Body of doc

EvaluationofInvestmentManagementof AIBL
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Chapter: One
Introduction

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1.01Introduction:
The majority of populations in Bangladesh are Muslims. Islam strictly forbids its fo1lowers to
deal with conventional Banks. The central issue concerns the payment of interest on loans and
savings. Islamic law forbids this practice while it is common practice in the conventional
banking industry. In this respect, Islam suggests a different banking system based on financial
products that emphasize the sharing of both the profits and losses between the borrower and
lender. In spite of; the Muslim majority; all Islamic banks have not been very successful in
Bangladesh. Islamic banking institutions have been in business in Bangladesh for a long time.
However, the market share is very small and they have failed to attract the interest of borrowers
or the savers.
Al-.Arafah Islami Bank Ltd. (AIBL) was established (registered) as a private limited company
18th June, 1995. The authorized capital of the Bank is Tk. 5,000.00 million and the paid up
capital is Tk. 4,677.28 million, Renowned Islamic Scholars and pious businesspersons of the
country are the sponsors of the AIBL Bank. Paid up capital is being owned 100 percentage
by indigenous shareholders.
The equity of the Bank stood at Tk. 9,647,45 million as on (31 December 2010), the
manpower was 1,711(app.) and the number of shareholders was 49,386. It has achieved a
continuous profit and declared a good dividend over the years. High quality customer
service through the integration of modern technology and new products is the tool of the
bank to achieve success. The bank has a diverse array of carefully tailored products and
services to satisfy customer needs.
The Bank is committed to contribute significantly to the national economy. It has made a
positive contribution towards the socio economic development of the country with 106
branches of which 21 is authorized dealer (AD) throughout the country.

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1.02 Backgroundof the Study:
Thesis program has been included to BBA Program for providing talent, up-to date and smart,
efficient executives. Report means gaining supervised experience. Thesis program offers an
opportunity to know the environment of any organization or on anything’s. By doing this
program, I have developed and refined my theoretical knowledge gained in the classroom. This
program provides exciting experience of planning, culture, behavior of employees and
management style of that organization, which helps me to fill the gap between theoretical and
very practical world.
Theoretical knowledge does not make a person perfect. To implement the academic knowledge,
practical knowledge related to it, is important. A perfect consideration between theory and practice is
important in the context of modern business world. In order to resolve the dichotomy between theory
and practice, our university arranges thesis program as a partial completion of BBA program. This
program is necessary for every student to complete his or her academic degree. Thesis program brings
students closer to the business theory and practical and thereby help them to substantiate their
knowledge sothattheycanprepare themselvestostarta successful career.
1.03 Objectives ofthe Study:
The main concern of this report is to identify Investment Management of Al-Arafah Islami Bank
Limited.
Main Objective:
• To identify, Investment Management of Al-Arafah Islami Bank Limited.

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Specific Objectives:
• To Explain the Investment approval and sanction procedure of Al-Arafah Islami Bank
Limited;
• To Explain the Investment assessment and risk grading system of Al-Arafah Islami Bank
Limited;
• To analyze the investment risk of Al-Arafah Islami Bank Limited.
• To identify the problems related to Investment Management of Al-Arafah Islami Bank
Limited of Gulshan Branch.
• To suggest the better ways of enhancing the performance of the Bank.
• To analyze the present investment situation of AL-Arafah Islami Bank Limited of
Gulshan Branch
Finally, to recommend actions that may be necessary to redesign the investment management
System for ensuring measurement of various performances and disclosure of significant
information.
1.04 Significance ofthe Study:
The study plays a significant role not only to the writer but also to those persons who conduct
further study on the related fields. The writer has gathered knowledge’s about A1BL’s
investment sector and he can use this knowledge in his forthcoming career. The Bank get the
report as summery, which can help other students as a guideline as well as for making right
policies in the similar cases. Likewise, Regulatory authority in banking sector get a summary of
Sariah based investment regulation, by which they easily realise whether their activities are
Sariah based or not. And how far their polices are abide by the respectives banks. In addition,
this report works as a secondary data for other researchers, which can make their work easier and
authentic. Furthermore, The Policy makers group easily realise the difference between
conventional banking and Sariah based banking system which can help them to modify new
policy and expanding their businesses. Finally, by the study, it is known that how AIBL is
managing their investment policies and working to reduce their investment Risks.

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1.05 Rationale ofthe Study:
With the rapid growing competition among nationalized, foreign and private commercial banks
as to how the banks operates its banking operation and how customer service
canbemademoreattractive, the expectation of the customer has immensely
increased.Reciprocating the sentiment, commercial/ private banks are trying to elevate their
traditionalbanking service to a better standard, to meet the challenging needs, demands.Side by
side these banks have now concentrated their attention towards diversification oftheir products
for better performances and existence. For the above circumstances, it hasbecome necessary for
Al-Arafah Islami Bank Limited, one of the leading commercial banks,to focus its attention
towards the improvement of the customer service. That’s why it is quitejustified to make an in
depth study about its operation and evaluate the service provided by this bank and scope for its
improvement.The study may help formulating policy regarding the idea relating to the feelings of
the customers and bankers. Future more, Al-Arafah Islami Bank Limited executives who are
actually executing policies undertaken by the top management will have a chance to
communicate their feeling and will have the feedback about their dealing from the customer.
1.06 Scope andLimitations of the Study:
Scope of the study:
The report concentrates only upon AIBL as a case study basis. Due to successful completion of
essential part of the report, it has the opportunity to discuss regarding following issues
• The present investment management system of Al- Arafah Islami Bank Ltd.
• To know about the investment management system at AIBL.
• The problems of investment management practice at AIBL etc.
• It does not discuss about the other functions of AIBL, like general banking, deposit
management, foreign exchange banking etc.

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Limitation of the study:
• Limitation of time: Major limitation of this report is time.
• Lack of Secondary data: The annual report and websites are the main secondary
information sources which are not enough to complete the report.
• Limitation of Scope: While collecting data, they usually don’t disclose more information
due to the confidentially of the organization.
• Due to lack of experience: There is a chance of having some mistake in the report
though best effort has been applied to avoid any kind of mistake.
• Lack of cooperation: Since the bank personals are very busy, they can’t provide me
enough time.
1.07 Methodology:
That study is based on investment management of Al-Arafah Islami Bank and it is a descriptive
research. To perform that study, data sources are identified and collected from various sources.
Then it would be classified, analyzed, interpreted and presented in a systematic manner and key
points are found. This overall process of methodology is given in the bellow.
ResearchType:
This is a Descriptive Research, which critically analyzes the investment activities of the Al-
Arafah Islami Bank Limited.
Sources of Data:
To prepare this report all the necessary information collected from primary and secondary
sources of data.

