“WELFARE INVESTMENT SCHEMES OF ISLAMI BANK BANGLADESH LIMITED”

Department of Business AdministrationUniversity of Science and Technology Chittagong.

Prepared By:

Muhammed Akhter JamilRoll No. : 326

EMBA Program for EngineersSemester: 3rd Semester

Objectives of the Study

The main objective of education is to acquire knowledge.

The Secondary Objectives of the Reports are :

1.To find out the Investment Policy of IBBL as well as its pros and cons.

2.To evaluate the Investment Modes of IBBL and its effectiveness.

3.To evaluate Different investment Schemes of IBBL.

4.To find out problems and possible remedies of IBBL.

Methodology of The Study

The Primary Sources of Information :

Direct observationInvestment OutlookQuestioning the concerned persons

The Secondary Sources of Information :

Web Site of IBBLDifferent reference books and journal Annual report of IBBLOther manual informationDesk report of the related department

Back Ground of IBBL

Islami Bank Bangladesh Ltd. (IBBL) was incorporated on march 13, 1983 under the companies Act. 1983 as the first interest fee shari’ah based commercial bank in South-East Asia. IBBL started functioning on march 30, 1983 and formally inaugurated on August 12, 1983.

The bank was promoted by 23 local sponsors including the government of Bangladesh and 4 local institutions and 13 foreign sponsors including Islamic Development Bank and 10 other foreign institutions. The bank went for public offering in November, 1985.

They got enlistment with Dhaka Stock exchange limited in 1985 and with Chittagong Stock exchange limited in 1996. IBBL has been declared as one of the 20 blue chip companies by DSE and as one of the 30 best companies by CSE.

Modes of Investment“Bai” Mode (Trading):

Bai MurabahaBai MuazzalBai SalamBai Istishna’a “Ijarah” Mode (Leasing):

Hire purchase (Ijarah)Hire purchase under Shirkatul Melk Share Mode:

MudarabaMusharakah

Welfare Investment Schemes of Islami Bank Bangladesh Limited

Household Durable Scheme Investment Scheme for Doctors Small Business Investment Scheme Housing Investment Scheme Transport Investment Scheme Car Investment Scheme Rural Development Scheme (RDS) Agriculture Implement Investment Scheme Micro Industries Investment Scheme Mirpur Silk Weavers Investment Scheme Industry Investment Scheme Investment on Real Estate

Welfare Investment Schemes of Islami Bank Bangladesh Limited

Source: Annual Report of IBBL 2012

Source: Annual Report of IBBL 2012

Financial Overview of IBBLSegment Information:

Source: Annual Report of IBBL 2012

Financial Overview of IBBLSegment Information:

Financial Overview of IBBL

Source: Annual Report of IBBL 2012

Graphical Representation:

Source: Annual Report of IBBL 2012

Financial Overview of IBBLGraphical Representation:

Financial Overview of IBBL

Source: Annual Report of IBBL 2012

Horizontal & Vertical Analysis:

Financial Overview of IBBLProfitability, Dividend, Performance and Liquidity Ratios :

Source: Annual Report of IBBL 2012

Financial Overview of IBBL

Distribution of Value Addition:

Source: Annual Report of IBBL 2012

Findings of the Study Islamic Banking is a new phenomenon in our country during last two

decades. So majority of our people have no proper knowledge about the activities of Islamic Banking as well as its investment mechanism hamper large scope of investment of IBBL.

Most of the people in our country have a bad impression of IBBL, operations regarding indirect generation of interest which meaning no difference between investment of IBBL loan / Credit / advance of conventional banks for this reason, they are not too much interested to make investment with IBBL.

IBBL, which is committed to avoid interest, can’t invest the permissible part of its statutory liquidity Reserve and short Term liquidity surplus in those securities.

This Bank can't invest in all economic sectors, which are prohibited by the law of Islam.

Findings of the Study This Bank revalues its investment operations within limited number of

investment modes and does not initiate investment modes according to changing diverse needs.

Sometimes investment operations of IBBL are hampered due to increase, dishonest, indiscreet, hypocritical nature of people.

IBBL has no strong promotional activities to increase motivate its present and potential investment client.

Policy Suggestions of the Study

IBBL can diffuse its scope of investment through focusing shariah concept regarding investment among the Bank officers; employer and the Clients by strong training, workshops and Clients get - together.

IBBL will have to take effective steps to remove the Misconceptions of

Mass Peoples that they hold about Islamic Banking System.

IBBL should initiates different investment modes according to changing /diverse needs of clients by conducting huge Research and study.

To fulfill the vision of "Mass banking" this Bank should grants investment portfolio to new entrepreneurs /new businessmen new companies etc.

To gain success in the programs like "Poverty Alleviation and "Self Reliant" especially in rural areas, this bank should provides investment facilities on the basis of individual.

We know the most important modes of investment are share mechanism but Islamic bank have no such strong application of that mode though theoretical use of share mechanism is so wide.

Investment against real estate of the Bank shall continue to be made within the ceiling prescribed in the plan.

The bank’s investment against agriculture, fishery, forestry and working capital investment are not significant compared to other private commercial banks. As such, the Bank shall make attempt for extension of investment in these sectors.

Policy Suggestions of the Study

Conclusion The prohibition of “Riba” (fixed interest) makes Islamic banking different

from Traditional banking. Of course, the investments of an Islamic bank must be channeled to the Islamic Shariah approved sectors. IBBL should more diversify its investment portfolio by size of investment, by sector of investment, viz. industrial, commercial, agricultural and by geographical area. This diversification will ensure mutual benefit both for the bank and the investment-client.

IBBL, since its inception, has been working for the upliftment and emancipation of the underprivileged, downtrodden and neglected sections of the populace and has taken up various schemes for their well-being.

Islami bank Bangladesh limited, being welfare oriented banking institution has by now designed and implemented thirteen investment schemes keeping in view the needs of different sectors and various sections of people for their socio-economic upliftment and to improve their quality of life.

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