CHAPTER -2

25

Profile of Sample Banks

2.0.0 Banking Sector in Bangladesh 2.0.1 Introduction
The Jews in Jerusalem introduced a kind of banking in the form of money lending before the birth of Christ. The word 'bank' was probably derived from the word 'bench' as during ancient time Jews used to do money -lending business sitting on long benches. First modern banking was introduced in 1668 in Stockholm as 'Svingss Pis Bank' which opened up a new era of banking activities throughout the European Mainland. In the South Asian region, early banking system was introduced by the Afgan traders popularly known as Kabuliwallas. Muslim businessmen from Kabul, Afganistan came to India and started money lending business in exchange of interest sometime in 1312 A.D. They were known as 'Kabuliawallas'. 2.0.2 Number and Types of Banks The number of banks in all now stands at 49 in Bangladesh. Out of the 49 banks, four are Nationalised Commercial Banks (NCBs), 28 local private commercial banks, 12 foreign banks and the rest five are Development Financial Institutions (DFIs). Sonali Bank is the largest among the NCBs while Pubali is leading in the private ones. Among the 12 foreign banks, Standard Chartered has become the largest in the country. Besides the scheduled banks, Samabai (Cooperative) Bank, Ansar-VDP Bank, Karmasansthan (Employment) Bank and Grameen Bank are functioning in the financial sector. The number of total branches of all scheduled banks is 6,038 as of June 2000. Of the branches, 39.95 per cent (2,412) are located in the urban areas and 60.05 per cent (3,626) in the rural areas. Of the branches NCBs hold 3,616, private commercial banks 1,214, foreign banks 31 and specialised banks 1,177. Bangladesh Bank (BB) regulates and supervises the activities of all banks. The BB is now carrying out a reform programme to ensure quality services by the banks.

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Nationalised Commercial Banks (NCBs) 1. Sonali Bank 2. Janata Bank 3. Agrani Bank 4. Rupali Bank Private Commercial Banks (PCBs) 1.Pubali Bank 2.Uttara Bank 3.National Bank Ltd. 4.The City Bank Ltd. 5.United Commercial Bank Ltd. 6. Arab Bangladesh Bank Ltd. 7. IFIC Bank Ltd. 8. Islami bank Bangladesh Ltd. 9. Al Baraka Bank Bangladesh Ltd. 10. Eastern Bank Ltd. 11. National Credit & Commerce Bank Ltd. 12. Prime Bank Ltd. 13. South East Bank Ltd. 14. Dhaka Bank Ltd. 15. Al-Arafah Islami Bank Ltd. 16. Social Investment Bank Ltd. 17. Dutch-Bangla Bank Ltd. 18. Mercantile Bank Ltd. 19. Standard Bank Ltd. 20. One Bank Ltd. 21. EXIM Bank 22. Bangladesh Commerce Bank Ltd. 23. Mutual Trust Bank Ltd. 24. First Security Bank Ltd. 25. The Premier Bank Ltd. 26. Bank Asia Ltd. 27. The Trust Bank Ltd. 28. Shahjalal Bank Limited (Based on Islamic Shariah) Foreign Banks 1.American Express Bank 2.Standard Chartered Bank

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3.Habib Bank Ltd. 4.State Bank of India 5.Credit Agricole Indosuez (The Bank) 6.National Bank of Pakistan 7.Muslim Commercial Bank Ltd. 8.City Bank NA 9.Hanvit Bank Ltd. 10.HSBC Ltd. 11. Bank Al-Falah Development Banks 1.Bangladesh Krishi Bank 2.Rajshahi Krishi Unnayan Bank 3. Bangladesh Shilpa Bank 4.Bangladesh Shilpa Rin Sangstha 5.Bank of Small Industries & Commerce Bangladesh Ltd. Others 1. Ansar VDP Unnayan Bank 2. Bangladesh Samabai Bank Ltd. (BSBL) 3.Grameen Bank 4.Karmasansthan Bank 2.0.3 Bangladesh Bank Bangladesh Bank (BB) has been working as the central Bank since the country's independence. Its prime jobs include issuing of currency, maintaining foreign exchange reserve and providing transaction facilities of all public monetary matters. BB is also responsible for planning the government's monetary policy and implementing it thereby. The BB has a governing body comprising of nine members with the Governor as its chief. Apart from the head office in Dhaka, it has nine more branches, of which two in Dhaka and one each in Chittagong, Rajshahi, Khulna, Bogra, Sylhet, Rangpur and Barisal. 2.0.4 Accounts: Current, Savings Current Account Generally this sort of account opens for business purpose. Customers can withdraw money once or more against their deposit. No interest can be paid to the customers in this account. If the amount of deposit is below taka 1,000 on an average the bank has authority to cut taka 50 from each account as incidental charge after every six months. Against this account loan facility can be ensured. Usually one can open this account
28

with taka 500. One can open this sort of account through cash or check/bill. All the banks follow almost the same rules for opening current account. Savings Bank Account Usually customers open this sort of account at a low interest for only security. This is also an initiative to create people's savings tendency. Generally, this account is to be opened at taka 1000. Interest is to be paid in June and December after every six months. If money is withdrawn twice a week or more than taka 10,000 is withdrawn (if 25% more compared to total deposit) then interest is not paid. This account guarantees loan. Almost all the banks follow the same rules in the field of savings account, except foreign banks for varying deposit. On an average, all the banks give around six percent interest. Special Services Some Banks render special services to the customers attracting other banks. 2.0.5 Internet Banking Customers need an Internet access service. As an Internet Banking customer, he will be given a specific user ID and a confident password. The customer can then view his account balances online. It is the industry-standard method used to protect communications over the Internet. To ensure that customers' personal data cannot be accessed by anyone but them, all reporting information has been secured using Version and Secure Sockets Layer (SSL). 2.0.6 Home Banking Home banking frees customers of visiting branches and most transactions will be automated to enable them to check their account activities transfer fund and to open L/C sitting in their own desk with the help of a PC and a telephone. 2.0.7 Electronic Banking Services for Windows (EBSW) Electronic Banking Service for Windows (EBSW) provides a full range of reporting capabilities, and a comprehensive range of transaction initiation options.The customers will be able to process all payments as well as initiate L/Cs and amendments, through EBSW. They will be able to view the balances of all accounts, whether with Standard Chartered or with any other banks using SWIFT. Additionally, transactions may be approved by remote authorization even if the approver is out of station. 2.0.8 Automated Teller Machine (ATM) Automated Teller Machine (ATM), a new concept in modern banking, has already been introduced to facilitate subscriber 24-hour cash access through a plastic card. The network of ATM installations will be adequately extended to enable customers to nonbranch banking beyond banking.

29

2.0.9 Tele Banking Tele Banking allows customers to get access into their respective banking information 24 hours a day. Subscribers can update themselves by making a phone call. They can transfer any amount of deposit to other accounts irrespective of location either from home or office. 2.0.10 SWIFT SWIFT is a bank owned non-profit co-operative based in Belgium servicing the financial community worldwide. It ensures secure messaging having a global reach of 6,495 Banks and Financial Institutions in 178 countries, 24 hours a day. SWIFT global network carries an average 4 million message daily and estimated average value of payment messages is USD 2 trillion. SWIFT is a highly secured messaging network enables Banks to send and receive Fund Transfer, L/C related and other free format messages to and from any banks active in the network. Having SWIFT facility, Bank will be able to serve its customers more profitably by providing L/C, Payment and other messages efficiently and with utmost security. Especially it will be of great help for our clients dealing with Imports, Exports and Remittances etc. 2.1.0 Islami Bank Bangladesh Limited (IBBL) 2.1.1 Introduction Bangladesh is one of the largest Muslim countries in the world. The people of this country are deeply committed to Islamic way of life as enshrined in the Holy Qur'an and the Sunnah. Naturally, it remains a deep cry in their hearts to fashion and design their economic lives in accordance with the precepts of Islam. The establishment of Islami Bank Bangladesh Limited on March 13, 1983, is the true reflection of this inner urge of its people, which started functioning with effect from March 30, 1983. This Bank is the first of its kind in Southeast Asia. It is committed to conduct all banking and investment activities on the basis of interest-free profit-loss sharing system. In doing so, it has unveiled a new horizon and ushered in a new silver lining of hope towards materializing a long cherished dream of the people of Bangladesh for doing their banking transactions in line with what is prescribed by Islam. With the active cooperation and participation of Islamic Development Bank (IDB) and some other Islamic banks, financial institutions, government bodies and eminent personalities of the Middle East and the Gulf countries, Islami Bank Bangladesh Limited has by now earned the unique position of a leading private commercial bank in Bangladesh. 2.1.2 Birth History of IBBL In January 1981, the Head of the Government, President of the Peoples Republic of Bangladesh while addressing the 3rd Islamic Summit Conference held at Makkah and Taif suggested, "The Islamic Countries should develop a separate Banking system of
30

their own in order to facilitate their trade and commerce" This statement of the President indicated favourable attitude of Bangladesh towards establishing Islamic Banks and financial institutions in the country. Earlier, in November 1980, Bangladesh Bank, the country's central bank, sent a representative to study the working systems of several Islamic Banks abroad. In November 1982, a delegation of Islamic Development Bank (IDB) visited Bangladesh and showed keen interest to participate in establishing a joint venture Islamic Bank in the private sector. They found a lot of works have already been done and Islamic Banking was in a ready form for immediate introduction. Two professional bodies namely Islamic Economics Research Bureau (IERB) and Bangladesh Islamic Bankers Association (BIBA) made significant contribution towards introduction of Islamic Banking in Bangladesh. They came forward to provide training on Islamic Banking to top Bankers and Economists to fill-up the vacuum of leadership for the future Islamic Banks in Bangladesh. They also held seminars, symposium and workshops on Islamic Economics and Banking throughout the country to mobilise public opinions in favour of Islamic Banking. Their professional activities were reinforced by a number of Muslim entrepreneurs working under the aegis of Muslim Businessmen-Society. These organisations concentrated mainly in mobilising equity capital for the emerging Islamic Bank. At last, the long drawn struggle to establish an Islamic Bank in Bangladesh became a reality and Islami Bank Bangladesh Limited was incorporated on 13th March, 1983 and commenced banking operations on and from 30th March, 1983 as the first Islamic Bank in the South East Asia. It is the first joint venture Bank in Bangladesh. The initial capital of Taka 56 million of the Bank was contributed by 11 foreign Islamic Banks and institutions, two foreign nationals, 4 Islamic Institutions and 19 local Industrialists and Philanthropists. The Bank is committed to run all its activities as per Islamic Shariah. IBBL through its steady progress and continued success has, by now, earned the reputation of being one of the leading Private Sector Banks of the country. The distinguishing features of IBBL are as under: All its activities are conducted on interest-free system according to Islamic Shariah. Investment is made through different modes permitted under Islamic Shariah. Investment-income of the Bank is shared with the Mudaraba depositors according to a ratio to ensure a reasonably fair rate of return on their deposits. Its aims are to introduce a welfare-oriented banking system and also to establish equity and justice in the field of all economic activities. It extends co-operation to the poor, helpless and low income group of the people for their economic upliftment particularly in the rural areas. It plays a vital role in human resource development and employment-generation, particularly for the unemployed youths.
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 Its aim is to achieve balanced growth & development of the country through investment operations, particularly in the less developed areas. 2.1.3 Administrative Structure of IBBL Islami Bank Bangladesh Limited is managed by a 24 Member Board of Directors. Of the Directors, 9 are foreigners and 15 local. A 9 Member Executive Committee has been formed by the Board of Directors for efficient operations of the Bank. A Shariah Council consisting of Ulamas, Economists, Financial and Legal Experts advises the Board on Shariah issues concerning operations of banking business. Besides, a Management Committee comprising of the Senior Executives and headed by the Executive President looks after the affairs of the Bank. Day to day management is entrusted to the Executive President who is assisted by the Management Committee and Member-Secretary, Shariah Council. IBBL serves its customers through 111 Branches. (as on 31.8.99) The Board of Directors and the Executive Committee are highly efficient teams consisting of industrialists, businessmen, technocrafts, bankers, management experts and parliamentarian. The Shariah Council members are renowned ulamas, bankers, economists, researches and one of them is a member of the National Assembly. The Executive management consists of professional Bankers deeply dedicated to run the Bank efficiently. The Islamic Bank Foundation established for providing financial assistance to the poor and needy people through various income generating, health care, relief and rehabilitation education and special programs is a result of social welfare commitment of IBBL. A layout of Management Structure and Legitimate Hierarchy of Management of IBBL are presented in the following pages.

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MANAGEMENT STRUCTURE OF ISLAMI BANK BANGLADESH LTD. AS ON 31.12.2006

BOARD OF DIRECTORS

SHARIAH COUNCIL Shariah Department EXECUTIVE COMMITTEE

Islami Bank
A. B.
A B C D E F G

BOARDS COMMITTEE
1. 2. 3. 4. 5. 6. 7. 8. Selection Committee Shariah Implementation Committee Real Estate Committee Standing Committee for Inv. Planning & Implementation Committee to study Audit & Inspection Reports of IBBL. Review Committee. Assignments and Privileges enjoyed/to be enjoyed by the Directors. Accounts Finalisation Committee.

ISLAMI BANK FOUNDATION Islami Bank Hospital (3 Nos.) Islami Bank Technical Institute (4 Nos.) Islami Bank Model School & College (1 No.) Monorom(1 No.) (Departmental Store) Islami Bank Cultural Centre(1 No.) Centre for Integrated Development for the Disabled(1 No.) Islami Bank Service Centre(2 Nos.)

C. D. E.

EXECUTIVE PRESIDENT

IBTR

F.

Board Secretary

MANAGEMENT COMMITTEE

G.
Audit & Inspection Department

DE

EVP Investment Division

EVP Operations Division

EVP International Division

Corporate Branches (3)

Zonal Offices (6)

Nawabpur Branch

Local Office

Foreign Exchange Branch

Legitimate Hierarchy of Management Zone North South Zone Board of Directors

Branches Branches Executive Committee (18) (18) Branches (16) (18)

Dhaka

Dhaka

Chittagong

Khulna

Bogra Zone

Comilla Zone

Branches (18)

Branches (20)

Branches (18)

Executive President Deputy Executive President

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Executive Vice President Senior Vice President Vice President Assistant Vice President Senior Principal Officer Principal Officer Senior Officer Officer Assistant Officer, Grade-I Assistant Officer, Grade-II Assistant Officer, Grade-III Other Employees: 1. Senior Assistant 2. Cashier-cum-Assistant 3. Senior Messenger-Cum-Guard/Senior Security Guard/ Senior Godown Guard. 4. Messenger-Cum-Guard Grade-I/Security Guard Grade-I Godown Guard Grade-1. 5. Messenger-Cum-Guard Grade-II/Security Guard Grade-II/ Godown Guard Grade-II. Technical and Blocked Cadres: 1. Mechanic/Electrician/Driver Grade-I 2. Driver Grade-II 3. Mali/Cleaner. It is to be marked for the following factors in case of employees promotion and incentives: 1. Senior Messenger-Cum-Guard, Senior Security Guard & Senior Godown Guard will be promoted to Asstt. Officer Grade-III only if they have requisite qualification as per promotion criteria and found qualified for promotion. 2. The Grades will, however, ultimately be abolished whenever all the existing manpower in the grades will be otherwise absorbed, promoted or retired. 3. No further recruitment in the Grades will be made either by direct recruitment or by promotion.
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3. Messenger-Cum-Guard Grade-I and equivalents will be promoted to the Asstt. Officer Grade-III only, if they have requisite qualifications as per promotion criteria and found qualified for promotion. 2.1.4 Shariah Council Islam is not merely a religion but a complete code of life. This code is enshrined in the Islamic Shariah, the body of laws that is the primary source of guidance for Muslims on all aspects of life. The Shariah Council of the Bank is playing a vital role in advising, guiding & supervising the implementation and compliance of Shariah principles in all business activities of the Bank. The Council, which enjoys a high status in the structure of the Bank, consists of prominent Ulema, reputed Bankers, renowned Lawyers 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. It may be mentioned here that Shariah Council also examines the Final Accounts of the bank and submits a separate report in this respect. 2.1.4 Islamic Bank Training & Research Academy (IBTRA) Islami Bank Training & Research Academy (IBTRA) was established simultaneously with the establishment of the bank in the year 1983 for the purpose of imparting training to manpower of all levels and conducting research programs. To cater the increasing training and research needs, the Academy has been up-graded in 1994 and an Academic Council has been formed to formulate policies to provide special emphasis on (i) Islamic Economics and Banking and (ii) practical operations on both Conventional and Islamic Banking system. 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 researches have been taking full advantage of the Library. Academy conducts the different training courses of the Islami Banks Officials for their development. The Academy also conducts workshops, Executive Development Program, Seminars and Internship Program of BBA, MBA and final year students of Management department, Finance & Banking Department and Marketing Department of the University of Dhaka. Besides, a motivational program is introduced for the clients of the Bank. Client Orientation Programs 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.
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2.1.5 Publicity and Public Relations The Bank, since its birth, has been relentlessly working to project and promote the 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 and News paper 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. Attractive multicolor posters are also being published for depicting the aims and objectives of people oriented special investment Schemes of the Bank. 2.1.6 SWOT Analysis of IBBL On the basis of banking scenario in home and abroad and considering IBBL's performance, strengths & weaknesses of IBBL and opportunities & threats for IBBL can be identified as below STRENGTHS i) Islamic Image. ii) High reputation in home & abroad. iii) Largest branch network among Private Banks. iv) Adequate Capital base. v) No provision shortfall vi) Strong and stable deposit base. vii) Diversified investment base. viii) Negligible insider investment ix) Gradual increase of market share of business. x) Product innovation. xi) Acknowledged market leader. xii) Expanding social services xiii) Dedicated policymaking body. xiv) Visionary and diehard professional leadership. xv) Training & Research facilities. xvi) Competitive cost advantages xvii) Pricing effectiveness xviii) Distribution effectiveness. xix) Cash flow. xx) Honesty/Honest & dedicated employees. Xxi) Having shariah board.

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WEAKNESS i) Slow and delayed customer service. ii) Growing number of incidence of fraud and forgery. iii) Deterioration of assets quality in some areas. iv) Inadequate computerisation. v) Lack of dynamic, specialised and experienced manpower at different levels. vi) Absence of shariah compatible and good investment opportunities. vii) Lengthy operational procedures. viii) Lesser volume of cost free fund ix) Lesser volume of ancillary income. x) Inadequate clients motivation. xi) Less advertising/promotional campaign xii) Non-ability to produce on time. xiii) Under manpower xiv) Poor working environment/House keeping. xv) Absence of dealing room operation. xvi) Surplus liquidity. xvii) No-job Rotation xviii) Lackings in quality Investment. xix) Doing business within traditional sectors. xx) Small/Narrow product line. xxi) Limitation of Shariah in introducing some operations like forward Booking. xxii) Absence of Mudaraba and Musharaka Investment. xxiii) Salary structure is less. OPPORTUNITIES i) Introduction of new deposit, investment and service products. Ii) Vast untapped market. Iii) Expanding banking operations by forming subsidiaries. iv) Scope of establishing branch network home and abroad. v) Leadership in islamisation of banking in the country. vi) Serving additional customer groups. vii) Expanding product line to meet broader range of customer needs. viii) Diversifying into related products. ix) We are operating in a Muslim Country. x) Falling trade barriers in attractive foreign markets. xi) To enhance Market Share.

