SERIAL NO.

NAME OF THE STUDENT ID No.

01. Mahmuda Mongur Diti 343

02. Mokerrama Najin 344

03. Md. Zahidul Islam 351

 

Objectives of the report

We tried our best to force the role of AB Bank Ltd. and Al-Arafah Islami Bank Ltd. in the social development of Bangladesh.Our special focus was on the problem of the environmental forces of the company and our objective was to find out the solution of this problem.Our additional focus was on the analysis of the financial state of AB Bank Ltd. and Al-Arafah Islami Bank Ltd.. So we tried to make an analysis view of that state. 1. Broad ObjectiveThe prime objective of the report is to analyze “Environmental Forces of AB Bank Ltd. and Al-Arafah Islami Bank Ltd.” 

2. Specific Objective - To present an over view ABBL and AIBL. - To find out the objective of ABBL and AIBL. - Analyzing the position in bank sector of Bangladesh. - To examine the formation of ABBL and AIBL. - To identify the service they provide. - To find out their existing and future programs. - To identify the problems with their management. - Evaluate the contribution in overall economic development. - To have introduction to the functions of general banking section. - To know about the profile of ABBL and AIBL. - To know about performance of the Bank. - To apply theoretical knowledge in the practical field.  

Methodology of the report

1. Type of researchThis report is a descriptive type of research, which briefly reveals the overall activities performed by AB Bank Ltd. and Al-Arafah Islami Bank Ltd. It has also been administered by collecting secondary data. Annual reports of AB Bank Ltd. and Al-Arafah Islami Bank Ltd. were the major secondary data sources in this regard. Environmental forces of social force analysis have also been used as major tools for the financial performance analysis. The study is performed based on the information extracted from different sources collected by using a specific methodology. This report is analytical in nature.

 

 

  

2. Sources of data Primary sources: - Officers - Customers

Secondary data: - Annual Report of the organization. - Different text book and journals. - Various reports and articles related to study. - Some of my course elements as related to this report. - Web base support from the internet.

3. Data Collection Procedure

Secondary data:For the “Environmental Forces of AB Bank Ltd. and Al-Arafah Islami Bank Ltd.” We are mainly used Secondary data.

Primary sources: Besides this we are also collect some information by taking expert opinion from the officers and communicate with their customers.  

4. Sampling plan

PopulationAll the customers and employees of AB Bank Ltd. and Al-Arafah Islami Bank Ltd. Sample elementIndividual customerSample frameThere was no sample frame found. Sampling procedureNon- probability convenience sampling…..    

   

Sample size

Area Number of Respondents.

Mirpur 5

Dhanmondi 2

Shahbag 3

Total 10

Limitation of the report

 

- Access to data regarding different performance indicators of ABBL and AIBL.

- The report is mainly based on the secondary data which published by different organization as annually, half-yearly, monthly, weekly or daily.

- Time constraints are another limitation of this report.

- Due to some legal obligation and business secrecy banks are reluctant to provide data. For this reason, the study limits only on the available published data and certain degree of formal and informal interview.

- The bankers are very busy with their jobs, which lead a little time to consult with.

- Finally, some recent data which were needed to enrich this report but the unwillingness of executives of the bank due to confidentiality was made my report limited to data content.

- Lack of my experience and practical experience. 

Overview of ABBL

Vision of the ABBL "To be the trendsetter for innovative banking with excellence & perfection"

Mission of the ABBL"To be the best performing bank in the country"  Goal of the ABBLTo achieve the desired goal, it has the intention to pursuit of excellence at all stages with a climate of continuous improvement.

Organogram OF ABBL: President & MD

Deputy managing Director Credit (CRM)

Deputy managing Director (Corporate)

Head of retail & consumer banking

Deputy managing Director (operator)

Head of IT Mkt. Treasury & Foreign Ram

CFO & Head of Finance

Head of Int. Control &Compliance

Relationship Officer (REATIL)

Relationship Officer (CORP)

Branch Manager & Relationship HeadHead of

Credit Admin & Monitoring (CAM)

Credit Admin Officer CAM

Regional Relationship Manager/ Head Cluster Relationship

Manager

Relationship Officer (SME)

Operations Manager

Import

Concurrent Audit

Priority Banking

General Banking Services

Customer Services Desk

Admin & Secu. & IT Application

Trade Finance

Financial Control

RemittanceExport

Cleaning & allied Services

Account opening & Cheque Mgt

Cash operation

Local Foreign

SWOT Analysis of the ABBL Strengths - Several types of loans and advances with unique features and facilities which are so much helpful for enhancing the economic growth. - Innovator of different new products and services like they are the innovator of ATM booth system. - They demand a standard interest rate on the loan and advances. - High geographic coverage. - Availability of online Banking facility. - Strong and attractive promotional activities.

