Académique Documents
Professionnel Documents
Culture Documents
The Word ‘Bank’ is derived from the word ‘Banco’ or ‘Banque’. Banco or Banque means a
bench. The early bankers transacted their money leading activities sitting on the benches in a
market place. According to others, the world ‘Bank’ is originally derived from the German
word ‘back’ meaning a joint stock fund. However, the term ‘Bank’ has been in use from the
Middle Ages in connection with the business of money lending.
Originally, ‘Banker’ or ‘Bank’ was defined as a person who carried on business of receiving
money, collecting of drafts, honoring cheque drawn upon it. Over the year of the banking
business has undergone many changes and now it covers a wide range of activities.
According to modern concept, banking is a business, which deals with borrowings, lending
and remittances of funds as well as much ancillary business.
Shahjalal Islami Bank Limited has a vision and mission to improve the financial sector of
Bangladesh i.e. economic condition of Bangladesh by providing effective and innovative
Commercial Banks, as the very name indicates, function primarily as deposit takers and
lenders to trade and commerce. But through a historical process, these Banks are now also
engaged in long medium and short term industrial lending, agricultural financing including
development financing. Commercial Banks are of three types Nationalized, Local Private and
Foreign Commercial Banks.
All over the world the dimension of banking has been altering rapidly due to deregulation,
technological modernism and globalization. Now bank must complete the market place both
with local institution as well as foreign ones. To survive in this competitive banking world
banks entail to develop appropriate financial structure, enlarge professionalism in the sense of
developing appropriate manpower structure and expertise and experience.
The MBA program (Comilla University) is designed to focus on theoretical and professional
development of people open to take up business as a profession as well as service as a career.
This internship provides the students to link up their theoretical knowledge into practical
fields. This report is prepared for the internship program consisting of a major in depth study
of the “General Banking activities of Shahjalal Islami Bank in comilla branch”. This
program enables a student to develop his analytical skill and scholastic aptitude.
Different data and information are required to meet the goal of this report. Those data and
information were collected from various sources, such as, primary and secondary which is
showed below:
There is a certain boundary to cover this study. It was not possible due to shortage of time to
cover each and every activity performed by the bank. So the study has covered only the
General banking Activities of Shahjalal Islami bank Limited.
Like any other articles and theories, this study is not free from limitations. I have tried my
best to overcome these limitations through extensive study, hard and sincere devotion to the
assigned duty. The major limitations are:
I complete my internship in a small branch, Comilla branch. So I don’t get the proper
information which I need.
The bank personnel and officials were very busy with their occupational activities.
Hence it was little bit difficult for them to help within their high schedule.
Relevant data and document collection were difficult due to the organization
confidentiality.
Three months time is not enough for such an extensive study. It is very difficult to
collect all the required information in such a short period.
Improper combination among various departments.
Due to some legal obligation and business secrecy banks are reluctant to provide data.
For this reason, the study limits only on the available published data and certain
degree of formal and informal interview.
2.4 Objectives:
To provide Banking service to the people within the commanding area.
To expand business based on Islami Shariah.
To keep position in the competitive market.
To contribute in profitability of SJIBL.
To contribute towards economic development and prosperity within the principles of
Islamic justice.
To facilitate efficient allocation of resources.
To help achieving stability in the economy.
2.5 Vision:
To be the unique modern Islami Bank in Bangladesh and to make significant
contribution to the national economy and enhance customers’ trust & wealth, quality
investment, employees’ value and rapid growth in shareholders equity.
2.7 Strategies:
To strive for customers best satisfaction & earn their confidence.
To manage & operate the Bank in the most effective manner.
To identify customers needs & monitor their perception towards meeting those
requirements.
To review & update policies, procedures & practices to enhance the ability to extend
better services to the customers.
To train & develop all employees & provide them adequate resources so that the
customers needs are reasonably addressed.
To promote organizational efficiency by communicating company plans, policies &
procedures openly to the employees in a timely fashion.
To cultivate a congenial working environment.
To diversify portfolio both the retail & wholesale markets.
In the meantime Shahjalal Islami Bank Ltd has established relationship with the following
National Bodies:-
Bangladesh Institute of Bank Management (BIBM);
The Institute of Bankers, Bangladesh (IBB);
The Bangladesh Foreign Exchange Dealers’ Association (BAFEDA);
Bangladesh Association of Banks (BAB);
Central Sharia Board for Islamic Banks in Bangladesh;
Islami banks Consultative Forum (IBCF); and
Dhaka Chamber of Commerce & Industry (DCCI).
Shahjalal Islami Bank Ltd. has established a core Research & Planning Division
comprising skilled person from the very inception of the bank.
The inner environments of the all branches of Shahjalal Islami Bank Ltd. are well
decorated.
Banking operations of the all branches of Shahjalal Islami Bank Ltd. have been
computerized to provide the promptly & frequently customers service.
The bank has established correspondent relationship with 102 countries of the world.
Shahjalal Islami Bank Ltd. provides attractive interest rate that the other financial
institutions.
The bank provides loan to the customers @ lower interest with easy & flexible
condition than the other do.
The bank frequent arranges customers meeting to achieve their valuable suggestions.
Letter of Credit (L/C) commissions and other charges are very lower than the other
banks.