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THREATS i) Non-performaing investment. ii) Deterioration (in some cases of morale standard of the employees. iii) Arrival of competitors in the market. iv) Unethical banking practices in the banking community. v) Unislamic banking practices by the so-called competitors. vi) Better working environment of the competitors. vii) Adverse change in the policy. viii) Lack of guidelines/supports from central bank for Islamic Banking. ix) Absence of Islamic Money Market. x) General dishonesty/fund diversifying nature of customers/investment clients. xi) Changing client/buyer needs. xii) Growing bargaining power of customers & suppliers. xiii) Growing financial institutions other than banks with substitute products. xiv) Slower market growth. xv) Adverse shifts in foreign exchange rates and trade policies of foreign governments. xvi) Entry of lower cost competitors. xvii) Internationalization of industry. xviii) Political instability. xix) Inadequate knowledge of Islamic banking XX) System among common people. 2.1.7 Deposit Schemes of IBBL Islami Bank gives special importance on savings. The objectives and principles of savings policy of the bank are: To encourage people to save for self and for the country as a whole. To develop a sustained savings habit among the people. To mobilize deposits through the operation of following accounts: 1. Al-Wadeeah It is one of the Islamic Principles based on which transactions of economic & noneconomic natures are performed. The root word of Al-Wadeeah is 'Wada' which means to keep some thing with somebody with trust with the permission of use. The word AlWadeeah denotes the thing or fund kept with some persons. The word 'Amanah' has also the similar meaning that is commonly used but there is a distinct difference between Al-Wadeeah and Al-Amanah. In Al-wadeeah principle, the person receiving the thing or fund can use it with the permission of the giver, and if it is a fungible type of items (that which is consumed in one use) return a similar type of things on demand to the giver. On the Other hand, in Amanah, the very thing, goods or

38

fund are required to be returned and there is no permission of using the same. Al-wadeeah Deposit Accounts are as under: a) Current Account b) Non-Resident Taka Account c) Convertible Taka Account d) Foreign Currency Deposit Account e) Other Accounts i) Sundry Deposit Account ii) Drafts Payable Account iii) Payment Order Payable Account iv) Profit Payable Account v) TT payable Account. 2. Al-Mudaraba It is one of the important modes of investment and business in the Islamic Shariah. Rather, it is a mode towards which the Islamic Banks all over the world have set their goal to arrive at. Mudaraba is the name of the business or enterprise done under a contract between two parties one of them provides funds and the other provides labour. The party who is financing is known as Sahib-al-Maal and the one who uses the fund is known as Mudarib. The result of the enterprise, if it is profit, is shared as per ratio agreed upon previously in the contract; if it is loss, it is entirely borne by the fund giver. The financer has no scope of taking part in the operational aspect of business. However, if the loss is incurred due to the inefficiency or negligence of the Mudarib, the loss will have to be shared by him. Since there is no element of interest in this transaction and only the result is shared, it is termed as one of the ideal modes of investment in Islamic Shariah. Al-Mudaraba Accounts are given below: a) Savings Account b) Savings Bond c) Hajj savings Account d) Special Savings (Pension Scheme) Account e) Term Deposits Account f) Special Notice Deposit Account. Features of Various Deposit Schemes: 1. Al-Wadeeah a) Current Account i) Current Account can be opened by firms, companies and individuals etc. with a
39

minimum balance of Taka 500/- only. Current A/c can be operated by cheque. No profit is paid on Current A/c Statement of A/c is provided monthly to the A/c holder. Non-Resident Taka Account Non-Resident Taka Account can be opened by overseas banks and correspondents. ii) This account may be opened with initial deposit sent from abroad in a freely convertible currency. c) Convertible Taka Account i) Convertible Taka Account may be opened in the names of foreign organisations/nationals viz diplomatic missions, U.N. organisations etc. ii) These accounts may be credited with foreign currency brought in or remitted from abroad or transferred from a Foreign Currency account or any other Non Resident Taka Account. d) Foreign Currency Deposit Account i) Foreign Currency Deposit Accounts may be opened in the names of Bangladeshi nationals residing abroad, foreign nationals residing abroad or in Bangladesh and also foreign firms, foreign missions and their expatriate employees. ii) Payments outside the country may be made freely from this account to the extent of balances lying therein. iii) No Payment in foreign exchange may be made to or on behalf of any resident in Bangladesh out of the foreign currency account. e) Other Accounts Other Accounts include the following: i) Sundry Deposit Account ii) Drafts Payable Account iii) Payment Order Payable Account iv) Profit Payable Account v) TT payable Account. ii) iii) iv) b) i) 2. a) i) ii) iii) iv) b) i) Al-Mudaraba Savings Account Savings Account can be opened in the name of individuals singly & jointly, educational institutions, clubs, Associations and socio-economic institutions. A minimum balance of Taka 1000.00 is required for opening the Account. Account can be operated by cheque. 75% weightage is given to savings account holder for sharing profit. Savings Bond Savings Bond can be purchased by individual aged 18 years and above, educational institutions, clubs, associations and other socio-economic
40

ii) iii) iv) c) i) ii) iii) d) i) ii) iii) e) i)

institutions. 8 years and 5 years term Bonds are available. Taka 5000, Taka 10,000, Taka 25,000, Taka 50,000, Taka 1,00,000 Taka 5,00,000 denominated Bonds are issued. 125% and 110% weightages are assigned to saving Bond of 8 years and 5 years respectively. Hajj Savings Account Hajj Savings Account can be opened only in the name of individuals. The period of deposit is 1 year to 25 years 110% weightage is given to Hajj savings Account. Special Savings (Pension Scheme) Account Persons of 18 years and above can open special savings (Pension Scheme) A/c either for 5 years or 10 years duration. Monthly installment ranges from Taka 100 to Taka 1000 per month. 130% weightage is assigned to 10 years deposit and 110% to 5 years deposit. Term Deposits Account Deposits under the above scheme can be made for 3,6,12,24 & 36 months at a multiple of Taka 1000 and above by an individual, clubs, societies etc. The following weightages are assigned to Term depositors: 36 Months 24 " 12 " 6 " 3 " 98% 100% " 96% 92% 88% " " " Weightage

ii)

f) i) ii) ii)

Special Notice Deposit Account Special Notice Deposit A/c can be opened by firms, Companies, Societies etc. Deposits are withdrawable by cheque giving prior notice. 55% weightage has been assigned to Short Notice Deposit.

2.1.7 Investment Schemes of IBBL The special feature of the investment policy of the Bank is to invest on the basis of Profit-Loss Sharing System in accordance with the tents and principles of Islamic Shariah. Earning profit is not the only motive and objective of the Banks investment policy rather, emphasis is given in attaining social welfare and in creating employment opportunities. The principles of investment operations of the Bank are:

41

 To invest fund strictly in accordance with the principles of Shariah. To diversify its investment portfolio by size of investment, by sector of investment,
viz industrial, commercial, agricultural and by geographical area. 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 accelerating sustainable socio-economic growth and upliftment of the society. To invest in the form of goods and commodities rather than giving out cash money to the investment clients.

To encourage social upliftment enterprises. To shun even high profitable investment in fields forbidden under Islamic Shariah
and are harmful for the society. The Bank extends investments under the principles of following modes of Investment: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Bai - Murabaha Bai - Muazzal Hire-Purchase Musharaka Mudaraba Ijrara Bai-Salam Ishtisna Quard Welfare-oriented Investment Schemes: a) Small Transport Investment Scheme b) Transport Investment Scheme c) Doctors Investment Scheme d) Small Business Investment Scheme e) Agriculture Investment Scheme f) Poultry Investment Scheme g) House hold Durables Investment Scheme

42

h) i)

Housing Investment Scheme Rural Development Scheme

Features of Various Investment Schemes: 1. Bai-Murabaha: It is a contract in which a client wishing to purchase raw materials finished goods, commodities, spares, machinery equipments or any other goods request the Bank to procure the items and sell them to him at cost plus a declared profit payable at the time of taking delivery of the goods. Important features: * Cost of the goods sold and the amount of profit added herewith should be made known to the client. * Bank procures and stores the goods, in its own or hired godown. * Delivery of the goods to the clients is made only against payment of cost plus profit either at a time or in installments as agreed upon. * On expiry of the stipulated period, bank can charge compensation and dispose of the goods at its own discretion. * Examine shariah permissibility of the items. Reject proposal outright if not permitted by Shariah. 2. Baimuazzal (Deferred Sale): It is a contract in which a client wishing to purchase raw materials, finished goods, commodities, spares, machines, equipments or any other goods request the Bank to procure the items and sell them to him at a price payable at a future date in lumpsum or in installments. * It is a credit sale. The bank transfers ownership and possession of the goods to the clients before receipt of sale price. * Sale price of the goods is payable by the client at a specified future date.

3. Hire Purchase:
It is a contract under which the Bank invests in equipment, machinery, transport or other durable articles for the clients against an agreed rental together with on undertaking from the clients to make full payment of price to the Bank of periodical installment for the purpose of essential purchase of the concerned rented article. * Bank retains ownership of the asset and is entitled to receive agreed rental unit full payment of purchase price thereof by the client is meant up. * Possession of the asset is passed on to the client for his exclusive use. Bank as the owner and the client as the hirer. * In case of Hire Purchase, the hire acquires ownership of the asset on full
43

payment of agreed value but in case of leasing operations, ownership of asset is not transferred to the lessee.

5. Musharaka:
Musharaka (Partnership) is another type of financing utilized by Islamic Banks. In this form of financing, two or more financiers provide the finance for a project. All the partners are entitled to a share in the total profits of the project according to a ratio that has been mutually agreed upon. However, any losses are to be shared exactly in proportion to the capital contributed. All the partners have a right to participate in the management of the project. However, they may also waive this right in favor of any specific partner. 6. Mudaraba: Mudaraba is a deed on the basis of which an agreement is signed between a Bank and a person (Real person or a legal entity) in order to enter into a commercial (Purchase and a sale of goods) investment and jobbing transaction. In this kind of agreement, the bank, as the owner, acts as the supplier of the necessary cash and the other party as the mudarib or amel. Capital owner is the Saheb-E-Mal and capital user is called Mudarib. All profits earned through the relevant transactions, shall be decided between the bank and the amel. On the winding up of the job, the ratios for this dividend shall be those initially agreed upon. The modern Islamic Bank is based on a framework that may be called a triple Mudaraba. This is structured as follows: The group of individuals who wish to invest their capital, i.e. the depositors of a bank. The Mudarib to whom the individuals entrust their capital by contract i.e. the bank. The entrepreneur, with whom the Mudarib signs a separate contract, passing to him the capital which was originally entrusted to him by the investors. Mudaraba transactions are allowed only where the purchase or sale of goods does not involve any physical or chemical changes. Mudaraba can be classified on the basis of business nature into 3 types such as: i) Domestic Trading Mudaraba: When purchases and sales are performed only within the country, it is known as Domestic Trading Mudaraba. ii) Import Mudaraba: When goods are imported from abroad and sold in the country it is known as Import Mudaraba. iii) Export Mudaraba: If Mudaraba is conducted for exportation of goods to foreign countries, it is known as Export Mudaraba. The bank may make insurance one of the conditions for the grant of facilities. Duration of the Mudaraba shall be the date of signing of the agreement. In the case of Import Mudaraba on the basis of the credits or sight / time drafts it should not be later than the date of opening of the Letter of Credit and it should be noted that the date of drawing on the funds of the documents from the bank accounts by the correspondent are not be considered the basis for the duration of the Mudaraba. In Mudaraba Transaction, the bank shall supervise the utilization of the capital, its return as well as
44

the operation processes involved. In this respect the amel is under obligation to maintain all documentation and sale or purchase of the goods. The amel has no right, without the agreement of the bank, to sale goods, relating to the Mudaraba on credit. If any loss incurs in the project, in that case the capital owner of the project will share loss in full. The Mudarib was in no way liable for such losses. His only commitment was his time and effort. Mudaraba are two types: i) Mudaraba Mutlak ii) Mudaraba Mukkaida i) ii) Mudaraba Mutlak : Here the complete freedom given to the Mudarib i.e. He will do the business in any place of any goods (permisible to Shariah). Here is the Mudarib is quite free from restrictions. Mudaraba Mukkaida : Here the business area, place, Specification of goods, style of business, Time gape of business, number of partners etc. fixed by the agreement of Mudaraba Mukkaida. Here the complete freedom not given to the Mudarib. Mudarib will do the business with the instruction of shaheb-E-Mal.

The complete freedom given to the Mudarib from any liability for capital in the event of loss and the disjunction between the owner of the capital and the third parties involved constitutes the distinctive characteristic of the Mudaraba. 6. Ijara (Leasing) Islamic leasing is not unlike its western counterpart. Islamic banks use this mode to finance capital goods to industry, charging a fixed rental with the repayment installments. Ijara wa iqtina is a leasing method ending with the client owning the goods leased. 7. Bai-Salam or Bai-Salaf: This is a system of agricultural finance whereby small farmers are provided with their daily needs during the season and sometimes with cash for agricultural operations. It is, however, open to abuse and does not reward the farmer so has not so far been used by Islamic banks. The product is delivered at a future date for a price paid in advance. Muslim jurists have laid down several important conditions for this procedure: a. The price agreed for the product should be paid in full in cash at the time of the contract. In this way, the total risk is borne by the financier. This is meant to avoid the unfair practice, known as shail, where financiers pay low installments throughout the season in order to ensure their profits and hedge against failure of delivery. Without this condition, the jurists are agreed that the salam contract is null and void. b. Delivery of the goods must be postponed for a fixed time. If the contract were used to

45

acquire the goods immediately, it would, in fact, be a trick to get them at a reduced price. c. The goods must be of a type that is commonly available at the time fixed for delivery. This ensures that the financier does not carry unnecessary risk and enables the farmer to obtain the product from another source if need be. The contract must specify clearly the kind and quality of goods to be delivered. This modality would seem to be a fair way of providing forward financing for small-and medium-range farmers. 8. "Istishna" Mode of Investment The word "Ishtishna" has derived from SANA-AA. Which means manufacturing and construction? Value/Price is to be paid before delivery of goods. Both delivery and price may be deferred as per HANAFI School of thought. Risk and conversion both are permitted. Goods may be fungible or non-fungible. 9. Quard-e-Hasana (Profit Free Loans): Most Islamic banks also provide profit free loans (Quard-E-Hasana) to their customers. However, practice differs in this respect. Some banks provide the privilege of profit free loans to the holder of investment account at the bank. Other banks provide profit free loans to needy students and the economically weaker sections of society. Yet others provide profit-free loans to small producers, farmers and entrepreneurs who are not qualified to receive financing from other sources. The purpose of these profit-free loans is to help them to become independent or to raise their incomes and standard of living. Second-helping to increase production with due emphasis on agricultural, livestock, and industrial production. 10. Welfare-Oriented Investment Schemes of IBBL The Bank, since its inception, has been working for the upliftment and emancipation of the under privileged, down trodden 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. a. Small Transport Investment Scheme Under the scheme, the Bank's providing Babytaxi, Tempo and Mishuk (a locally produced three-wheeler auto transport) to the educated youths for their self employment and to replace the traditional slow-moving transport system of the metropolis. Such employment, it is hoped, will invigorate the moral fibre of the society. Present member of clients under the scheme is 221, amount disbursed in Taka 10 million. b) Transport Investment Scheme To ease the existing transportation problem and ensure speedy economic growth and
46

development of the country, particularly the expansion of trade, commerce and industry, the Bank has taken up this scheme. Under this scheme, investment is being allowed to the existing successful businessmen and potential entrepreneurs in this sector for all types of road and water transport like bus, mini-bus, truck, launch, cargo-vessel, transport for rent a car service and babytaxi, tempo, pick-up van for self-employment and ambulance for clinic & hospital. 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, micro-bus and jeeps. Number of clients under the scheme is 1802 and amount disbursed Taka 990 million. c) Doctors Investment Scheme The Bank has taken up this scheme to help un-employed qualified doctors to go for selfemployment and to provide the latest medical equipments to specialist doctors to extend modern medicare facilities throughout the country. Amount disbursed under the scheme is Taka 50 million and number of clients is 52. d) Small Business Investment Scheme This scheme has been taken up for self-employment of educated unemployed youths of rural and urban areas and to provide investment to small businessmen and entrepreneurs. Investment is extended for about 200 economic activities in sectors as live-stock, fishery, agro-farming, processing and business, manufacturing, trading/shopkeeping, transportation, agricultural implements, forestry and service viz. laundry, signboard painting etc. Under this scheme small businessmen and entrepreneurs are given investment upto Taka 30 thousand without any collateral and upto Taka 50 thousand on easy terms and conditions. Taka 440 million has so far been disbursed under the scheme and number of clients is 10107. e) Agriculture Implements Investment Scheme In keeping with the people-oriented and welfare objectives of the Bank, this scheme has been introduced to provide power tillers, power pumps, shallow tubewells, thrasher machines etc. on easy terms to unemployed rural youths for self-employment and to the farmers to help augment production in agricultural sector. Number of clients in this sector is 701 and amount disbursed is Taka 20 million. d) Poultry Investment Scheme To create opportunities for self-employment of educated youths and small entrepreneurs and to meet the country's growing demand of protein food like chicken, eggs etc. this scheme has been introduced. Number of clients in this scheme is 2 and investment disbursed is Taka 1 million.

47

e) Household Durables Investment Scheme The objective of the scheme is to increase standard of living and quality of life of the fixed income group by extending them investment facilities to purchase household articles such as furniture, electric and electronic equipments like television, refrigerator, gas cooker etc. Number of clients under this scheme is 58741, amount disbursed is Taka 1590 million. f) Housing Investment Scheme The Bank has introduced this scheme recently to ease the serious housing problem in the urban areas and to make arrangement for comfortable accommodation of the fixed income group. Number of clients here is 117 and amount disbursed is Taka 130 million. g) Rural Development Scheme Bangladesh is predominantly an agricultural country with vast majority living in rural areas. More than 50% of the rural people live under the poverty line, Seasonal unemployment and underemployment is so acute that many people remain idle and without job in most of the time of the year. As a result, people in large number are migrating to urban areas, particularly in metropolis in search of employment thereby creating social and environmental hazards. Islami Bank has, therefore, taken up a scheme to reactivate the rural economy and develop model villages through integrated approach. The objective of the scheme is to create income generating and productive selfemployment opportunities through extension of investment for the development of rural areas and thereby contribute in alleviating rural poverty. The scheme has, by now, been introduced in 38 districts through 52 branches of the Bank which will gradually be extended throughout the country. Investment under this scheme is allowed for the purpose of, amongst others, production of 21 types of main crops viz. food, cereals and cash crops, off farm activities like dairy, beef fattening, goat rearing, poultry, shop keeping, peddling etc. Rural transport like rickshaw, rickshaw van, cart etc. irrigation equipment, hand tubewell housing materials, in all cover about 343 types of economic activities. Under the scheme the IBBL has so far provided investment of Tk.90 million to 14123 clients. Islami Bank Foundation, a subsidiary of the Bank, engaged in social welfare activities shall, side by side, take care of the requirement of sanitation, medicare and education of the village through integrated area development approach under Islamic model. The Rural Development Scheme is operating very successfully. The recovery rate under the scheme is 99%.The Rural Development Scheme of IBBL is a very popular investments scheme. This scheme is so competitive that the NGOs providing micro credit on traditional interest system find in difficult to continue their activities in the areas where IBBL's Scheme is functioning.

48

2.1.8 Foreign Exchange Business Foreign Exchange deals with foreign trade and foreign remittance. Foreign trade is Import and Export. Foreign remittance is inward remittance and outward remittance. Islami Bank is doing Import, Export and Remittance business with satisfactory performance. The achievement of Islami Bank in the area of foreign exchange business has been quite phenomenal. The Bank has been providing services to import and export trade and for repatriation of hard-earned foreign exchange of Bangladeshis living and working abroad.To handle foreign exchange business effectively and efficiently. The Bank developed a wide network of correspondents throughout the world. 2.1.9 Achievements of IBBL The IBBL has many successful stories of achievements. These are summarized below: 1. IBBL is the pioneer institution for introduction of Islamic Banking in Bangladesh. 2. The success of IBBL has imbibed other sponsors at home and abroad to establish Islamic Banking in Bangladesh. Three national, one international Islamic banks have 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 have also expressed their intention to introduce Islamic Banking. 3. IBBL has successfully mobilised deposits from a section of people who hither to before did not make any deposit with interest based banks. 4. The Islamic Banking products which are offered by IBBL through its 107 branches located at important centres all over the country and spontaneous acceptance of those products by the people proves the superiority of Islamic Banking. 5. IBBL's market share of deposit investment and ancillary business is steadily increasing. 6. IBBL, though still a tiny bank, handles more than 10% of country's export and import trade. 7. Among the contemporary commercial Banks IBBL's position is first in respect of mobilisation of deposit, deployment of fund and earning profit. 8. Investment in industrial sector occupies 52% of IBBL's investment portfolio. This is a unique example of industrial finance by a commercial Bank. 9. More than 105000 workers are employed in the industrial projects financed by IBBL. IBBL has thus made significant contribution to solving unemployment problem of the country. 10. Dhaka,the capital of Bangladesh being a Mega city-has acute transport problem. IBBL has joined hands with an enterprising group to introduce a fleet 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. 11. IBBL has introduced several other welfare oriented investment schemes, such as Small Transport Investment Scheme, Small Business Investment Scheme,
49

12.

