Report on Modes of Investment

 What is Investment:

Investment means to buy goods and services with a view to earn profit with risk of loss. When these goods and services are sold again , money comes back. This cyclic process may be expressed as follows:

“Transformation of Money into goods with risk of loss, again Transformation of goods into Money”.  

Investment is not possible without Bai & Bai means Buying and Selling.

 Modes of Investment:

There are three Investment Modes which are:

• Trading Mode (Bai Mechanism)
  1. Bai Murabaha

1. Bai Muajjal
2. Hire Purchase (Ijarah)
3. Hire Purchase under Shirkatul Malk (HPSM)
4. Mudaraba
5. Musharakah

3. Bai Salam
4. Bai Istishna’a
• Leasing Mode (Ijara Mechanism)

• Share Mechanisms

 Description of three investment modes:

Trading modes (Bai-Mechanism)

i. Bai-Murabaha

Meaning:

The terms “Bai” and “Murabaha” have been derived from Arabic words Murabaha” and “Bai”. The word Bai means purchase and sale and the word Murabaha means a in cash” Bai-Murabaha meas sale for which payment is  in cash or in future fixed date or within a fixed period. In short, it is a sale on cash.

Definition:

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

Types of Murabaha:

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

Ordinary Bai-Murabaha:

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

Bai-Murabaha on Order and Promise :

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

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

ii. Bai – Muajjal

Meaning:

The terms “Bai” and “Muajjal” have been derived from Arabic words Ajal and Bai. The word Bai means purchase and sale and the word Ajal means a fixed time or a fixed period” Bai-Muajjal meas sale for which payment is made at a future fixed date or within a fixed period. In short, it is a sale on credit.

Definition:

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

iii. Bai – Salam

Meaning:

The terms “Bai” and “Salam” have been derived from Arabic wordsBai and Salam. The word “Bai” means “sale and purchase” and the word Salam means “Advance”. “Bai-Salam” means Advance Sale and Purchase.

Definition:

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

Iv.Bai-Isteshna’a

Meaning:

The word istisna has been derived from the word” Istisna” which means industry or Manufacturing enterprse. Istisna means to goods manufactured by placing orders to a manufacturer.

Definition:

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

Leasing mode (ijara mechanism):

i Hire purchase /Ijarah 

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

ii Hire Purchase Under shirkatul Melk

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

Stages of Hire Purchase under Shirkatul Melk:

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

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

Types of sale contract in hire purchase under shirkatul melk

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

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

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

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

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

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

Hire Purchase under Shirkatul Melk through transfer of legal title by gifts (for no consideration)

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

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

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

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

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

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

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

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

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

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

Hire, Delivery, Sale and Transfer of Title of Asset to the Client:

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

Share mechanism

i. Mudarabah

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

ii. Musharaka

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

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

i Quard

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

ii. Quard-E-Hasana

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

 Operational procedures of the investment of IBBL:

Induction of client

Application

Categorization

Processing and appraisal

Sanction

Documentation

Purchase of goods by the Bank

Taking delivery of goods by the Bank

Sales and delivery of goods to the client

Induction of Client:

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

• Brief him on the salient features of Bai-Murabaha mode of investment.
• Look to the past performance of the client.
• Check-up Head Office Current investment policy and Branch’s track record of bai-Murabaha Investment of thie items.
• If the proposal is found permissible under Islamic principles and suitable, advise the client to submit formal Application, if not found suitable, regret politely.
• Request potential client to open an Al-Wadia current Accont. Let him maintain the Current Account Satisfactorily for a reasonable period. This will generally mean six months).

Application:

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

• Obtain and affix attested photograph(s) of the Proprietor /Partners /Directors /Trustee /Administrator on the top right hand corner of the application.
• Scrutinize the application of the client to see that :

A. All columns are properly filled in.

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

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

are submitted.

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

Processing and appraisal:

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

• Examine shariah permissibility of the goods. Reject the proposal outright, if not permitted by Islamic Sharah.
• Check-up Credit Restriction Schedule of Bangladesh Bank and Head Office Current Investment Policy Guidelines.
• Visit the Business establishment of the Client. Talk to the business and important personalities of the locality to ascertain the Honesty, Integrity and Business dealings of the Client.
• Request for confidential report of the client from local Bank Branches. Confident Report from Credit Information Bureau (CIB) of Bangladesh Bank through Head Office Investment Divisioin as per Instruction Circular of Head Office in this Regard.
• Optain Financial Statement/Balance Sheet of the Client for the last three consecutive years for Investment Proposals of Tk. 50.00 lac or above as per Head Office Instruction.
• Inspect Land, Building, other Assets and Properties proposed to be Mortgaged or Hypothecated.
• Forward Documents, Title Deeds and other relevant Papers to approve Lawyer of the Bank for examination and furnishing his opinion.
• Obtain Lawyer’s Opinion as per clause No. 8.02.
• Please study the following carefully and note down the actual findings in the Appraisal Form against each item :