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Primary sources:
i) Discussion with the Employees
ii) Interviewing Employees and Manager
iii) Observation on Organizational procedures and structures
iv) Conversation with the customer.
Secondarysources:
• Internal: Annual Reports of Al-Arafah Islami Bank other published documents of the
bank, Al-Arafah Islami bank Website.
• External: Books, Articles, Journals, Newspaper, Web browsing
•
Descriptionof Data:
This report based on qualitative data which quantitative form. In order to make the report more
meaningful and presentable two source of data and information have been used widely.
Survey Period:
I have worked for this report through my internship program The survey period was two months
in which I have researched for this report.
Sample SelectionProcedure:
The Sample used for this survey named random sampling.

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Sample Size:
I did Survey on the three sector General banking, Investment, Foreign Exchange who use the
product of AIBL and related with AIBL activities.
Data Analysis and Report writing:
The quantitative analysis tools are used to analyze gathered data and different types of computer
software’s are used for reporting the gathered information from the analysis, such as- Microsoft
Word, Microsoft Excel.

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Chapter two:
Profile of the
Organization

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2.01 HistoricalBackgroundof Al-Arafah Islami Bank Limited (AIBL)
Islamic ideology encourages us to succeed in life here & hereafter. To achieve this success we
must follow the way dictated by the Holy Quran and the path shown by Rasul (SM). With this
goal in view Al-Arafah Islami Bank Ltd. was established (registered) as a public limited
company on 18 June, 1995. The inaugural ceremony took place on 27 September 1995.The
authorized capital of the bank is Tk.2500.00 million and the paid up capital Tk.1500 million.
Some very renowned Islamic personalities and pious businessmen of the country are the
sponsors of the bank. The total paid up capital was invested locality. The bank is committed to
contribute significantly in the national economy. It has made a positive contribution towards the
towards the socio economic development of the country by opening 94 branches on which 31
authorized dealer (AD) throughout the country .The equity of the bank stood at Tk.3415 million
as 31 December 2011, the manpower are 1805 and number of shareholders are12561.The bank
conducts its business on the principles of Mudaraba, Bai-muazzal, and hire purchase transactions
approved by Bangladesh Bank. Naturally, its modes and operations are substantially different
from those of other conventional commercial bank. There is a Shariah council in the banks who
maintains constant vigilance to ensure that the activities of the bank are being conducted on the
precepts of Islam. The Shariah council consists of prominent Ulema, reputed bankers, renowned
lawyers and eminent economist.
2.02 Vision of Al-Arafah Islami Bank Limited
To be a pioneer in Islami Banking in Bangladesh and contribute significantly to the
growth of the national economy

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2.03 Missionof Al-Arafah Islami Bank Limited
• v Achieving the satisfaction of Almighty Allah both here & hereafter.
• v Proliferationof Shariah based banking practices.
• v Quality financial services adopting the latest technology.
• v Fast and efficient customer service.
• v Balanced growth.
• v Steady & competitive return on shareholders’ equity.
• v Innovative banking at a competitive price.
• v Maintain high standard of business ethics.
• v Attract and retain quality human resources.
•
• v Extending competitive compensation packages to the employees.
•
• v Firm committed to the growth of national economy.
•
• v Involving more in Micro and SME financing.

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2.04 Principal Activities:
The principal activities of the bank is to provide all kinds of commercial banking products
and services to the customers including deposits taking, cash withdrawal, extending
investments to corporate organization, retail and small & medium enterprises, trade
financing, project finance, working capital finance, lease and hire purchase financing,
issuance of Debit card. Its vision is to be the best private commercial bank in Bangladesh in
terms of efficiency, capital adequacy, asset quality, sound management and profitability.
2.05 Objectives ofAl-Arafah Islami Bank Limited:
The objectives of Al-ArafahIslami Bank include-
 To conduct interest-free and welfare oriented banking business based on Islamic Shariah
 To implement and materialize the economic and financial principles of Islam in the
banking arena
 To contribute in sustainable economic growth
 To help in poverty alleviation and employment generations
 To remain one of the best banks in Bangladesh in terms of profitability and assets quality
 To earn and maintain a ‘Strong’ CAMEL Rating
 To introduce fully automated systems through integration of information technology
 To ensure an adequate rate of return on investment
 To maintain adequate liquidity to meet maturing obligations and commitments
 To play a vital role in human development and employment generation
 To develop and retain a quality work force through an effective Human Resources
Management System
 To ensure optimum utilization of all available resources
 To pursue an effective system of management by ensuring compliance to ethical norms,
transparency and accountability at all levels.
2.06 Goals ofAl-ArafahIslami Bank Limited:
Al-ArafahIslami Bank Ltd. will be the absolute market leader in the number of loans given to small and
medium sized enterprises throughout Bangladesh. It will be a world-class organization in terms of service
quality and establishing relationships that help its customers to develop and grow successfully. It will be
the Bank of choice both for its employees and its customers, the model bank in this part of the world.

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2.07 SWOT Analysis of AIBL:
SWOT analysis is a tool for screening an organization and its environment. It is the first stage of
planning and helps marketers to focus on key issues. It helps to detect the possible threats and
opportunities in the market and viability. It helps to recognize internal strength and overcome
weakness.
It is the scanning of the internal and external environment. So it is an important part of the
strategic planning process. Environmental factors internal to the firm usually can be classified as
strengths or weakness and those external to the firm can be classified as opportunities or threats.
Every organization is composed of some internal strengths and weakness and also has some
external opportunities and threats in its whole life cycle.
SWOT analysis means-
S=Strength
W=Weaknesses
O=Opportunities
T=Threats
STRENGTHS:
1. Investment department of AIBL is financially sound and its financial position is strong
competitive market.
2. Country wide investment control network of Runner Motors is their major operation.
3. It has a huge numbers of effective, efficient, Motivated and honest human resources.
4. Online banking through its smart database known as ABABIL.
5. AIBL utilizes state of the art technology to ensure consistent quality and operation.
6. Gulshan branch is more or less situated in a commercial area. So its investment
department has huge numbers of clients.

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WEAKNESS:
1. It has some little trained human resources in some places.
2. Gulshan branch of AIBL’s credit facility is not satisfactory for the customers.
3. Lacks of aggressive advertising and advertising is not sufficient to attract customers.
4. Number of attractive products is limited.
OPPORTUNITY:
1. Gulshan branch of AIBL can introduce more innovative and modern customer service.
2. This branch can introduce new product as its high demand.
3. As it has on-line banking service it is capable of serving quicker.
4. Focus more on corporate social responsibility to earn long term goodwill.
THREATS:
1. Increasing number of Islamic banks as well as conventional banks.
2. Liquidity crisis due to investment in stock market.
3. Deposit crisis in recent period.
4. Frequency taka devaluation and foreign exchange rate fluctuation is causing problem.
5. Local competitors can capture huge market share by offering similar products.
6. As its major investment in transport sector so political issues hamper it more.

