slide(modes of investment)

8/10/2019 Slide(Modes of Investment)

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Presented By:

Naquibul Hasan Chowdhury

ID:10112101481

BBA Program, 24thIntake

Department of Finance

Bangladesh University of Business&Technology (BUBT)


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Presentation Topic-

Analysis of Investment Performance of

IBBL


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Area Covered

Objectives of the Report

Methodology of the Report

Limitations of the Study

Concept of Conventional & Islami Banking Profile of IBBL

Different modes of investment

Analysis of Investment performance of IBBL

Comparative Analysis

Findings

Conclusion

Recommendations


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Objectives of the Report

The primary objective of this report is to analyze the investment performance

of Islami Bank Bangladesh Ltd. The following objectives can be listed as the

specific objectives of the study.

To understand the different modes of investment and mode wise investment

procedure of IBBL.

To examine the trend of inevestment and deposit over the years

To examine the mode wise investment and income of IBBL

To analyze classiffied investment of IBBL

To evaluate the investment performance of IBBL within the banking industry


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Methodology of the Report

Research design:

The study, Analysis of Investment Performance of Islami Bank Bangladesh

Limited, is descriptive in nature which is based both on primary and

secondary data. The study focuses on mode wise investment mechanism

and mode wise investment performance of IBBL.

Description and Sources of data:

The data required for this study were collected from both primary and

secondary sources; however, majority of the information was collected

from secondary sources.

a) Primary source

Primary data was collected form Branch Manager & Second Officer

Face to face conversation with employees and staffs

Practical work experience

Face to face conversation with clients


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b) Secondary source

The secondary data has been collected from

Annual Report of Islami Bank Bangladesh Limited

Manuals of Investment of IBBL

Website of the Islami Bank Bangladesh Limited

The major portion of the data source used for this report is a secondary one.

Data analysis and reporting:

Trend analysis and comparative analysis are made to analyze the mode wise

investment performance of IBBL. Trend of investmnet, deposit, mode wise

investment, mode wise income are analyzed in the study. A comparative analysis

of non performing loan,investment to deposit ratio of IBBL with industry average

are made. Software like microsoft word, Excel are used for analyzing andreporting purpose of the report.


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Limitations of the Study

I have faced some problems during preparing my report:

Lack of experiences has acted as constraints in the way of meticulous

exploration on the topic.

Lack of current information. Shortage of time for preparing the report in order.

The study was conducted mostly on secondary data.


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Conventional Islami Bankng

Conventional Bank: Bank is a financial institution that collects deposit from

customer, provides loan to the customers and gives the opportunity of moneywithdrawal through check , ATM cards etc.

Islami Banking: An Islamic Bank is a financial institution that operates with the

objective to implement and materialize the economic and financial principles of

Islam in the banking arena.

The Organization of Islamic Conference (OIC) has approved the definition of

Islamic Bank as,

A financial institution whose statutes, rules and procedures expressly states its

commitment to the principles of Islamic Shariah and to the banning of the receipt

and payment of interest on any of its operations.


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Conventional Vs Islamic Banking


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Profile of IBBL

Islami Bank Bangladesh Limited is a Joint Venture Public Limited Company

engaged in commercial banking business based on Islamic Shari'ah with 63.09%foreign shareholding having largest branch network ( total 286 Branches) among

the private sector Banks in Bangladesh. It was established on the 13th March 1983

as the first Islamic Bank in the South East Asia. It is listed with Dhaka Stock

Exchange Ltd. and Chittagong Stock Exchange Ltd. Authorized Capital of the

Bank is Tk. 20,000.00 Million and Paid-up Capital is Tk. 14,636.28 Million having

33,686 shareholders as on 31st December 2013.

Mission

To establish Islamic Banking through the introduction of a welfare oriented

banking system and also ensure equity and justice in the field of all economic

activities, achieve balanced growth and equitable development in through

diversified investment operations particularly in the priority sectors and less

developed areas of the country.

To encourage socio-economic up liftmen and financial services to the loss-income

community particularly in the rural areas.


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Vision

To always strive to achieve superior financial performance, be

considered a leading Islamic Bank by reputation and performance.

To establish and maintain the modern banking techniques, to ensuresoundness and development of the financial system based on Islamic

principles and to become the strong and efficient organization with highly

motivated professional, working for the benefit of people, based upon

accountability, transparency and integrity in order to ensure stability of

financial systems. To encourage savings in the form of direct investment.