Profit earning is not the main aim of the SJIBL. The bank is responsible to maintain
the social duties.
During 2013 the bank through its73 branches mobilized deposit of Tk.83350million and
deployed Tk.80592 million in investment. Total income of the bank was Tk.12007 million
and total expenditure stood at Tk. 9009 million, resulting in operating profit of Tk.2998
million. The Bank handled total Foreign exchange business of Tk.166906 million in the year
2013.
Comparative position of equity for the year 2013 & 2012 is given below:
15.00%
Percentage
10.00% Actual
Requirement
5.00%
0.00%
2008 2009 2010 2011 2012
Year
2.17 Deposits:
150000
100000
50000 Total Deposit
0
2009 2010 2011 2012 2013
Year
6.22% 3% 5% 3%
16.92%
Al-Wadia Current Account
Mudaraba Savings Deposit
Mudaraba Short Notice Deposit
Mudaraba Term Deposit
Deposit in Schem e
Other Deposits
B) Expenditure:
1) Profit on Deposits: Bank distributed profit of Tk.7376.42.million among the
Mudaraba Depositors in the year 2013 against Tk.4657.92 million in the year 2012
which is 72.98% of the Investment income earned from deployment of Mudaraba
Fund and 81.88% of total expenditure of 2013 against 77.89% of 2012.
20000
In Million Taka
15000
10000 Line 1
5000
0
2003 2005 2007 2009 2011 2013
Overall Activities of General Banking:A Study
YearOf Shahjalal Islami Bank Limited. 16
2) Operating Expenses: total operating expenses as on 31.12.2013 was Tk.1632.50
million as against Tk1322.25 million of 2012, Which was 18.12% of the total
expenditure of the year 2013 against 22.11% of 2012.
3) Operating profit: During 2013, the bank earned an amount of Tk.12006.82 million
and spent an amount of Tk.9008.93 million, which resulting a total operating profit of
Tk.2997.89 million over last year i.e. 31.12.2012. From the operating profit tk.310.00
million was kept provision for investment, Tk.63.00million.
A summary of operating result of the bank as on December 2013 vis-à-vis the position of
December 2012 is shown below:
2.20 Dividend:
The board of directors of the bank has recommended stock dividend @ 28% i.e. to issue 25
bonus shares as against 100 shares to its shareholders for the year 2013.
1. Board of Directors.
2. Board Committee
3. Executive Committee.
4. Policy Committee.
The functions of the corporate management are:
Board of Directors: The Board of Directors consists of 24 members. The Board of
Directors is the apex or zenith body of the bank.
Board Committees: The Board of Directors who also decides on the composition of
each committee determines the Board responsibility of each committee.
Executive Committee: All routine matters beyond delegated powers of management
are decided upon by or routed through the Executive Committee, subject to
ratification by the Board of Directors.
Policy Committee: All matters relating to the principles, policies, rules and
regulation, ethics etc. for operation and management of the Bank are recommended
by the Committee to the Board of Directors.
Chairman
2.23 Board Committees of SJIBL:
Board of Directors
Board of who also decides the composition of each committee determines
Sponsors
Directors
the responsibilities of each committee. EXECUTIVES COMMITTEES OF SJIBL: All
routine matters beyond delegated powers ofDirector
Managing management are decided by or routed
through the Executives Committee, subject to rectification by the Board of Directors.
Deputy Managing Deputy Managing
Director Director
GSD, CAD, A&I, GB, ID, IT, CREDIT, R&P
D&M
Vice President
Senior Asst.
Vice President
Asst. Vice
President
Executive Officer
Abbreviations:
Institutional supply of credit has been made possible by a system of financial inter-mediation
organized in a way where conventional banks collect small savings from the public by
offering them a fixed rate of interest and advancing the loan able funds out of the deposited
money to enterprising clients charging relatively higher rates of interest. The margin between
these two rates is the bank’s income. In addition, banks also provide many other services to
the public for which it receives service charges.
In response, though not exactly to that exigency but for quite a few other reasons, the second
half of the twentieth century witnessed a distinctly separate line of thinking on banking. This
was institutionalized at the end of third quarter and subsequently emerged as a new system of
banking called Islamic banking {also called Profit-Loss-Sharing Banking (PLS)}. The world
has now been experiencing operation of as many as 250 Islamic banks and financial institu-
tions in more than 50 countries, Muslim and non-Muslim. There are religious as well as
economic reasons, which have contributed to the emergence of PLS-banking as an alternative
to its conventional counterpart. It is the prohibition of Riba in the Quran that, according to the
proponents of the PLS-system, was the source of inspiration for establishing banks in line
with Islamic Shariah. The basic intention behind establishing Islamic banks was the desire of
Muslims to reorganize their financial activities in a way that do not contradict the principles
of Shariah and enable them to conduct their financial transactions without indulging into
Riba. These writers consider rate of interest in the conventional banking mechanism
synonymous to Riba, the term as used in the Quran. One of the reasons for this is that the
outcome of the productive effort is uncertain, and so interest necessarily involves an element
of Gharar, that is, uncertainty. On this religious ground, proponents of the PLS-system urge
The economic reason derived from a verse of the Quran providing inspiration to devise an
interest-free financial system has been substantiated in the way that interest, instead of
increasing wealth, reduces it. The primary reason of why the Quran has taken such a hard
approach towards interest is that Islam stands for establishing a just economic system free
from all kinds of exploitation. Further, Muslim economists consider depression and
stagflation very often found in the capitalist world as an outcome of the financial system
based on interest.