13. 14. 15. 16.

17. 18. 19. 20. 21.

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 down trodden section of the populace - an area where no other Commercial Bank has extended any finance. IBBL's mission is to reach to all 68000 villages of the country as early as possible. IBBL has contributed 850 million Taka as income tax to the Government Exchequer on its net profit over the last fifteen years. At the initiative and drive of IBBL, several universities in Bangladesh have introduced courses on Islamic Banking and Finance. IBBL has organized 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. IBBL has been continuously pursuing the Government to allow formation of Islamic Insurance Company. It has been learnt that the Government is contemplating to grant license for establishing an Islamic Insurance Company in the near future. 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. 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 Foundation for carrying out social welfare activities. The foundation has taken up a number of schemes covering the whole of Bangladesh. A sum of Taka 260 million has so far been spent in social welfare activities.

As one of the leading non-government voluntary organizations of the country, the Foundation is working with unique and special programs for the welfare of distressed humanity and to make poor, down trodden, landless and assetless people self-reliant. The aims and objectives of the Foundation are to serve the 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. Some important Schemes of the Foundation are: -

50

1. Income Generating Scheme

The objective of this scheme is to encourage unemployed youths in nation building activities and to make them self-reliant. This scheme has been taken up to train rural health workers and to fund poultry, pisciculture, cottage industry, small trading, in addition to providing rickshaws, sewing machines etc. for income and employment generation. 2. Educational Scheme Scholarship & stipend are awarded to the poor and meritorious students under this scheme. 3. Health Scheme This scheme has been taken up to establish child and maternity centres, charitable dispensaries, provide grants for medical treatment of the poor install tube-wells for the supply of pure drinking water and build sanitary latrines in order to fulfil health needs of the rural people. 5. Humanitarian Assistance Humanitarian Assistance are provided to the poor, disabled persons, families affected by river erosion and for marriage of poor girls. 6. Emergency Relief Operations Financial assistance to the people affected by natural calamities is provided under this scheme. 7. Service Center The Foundation has been establishing permanent service centres in coastal areas and off-shore islands to be used for the purpose of integrated social development as well as safe shelter during natural disaster. 8. HRD Programme Under HRD programme, the foundation has established several Technical Training Centres for imparting vocational training and kindergarten Schools. Projects like mosque based income generating centres and prisoner rehabilitation projects are expected to be established in the near future. 9. Assistance to Mosque Financial assistance for construction, extension and renovation of mosques are provided under this scheme. 10. Dawa Programme Islamic Research magazines and other Islamic Literatures are distributed under this programme among academicians, journalists, judges, Lawyers, high officials, bankers, litterateurs, and important libraries and institutions of the country.

51

11. Sales Centre Foundation has established sales centres to encourage poor women folk for selfemployment and for marketing home made garments, handicrafts and other items produced by them. 12. Islami Bank Hospital The Foundation has set up hospitals for providing modern medical treatment to all sections of the people at reasonable cost. By now, the Islami Bank Hospitals have earned good reputation in the society. National and international ratings of IBBL IBBL's past performances have been evaluated by Bangladesh Bank, several credit rating agencies home & abroad and by the local press. International Press In the midst of a difficult Banking system known to be plagued by high nonperforming loans (NPLs), one could easily conclude that it would be difficult to find a bank that is different from norm. However, IBBL provides a refreshing change and is, thus, a pleasant surprise. Although it does not command the market share as the 4 public sector banks, IBBL, which claims to have little interference in lending from the government, has nonetheless, managed to find a niche market of its own-says the BANK ATCH a New York based international Credit Rating Agency in its January 30, 1998 issue. As a market leader offering banking services based on the Islamic rule of Shariah, IBBL's profitability trend has been quite impressive. The Bank's ability to keep its return on asset (ROA) well above the industry's average reflected its resilience to possible shocks in the banking system. Concerns over massive NPLs and under provisioning are common amongst local banks. But this seems well resolved in IBBL. IBBL's good performance and solid capital base have indeed provided refreshing change found within a banking system saddled and held back by huge NPLs the above agency continued to comment in the same issue. National Press It is one of a few local banks according to CAMELS (Capital, Assets, Management, Earnings, Liquidity & Sensitivity) rating made by the Bangladesh Bank. It holds the highest amount of liquidity among all banks and its ability to keep return on assets at 1.07 percent is well above the banking sector's average of 0.33 percent- The Financial Express, Dhaka commented in its issue of May 28,1998. The Holiday in its 29th August, 1997 issue carried out a report under the heading Setting a precedence of sound banking and commented While the country's banking system is burdened with bad debt portfolios and also suffers from a liquidity
52

shortage, the Islami Bank Bangladesh Ltd. (IBBL) has created a unique precedence by improving its reserve and deposit positions substantially, making handsome profits, and offering attractive dividends to its share holders and depositors. IBBL's World rating As per Bankers' Almanac (January 2001 edition) published by the Reed Business Information, Windsor Court, England, IBBL's world Rank is 1771 among 3000 banks selected by them. This position was 1902 among 4500 selected banks as on January 1999 edition. IBBL's country Rank is 5 among 39 banks as per ratings made by the above Almanac on the basis of IBBL's Financial Statements of the year 2001. Award and Prizes: International & National Perspective:
IBBL was awarded for several times by international & national organisations. The Global Finance, a reputed London based quarterly magazine, awarded IBBL as the best bank of the country for the year 1999 and 2000. IBBL has got the 2nd prize of National Export Fair for its pavilion of Service Organisation in 1985.

2.1.10 Constraints and Prospects of Islamic Banking System in Bangladesh 2.10.a Legal and practical Constraints being faced by Islamic Banks in Bangladesh Despite tremendous popular support, spectacular success in terms of mobilisation of deposit and distribution of profit, Islamic Banking in Bangladesh is 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 be developed. 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 surplus in those securities. There are other problems, such as (a) Shortage of professional conversants with Islamic Banking; (b) Lack of familiarity with the Islamic products by the International Financial and non-financial sector. (c) Severe competition in the financial sector; (d) Economic slow down and political situation of the Country; (e) Inadequate track record of Islamic Banking. (f) Absence of infrastructure for Islamic trade financing. (g) Income tax laws and structure are not conductive to Musharaka Mode of Financing. (h) The existing process of investment recovery laws are lengthy and cumbersome and also not appropriate for recovery of investments made under Islamic modes. In spite of the present limitations. Islamic banking system has tremendous potentiality and good prospect in Bangladesh. Firstly, the successful launching and operation of Islamic banks in Bangladesh has established the fact that banking without interest and the launching of Islamic Money Market in the country are feasible. Secondly, Islamic
53

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. 2.10.b Prospects of Islamic Banking in Bangladesh Despite the above problems and shortcomings the Islamic Banks have the following further good prospects to grow: a) Islamic bank investment portfolio can be diversified and extended for long term financing under Musharaka and Mudaraba. b) The clients of the Islamic Bank may be equipped with knowledge of Islamic banking through seminars and symposiams. c) Islamic banks can develop unanimous Shariah Manual or guide lines for day-today consultation and clientele motivation. d) Islamic Banks can expand their network in the rural areas of Bangladesh. e) The research and development (R&D) for Islamic Economics, Banking and Finance can be geared up. f) Co-operation among Islamic Banks can be extended throughout the world. g) Muslim countries, who have established Islamic Banks, if involve with international trade on Islamic principles, that would contribute to grow international transactions under interest-free system. This will further help developing an Islamic Common Market. h) The Central Banks of the Muslim Countries can help creation of environment for Islamic Banking with more responsibilities. i) Uniform accounting systems and standards can be developed for providing consistency in accounting treatment of various operations and products of Islamic Banks. j) New and innovative products can be designed for financing on profit and loss sharing basis. 2.10.c Global Scenario of Islamic Banking in the 21st Century To face the challenges of the 21st century, necessary preparation is being taken from every corner of economics with the progressive forces. Judging from the progress of Islamic economics thus far, it is seemed that we could not develop a complete system of Islamic Economics that could be considered as a viable or better alternative to the prevailing system. Because the 21st century is not going to provide us a similar economic environment anymore. With the complete implementation of the World Trade Organisation (WTO) in the year 2003. In efficiencies and low productivity of the Islamic financial institutions will certainly jeopardies their success. Though the theme of Islamic economics is ancient. But its gradual development is found very lately. So, it has various lackings and problems for its development.

54

The following are main problems facing regularly: a) Necessary Islamic Economist is not available: Islamic economist requires knowledge of "Shariah" and mastering Arabic. However, Shariah is a discipline in its own right that is not easy to be master by economists, especially for those who do not speak Arabic. Mixing both economics and Shariah seems to be required for Islamic economics to make measurable advances in the 21st century. Number of Surah economist is very small. b) Shortage of Islamic financial Institutions : Sufficient Islamic Financial Institutions has not yet been established to face the future competition in the 21st century. c) Un-Islamic Central Bank: In most muslim countries, Central Bank is not islamic. Under un-Islamic Central Bank, an Islamic Bank and other financial institutions cannot run smoothly. d) Un-Islamic Government: In most muslim countries, Government is un-Islamic. So, their administrative, legal, social, political system and financial policy is not favourable to establish of Islamic economics. In this situation, Islamic Financial Institutions have to face a lot of obstacles. e) Information Technology: There is another domineering factor that will overwhelm us in the 21st century namely information age. We have noticed that knowledge-based economics is becoming more and more fashionable, particularly in West. Yet not a single muslim country is at par with any at there western nations thus, far either in terms of technological advancement, or in terms of participation. f) Shortage of efficient and skillful manpower: Shortage of efficient and skillful manpower is one of the main obstacles to reach the desired goal of Islamic Banking and other financial institutions. 2.1.11 Aims and Objectives: 1. To conduct interest-free banking. 2. To establish participatory banking instead of banking on debtor-creditor relationship. 3. To invest on profit and risk sharing basis. 4. To accept deposits on Mudaraba & Al-Wadeah basis. 5. To establish a welfare-oriented banking system. 6. To extend co-operation to the poor, the helpless and the low-income group for their economic upliftment. 7. To play a vital role in human development and employment generation.

55

8. To contribute towards balanced growth and development of the country through investment operations particularly in the less developed areas. 9. To contribute in achieving the ultimate goal of Islamic economic system. 2.1.12 Corporate Information: (As on 31st December 2006)
1. Date of Incorporation : 2. Inauguration of 1st Branch : 3. Formal Inauguration :

13th March 1983 (Local office, Dhaka)30th March 1983 12th August 1983

4. Share of Capital A. Local Shareholders : 42.63% B. Foreign Shareholders : 57.37% 5. Authorized Capital : Tk.5,000.00 million 6. Paid-up Capital : Tk.3,456.00 million 7. Deposits : Tk.132,419.40 million 8. Investments (including investment in Shares) Tk.117,132.83 million 9. Foreign Exchange Business : Tk.201,822.00 million 10. Number of Branches : 186 (as on Dec '07) 11. Number of Shareholders : 20,960 12. Manpower : 7,459 2.1.13 Functions: 1. 2. 3. 4. 5. 6. The functions of Islami Bank Bangladesh Limited are as under: To maintain all types of deposit accounts. To make investment. To conduct foreign exchange business. To extend other banking services. To conduct social welfare activities through Islami Bank Foundation.

2.1.14 Membership of Different Organization / Chamber: Local: 1. Bangladesh Institution of Bank Management (BIBM) 2. The Institution of Bankers Bangladesh (IBB) 3. Bangladesh Association of Banks (BAB) 4. Bangladesh Foreign Exchange Dealers' Association (BAFEDA) 5. Central Shariah Board for Islamic Banks of Bangladesh 6. International Chamber of Commerce- Bangladesh

56

Foreign:
1. International Association of Islamic Banks (IAIB), Jeddah, K.S.A. 2. Accounting and Auditing Organizations for Islamic Financial Institutions (AAOIFI), Manama, Bahrain. 3. General Council of Islamic Banks & Financial Institutions (GCIBFI), Manama, Bahrain (IBBL is a member of its Executive Council) 4. Society for Worldwide Inter-bank Financial Telecommunication (SWIFT) 2.1.15 Paid-up Capital and Reserve: The Authorized Capital of the Bank is Taka 5000.00 million and Paid-up capital is Taka 3,456.00 million in 2006. The Paid-up Capital was Taka 67.50 million in 1983. The Reserve Fund of the Bank has been increasing steadily. On 31st December 1983, it was Taka 0.36 million and stood at Taka 6551.23 million as on 31st December 2006. Taka 5450.94 million as on 31st December 2005. Taka 4329.92 million as on 31st December 2004. Taka 3280.80 million as on 31st December 2003. Taka 23852.07 million as on 31st December 2002. Taka 1998.04 million as on 31st December 2001. Taka 1759.65 million as on 31st December 2000. Taka 1115.61 million as on 31st December 1999. Taka 1011.84 million as on 31st December 1998. Taka 930.17 million as on 31st December 1997. Taka 759.39 million as on 31st December 1996. Taka 535.08 million as on 31st December 1995. Taka 303.57 million as on 31st December 1994. 2.1.16 Equity: As per Capital Adequacy Policy prescribed by Bangladesh Bank, the Central Bank of the Country, bank has maintained 9.11% Capital on its Risk-Weighted Assets against which total equity of the Bank as on September 30, 2007 stood at Taka 12,135 million. This was Taka 10,435.96 million in 2006, Taka 8,331.14 million in 2005, Taka 6,691.12 million in 2004, Taka 5,266.47 million in 2003, Taka 3,540.52 million in 2002, Taka 2,993.24 million in 2001,Taka 2,671.06 million in 2000, Taka 1,659.26 million in 1999, Taka 1,517.55 in 1998, Taka 1,429.86 million in 1997, Taka 1241.05 in 1996,Taka 813.09 million in 1995,Taka 420.06 million in 1993, Taka 537.35 million in 1994 and Taka 420.06 million in 1993.

57

2.1.17 Performance:
(Amount in Million Taka) Particulars Authorized Capital Paid-up Capital Reserves Fund Total Equity Total Deposits (Including bills payable) Gross Total Investments (Including Inv in Share) Gross Import Business Export Business Remittance Total Foreign Exchange Business Total Income Total Expenditure Net Profit before Tax
Payment to Government (Income Tax)

2001 1,000.00 640.00 1,998.04 2,993.24 41,640.94

2002 1000.00 640.00 2852.07 3540.51 56,246.3 7 49,185.9 2 33,788.0 0 16,673.0 0 14,670.0 0 65,131.0 0 5,234.07 4,240.02 994.05 397.62

2003 3000.00 1920.00 3280.37 5266.47 70,552.6 5 62,755.9 0 46,237.0 0 21,738.0 0 16,668.0 0 84,643.0 0 6,841.29 6039.28 802.01 426.61 20% (Stock) 98,046.8 5 81,704.7 4

2004 3000.00 2304.00 4329.92 6691.12 88,452.18

2005 5000.00 2764.80 5450.94 8331.14 108261

2006 5000.00 3456.00 6551.23 10435.96 132814.00

37,648.75

83,893.63

102145

123959.00

25907.00 16082.00 9879.00 51868.00 4,259.55 3,683.43 576.12 181.48

59,804.00 29,192.00 23,669.00 112,665.00 8262.73 6419.74 1842.99 829.35 20% (Stock) 125,776.94 102149.28

74,525.00 36,169.00 36,948.00 147,642.00 10586.78 8424.36 2162.42 973.09 25% (Stock) 150959.66 122880.35

96870.00 21133.00 53819.00 201822.00 14038.30 11129.63 2908.67 1490.12 15% Cash 10% Bonus 188115.27 150252.82

Dividend Total Assets (including Contra) Total Assets (Excluding Contra)

25% 58,644.46 49,551.87

25% 77,463.1 2 65,080.1 2

58

Fixed Assets

1,276.89

1725.53

2036.65

2552.70

3067.90

3724.69

No. of deposit account holder No. of investment account holder Cumulative amount of disbursement from RDS Outstanding Investment of RDS RDS no. of A / C holder RDS no. of village Number of Foreign Correspondents Number of Shareholders Number of Employees Number of Branches Book value per Share ( Taka) Earning per Share (Taka) Market Value per Share (Taka) (Highest) Capital Adequacy Ratio

1,355,053 176,138

16,51122 1,96295

19,94266 22,3954

22,91269 26,4863

2705180 297943

3207131 421751

1323.87

2,029.67

2923.60

4216.77

6033.36

9303.12

371.1 100,470 2,214 815 9,917 3831 121 3519 617

432.1 107,225 2875 830 10,747 4249 128 4205 932

570.9 130,465 3700 840 14,196 4673 141 2181 195.92

789.97 163,465 4230 850 15,892 5306 151 2257 518.59

1106.00 164116 4560 860 17201 6202 169 3013 487.57

2242.00 295012 8057 870 20960 7459 176 3019.66 485.94

3,205.00

3656.00

2595.00

4833.00

5580.00

4749.00

9.24%

8.64%

9.43%

9.21%

9.44%

9.43%

(Note: One Million = Ten Lac)

59

60

2.2.0 Export Import Bank of Bangladesh Ltd. 2.2.1 Introduction "Export Import Bank of Bangladesh Ltd." usually named as "EXIM Bank" is a completely shariah based Islamic bank. All of its activities are being operated under the norms of Islamic shariah. The bank was established as a traditional bank on the 3rd of August in the year of 1999. Though it started its operation as a traditional bank, it was converted to an Islamic bank on the 1st of July in the year of 2004. The bank has got a dramatic change through this conversion. 2.2.2 Vision And Mission Vision: The gist of vision of Export Import Bank of Bangladesh Ltd. is Together Towards Tomorrow. The bank believes in togetherness with its customers, in its march on the road to growth and progress with services. To achieve the desired goal, there will be pursuit of excellence at all stages with a climate of continuous improvement, because, in Export Import Bank of Bangladesh Ltd., everybody believes the line of excellence is never ending. Banks strategic plans and networking will strengthen its competitive edge over others in rapidly changing competitive environments. Its personalized quality services to the customers with the trend of constant improvement will be cornerstone to achieve banks operational success. Mission: 1. To be the most caring and customer friendly and service oriented bank. 2. To create a technology based most efficient banking environment for its customers. 3. To ensure ethics and transparency in all levels. 4. To ensure sustainable growth and establish full value of the honorable shareholders and 5. Above all, to add effective contribution to the national economy. 2.2.3 Achievement It is a great success that by the grace of Almighty Allah, the bank have been migrated at a time with all the branches from its conventional banking operation into shariah based Islamic banking operation without any trouble. Lot of uncertainties and adversities were there into this migration process. The officers and executives of the bank motivated the valued customers by counseling and persuasion in light with the spirit of Islam especially for the non-Muslim customers. IT division has done the excellent job of converting and fitting the conventional business processes into the processes based on shariah. It was possible by following a systematic procedure of migration under the leadership of honorable Managing Director. 2.2.4 Corporate Culture This bank is one of the most disciplined banks with a distinctive corporate culture. The bank believes in shared meaning, shared understanding and shared sense making. People can see and understand events, activities, objects and situation in a distinctive
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way. They mould their manners individually to suit the purpose of the bank and the needs of the customers who are of paramount importance to the bank. The people in the bank see themselves as a tight knit team/family that believes in working together for growth. The corporate culture the bank belongs has not been imposed; it has rather been achieved through banks corporate conduct. 2.2.5 Social Commitment The purpose of the banking business is, obviously, to earn profit, but the promoters and the equity holders are aware of their commitment to the society to which they belong. A chunk of the profit is kept aside and/or spent for socio-economic development through trustee and in patronization of education, art, culture and sports of the country. The bank wants to make a substantive contribution to the society where it operates, to the extent of the separable resources. 2.2.6 Shariah board: The Board of directors has formed a shariah supervisory board for the Bank. Their duty is to monitor the banks transactional procedures, & assuring its shariah compliancy. This board consists of some members headed by a Chairman. The tasks of the shariah supervisor in summary is replying to queries of the banks administration, staff members, shareholders, depositors, & customers, follow up with the Shariah auditors and provide them with guidance, submitting reports & remarks to the fatwa & shariah. Supervision board and the administration, participating in the banks training programs & handling the duty, help the bank in numerous ways. 2.2.7 Export Import Bank of Bangladesh Ltd. at a Glance: (Amount in Crore) Sl. No. Particulars 2000 2005 2006 01. Paid-up Capital 22.50 87.89 171.38 02. Equity 26.52 191.24 311.17 03. Total Deposits 393.45 2831.92 3503.20 a) Demand Deposits 89.56 394.59 378 b) Time deposits 303.89 2437.33 3125.20 04. Investment 217.05 2604.63 3264.12 05. Off balance sheet activities 765.35 3371.67 4179.35 06. Gross Income 18.74 161.15 201.39 07. Gross Profit 9.97 117.58 137.87 08. Net Profit After Tax 4.81 55.53 65.02 09. Number of Employees 237 687 765 10. Number of Branches 8 28 30 11. Salary & allowance 3.70 23.17 33.10 12. Earning Assets 361.37 2767.93 3487.45 13. Return on Assets (After Tax) 5.34 % 1.73% 1.65% 14 Price Earnings Ratio n/a 10.53% 7.74%

