum Tk.1.00 per week in the Centre Fund. This Fund will be kept by opening a Centre Fund Account at the Branch in the Mudaraba Savings Account. This Fund will be utilised for the welfare of the members by way of Quard as per decision of the Centre in the weekly meeting. This account will be operated by Centre Leader & Deputy Centre Leader jointly. This fund will be refundable.

Supervision, Follow-up and Monitoring:

The investment under the Scheme will be fully supervised. The Branch must take the responsibility for the investment as well as recovery. To ensure this the Branch must ensure systematic and continuous relationship with the clients. To achieve this close relationship, the Branch must work together and meet closely and regularly with the clients.

Accordingly, the target area should be nearest to the Branch and to make continuous relationship with the client, Group approach should be encouraged. Through Group approach, clients will be motivated, induced and pressed by the fellow members in the recovery of the investment.

At least one field officer will be appointed for every 300-investment clients in addition to one or more Assistant Officer/Officer who will work in the Branch and supervise the works of the field officers. The field officers will under-take the following functions under the overall supervision of the Officers/Managers of the concerned Branch.

  • Conduct base-line survey of the area.
  • Organize the target Group people and induce them to form Group’s.
  • Attend Group meetings and conduct the meetings, elect Group Leader and Deputy Leader of the Group.
  • Minimum 2(two) and maximum 6(six) Groups will form a Centre. Each Centre elects a Centre Leader and a Deputy Centre Leader among the Group Leaders & Deputy Group Leaders to co-ordinate the Centre activities.
  • Ensure collection of weekly personal savings and weekly installments and enter them in the ledger.
  • Issue Pass Book to the members duly signed by the field officer. This Pass Book will be verified with the respective Ledgers by the Project Officer of the Branch every month.


Appointment of field officer:

field officer will be appointed by Head Office as per rules. One officer will be responsible to supervise minimum 300 clients. Officer should be appointed well ahead of starting implementation of Scheme in the branch.The concerned Branch will start operation of the Scheme after satisfactory completion of the base-line survey, formation of the Groups, motivation of the Group members and compliance of the Group disciplines etc.

  • The eligibility criteria for the field officers will be the followings:
  • Young man with initiative and drive.
  • Minimum education: graduate or equivalent.
  • The field officers will be recruited as per Recruitment Policy of the Bank, keeping in view, amongst others, ideological commitment of the candidates.


Supervision and Logistics

The Scheme will be supervised by two or more officials    from the Branch as under :

  1. Assistant Officer / Officer as project Officer
  2. Ffield Oofficer

Designated Assistant Officer/Officer of the Branch will perform the duties as under:

  • Advise and guide the Field Officers in implementing the Scheme.
  • Provide necessary training to the members/Group members on the different aspects of the Scheme.
  • Ensure strict and timely attendance of the Group members in the weekly meetings. Ensure regular deposit of savings & Centre fund by members.
  • Ensure strict adherence of Group activities and responsibilities in disbursement as well as recovery of the investment.
  • Ensure proper endues of the investment.
  • Ensure recovery of instalment on weekly meetings.
  • Ensure investment in profitable activities.
  • Imbibe the member’s confidence on the Scheme and continuity of Bank investment in future. This reduces the rate of default.
  • Ensure deposit of savings/instalment money within the same day realised/collected from the members with the Branch and posting of the same in the respective Ledgers.
  • Ensure balancing of ledgers and preparation of statements and returns of RDS as per instructions issued from time to time and submission of the same to the Zonal Office and Head Office in time.
  • To ensure mobility and proper supervision and follow-up, the regular Officer of the Branch will be provided with one motorcycle by the Bank. The field officer will also be provided with one bicycle against Quard. The Quard will be recoverable from the emoluments of the Supervisor  @Tk.150.00 per month.


Application and Processing:

The Branch will start receiving investment applications and accord approval in the following manner as soon as the Investment Committee of the Branch will be satisfied that the Group members conform to the principles of Group activities and it is ensured that such Group activities will be carried out without any hindrances in future.