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Chapter Three:
Analysis & Finding

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3.01 Investment:
Investment has different meanings in finance and economics. Finance investment is putting
money into something with the expectation of gain that upon thorough analysis has a high degree
of security for the principal amount, as well as security of return, within an expected period of
time. The making of loans and advances has always been prominent profitable function of the
Bank. The objective of the investment management is to maximize the performing asset and the
minimization of the non-performing asset as well as ensuring the optimal point of loans and
advances and their efficient management.
3.02 Factors Relatedwith Investment:
1. Risk
2. Time
3. Interest Rate
4. Security or Collateral
5. Operating Expense
6. Legal Considerations
7. Inflation
8. Finance Charge

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3.03 Importance of Investment:
1. Investment plays a vital role in national economy in the following ways-
2. It provides working capital for industrialization
3. It helps to create employment opportunities
4. Investment controls almost all kinds of production activities of the country
5. It brings social equity
6. Cash generation occurs for its successful performance
7. Business cycle can run well only by the help of lending system
8. Economic stabilization
9. Raise standard of living.
3.04 Investment Section:
Investment means the commitment of funds to one or more assets that will be held over some
future time period. 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.

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3.05 AIBL Investment Sectors:
1. Investment in Agricultural Sector
2. Investment in Industrial Sector
3. Investment in Business Sector
4. Investment in Foreign Trade
5. Investment in Construction and Housing
6. Investment in Transportation Sector
7. Hire Purchase Sirkatul Melk (HPSM)
8. Investment Schemes in Mosque and Madraba (MMIS)
9. Village and Small Investment Schemes (GSIS)
10. Small Enterprise Investment Schemes (SEIS)
11. Consumer Investment Schemes (CIS)
12. Rural or Agriculture Investment Sector

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3.06 Modes ofInvestment of AIBL (Figure- 5.1):
When money is deposited in the AIBL, the bank, in turn, makes investments in different forms
approved by the Islamic Shariah with the intention to earn a profit. Not only a bank, but also an
individual or organization can use Islamic modes of investment to earn profits for wealth
maximization. Some popular modes of investment of AIBL’s are discussed below.
Modesof Investment
Share Mechanism Bai- Mechanism Ijara Mechanism
Mudaraba Musharaka
H.P.S.M Ijara
Bai-Murabaha Bai- mujjal Bai-Istisna
Figure----5.1

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3.07 Investment Products in AIBL:
1. Bai-Mudaraba
2. Bai-Musharaka
3. Bai-Murabaha (C.C Pledge)
4. Bai-Muajjal (Commercial& Real State)
5. Bai-Salam
6. Bai-Istesna
7. Bai-Ijara Bill
8. Bai-Murabaha(Trust Receipt)
9. Hire Purchase Sirkatul Melk (Real State)
10. Hire Purchase Sirkatul Melk (HPSM)
11. Consumer Investment Scheme (CIS)
12. Small Enterprise Investment Scheme (SEIS)
13. Mosjid-Madrasha Investment Scheme (MIS)
14. Agriculture &Rural Small Investment Scheme etc.
Bai-Mudaraba;
It is a form of partnership in profit where one party provides the fund while the other provides
expertise and management. The first party is called the Sahib-al-Maal and the latter is referred to
as the Mudarib. Any profit accrued is shared between two parties on a pre-agreed ratio, while
Capital loss is exclusively borne by the supplier of the capital accept the loss it is due to the
breach of trust by the Mudarib.

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Table: Trend of Murabaha Import Bill (MIB):
Particulars
Year
2011 2012 2013
Amount of taka 529126994 73103174 000000
Growth (%) …… -86.18
Source: Yearly statement of AIBL, Gulshan Branch.
To describe the above table information and presented here with the following column chart:
Chart: : Murabaha Import Bill (MIB) investment scenario.
From the table and chart presented above, it can be said that, Gulshan Branch of AIBL, the Limit
of Murabaha Import Bill (MIB) was Tk. 529126994 in 2011.In 2012 it was decress by -86.18%
but in 2013 the investment is zero. So, the demand of Murabaha Import Bill (MIB) is not
constant. As it depends on client’s business purpose.
529126994
73103174
0
0
100000000
200000000
300000000
400000000
500000000
600000000
2011 2012 2013
Trendof Murabaha Import Bill(MIB)

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Bai-Musharaka:
Under this mode the Bank and clients jointly participate in a project, in a scheme or project.
Profit is shared between the Bank & the concerned client as per pre-agreed ratio. On the other
hand loss is shared according to capital ratio.
Bai-Muajjal(Sale on deferred payment basis):
Bai-Muajjal may be defined as 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
an agreed fixed price payable at a certain fixed future date in a lump-sum or within a fixed
period by fixed installments. The seller may also sell the goods purchased by him as per order
and specification of the buyer.
Table: Trend of Bai-Muajjal (general):
Particulars
Year
2011 2012 2013
Amount Tk. 1915012046.63 3006564211.73 3424871824.02
Growth (%) ............ 56.99 13.92

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Following column chart way help to describe the above presented information:
Chart: Bai-Muajjal (general) investment scenario.
of Bai-Muajjal (General) was Tk. 1915012046.63 in 2011.Although increased in 2012 by
56.99% %, but in 2013 it decreased by 13.92 % . So, the demand of Bai-Muajjal (General)
varies time to time.
Table: Trend of Bai-Muajjal (Real Easte):
Particulars
Year
2011 2012 2013
Amount 29169334.00 20467250.00 0000
Growth (%) ------ -29.84
1915012047
3006564212
3424871824
0
500000000
1E+09
1.5E+09
2E+09
2.5E+09
3E+09
3.5E+09
4E+09
2011 2012 2013
Trend of Bai- Muajjal(General)

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Chart: : Bai-Muajjal (Real Easte) investment scenario.
of Bai-Muajjal (Real Easte) was Tk. 29169334.00 since 2011.In 2012 is deccreased by -
29.84% but in 2013 the investment is zero .So, the demand of Bai-Muajjal (Real Easte)
decreased time to time.
Table: Trend of Bai-Muajjal (SEF):
Particulars
Year
2011 2012 2013
Amount 00000 00000 6622700.00
Growth (%)
To describe the above table information and presented here with the following column chart:
29169334
20467250
0
0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
2011 2012 2013
Trend of Bai-Muajjal(Real Easte)