- Own training institutional which arrange useful and distinctive training program time to time. - Duties and responsibilities of the employees in the RM and CAM department are clearly define. - Co-operative and skilled personal, who are very much specialized in interacting with clients. (Particularly in RM and CAM department.) - ABBL employees are one of the major assets of the company. The employees of ABBL have a strong sense of commitment towards organization and also feel proud and a sense of deluging towards ABBL. The strong organizational culture of ABBL is the main reason behind this strength.

Weaknesses

- Various complex requirements demanded by the Bank to give the loan. - This bank mainly provides services to their big corporate clients. - Variability of credit card facility for all customer groups. It provides credit and facility only for the selected customer groups. - They have only one branch for Islamic Banking but it has a great demand in BD.

Opportunities - Possibility to generate very high note of return as compared to fixed rate of interest. - An industry with an endless demand.Name of the products are so easy to understand so people easily their loan facilities. - The use of latest technology in all spheres of banking, which will increase the banks efficiency and service quality more. - Introduction of online banking facility is ennobling the bank to offer its banking service beyond its national border. - Expansion of its existing product services basket.  

 

Threats: - Strong appetite for Islamic financial services among the people of Bangladesh, but AB Bank has only one branch of Islamic Banking. - The upcoming private of ABBL, it is expected that in the next few years more commercial banks will emerge. If that happens the intensity of competitor will rise further and banks will have to develop strategies to compete against and win the battle of banks. - Unfavorable government rules and regulation regarding banking business. - Now day’s different foreign and private banks are also offering similar type of product with an almost similar profit margin. So, if all competitors fight with the same weapon, the natural result is declining profit.

Overview of AIBL

Vision of the AIBLTo be a pioneer in Islami Banking in Bangladesh and contribute significantly to the growth of the national economy.  

Mission of the AIBL - Achieving the satisfaction of Almighty Allah both here & hereafter. - Proliferation of Shariah Based Banking Practices. - Quality financial services adopting the latest technology. - financing.

  

- Fast and efficient customer service. - Maintaining high standard of business ethics. - Balanced growth. - Steady & competitive return on shareholders' equity. - Innovative banking at a competitive price. - Attract and retain quality human resources. - Extending competitive compensation packages to the employees. -Firm commitment to the growth of national economy. - Involving more in Micro and SME

Goal of the AIBLAl-Arafah Islami Bank Limited is Islamic Banking institutions that operates with the objectives t implement and materialize the economic and financial principles of Islamic in the banking arena. The objectives of AIBL are not only to earn profit, but also to do good and welfare to the people. The main objectives of AIBL are listed below-

- To conduct interest free banking - To establish participatory banking instead of banking on debtor creditor relationship - To invest through different modes permitted under Islamic Shariah

- To accepts deposits on profit loss sharing basis - To establish as welfare –oriented banking system - To extend co-operation to the poor, the helpless and the low income group for their economic up liftmen - To play a vital role in human development and employment generation - To contribute towards balances growth and development of the country through investment operations particularly in the less developed areas - To contribute in achieving the ultimate goal of Islamic economic System.  

Organogram OF AIBL:Board of Director

Managing Director

Deputy Managing Director

Executive Vice President

Senior Vice President

Vice President

Assistant Vice President

General banking Investment Foreign Exchange

Export ImportA/C

openingCash Clearin

gAccount

SWOT Analysis of the AIBLLike other organizations, AIBL also have its strength, weakness, opportunities and threats. The following stated the SWOT of the bankCore strength(S) - AIBL was adjudged second among the entire Islamic bank in the country in terms of service and business. The customer service was conducted by the general banking. - AIBL is doing business under the direct supervision of Bangladesh Bank. - Good asset quality - Satisfactory business growth - Diversified product lines - Experienced top management - Good operating efficiency

The following are the core strength of the Islamic bank for which it is now considered to be the emerging sector for success: If we drew the differences between the normal banking and the Islamic bank than it will be clear about the core strength of Islamic bank:

One of the key strength of the Islamic bank is that it distributes a significant amount of profit that they earn by investing different areas. On the other hand, in case of conventional banking they provide a fixed amount of return which is called “RIBA” or interest that may not be consistent with the profit positioning of the bank’s operations. So in case of conventional banking, they either sacrifice by bearing losses or they deprived the depositors’ by not paying them the part of profit.