The application as per Bank’s approved format will be distributed among the eligible members of the Group. The Bank officials will help in filling in the forms.

The application after properly filled-in will be submitted to the Branch.

Upon receipt of the applications from the members, the Bank officials will verify the forms and discuss in the weekly meeting with other members and ascertain that the Group will take responsibility in the recovery of the installments and also dwell on the applicants past behavior in the Group meetings. The Group Leaders will recommend the application along with Bank’s field officer and designated Officer of the Branch for sanction.

The application, thereafter, will be presented to the Branch for sanction of the investment.

The Investment Committee at the Branch will give its observation and sanction the investment if found suitable.

The applications found suitable for sanction should be disposed off within 7 days from the date of receipt of the applications till date of disbursement of the investment. The applications which do not merit consideration should be disposed off within 7 days and decision be conveyed to the applicants accordingly.



To secure the Bank’s investment, the following documents will have to be executed:

  1. Prescribed application form with Deed of Agreement & Group guarantee
  2. DP Note & DP Delivery letter.
  3. Hypothecation of crop’s/stock’s etc. deed where applicable.
  4. Memorandum of deposit of title deed where applicable.

Other Investment Facilities:

The investment requirements of the deserving and investment worthy clients of the area who are not covered under the Scheme may be accommodated under other existing/proposed Schemes of the Bank:

  • Small Business Investment Scheme.
  • Agriculture Implements Investment Scheme.
  • Micro Industries Investment Scheme.
  • Dairy Investment Scheme.


The existing field officer and designated Project Officer will explore the possibilities of investment in the area under the aforesaid Schemes and recommend to the Branch for sanction. If the Branch is designated to handle the proposal of the client under the above Schemes, and if it is within business discretionary power of the Branch Incumbent, the Branch may sanction; but if it is not, the Branch may send the same to Zonal Office/ Head Office for sanction. The entire Scheme has been chalked out in such a way so that all the persons within the command/ target area may be brought within the fold of Bank’s Investment Scheme for productive economic activities.


Micro Industries Investment Scheme :

Bangladesh as a developing country has been trying for its overall economic growth. One of the major problems confronting its growth is lack of development of enterprises and potential entrepreneurs who can create more job opportunities by establishing new enterprises in the industrial sector. There are a number of educated unemployed youths and also skilled & semi skilled unemployed persons in the country. Besides, every year quite a good number of youths are coming out of the general/technical educational institutions to add to this already crisis ridden employment  market.

Development programs and efforts will bring no meaningful result unless and until income generating employment opportunities can be created for the growing number of unemployed people including the educated unemployed youths. Establishment and expansion of micro industries can play a vital role in creating more employment opportunities as well as in the overall socio-economic development of the county.

Islami Bank Bangladesh Ltd. has been appreciably participating in this direction by financing industrial sector. With a view to creating wider base for industries, the Bank has decided to launch “Micro Industries Investment Scheme” through its Branches. This scheme has been devised to career to the investment needs of those persons who intend to set-up new micro industrial ventures or to restructure their old units by way of BMRE involving a total cost of Tk. 5.00 lac.

This is intended mainly to create new jobs for the educated, skilled & semi unemployed and also to encourage those who remain outside the purview of investment due to shortage of funds and insufficient collateral. The scheme has been prepared with easy terms and conditions to encourage the small entrepreneurs, educated unemployed youths and skilled/ semi skilled persons to come forward for establishment of micro industries commensurate with the local demand.


The main objectives of the scheme are as follows:

  • To create income generating employment opportunities through establishment of new micro industries and BMRE of existing units by providing necessary investment facilities.
  • To encourage establishment of micro industries in differnt areas of the counrty by potential entrepreneurs like educated unemployed youths, technically qualified and skilled / semi skilled persons.
  • To encourage wage earners to utilise their hard-earmed money in the country by providing additionl investment needs for establishment of micro-industries.
  • To provide investment facilities for self-employment of the unemployed and under employed persons having education, knowledge, skill, experience and initiative to undertake micro industrial enterprises.