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

• Where sale price of the goods is payable by the client at specified future date in lump sum or installments as per proposal.
• For Bai-Murabaha Commercial and Bai Murabaha Industrial Investment, prepare Appraisal Report on F-167B. For appraisal Bai-Murabaha agriculture and For Bai-Murabaha Import use special Appraisal Form devised for each of those, if any, otherwise F-167B providing the available/required supplementary information. In course of preparation of the appraisal report please ensure incorporation of all information of all information, particulars figures and statistics in Appraisal Form correctly with special attention to the following: Contact primarily with the producers/sellers/suppliers of the goods in the market, study the market price and work out the purchase and sale prices of the goods as per guidelines.

Sanction:

• On completion of Appraisal as provided herein above, of the Proposal is found viable, issue Sanction Advice (F-188) if it is within the business power of the Branch mentioning all the terms and condition is duplicate to the Client and endorse copies to Zonal and Head Offices retaining one copy in the Clien’ts file duly accepted by the Client.
• If the proposal is not within the Discretionary Power of the Branch, the Branch shall with Appraisal Report on F-167A and F-167B to Zonal Office/Head Office.
• If the proposal is within the Business Power of the Zonal Office, Zonal Office shall accord Approval /Regret the Proposal.
• If the proposal is not within the Business of the Zonal Office shall forward the proposal to Head Office with their views and recommendations.
• On receiving the proposal and the Appraisal Report along with supporting papers Head Office will either approve or Regret.
• If the Branch/the Zonal Office /Head Office, the branch will issue the Sanction advice (F-188) with a copy to Zo/HO duly recorded in /Facility Sanctioned Register (B-119) with authority to the investment Client for the limit.
• If the client duly accepts the sanction terms and conditions enter the particulars of the sanctioned proposal in the limit Register (B-117) allotting a Fixed Serial number for each Client as per Limit Register which shall remain permanent irrespective of the mode(s) so long the Client continues business with the Bank.
• Open file Client-wise, affixing the Fixed Number allotted to him as per Limit Register (B-117) and Client’s name, address, telephone number be recorded prominently in the inner side of the investment File for easy tracing in case of need.
• In case of investment to the existing Client, obtain required papers, document with the past performance and outstanding liabilities of the Client, if any and process of sanction the propsal as per instruction laid down here-in-above after due evaluation or study.

Documentation:

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

• Bai-Murabaha Sanction Advice (F-188) deal-wise duly accepted by the Client.
• Bai-Murabaha (Deal-Wise) (AF-1).
• Joint and Several D.P. Note (CF-2).
• Single party D.P. Note (CF-1), if there is no guarantor.
• Double Party D.P. Note (CF-2), if there is guarantor(s) to be made by the Client in favor of the guarantor and endorsed by the later to the Bank.
• D.P. Note Delivery Letter (CF-3).
• Letter of Hypothecation (CF-5) for the asset(s) and Client’s stock in Trade /Work-in-Process.
• Letter of Disclaimer (CF-15), if the goods are stored in Client’s /party’ own/hired godown.
• Agreement for Pledge of Goods (CF-4).
• Insurance Policy (if stored in Client’s /Party’s Godown /Yard under Bank’s effective control duly recorded insurance Register (B-39).
• Letter of Gurantee (CF-14).
• Balance Confirmation Letter (CF-16)
• Trust Receipt (CF-11).
• Letter of Installments (CF-17).

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

• In case of Equitable Mortgage, Memorandum of Deposit of Title Deed (MDTD) signed by the owner of the property.
• In case of Legal Mortgage, Registered Deed should be obtained.
• Personal Guarantee of the onner(s) of the properly on CF-14.
• Original title Deed(s) with CS, RS, SA, Mutation Parcha, DCR of the property and Mutatioin record.
• Upto-date Rent Receipt.
• Non-encumbrance Certificate along with Search Fee Paid Receipt of the concerned Registry Office.
• Site Plan (Map-Naksha) of the Mortgaged Property.
• Valuation Certificate issued by a competent Engineer and physically verified by the Branch Officials.
• Lawyer’s Certificate
• An affidavit sworn.