As the Islamic bank has to provide a significant of profit so they have to investment in a proper way to maximize the return. Because if a investment becomes classified which will affect the total profit position of the Bank, that will become the impediments to the profit of the depositors’.

Under conventional banking the depositors’ can estimate the income from their deposit that lead them to expand the area of his expense which ultimately increase the inflation. On the other hand, in Islamic bank the depositors’ have to wait for the profit, so that can’t increase the tendency to expense much.

Islamic collect deposits by Murabaha Mode whereas they invest by Murabaha, Mishawaka Mode that increase the intimacy with the Bank and with the depositors’.

Meanwhile islami bank provide credit through Murabaha, Bai-muajjal etc. Under these systems banks have full regulatory power that’s why it develops good friendship relation with the Bankers’ and the clients’.

Islami banks fulfill its administration expenses from the profit of its investment and from the service charges. So bank ensures close observation to its investment so that the investment profit doesn’t come down as well as its service charges goes up.

Islami bank works to the development the socio-economic and value system of the people that is not seen in case of normal banking.Islami bank does not incur losses as it provide the return under the scientific process where as the conventional banks provide interest though they incur losses that ultimately reduce the deposit of the clients.

Islami bank includes the profit suspense system in its investment mode especially in Murabaha and Bai-Muajjl system. Islami banks are following this system prior to the Bangladesh Bank’s FSRP.

Islami banks ensure the utilization of credit for which the client received the money. For this reason people have a low scope to use it in other purpose which ultimately ensures the recovery of invested money. Beside observation Islami banks find other sources of investment.

Islami banks invest in the human welfare sector. So Islamic bank practices mainly welfare banking. These banks invest only in those sectors where human welfare can be ensured.

If needed islami provide Quard-a-hasana, which means the way to provide credit without any profit. So this system provides benefits to the poor.

Islami bank is free from the circle of interest or “Riba”. Interest actually has some bad impact on the society as well as on the economy. A famous economist James Ken said if banks don’t provide any interest but the people will deposit to bank. According him the only reason is safety that the people want from banks. So banking system without interest is the best banking practices.

The benefit of interest is mainly upwarding. This means that the interest that middle class people provide ultimately goes to the hand of rich people.So it can be said that the benefits that the Islami has it significant which give the new era to the banking sector around the world as well as the AIBL.

Major weakness:MIS at primary stageLimited Branch networkLimited market share Islamic banking is guided by some principles but it has some weaknesses, some of the major weaknesses are discussed in below: Lack of profit and loss sharing:Profit Loss Sharing (PLS) dominates the theoretical literature on Islamic finance. Broadly, PLS is a contractual arrangement between two or more transacting parties, which allows them to pool their resources to invest in a project to share in profit and loss. Most Islamic economists contend that PLS based on two major modes of financing, namely Mudaraba and Musharaka, is desirable in an Islamic context wherein reward-sharing is related to risk-sharing between transacting parties..

Almost all theoretical models of Islamic banking are either based on Mudaraba or Musharaka or both, but to-date actual practice of Islamic banking is far from these models. Nearly all Islamic banks, investment companies, and investment funds offer trade and project finance on mark-up 3 , commissioned manufacturing, or on leasing bases. PLS features marginally in the practice of Islamic banking and finance.

Whatever is the degree of success of individual Islamic banks, they have so far failed in adopting PLS-based modes of financing in their business. Even specialised Islamic firms, like Mudaraba Companies (MCo’s) in Pakistan, which are supposed to be functioning purely on a PLS basis, have a negligible proportion of their funds invested on a Mudaraba or Musharaka basis. According to the International Association of Islamic Banks, PLS covered less than 20 percent of investments made by Islamic banks world-wide (1996. Likewise, the Islamic Development Bank (IDB) has so far not used PLS in its financial business except in a few small projects.

Opportunities:

AIBL has some opportunities which are given below:About 85% people are Muslims in our country.Other Islami banks do not cover the demand of customer as their requirements as Muslim.People aware of their religious because people dont know the concept of Islami banking before.