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2.2.8 SWOT Analysis of Export Import Bank of Bangladesh Ltd.: SWOT is an acronym for the internal strength and weakness of a firm and the environmental Opportunity and Threat facing that firm. So, if we consider Export Import Bank of Bangladesh Ltd. as a business firm and analyze its strengths, weaknesses, opportunities and threats the scenario are be as follows: Strengths: Energetic as well as smart team work. Good Management Cooperation with each other Membership with SWIFT Good banker-customer relationship Strong Financial Position Online Banking Services Strong position in CAMELS rating. Opportunities: Growth of sales volume Change in political environment Launching own ATM card services. Threats: Different services of FCBS (Phone Banking/Home Ban king) Existing card services of Standard Chartered Gridlays Bank Daily basis interest on deposit offered by HSBC Entrance of new PCBs Weakness: Lack of proper motivation, training and job rotation Lack of experienced employees in junior level management Lack of own ATM services. 2.2.9 Products of EXIM Bank Ltd.: Deposit Products: 1. Al-Wadiah Deposit Account 2. Mudaraba Deposit Account (RFCD, NFCD) 3. Mudaraba Savings Monthly Scheme (Money Grower) 4. Mudaraba Income Scheme (Steady Money) 5. Mudaraba Super Savings-Double in 6 years 6. Mudaraba Multiplus Savings-More than triple in 10 years 7. Mudaraba Education Savings- For Higher Education 8. Mudaraba Hajj Prokalpa
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9. Mudaraba Credit Cards 10. Foreign Currency Deposit Account Investment Products: 1. Corporate Finance 2. Commercial Finance 3. Industrial Finance 4. Project Finance 5. Lease Finance 6. Syndicate Finance 7. Hire Purchase Finance 8. Real Estate Finance 2.2.10 Export and Import Trade Handling and Financing As a commercial Bank, they do all traditional Banking business including the wide range of savings and credit scheme products, retail banking and ancillary services with the support of modern technology and professional Excellency. But its main focus is, for obvious reason, on export and import trade handling and the development of entrepreneurship and patronization of private sectors. 2.2.11 Shariah Auditing This is the civil supervisory aspect that shapes the Banks main feature. Its existence is part of the Sharia Supervision procedures. One of its main task is to check the Sharia compliancy in the Banks transactional procedures in accordance to the Fatwas issued in that regard, under the guidance of the Sharia Supervisor. The Sharia auditor is assigned the task of revising the Banks transactional procedures throughout the year to check the extent to which the staff members and the different departments have abided by the regulations, advices, and Fatwas issued by the Fatwa & Sharia Supervision Board, forums, & banking conferences. As well as, assuring that all the contracts that states a right for the Bank or an obligation on the Bank is certified by the Fatwa & Sharia Supervision Board. Moreover, the Sharia Auditing submits periodic reports to the Sharia Supervisor in order to be proposed to the Fatwa & Sharia Supervision Board to state what it finds appropriate in that regard. 2.2.12 Banking with shariah principles Export Import Bank of Bangladesh Limited is the 1st bank in Bangladesh who has converted all of its operations of conventional banking into shariah-based banking since July/2004. We offer banking services for Muslims and non-Muslims alike allowing our customers choice and flexibility in their savings and investments. Our products are approved by our Shariah Board comprising of veteran Muslim scholars of our country who are expert in all matters of Islamic finance. The process by which Noriba's investments are designed and executed allows the Bank to offer a

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combination of Sharia compliance and capital markets expertise that is unique throughout the world. The Noriba Sharia Board commits Noriba to the strict adherence to the requirements of the Sharia as a result of the Banks sole focus on Sharia-compliant investments and the full supervision of its financial products and transactions. Noriba experts specifically design each of the Bank's investment vehicles with the approval of the Noriba Sharia Board. Once the given product or transaction has been arranged, the Noriba Sharia Board carefully screens it for compliance before giving final approval for its implementation. This control mechanism guarantees that all aspects of Noriba's final products and banking transactions are in adherence with the guidelines of the Sharia. 2.2.13 Branches of Exim Bank: Total number of branch of that bank are 35. These are mentioned below: 1. Motijheel Branch 2. Panthapath Branch 3. Agrabad Branch 4. Khatungonj Branch 5. Gazipur Branch 6. Imamgoanj Branch 7. Gulshan Branch 8. Sonaimuri Branch 9. Sylhet Branch 10. Nawabpur Branch 11. Narayangonj Branch 12. Shimrail Branch 13. Rajuk Avenue Branch 14. New Eskaton Branch 15. Uttara Branch 16. Laksham Branch 17. Mirpur Branch 18. Jubilee Road Branch 19. Elephant Road Branch 20. Gazipur Branch 21. Mawna Branch 22. Bogar Branch 23. Jessor Branch 23. Malibagh Branch 24. Ashulia Branch 25. Ashuganj Branch 26. CDA Avenue Branch
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27. Chowmuhani Branch 28. Satmasjid Road Branch 29. Bashundhara Branch 30. Fenchuganj Branch 31. Comilla Branch 32. Rangpur Branch 33. Moulovi Bazar Branch 34. Savar Bazar Branch 35. Karwan Bazar Branch 2.2.16 sections of EXIM Bank EXIM Bank has three sections for its different tasks. They are 1. General section: It deals with the normal task of a bank. That means receiving deposits and payment of demands of the customers. 2. Investment Section: This section deals with all kinds of investment projects such as Local investment and Foreign transactions investment (letter of credit). 3. Remittance: This section deals with remittance transactions. 2.2.17 Corporate Information Date of incorporation : June 2002, 1999 Inauguration of first Branch: August 03, 1999 Authorised Capital : Tk.350.00 Crore Paid-up Capital : 171.375 Crore Number of Branches : 35(Thirty Five) Credit Rating: Long Term : A- (Adequate Safety) Short Term ST-3 (Good Grade) 2.3.0 Al-Arafah Islami Bank Limited 2.3.1 Introduction Al-Arafah Islami Bank incorporated in Bangladesh as a banking company in 1995 with limited liability by shares. It started business on 27 September of that year with an authorised capital of Tk 1,000 million. At inception, its paid up capital was Tk 101.20 million divided into 101,200 ordinary shares of Tk 1,000 each. 23 sponsors of the bank subscribed the total issued capital. Al-Arafah Bank is an interest-free shariah bank and its modus operandi is substantially different from those of regular commercial banks. The bank however, renders all types of commercial banking services under the regulation of the Bank Companies Act 1991. It conducts its business on the principles of musharaka, Bai-murabaha, Baimuajjal and Hire Purchase transactions. A Shariah Council of the bank maintains constant vigilance to ensure that the activities of the bank are being conducted according to the precepts of Islam.

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The management of the bank is vested in a 23-member board of directors, who oversee the affairs of the bank through a managing director, the chief executive officer of the bank. All activities of the Al-Arafah Islami Bank are conducted on an interest-free system according to Islamic Shariah. It invests all of its surplus funds on the basis of the trade mode of financing ensuring buying and selling of halal commodities and on a profit and loss sharing basis. A fixed percentage of income derived from investment of mudaraba deposits is distributed to the mudaraba deposit holders. The investment of the bank is supervised strictly so that no investment becomes overdue with consequential loss of investment income. Its modes of investments are: a) Mudaraba finance - purchase and sale of commodities as per requests by clients permissible under shariah regulations; b) Bai-Muajjal - cost plus sale of the commodity on deferred payment basis against adequate collateral; c) Bai-Salam (advance sale) - buying of goods from producers/suppliers on payment in advance after entering into a firm contract and receipt of their delivery at a future specified date; d) Ijara Bil-Bai (Hire Purchase Sirkatul Meelk) - purchase of durable items on equity participation by both the bank and the client and handing them over to the client on installment sale rental basis; e) Mudaraba - entire capital provided by the bank against firm assurance of the entrepreneur that he will manage the business properly and efficiently as manager and the profits derived from the investment will be shared in accordance with the agreement between the bank and the client; and f) Musharaka - capital is provided by the bank and the investment client on the basis of partnership, in which profit is shared in agreed ratio and the loss is shared on equity ratio. The bank has recently introduced some schemes for upliftment of fixed wage-earners as well as small traders and for income generating activities. These are: Desired Durables Investment Scheme (DDIS), Masjid Madrasah based Investment Scheme (MMIS), Small Business Investment Scheme (SBIS), Special Pally Biniog Prakalpa (Rural Investment Project) and Transport Investment Scheme. 2.3.2 Special Features of the Bank 1. All activities of the Bank are conducted under an interest-free system according to Islamic Shariah. 2. It's investment policies under different modes are fully Shariah compliant. 3. During the year 2003, 70% of the investment income has been distributed among the Mudaraba depositors. 4. It believes in providing dedicated services to the clients imbued with Islamic spirit of brotherhood, peace and fraternity.

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5. The bank is committed towards establishing a welfare-oriented banking system to meet the needs of low income and underprivelage class of people. 6. The Bank upholds the Islamic values of establishment of a just economic system through social emancipation and equitable distribution of wealth. 7. Following the Islamic traditions, it is assisting in the economic progress of the socially disadvantage people; in the creation of employment opportunities and in upliftment of rural areas to ensure a balance development of the country. 8. The Bank believes in social and philanthropic activities and has established AIBL English Medium Madrasha and AIBL library. More endeavours will inshallah follow in future. 2.3.3 Deposit Schemes 1. Al Wadea Current Deposit (CD) 2. Mudaraba Saving Deposit (MSD) 3. Mudaraba Term Deposit (MTD) 4. Mudaraba Short Notice Deposit (SND) 5. Monthly Profit Based Term Deposit (PTD) 6. Monthly Installment Based Term Deposit (ITD) 7. Monthly Installment based Hajj Deposit (MHD) 8. Onetime Hajj Deposit (THD) 9. Marriage & Investment Deposit (MIS) 10. Al-Arafah Savings Bond (ASB) 11. Foreign Currency Deposit (FCD) 12. Pension Deposit Scheme (PDS) 13. Cash Waqfa Deposit Scheme (CWD) 14. Mudaraba Millionaire Deposit scheme 15. Mudaraba Double Deposit Scheme 16. Mudaraba Lacpoti Deposit Scheme 17. Mudaraba Kotipoti Deposit Scheme 2.3.4 Investment Schemes The Total investment of the bank stood at Tk.5079.21 million against Tk.3728.41 million during the corresponding period of last year. The percentage of increase is 36.23% as against 13.00% in banking sector. The bank extends investments to the clients under the following modes of investment under Islamic Shariah: 1. 2. 3. 4. 5. 6. Murabaha Bai-Muazzal Bai-Salam Hire Purchase (HPSM) Mudaraba Musharaka
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7. Qard 8. Special Investment 2.3.5 Foreign Exchange Trade A substantial amount of income of the bank has been derived from Foreign Exchange business. The bank handled import business to the tune of Tk.5559.27millipon in the year 2001 as against Tk. 5979.90 million during the preceding year. On the other hand, the export business handled by the bank during the year amounts to Tk. 2524.63 million as against Tk. 3313.20 million during the preceding year. The bank is under correspondence with 35 foreign banks in 170 places of the globe for establishing correspondents and agency relationship. Besides our foreign exchange trade has improved due to introduction of SWIFT. 2.3.6 Branches of AIBL (A) Dhaka Division (22) 1. Motijheel 2. Moulvi Bazar 3. Nawabpur Rd. 4. VIP Rd. 5. Motijheel Corp. 6. New Elephant Rd. 7. Uttara Model Town 8. North South Rd. 9. Banani 10. Mirpur 11. Mymensingh 12. Mouchak 13. Dhanmondi 14. Madhabdi 15. Pagla 16. Joydebpur 17. Mohammadpur 18. Narayangonj 19. Islampur 20. Dilkusha 21. Kapashia, Gazipur 22. Progati Sarani,Badda (B) Barisal Division (01) 1. Barisal (C) Chittagong Division (10)

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1. Agrabad 2. Khatungonj 3. Jubilee Rd. 4. R Nizam Rd. 5. Comilla 6. Companigonj 7. Gallai 8. Chowmuhani 9. Feni 10. Cox's Bazar (D) Sylhet Division (05) 1. 2. 3. 4. 5. Laldighirpar Zindabazar Moulvi Bazar Rupashpur Beani Bazar, Sylhet.

(E) Khulna Division (04) 1. 2. 3. 4. Khulna Shatkhira Benapole Jessore

(F) Rajshahi Division (04) 1. Rajshahi 2. Bogra 3. Saidpur 4. Mohadebpur 2.3.7 Corporate Information Date of Registration : Inauguration of first Branch : Authorised Capital : Paid-up Capital : Equity : Number of Branches : Deposit : Investment : Number of Manpower : Number of Shareholder : June 18, 1995 September 27, 1995 Tk.250.00 Crore 85.42 Crore 169.01 Crore 46 (Forty Six) 1677.53 Crore 1742.31 Crore 912 4487
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2.4.0 Shahjalal Islami Bank Limited (SJBL) 2.4.1 Introduction Shahjalal Islami Bank Limited (SJBL), a Sharial Based commercial Bank in Bangladesh was incorporated as a Public Limited Company on 1st April, 2001 under Companies Act 1994. The Bank commenced commercial operation on 10th May 2001 by opening its 1st branch, i.e., Dhaka Main Branch at 58, Dilkusha, Dhaka obtaining the license from Bangladesh Bank, the central Bank of Bangladesh. 2.4.2 Objectives From time immemorial, Banks principally did the functions of moneylenders or "Mohajans" but the functions and scope of modern banking are now a days very wide and different. They accept deposits and lend money like their ancestors, nevertheless, their role, as catalytic agent of economic development encompassing wide range of services is very important. Business commerce and industries in modern times cannot go without banks. There are people interested to abide by the injunctions of religions in all sphere of life including economic activities. Human being is value oriented and social science is not value-neutral. Shahjalal Islami Bank believes in moral and material development simultaneously. "Interest" or "Usury" has not been appreciated and accepted by "the Tawrat" of prophet Moses, "the Bible" of prophet Jesus and "the Quran" of Hazrat Muhammad (SM). Efforts are there to do banking without interest. Shahjalal Islami Bank Limited avoids "interest" in all its transactions and provides all available modern banking services to its clients and wants to contribute in both moral and material development of human being. No sustainable material well-being is possible without spiritual development of mankind. Only material well-being should not be the objective of development. Socio-economic justice and brotherhood can be implemented well in a God-fearing society. Other objectives of Shahjalal Islami Bank includes:

To establish interest-free and welfare oriented banking system. To help in poverty alleviation and employment generations. To contribute in sustainable economic growth.

2.4.3 Vision and mission Vision: To provide quality services to our customers, To set high standards of integrity, To extend our customers innovative services acquiring state-of-the-art technology blended with Islamic principles, and brings total satisfaction to our clients, sponsors and employees.

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Mission: To expand Islamic banking through welfare oriented banking system, ensure equity and justice in economic activities, extend financial assistance to poorer section of the people and achieve balanced growth and equitable development. 2.4.4 Products & Services: a. Deposit Products: Shahjalal Islami Bank Limited accepts deposits on the basis of Mudaraba in the following types of accounts, and pays profit, like that of dividend in these accounts, except Al Wadia Current Account. The relationship between banker and customer is not debtor-creditor relationship of conventional banks. The depositor is a partner in business with SHAHJALAL ISLAMI BANK LIMITED. Customers deposit their fund in the following types of Accounts: 1. Mudaraba Short Notice Deposit Account 2. Mudaraba Savings Account 3. Mudaraba Term Deposit Account 4. Other Scheme Deposit Accounts Average 70% of profit earned by the bank is distributed proportionately among depositors annually. b. Investment modes: To provide interest-free Banking Shahjalal Islami Bank has adopt the following modes of investment: 1. Musharaka (equity participation on the basis of sharing profit and loss) 2. Mudaraba (sharing of profit and loss in business where one of the partners provides expertise and management and other partner provides capital remaining inactive) 3. Murabaha (buying and selling of commodities, goods etc. with profit) 4. Bai-Muajjal (credit sale with profit) 5. Ijara (leasing for rent) 6. Hire purchase or Shirkatul Melk 7. Bi-Salam (purchasing of agricultural products while in production and providing advance money to the producers) 8. Istishna (purchasing of industrial products while in production and providing advance money to the producers). 9. Quard.
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2.4.5 Computer services: Shahjalal Islami Bank is computerized and provides the following services some of these services will be introduced soon. Shahjalal Islami Bank Limited introduced a few schemes, which are very popular: 1. Online services 2. Automated Accounting 3. Integrated System 4. Signature Verification 5. Any Branch Banking 6. ATM Services (to be implemented) 7. POS Services (to be implemented) 8. Other Delivery Channel Services (to be implemented) 2.4.5.a SJIBL VISA Card Card is considered as a new dimension of product resulting from technological development in the banking arena. In line with our affiliation with VISA International for VISA ATMs and POS, the following two products are launched broadening service products of the Bank to the clients: 1. VISA Electron (SJIBL VISA Debit Card - local) 2. VISA Prepaid (SJIBL VISA Prepaid Card) SJIBL VISA Debit Card: To a customer, My card, my money concept is used for Debit Card. Any accountholder of SJIBL can apply for a SJIBL VISA Debit Card against his/her Al-Wadiah Current Deposit (AWCD), Mudaraba Savings Deposit (MSD) or Mudaraba Short Notice Deposit (MSND) Account. He/she is fully authorized to enjoy the benefits of cash withdrawal from ATMs, liberty of shopping, dining, paying utility bills and having access account information through SMS, etc. round the clock. SJIBL VISA Prepaid Card (Local): SJIBL VISA Prepaid Local Cards are open to the customers even having no account with Shahjalal Islami Bank Limited. Cardholders can have the card against prepayment and have access from anywhere in Bangladesh. SJIBL VISA Prepaid Local Cards are accepted locally at all VISA labeled merchant outlets, ATMs, etc. SJIBL VISA Prepaid Card (International): SJIBL VISA Prepaid International Cards are also open to the customers even having no account with Shahjalal Islami Bank Limited. Cardholders can have the card endorsing US Dollar paying against Travel Quota, Exporters Retention Quota or marking lien of his/her FC Account.
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SJIBL VISA Prepaid International Cards are accepted world wide at the entire VISA labeled merchant outlets, ATMs, etc. SJIBL VISA Prepaid Card (Dual): The Dual Card is a hassle free product, no need to carry two separate plastic cards for local and international card. Now, with one plastic card the Cardholders can enjoy all the benefits and make transactions locally & globally from their Prepaid card account at all the VISA labeled merchant outlets, 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 the entire VISA labeled merchant outlets, ATMs, etc. 2.4.5.b GP Bill Grameen Phone subscribers availing the service to pay their bills, advances, security deposit and other related charges through all branches of Shahjalal Islami Bank Limited. 2.4.6 Shariah Council 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. 2.4.7 Branches of SJIBL SL Name of the Branches Dhaka Zone 1 Dhaka Main Branch 2 Mitford Branch 3 Dhanmondi Branch 4 Gulshan Branch 5 Foreign Exchange 6 Joydevpur Chowrasta Branch 7 Kawran Bazar Branch 8 Uttara Branch 9 Bangshal Branch 10 Baipail (Dhaka EPZ) Branch 11 Narayanganj Branch SL 18 19 20 21 22 23 24 25 26 Chittagong Zone Agrabad Branch Khatunganj Branch Jubilee Road Branch Muradpur Branch Sylhet Zone Sylhet Branch Dargah Gate Branch Beanibazar Branch Moulvibazar Branch Khulna Zone Khulna Branch