Thus, Islamic banking emerged as a response to both religious and economic exigencies.
While religious exigency calls for avoiding any transaction based on interest, economic
exigencies, on the other hand, provide a new outlook to the role of banking in promoting
investment/productive activities, influencing distribution of income and adding stability to
the economy. Islamic banking is thus perceived as an improved system in all dimensions.
Islami banking has been defined in different ways. The definition of Islamic bank, as
approved by the Secretariat of the OIC, is stated in the following manner.
“An Islami bank is a financial institution whose statutes, rules and procedures expressly state
its commitment to the principle of Islamic Shariah And to the banning of the receipt and
payment of interest on any of its operations”.
Shawki Islami Shehta viewing the concept from the prospective of an Islamic Economy and
the prospective role to be played by an Islamic bank therein opines:
“It is, therefore, natural, and indeed, imperative for an Islamic bank to incorporate in its
functions and practices commercial investment and social activities, as an institution designed
to promote the civilized mission of an Islamic Economy”(Ibid).
It appears from the definition that Islamic banking is systems of financial intermediation that
avoids receipt and payment of interest in its transaction and conducts its operation in a way
The primary objective of establishing Islamic banks all over the world is to promote,
foster and develop the application of Islamic principles in the business sector. More
specifically, the objectives of Islamic banking when viewed in the context of its role in the
economy are listed as following:
Financial sector reforms to strengthen the regulatory and supervisory framework for
banks made headway in 2013 although at a slower than expected pace. Overall health of the
banking system showed improvement since 2002 as the gross Non-performing Loans (NPL)
declined from 28 percent to 14 percent while net NPL (less Provision) reduced to 8 percent
from 21 percent. This led significant improvement in the profitability ratios. Although the
Private Commercial Banks (PCB) NPL ratio registered a record low of 6 percent, the four
Nationalized Commercial Banks (NCB) position are still weak and showed very high NPL at
25 percent. The NCBs have large capital shortfalls with a risk-weighted capital asset ratio of
just 0.5 percent (June 2013) as against the required 9 percent. For the PCBs risk-weighted
capital asset ratio stood at 10 percent.
Bangladesh Bank issued a good number of prudential guidelines during the year 2012 and the
first quarter of 2013 which among others relate to
Besides, recent decision of the Government to corporatize the remaining three NCBs along
with the initiative to sale the Rupali Bank are bound to usher in changes in the banking sector
competitiveness aspect. Bangladesh Bank has also taken up the task of implementing the
Basel II capital accord. Further, the recent enactment of the Micro-credit Regulatory
Authority Act (MRAA) for the regulation of the Micro Finance Institutions (MFI) has been a
major development in the year 2013. Since 1998 CAMEL rating of banks gradually improved
and in 2013 Bangladesh Bank updated this rating model by incorporating the market risk and
the new model is known as CAMELS.
The banking system at independence consisted of two branch offices of the former
State Bank of Pakistan and seventeen large commercial banks, two of which were controlled
by Bangladeshi interests and three by foreigners other than West Pakistanis. There were
fourteen smaller commercial banks. Virtually all banking services were concentrated in urban
areas. The newly independent government immediately designated the Dhaka branch of the
State Bank of Pakistan as the central bank and renamed it the Bangladesh Bank. The bank
was responsible for regulating currency, controlling credit and monetary policy, and
administering exchange control and the official foreign exchange reserves. The Bangladesh
government initially nationalized the entire domestic banking system and proceeded to
reorganize and rename the various banks. Foreign-owned banks were permitted to continue
doing business in Bangladesh. The insurance business was also nationalized and became a
source of potential investment funds. Cooperative credit systems and postal savings offices
handled service to small individual and rural accounts. The new banking system succeeded in
establishing reasonably efficient procedures for managing credit and foreign exchange. The
primary function of the credit system throughout the 1970s was to finance trade and the
public sector, which together absorbed 75 percent of total advances.
Though there is no complete Islamic Banking Act for controlling, guiding and
supervising the Islamic banks in Bangladesh, some Islamic banking provisions have already
been incorporated in the amended Banking Companies Act, 1991 (Act No. 14 of 1991).
Bangladesh Bank did not set up any separate Department at its Head Office to control, guide
and supervise the operation of the Islamic banks. Inspection and supervision of the Islamic
banking operations are conducted by the Bangladesh Bank as per the general guidelines
framed for the conventional banks. So, ensuring implementation of Shariah principles in the
Islamic banks are being conducted by their own Shariah Councils. The role of Bangladesh
Bank in controlling, guiding and supervising the Islamic Banks in Bangladesh in accordance
with Islamic Shariah is very minimal. In observing the Shariah implementation status of the
Islamic banks, Bangladesh Bank examines only the report of the respective banks’ Shariah
Councils. However, the inspectors and supervisors of Bangladesh Bank are not equally
familiar with the technicalities of the different operational methodologies of the Islamic
banking. This is because of the fact that there is no separate Department to look into this
important matter. A committee of experts set up by the Governors of Central Banks and
Point wise differences between Islamic Banking and conventional Banking Particularly in
Accounting Transactions are Summarized below:-
Chapter: Four
1. Al-Wadia (Current Account): The word ‘Al-Wadia’ has been derived from the Arabic
word ‘Wada’ which means to keep/to deposit/to give up/Amanat. As per Shariah , Amanat
means to keep something (goods/money/others) to any reliable person/institution for safe and
secured preservation of the same keeping its ownership unchanged and which will be
returned to the owner of the fund on demand as it is/in original shape. In case of Amanat
Bank/any other institution cannot use, invest and amalgamate the funds without the prior
permission of the owner of the Amanat.