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

• Letter of Hypothecation (CF-5).
• Trust Receipt (CF-11).
• Legal Mortgage of Machineries.

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

• Agreement for Pledge of Shares.
• Share Transfer Deed in Duplicate.
• Share Delivery Letter
• Letter to the concerned Company to register Lien in Bank’s Favor.

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

• Letter of Partnership
• Copy of Partnership Deed

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

• Certified copy of the Memorandum and Articles.
• Resolution of the Board of Directors.
• Personal Guarantee of all the Directors.
• Certificated of Incorporation
• Certificated of Commerncement

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

• Copy of Trust Deed.
• Resolution of the Board of Trustees
• Charge Document
• Personal Guarantee of the Office Bearer

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

• Clearance from the Registrar
• Letter to be issued to the concerned Registrar
• Personal Guarantee of the Office Bearer
• A copy of Bye-laws of the Society.

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

• Letter of Partnership
• Copy of Partnership Deed

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

• Certified Copy of the Memorandum and Articles.
• Resolution of the Board of Directors
• Personal Guarantee of all the Directors
• Certificated of Incorporation
• Certificated of Commencement

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

• Copy of Trust Deed
• Resolution of the Board of Trustees
• Charge Document
• Personal Guarantee of the Office Bearer

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

• Clearance from the Registrar
• Letter to be issued to the concerned Registrar
• Personal Guarantee of the Office Bearer
• A copy of Bye-laws of the Society

Signature of the Client:

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

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

Purchase of Goods by the Bank:

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

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

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

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

• Obtain deal-wise application Order for Purchase on F-136 after due study.
• Open investment account in Investment Account Opening Register (B-102).
• Enter the Account Particulars in the Investment Ledger (B-105).
• It should be carefully noted that purchase of goods shall be made only after completion of all the Documentation formalities, including Pre-Audit memo (F215).
• In case purchase of Bai-Murabaha goods by the Bank on Ceredit/deffered payment basis, the Bank shall execute a Credit Purchase Agreement with the seller to that effect mentioning date of delivery of Goods to the bank and that of payment by the Bank.
• If the goods are to be purchased from the local or outstation market and money is to be paid/remitted thereof and other expenses such s TA/DA, transportation etc, shall be borne by the Bank, which shall ultimately be loaded on the cost of Goods.

Taking Delivery of Goods by the Bank:

• After finalization of purchse of Bai-Murabaha Goods either by the Bank officials or through any Agent from the local or out station market the Bank shall request the seller to delivery the goods purchased to the Bank’s Authorized official /Agent or to the Bank godown against proper acknowledgement.
• After taking delivery of the goods by the Bank or trough and Agent, the Bank shall make payment of the price of the goods to producers /sellers /supplier through DD/TT/PO against Cash memo which will exclusively be issued in the name of the Buying Agent.
• The Bank shall not be invest in such cases where the allotting Authority will not accept the Letter of Authority and agree to deliver the goods to the Bank as per authorization of this Allottee.

 Investment Scenario of IBBL:

Islami Bank Bangladesh Ltd. through its steady progress and continued success has earned reputation and by the grace of the Almighty Allah has become leading private sectors bank of the country. The network of the branches widened and the size of investment portfolio of the Bank has been increasing substantially day by day.

As in the past, over the years the Management concentrated its efforts on popularizing the Islamic Banking concept and side by side expanding its operational activities. Now IBBL is one of the Largest Private Commercial Banks in the country with the Investment of 174,058 million and Deposit 166,000 million. The growth rate of IBBL investment is tremendous as reflected in the following chart.

Sector Wise Investment of IBBL:

Industrial sector is contributing the highest to IBBL investment. In 2007, investment in industrial sector was Tk. 78,761 million which is 51.14% of total investment. It signifies the commitment of the Bank towards rapid growth of the economy and to increase the per capita income of the people by creating employment opportunities and greater contribution to the national economy. Sector wise investment of IBBL in 2007 is –

 Mode Wise Investment of IBBL:

Investment of Islami Bank Bangladesh Limited is mainly concentrated in Bai Mode & HPSM. Share of Bai-mode is 59% in IBBL’s total investment. On the other hand, HPSM which is related shirkat contributes 35% in IBBL investment. Share of Mudaraba and Musharaka is not significant in the investment of IBBL.

C. Area wise Investment of IBBL

Islami Bank Bangladesh Limited diversifies its investment in urban and rural areas. 91.63% of IBBL’s total investment is in urban areas while in rural areas it is 8.37%.