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Chart: : Bai-Muajjal (SEF) investment scenario.
From the table and chart presented above, it can be said that, Gulshan Branch of AIBL, the
largest demand for Bai-Muajjal (SEF) is observed here, in the Year of 2013.Although it falls in
2012&2011.
Bai-Salam(advance sale):
Bai-Salam means buying of goods from producers or suppliers in advance payment after entering
into a firm contract and receipt of their delivery at a future specified date.
Bai-Ijara Bill (hire-purchase sirkatul melk):
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.
0 0
6622700
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
2011 2012 2013
Trend of Bai-Muajjal(SEF)

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Table:Trend of H.P.S.M. Transport:
Particulars
Year
2011 2012 2013
Amount(Tk. in Lac) 36357712.31 41263202.31 52034489.31
Growth (%) ………. 13.49 26.11
Chart: : H.P.S.M. Transport investment scenario.
of H.P.S.M. Transport was Tk. 36357712.31 in 2011.In 2012&2013 it was increased by 13.49
% and 26.11% so Transport Investment increased day by day.
36357712.31
41263202.31
52034489.31
0
10000000
20000000
30000000
40000000
50000000
60000000
2011 2012 2013
Trend of H.P.S.M Transport

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Table: Trend of H.P.S.M. (Real Easte):
Particulars
Year
2011 2012 2013
Amount 105123288.63
121431714.74
422798576.74
Growth (%) ………. 15.52 248.18
To describe the above table information, with the following column chart:
Chart: H.P.S.M. Real Easte investment scenario.
of H.P.S.M. Real Easte was Tk. 105123288.63 in 2011 but in 2012 it was increased by 15.52%
but again in 2013 it increased by 248.18%. Here, this is a good sign. The largest demand for
H.P.S.M. Real Easte was observed in 2011.
105123288.6 121431714.7
422798576.7
0
50000000
100000000
150000000
200000000
250000000
300000000
350000000
400000000
450000000
2011 2012 2013
Trend of H.P.S.M Real Easte

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Table: Trend of H.P.S.M. General (Short Term):
Particulars
Year
2011 2012 2013
Amount 232436571.00 507302004.80 397585360.30
Growth (%) --- 118.25 -21.63
Chart: :H.P.S.M. General (Short Term) investment scenario.
of H.P.S.M. Industrial (Short Term) was Tk. 232436571.00 in 2011 and 2012 it was
increased by 118.25% but in 2013 it radically decreased by -21.63% .So it becomes less
attractive.
232436571
507302004.8
397585360.3
0
100000000
200000000
300000000
400000000
500000000
600000000
2011 2012 2013
Trend of H.P.S.M General(Short Term)

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Table: Trend of Quard against Car:
Particulars
Year
2011 2012 2013
Amount tk 1882804.00 1467502.00 00000
Growth (%) --- -22.05 0000
Chart: Quard Against Car investment scenario.
of Quard Against Car was Tk. 1882804.00 in 2011.it is decreased gradually in 2012 and
2011.So, it is seemed that the demand of Quard Against Car decreased day by day.
1882804
1467502
0
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
2000000
2011 2012 2013
Trend of Quard Against Car

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Table: Trend of Quard Against MTDR
Particulars
Year
2011 2012 2013
Amount 50241350.00 1008664050.00 10938032.00
Growth (%) ……… 1907.64 -98.92
Chart: : Quard Against MTDR investment scenario.
of Quard against MTDR was Tk. 50241350.00 in 2011 and in 2013; it was increased highly by
1907.64% but in 2013 it falls by -98.92%. So, the demand of Quard against MTDR decreased.
As the bank did not get any new client to investment in this sector.
50241350
1008664050
10938032
0
200000000
400000000
600000000
800000000
1E+09
1.2E+09
2011 2012 2013
Trend of Quard Against MTDR

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Table: Total Investments for Last 3 Years
Particulars
Year
2011 2012 2013
Amount(Tk. in Lac) 3750994672.66 6838303565.94 6960311255.22
Growth (%) ……… 82.31 1.78
Chart: Total Investment For Last 3 Years investment scenario.
of Investment was Tk. 3750994672.66 . in 2011 and in 2012,and2013 it was increased gradually
by 82.31%.and1.79%. This investment trend indicates the positive sign for the branch.
3750994673
6838303566 6960311255
0
1E+09
2E+09
3E+09
4E+09
5E+09
6E+09
7E+09
8E+09
2011 2012 2013
Total Investment for Last 3 Year

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Table: Individual Investment percentages (%) in year 2013
Product Name
Amount
ofTaka
% of total
investment
Bai-Muajjal 3705660336.02 53%
H.P.S.M. Transport 52034489.31 1%
H.P.S.M. Real Easte 422798576.74 6%
H.P.S.M. Industrial (Short Term) 397585360.30 6%
H.P.S.M. Machinery 811607814.85 12%
Quard Against MTDR 10938032 0%
Quard Against Inland Bill (QIB) 404918850 6%
Bai-Istisna 101743904 1%
Trust Receipt 1040280628 15%
Forign Bills Purchased 8963000 0%
Hire -Purchase 3780264 0%
Total= 36186.39 100.00%
Source: Yearly statement of AIBL, Gulshan Branch (2013).

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To describe the above table information, with the following pie chart:
Chart: 2.13: Percentage of each Product among total investment scenario.
From the table and pie chart presented above, it can be said that, among the total investment of
different sectors, Bai-Muajjal is( 53%) which is the maximum portion of investment, then the
next position is trust Receipt (15%) . According to the clients are more satisfied to take these two
types of investment than others based on terms and conditions.
Bai-Muajjal
53%
H.P.S.M. Transport
1%
H.P.S.M
. Real
Easte
6%
H.P.S.M. Industrial
(Short Term)
6%
H.P.S.M.
Machinery
12%
Quard
Against
MTDR
0%
Quard Against
Inland Bill (QIB)
6%
Bai-Istisna
1%
Trust Receipt
15%
Forign Bills
Purchased
0%
Hire -Purchase
0%
Individual Investment percentage2013

Page | 38
3.08 Investment Management:
Investment management is a dynamic field where a certain standard of long-range planning is
needed to allocate the fund in diverse field and to minimize the risk and maximizing the return
on the invested fund. Continuous supervision, monitoring and follow-up are highly required for
ensuring the timely repayment and minimizing the default. Actually the Investment portfolio is
not only constituted the bank’s asset structure but also a vital factor of the bank’s success. The
overall success in Investment management depends on the banks investment policy, portfolio of
investment, monitoring, supervision and follow-up of the loan and advance. Therefore, while
analyzing the Investment Management of AIBL, it is required to analyze its investment policy,
Investment procedure and quality of Investment portfolio.
3.09 Investment Decision:
The principal function of a bank is to lend or invest. Lending is a dynamic activity. It helps to
create entrepreneur. So the country becomes industrialized. When a country becomes
industrialized, it reduces poverty from the society and from the country. Bank collects deposits
from common people and invests that money to the people those who are willing to run business
or to set up an industry. In this respect the bank takes collateral security to secure the invested
amount. Although all lending involves some degree of risk, it is necessary for any bank to
develop sound and safe lending policies and new lending techniques in order to keep the risk to a
minimum. The principle of sound lending is called credit evaluation principles may therefore, be
summarized below.
3.10 Credit Evaluation Principles:
• Safety:
Safety is the first guiding principle of a prudent banker. A bank is in business to make money. It
mainly uses depositor’s fund as a means of its earnings. The money of the depositor’s being
repayable on demand or after a short notice, determines the capacity of a bank as to the period
for which he can safety lend it out without an uncalculated risk. Safety should never be sacrificed
for profitability. Once the confidence of the depositor’s is shaken, the banker cannot carry on the