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12 13 14 15 16 17

Satmasjid Road Branch Banani Branch Joypara Branch Motijheel Branch Mirpur Branch Savar Branch 10th May 2001 21 377 Tk.200 Crore 187.16 Crore Tk.100.00

2.4.8 Corporate Information: Commencement of Business : Number of Branches : Number of Employees : Authorized Capital : Paid-up Capital : Face Value per Share :

2.5.0 Prime Bank Limited 2.5.1 Introduction The bank was incorporated as a public limited company in Bangladesh under Companies Act 1994. It commenced its banking business with one branch from April 17,1995 under the license issued by Bangladesh Bank. Presently the bank has 42 branches all over Bangladesh and a booth located at Dhaka club, Dhaka. Out of above 42 branches, 05 branches are designated as Islamic Branches complying with the rules of Islamic Shariah, the modus operandi of which is substantially differently from other branches run on commercial conventional basis. The bank is listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited as a publicly quoted company for its general class of share. The principal activities of the bank are to provide all kinds of commercial banking services to its customers through its branches in Bangladesh. The bank also carries out merchant banking activities under the license issued by the Securities and Exchange Commission (SEC), Dhaka, Bangladesh. In the backdrop of economic liberalization and financial sector reforms, a group of highly successful local entrepreneurs conceived an idea of floating a commercial bank with different outlook. For them, it was competence, excellence and consistent delivery of reliable service with superior value products. The sponsors are reputed personalities in the field of trade and commerce and their stake ranges from shipping to textile and finance to energy etc. As a fully licensed commercial bank, Prime Bank Ltd. is being managed by a highly professional and dedicated team with long experience in banking. They constantly focus on understanding and anticipating customer needs. As the banking scenario

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undergoes changes so is the bank and it repositions itself in the changed market condition. Prime Bank Ltd. has already made significant progress within a very short period of its existence. The bank has been graded as a top class bank in the country through internationally accepted CAMELS rating. The bank has already occupied an enviable position among its competitors after achieving success in all areas of business operation. Prime Bank Ltd. offers all kinds of Commercial Corporate and Personal Banking services covering all segments of society within the framework of Banking Company Acts and rules and regulations laid down by our central bank. Diversification of products and services include Corporate Banking, Retail Banking and Consumer Banking right from industry to agriculture, and real state to software. Prime Bank Ltd., since its beginning, has attached more importance in technology integration. In order to retain competitive edge, investment in technology is always a top agenda and under constant focus. Keeping the network within a reasonable limit, our strategy is to serve the customers through capacity building across multi delivery channels. Our past performance gives an indication of our strength. We are better placed and poised to take our customers through fast changing times and enable them compete more effectively in the market they operate. The bank has consistently turned over good returns on Assets and Capital. During the year 2006, the bank has posted an operating profit of Tk. 2131 million and its capital funds stood at Tk 4409.21 million. Out of this, Tk. 1750 million consists of paid up capital by shareholders and Tk. 2659.21 million represents reserves and retained earnings. The banks current capital adequacy ratio of 9.95% is in the market. In spite of complex business environment and default culture, quantum of classified loan in the bank is very insignificant and stood at less than 0.82%. 2.5.2 Deposit Schemes: Bank is the largest mobilizer of surplus domestic savings. For poverty alleviation, we need self-employment, for self-employment we need investment and for investment we need savings. In the other words, savings help capital formations and the capital formations help investments in the country. The investment in its turn helps industrialization leading towards creation of wealth of the country. And the wealth finally takes the country on road to progress and prosperity. As such, savings is considered the very basis of prosperity of the country. The more the growth of savings, the more will be the prosperity of the nation. The savings rate in Bangladesh is one of the lowest in the world. In order to improve the savings rate, Financial Institutions responsible for mobilization of savings should offer attractive Savings Schemes so that the marginal propensity to save increases. The
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savings do not, of course, depend only on the quantum of income but largely depend on the habit of savings of the people. 2.5.3 Vision of The Bank To be the best Private Commercial Bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management and profitability having strong liquidity. 2.5.4 Mission of The Bank 1. To build Prime Bank Limited in to an efficient, market driven, customer focused institution with good corporate governance structure. 2. Continuous improvement in our business policies, procedure and efficiency through integration of technology at all levels. 2.5.5 Strategic Priorities of The Bank To have sustained growth, broaden and improve range of products and services. 2.5.6 Objectives of Prime Bank Limited The objectives for which the bank is established are as follows: 1. 2. 3. 4. 5. 6. 7. To carry on, transact, undertake and conduct the business of banking in all branches. To receive, borrow or to raise money on deposit, loan or otherwise upon such terms as the company may approve. To carry on the business of discounting and dealing in exchange of shares and securities and all kinds of mercantile banking. To provide for safe-deposit vaults and the safe custody of valuables of all kinds. To carry on business as financiers, promoters, capitalists, concessionaires and brokers. To act as agents for sale and purchase of any stock, shares or securities or for any other momentary or mercantile transaction. To establish and open offices and branches to carry on all or any of the business abroad and within the country provided prior permission is obtained from Bangladesh bank.

2.5.7 Management and Human Resources A well-educated, skilled and enterprising workforce with wide experience in the banking is a precondition for the continued growth and progress of any bank. PBLs aim is to recruit and retain a competent workforce. In the expectation of continued growth, the bank in 1998 established a training institute for its own staff. Prime Bank recruits experienced bankers as well as fresh graduates and trains them through the
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Training institute. Its human resources strength is 894 as on December 31, 2004. All of the top executives of the bank have diversified Banking and Auditing experience for many years with leading Private Commercial Banks and other financial institutions. 2.5.8 Departments of Prime Bank LTD. Total division and departments of Prime Bank Limited can be classified under three main aspects of banking. 1. Administrative department 2. Operational department 3. Miscellaneous/other department 2.5.9 On-line Banking The bank has set up Wide Area Network (WAN) across the country within its all branches to provide on-line branch banking facility to its valued customers. The service named PRIMELINE has opened up several possibilities of improved customer services. Under this facility client of one branch are able to do banking transaction at any other branch of the bank. The bank hosted its Web Site (www.prime-bank.com) to facilitate dissemination of information about the banking services and facilities of Prime Bank Limited all over the world. 2.5.10 Information Technology in Banking Operation Prime Bank Limited has adopted automation in banking operation from the first day of its business. The main objective of this automation is to provide efficient and prompt services to its valued clients. At present all the branches of the bank are computerized under UNIX operating system to provide best security to the information. Prime Bank Limited is providing comprehensive range of banking services with utmost care and efficiency to its customers. Auto Teller Machine is used to count money properly to save clients valuable time as well. The customer can draw money/cash from their account within a minute. 2.5.11 SWIFT Service Prime Bank Limited is one of the first few Bangladeshi Banks to obtain membership of SWIFT (Society for Worldwide Inter-bank Telecommunication). SWIFT is a members owned cooperative which provides a first and accurate communication network for financial transactions such as Letter of Credit, Fund Transfer etc. By being a member of SWIFT, the bank has opened up possibilities for uninterrupted connectivity with over 5700 user institutions in 150 countries all over the world.

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2.5.12 Products and Services of Prime Bank Limited Prime Bank Limited offers various kinds of deposit products and loan schemes. The bank also has highly qualified professional staff members who have the capability to manage and meet all the requirements of the bank. Every account is assigned to an account manager who personally takes care of it and is available for discussion and inquiries, whether one writes, telephones or calls. 2.5.13 Performance at a glance ( Taka in Million)
Particulars Income Statement Interest Income Interest Expense Net Interest Income Non-interest Income Non-interest Expense Net Non-interest Income Profit before provision and tax Provision for loans and assets Profit after provision before tax Tax including deferred tax Profit after tax Balance Sheet Authorized Capital Paid-up Capital Total Shareholder's equity Deposits Long-term liabilities Loans and advances Investments Property, Plant and Equipment Earning Assets Net current assets Total assets Current ratio Debt equity ratio Other Business Import Export 2002 1620 1055 565 631 448 183 748 51 697 279 418 2003 2159 1408 751 841 591 250 1001 232 770 394 375 2004 2641 1616 1025 946 824 121 1146 82 1064 452 612 2005 3446 2271 1175 1232 886 346 1520 320 1201 633 568 2006 5199 3698 1500 1732 1101 631 2131 390 1741 689 1052

1000 600 1526 16482 5350 12687 1996 219 15125 437 19359 1.00 8.56% 19564 12190

1000 700 1732 20483 7052 16492 2750 256 19335 583 24249 0.96 8% 25441 16490

1000 1000 2240 28069 7371 23220 3084 322 27131 (1299) 32362 1.06 7% 36747 19502

4000 1400 2808 36022 11406 31916 3940 372 36727 31 41506 1.00 7% 40303 28882

4000 1750 3860 54724 16877 45010 7844 412 55458 5286 60899 0.88 7% 52639 41801

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Remittance Guarantee Business Inland letter of credit Capital Measures Total risk weighted assets Core capital (Tier-I) Supplementary capital (Tier-II) Total Capital Tier-I capital ratio Tier-II capital ratio Total capital ratio Credit Quality Non performing loans (NPLs) % of NPLs to total loans and advances Provision for unclassified loans Provision for classified loans Share Information Market price per share (Taka) No. of shares outstanding (million) No. of shareholders at actual Earning per share (Taka) Dividend Cash Bonus Effective dividend ratio Market capitalization Net assets per share (Taka) Price earning ratio (times) Operating Performance Ratio Net interest margin on average earning assets Net non-interest margin on average earning assets Earning base in assets (average) Cost income raito Cost deposit raito Cost of funds on average deposits Return on average assets

1252 3659 1523

3063 4248 3729

2140 4085 4267 23050 2240 236 2476 9.72 1.02 10.74 352.73 1.52% 231.73 174

3688 5303 5405 31890 2808 369 3177 8.80 1.16 9.96 308.21 0.96% 364.80 127.00

15050 5386 10174 44324 3860 549 4409 8.71 1.24 9.95 367.15 0.82% 544.80 308.52

13389 16455 1526 1782 139 176 1665 1958 11.409 10.83 1.04 1.07% 12.44 11.90% 188.22 326.53 1.48% 1.98%

131.73 171.73% 122.81 249.44 307.51 6 1727 59.73 36.67% 20% 16.37% 40% 1845.06 234.81 5.15 4.26% 1.38% 374.25 7 1993 37.55 62.86% 20.00% 42.86% 67.70% 2619.75 233.12 9.97 4.36% 1.45%

879.50 681.50 528.75 10 14 17.50 2620 4467 5262 43.71 40.59 60.11 40.00% 25.00 30%(proposed) 40.00% 25.00% 30% 47.06% 29.17% 33% 8795.00 9541.00 9253.13 223.98 200.57 220.57% 20.12 16.79 8.80% 4.41% 0.52% 3.68% 1.08% 3.23% 1.37% 90.02% 34.07% 82.25% 8.15% 20.5%

75.53% 79.02% 82.08% 86.45% 37.48% 37.11% 41.83% 36.82% 76.98% 80.52% 80.72% 88.60% 7.13% 7.62% 6.66% 7.09% 2.38% 1.72% 2.16% 1.54%

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Return on average equity Other information No of Branches No of employees No of foreign correspondents Average earning assets Average total assets Average deposits Average equity

30.03% 22.70% 30.43% 22.51% 27 30 36 41 730 777 894 1024 422 441 501 517 13254.64 17230.13 23233.08 31929.08 17547.94 21804.03 28305.38 36933.96 14795.74 18482.42 24276.24 32045.85 1392.34 1654.14 2010.83 2523.90

31.55% 50 1172 528 46092.85 51202.88 45373.27 3333.94

2.5.14 Rating Rationale Assessment Prime Bank is among the best of Bangladeshi banks. Our Individual rating reflects its reasonably sound financial condition but also its relatively short history, as well as the challenging operating environment in Bangladesh. Although it has grown rapidly since its inception, it has maintained a far healthier financial profile than the problematic state banks or other private banks. PB has been profitable since its first year of operations. Support Given its small size and private ownership, Prime Bank would look to its own shareholders for support should this be needed. However, in the absence of a large, institutional controlling shareholder, we have reservations as to their propensity or ability to provide funds in an extreme situation. The government's propensity to provide timely support to Prime Bank is also likely to be less than for larger state banks. We therefore, assign a support rating of "5" to Prime Bank, which implies that support is possible but cannot be relied upon. 2.5.15 Organogram of Prime Bank Limited:
Board of Directors

Executive Committee of the Board

Policy Committee of the Board

Board Secretariat

Board Audit Cell

Senior Public Relation Treasury Unit International Investment Marketing Executive Vice Division Division President

Managing Director Monitoring & General 81 Inspection Service Computer D.M.D H.R.D F.A.D Division Division Division

Corporate Research & Credit Development Affairs Division Committee

2.2.20 Information Technology Department 2.5.16 Stake Holders Benefits Customers, Securities & Exchange Commission, Bangladesh Bank, Government is the stake holders of any bank & Prime Bank is not exception. SEC, Bangladesh Bank, requests the bank to submit report in each 7 days. Employees of prime bank can collect information about all transactions at a glance. The process the data & make report using computer information system for Bangladesh Bank. The process takes a little time than if it is done by manually. Prime Bank can implement any new rules which come from regulatory authority in a short time. They can inform all branches in a short. So that all branches can know the change of rules & regulations any time. 2.5.17 Prospects: Size is a crucial issue in banking and Prime Bank, being a very small bank has its limitations. With an equity base of only BDT 1.5bn (USD 26mn), Prime Bank does not have the critical mass to cater to large borrowers or expand its business (including its proposed consumer banking initiatives) beyond a certain level. To be fair, the bank has so far done an excellent job in catering to the requirements of its traditional customers, the small to medium exporters, despite operating in a challenging environment. The bank has tentative plans to strengthen its equity to BDT 5bn, but the time frame is somewhat uncertain, and it is unclear whether it will be through fresh equity infusion, or through retained earnings over the years. As for all Bangladeshi private banks, Prime Banks shareholders are individuals, and their ability to infuse large amounts of capital is unclear. Nevertheless, in the near-term, Prime Bank should continue to perform satisfactorily, even as its high growth rate (albeit from a smaller base) is a slight concern. However, it is difficult to comment on the longer-term prospects of the bank (three years and beyond). Although there is some recognition amongst policy makers that there were too many (private) banks in the country, and a consolidation at some stage may be desirable, their near-term priority seems to be to address the huge asset quality problems of the state banks, and possibly privatize some of those. Therefore, consolidation amongst private banks does not appear likely over the next 2-3 years. 2.5.18 RISK MANAGEMENT Risk management is not sophisticated in Bangladesh by international standards, although it is improving in private banks. Prime Banks Board of Directors is responsible for setting strategic risk objectives and the risk appetite of the bank. Reporting to the Board are the Management Committee (which takes all policy decisions and is chaired by the CEO) and the Credit Committee, which is chaired by the Additional Managing Director, and meets every week. The bank has also recently
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set up an Asset and Liability Committee (ALCO), which is headed by the Additional MD, and is responsible for liquidity management, management of interest rate and other market risks and for maturity mismatches. The ALCO also determines the pricing policy of the bank for its various assets and liabilities. While audit and inspection of various branches is an integral part of internal operational management, the bank has also set up a Board Audit Committee for the past one year (on the recommendations of the central bank). This committee monitors audit reports and reviews audit objections and generally ensures compliance with the rules and regulations of the central bank. Bank management claims that the setting up of this committee has improved the compliance culture and corporate governance within the bank. Credit Risk: Prime Bank primarily lends for trade finance although some amount of project financing is also undertaken. The bank has generally maintained a conservative approach towards lending and management claims that their credit appraisal process is more stringent than that of its local peers (we were informed that typically only one out of three proposals originating at the branch level is eventually approved). The bank follows a two-tier credit screening process: the branch prepares a credit proposal and sends it to the Head Office, where the credit officers analyse the business risks and the nature of the collateral. If acceptable, a detailed credit memo is prepared and sent to the Credit Committee, which comprises senior credit and operations executives. The managing director can approve proposals up to BDT 30m while proposals between BDT 30m and BDT 50m are referred to the management committee; proposals above BDT 50m can only be approved by the Board. Fitch understands that cash flow is the primary consideration for all loan proposals although the nature of collateral is also taken into account while sanctioning proposals. Loss Reserves: Prime Banks level of financial disclosure is higher than most of its local peers. While it classifies NPLs in accordance with Bangladesh Bank (Bangladeshs central bank) regulations, which are somewhat liberal by international standards, it nevertheless makes loan loss provisions in excess of statutory regulations. The excess amount is disclosed in the banks annual report, as is the huge shortfall in the case of government banks annual reports. Market Risk: Prime Bank is exposed to interest rate and liquidity risks on account of a structural maturity mismatch arising from funding the loan and fixedincome investment portfolio (mainly government bonds) primarily through short-term customer deposits. These risks are slightly mitigated due to high renewal rates of the banks deposits. Foreign currency loans are fairly well matched with foreign currency deposits (about 3% of total deposits) and the bank manages small mismatches through swaps and foreign
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exchange contracts. We are informed that most of the banks foreign exchange business is client-driven although proprietary trading may slightly increase in future with improved skill sets of its traders. All foreign exchange activities are subject to central bank guidelines, and strict trading limits, such as intra-day, overnight and stoploss limits. Currently, the treasury activities of the bank are quite limited and there appear to be satisfactory control mechanisms to ensure segregation of duties between dealers and the back office. However, the banks ability to manage its overall operational risk, particularly in light of the Basle 2 guidelines, is likely to be inadequate, similar to most of the Bangladesh banking sector. None of the banks in Bangladesh are presently in a position to quantify the amount of market risk in their books, although Prime Bank has some tentative plans to introduce VaR type measurement tools in a few years time. 2.5.19 Deposit Schemes: The savings rate in Bangladesh is one of the lowest in the world. In order to improve the savings rate, Financial Institutions responsible for mobilization of savings should offer attractive Savings Schemes so that the marginal propensity to save increases. The savings do not, of course, depend only on the quantum of income but largely depend on the habit of savings of the people. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Contributory Savings Scheme Monthly Benefit Deposit Scheme Education Savings Scheme Fixed Deposit Scheme Short Term Deposit Lakhopati Deposit Scheme Double Benefit Deposit Scheme Foreign Currency Account Resident Foreign Currency Deposit Account Non-resident Foreign Currency Deposit Account Non-resident Taka Account Non-resident Investors Taka Account House Building Deposit Scheme Prime Millionaire Scheme

Loan Schemes: 1. General Loan Scheme 2. Consumer Credit Scheme 3. Lease Finance 4. House Building Loan & Apartment Loan Scheme 5. Advance against Shares
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6. 7. 8.