The eligibility criteria for the selection of the entrepreneurs under the scheme will be as under:

  • Engineering diploma of degree holders, of persons having diploma or certificate from any Technical Notational Training Institutes and willing to set-up micro industries.
  • Educated unemployed youths having initiative and knowledge regarding the proposed industry.
  • Skilled and semiskilled persons having practical knowledge and experience in industrial perations.
  • Persons already engaged in micro-industries as owners and willing for BMRE of their enterprises.
  • Wage Earners who want to establish micro industries having work experience/ training in the particular field of industry.
  • The proposed enterprise must be exclusively owned by Bangladeshi Nationals, which use undigenons raw materials or imported raw materials not exceeding 25% of the total requirement of raw materials. (R. Page 126)
  • Defaulters and persons/enterprises having outstanding liabilities with other Banks and Financial Institutions will not be eligible for availing investment under the scheme.

Ceiling of investment by Bank :

The extent of Bank’s investment will depend upon the actual requirement of a particular industry/ enterprise, its nature of production, model & origin of machineries the working capital requirements etc. The Branch should ascertain the cost OT the project taking into account all the above issues.

Bank’s investment shall not be more than 60% of the cost of machineries or 50% of the total cost of the project (both machinery & working capital), whichever is less, within the maximum total investment ceiling of Tk.5.00 lac per project/enterprise. The client’s equity shall be calculated taking into account cash investment plus the cost of the project land & building if owned.


  • To secure Bank’s investment, collateral security of immovable properties backed by irrevocable General Power for Attorney shall have to be obtained.
  • In case of technically qualified persons and educated unemployed youths, the original educational certificates shall have to be deposited with the Bank.
  • The ownership of machineries/equipments shall remain in the name of the Bank till full adjustment of Bank’s dues.
  • The stock (existing & future) shall remain hypothecated with the Bank till full adjustment of Bank’s investment.
  • In case of exceptionally deserving candidates, such as educated, experienced, sincere, hardworking young-men with good reputation who intend to set-up & run the industries fulfilling all the terms & conditions except that of collaterals they may be allowed an investment up to a maximum ceiling of Tk. 2.00 lac without collateral but on personal guarantee of 2(two) reputable persons having good financial means and social standing acceptable to the Bank.

Period of Investment

Capital Machinery: 5 years (Exclude reasonable gestation period)

Raw Materials: 1 years (From date of disbursement of investment)

Risk Fund

The client will contribute in the risk fund @ 20% of the total Bank’s investment for the project/ enterprise at the time of disbursement in order to meet any loss caused by genuine / and unforeseen risks hazards.

Mode of Investment

Capital Machinery: Hire Purchase Shirkatul Melk

Raw Materials: Murabaha (TR)

Recovery of Investment

The mode of payment shall be determined considering the cash flow of the particular project enterprise within the investment period. The Branch in consultation with the client will determine the installment and payment period. However, the following may be considered in fixing the mode of payment.

  1. Hire Purchase: In monthly/ fortnightly/ weekly installment basis.
  2. Murabaha (TR) : In Lump sum at the end of the tenure of investment

In order to encourage regular payment of Bank’s dues, branch should encourage installment payment in both the modes. This will reduce the risk of overdoes & diversion of funds.

Command Area

Investment under the Scheme shall be made within the 20 km. radius from the branch.


Close supervision must be ensured by the branch for proper implementation of the project and recovery of installments in time. For this purpose supervisors (technical hands) shall have to be appointed for each of the designated branches Initially at the stage of implementation, the supervisor must visit the project weekly and after implementation at least once in a month keep the Branch Manager informed about the position of he project in detail.

Sanction & Disbursement

Project investment Department of Head office shall scrutinise the proposal on the basis of the information furnished and the recommendation of the Branch and Zonal Office. If the proposal is found suitable in all respect for making investment, Head Office will issue sanction advice to the Branch, Thereafter, necessary arrangements shall be made by the Branch for disbursement, only after completion of all the required formalities including documentation as per Bank’s rules relations and normal.