2. Al-Mudaraba (Deposit Account): The word Mudaraba derived from the Arabic word
‘Darb/Darabun’. Literally it means movement to earn profit (munafa). It is a form of
partnership where one of the parties called the ‘Shahib-al-mal’ provides a specified amount
of capital and acts like a sleeping or dormant partner, while the other party called the
Mudarib (entrepreneur), provides the entrepreneurship and management for carrying on any
venture, trade, industry or service with the objective of earning profit. The Mudarib is
required to work with honesty and sincerity and to exert the maximum possible care and
precaution in the exercise of the functions.
Mudaraba Deposit Products
A: Individual
i. Genuine & acceptable introduction
ii. Attested photograph of the account operator’s/A/c holder’s
iii. Certificate from the Chairman/ Commissioner/ Gazette Officers or any
responsible person
iv. Verification of introducer’s signature
v. Admittance of the signature(s) of opener/ operator’s A/c
vi. Transaction profile
vii. Obtain KYC
viii. Declaration/Undertaking
ix. Letter of Thanks
(a) It must be sent to the A/c holder and introducer
(b) Office copy to be affixed with the AOF
(c) It will have to be dispatched under registered courier
B: Joint Account
i. All item for individual account holder as stated above
C: Sole Proprietorship
In case of opening an account by a sole-proprietor of a firm, he/she should sign the account
opening form and furnish his specimen signature showing his representative character.
Account in the firm’s name, is deprived of the power, which fact is known to the banker,
there can be no legal objection to a banker opening an account in the name of the firm at
request. Failure, however, to make proper enquiries by referring to the partnership
agreement or any other record in writing which may be available before opening of account
on behalf of a firm in a partner’s name may lead a banker in trouble.
When a current account is to be opened for a private limited company the banker will have to
obtain the following requirements:
Online services
Automation in Banking Operation
ATM / POS Service
SMS / Push Pull Services
Personal Management Information System (PMIS)
SWIFT
REUTERS
Signature Verification
Any Branch Banking
Other Delivery Channel Services (to be implemented)
The Dual Card is a hassle free product, no need to carry two separate plastic cards for local
and international card. Now, with one plastic card the Cardholders can enjoy all the benefits
and make transactions locally & globally from their Prepaid card account at all the VISA
labeled merchant outlets, ATMs, etc.
SJIBL VISA Souvenir Card /Gift Card – Local
SJIBL Souvenir Card is a very attractive and stylish product. Like a Gift Card, SJIBL
Souvenir Card can be used by anyone wishes to. The intending customer may have the card
instantly or may customize the card as required. The SJIBL Souvenir Cards are accepted
locally at all the VISA labeled merchant outlets, ATMs, etc.
Features:
Sense of satisfaction of having an International brand
Anywhere anytime banking
24 hours and 7 days a week banking
Directly linked to Cardholders Account
Convenient cash withdrawal at ATMs
Acceptability at huge number of Q-cash ATMs around Bangladesh
Accepted at all VISA terminals locally and globally
Local & International transactions with the same card (for Dual Cards)
Balance Inquiry
Mini Statement
PIN Change
Shopping at a large number of Q-cash POS terminals around Bangladesh
Payment of Utility Bills
Note: VAT charges will be added with all fees (other than Transaction charges)
Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 42
4.8 SMS / Push Pull Services:
Shahjalal Islami Bank again fulfills the demand of time in the era of modern banking
technology by introducing the Mobile banking i.e. SMS / Push Pull Service. SJIBL offer a
range of ways for you to access and manage your money so that clients are always in control
of financial transactions; it is fast, secured and economical. Get real-time banking
information on customer’s handset. This automated SMS / Push Pull can be reached 24 hours
a day, 7 days a week. This service performs Balance query, Mini statement, Cheque Book
Request, Cheque Leaf Status, FC Rate Information, Cheque Stop Payment Instruction,
Statement Request by Courier/Post, Statement request by E-mail, Help inquiry, PIN Change
through SMS via a fixed mobile number given by customers. This service will soon include
utility bill and fund transfer facilities.
Benefits of SMS
A new technology based service will attract new client base.
Clients will be facilitated with Cell phone based banking service.
Enhanced and extended customer services levels on a collaborative basis.
It will reduce teller question.
This system should be run in LAN and WAN environment and centrally controlled data of all
employees. Employees ID, Biometric Image with Signature will remain be enrolled in the
software.
4.10 SWIFT:
The Bank has already become a member of Society for Worldwide Inter Bank Financial Tele-
Communication (SWIFT) to provide secured and accurate communication network for
financial transactions, i.e. L/C Remittance etc.
4.11 REUTERS:
The Bank has also established liaison the facility of REUTERS, through which the bank
received regular, latest information about the exchange rate, etc and other price sensitive
information to take prompt and correct decision.