To encourage investment particularly in projects which are more likely to

lead to higher employment.


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Products and Services:

Under products and services Islami Bank Bangladesh Ltd. has below

categories:

1. Deposit Schemes:

Al-Wadeah Current Account (AWCA)

Mudaraba Savings Account (MSA)

Mudaraba Term Deposit Account (MTDR)

Mudaraba Special Notice Account (MSNA) Mudaraba Hajj Savings Account (MHSA)

Mudaraba Special Savings (Pension) Account (MSSA)

Mudaraba Savings Bond (MSB)

Mudaraba Monthly Profit Deposit Account (MMPDA)

Mudaraba Muhor Savings Account (MMSA)

Mudaraba Waqf Cash Deposit Account (MWCDA)

Mudaraba NRB Savings Bond (MNSB) Account

Mudaraba Foreign Currency Deposit Account (MFCD)

Students Mudaraba Savings Account (SMSA)


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Investment Modes

Bai Mechanism,

Share Mechanism Ijara Machanism

Investment Scheme

Rural Development Scheme

Foreign Exchange

Special Service:

Locker Services

ATM services

M cash

I banking

Online service


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Different modes of Investment

Modes of Investment of IBBL

Mudaraba

Musharaka

Hire Purchase

under Shirkatul

Meelk

Bai Murabaha

Bai-Muazzal

Bai-Salam

Bai Istishna

Bai- as- Sarf

Bai

Mechanism

Share

Mechanism

Ijara

Machanism


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Bai-Mechanism(Trading Mode)

Bai- Murabaha(contract Sale on profit)

Bai-Murabahamay be defined as a contract between a buyer and a seller under which

the seller sells certain specific goods permissible under Islamic Shariah and the Law of

the land to the buyer at a cost plus an agreed profit payable today or on same date in the

future in lump-sum or by installment. The profit may be either a fixed sum or based on

a percentage of the price of the good.

Procedure of investment under Bai-Murabaha:

First Step: The client submits a proposal regarding his requirements of the bankSecond Step: The client promises to buy the commodity from the bank on a Bai-Murabaha

basis.

Third step: The bank informs the client of its approval of purchasing the commodity. The

bank may pay the price immediately pr as per the agreement.

Fourth step: The two parties (the bank and clients) sign the Bai-Murabaha sale contractaccording to the agreement of the promise to purchase.

Fifth Step: The Bank authorizes the client or his nominee to receive the commodity.


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Bai- Muajjal (Deferred Sale)

The Bai-Muajjal may be defined as a contract between a buyer and a seller under

which the seller sells certain specific goods, permissible under Shariah and law of

the country, to the buyer at an agreed fixed price payable at a certain fixed futuredate in lump sum or in fixed installments.

Procedure of investment under Bai-Muajjal Mode:

First Step:To offer an order by the client to the bank to purchase a specific good .The

client will promise to buy the goods from the bank.Second Step: The client will an agreed fixed price payable at a certain fixed future date

in lump sum or within a period by fixed installments.

Third Step: The bank will take collateral to guarantee the implementation of promise.

The Bank and Client sign the agreement. Than bank will purchase goods from the

supplier according to the Bai-Muajjal agreement.

Fourth Step: Than Bank will deliver the goods to the client at the time and place

specified in agreement.


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Bai Salam (Advanced purchase)

It is a sale in which an advance payment is made by the buyer, but the delivery is delayed

to an agreed date. In the Bai-Salam, a financial transaction happens in advance in cash as

a price of commodity whose delivery will be in a future date. It means deferred is thecommodity sold (debt in kind) and price of the commodity described is to be aid

immediately in advance.

Procedure of investment under Bai-Salam:

1. Cash sale or sale on Credit- the Bank pays the price in the contract meeting so that theseller makes use of it and covers his financial needs. The seller abides the delivery of the

commodity on the specific due date.

2. Delivery and receipt of the commodity on the specific due Date: The bank there is

several options at the disposal of the bank to choose one of them.

3. The sale Contract: The bank agrees to sell the commodity for cash or a deferred price

higher than the salam purchase price. The buyer agrees to purchase and to pay the price

according to the agreement.


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Bai Istisnas

Instisna'a sale is a contracting which the price is paid in advance at the time of

contract and the object of sales manufactured and delivered later a manufacturer, artistor craftsman may take orders, with or without advance payment, to make articles

himself or hire labor to do so.