Threat(S):

First, PLS contracts are inherently vulnerable to agency problems as entrepreneurs have disincentives to put in effort and have incentives to report less profit as compared to the self-financing owner-manager. This argument is based on the idea that parties to a business transaction will shirk if they are compensated less than their marginal contribution in the production process, and as this happens in the case of PLS, the capitalists hesitate to invest on PLS basis.

 

Second, PLS contracts require well-defined property rights to function efficiently. As in most Muslim countries property rights are not properly defined or protected, PLS contracts are deemed to be less attractive or to fail if used.

Third, Islamic banks and investment companies have to offer relatively less risky modes of financing as compared to Mudaraba or Musharaka in the wake of severe competition from conventional banks and other financial institutions, which are already established and hence more competitive.

Fourth, the restrictive role of shareholders (investors) in management and, hence, the dichotomous financial structure of PLS contracts make them non-participatory in nature, which allows a sleeping partnership. In this way, they are not sharing contracts in a true sense; the transacting parties share financial resources without participatory decision-making.

Fifth, equity financing is not feasible for funding short-term projects due to the ensuing high degree of risk (i.e., the time diversification effect of equity). This makes Islamic banks and other financial institutions rely on some other debt-like modes, especially mark-up to ensure a certain degree of liquidity.

Sixth, unfair treatment in taxation is also considered to be a major obstacle in the use of PLS. While profit is taxed, interest is exempted on the grounds that it constitutes a cost item. This legal discrimination and its associated problem, tax evasion, make PLS less reliable as a tool for reward sharing.

Seventh, secondary markets for trading in Islamic financial instruments, particularly Mudaraba and Musharaka, are non-existent. Consequently, they have so far failed to effectively mobilise financial resources.

Beside the above mentioned limitations of lack of profit and loss sharing banks’ that are operating as Islamic banking philosophy are also facing the following limitations: 1. Islamic banks suffer from serious sort of liquidity problem. Because they don’t have specific Shariah sector on which they can invest their liquid money. The Bangladesh Bank has not yet introduced any profit and loss basis bond, though BB is now discussing to introduce Mudaraba Bond but it is not yet implemented. The problem of this bond is that the sector where it will invest is not said.

2. Islamic bank deposited 10% cash amount against the BB requirement of SLR & CRR, on which the Islamic banks’ has no chance to earn profit. On the other hand, the conventional deposited only 4% of CRR on without profit basis. From the observation it will be clear that Islamic banks’ are not getting any profit on 6% on cash deposits.

3. Islamic bank don’t get any profit from the FC Clearing Account while same is getting by the Islamic banks. It will be beneficial to provide them on three, seven, fifteen or one month basis that will recover them from loss.     

Analysis and Findings of ABBL

Society influences to the Bank to developing their activities and helps to grow the business. After influence, Bank decides by providing different kinds of new and potential products and services to the society. At the same time, banks grow faster and achieve some long –range growth and also society will be satisfied. These are -

Products & Services of ABBL

Corporate Banking At AB Bank we provide complete range of solutions to meet Corporate Customers' requirement. Our Corporate Banking solutions include a broad spectrum of products and services backed by proven, modern technologies. 

 

Following are some of the products and financial tools of Corporate Banking: - Project Finance - Working Capital Finance - Trade Finance - Cash Management - Syndicated Finance, both onshore & off-shore - Equity Finance, both onshore & off-shore - Corporate Advisory Services

SME Banking: - SME LoanSME Sectors in which AB Bank has participated so far: - Agro machinery - Poultry - Animal Feed - Dairy Product - Fruit Preservation - Hotel & Restaurants -Garments Accessories

- Leather products - Plastic product - Furniture : Wooden & Metal - Ink - Paint - Printing & Packaging - Wire & Cable - Aluminum - Cement and Lime Plaster - Clinics and Hospitals - Engineering & Scientific Instruments

 

Large Loan & Project Finance In order to cater the demand of client AB Bank has segmented its portfolio in terms of loan size. As per this segmentation any loan over Tk. 10.00 Crore falls under the purview of Large Loan Unit.In AB Bank, there is also a separate Project Finance unit who evaluate the business. The unit is entrusted to handle the portfolio in a focused manner. AB Bank is always in fore front to support   establishment of new projects of diverse nature which will help to broaden the manufacturing arena vis-à-vis to generate to employment.At the moment AB Bank ‘s exposure in Large Loan & Project Finance portfolio is distributed in the following  sectors:

Non-Resident Bangladeshi (NRB) Banking Facilities offered to NRBs - Opening of Foreign Currency A/C - Wage Earners Development Bond - USD Premium Bond - USD Investment Bond

Money Transfer Foreign Remittance through Exchange HouseFor Inward Remittance, AB Bank established extensive drawing arrangement network with Banks and Exchange Companies located in the important countries of the world.