When a party looses his/her cheque book, then he/she apply for duplicate cheque book. Bank
stop payment order for that lost cheque book series in the respective ledger. Then client’s
needs guarantor’s certificate and guarantor must be an account holder of that branch with
sufficient balance. In this case, the party will apply to the branch manager for duplicate
cheque book. The party must give indemnity bondage referring that he/she will be liable for
any fraud-forgery by the lost cheque. After the formalities, Bank issue of new cheque book
for client.
Account closed.
Insufficient funds.
Payment stopped.
Refer to drawer.
Drawn against uncontrolled funds.
Amount in words and figure.
Drawer’s signature differs.
Alternation requires draw’s full signature.
Cheque postdated.
Date incomplete or missing.
Local Remittance means sending money from one place to another place for the customers
and it’s very important service system in our country. For this service, our country business
sectors are get facility by transfer funds from one place to another. Some of the instrument
that Shahjalal Islami Bank Limited, Foreign Exchange Branch provides are immense
beneficial to the clients. These are:
1. Demand Draft (DD)
2. Pay Order (PO)
3. Telegraphic Transfer (TT)
First bank cheques the “Test Code” mentioned on the draft. If “Test Code” agrees then
believe that Demand Draft is not forged and makes payment. For further confirmation, the
issuing bank sends an advice about the Demand Draft to the paying branch. For Demand
draft, commission is taken in the following way:
Particulars Charges
Particulars Charges
Issuance @ 0.15% or minimum Tk.25
Cancellation Tk.100
1. Kushiara
2. Western Union.
4.16.1 Kushiara:
Kushiara Money Transfer’s a definition of safety and reliability and a popular
Money Transfer Company in United Kingdom (U.K.). Kushiara offers “Instant Cash” next
day collection from Bank counter at most cities in Bangladesh and “Quick Credit” to
beneficiary’s account in all over the Bangladesh.
Payment may be made by bank deposit (Kushiaras account at Barclys Bank) or cheque or
bank draft. Please do not send cash through post. Bank shall process the remittance request
and post the customer copy of the remittance form to customers given address after the fund
are cleared. The usual times for clearing of cheques require 3-5 working days
4.16.2 Western Union:
Western Union Financial Services Inc. U.S.A. is the number one and reliable money transfer
company in the world. This modern Electronic Technology based money transfer company
has earned world wide reputation in transferring money from one country to another country
within the shortest possible time.
Shahjalal Islami Bank Limited branch in Bangladesh offer Western Union Money Transfer.
Then simply fill a form and collect money. Shahjalal Islami Bank Limited has 26 such
branches all over Bangladesh and Western Union has over 280,000 agent locations across 200
countries and territories.
4.16.3 SWIFT:
Shahjalal Islami Bank Limited is a member of the society for Worldwide Inter Bank Financial
Telecommunication (in abbreviation S.W.I.F.T). SWIFT is the industry-owned co-operative
supplying secure, standardised messaging services and interface software to nearly 8,100
financial institutions in 207 countries and territories. SWIFT members include banks, broker-
dealers and investment managers. The broader SWIFT community also encompasses
corporate as well as market infrastructures in payments, securities, treasury and trade.
In secondly, cheque collection from another bank outside the clearinghouse. These cheques
are settled debiting depositors account and sending DD or TT in favor of sender’s bank.
Clearing Department works are classified in three ways:
A. Outward Clearing
B. Inward Clearing
C. Transfer Delivery
A. Outward Clearing:
The instruments drawn on other banks, within the clearing house area, deposited through our
clients are sent for collection is called outward clearing.
The amount in party A/C in the clearing part is not in the available balance part of the
computer program. If the instrument is honored then the amount merges are available
balance. This is done by customized software prepared by SJIBL IT Department.
B. Inward Clearing:
We receive cheque drawn on our branches within the clearing house area presented by other
banks known as inward clearing.
C. Transfer Delivery:
Transfer Delivery is two types:
Outward
Inward
Sorting
At end of the day, the amount of cash has to be sorted out in order to identify the different
types of notes, say-500, 100, 50, 20, 10 and 5 and so on. Hundred pieces of any type note
create a packet and ten packets made a bundle. In this way, the cash is actually sorted out.
Stitching
After sorting out the cash, packets are stitched along with a slip bearing the name of the bank,
total number of notes and the signature of the cash-in-charge. Two round seals are given at
both sides of packet.
Bank branch should be authorized dealer, with due approval from Bangladesh Bank to run
foreign exchange transactions. According to the Bangladesh Law, the payment must be
received within 120 days.
CONTRACT
ADVISING BANK
OPENING BANK Documents
NEGOTIATING BANK
REIMBURSING BANK
Reim.Claim
L/C Foreign
operation Remittance
Import Export
operation operation
Foreign exchange department of SJIBL, has been divided into two sections:
1. Foreign Remittance
2. L/C Operation
4.22: IMPORT:
4.22. 1: Meaning of Import:
Import means lawfully carrying out of anything from one country to county for Buying. It
will be occurred according to the Government law.
Based on the needs of commodity and availability of finance, Government declares policy.
For import of goods for a particular period having approval from the National Assembly is
defined as Import policy order. Import policy is a guideline of a set of rules envisaged by
Government Authority i.e. the Ministry of Trade and commerce for the registered importer
for import of goods inside the country.