Bai- as- Sarf

It means currency trading & is an export financing investment mode. When an export

bills in foreign currency, submitted by the exporter at bank, bank purchase/ negotiate

the bill at a particular rate of exchange & give value in TK to the client exporter by

creating an investment, then it is called Bai as Sarf.


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Share Mechanism

Mudaraba

It is a form of partnership where one party provides the funds while the other provides

the expertise and management. The first party is called the Sahib-Al-Maal and the latteris referred to as the Mudarib. Any profits accrued are shared between the two parties on

a pre-agreed basis, while capital loss is exclusively borne by the partner providing the

capital.

Procedure of investment under Mudaraba

The bank provides the capital as a capital owner. The Mudarib provides the effort and

expertise for the investment of capital in exchange for a share in profit that is agreedupon by both parties.

The Results of Mudaraba: The two parties calculate the earnings and divide the profits

at the end of Mudaraba. This can be done periodically in accordance with the terms of

the agreement, subject to the legal rules that apply.

Payment of Mudaraba Capital: The bank recovers the Mudaraba capital it contributedbefore dividing the profits between the two parties because the profit is considered

collateral for the capital.

Distribution of wealth resulting from Mudaraba: In the event a loss occurs, the

capital owner (the bank) is responsible for the entire loss. In the event of profits, they

are divided between the two parties in accordance with the agreement between them,

subject to the capital being recovered first.


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Musharaka (Partnership)

Musharaka meaning a partnership between the Bank and the Client for a particular

business in which both the Bank and the Client provide capital at an agreed upon ratio

and manage the business jointly. Share the profit as per agreed upon ratio and bear theloss, if any in proportion to their respective equity.

Procedure of investment under Musharaka:

Capital should be specific Equal share is not a must

Active participation of partners

Ratio of profit prefixed

Variation in share of profit permissible

Participation and sharing profit & loss


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Ijara Mechanism (Leasing Mode)

Hire Purchase Sirkarul Meelk (HPSM): HPSM is a combination of three Inv mechanisms:

Sirkatul Meelk (SM)

Leasing (H: Hiring)

Bai(P: purchase)

Investment item or asset to be build/ purchased, must be capable to generate rent. It is

widely practice by the bank in real estate, transport, industrial project finance etc.

SM (Sirkatul Meelk- Partnership): It is a contract of partnership in ownership of an assethaving capability to produce service/ rent through purchasing/ building the inv item/

asset by deploing equal/ unequal capital by the partner.

H (Hiring): One partner (Hirer) hires the part/ share of asset of other partner (Hiree) against

payment of rent there against to the hiree in installment basis.

P (purchase):One partner (Hirer: Inv client) promise to purchase the share of other partner

(Hiree: Bank) against payment of share value of hiree part by part for acquiring ultimate/

100% owner of the subject asset at the end of the contract period.


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Analysis

1. Year Wise Deposits of Islami Bank Bangladesh Limited

2009 2010 2011 2012 2013

No. of Deposetors 4591463 4939502 6004731 7031297 8538969

Acc. Increased 229567 348039 1065229 1026566 1507672

Growth % 5% 8% 22% 17% 21%

4591463 4939502

6004731

7031297

8538969

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

9000000

No. of Depositors


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2. Deposit Collection & Growth rate

Year 2009 2010 2011 2012 2013

Deposit 244292 291935 341854 417844 473141

Growth 42177 47643 49919 75990 55297

Growth % 20.86% 19.50% 17.10% 22.23% 13.23%

20.86% 19.50%17.10%

22.23%

13.23%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2009 2010 2011 2012 2013

Growth Rate %

Growth Rate %


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3. Year wise Investment & Growth rate

Year 2009 2010 2011 2012 2013

Investment 214616 263225 305841 372921 406805

Growth Amount 34562 48609 42616 67080 33896

Growth % 19.20% 22.65% 16.19% 21.93% 9.09%

19.20%

22.65%

16.19%

21.93%

9.09%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2009 2010 2011 2012 2013