8.2 Investment of IBBL in National Perspective:

IBBL is the second largest Bank in investment among the Banks of Bangladesh with 9% share which was 7.67% in 2006 and 6.67 in 2005. Nationalized Sonali Bank is in the leading position with 12% share.

8.3 Investment Plan for 2008-2012:

Currently a “5 year perspective Investment Plan” has been porposed for the year 2008-2012 in continuation of 7 years Plan from 1996-2002 and 5 Years Plan from 2003-2007. The plan has been formulated keeping in view of the national economic priorities and aiming at diversification of the investment portfolio by size, sector, geographical area, economic purpose and securities to bring in phases all sectors of the economy and all types of economic activities and different economic strata of the society within the fold of Bank’s investment operations.

8.4 There are some special schemes under investment:

i. Household durable scheme

Islami Bank Bangladesh Limited has introduced Household Durables Investment Scheme which has already created great enthusiasm among the people and received tremendous response from them. Objectives are to assist the service holders with limited income in purchasing household articles such as Furniture, electronic and electronic equipments like television, refrigerator, gas cooker etc.

ii. Investment scheme for doctors

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

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

iii. Small business investment scheme

Bangladesh a third-wood developing country is rich in natural and human resources. Inspite of vast possibilities, the majority people of the country livein hardship-below poverty tapped, explored and exploited. Physical labour is their only means of earning. A large segment of this populace is active youth force. Many of them are efficient, intelligent and energetic with initiative & drive and have courage to tale risks. But they can not uplift their socio-economic condition due to poverty, lack of financial support and other required facilities.

iv. Housing investment scheme

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

v. Real estate investment program

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

vi. Transport investment program

Under this scheme, investment in being allowed to the existing successful businessmen and potential entrepreneurs in this sector for all types of road and water transport with simple and easy terms and conditions. The bank is also extending investment facilities to multinational companies, established, business houses and well to do officials and professionals for acquisition of private cars, microbus and jeeps.

vii. Car investment scheme

Car is considered as on essential mode of transport in the modern society, particularly by a section of the officials, business houses and business executives and established professionals for movement in discharging their duties and responsibilities punctually and efficiently. Many of these categories of people can not purchase a car on payment of entire purchase value at a time out of their own sources. To meet this need Islami Bank has introduced the ‘Car Investment Scheme’ for the mid and high ranking officials of government and semi-government organizations, corporations; executives and directors of big business houses and companies arid also for persons of different professional groups on easy payment terms and conditions.

viii. Rural development scheme of ibbl

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.

iX. Agricultural implements investment scheme

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

The Bank has introduced “Agriculture Implements Investment Scheme” to provide power tillers, power pumps, shallow tubewells, thrasher machine etc. On easy terms unemployed youths for self-employment and to the farmers help augment production in agricultural sector.

x. Micro industries investment scheme

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 iaunch “Micro Industries Investment Scheme” through its Branches.

8.5 Objectives and Principles:

• To invest fund strictly in accordance with the principles of Islami Shariah.

• To diversity its investment portfolio by size of investment, by sectors (public and private) by economic purpose, by securities and by geographical area including industrial, commercial & agricultural.

• To ensure mutual benefit both for the Bank and the investment client by professional appraisal of investment proposals, judicious sanction of investment close and constant supervision and monitoring thereof.

• To make investment keeping the socio economic requirement of the country in view,

• To increase the number of potential investors by making participatory and productive investment.

• To finance various development schemes for poverty alleviation, income and employment generation with a view to accelerate sustainable socio-economic growth and for enlistment of the society.

• To invest in the form of goods and commodities rather than give out cash money to the investment clients.

• To encourage social enlistment enterprises.

• To shun even highly profitable investment in fields forbidden under Islamic Shariah and are harmful for the society.

• The Bank extends investments under the principles of Bai-Murabaha, Bai-Muazzal, Hire Purchase under Shirkatul Melk and Mudaraba. The Bank is making sincere efforts to go for investment under Mudaraba principle in near future.

8.6 Importance of Assessing of Investment Needs:

Assessment of Investment needs is necessary for the following reasons.

1. To detect actual Investment limit of Bank.

2. To detect actual Investment against obsolete /out dated/non trading items.

3. To assess the quality, quantity, price and marketability of the commodities

4. To ensure proper follow-up supervision and monitoring of the Investment.

5. To ensure capacity of the client in handling Investment activities.

6. To over come the situation of Division of found by the clients

7. To ensure trading instead of lending of money.

8. To ensure payment against delivery of goods.

9. To ensure actual buying and selling of goods.