Earlier import policy has been formulated the five years. But present import policy order has
been formulated for 3 (three) years, Effect from the 14th June 2003 to 30th June 2006 and valid
till announce of new import policy order. If require Government can revise the policy in each
every years.
ITC number is compulsory (H.S code 6 digit) to be mentioned in the L/C and LCAF to
identification the item to be imported.
1. Requirement Right of Refusal (ROR) for public sector agency from Ministry of
Industry or respective Ministry/department of both to Import item under Restricted
List.
2. Import cannot be Israel.
3. Pre-shipment inspection (PSI) for private sector normally PSI is not mandatory.
4. Shipment to be made through Bangladeshi ship some exemption
3. Notwithstanding anything mentioned else where, all imports into Bangladesh shall be
subject to such general or specific conditions as many have been prescribed in this order.
4. In addition to the conditions mentioned in the control list the conditions. Restrictions and
procedures for import of various items mentioned in the test portion of this order, shall as
usual, apply in case of import of those items.
5. If, while determining the import status of an items mentioned in the control list the
description of goods does not conform to the H.S Code mentioned against item, or any
discrepancy arises between the H.S Code and the description of goods, in that case the
description of goods shall prevail, In other words, if the import of a particular item is shown
as banned in the control list, or is shown as importable as subject to fulfillment of conditions
in the list, the said ban or restriction as the case may be, shall equally apply to the import of
that item , even if such ban or restriction is mentioned else where and not against the
appropriate H.S Code, if any importer, taking , advantage of such discrepancy, import any
banned items or restricted items or restricted item without fulfilling the respective
conditions, such import shall be treated to have been made as in contravention of the
provisions of this order.
4.22. 6: The Documentary Letter of Credit:
Letter of Credit is a credit contract where the Opening/Issuing Bank is committed to place an
agreed amount of money at the beneficiary’s disposal under some agreed conditions. In other
words letters of credit is a letter form the importer Bankers to the exporter that the bills if
drawn as per terms & conditions complied with will be honored on presentation.
2 Types of L/C:
1. Revocable Credit:
As per Article no. 8 (a) A revocable credit is a credit which can be amended or canceled by
the issuing bank at any time without prior notification to the seller since to offers little
security to the seller.
2. Irrevocable Credit:
As per Article no 9 an irrevocable credit constitutes a definite undertaking of the issuing
Bank. A credit cannot be amended or cancelled without the agreement of all parties. It gives
the seller grater assurance of payment. An irrevocable credit can be either confirms or
unconfirmed dependant on the desire of the seller.
As per import & Export control Act. 1950 no person can indent, import or export any goods
into Bangladesh except kin case of exemption issued by the Government of the peoples
Republic of Bangladesh. Violation of this order is punishable with fine under the provisions
of Sea Customs Act 1878 as applied by sub section (3) of Section 3 of this Act.
1. Application form.
2. Nationality Certificate.
3. Income Tax registration Certificate with GIR.
4. Trade License from the municipal or local Authority.
5. Membership Certificate.
6. Partnership deed (for partnership firm)
7. Certificate of Registration with the register of joint Stock Co. & Articles and
Memorandum of Association in case of Limited Co.
Overall Activities of General Banking:A Study Of Shahjalal Islami Bank Limited. 63
8. Bank Certificate.
9. Documentary evidence for business existence.
10. Original copy of Treasury Chalan being payment of registration fees.
11. Original copy Chaplin for passbook.
12. Other documents if any required by the CCI & E.
13. Ownership’s documents or Rent receipts of the place of Business.
14. Survey clearance from the relevant Authority.
The nominated bank of the application will examine the papers/documents s& verity the
signature of the applicant and forward the same to the concerned office of the CCI & E with
forwarding schedule in duplicate through bank’s representative. The duplicate copy of the
same bearing the acknowledgement of CCI & E office of the receipt of the documents is back
by the bank and is preserved.
If the documents are found in order and the CCI & E is satisfied the IRC is issued to the
applicant and sent direct to the nominated bank. The passbook is also issued by the CCI & E
simultaneously to the importer and sent direct to the nominated bank.
Amendment of Credit: Sometimes the importer may require amendment to be made in the
L/C, but this amendment must be made with the consent of the exporter, otherwise
amendment will have no validity.
Adding Confirmation: Sometimes the exporter may not rely on the L/C issuing bank.
Exporter requires the L/C to be confirmed by another bank situated in his country. Then on
request of issuing bank, any bank in exporter’s country gives guarantee about the payment.
This is called Confirming Bank. By adding such confirmation, confirming banks undertakes
the liability to honor the bill of exchange of exporter.
Validity and Expiry of Credit: All L/C must mention the expiry date of L/C within which
the documents for payment/acceptance must be presented. This date must exceed the date of
Free On Board (FOB): Under FOB basis, the exporter quotes the price covering all his
expenses until the goods duty packed are delivered “on board”, the carrying vessel named
and arranged by the buyer with the freight and the insurance being paid by the buyer. The
importer bears any costs incurred and all risks from the time the goods are placed on board
inclusive of those arising out of the ship’s failure on berth.