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banking business. Investment or advance should be expected to come back timely otherwise the
securities would be sold to liquidate the investment. The repayment of the investment depends
upon the borrower’s (a) capacity to pay and (b) willingness to pay.
• Liquidity:
Liquidity is the ease by which an asset can be exchanged for another with little or no loss of
value; usually cash .Liquid assets are those held in cash or are invested in instruments which can
be converted rapidly into cash like deposits in cash with a bank as a current demand deposit,
deposits in other banks and investments in short term liquid government securities. The bank
manager tries to maximize his/her bank's return on total assets by investing as much of the cash
available. However, the management is also challenged by the need to have enough liquidity to
meet any mismatch of the term structure (maturity dates) of assets and liabilities. That’s why for
getting high liquidity banks are try to give short term maturity loan and meet the depositor’s
demand.
• Profitability:
Commercial bank has to distribute its resources in a manner that they meet the twin requirements
of liquidity and profitability. A bank has therefore, to see that major portion of asset owned by it
are not only liquid but also aim at earning good profit. The working funds of a bank are collected
mainly by the means of deposit from the public and the interest (in term of Islamic bank it is
designated as profit) has to be paid on those deposits. They have also to meet their establishment
charge and other expenses. They have to make provision for depreciation of their fixed assets
also for any possible bad or doubtful debts. The different between the profit received on
investment and the profit paid on deposits constitutes a major portion of banker’ income. The
bank will not however, enter into a transaction unless a fair return assured.
• Purpose:
A banker would not through away money any purpose for which the borrower want. The purpose
should be productive so that the money not only remains safe but also provide a definite source
of repayment. The banker should study the purpose for which loan is required and the resources
from which the borrower is expected to repay. If the funds borrowed are employed for

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unproductive purpose like: marriage ceremony, pleasure trip, repayment of old debts or
speculative activities etc.
• Should avoid adverse selection:
Adverse selection is the problem created by asymmetric information before the transaction
occurs. Adverse selection in bank occurs when the potential borrowers who are the most likely to
produce an undesirable (adverse) outcome-the bad credit risk- are the one who most actively
seek out a loan and are thus most likely to be selected. Because adverse selection makes it more
likely that loans might be made to bad credit risk, lender may decide not to make any loans even
though there are good credit risks in the marketplace and In economics and contract theory,
information asymmetry deals with the study of decisions in transactions where one party has
more or better information than the other. This creates an imbalance of power in transactions
which can sometimes cause the transactions to go awry. Examples of this problem are adverse
selection and moral hazard. So that, Moral hazard is the problem created by asymmetric
information after the transaction occurs. Moral hazard in bank is the risk that the borrower might
engage in activities that are undesirable from the lender’s point of view because they make it loss
likely that the loan will be paid back. Because moral hazard lowers the probability that the loan
will repaid, so lender as well as bank manager may decide that they would rather not make a
loan.
3.11 Security:
It is the practice of bank not to invest money without any security. A banker would like to
recover the investment from the sell of the security. They would prefer an investment to come
back from the normal source. The importance of an adequate and acceptable security can hardly
be over emphasized. Security serves as a safety value for an unexpected emergency. Security
agreement for collateral - loan and security agreement, for use with any type of collateral, is used
to establish and secure lender's interest until fulfillment of loan obligations. A Security
Agreement is supplemental to the actual evidenced loan or "Promissory Note" and is necessary
in the event of default since it is the legal document which the lender will need to assemble,

Page | 41
repossess, foreclose on, appoint a receiver for or collect revenues from the collateral. This
agreement is used by banks to secure loans.
3.12 Limit of Investment:
Investment is offered to the extent of single borrower exposure limit as fixed by the Bangladesh
Bank from time to time.
3.13 Procedure ofInvestment:
Potentials clients may be advised to open Al-Wadeah Current Account, if there is no such
account. The client should maintain the current account, satisfactorily for a reasonable period.
Different investment disburses procedure are different from each other.

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Here some common procedure are describing below by graphically and step
by step: Figure
Submission of Required Proposal
Analysis of the Proposal
Track Client’s previous record
Field Visit
Signing a Promise to Purchase
The First Sale Contract
Signing Contract
Delivery& Receipt of Commodity
Figure 4.10.1

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Procedure of Investment (Step by Step):
Step 1: The client’s sends a proposal with the specifications of the commodity for purchasing
Step 2: Branch analyze the project described in proposal. Through the Branch and requests to
make him known the date and method of payment of price, etc.
(II) The Branch sends a quotation valid for certain a period mentioning the cost of the
goods plus profit of the Bank.
Step 3: The past performance of the client to be studied and Branch’s track record of proposed
investment.
Step 4: If necessary Branch visits the proposed project.
Step 5: (I) The client promises to buy the commodity from the Bank.
(II) The Bank studies the request and determines the securities with terms and conditions
for approval.
Step 6: (I) The Bank informs the client of its approval of purchasing the commodity.
(II) The Bank may offer the price immediately as per the agreement.
(III) The seller expresses its approval to the sale and sends the invoice.
Step 7: The parties (Bank and Clients) sign the contract according to the agreement of the
promise to purchase.
Step 8: (I) The Bank authorizes the client his nominee to receive the commodity.
(II) The seller sends the commodity to the place of delivery agreed upon.
(III) The client undertakes the receipt of the commodity in its capacity as legal
representative and notifies the Bank of the execution of the proxy.

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3.14 Criteria for Selection:
Clients of the bank for following Investment are to be selected with prudence and good
judgment. It should be kept in mind that the person are important than their properties. They
must have good character, commitment, capability, integrity and means. Their past performance
must be verified first. None should be entertained without verification of his background,
experience in the line of business, credit worthiness, financial needs; capacity to handle the
finance applied for Favoritism, personal relationship with a client must not get any consideration
for providing Bank’s investment. A detailed credit report of the client must be prepared and all
necessary information’s should be collected and verified at the time of selection of the client.
Clients of distant areal/ beyond control should not be entertained.
What Makes a Good Investment?
The credit department is responsible for analyzing and making recommendation on the fate of
most loan applications. This department must ask and get satisfactory answer of three major
questions regarding each loan application.
Questions are
• Is the borrower credit worthy?
• Can the loan agreement be properly structured and documented so that the bank and the
client has bank probability of being able to service the loan without excessive strain?
• Can the bank perfect its claim against the assets or earnings of the customer such that in
the event of default recovery with low cost and low risk?