Custodial Services for investors (both individual & institutional) investing in through Stock exchange One stop services for payment of utility bills. Credit card

2.5.20 Network Structure Prime Bank Limited use WAN (wide area network) to connect all branches with Head Office. This system is operated by the head office of prime bank. Prime Bank has 42 existing branches around Bangladesh & those are far away from one branch to another. In order to communicate with all branches WAN system is perfect to them. Prime Bank also uses LAN (local area network) system. It has three head office branches in Motijheel. These three branches are connected by LAN system because some information is only used by head office branches. Hardware and software Components: Hardware Components of Prime Bank are-IBM, P series, X series, DS 4800, Database server, Application server, Storage tape library and oracle database etc. These machines are used in Head Office of Prime Bank & these are connected by LAN system. Previous Hardware Components: Prime Bank Limited used UNIX, HP server. These components had some problemsUnable to provide online service. Shortage of storage capacity. Prime Bank has a number of accounts. The system could not store huge amount of information. Service was not quick. From 1997-2005 they used PC Bank which was a full Banking software made by a Bangladeshi company. Present hardware and software: Now they use P series, X series, DS4800 hardware and T24 Automated full banking software which is made by a Switzerland company. Now the bank can provide online banking by using new machines & new software. Facilities of online banking areAccounts holder can check account balance from any branches.Customers can deposit & withdraw money in any time through ATM card. Future services: By using TEMENOS T24 Automated banking software, near future Prime Bank will provide the modern services to its clients. 2.5.21 Facilities for all types of customers SMS banking Account holder can check a account balance through mobile phone SMS banking .It will save time and transportation cost .No need to go to bank to know account balance .
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Internet banking Prime bank will provide internet banking service for their customers .Customers of prime Bank will able to perform banking activity in front of computer in home. Online bill payment services-Prime bank account holder will be able to pay Electricity bill, Gas bill, Telephone bill by using ATM card through online bill payment system. 2.5.22 Internally developed Software: Prime bank internally developed some software and information system .These software are used for internal operationIn-house Resource information system Classified Loan Management 2.5.23 Users Benefit: There are two types of usersExternal users: The main focus of all activities of a bank is customers. They use online, ATM card to with draw money. Internal Users: Board of directors & management. Management use information technology for quick decision making. In order to made decision, information is necessary. Information Technology store huge data & process the data then give information in a short time. 2.5.24 Islamic Mode of Operation: Prime Bank Limited has started its operation as a Conventional Bank in April 1995. But pretty soon afterwards, within few months, the Bank has taken up the Challenge to start Islami Banking Operations. The Challenge is not so much as in operating Islamic Banking but in maintaining both the forms in Parallel. From its inception as an Islami Bank the bank has proven itself to be worthy of its slogan of Bank with a Difference, through successful operation of Islami Banking. Prime Bank has started its Islami Banking operation through its first Branch being inaugurated at 19, Dilkusha C/A, Dhaka on 18 December 1995. Since then it has so far has established four more branches at different locations in the Country. Because of its popularity and managements commitment toward social well being gradual expansion of Prime Banks Islami Banking operations is assured. Following are the salient features of Islamic Banking, as is practiced in Prime Bank Limited: 1. All activities are conducted according to Islamic Shariah. 2. Interest free monetary operations. 3. Building partnership relation between the Bank and its customers. 4. Following Islamic principles in its investment portfolio. 5. While investing special consideration to social needs is given. 6. Through small and long term deposit schemes providing hope to the poor income group of the society.
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7. 8.

Client service centric banking, through which making the clients feel special. Conduct welfare activates etc.

Service Portfolio: Prime Bank provides following services under Islami Banking: 1. Deposit 2. Investment 3. Foreign Trade 4. Remittance and Fund Transfer Weightage Principle in Distributing Profit to the Depositors: Deposit of different A/Cs is not given equal weightage in ascertaining profit rate. Bank gets opportunity to invest fund for long period if the deposit is obtained for long period. If duration of deposit is long term the risk of deposit is higher. Depositor participates in long term investment of the bank and face higher risk. As such, Bank fix up profit on the different weightage against various types of deposit A/Cs on the basis of risk. 2.5.25 Corporate Information Incorporation of the Company : Commencement of Business : Number of Branches : Number of Employees : Authorized Capital : Paid-up Capital : Total Assets : Total Equity : 12 February 1995 17 April 1995 50 1172 Tk.400.00 Crore Tk.175.00 Crore Tk.5120.28 Crore 333.39

2.6.0 National Bank Limited 2.6.1 Introduction National Bank Limited has its prosperous past, glorious present, prospective future and under processing projects and activities. Established as the first private sector Bank fully owned by Bangladeshi entrepreneurs, NBL has been flourishing as the largest private sector Bank with the passage of time after facing many stress and strain. The member of the board of directors is creative businessman and leading industrialist of the country. To keep pace with time and in harmony with national and international economic activities and for rendering all modern services, NBL, as a financial institution automated all its branches with computer network in accordance with the competitive commercial demand of time. Moreover, considering its forth-coming future the infrastructure of the Bank has been rearranging. The expectation of all class businessman, entrepreneurs and general public is much more to NBL. Keeping the target in mind NBL has taken preparation to open new branches by the year 2007.
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The emergence of National Bank Ltd. in the private sector is an important event in the Banking arena of Bangladesh. When the nation was in the grip of severe recession, Govt. took the farsighted decision to allow in the private sector to revive the economy of the country. Several dynamic entrepreneurs came forward for establishing a bank with a motto to revitalize the economy of the country. National Bank Limited was born as the first hundred percent Bangladeshi owned Bank in the private sector. From the very inception it is the firm determination of National Bank Limited to play a vital role in the national economy. We are determined to bring back the long forgotten taste of banking services and flavors. We want to serve each one promptly and with a sense of dedication and dignity. The then President of the People's Republic of Bangladesh Justice Ahsanuddin Chowdhury inaugurated the bank formally on March 28, 1983 but the first branch at 48, Dilkusha Commercial Area, Dhaka started commercial operation on March 23, 1983. The 2nd Branch was opened on 11th May 1983 at Khatungonj, Chittagong. At present, NBL has been carrying on business through its 91 branches spread all over the country. Besides, the Bank has drawing arrangement with 415 correspondents in 75 countries of the world as well as with 32 overseas Exchange Companies. NBL was the first domestic bank to establish agency arrangement with the world famous Western Union in order to facilitate quick and safe remittance of the valuable foreign exchanges earned by the expatriate Bangladeshi nationals. NBL was also the first among domestic banks to introduce international Master Card in Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card. The Bank has in its use the latest information technology services of SWIFT and REUTERS. NBL has been continuing its small credit programme for disbursement of collateral free agricultural loans among the poor farmers of Barindra area in Rajshahi district for improving their lot. Alongside banking activities, NBL is actively involved in sports and games as well as in various Socio-Cultural activities. Up to September 2006, the total number of workforce of NBL stood at 2239, which include 1689 officers and executives and 550 staff. Since the very beginning, the Bank exerted much emphasis on overseas operation and handled a sizeable quantum of homebound foreign remittance. The Bank established extensive drawing arrangement network with Banks and Exchange Companies located in important countries of the world. Expatriates Bangladeshi wage earners residing in those countries can now easily remit their hard-earned money to the country with confidence, safety and speed.

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Banking is not only a profit-oriented commercial institution but it has a public base and social commitment. Admitting this true NBL is going on with its diversified banking activities. NBL introduced National Bank Monthly Savings Scheme (NMS), Special Deposit Scheme, Consumer's Credit Scheme and NBL Housing Loan, NBL Small Business Loan, Small House Loan Scheme, Festival Small Business loan etc. to combine the people of lower and middle-income group. Inspired by its social obligation and commitment and responsibility, NBL has been running a School and College up to Class XII solely on its own guardianship. From the very inception, this institution has been maintaining a good track record of results at the SSC and HSC Examinations. Conducted by a well-educated and trained team of teachers, reputation of this institution has been increasing day-by-day as a result of their relentless and sincere endeavor. Transparency and accountability of a financial institution is reflected in its Annual Report containing its Balance Sheet and Profit & Loss Account. In recognition of this, NBL was awarded Crest in 1999 and 2000, and Certificate of Appreciation in 2001 by the Institute of Chartered Accountants of Bangladesh. 2.6.2 Offers For Depositors 1. Savings Deposits Account 2. Current Deposits Account 3. Term or Fixed Deposit Accounts 4. Steady Money Deposit Accounts like STD (Short Term Deposit) A/c 5. Super Savings Deposit Accounts 6. Special Deposit Scheme 7. Monthly Savings Scheme 2.6.3 Offers For Borrowers Funded Credit Facilities 1. Cash Credit (Hypo.) 2. Cash Credit (Pledge) 3. Over Draft facilities against Financial Instruments like FDR, TDR, MSS, etc. 4. Over Draft facilities against Work Orders 5. Over Draft facilities to participate in different tenders. 6. Term Loan for Long Term and Short Term 7. Purchasing or Discounting the Local and Foreign Documentary Bills NonFunded Credit Facilities 1. Issuing Bank Guarantee in the form of Performance Guarantee or BidBond 2. Issuing Foreign Bank Guarantee 3. Issuing Shipping Guarantee Import Credit Issuing different types of L/C like Sight or Cash L/C, Deferred L/C Post Import Credit facilities like 1. PAD (Payment Against Documents)

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2. LIM (Loan against Imported Merchandise) facility to retire the documents against L/C(s) 3. LTR (Loan against Trust Receipt) facility to retire the documents against L/C(s) Export Credit Issuing Back to Back L/C Post Export Credit facilities like 1. PC (Packing Credit) 2. ABP (Acceptance for Bills Payment) 3. LDBC (Local Documentary Bills Collection) 4. FDBC (Foreign Documentary Bills Collection) 2.6.4 Consumer Credit Scheme NBL Consumer Credit Scheme gives a great opportunity to buy household and office items on easy installments. This scheme gives the advantage of part payment to cope with the high price tags of many necessary home and office appliances. This scheme facilitate the limited earning persons to bring Television, Refrigerator, VCR, Personal Computer, Photo Copier, Washing Machine, Furniture, Microwave Oven, Car, and a number of other expensive items within the buying range. With this scheme NBL makes better living possible for people living on fixed income. Customers can buy those home and office equipment's without over taxing their budget. 2.6.5 Products of Modern Age Credit Card Through its Credit Card both VISA and Master Card NBL has not only initiated a new scheme but also brought a new life style concept in Bangladesh. Now the dangers and the worries of carrying cash money are memories of the past. Credit Card comes in both local and international forms, giving the client power to buy all over the World. Now the customers enjoy the conveniences and advantages of Credit Card as the step into the new millennium. NBL ATM Service Access to prompt cash NBL has introduced ATM service to its Customers. The card will enable to save the customers from any kind of predicament in emergency situation and time consuming formalities. NBL ATM Card will give the distinguished Clients the opportunity to withdraw cash at any time, even in holidays, 24 hours a day, 7 days a week.

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Joining with the world's largest money transfer service "Western Union", NBL has introduced Bangladesh to the faster track of money remittance. Now money transfer between Bangladesh and any other part of the globe is safer and faster than ever before. 2.6.6 Other Special Banking Offers 1. Bridge Finance 2. Underwriting 3. Act as Manager to Issue in IPO of various Limited Companies 2.6.7 Creating Customer Loyalty For a banking organization it is not a tough job to make the Customer loyal. If a customer has a long association with a specific bank a weakness or loyalty been grown up in his mind to the same Bank. It is a matter of customer psychology that when a customer gets used to transact frequently with a bank normally he inclined to keep the relationship going on with the bank unless and until he has got any bitter experience with the said bank. However, it noted from numbers of instance that while any customer get better facilities or more advantages from another bank they tends to switch to another bank. Like any other organization highly satisfied customers produce a great deal of benefits for the bank. Satisfied customers are less price sensitive. They talk favorably to others about the bank and its products and remain loyal for a longer period. If satisfaction increases so does loyalty. Highly competitive markets show surprisingly little difference between the loyalty of less satisfied customers and those who are somewhat satisfied. However, they show a tremendous difference between the loyalty of satisfied customers and completely satisfied customers. Even a slight drop from complete satisfaction can create an enormous drop in loyalty. This means that banks must aim high if they want to hold on to their customers. Customer delight creates an emotional relationship with a product or service, not just a rational preference. This, in turn, creates high customer loyalty. National Bank limited has been able to develop customer loyalty among a major portion of their old customers who have been banking for quite a long time. But, at the same he also looses a considerable portion of his old customer who are less satisfied and switches to another bank because of highly competitive market. The management of NBL focuses on creating customer loyalty among the selected customers who are profitable and tested ones. 2.6.8 Broadening Connections with the Customers It is very important and significant function of a bank to broaden its connection with the customers in order to retain their existing customers and getting their opinions, views, comments basing which the bank can provide expected value to the customers and make them satisfied. The connection can be maintained from the branch level or
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regional office level and from the top management of the Bank at Head Office considering the necessity. If the connection occurred frequently the customer will remain loyal and long term relationship can be built out of continuous and regular connections. In National Bank Limited connections with the customers happened from both branch and Head Office level. However, as NBL has spread its branch network all over the country, so it is not possible to maintain connections by the Head Office with the customers of remote area. In this case, NBL has divided its branches in some regions basis on their location and territory. For every region a regional office has been set up so as to broaden the connections with customers of different territories. 2.6.9 Marketing Strategies Marketing Strategies is a very important and significant task to achieve the organizational goal and to maximize profit and minimize the cost. Banks require to develop different effective marketing strategies and to update them so as to keep pace with time and coup with the customers demand, needs and wants. Without effective marketing strategies it is impossible to survive and to boost the organizations overall conditions. National Bank Limited gives lot importance on marketing strategies. NBL has a Division in the Head Office called Marketing Division which is involved to develop marketing strategies and implement the same under direct supervision of the Managing Director. Branches also frequently asked for providing ideas to develop the effective marketing strategies as they are directly involved with the customers and receiving the views, opinions and advices from them. 2.6.10 Segmentation & Targeting Todays marketing concept in order to make the marketing activities more effective Customers segmentation and targeting. The needs and demands varies among the customers. Through market segmentation bank can divide large, heterogeneous market into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs. To make the marketing services more effective banks have group the customers according to the different benefits that they seek from the bank. Customers can be segmented on the basis of their nature, size, purpose, etc. In the banking organizations segmentation must devised generally with the view to full market coverage, however, some specialized product might be segmented based on Selective Specialization or market specialization.National Bank Limited practices the segmentation approach to render their service to the customers more efficiently and effectively. In order to invest the money for long term and short term or in the specialized sector like Readymade Garments sector, or different industrial sectors, to invest for commercial or trading organizations, or individual borrowers the bank efficiently segmented the customers in different groups and target
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them with different products and investments. As per different target group the bank fix and allocate their assets to utilize them properly in a lucrative manner. 2.6.11 Positioning Positioning is another crucial part of banking. Under the competitive market condition banks have make their individual position in the market. If any bank cannot make it strong position it cannot survive in the highly competitive market. National Bank Limited has make a strong position in the banking sector of our country providing value through their product, services, advices. Mention may be made here that NBL played a very significant role for emerging the readymade garments sector since early 1980s and make a distinguishable position in this sector. They also make their position among all other economic sector providing value and meet their needs and wants. 2.6.12 New Product Development In order survive in the highly competitive market and achieve the organizational goals banks have to develop new products and services with different dimensions so as to retain their customers and attract the new ones with the passage of time. National Bank Limited is striving relentlessly to develop new products and concepts since their inception. 2.6.13 Pricing Pricing is another vital factor for a banking organization. If any bank fails to determine the price of the products and services properly it will be ruined very soon. During pricing the products the following factors must be considered by the banks: 1. Competitive situation 2. Competitors pricing, cost and offers 3. Demand of the products and services 4. Cost of fund 5. Organizational goals both in the long run and short run 6. Price elasticity of demand 7. Economic conditions National Bank limited determines the price of their products and services on CompetitionBased Pricing approach. 2.6.14 Promotional Activities Promotional activities is one of the most significant and strong weapons for the survival and to succeed among the competitors. The promotional strategy required for effective marketing of the products includes direct contact with customers, advertising Sales Promotion and Public Relations, Participating in the important social activities,