Growth Rate of Investment

Growth %


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4. Investment to Deposit ratio

year Investment to

Deposit Ratio2009 87.85%

2010 90.17%

2011 87.29%

2012 85.18%

2013 82.35%

87.85%90.17%

87.29%85.18%

82.35%

75.00%

80.00%

85.00%

90.00%

95.00%

2009 2010 2011 2012 2013

Investment to Deposit Ratio

Investment toDeposit Ratio


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5. Sector Wise Investment

Year 2012 2013

Industrial 104975 121531

Commercial 32324 39135Real Estate 21754 27057

Agriculture 19658 20306

Transport 6449 6687

SME 176107 173660

Other 11654 18429

28%

9%

6%5%

2%

47%

3%

Sector wise investment in2012

Industrial

Commercial

Real Estate

Agriculture

Transport

SME

Other

30%

9%

7%5%2%

43%

4%

Sector wise investment in2013

Industrial

Commercial

Real Estate

Agriculture

Transport

SME

Other


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6. Scheme Wise Investment

Year 2009 2010 2011 2012 2013

Rural Development Scheme(RDS) 3752 5110 7072 10390 13731

House hold Durable Scheme 686 962 1070 955 1048

Invest Scheme for Doctors 17 15 14 32 37

Transport Investment Scheme 3630 4732 6707 6887 7057

Car Investment Scheme 54 139 152 113 75

Small Business Investment Scheme

(SBIS)

1160 1703 2348 2774 3202

Micro-Industries Investment Scheme 50 47 38 36 29

Agricultural Implements Investment

Scheme

77 127 210 278 337

Housing Investment Scheme 453 419 367 316 261

Real Estate Investment Program

(REIP)

7933 10155 12485 15660 15903

PGHBN 358 903 1483 2059

Sub Total 17812 23767 31366 38924 43739

Total Investment 214616 263225 305841 372921 406805

% of total investment 8.3 9.03 10.26 10.72 10.75


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7. Division wise investment

8.Area wise investment

58%20%

7% 9%

2% 2% 2%

Division Wise Investment in 2013

Dhaka

Chittagong

Khulna

Rajshahi

Rangpur

Sylhet

Barisal

15%

85%

Area Wise Investment in 2013

Rural Area

Urban Ara


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9. Mode Wise Investment

Year 2009 2010 2011 2012 2013

Bai-murabaha 117180 146135 177,136 221632 225876

HPSM 73871 80093 89,070 96056 95481

Bai Muajjal 7318 12393 15,912 18295 24053

Bill Purchased & Negotiation 11289 5141 2,744 9531 29686

Quard 2833 2095 5,614 9156 13670

Bai- Salam 2082 3624 3,528 4532 4200

Mudaraba 0 1500 2,266 0 0

Musharaka 43 12244 9,571 13719 13838

Total 214616 263225 305,841 372921 406805

214616 263225305,841

372921406805

0

100000

200000

300000400000

500000

2009 2010 2011 2012 2013

InMillionT

K

YEAR

Mode Wise Investment


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10. Income from investment

Year 2009 2010 2011 2012 2013

Investment 214616 263225 305,841 372921 406805

Income from investment 21370.53 24766.26 32019.53 43672.23 48145.46

% of income from mode

wise investment

10% 9% 10% 12% 12%

10%9%

10%12%

12%

0%

2%

4%

6%

8%

10%

12%

14%

2009 2010 2011 2012 2013

% of income from mode wise investment

% of income


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11. Investment under Bai Mechanism

Year 2009 2010 2011 2012 2013

Bai-murabaha 117180 146135 177,136 221632 225876

Bai Muajjal 7318 12393 15,912 18295 24053

Bill Purchased & Negotiation 11289 5141 2,744 9531 29686

Quard 2833 2095 5,614 9156 13670

Bai- Salam 2082 3624 3,528 4532 4200

Sub Total 140702 169388 204,934 263146 297485


Total Investment as a Percentage under Bai

mechanism

65.56% 64.35% 67.01% 70.56% 73.13%

65.56%64.35%

67.01%

70.56%

73.13%

58.00%

60.00%

62.00%

64.00%

66.00%68.00%

70.00%

72.00%

74.00%

2009 2010 2011 2012 2013

%o

ftotalinv

estment

Total Investment as a % under Bai mechanism

% of total investment

12 I f B i M h i


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12. Income from Bai Mechanism

Year 2009 2010 2011 2012 2013

Bai Murabaha 11716.35 13436.2 18634.82 25625.83 28494.77

Bai Muajjal 947.2 1170.33 1638.05 2342.46 3235.75

Bai Salam 130.1 204.45 222.31 360.05 306.18

Bai As Sarf 85.25 107.85 181.13 161.41 221.37

Income from Bai Mechanism 12878.90 14918.84 20676.32 28489.74 32258.07

Income from Investment 21370.53 24766.26 32,020 43672.23 48145.46

Income from Bai mechanism as % of total income 60.26% 60.24% 64.57% 65.24% 67.00%