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3.15 Documents neededfor preparing investment proposal:
• Application for investment facility (Organization pad)
• Trade License
• IRC for importer
• ERC for Exporter
• Membership Certificate of Chamber of Commerce
• TIN (Tax Identification Number) Certificate
• VAT registration certificate
• Bank Account Statement
• Account Statement from others Bank
• Stock Valuation Report
• Account receivables
• Account payables
• Particulars of the Properties
• Others Assets Statement
• CIB (Credit Information Bureau) Report
Proposal Analysis:
The project proposal; is analyzed and decision about the project should be taken. The investment
department is responsible for the analysis, after preliminary appraisal of the investment project the final
approval is obtained from the manager. If the proposal is beyond the capacity of the manager then it is
sent to head office, then head office makes memo for the placement to managing board of directors as per
delegation of business power. The delegation of business power is also assigned to employees as per their
designation. And finally the head office decision is sent to branch authority as sanction advice or regret
letter.

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Terms and Conditions Applied:
• The disbursement will be made after Completion of all documentation and other
formalities after full satisfaction of the branch.
• Any drawing beyond the sanction limit will not be allowed under any circumstances.
• The disbursement will be allowed under the principle of Shariah.
• The client will have provide an undertaking to the effect that the client does not have any
overdue/non performing liability with any other Bank(s)/Financial Institution(s) in the
name of client’s company or in the name of client’s sister/allied concern(s).
• The client will have to route all of his/her business through the Bank gradually.
• All legal fees, Insurance Premium and other relate cost(s) must be carried by the client.
• Balance Confirmation Certificate must be submitted to the Bank regularly as 30thJuneand
31thDecember of each calendar year.
• The Stock Valuation Report/Statement to be submitted to the Bank on Yearly basis.
• The client shall have to deposit the proceeds of the of the goods towards adjustment of
the related investment account(s) with the branch immediately after sale irrespective of
the due date of payment of the investment.
• The client will not avail any sort(s) of investment facility from any other branch of this
Bank without prior written permission from the Bank.
• A signboard with the inscription that “The property is mortgaged with Al-Arafah
Islami Bank Limited, Gulshan Branch, Dhaka”, should be displayed at a conspicuous
place in a prominent manner on the mortgaged property.
• In the event of client failure to make full payment of sale on the due date, compensation
shall be recovered from client as per Bank’s rule as mentioned earlier.
• Any change of address of the client must be notified to the branch immediately after
change of the same.
• Daily sale proceeds/income of the project shall have to be deposited in client’s current
account with the branch.

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3.16 Cause ofover dues:
Irregular/over-due investment in a bank increases at a faster rate and the same ultimately
jeopardize the interest of the bank. In this connection we append below the causes of irregular
and over-due investment for immediate attention of the concerned officials so that the trend in
this regard can be arrested.
General Causes of Over dues:
(1) Selection of the client:
While selecting investment clients Branches do not give due weighted average in this regard. As
such clients having bad track record are also inducted for allowing investment. Selecting of
client should always be made strictly on the basis of criteria given in short as under:
• The client should be an honest man of active habit with firm commitment. His
honesty and integrity must be undisputed.
• He must be a good businessman having sufficient experience in the related line
of trade. He should also have good track record of repaying bank investment.
• He must organize his own capital in the business and capacity to bear the loss as
well as to run the business. He must have foresight for producing future market
conditions.
• He should deal in such commodities which have social utilities and Sharia
permissibility.
(2) Violation of Discretionary Power:
Investments are often allowed violating Discretionary Power of the Branch Manager which
ultimately results in irregularities. Under no circumstances Discretionary Power should be
exceeded. In case any investment is allowed due to exigencies of circumstances beyond
Discretionary Power with prior permission of Head Office over telephone that should be got
confirmed in witting and formal approval be obtained without delay.

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(3) Command Area:
The client must have business establishment within bank’s command area. Some times branches
make investment in remote place beyond the command area of the branch. As result branch can
not ensure effective supervision and control over the investment. Therefore, while making
investment branches should ascertain that the business establishment of the investment client is
within the command area or within reasonable distance for ensuring easy and effective
supervision and control as well as constant follow- up for timely recover of investment.
(4) Net Worth of the Party:
The net worth of the party must be ascertained properly. Nevertheless, the investment is in
business, cash flow and liquidity position are also to be ascertained. In fact bank takes decision
for making investment among others on the net-worth of the party. If the net-worth is not
ascertained properly bank interest may be jeopardized subsequently.
(5) Market Report and Confidential Report:
Market report and bank’s confidential report are not obtained. The means and standing of the
party as well as performance with the previous/present banker is to be obtained checked and
verified.
(6) Cash Flow:
Party’s own investment in business both in cash should be properly ascertained. In addition cash
flow and outflow in business should also be examined by referring to statement of account.

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(7) Proper Purchase and Sale:
Proper purchase and sale of goods must be done correctly and possession of commodity shall be
obtained. In this connection price, quantity and quality must be properly ascertained. Purchase
memo/cash memo, shall be obtained in the name of bank.
(8) Proper Documentation:
Disbursements of investments are made before completing documentation formalities obtaining
proper securities. Proper charge documents in the respect of collateral securities relating to
property offered as collateral must be obtained. Original title deeds of mortgaged property, via
deeds, C.S., S.A., R.S./B.S. and mutation parch up-to-date rent receipt, non encumbrances
certificate with charge fee receipt, Memorandum of deposit of title deeds, affidavit must be
obtained.
Legal opinion on the title deed shall also be obtained. Registered mortgage of property shall be
obtained on execution of deeds drafted by legal advisor.
Causes of Overdues of Murabaha Investment:
• Quality and Quantity: The quality and quality of Murabaha goods are to be properly
verified and checked at the time of purchase and storing. The Murabaha goods should
also be verified at regular interval to ensure that the quality is not deteriorating. While
receiving the goods in the godown, the officers concerned should verify the quality and
quality and ensure receipt of the goods in good condition.
• Over Pricing: Goods should be purchased at the whole sale market price. Overpricing
should always be avoided avert possible shortfall. The price trend of the commodities for

Page | 50
the last one year should be kept in view and accordingly percentage of cash security
should be fixed-up so that bank’s interest is not jeopardized due to fluctuation.
• Slow Moving Items: Murabaha investment against slow moving or obsolete or
hazardous or less demandable items should always be avoided.
• Control and Supervision of Godown: Overnight watch and ward arrangement of
godown are to be made. Some times Godown staffs are utilized for office works of the
branch which should be avoided Godown staff must be deployed in Godown for proper
control and supervision of Murabaha stock.
• Inspection: Authorized officials must inspect the Godown at lest once in a month and
certificate in this regard must be kept in branch record. The duties and responsibilities of
Godown staffs must be spelt out in clear terms. Branch must also ensure that the Godown
staff are discharging their duties properly.
• Excess Delivery: Excess delivery and delivery without receiving payment result in
unadjusted shortfall which is a gross irregularity and tantamount to defalcation.
Therefore, it must be ensured that excess delivery without receiving payment does not
occur.
• Handling of the Keys of Storehouse: Some times keys of the storehouse are not
properly handled and the same is delivered to the party. This is not only a great lapse but
also fraught with great risk. Under no circumstances storehouse keys should be handed
over to the party or any unauthorized person other than the bank’s officials.