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etc. Now a days banks also develop web site for electronic media based marketing and promotion. National Bank limited carries out effective promotional activities to reach to their potential customers. Mention may be made here that National Bank Limited sponsored the Senior Division Football League over the years and the title of the football league is NBL Senior Division Football League. 2.7.0 Standard Chartered 2.7.0 Introduction Standard Chartered Bank started its business in Bangladesh in 1948, opening its first branch in the port city of Chittagong. The bank increasingly invested in people, technology and premises as its business grew in relation to the country's thriving economy. At present the bank has 6 offices in Dhaka Chittagong and Sylhet, including the country's only offshore banking unit inside the Dhaka Export Processing Zone at Savar. Extensive knowledge of the market and essential expertise in a wide range of financial services underline our strength to build business opportunities for corporate and institutional clients at home and abroad. Continuous upgrading of technology and control systems has enabled the bank of offer new services, which include unique ATMs and Phone banking. Standard Chartered's services in Bangladesh, ranges from Personal & Corporate Banking to Institutional Banking, Treasury and Custodial services. 2.7.2 Organizational Overview Standard Chartered Bank derives its name after two banks Standard Bank of British South Africa and the chartered Bank of India, Australia and China. The merger took place in 1969. Standard Chartered Bank is regulated by the Bank of England and is a clearing bank in the United Kingdom. The new millennium brought with it two of the largest acquisition in the history of the bank- the acquisition of the Grindlays Bank from the ANZ group for a consideration of $1.34 billion and acquisition of the Chase Consumer Banking Corporation in the Hong Kong for $ 1.32 billion. These acquisitions demonstrate Standard Chartered Banks firm commitment to the emerging markets. Standard Chartered employs 29,000 people in over 500 offices in more than 50 countries. The group provides consumer-banking services to individuals and small to medium size businesses, and offers Wholesale Banking capabilities to corporate and institutional clients. With 150 years in the emerging markets the group has unmatched knowledge and understanding of its customers in its markets. Standard Chartered
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recognizes its responsibilities to its staff and to the communities in which it operates. Their 150 years of history gives them a deep better understanding of their markets, their customers, and the local communities in which they operate. It is a strong platform for future growth. Standard Chartered is holding leading positions in dynamic markets. They are in some of the worlds fastest growing markets including he United Arab Emirates, India, China, and the markets of South Asia. They are present in many of their markets for several generations and have became a trusted partner to businesses and individuals. In other words, they are trusted and well respected provider of financial products and services. They have built up an enviable knowledge of local markets in Asia, Africa, the Americans and the Middle East. In many cases, they have had a presence for more than a century. Their first two branches were in Calcutta and Shanghai and we have been operating continuously in China for the last 144 years. 2.7.3 The Impact of War Even the First World War offered opportunities for expansion when the Standard Bank set up a branch in Tanzania shortly after British troops occupied the formerly German administered Dar es Salaam in September 1916. Both banks survived the inter-war years but the world trade slump led to the closure of operations in the Canary Islands, Liberia, the Netherlands, and Equatorial Guinea. Disaster struck the Chartered Bank's office in Yokohama, Japan, when it was destroyed by an earthquake in 1923 killing a number of staff. The Chartered Bank was particularly effected by the Second World War when numerous Asian countries were occupied by Japan. 2.7.4 The Post War Years After the Second World War many countries in Asia and Africa gained their independence. This led to local incorporation in some countries, particularly in Africa. Other operations such as those in Iraq, Angola, Myanmar and Libya were nationalised, while in Indonesia the Jakarta office was destroyed in an attempted coup d'etat. In 1948 the Chartered Bank opened in Bangladesh and during 1957 it acquired the Eastern Bank. The Eastern Bank gave the Chartered Bank a network of branches including Aden, Bahrain, Beirut, Cyprus, Lebanon, Qatar and the United Arab Emirates. The Chartered Bank also entered into a joint venture to form the IranoBritish Bank which opened for business in 1959. The bank grew rapidly and had 24 branches when it was nationalised in 1981. By the mid 1950s the Standard Bank had around 600 offices in Southern, Central and Eastern Africa. Its network grew substantially in 1965 when it merged with the former Bank of British West Africa which had some 60 branches in Nigeria, 40 branches in Ghana and eleven branches in Sierra Leone in addition to operations in Cameroon and Gambia. Despite these acquisitions and expansion into new countries such as Mexico, South Korea and Oman (1968), both the Standard and Chartered Bank networks were comparatively small. Both viewed the future with some trepidation as the need to protect themselves from
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acquisition became ever more apparent. Standard Chartered PLC In 1969 the decision was made by the Standard Bank and the Chartered Bank to undergo a friendly merger thus forming Standard Chartered PLC. It was one year later that the descendants of the "Chartered Bank of India, Australia and China" were finally permitted to open a representative office in Sydney, Australia. Standard Chartered subsequently acquired the UK based Hodge Group, in which it already had a minority shareholding, and the Wallace Brothers Group. The Hodge Group brought to Standard Chartered an extensive network of UK offices specializing in installment credit and industrial leasing, and after a period of rationalization its name was changed to Chartered Trust Limited. Standard Chartered's operations in Jersey emerged from the integration of other Hodge Group businesses with those of Wallace Brothers Bank (Jersey), Limited. Standard Chartered decided, after the merger, to expand the Group outside its traditional markets. In Europe a number of offices were opened including Austria, Belgium, Denmark, Ireland, Spain and Sweden as well as several major cities in the UK. Standard Chartered also opened offices in Argentina, Canada, Colombia, the Falkland Islands, Panama and Nepal. In the USA a number of offices were opened and three banks were acquired. These included the Union Bank of California which gave Standard Chartered a presence in Brazil and Venezuela. The opening of a branch in Istanbul in 1986 was overshadowed by a far more dramatic event when Lloyds Bank of the UK made a hostile take-over bid for Standard Chartered. Standard Chartered won its right to remain independent but entered into a period of considerable change. By the late 1980s Standard Chartered already had considerable exposure to third world debt. To this was added provisions against loans to corporations and entrepreneurs who could not meet their commitments. Standard Chartered reviewed its operations and decided to focus on its core strengths of Consumer Banking, Corporate & Institutional Banking and Treasury in its well established operations in Asia, Africa and the Middle East. This led to a series of divestments notably in Europe, the United States and Africa. During this time staff numbers were reduced; businesses not considered core were sold or closed; associate holdings disposed of; unprofitable branches closed and back office functions consolidated. In addition expensive buildings were sold with the proceeds reinvested in the business, and the senior management team was radically changed and strengthened. 2.7.5 Standard Chartered in the 1990s Even within this period of apparent retrenchment Standard Chartered expanded its network, re-opening in Vietnam in 1990, Cambodia and Iran in 1992, Tanzania in 1993 and Myanmar in 1995. With the opening of branches in Macau and Taiwan in 1983 and 1985 plus a representative office in Laos (1996), Standard Chartered now has an office in every country in the Asia Pacific Region with the exception of North Korea. In 1998 Standard Chartered concluded the purchase of a controlling interest in Banco Exterior de Los Andes (Extebandes), an Andean Region bank involved primarily in trade finance. With this purchase Standard Chartered now offers full banking services in Colombia, Peru and Venezuela. In 1999, Standard Chartered
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acquired the global trade finance business of Union Bank of Switzerland. This acquisition makes Standard Chartered one of the leading clearers of dollar payments in the USA. Standard Chartered also opened a new subsidiary, Standard Chartered Nigeria Limited in Lagos, acquired 75 per cent of the equity of Nakornthon Bank, Thailand; and agreed terms to acquire 89 per cent of the share capital of Metropolitan Bank of the Lebanon. 2.7.6 Business Activities of the Global Standard Chartered Bank: The bank provides a full range of products and services all around the world, some of which are mentioned here: (a) Global Consumer Finance: There are seventy-six branches and finance centers under this division in about the countries with a workforce of 1616 employees. Some of the services provided by this divisions are unsecured personal loans, credit cards and retail store cards, vehicle related leases, etc. (b) Personal Banking: There are about 410 branches with a workforce of 12,000 employees working under this division in 28 countries. Some of the services provided by this division are various kinds of insurance and loans, account maintenance, travelers cheques and money exchange etc. (c) Global Corporate and Institutional Banking: There are 350 branches under this division. This division provides services in 42 countries. The services provided by this division are International Trade Management, Institutional banking, Treasury, Custody and Cash Management. (d) Global Custodial Service: There are 17 offices under this division and about 900 staff members, operating in 14 countries and headquartered in Singapore. Standard Chartered Equator fulfils standard Chartered Banks strategic commitment to provide custody and clearing services in the Greater Asia. Standard Chartered Bank has one of Asias leading custodians over 40 years. Equators focus is on the followings: Commitment to equity Dedication to the customer needs Sustained investment in people and systems. (e) International Trade Management: Principle services of this division are to the people are Import Letter of Credits(L/C), Import Bills for Collection, Back to Back Letter of Credit, Direct Export Bills for Collection, Bulk Letter of Credit Collection, Bonds and Guarantees. (f) Global Cash Management: The division is operational in all countries where the group has Corporate & Institutional Banking division. Standard Chartered Bank recognize the importance of
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Cash Management to corporate and institutional customers and offers a comprehensive range of services and liquidity management. Services provided worldwide by this division with stress on Asian delivery. (g) Global Institutional banking: Throughout Standard Chartered Banks network of more than 600 offices in over 40 countries, it is very well positioned to provide a wide range of services to institutional clients: commercial, merchant & central banks; brokers and dealers; insurance companies; fund managers and others. Offices of emerging markets of Asia, SubSaharan, the Middle East and Latin America are complemented by the branches in the developed countries such as USA, UK and Japan and banks membership of the clearing systems in those countries. The Institutional banking group has a network of offices in 25 countries throughout Asia, North America, Europe, Africa and The Middle East. (h) Global Electronic Banking: Electronic Banking Provides various types of support through a wide range of operating systems, sweeping transaction accessories with the provision of reporting features or other special functions. 2.7.7 Branches of Standard Chartered in Bangladesh After acquisition, Grindlays Bank is a part of Standard Chartered Group. The Bank presently has 18 outlets in 5 cities serving over 1,25000 customers. The network of SCB Bank in Bangladesh includes:

10 Branches in Dhaka city 1 Branch in Savar EPZ (recently started with full banking operations) 1 Branch in Narayanganj 3 Branches in Chittagong 1 Branch in Khulna 1 Branch in Sylhet. 1 Branch in Bogra

2.7.8 Product Division There are different divisions for targeting different type of customers. Mainly consist of two divisions, that is Consumer Banking Division (C B) and other is Corporate Banking Division named Corporate and Institutional Banking (C & I). Consumer banking division meets the needs of individual customers with various products like Savings Account, Extra Value Savings Account, Access Account, Call Deposit, FCY Deposit, NFCD Fixed Deposits, RFCD Account, Personal Loans, Auto Loans, Flexi loans, Cash Line, Installment loans, etc. This department also deals with other savings instruments like education savings scheme, rainy day
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scheme, marriage day scheme, millionaire scheme (some printed brochures are enclosed in the Appendix) Corporate and institutional banking meets the needs of companies, banks and other financial institutions. Standard Chartered provides a full range deposit and loan products to it's corporate clients. Rapid decision-making is an important feature of SCBs services to international and domestic companies doing business in Bangladesh. All accounts are assigned to a Relationship Manager to look after client needs. Each relationship manager keeps close contact with the client obtaining in-depth knowledge of the client's business and providing timely advice. This divisions products include network banking and borrowing services like working capital loan, long term loans, short term loans, margin account, commercial large loans, real estate apartment loans, heavy transport buying loans, real estate mortgage loans, construction loans, restaurant loans, and above all it includes all international trade related services like L/C issuing, L/C amendment, L/C Transfer, L/C Confirmation, Negotiation, Bank Guarantees, etc. These products are only served to the corporate clients of the bank, and those are mostly local corporate, large and local corporations, multinational national companies. List of some of them are given in the appendix section. This focus allows the business to develop an in-depth understanding of the banks customers evolving requirements. This in turn enables SCB to develop the products and services that help them to stand out from the competition. Treasury provides support to the customers of both these business and develops customers (both individual and organizational) of its own. 2.7.9 The Division of SCB Bangladesh The bank is divided into several divisions and business units, which are also further sub-divided. The divisions are mainly based on some service lines designed for and provided to targeted customers, other divisions and units are there to support the business activities of the major service based divisions. The following is the list of the divisions of SCB in Bangladesh. Note that the divisions are little different compared to the major areas of the Group. 2.7.10 Major Business Units (a) Corporate Banking Group Standard Chartered Bank offers its local customers a wide variety of financial services. All the accounts of corporate clients, which mainly comprise the top local and multinational companies operating in Bangladesh, are assigned a Relationship Manager (RM) who maintains regular and close contact to cater to their needs. The objective of this department is to maintain a thorough knowledge of the client's business and to develop positive relationships with them. This is maintained through
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interactions to offer timely advice in an increasingly competitive business environment. The expertise of the Financial Institution (former Institutional Banking) and Treasury groups is also available whenever required. The unique Off-shore Banking Unit (OBU) in Savar offers a full range of facilities to overseas investors, and recently that Savar Branch have expanded many of its activities. The Corporate Banking Group in Bangladesh has displayed a spirit of community involvement by working with NGOs to underwrite soft loans.

Standard Chartered Bank offers its corporate customers:

The wide varieties of lending needs are offered with skilled and responsive attention. Project finance and investment consultancy. Syndicated loans. Bonds and Guarantees. Local and International Treasury products. The trade finance of Standard Chartered Bank takes care of the commercial activity related issues, particularly those related to import and export finance services. Some of the services are: Some of the services are: Trade finance facilities including counseling, confirming export L/Cs and issuing of import L/Cs, backed by its international branch and correspondent loan network Bond and Guarantees Project finance opportunities for import substitution and export oriented project (b) Treasury Division The foreign exchange and money market operation of the Standard Chartered Bank in the world is extensive. Exotic currencies happen to be one of its special areas of strength. A 24 hour-service is provided to customers in Bangladesh through the Bank's network of dealing centers placed in the principal of the world. The Bank's treasury specializes in offering solutions to those who wish to manage interest rate and currency exposures that result from trade, investment and financing activities of other dynamic economies of the region. Treasury operations are developed in line with changing market conditions to provide the best services to its customers. According to BAFEDA (Bangladesh Foreign Exchange Dealers Association), Standard Chartered Bank presently controls 42% of the local foreign exchange market's traded volume. (c) Financial Institution Department (Former Institutional Business Group)

Financial Institution Department (former Institutional Banking) is a specialized banking unit of Standard Chartered, providing products and services to the specific needs of other banks and financial institutions. It assists the local banks by taking care of their cross-border business through the worldwide Standard Chartered Bank

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networking over 40 countries. It offers various services like L/C Confirmation, Negotiation, Inter and intra Bank Guarantee, Local Bill Discounting, L/C Advising, L/C Transfer, L/C amendment advising, Reimbursement Undertaking and Authorities, Fund Transfers, Export proceeds, BDT Draft Drawing, International Payments (T Ts), Account Services (Vostro Account Management) (d) Consumer Banking Division Superior retail banking services comprising a wide range of deposit and loan products are offered by the Standard Chartered Bank to its individual customers. The Consumer Banking division constantly faces challenges and meets them by developing new products and services to fulfill the specific requirements of local and foreign customers. Bank offers a 24-hour service in Bangladesh through its Moneylink ATM network and Phone-link Phone Banking services. The below mentioned type of accounts are served by the Consumer Banking Division. Personal Current Account Personal Savings Account Personal Access Account Consumer Fixed Deposit Account Personal Call Deposit Account Non-resident Foreign Currency Deposit Account Resident Foreign Currency Deposit Account Convertible Taka Account Foreign Currency Accounts for Foreign Nationals Foreign Currency Accounts for Bangladeshi Nationals Escrow Account Private Non-Resident Taka Account (e) Card Division Card is the latest area that has been identified for rapid development. The bank is the one of the acquirers of three major cards in Bangladesh. Two of the credit cards are VISA and MASTER CARD and the one is the charge card known as Japan Credit Bureau (JCB). Standard Chartered Bank is the subsidiary or secondary agent of the credit cards and a primary agent of JCB. SCB started its cards operation in 1989 as a part of retail banking. Initially, SCBs card market was very small, with only 30 merchants. But seeing the economies and the consumers attitude towards the credit card has given the opportunity to expand their market base by acquiring high quality merchants in the chosen segment. The bank is the first to introduce the TAKA CREDIT CARD. The card is issued basically to a persons name and the specific person can use the card in anywhere in Bangladesh.

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(f) Custodial and Clearing Service Headquartered in Singapore, Standard Chartered Equitor fulfils the group's strategic commitment to the provision of custodial service in Asia. Equitor's customers are primarily foreign global custodians and broker/dealers requiring cross border information as well as sub-custodian services. Standard Chartered Bank, Bangladesh is responsible for the planning in Bangladesh, but the overall management of the custody business is based on Equitor's international business strategy. 2.7.11 Information and Technology Department This department is instrumental in the running of all the computerized operations of the bank. They help in the implementation and generation of computerized reports. Another major duty of the department is to maintain communication with the rest of the world. 2.7.12 Operation Operation is part of the support division, which helps to run the businesses of the bank in a smooth and controlled manner. Since it helps mainly in processing the works of the business units, any mistakes made can be easily detected and on time. Following are the main functions of the operations department: Central operations deals with the closing and opening of accounts and other payment and account related processing of the Personal Banking division Treasury operations help to deal with the processing works of the treasury division. Loan Administration Unit (LAU) deals with the processing of the Corporate Banking division. Operations also have a department that deals with internal projects that arises from the need to deal with certain problems or to make certain changes. 2.7.13 Legal and Compliance In the UK, Standard Chartered Bank is regulated by the Bank of England, while in Bangladesh local banking laws regulate it and rules set by the Ministry of Finance and Bangladesh Bank. It also encourages its staff to conform to an internal culture of ethical behavior and sensitivities to the culture and religion of the country. Some of the key areas that the Legal & Compliance department has to take care of are: any kind of legal issues, to advise the CEO regarding all matters and the management on legal and regulatory issues, correspond regulatory compliance issues to MESA Regional Head of Compliance, and supervise internal control (e.g. internal audit). 2.7.14 External Affairs This department deals with advertising, public relations, promotions, partial marketing which involves disseminating new products and services to customers and above all ensuring service quality.

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2.7.15 Human Resources Division This department manages recruitment, training and career progression plan. Standard Chartered Bank highlights the importance of developing its people to create a culture of customer service, innovation, teamwork and professional excellence. SCB recruits people by two ways. One is a Management Trainee that has a probation period of six months and after the probation period the trainees will be counted as an officer and they will do the different kinds of managerial works and another is Non Management Trainee which does not have any fixed probation period. Time required for training is department on the recruited persons performance. In case of non-management trainee, two ways of recruitment is taken place. They are (a) taken by signing a contract with some outside organization for three months and after three months the contract may be renewed or not depending upon the employees performance. These people coming through outside contract are called Out Source. (b) Taken by signing a contract with the bank for the three months and after three months the contract may be renewed or not depending on his/her performance. These people coming through bank contract are called In source. 2.7.16 Controlling Structure at SCB Alike all other big multi-national companies, management in SCB consists of planning organizing, directing, controlling all of the resources of an organization. The goal of Standard Chartered Bank is to be the "Bankers of First Choice." Towards that goal, the overall planning in the Organization is done at the headquarters level in Dhaka by a Management Committee (MANCO), headed by the CEO and consisting of the business heads like Corporate Banking, Consumer Banking, Treasury, Global Markets, and from the support divisions the heads of Human Resource, Operations and Finance Departments. They meet once a month, or when special situations arise, to plan the strategic decisions. The decision making, although apparently based on a top-down approach, leaves room for participation down to the level of department heads, which are responsible for carrying out the planning of their department within the broad guidelines set by MANCOM. Among the broad strategic objectives are: Creating a congenial work environment Modernization of the management information system to achieve full automation by drastically cutting down the paper works in long term. Focusing on service quality and consume needs Recruiting and maintaining top grade, efficient employees To invest in those technological systems which will upgrade and enhance financial services Creating an excellent brand image of the bank. 2.7.17 Personnel Policies: The number of officers exceeds the number of clerk, which is a straight contrast to local banks specially the nationalized commercial banks. Standard Chartered Bank

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pays great attention to recruiting high quality staff through proper evaluation and improving their skills through structured training. Reward and punishment base on strict performance evaluation and opportunities of promotion both in country and abroad are two important features of the personnel policy of Standard Chartered Bank. 2.7.18 Recruiting, Training and Career Progression: The recruitment process is based on references, advertisements and internships. Entry point screening is done both by the written and oral test. The medical record of the potential employee is very important and those suffering from potentially life threatening and performance deterring diseases are not hired, even if they were otherwise qualified. The placement of the staff is done in two ways. Either the employee undergoes a management trainee program with a probation period of nine months and is categorized as an officer leading to various managerial jobs, or is recruited at a non-management level as banking assistance or support officer. There is a structured training framework for all the employees, and a channel for moving people from national to international positions. International graduate recruitment and personal skill development for entry-level employees are a part of the human resources development efforts at Standard Chartered Bank. 2.7.19 Planning, Organizing, Directing and Controlling The top down planning approach is mostly followed at Standard Chartered Bank. The top managers have the authority to decide how they will achieve their goal because SCB group worldwide decides the goal. The Business Bank mainly does planning and Retail Bank Division, IT Department provides all the assistance and information that is required to create and execute long term and short term planning. Planning and IR Department provides all the assistance and IT and other infrastructure in order to reduce the paperwork IT has taken a plan to achieve the long tern plan. One branch manager in each of it is managing SCBs all branches. The performance of each branch is solely dependent on the branch manager. Management is partly authoritative and participant at the top level of SCB But every one has some assigned work to do for the day and they cannot deny this. Sitting arrangement is created in such a way that coworkers can sit close to each other and have sharing of their work and at the same time can have easy contact with each department coordinator/ Head. The work environment is very friendly. The room contains sufficient amount of light and is always cooled by high capacity air conditioners. 2.7.20 Five Values of Standard Chartered Bank Standard Chartered Bank has five values and these values are key to their success. These value determine how the employees achieve their goals, the way they work together and how it feels to be a part of Standard Chartered Bank. In brief these values are: 1. Courageous: Being courageous is about confidently doing whats right. Often the task may seem insurmountable but with courage and tenacity, the odds can be overcome. A truly courageous act both inspires and builds character.
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2. Responsive: How we response to our customer will influence their belief in our