Islami Banking The goals and objectives of Islamic banking Wing are as under: - To facilitate the Islamic banking system in the country - To create new entrepreneurs and to arrange required finance for them - To play effective role for socio economic development of the country - To give assistance in launching welfare oriented economic system under Islamic values Under this wing AB Bank extends the following Islamic banking services: - Deposit services - Investment services

Under Deposit services the following services are being rendered: - Mudaraba Savings Account - Mudaraba Short Noticed Account - Mudaraba Term Deposit Account (with different terms) - Mudaraba Monthly Profit Account - Al-Wadiah Current Deposit Account - Mudaraba Deposit Pension Scheme - Besides Mudaraba Hajj Deposit Scheme and some other schemes are under process. 

Investment Services

AB Bank Islmic Banking Wing provides investment facilities for project finance, working capital finance, SME finance, consumer / retail baking finance etc. under following modes: - Hire-Purchase under Shirkatul Melk (HPSM) - Ijara or Leasing - Bai-Muajjal / Bai-Murabaha - Musharaka - Mudaraba.  

Sector of Investment:Islamic Banking Wing of the bank finances in all sectors i.e., Industry, business, Agriculture, Real Estate etc. if purpose of the investment  is permissible under Islamic Shariah. Limit of Investment:Investment is offered to the extent of single borrower exposure limit as fixed by the Bangladesh Bank from time to time.  

Foreign Trade

Islamic Banking Wing provides the following services at its foreign trade desks: - Opening of LCs - Post -Import Finance - Export bill purchase and negotiation - Pre-shipment financing etc.AB Bank Islamic Banking Wing has been continuously trying to expand it’s service horizon keeping the necessity of valued clients in view and upholding the principle of Islamic Shariah.

Investment bankingAB Investment Limited, a subsidiary of AB Bank Limited incorporated under the companies act 1994 and running its Merchant Banking operations being licensed by the securities and exchange commission.

Custodial Service Customers:Investors Who Are Interested to Invest In the Bangladesh Capital Market   • Non Resident Bangladeshi (NRBs)   • Foreign Institutional and individual clients   • Local Institutions   • Sponsors' group and High net worth client

Services:   • Safe custody of client securities   • Foreign Trade Execution and Settlement   • Share transfer in the name of client   • Complete the Dematerialization process as per client request   • IPO, Private Placement & Right share subscription as per client instruction with deposit   • All types of corporate action that includes cash dividend, bonus share and right share collection   • Open BO account    • Instant information regarding client securities position as per their request   • Quarterly reporting to the client by Custodial Department

Brokerage Service

Introduction:AB Securities Limited (ABSL) is a subsidiary company of AB Bank Limited having holding 99.60% shares of the ABSL. Earlier, AB Bank Limited provided stock broking services through Arab Bangladesh Bank Foundation (ABBF) since 2006. Incompliance with Bangladesh Bank’s directives, AB Bank Limited formed separate subsidiary company under Company Act 1994 in name of AB Securities Limited (ABSL) and shifted its stock broking services from ABBF to ABSL. ABSL started its new journey on 2nd August, 2010 with improved customer service, highly skilled professionals and state of art technologies. Memberships of both Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited has been transferred in name of ABSL to provide more efficient and professional broking services to the capital market investors.

Brokerage Services: We provide broking services under following categories:a) Individual & Joint Account (Local, NRB & Foreign)b) Institution Investment Account (Local and Foreign)

Margin Loan Facilities: We also provide margin loan facility to our valued clients as per desecration of management of ABSL.Stock Dealer Service: ABSL also has the stock dealer license to manage own portfolio as well as can manage reputed institution’s portfolio accounts.