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• Storing of Goods: Very often Murabaha goods are stored haphazardly and piled-up
position. As a result the actual position of goods can not be ascertained. Goods must be
stored in countable manner with due care so that the quality and quantity can be
determined at any time.
• Bank Signboard: Bank signboard is not displayed in and outside the Murabaha
storehouse which must be invariably displayed.
• Stack Card: Stack card should be displayed with up to-date information on each
consignment for easy counting and identification.
• Delivery Order: Delivery order should be issued properly field in with necessary posting
in stock and delivery register.
• Insurance: Comprehensive insurance covering value of entire stock + 10% above the
cost should be obtained from enlisted insurance company.
Causes of Over dues of Bai-Muazzal Investment:
• Party Must Have Shop: Bai-muazzal investment should not be allowed to any one who
does not have own shop. The shop must be visited by the responsible official to ascertain
his overall business position.
• Assessment of Investment Need: Since Bai-muazzal investment amount to cash loan
therefore, the need of Bai-muazzal investment shall be carefully determined. Investment
should not be more than 30% of own investment of the client.

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• Supervision: Bank’s officials must pay regular visit to the shop of the investment clients
so that, the investment client feel oblige to make regular transaction in current account as
well as repay investment in time.
• Stock in Business: Stocks in business are not verified by obtaining stock report at regular
intervals. Monthly stock-report should invariably to obtain from the clients.
• Insurance: Insurance shall have to be obtained covering risk of fire and other accident as
well, on hypothecated stock which many branches don’t obtain.
• Follow-up: Follow-up and frequent contact before due date and constant persuasion on
or before due date are to be made by the branches for timely adjustment and to over dues.
Causes of Over dues of Hirepurchase under Shirkatul Melk Investment:
• Obtain of Equity: Equity as per norms and practice is not being recovered before
disbursement of Hire purchase investment. Proper and adequate equity should invariably
be obtained by collateral security for the rest amount.
• Model and Make: Machinery and vehicle of recent model and make shall have to be
procured. Before procuring machinery and vehicle, its technical feasibility must have to
be ascertained. From the experience it is observed that unless machinery and vehicle, is
found technically viable the investment client can not repay the loan as per schedule. In
case of vehicle it must be get registered in bank’s name only and insurance cover note,
road permit, tax token must be obtained in bank’s name.
• Supervision: The vehicle/machinery must be inspected at least once in a month so that,
the same cannot be shifted elsewhere/another route/place without bank’s knowledge.

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3.17 Monitoring and Recoverystage:
At this final stage of investment processing of the Al-Arafah Islami Bank Limited (AIBL), Bank
will contact with the client repeatedly, for example- Bank can obtain Yearly stock report from
the client in case of micro investment. Here the Bank will keep his eye on over the investment
taker. If needed Bank will physically verify the client’s operation, also if Bank feels that
anything is going wrong then it tries to recover its investment fund from the client.
Procedure to be Followed for Recovery of Irregular/Overdue Investment and Time Barred
Investment
To regularize/recover irregular and over dues investment in order to overcome the situation all
concerned should take to the following procedures for recovery of aforesaid investments. In this
regard a brief definition of irregular/stuck-up/overdue investment is also given.
a) Irregular Investment:
An investment is said to be irregular when regular repayment is not made as per schedule of
repayment, improper documentation leads to non-repayment and value of security falls
down/security becomes obsolete or security available does not patch the investment outstanding.
b) Stuck-up investment:
An investment is said to be stuck-up when repayment is stopped as a result of closing of
bossiness, death of investment client and for any other unforeseen circumstances regarding the
investment client unable to pay.
c) Over due investment:
An investment is said to be over due when repayment does not come within the period of
investment or expiry of the limit and in case of bills repayment is not received on due date and
procedure to be followed for recovery above investments is given bellow:
• Connecting with the client in writing and meeting personally:

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In order to timely recovery of investment, supervision at all stage shall be ensured. This will
include supervision from the date of disbursement to total repayment. In case repayment as per
schedule, the manager should personally enquire about the causes of non repayment. If he or she
convinced that the difficulty is temporary in nature and is likely to overcome shortly he should
discuss the situation with the investment clients and obtain reasonable definite repayment
schedule under intimation to head office.
Apart from the above as and when any investment becomes irregular or stuck-up or likely to be
over dues, the branch manager apart from contacting the borrower in writing should also consult
discuss with the investment client about his or her difficulties in regular repayment. If necessary
the manager will give suggestion in consultation with head office for overcoming the difficult
situation. He will personally pursue in such a manner with the investment client so that
investment can be realized without hindering good relationship with the investment clients.
• Sending Resume of Investment to Head Office:
Branch manager will send the resume of investment with mentioning therein the latest position
of investment, security, and irregularities occurred (if any) and the efforts made in the meantime
for regularization of the investment as well as suggesting future action.
• Issuance of Registered Notice: If persuasion does not bring any fruitful result manager
will issue a final registered demand notice impressing upon the client concerned to repay
within 15 days time from the date of receipt of the letter with acknowledgement due.
• Legal Notice to be issued: If the client does not come forward to repay within a
reasonable period, legal notice is to be served through panel lawyer of the bank with copy
endorsed to head office. The reaction of legal notice is also to be brought to the
knowledge of head office with comments of the branch manager for further instructions.
• Suit to be filed: If filing of suit is allowed by head office the same should filed against the
debtor/client concerned and the guarantor if any under civil procedure code 9 for specific