Social Benefits

The educated unemployed, technically qualified persons skilled and semi skilled persons will be socially rehabilitated and will get better employment and income generating opportunities.

Unemployment and its consequent evils will be gradually eliminated from the society.

Wage eamers will get opportunity to utilize their hard earned money in productive & profitable enterprises & can settle them selves within the country in a peaceful environment with their family members.

Through formation of capital, Micro Industrial Enterprises will be self-operating units and will generate better and higher income for the target groups.

The quality of life of these entrepreneurs will improve and it will gradually develop the socioeconomic condition of the c country.


List of Micro Industries:

Food and Agriculture Industries:

Bakery & Confectionery, Mills, Oil Mill, Flour Mill, Dal Mill, Chira Mill, lce Factory, Farm, Beef Fattening, Dairy (small/ medium), poultry, Fish Farm/shrimp Culture, Hatchery (Shrimp and other fishes) poultry Feed/ Fish Feed, Food products, Lozenge, Chanachure etc, Food products (Jam, Jelly and other types of fruit processing / canning). Dried Fish, Coconut Products, Mill Processing & Pasteurization Plant.

Plastic & Rubber Industries:

Polythene, Plastic & Rubber products, Rubber Tread, PVC products.

Forestry & Furniture Industries: 

Furniture, wooden furniture, steel furniture, Cane Furniture, PVC Furniture, etc. Woodwork saw Mill, Nursery.

Engineering Workshop:

(Mech/Automobile workshop, welding etc.). Spare parts manufacturing, wire Nails/ Wire, Netting/ Nut-Bolts etc., Filter Aluminum products, sanitary goods.

Leather Industries:

Leather products, Footwear.

Chemical Industries:

Sop (Both washing & toilet soap), Chemical Products, Cosmetics industries.

Textile industries:

Silk Yarn, Weaving (Power Loom/ Hand Loom), Ready-made Garments/ Garment Accessories etc. shoe, Lace, & Tape etc. Hosiery, Dyeing & Printing: Screen Printing, Specialized silk, Screen, Printing, Block Printing, Batik Printing, Handloom products.

Recycling Industries:

Waste Cotton Refiner, Waste Plastic Recycling/ Sponge/ chapels, plastic toys etc. Waste Paper and Polyphone Recycling.

Service Industries:

Service shop (Radio/ Two-in-One/T.V./Computer etc.).

Electrical Accessories industries:

Electrical items (Fan, Bulb, Motor Parts etc.) Decoration Light shades.

Computer Technology:

Computer Training centre, Development and assembling of Hard Ware/Soft ware technology.

Paper Products Industries: 

Printing press, Packaging/ Board/ Packing Materials etc. Graphic Scan, Printing Process Studio etc. Handmade paper /Office Stationery.

Mirpur silk Weavers /Investment Scheme

The scheme has been taken up to assist the silk weavers of Mirpur area particularly in respect of requirement of working capital, BME of existing unit by adding further machinery’s, to develop new entrepreneurs and to assist the workers for getting further training for producing products of various modern design and for modernization of the Silk sector.



I have found some problem and prospect of schemes of Islamic bank Bangladesh limited. So I have mentioned it below:

Household Durable Scheme :

Out look:It is a good investment scheme of ibbl . but it seems to me that the rate of returm is high I:c: 19% which is complicated to pay back .for this reason general people can not take it easily . Many people can not get facility of that scheme of ibbl .

The procedure of taking investment is very long .

How to overcome it: if the bank impose low rate of interest and short procedure of taking investment then many people can take the opportunity of that scheme  of ibbl .


it is a good investment scheme of ibbl . by taking funds new doctors are buying modern medical instrument and opening the chamber for giving treatment to the patient .

So bank should provide big portion of investment under this scheme . Then more new doctors will commence their service to patient and country¢s people will get more service form the doctors.


outlook: Bangladesh is a third world developing country and it¢s economy based on agriculture .so small business investment scheme is very suitable for this country. Many people are opening their small business by making investment of that scheme form ibbl.