CDBL Services as full service Depository Participant (DP): As a full service depository participant, ABSL provides following services:

a) BO (Beneficial Owner) accounts opening and maintenance.b) Dematerialization & c) Rematerializationc) Freeze (freeze request and release request) and suspensionsd) Pledging, unpledging and confiscatione) BO ISIN balances and master maintenance enquiry

Future Products ExpansionNew BusinessIn addition, AB Bank will also expand its operations in the investment banking in the following areas:

Business Area Status

Islamic Capital Market Products Supporting infrastructure going to be prepared

Processing Asset Management / Mutual Fund

Derivatives Products We are planning to launch and manage Mutual Fund in future.

Cards - Debit Cards - Credit Cards - ATM Locations - Merchant Outlets - FAQ - Future Plans

 

Safe Deposit Locker

Advantages / Key Benefits: - Wide Availability. - Lockers available in various sizes. i.e. Small, Medium and Large with varying rents. - Lockers are rented out for a minimum period of one year. Rent is payable in advance. - The rent may be conveniently paid from your deposit account with us. - Direct debits for locker rentals from your account rid you of the hassles in writing out cheques.

Eligibility:An individual (not minor), firms, limited company, associations, clubs, trusts, societies, etc may hire a locker.

Accounts: - Individual and Joint Account - Sole Proprietorship Account - Limited Company Account - Partnership Account

Retail Banking Personal Banking Loan Products - Personal Loan - Auto Loan - Education Loan (disbursed to parents/guardian) - Education Loan (for executive) - Home Loan

Analysis and Findings of AIBL

Society influences to the Bank to developing their activities and helps to grow the business. After influence, Bank decides by providing different kinds of new and potential products and services to the society. At the same time, banks grow faster and achieve some long –range growth and also society will be satisfied. These are –

Product of AIBL Bank Ltd. as an Islamic Bank

Need based deposit productThe AIBL (Al-Arafah Islami Bank) offers their customers’ genera banking facilities, which ensures the safety of their money as well as the fair and smart return of their money. Following are the ways through which Banks collects their deposits from the clients: - AL-WADIA CURRENT DEPOSIT - MUDARABA SAVINGS DEPOSIT - MUDARABA SHORT TERM DEPOSIT - MUDARABA TERM DEPOSIT - MUDARABA SUNDRY DEPOSIT - MUDARABA DEPOSIT UNDER SCHEMES - BAI MUAZZAL SPL.DEPOSIT (CCH) - FOREING CURRENCY DEPOSITS - BAI MRAJJAL DEPOSIT (CCH) - MURABHAHA DEPOSIT (CCP)

B. MUDARABA SAVINGS DEPOSIT

Mudaraba Saving Deposit (MSD) is open by the lower and middle classer people who wish to save a part of their incomes to meet their future need intend to earn an income from their savings. It aims at encouraging savings of non-trading person(s), institution(s), society, etc. by depositing small amount of money in the bank.

Under this MUDARABA SAVINGS DEPOSIT, the bank has a number of financial deposits scheme which are- - One time Hajj deposits scheme - Hajj Account scheme - Monthly profit based turn deposit scheme - Savings investment Scheme - Monthly Deposits Saving Scheme - Marriage Deposit and Investment Scheme - Lakhapati deposit scheme

Modes of Investment:Bai- MurabahaBai- MuajjalIjara Bil-Bie (Hire Purchase)MudarabaMusharakaBai-Salam

Other special Investment Scheme:Masque Based Investment SchemeVetches Investment SchemeConsumer Investment SchemeSmall investment Scheme

 

Grameen & small investment schemeAn investment product “Grameen & small investment” is in operation. The objective of this project is to introduce Shariah based banking system in rural and village area, creating employment through financing to low income group, build up savings attitude, improvement of living standard of rural low income mass people, creating opportunity to carry out Islamic lifestyle by way of alleviating poverty and at the same time to make other financially established by investing in small investment projects. Initially this scheme was introduced in three branches of AIDL i.e Gallai, Comilla Ruposhpur Srimongal and Companion Comilla. There is a plan to expand this project gradually in other rural branches.