commitment to them. A proactive response is often unexpected and more effective for that. It clearly demonstrates our willingness to go beyond the unexpected. 3. International: As a member of global village we view the world from the widest perspective. We are all global citizens and the world is full of new opportunities and exciting possibilities. We also deliver world class products and services. 4. Creative: Creativity belongs to those of us who are excited by challenges and engage them in fresh thinking and an open mind. Creative thinkers are not limited by convention but allow their minds to soar beyond predictable solutions. 5. Trustworthy: Trust is the foundation of every successful relationship. We trust because we believe in the sincerity of our promise. Building trust can take forever. Losing takes only moments. 2.7.21 SWOT Analysis The acronym for SWOT stands for STRENGTH WEAKNESS OPPURTUNITY THREAT The SWOT analysis comprises of the organizations internal strength and weaknesses and external opportunities and threats. SWOT analysis gives an organization an insight of what they can do in future and how they can compete with their existing competitors. This tool is very important to identify the current position of the organization relative to others, who are playing in the same field and also used in the strategic analysis of the organization. Strength SCBs Banking Experience for more than 55 years provides SCB the strength of being the market leader in the foreign banking sector. This strength of SCB is totally unmatched by any other multinational bank in Bangladesh, as the long term success of a bank heavily depends on its reputation while dealing with every sensitive commodity like money. SCB is the first bank in Bangladesh to issue Money link (ATM) card. As the market leader, they showed the most substantial corporate strength among the foreign banks by grabbing the opportunity that exists in the market. In Bangladesh SCB has wide range of customer base and is operating efficiently in this country. SCB has a bulk of qualified, experienced and dedicated human resources. SCB has the reputation of being the provider of good quality services to its potential customers
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Weakness SCB has fewer branches than their competitors. Such as SCB have only 18 branches whereas Uttara Bank Limited has 198 branches and 12 regional offices. SCG has more and high fees and charges compared to its rivals. Such as minimum balance fee, ledger fee etc. as a result SCB is loosing its customers. SCB often has problem with market share as ATM machines. Customers often complain that the ATMs are out of order. SCB hasnt that much good market share as other multinational bank. Its as because SCBs marketing strategy is not aggressive they always follow defensive/ conservative strategy. This may be considered as weakness. Opportunity The population of Bangladesh is continuously increasing at a rate of 7.3% per anam. The countrys growing population is gradually and increasingly leraning to adaptation of consumer finance. As the bulk of our population is middle class, different types of products have very large and easily pregnable market. The activity in the secondary financial market has direct impact on the primary financial market. Investment is a national socio economic activity. And activity in the national economy controls the bank. Bangladesh have a huge consumer base for maintaining several accounts. So SCB has the opportunity to keep these customers by reducing its current fees and charges. Threat In todays economy, substantial amount is remaining idle and currently the investment in the secondary market by foreign is relatively low. These economic situations of the country indicate political threats. Increased competition by other foreign banks is also another threat to SCB. At present HSBC and CITI Corp are posing significant threats to SCB regarding retail and business banking respectively. Furthermore, the new comers in private sector Prime Bank, Dutch Bangla Bank, EXIM Bank, BRAC Bank, Southeast Bank, Mercantile Bank, Social Investment Bank, Islami Bank are also coming up with very competitive force. 2.7.22 Consumer Products of SCB In the consumer market, SCB is well reputed for introducing innovative and lucrative offers and products to its customers. SCBs products have always been a master blaster in the banking market. (a) Personal & Joint Account For opening a personal or a joint account one needs to submit a valid passport or any identification attached with photo, one passport size photograph and needs to be introduced by any account holder of SCB whose account is minimum six months old.
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To open the account the person needs to fill up a form mentioning his name, address, telephone number, date of birth, occupation etc. as well as mode of operation and specimen signature. Account holder must appoint a nominee with photograph and signature who also must attest nominees signature and photo. (b) Current Account To open a Current Account one has to deposit a minimum of Taka.50, 000. And account holder of those account need to have average balance of Taka 50000 at all time, otherwise a charge of Taka 500 will be debited. And the closing charge for those accounts is Taka 250, and if it is closed before six months, the charge will be Taka 500. Current Accounts (Local Currency & Foreign Currency): Minimum balance required BDT 50,000 or equivalent (c) Savings Account To open a Savings Account one has to deposit a minimum of Taka. 100,000 and Taka 300,000 for extra value savings account (EVSA). And account holder of those account need to have average balance of Taka 100,000 at all times, otherwise a charge of Taka 500 will be debited. And the closing charge for those accounts is Taka 200, and Taka 300 for EVSA accounts. If the A/C is closed before six months, the charge will be Taka 500 and Taka 1000 for EVSA. Average Balance Average balance below BDT 100,000 Average balance BDT 100,000 to 500,000 Average balance BDT 500,000 to 1,000,000 Average balance BDT 1,000,000 Interest Rate 00.00% 04.50% 05.00% 05.50% Interest Rate No interest is paid

(d) Short Term Deposit (STD) Accounts: Minimum balance for maintaining a STD (Short Term Deposit) or Call Deposit Account is required BDT 250,000. Interest Rate on this type of account is 4.00% to 6.00% (Rate varies on amount). The main reason for big clients to maintain this type of account is just to earn interest on big amount on a daily basis. (e) Access Account Access account is quite new feature of SCB that allows customers to have an account with SCB without any charges that are present in other types of accounts. Access account differs from its other account services in the way that it requires no minimum
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deposit size and hence it doesnt provide any interest. The advantage is that students / people of medium income level trying to avoid high bank charges can use this account to meet emergency cash requirements. The account holders do not get any facility of cheque book and cannot withdraw more that Taka. 20, 000 in a day and also cannot overdraw their account. The charges include Taka. 150 per year and Taka. 250 for government excise duty. And the closing charge for those accounts is Taka 200. (f) Resident Foreign Currency Deposit (RFCD) Specially designed foreign currency account for resident Bangladeshis. Offers wonderful opportunity to build a deposit base in foreign currency. Helps make for overseas commitments and dues like credit card bills, traveling expense, recreation tours, etc. This service is offered in currencies like USD, GBP and Yen. The interest that SCB offers is very competitive, but the deposit can only be made in foreign currency. The withdrawals can only be made in local currency. It offers fund Remittance in LCY and FCY to any place in and out of the country. (g) Foreign currency current account Applicable to Bangladeshis working abroad, it can be opened in USD, GBP and Yen without restriction on transaction frequency. Can be operated through nominees, in absence of the account holder. Fund remains in foreign currency and is freely remittable. The deposit can be made in foreign currency only (Cash, TC or Drafts or transfer from other FCY account). But cash withdrawals can only be made in local currency only. Fund can be used to make investment in Wage Earners' Development Bond (h) Non - Resident Foreign Currency Deposit (NFCD) A short-term foreign currency deposit account suitable for Bangladeshis living abroad, offering most competitive interest rates available in both local and international markets. The interest paid in this account is in foreign currency, it can be opened for a term of 1 months, 3months, 6 months and 12 months. The interest rates are tiered (based on amount and term), but payable on maturity, but automatically renewable. It can be used as security against personal/commercial loan. 2.7.23 Account Statement Charges The charge for holding statements is BDT 1000 per annum per account, and for Additional/ Duplicate statement (Per cycle) is BDT 200 per statement. Photocopy of statements is Taka 1000. 2.7.24 ATM Card Charges The annual fees for ATM card is Taka 150 per card, and the charge in case of damaged or lost card is Taka 300 per card. And phone banking is absolutely free.

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2.7.25 Charges for Cash and Travelers Cheque Foreign Currency For issuance of FCY cash, customers need to pay 1% of the transaction plus Taka 200/= per passport. And for issuance of Travelers cheque 1% of the transaction plus Taka 200/=. The charge for encashment is absolutely free in case of travelers cheque issued by SCB.And encashment for other banks issued T.C is 0.25% of the transaction value or minimum BDT 500. SCB also provides encashment facility for non-customers, is 0.25% of the transaction value or Taka 1,000. 2.7.26 Charges for maintaining Student file For customers, opening student file for SAARC countries, they charge BDT 3500 per student, per annum plus Taka 500 per remittance. This is a centralized system. No matter where the customers conduct his/her banking, for opening and maintaining student file, he/she is bound to come to SCB Kakrail Branch, which is at 109, Kakrail. That branch exclusively deals with Student File. And, the charge for other countries is Taka 5000 per student file plus Taka 500 per remittance. This opening of student file is not available for non-customers. 2.7.27 Fixed Deposit Account For a fixed deposit account a person needs to deposit a minimum of BDT 100,000. After the maturity of the fixed deposit the depositor will get the principal along with the interest. The interest rate for this fixed deposit varies with the amount and period. The rate increases as the amount and time period increases. Fixed Deposit (effective from 1st February 2003): Local currency for Consumer Customer Tenor 3 Months 6 Months 12 Months 2 Years 3 Years and above Minimum amount required BDT 100,000 BDT 100,000 BDT 100,000 BDT 100,000 BDT 100,000 BDT 10M & Below 7.00% 7.50% 7.75% 8.25% 8.50% BDT Over 10M 7.75% 8.25% 8.50% 8.75% 9.00%

But the above deposit rates may be increased by 1.00% for priority/Wholesale clients at the discretion of the Management. In that case, the branch sales and services manger needs to obtain approval from HOC&I and HOCB for C&I and CB deposit respectively with regard to above discretionary interest rates. 2.7.28 Lending Rates For Consumer Banking: a. Money Builder b. Cash Line (Loan)
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12.00% to 14.00% 11.00% to 13.00%

c. Cash Line (Overdraft) d. Instalment Loans: i. Type A (100% Covered) ii. Type B (50% to 99% Covered) iii. Type C (30% to 49%)

12.00% to 14.00% 13.00% to 15.00% 15.00% to 17.00% 17.00% to 19.00%

e. Personal Loan 18.00% to 20.00% f. Supra National Organizations Personal 07.00% to 09.00%

2.7.29 Sole Proprietorship Account Just like the personal and joint account, an account opening form and one passport size photograph is required. The customer also needs to submit a copy of his trade license, Sole proprietor Declaration From and signature. The account holder must attested nominees signature photo. 2.7.30 Partnership account Just like the sole proprietorship account, an account opening from and one passport size photograph is needed. Account holder must appoint a Nominees signature and photo. Moreover the customer is required to provide the following documents: Required Certified copy of the Partnership Deed of the firm. Certificate of Registration of the firm. List of partners with their address. Latest copy of Balance Sheet. Extract of resolution of the partners of the firm for opening the account and authorization for its operation duly certified by the firms Managing Partner. List of names with appointments and specimen of the persons who are authorized to operate the account duly certified by the Managing Partner of the firm. 2.7.31 Limited Company Account To open a limited liability company account the customer is required to submit the following documents: Certified copy of the memorandum and articles of association of the company. Certificate of incorporation of the company. Certificate from the Joint Stock Registrar that the company is entitled to commence business. Latest copy of Balance Sheet. Extract of Resolution of the Board / General Meeting of the company for opening the account and authorization for its operation duly certified by the Chairman or Managing Director of the company.
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 List of names with appointments and Specimen signatures of the persons authorized to operate the account and request the bank to open a letter of Credit / Guarantee duly certified by the Chairperson or Managing Director of the company. 2.7.32 Tele Banking Services Tele banking service allows the account holders to make inquiries and service requests over the telephone. To get this Service all a customer needs to do is to fill up a TeleBanking form mentioning his name, account number, contact address, and telephone number. After the application TIN (Telephone Identification Number) is given to that customer. TIN is a personal security password, which a customer can change at any tine. A person who requests service through Tele Banking is required to take delivery of the service by nominated branches within two days of requests. If a customer fails to receive this service within two days the request will be cancelled and Taka. 200 will be charged from his personal account 2.7.33 Speed Cheque Deposit The Speed Cheque Deposit system saves a customers precious time by allowing him to drop the Cheque in the Speed Cheque Deposit Box. All a customer needs to do is to complete the Cheque deposit slip and keep the counterfoil. To complete the Cheque deposit slip a person has to mention the account number of the Cheque, the name of the bank with branch, cheque number and amount. After finishing writing the cheque deposit slip the customer needs to staple the cheque with the slip and drop it inside the box. 2.7.34 Money Link (ATM) Card SCB Launched Automated Teller Machine (ATM) in Bangladesh in the year of 1998. A person can access his personal, current and savings account 24 hours a day by using a Money Link Card or ATM card in this machine. This card can be used for cash withdrawal, cash / cheque deposit, fund transfer between accounts, balance inquires, statement requests etc. Apart from SCB Money Link cards (ATM) it also accepts both local and International Master Card and VISA Credit Cards. Taka 150 is charged per ATM card for a period of 1 year. For security reason a person cannot access his account without his PIN (Personal Identification Number). 2.7.35 Credit Card Types of credit cards 1. Gold Master Card 2. Silver Master Card 3. VISA Silver Card Requirements: 1. Completed credit card application form. 2. One copy of passport size photograph. 3. Minimum monthly income of Tk. 10,000 for Master and VISA Card Silver. 4. Minimum monthly income of Tk. 55,000 for Master Card Gold.
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5. Documents (e.g. Salary Certificates, Income Tax Certificates, 6 months bank statement, Photocopy of passport or other Documents). 6. For foreigners, work permit from the ministry is required. 2.7.36 Features of Credit Card Wide Acceptance: SCB Credit Card is accepted at more than 3,000 outlets around the country. One can use his/her card for everyday purchases as well as for high value purchases. Its wide range of merchants include hotels, restaurants, airlines & travel agents, departmental stores, hospital and diagnostic centers, jewelry shops, electronic and computer shops, leather goods, mobiles and ISPs and many more. This number is increasing everyday to cater to customers growing needs. Easy Credit: With SCB Credit Card customers have the convenience to pay as little as 5% of their outstanding on the card account every month, thus having the power and flexibility to plan their payments. Minimum monthly payment is 5% of the cardholders closing balance or Tk. 500 whichever is higher. If the closing balance is more than Tk. 500 it must be paid in full. Instant Cash Advance: SCB Credit Card gives its customers to access to cash up to 50% of the credit limit. Customer can withdraw cash advance from all SCB and SCG ATM around the country, thus having access to cash 24 hours a day. Besides, cash advance can also be taken from any of its branches across the country. Safe and Secure: Customer does not need to carry cash anymore if he/she is carrying SCB Credit Card. If someone last his/her card can be protected from the financial charges from the moment he/she reports to the bank. Air Accident Insurance: SCB Credit Card gives the customer free air accident insurance coverage up to Tk. 100,000 (Silver Card) and Tk.500,000 (Gold Card). This coverage is also applicable for supplementary cardholders. Supplementary Card: Customers can apply for supplementary card(s) for their spouse, parents, sisters, brothers, friends of children over 18 years of age. All charges on the supplementary card are reported on the monthly statement. Besides, for customers peace of mind one can assign monthly spending limit on each Supplementary Card. From March 2002 first Supplementary card is free for lifetime. 2.7.37 SME Banking Our SME Banking team is dedicated to you and your business. Our aim is to help your business reach its fullest potential. We share your vision for growth and we'll support you with customised product packages, responsive services and access to expert advice. Our international network and trade expertise spanning Asia, Africa and the Middle East are also an advantage when you're planning to expand business operations. Benefits at a glance: a) Enjoy preferential pricing on business transactions. b) Receive rewards on banking services rendered. c) Take advantage of our international network and trade expertise.
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d) Gain unlimited access to professional advice, poducts and services through our Relationship Manager. e) Get the right products, services and support for your local and international businesses. 2.7.38 Services (a) Cash Management We'll help you take control of your cash flow with banking and investment services to suit the way you do business. (b) FX/Treasury Services Our foreign exchange services are designed to help you take advantage of market movements with minimal risk. Trade Finance & Working Captial We offer a comprehensive range of import and export services, plus Express Trade services to boost your working capital. (d) Loans & Mortgages From SME mortgages to cross-border financing, we'll provide the funds you need to drive your business forward. (e) Transaction Banking A world leader in trade finance solutions, cash management and securities services. 2.7.39 Leading the way in Islamic Banking At Standard Chartered Saadiq our dedicated Islamic Banking team combines Shariah expertise with strong business acumen to offer customers the best of both worlds comprehensive international banking services and a wide range of Shariah compliant financial products based on Islamic values. The word Saadiq means 'truthful' in Arabic, representing our commitment to provide innovative banking solutions that uphold our customers' beliefs. Our aim is for Standard Chartered Saadiq to be recognised as a leading provider of Islamic Banking across the globe. 2.7.40 Personal Banking Choose from a wide range of best-in-class financial products that comply with the principles of Online Banking 2.7.41 Online Banking Standard Chartered Online is an innovative Online Banking service that you can tailor to suit your precise banking needs. It gives you convenient, round-the-clock banking services ranging from day-to-day account transfer transactions to real-time valuable financial information. Now you can manage your finances anytime, anywhere.
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2.7.42 Building a sustainable business We have been in business for more than 150 years. We are certain that our success over another 150 years will depend on our ability to deliver a sustainable business in which our skills and talents turn issues into opportunities. That means taking a longterm view of the consequences of our actions. To focus on areas where we can have the most impact we have identified seven pillars to building a sustainable business. (1) Sustainable lending Sustainable lending & the Equator Principles (2) Community investment Educate 1m about HIV/AIDS Standard Chartered wins a 2007 Global Business Coalition award (3) Access to financial services USD500m commitment to Microfinance Helping promote economic development, reduce poverty and improve living standards (4) Environment As a bank, our own environmental impacts relative to other sectors are small, though we are strongly committed to minimising them. (5) Tackling financial crime The threat that our products and services might be used by criminals is a significant risk for Standard Chartered, as it is for any bank. (6) Responsible selling & marketing Treating customers fairly is a priority for the Bank and we want to set a standard for openness and transparency with our customers. (7) Great place to work Standard Chartered employs almost 65,000 people in 56 countries and territories, representing over 100 nationalities. 2.8.0 Citibank N A 2.8.1 Citibank N A Citibank N A is a foreign private bank in Bangladesh. The Bangladesh branch commenced its banking operations on 24 June 1995 after obtaining license from Bangladesh Bank in January 1995. Before starting full-fledged banking activity through the branch at Dhaka, it established a foreign representative office here in

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1987. The present branch of the bank is the upgraded and transformed shape of the representative office. Citi Group Inc., a merger of Citicorp Inc. and Travelers Group Inc. formed on 8 October 1998, is a bank holding company under the laws of United States of America. It is the sole shareholder of Citibank N A and its head office in New York governs the businesses of its Bangladesh branch. The bank commenced business in Bangladesh with a paid up capital of Tk.204 million and total assets of Tk.809 million. 2.8.2 Principle Activities The principal activities of the Dhaka branch of Citibank N A are to provide all kinds of commercial and merchant banking services to its customers. In addition to traditional lending activities, the bank is extensively involved in longterm financing in Bangladesh through equity participation and in other forms of term investments. It has equity participation in Shinepukur Ceramic Ltd and the country's first private television channel Ekushey (ETV). Citibank N A provided support to large, medium and small scale industries in the form of working capital financing, medium and long-term financing, export servicing and import financing, and loans and advances to trade and commerce. 2.8.3 e-Solutions Citibank offers to carry out all banking operations from anywhere around the world with connectivity to CitiDirect Online Banking of Citibank. It is an award winning, web-based delivery platform which is recognized worldwide in over 100 countries. The operation in this platform is flexible, secure and cost-effective with a capability to take care of all banking needs. CitiDirect Online Banking is a complete package for managing all cash collection and payment related transactions. It covers the process of payment from beginning-to-end as creation of payment instruction and, authorization of the instruction which reaches Citibanks end instantly for processing. In today's world of decentralized operations, this web platform offers the facility of remote authorization from any location. This platform serves all reporting needs relating to monitoring sales collection account transactions. CitiDirect helps also for account reconciliation where get the real time account statement. The trade service available in this platform offers the facility to track trade documentation and Letter of Credit status in different transaction stages. It brings to the unique features of 1. Customized reporting formats at request 2. Availability of saved reports both in the internet and in e-mail account

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3. Consolidated real-time transaction capabilities 4. Remote authorization and alert function 5. Wide range of import and export related trade services 6. Dedicated and experienced implementation manager's assistance

2.8.3 Mobile Based Remittance Service From Malaysia Citibank and DIGI Telecommunications Sdn Bhd have teamed up to provide a new service - DiGiREMIT - to facilitate the transfer of money from Malaysia to Bangladesh, Indonesia and the Philippines. The new service is designed to simplify the transfer of money by using mobile phones. DIGI acts as a remittance agent of Citibank to its prepaid and postpaid cell phone customers, who can register at any of the 47 DiGi centers throughout Malaysia. The service offers issuance of drafts in Bangladesh payable at over 800 locations, which are delivered between 24 to 72 hours. The registration creates a virtual wallet for the customer to load up to Malaysian Ringgit (RM) 5,000 at any one time. The customer can then remit via SMS anytime or over the counter at designated DiGi outlets, subject to a limit of RM 5000 per transaction. The fee for the service starts from RM 8. Customers will also automatically receive free personal accident coverage along with that.

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