Term Paper on Islami Bank Limited

1 January 2017

Background of the Study Islami Bank Bangladesh Limited (IBBL) is the first of its kind in the South East Asia which was established in 1983 with a view to provide banking services based on Islamic principles. The bank, which started its operation with only 3 branches in the first year of its inception, has now 207 branches in 26 years of operation. As a bank, Islami Bank Bangladesh Limited receives deposits from its customers from all over the country as well as from abroad on profit and loss sharing basis and deploys that fund to different investment clients to gain profit.

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The bank distributes an agreed portion of the profit earned to the customers and the shareholders. Islami Bank Bangladesh Limited also performs foreign exchange business. In this process, the bank endeavors to contribute to the betterment of the society. In the context of open market economy, the foreign exchange business is growing rapidly and playing a vital role in the economic growth of a country. About 40 % of total business of our country is rolling through foreign exchange transaction. Islami Bank Bangladesh Limited has significantly contributed in flow of international transactions.

Among the private commercial bank of our country IBBL is being kept the first position in export, import, remittance flow and as well as earnings the operating profit. Why I have chosen this topic, because to focus the foreign exchange banking performance of IBBL & its activities as based on Islamic Shariah. This study is done to evaluate the over all activities of IBBL. Findings of the study may benefit the organization itself to take strategic decision on its future plan to enhance the volume of foreign exchange transaction. It may also benefit the readers as well as researchers who have particular nterests in international trade finance. 1. 1 Scope of the Study The scope of this paper is to discussion of various aspects of Deposit Mobilization, Investment Mechanism & Foreign exchange operation of IBBL. This report aims to focus the actual practices “An Overview Of Foreign Exchange Operation” of Islami Bank Bangladesh Limited and its operations. 1. 2 Objectives of the Study The first objective of writing the report is fulfilling the partial requirements of the BBA program. The main purpose of this study is to have a better orientation on Foreign Exchange business performances of the bank.

In this report, I have attempted to give an overview of Foreign Exchange Operation of Islami Bank Bangladesh Limited . Following are the main objectives ? To familiar the history and operations of Islami Banking in Bangladesh. ? To show the investment mechanism and product offerings in different modes of IBBL. ? To show overall investment proposal, appraisal procedures, documentation system of IBBL and Conventional Banks. ? To show an overview of Foreign Exchange Operation of IBBL. ? To show the differences with conventional banking regarding investments aspects ? To identify strength and weakness of investments of IBBL. To identify the problems related to investments faced by IBBL. ? To recommend actions that may be necessary to redesign the investments of IBBL. 1. 3 Methodology The study is performed based on the information extracted from different sources collected by using a specific methodology. The methods of completing the report have included some steps which are followed by one by one. First of all I selected the topic of the report then I had to collect information relating to the topic by primary and secondary sources and through personal interview. As a Internee of IBBL it was easy for me to collect data.

After gathering the information I had to determine the procedure of research and sampling plans. After gathering all the information I required, I have come up with an expected result of the report. Population: All the Branches of IBBL located in everywhere in Bangladesh has been taken into consideration as population. Sample: Islami Bank Bangladesh Ltd, Head Office complex Branch. Data collection: Source of data of this report can be divided into two categories: 1. 4 Sources of Information ? Primary Sources: • Practical experience of banking. • Training, workshop & seminar. • Related files, books study provided by the officers concerned. Secondary Sources: • Research papers, training materials, magazines. • Annual Report ,Audit Reports of IBBL • Banking related text books, Relevant books, Research papers, Newspapers and Journals, Manuals. • Class notes of IBTRA, Website of IBBL. 1. 5 Limitations of the Study From the intention to make the report realistic and properly accepted this report has been conducted. However, many problems appeared in the way of conducting the study. During the study it was not possible to visit the whole area covered by the bank although the financial statements and other information regarding the study have been considered.

The study considers following limitations: ? The major limitation I faced in preparing this report was the sensitivity of the data. As it is a highly competitive market, if the margin information is released to other competitors, it may have a negative impact on their business. Resultantly, in some cases management were reluctant to give some specific data. ? Confidentiality of data was another important barrier that was confronted during the conduct of this study. Every organization has their own secrecy that is not revealed to others.

While collecting data on IBBL, personnel did not disclose enough information for the sake of confidentiality of the organization ? Rush hours and business was another reason that acts as an obstacle while gathering data ? Time limitation is also a big factor, which hinders the data collection process. Due to time limitation many aspect could not by discussed in the present study. What is Islamic Bank? An Islamic Bank is a financial institution that operates with the objectives of implementing and materializing the economic and financial principles of Islam in the banking arena.

The definition of Islamic Bank as approved the General Secretariat of the OIC is stated in the following manner. “An Islamic Bank is a financial institution whose status, rules and procedures expressly state its commitment to the principle of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operations. ” According to Islamic Banking Act 1983 of Malaysia, “Islamic Bank is a Company which carries on Islamic banking business. Islamic banking business means banking business whose aims and operations do not involve any element which is not approved by the religion of Islam. 2. 1 Why Islamic Bank? The objective of Islamic banking is not only to earn profit, but to do good and welfare to the people. Islam upholds the concept that money, income and property belong to Allah and this wealth is to be used for the good of the society in general and human being in particular. Islamic banks operate on Islamic principles including profit and loss sharing, strictly avoiding interest, which is the root of all exploitation and is responsible for large scale inflation and unemployment.

An Islamic bank is committed to try its best to do away with disparity and establish justice in the economy, trade, commerce and industry, build socio-economic infrastructure and employment opportunities. 2. 2. 1 Introduction Islami Bank Bangladesh is one of the pioneer private commercial bank of Bangladesh. It was incorporated on 13. 03. 1983 as a public company with limited liability under company act, 1913. The Bank started its business from 30. 03. 1983. IBBL is based on Islamic Sharia’h. It is the first Islamic Bank in Southeast Asia. Now, it is the leading private commercial Bank in Bangladesh.

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