So I think that it is a very good investment scheme for this country and the portion of amount should increase in that scheme.


outlook: it is very good investments scheme for house fewer clients. But it seems to me that the profit rate is high and many people cannot take it form bank.

So profit rate should be reduce and then many people will able to take it form bank.

Real estate Investment PROGRAM:

outlook it is a good idea and a good investment program for them whose are not accepted to get investment under house investment scheme. This type of people can take funds under real estate investment program.

Transport Investment PROGRAM:

outlook n: Transport investment program is a good program. Under this program ibbl provides investment to the existed transport businessmen. But ibbl does not provide investment to the knowledgeable businessmen those are not existed. So in this case, existed businessmen who are rich, they become richer and who have no money or little money, they are not getting scope to compete in the transport market. So rich people are being richer and poor people are being poorer.

How to overcome: I think that investment should not provide not only existed transport businessmen but also knowledgeable businessmen about transport.


outlook: it is a good investment scheme of ibbl. Many mid level and high-level officers are not able to buy a car by giving full payment at a time. So they have a great opportunity to buy a car under this scheme.

Under this scheme they buy a car.


outlook: it is a good scheme of ibbl. Under this scheme rural people are taking investment form ibbl and they are developing their life day by day. They are being able to meet their life¢s need.

So it seems to me that the portion of amount of this scheme and the opration and rang should increase. Then more more rural people will get the facility under this scheme.


outlook: under this scheme poor farmers are getting funds for buying their agriculture instrument like power tiller, power pumps, shallow tubewells, thresher machine.

Since our country¢s economy is based on agriculture sector. So it is more suitable for our economy. I think that the scope of investment scheme should increase rapidly.

Micro Industries Investment SCHEME:

outlook it is also be a good investment scheme of ibbl. Enterprenuer of small business are taking investment under this scheme. Small business enterprenures are getting incouragment under this scheme and our country¢s economy is being strong.

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



Summary and Conclusion

The prohibition of riba (fixed interest) makes Islamic banking different from Traditional banking. Of course, the investments of an Islamic bank must be channeled to the Islamic Shariah approved sectors. The phenomenal growth of Islamic banks has attracted the attention of bankers, business community and Bank customers. It is also contended that Islamic banks are not very different from Traditional banks. This debate raises a natural question that if Islamic banks are no different from Traditional banks, why are they growing so fast? A survey analysis of the deposit and investment mechanisms and the opinions of the bankers and the customers of both Islamic and Traditional banks help our understanding and identification of this debate. Our theoretical analysis shows that Islamic bank practices are indeed different from those of Traditional banks. The central theme of this study is to examine the premises of Islamic banking in Bangladesh in the context of some apparent similarities between both Islamic and Traditional banks & NGO, which frequently tend to equalize the both systems of banking. Data of this study was collected from secondary sources. Findings of the study was consulted with the available literature and Executives of banks to confirm their reliability and acceptability. Islamic banking maintains Al Wadiah Current, Mudrabah Savings and Term Deposit accounts, and Traditional banks maintain Current Deposit, Savings Deposit, and Term Deposit accounts. An analysis of these deposit mechanisms shows a misleading similarity that both Islamic and Traditional banks pay money for the deposits of the customers, which is termed as profit in Islamic banking or interest in Traditional banking respectively. While payment of return on deposit in Islamic banking contains element of risk, payment of interest in Traditional banking does not contain the element of risk.

In part three we give emphasize on the Rural Development Scheme & Micro Investment of IBBL, As per the guidance, we select the range of such scheme in one lac taka. This part present compact picture of eligibility of the clients, command area, sector of investment, ceiling of amount, mode of investment, period of investment, client equity, security, group grantee, recovery procedure, performance, comparison of the performance etc. of several schemes. Besides this, problems, prospects, as well as recommendation of “Rural development Scheme” are given. From the above analyses it can be assessed that in near future marvelous success stories are waiting for Islami Bank Bangladesh Ltd. We give our best effort to make this report a master piece.