Cost and Freight (C & F): In this case the exporter quotes the FOB price plus insurance
cost. The responsibilities of carrying out all formalities for shipment of the goods develop
upon the seller.
Cost, Insurance and Freight (CIF): Under CIF, the exporter quotes C&F price plus the
insurance cost. The responsibility of carrying out all formalities for shipment of the goods
develop upon the seller.
Free alongside Ship (FAS): Under FAS, the seller quotes the price covering all his charges
until such time as goods are loaded on train at the specified railway station. The buyer is
responsible for all charges from the time he takes delivery of all goods from the exporter’s
yard.
EX-Factory: The seller quotes the price of the goods ex-factory on the date agrees. The
importer is responsible for all further necessary arrangements and charges.
4.22.10 Parties to Letter of Credit:
1. Importer (Buyer)/Applicant
2. The Issuing Bank (Opening Bank)
3. The Advising Bank (Notifying Bank)
4. Exporter/Seller (Beneficiary)
5. Confirming Bank
6. Negotiating Bank
7. The Paying/Reimbursing/Accepting/Remitting Bank
Applicant: The person/body who requests the bank (opening bank) to issue letter of credit. As
per instruction and on behalf of the applicant, the bank opens L/C in line with the terms and
conditions of the seller contract between the buyer and the seller.
Reimbursing/Paying Bank: the bank nominated in the letter of credit by the issuing bank to
make payments stipulated in the document, complying with reimbursing bank.
SELLER BUYER
2. Doc .Credit
Application
4. Advise of
Doc .Credit
3. Documentary Credit
4. Thronging of L/C
a. SWIFT is a worldwide community. It has over 7500 financial
institution over 199 Countries as its member.
4.23 EXPORT:
a) Nationality Certificate.
b) Copy of valid Trade License.
c) Income Tax Certificate.
d) Bank Certificate.
e) Copy of rent receipt of the business firm.
f) Registered Partnership Deed in case of partnership concerns.
g) Memorandum of Articles & Association and Incorporation certificate in
Case of Limited Company.
On satisfaction of the CCI & E the potential exporter is advised to deposit export registration
fee of Tk. 1,000/- through Treasury Chelan to Bangladesh Bank/ Sonali Bank for enabling
them to issue ERC. The ERC may be renewed every year on payment of renewal fee of Tk.
1,000/- through Treasury Chelan as started.
Exporters are allowed to export the commodity under irrevocable letter of credit. Under this
type of export, exporter will ship the goods as pr terms of the credit and will get payment as
per arrangement of the credit.
Exports are allowed against firm contract. As per contract, importer will ship the goods and
the buyer will make payment after selling the consignment.
c. Export against advancement payment:
Sometimes exporter receives payment in advance. In that case Authorized Dealer should
obtain a declaration from the exporter on the “Advance receipt voucher” certifying the
purpose of the remittance. Then the exporter will export the goods against the advance
payment.
a) Export L/C.
b) Firm Contract.
c) Advance Payment.
(4) Transport documents related to land route or sea and any other Author8ized Dealer. The
Airway Bill and any other documents of title to car4go may be drawn to the order of a Bank
in the country of import. However in case of advance payment, transport document may be
drawn to the order of Foreign Importer Bank endorsement of transport documents is
prohibited. Directions under Sl. No. shall not apply in the following cases:
(5) ‘EXP’ must be submitted to the Bank by the exported and Bank will submit the Duplicate
Copy to the Bangladesh Bank within 14 days from the date of shipment.
(6) Payment for goods exported should be received through an authorized dealer in freely
convertible currency.
(8) Overdue export bills statement to Bangladesh Bank should be submitted by the 15th of the
month, following quarter to which it relates.
(9) In case of short shipment, exporter should give a notice of short shipment of\n the
prescribed from in duplicate, the prescribed from in duplicate, the customs, who will forward
a Certified copy of the notice, to the Bangladesh Bank.
4.23.6: Issuance of EXP Forms and Number:
Bank will certify EXP Form only after confirming the following:
a) Arrangements have been made for realization of Export proceeds.
b) Bona-fides of the importer/ consignees abroad.
c) Arrangements have been made for receipt by Authorized dealer of documents of
title to goods.
d) The EXP has been signed by the exporter
1. Pre-shipment finance:
Export Requirement:
All export from Bangladesh must be declared by the shipper on EXP form to the Bank
enabling them to submit the duplicate within 14 days from the date of shipment.
The shipper is required to repatriate the export proceeds within 4 months from the date of
shipment otherwise penalty is imposed upon them. A careful watch is to be dept to ensure that
the sale proceeds are received on due date. A due date diary must be maintained to pursue the
individual case.
4.23.12: Papers are requirement in regard to export of goods subject to L/C
stipulation:
1. Commercial Invoice.
2. Certificate of origin.
a. Purchasing documents.
b. Sending documents to L/C opening banks or correspondent for
collection of proceeds .After collection adjustment of negotiation value.
3. Reporting
a. Duplicate EXP to Bangladesh Bank.
b. Triplicate EXP after relation of proceeds to Bangladesh Bank.
c. Monthly statement to Head office.
4. Export Under Back to Back System.
a. Export L/C advising.
B .Proposal for BB L/C
c. Checking.