Within the scope of Grameen and Small investment schame, Investment has been made in the following sectors:

1. Fisheries2. Poultry Rearing3. Cattle Rearing4. Goat Rearing 5. Beef fattening6. Poultry Firm7. Procesing of muree8. Processing of Sweets9. Sationary business

10.Vegetables business11. Tailorin Business12. Cultivation of Betle Lealf13. Woek of baboo and cane14. Cultivation of pinaapple15. Cultivation of lemon16. Processing of Crockeries17. Purchaseing of Rickshaw 18. Small business i.e Paddy,Rice19. Medicine shop and shoe stores20. Library business

Alternative delivery channel - ATM - POS - Internet Banking - Phone Banking - Mobile Banking - SMS Banking - Islamic Banking Window - Customize consumer lending -Student service - Merchant banking service for investor

Corporate Social Responsibilities Al-Arafah Islami Bank Foundation :The Bank has a Foundation launching philanthropic activities. Al-Arafah English Medium Madrasah and Al-Arafah Islami Bank Library are major two wings for launching philanthropic activities.

Al-Arafah English Medium Madrasah :Al-Arafah English Medium Madrasah has been established by the Al-Arafah Bank Foundation with a view to building next generation according to the ideals of peace and equality of Islam and to establishing banking and other aspects of life in the way of Islam. The prime aim of this madrasah is to contribute towards building human resource and in the broader sense to ensure human welfare. With the view Al-Arafah Islami Bank Foundation has established an English medium madrasah at Dhanmondi in 1999. Such institution upto O level of its kind is for the first time in Bangladesh.

Al-Arafah Islami Bank Library :Library is the carrier & reservoir of knowledge. Al-Arafah Islami Bank has shown that other than generating profit, it can also contribute significantly in the field of providing good source of knowledge by establishing a public library at 32, Topkhana Road, Chittagong Bhaban (1st floor), Dhaka, thus strengthening social development. It is situated in a sound, healthy surroundings. It harbors 23,000 books of reference for the researchers, students, professionals, bankers, physicians, engineers, politicians, writers or journalists, even for the kids.

It is open to all from the year 2000 and well located & accessible to everybody. It procured some exceptional collection of books on religion, economics, banking, computer science, business administration, sociology, English & Arabic language and juvenile literature in Bangla, English, Urdu & Arabic, which are very rare. 

Trends of Performance ParametersThe main function of AIBL are to collect deposits, mobilization funds, select projects for funding, provide investment (loan & advances) and recover the same for reinvestment. In order to asses the overall performance of AIBl, there are some indicators are measured.

 General BusinessIn assessing the performance dynamics in respect of general business, as many such as total business, total deposits, total investment (loan & advances) and foreign exchange performance have been used. They are analyzed below.

Total BusinessAIBL is one of the new entrants of the 3rd generation banks having only 50 branches currently. With in short time period, AIBL has been to create an image as a progressive and dynamic financial institution for itself and has earned significant reputation in the country’s banking sector. Despite of stiff competition in banking sector, AIBL witness a considerable improvement in its overall business performance during 31 December, which contributed to consolidate the position of the bank.

At the end of last year, the number of depositors stood at 253273 and the amount deposit has accumulated to Tk. 29690.12 million. The total numbers investors are 14213 and total investment extended to them was a sum of taka 29723.79 million.

The bank has earned Tk. 4387.26 million and incurred an expense of Tk 2859.16 million in the last year. At the end of the year the profit before tax has stood Tk. 1528.09 million, which is 88.97% more than Tk. 590.66 million pre-tax income of the last year.

Major Findings of AIBL

AB has taken the following measure to create, sustain deliver value which are as follows:

Maintaining Adequate CapitalCapital Adequacy Ratio (CAR) determines the capacity of the bank in terms of meeting the time liabilities and other risks such as credit risks, market risks etc. At the end of 2010, bank’s total capital reached at taka 1,079.02 crore as against taka 743.98 crore on 31 December 2009.

Risk ManagementAB Bank risk management system has been designed and implemented to ensure quality and value of assets and smooth banking operations and services in a sustainable way to protect interest of shareholders, depositors and all the stakeholders.

Sustainable Dividend Policy AB bank paid 15% stock dividend and 15% cash dividend in 2009 while for 2010 the proposition is stock dividend 25% and cash dividend 20% respectively.

Maintenance of liquidityBanks maintains liquid assets to carry out the day to day operations and fulfill the statutory requirements in relation to business. Assets & liabilities committee (ALCO) of the Bank monitors the evolving business situation and provides direction to maintain an optimum trade-off between liquidity and profitability.Utilization of resourcesBank follows the overall limit of credit-Deposit ratio to ensure resource utilization. This has contributed towards improvement of assets quality in the overall.Contribution to the National ExchequerAB Bank contributed tk.220 crore into the national exchequer in the form of VAT, Income Tax and Excise duty.