60.26%60.24%

64.57%65.24%

67.00%

56.00%

58.00%

60.00%

62.00%

64.00%

66.00%

68.00%

2009 2010 2011 2012 2013

Income from Bai mechanism as % of total investmentincome

Income from Baimechanism as % of totalincome


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13. Investment under Share Mechanism

Year 2009 2010 2011 2012 2013

Mudaraba 0 1500 2,266 0 0

Musharaka 43 12244 9,571 13719 13838

Sub Total 43 13744 11,837 13719 13838


Total Investment as a percentage under Share

mechanism

0.02% 5.22% 3.87% 3.68% 3.40%

0.02%

5.22%

3.87% 3.68%3.40%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

2009 2010 2011 2012 2013

Total Investment as a percentage under Sharemechanism

Total Investment as apercentage under Sharemechanism

14 I f Sh M h i


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14. Income from Share Mechanism

Year 2009 2010 2011 2012 2013

Mudaraba 0 7.58 -284.57 18.56 0

Musharaka 551.8 891.41 1608.59 1650.85 2013

Total Income from Share Mechanism 551.80 898.99 1324.02 1669.41 2013.00

Income from Investment 21370.53 24766.26 32,020 43472.23 48145.46

Income from Share mechanism as % of

total income

2.58% 3.63% 4.14% 3.84% 4.18%

2.58%

3.63%

4.14%3.84%

4.18%

0.00%

0.50%

1.00%

1.50%2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

2009 2010 2011 2012 2013

Income from Share mechanism as % of totalinvestment income

Income from Share

mechanism as % oftotal income


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15. Investment under HPSM

Year 2009 2010 2011 2012 2013


HPSM 73871 80093 89,070 96056 95481

Total Investment as a Percentage

under HPSM

34.42% 30.43% 29.12% 25.76% 23.47%

34.42%30.43% 29.12%

25.76%

23.47%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

2009 2010 2011 2012 2013

Total Investment as a Percentage under HPSM


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16. Income from HPSM

Year 2009 2010 2011 2012 2013

Income from HPSM 7129.47 8032.62 8562.56 11000.36 11621.38

Income from total Investment 21370.53 24766.26 32,020 43672.23 48145.46

Income from HPSM as % of total

income

33.36% 32.43% 26.74% 25.19% 24.14%

33.36% 32.43%

26.74%25.19%

24.14%

0.00%

5.00%10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

2009 2010 2011 2012 2013

Income from HPSM as % of total investment income

Income from HPSM as % oftotal income


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17. Classified Investment

Year 2009 2010 2011 2012 2013


Total Classified investment 5063.396 4655.632 8292.324 14212.8 14941.9

% of Classified Investment in total Investment 2.36% 1.77% 2.71% 3.81% 3.67%

2.36%

1.77%

2.71%

3.81%3.67%

0.00%

0.50%

1.00%

1.50%2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

2009 2010 2011 2012 2013

% of Classified Investment in total Investment

% of Classified Investment

in total Investment

18 Substandard Investment


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18. Substandard Investment

Year 2009 2010 2011 2012 2013

Substandard Investment 1576.532 896.419 3,152 2094.313 1707.266


% Substandard of total Classified Investment 31.14% 19.25% 38.01% 14.74% 11.43%

31.14%

19.25%

38.01%

14.74%

11.43%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

2009 2010 2011 2012 2013

% Substandard of total Classified Investment

% Substandard of totalClassified Investment


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19. Doubtful Investment

Year 2009 2010 2011 2012 2013

Doubtful 751.159 520.745 802.794 1295.18 653.099


% Doubtful of total Classified Investment 14.84% 11.19% 9.68% 9.11% 4.37%

14.84%

11.19%

9.68%9.11%

4.37%

0.00%

2.00%

4.00%6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

2009 2010 2011 2012 2013

% Doubtful of total Classified Investment

% Doubtful of totalClassified Investment

20 B d & L


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20. Bad & Loss

Year 2009 2010 2011 2012 2013

Bad & Loss 2735.705 3238.468 4337.204 10823.31 12581.54


% Bad & Loss of total Classified

Investment

54.03% 69.56% 52.30% 76.15% 84.20%

54.03%

69.56%

52.30%

76.15%

84.20%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

2009 2010 2011 2012 2013

% Bad & Loss of total Classified Investment

% Bad & Loss of totalClassified Investment


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Comparative Analysis

1. Deposit of IBBL and Total National Deposit

Year 2009 2010 2011 2012Total National Deposit 3037800 3721900 4509700 5396000