1. Master L/C
2. Valid bonded ware house license
3. Quota allocation for quota items
4. ERC in addition to IRC
5. Indemnity/Undertaking
6. NO objection form previous banker
7. Factory inspection certificate
8. BGMEA Membership
Problems of Back to back L/C:
1. Shipment time gap: Sometime time is shorted for exporting against import
L/C, kit may be caused.
2. Terms and rules violations: SJIBL cannot violate the rules & term of Shariah
council.
4. Payment of back to back L/C bill: No stock bills are supported against
Shariah.
4.25 Investment:
Investment is the action of developing funded with intension and expectation that they will
earn a return for their owner. When resources are spent to purchase fixed and current assets
for use in a production process or for trading process, then it can be termed as real
** Musharaka
**Mudaraba
**Bai-Murabaha
**Bai- Muajjal
**Bai-Salam
** Ijarah (Lease)
1.Mudaraba: It is a form of partnership where one party provides the fund while the other
provide the expertise, labor and the letter referred to at the Mudaraba any profits accrued are
shared between the two parties on a per –agreed basis, while capital loss in exclusively born
by the partner providing the capital.
Important Features:
Bank supplies capital as Sahib- al –Mall and client invest if in the business with his
experience.
6.4. 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 returning those
goods. It must follow the principle of equal for equal return with homogeneous 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.
Most of the people in our country have a bad impression of SJIBL’s operations regarding
indirect generation of interest which meaning no difference between investment of SJIBL
loan / Credit / advance of conventional banks for this reason, they are not too much
interested to make investment with SJIBL.
Because of improper insufficient application of Islamic Banking rule in our country. The
investment operations of SJIBL can't run smoothly.
SJIBL, which is committed to avoid interest, can’t invest the permissible part of its
statutory liquidity Reserve and short Term liquidity surplus in those securities.
This Bank can't invest in all economic sectors, which are prohibited by the law of Islam.
Portfolio due to insufficient and unskilled manpower in these regards .As a result, there is
a large amount of money being idle and thus potential profit is not increasing.
SJIBL has no strong promotional activities to increase motivate its present and potential
investment client
SJIBL does not grant investment portfolio for new entrepreneurs new businessmen new
companies etc., which ultimately create "Class Banking
=1.26%
From the Trend analysis ,We see that trend of profit is decrease due to Economic
recession, down share market & other unavoidable uncertainities.But in spite of this the tend
of Deposit, Investment & foreign Exchange business is in better situation of SJIBL.
5. SWOT Analysis:
Not surprisingly, in the competitive arena of marketing era SWOT analysis is a must based on
Product, Price, Place and Promotion of a financial institute like private bank. From the
SWOT analysis we can figure out ongoing scenario of the bank. So to have a better view of
the present banking practices of SJIBL I did the SWOT analysis.
SWOT Analysis
Error: Reference source not found
With a view to ensuring the vision of Shahjalal Islami Bank Ltd. some initiatives should be
executed on the emergency basis like:
My learning experiences from the various departments are given in the following table. A
short summary of my duties and responsibilities are also stated below:
Accounting section:
Credit section:
Sorting the loan form and put that form in according to customers file.
Remittance section:
7.1 Findings: There are some matters that I have found during the internship period:
The fund management system is very effective. For keeping these systems
effective, necessary changes in credit policy, loan and advance policy, and
provision for provisionary made continuously.
The strength of the Bank lies on the top management of the company and the
financial soundness of the sponsors, as they are all well reputed personalities
in the Bangladesh.
The top management gives its highest attention in the operation of fund
Management.
The customer service is very much impressive than other financial institution.
Remittances, both local and foreign are effective manner of customers.
The top management recently has to decide to start online banking system.
This decision will motivate the employees who are very effective in computer
skills.
Lack of professional data entry operators, Not a proper skilled human resource
in every department.
5.1 Recommendations:
5.2 Conclusion:
From the practical implementation of customer dealing procedures during the whole period of
my practical orientation in Shahjalal Islami Bank Limited, I have reached a firm and concrete
conclusion in a very confident way. I believe that my realization will be in harmony with
most of the banking thinkers. It is quite evident that to build up an effective and efficient
considered as soon as possible. Besides, every bank has to survive amidst of a large number
of banks including local and foreign. That’s why to keep pace with expected profit margin of
the time being and for the future every bank should try heart and soul to please the customers
in a smart and trusty way. But quite regretful to mention that most of our bank face
decreasing profit trend due to switch over of their present customers to those foreign with
higher customer service facilities. So, timely decision for introducing sophisticated banking
instruments should be taken as early as possible. After taking effective and time defeating
measures regarding efficient employees and instruments will help the local office of Shahjalal
Islami Bank Limited to reach the pinnacle of success with high profit and productivity. A new
bank they should be stronger in financial side because there is too much competition and new
banks are growing up. If Shahjalal Islami Bank Limited adopts professionalism within the
framework of Shahriah, they will be able to earn handsome “Halal” profit and pay higher
return to the depositors and share holders, ultimately public will get more confidence on this
type of banking. Now the time for Shahjalal Islami Bank Limited to fabricate in success they
have achieved and go on with its operation. The Shahjalal Islami Bank Limited have an
illusion to their customers, this statement is given below:
“Our Goal is to be
The Bank You Choose
To Bank with.
Bibliography
Web site:
www.shahjalalbank.com.bd
www.business.com.bd.