There are many internal strengths and weaknesses of ABBL. These causes are:

- Innovator of different new products and services like they are the innovator of ATM booth system. ABBL employees are one of the major assets of the company. - They demand a standard interest rate on the loan and advances. High geographic coverage. Availability of online Banking facility.Strong and attractive promotional activities. - The employees of ABBL have a strong sense of commitment towards organization and also feel proud and a sense of deluging towards ABBL.

- Reputation of being a provider of superior quality financial services among its customers, particularly the RM and CAM department has obtained most of the clients’ reliability in providing different loans and advances.

- Various complex requirements demanded by the Bank to give the loan. This bank mainly provides services to their big corporate clients. - Variability of credit card facility for all customer groups. It provides credit and facility only for the selected customer groups. They have only one branch for Islamic Banking.

Major Findings of AIBL

Understanding Customer and BankerThere is a gap between the customers and bankers. Customers are unwired about the moral of Islamic banking system. Sometimes they are not familiars with the rules of Islamic banking.

Management ProblemThe management of AIBL takes no risk when they give loans to their clients. They are very slow in decision making. They sometimes fail to take the current opportunities for this slow decision makings process.

CentralizationThe Al-Arafah Islami bank is too much centralized. For each and every work branch office has to get permission from the head office. The head office tightly controls each and every branch.

Advertising and PromotionAdvertising and promotion are the weak points of Al-Arafah Islami Bank Ltd. AIBL do not have any effective marketing activities. Others banks have betters marketing strategy. 

Employee’s Dissatisfaction Lack of Promotion longer probationary period is the main causes of dissatisfaction among the employees.Lengthy Investment processIn Islamic Banking System Lone is very lengthy process. But it is lengthier in AIBL, because branch managers do not have the power to give lone. For every lone manager have send proposal to head office. Management does not want to take risk.Lack of State-of-artTechnology that AIBL is using for their banking system is not updated. Now there is some international bank in Bangladesh, they are very fact and very up dated. AIBL is their clients because of technology

Causes of Poor Performance:There are many causes for Poor Performance of AIBL. These causes are:

- Head office of AIBL based operating decision is one of the major cause of poor operating performance. In the today’s competitive environment continuous monitoring and instant response to the market demand are the keys to success, As the management of the AIBL can not exercise any financial and decisional power without the prior approval of the head office, it sometimes lags behind the competitors in terms of instant market response.

- The bank is interested to invest in the trading and shop keeper based not to more willing to invest in the small and cottage industries and medium and big industries for risk. - Its advertisement is not target based and adequate. - Management information System (MIS) AIBL is not adequate; Management information system is also poor. Accounting and Information System is newly introducing in on line banking .All these are preventing the Management of the factory to take appropriate operating decision. - AIBL‘s products are not diversified such ATM card, Visa Card, Credit Card are not introduced.

- Investment Procedure comparatively difficult than other banks. - Each branch employees are less as there require. - Top level management’s decision making is very weak of Al- Arafah Islami Bank Ltd - AIBL has a lack of right experienced personnel in the right position. - Planning and controlling system not properly executed. - Lack of competitiveness.   

Recommendation of ABBL

  We would like to put the following recommendation:  - Maximizing diverse business platform reach. - Reap benefit with expansion of corporate business base through “nurturing” of existing clients while propagating the growth strategy. - Diversification of business into SME and retail while aligning with regulatory priorities. - Re-emphasizing on service delivery. - Enhance AB’s image as a corporate citizen through compliance and focus on value driven CSR. - Ensuring Shareholders value creation.   

Recommendation of AIBL

 Recommendation to Improve Performance of AIBL:  - Al- Arafah Islami Bank Limited should delegate authority and responsibility to the branch so that they can take some decision in some cases.

- The authorities must keep it mind that `No risk No gain’ is the main philosophy of a business. So they should investment in the small and cottage industries even in the medium and large scale business.

- Its advertisement must set up on the target based and adequate.

- As the management Information System is new, they should provide proper training the employees.

- Al- Arafah Islami Bank should introducing multidimensional service products to compete with other competitors.

- Skilled employees must be recruited to provide better services.

- Top level management should take proper decision.

- The authorities of AIBL should set up right personnel to the right place at the right time.