Total Deposit of IBBL 244292 291935 341854 417844

% of deposit of IBBL in TND 8.04% 7.84% 7.58% 7.74%

8.04%

7.84%

7.58%

7.74%

7.30%

7.40%

7.50%

7.60%

7.70%

7.80%

7.90%

8.00%

8.10%

2009 2010 2011 2012

% of deposit of IBBL in TND

% of deposit of IBBL inTND

2 I t t f IBBL P t f T t l N ti l I t t


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2. Investment of IBBL as a Percentage of Total National Investment

Year 2009 2010 2011 2012

Total investment of IBBL 214616 263225 305841 372921

Total National Investment 2439800 3297500 3842600 4238500

% of IBBL investment in TNI 8.80% 7.98% 7.96% 8.80%

8.80%

7.98%7.96%

8.80%

7.40%

7.60%

7.80%8.00%

8.20%

8.40%

8.60%

8.80%

9.00%

2009 2010 2011 2012

% of IBBL investment in TNI

% of IBBL investment in

TNI


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3. NPL of national and IBBL

Year 2009 2010 2011 2012

% of national NPL 9.20% 7.30% 6.10% 10.03%

% of IBBL NPL 2.36% 1.77% 2.71% 3.81%

9.20%

7.30%

6.10%

10.03%

2.36%

1.77%

2.71% 3.81%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2009 2010 2011 2012

% of national NPL

% of IBBL NPL


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Findings

The study, Analysis of investment performance of Islami Bank Bangladesh

Limited, reveals the following majors findings.

The deposit collection of IBBL has increased over the years but the growth

rate has fluctuated over the year. The deposit of IBBL as percentage of totalnational deposit has decreased over the last three years of analysis.

The investment of IBBL has increased over the years but the the growth rate

has fluctuated over the year. The investment of IBBL as percentage of total

national investment has decreased over the last three years of analysis.

The investment of IBBL is maximum in the industrial SME sector and

minimum in the transport sector. They invest low amount in other sectors like

commercial, real state, agriculture etc.

IBBLs investmentunder Bai mechanism was 73.12% of total investment in

2013. And the income is 67.00% from bai mechanism. Income from Share

mechanism is increasing over the year.

IBBL invested low amount in share mechanism.

NPL ratio of IBBL has increased over the last four years.Yet, NPL ratio of

IBBL is lower than industry average.


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Conclusion

Islami Bank Bangladesh Limited has made a revolution in the conventional

banking especially in the field of bank investment. IBBL became successful in

proving that bank investment (lending) can be made properly, profitably

following profit & loss sharing concept with abolishing interest, and which is

also beneficial to human being & society. And these all characteristics of bank

investment are absolutely absent in case of conventional bank. Banking

without interest seems feasible as far as it goes. But it still awaits a fair trialwithout which it will be dogmatic to pass any judgment on it. Practical

experience is therefore no guide as to its success or failure. The rate of return

can fall to zero as envisaged in Islam only in an ideal society in which future

can be perfectly fore-seen and social security prevails from cradle to grave. In

this case even on single country can unilaterally work out the system becauseof closer international ties and inter- dependence. Therefore, such a system

pre-supposes an international community imbibed with a sense of cooperation

and universal brotherhood and sprit of Islam.


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Recommendations

The following recommendations can be suggested from the analysis of investment

performance of Islami Bank Bangladesh Limited.

IBBL should introduce new deposit product like Mudaraba Shikkha Deposit of

Shahajalal Islami Bank to maintain and increase its trend of deposit.

In order to maintain and increase the trend of investment, IBBL can open new

branch in the rural area. This will also increase the deposit of IBBL.

IBBL invested in Bai mechanism. IBBL should increase its investment underShare mode & HPSM.

IBBL usually does not invest in rural areas but they should invest in those areas for

rural development.

IBBL should consider the five Cs regarding borrower before selection of the client

to reduce the classified investment.

IBBL should properly monitor the behavior of borrower to ensure the use of loan

for the specified purpose.


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