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performance to be deemed as branch of contract. In case the investment is not covered by
collateral security suit is be filed with attachment of assets before judgment.
• Disposal of Murabaha Stock: In case where the investment is secured by promise of stock
it should be mentioned in the registered notice that in case the party fails to lift Murabaha
goods on making repayment, the bank shall dispose off the same by inviting open tender
through national/local daily.
• Inviting Tender for Disposal of Stock: In spite of the above if the client does not come
forward to lift the goods, tender notice shall be published in one daily or national daily
newspaper on obtaining head office approval. The goods shall be delivered to the height
tender on obtaining head office approval and money suit as the case may shall be filed for
short fall (if any). For minimizing the cost of advertisement, tender/sale notice of several
clients shall be published through one tender/sale notice.
• Criminal Suit for Recovery of Vehicle/Machineries:
In case of hire purchase investment, criminal suit under section 406/420 read with section
No.98or 100 CRPC for breach of contract as well as issuance of search warrant for recovery of
immovable or moveable that is transport or machineries shall be filed in case the investment
client fails to the installment as per schedule and also do not surrender the assets. After taking
possession of the assets, the same shall be sold by inviting tender and money suit under section
No.9 of the civil procedure code for specific performance to be deemed as branch of contract if
not backed by mortgage of property or mortgage suit for realization of money by selling the
mortgaged property wherein mortgagor also can purchase the auctioned property under civil
procedure code

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• Civil Prison in Case Asset of Judgment Debtor:
It may be maintained that in case no assets is found for execution of decree civil prison of the
judgment debtor may be executed under order 21 rule 37 of civil code. It may be mentioned that
under this order and rule the judge can accord 6 month jail to the judgment debtor and have to
bear the cost of food of the prisoner at government rate.
• Limitation is for three years if debt is not backed by mortgage of property and twelve
years if backed by mortgaged property:
If the bank’s investment is not backed by any mortgage of immovable property it becomes time
barred after 3(three) years from the date of initiation. In case of investment secured by mortgage
of property the limitation for filling suit is 12 years from the date of initiation.
• Computation of limitation if debt is acknowledged in writing or by signing the deposit
pay-in-slip:
Provided further that before expiry of the above period if the investment client acknowledge in
writing signed by himself or by his duly authorized agent or any payment made by respective
borrower by deposit slip signed by him or his authorized agent, a fresh period of limitation shall
be computed from the time and date when acknowledgement of debt is signed him authorized
agent or part payment of debt is made by him under his signature or his authorized agent.

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1.18 Findings of the Study:
• Before the disbursement, they checked all security and viability of the borrower for
covering the risk.
• The process of CIB (Credit Information Bureau) to permit investment is lengthy. It takes
15-20 days to get the approval of the investment proposal.
• Usually Banks are responsible to invest to those who are eligible for the profitable
business. But in reality, small investors do not get the funds easily. They have to fulfill
more terms and conditions than those who have greater influence in the business
community.
• In Investment Department of this branch, have enough number of computers as well as
printers with proper UPS facility & there is no shortage of equipment
• AIBL follows branch banking. So, they do not need wait for long time for getting the
permission from the head office to approve investment proposal.
• They maintain the rule and regulations of Bangladesh Bank for taking decisions of
investment.
• Officers in Investment Department are very efficient to their responsibility. They are very
much aware in choosing right person for investment to ensure its recovery.
• In Investment Department of this branch, the each and everything is crystal clear before
the customers. If clients do not want to know about the Banking information, sometimes
the hide information to their clients.
• AIBL Gulshan Branch capable enough to disburse huge amount of funds, because of their
strong liquidity position.

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Chapter Four:
Conclusions and
Recommendations

Page | 59
Conclusion:
Al-Arafah Islami Bank Limited is an Islami Shariah based bank in private banking sector. The
time period of this bank is very little although AIBL has already made a good position among the
Islam oriented bank as well as private bank and created an image in client’s mind. Organizational
point of view seventeen years is not very long time but within this short time AIBL created a
good financial condition and total deposits & investments of the bank is fairly satisfactory.
AL-Arafah Islami Bank Limited believes that building strong relationship with all stakeholders,
particularly customers, is crucial for growth and prosperity. Technology and competition have
made it vital to build stronger bonds with the customers to meet their need at their convenience.
AIBL put emphasis on meeting this continuous challenge of managing relationship.
During the course of my practical orientation I have tried to learn the practical banking to relate
with my theoretical knowledge. This internship was arranged for gaining knowledge of practical
banking and compares this practical knowledge with theoretical knowledge involve identification
and making recommendations.
Effectively Corporate Governance procedures are essential for achieving and maintaining public
trust and confidence in the banking sector, which are critical to the proper functioning of the
banking sector and economy as a whole.
Al-Arafah Islami Bank Limited will continue to reinforce their efforts to meet the needs and
expectation of the customers. AIBL sets goal and challenges for employees to respond better to
customer’s needs. AIBL make themselves from different the competitors through Shariah based
services and flexible and personalized services.

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Recommendations:
• Decision making power should be decentralized effectively so that business can
rapidly be enhanced.
• This bank should be appointed a number of handsome and qualified employees at very
soon for maintaining the normal flow of works.
• Effectiveness of credit policy depends on effective information system so that, bank
should increases better accounting information system and management information
system as well.
• AIBL can offer student loan for higher education and different deposit schemes for
college and university going students.
• Islamic banks can provide efficient banking services to the nation if they are supported
with appropriate banking laws, and regulations. This will help them introducing profit
& loss sharing modes of operations, which are very much conducive to economic
development.
• It would be better if Islamic banks had the opportunity to work as a sole system in an
economic development. Studies show that Islamic banks can not operate with its full
efficiency level if it operates under a conventional banking framework, their
efficiency goes down in a number of dimensions.
• They should set up training institutions on Islamic banking and should impart training
to borrowers and other public to increase their clients.
• To train up the officials for managing the investment portfolio and foreign exchange
efficiently, finally should develop the relationship between a banker and customer
under the Islamic banking system.
• Although many Islamic bank in Bangladesh starts ATM service, but until now AIBL
can not introduced this facility toward clients. So they should launch ATM service
immediately.
• They have Shortage of trained and efficient manpower committed to Islamic banking,
so they should increase number of skilled person.
• They have absence of an organized Islamic inter-bank money market And
• They should increase co-ordination and co-operation among the Islamic banks

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References:
Books
 Bedi, H.L. “practical Banking Advance”UBS Publishers Distribution Ltd. New Delhi,
 Frank K. Reilly and Keith C. Brown, “Investment Analysis Portfolio Management”, 7th
Edition.
 C.R Kotheri, “Research Methodology” Second Edition, 2003-2004, wishwa
Prakashan,Calcutta,India.
Prospectors
 Investment Annual Report, Al-Arafah Islami Bank Ltd, 2011
 Investment department of Al-arafah Islami Bank Gulshan Branch.
 Bangladesh Bank, Guideline to fill in the Banking, Statistic Department.
 Bangladesh Bank (Baking Supervision and Regulation Department).
Websites
www.al-arafahbank.com
www.wikikipidia.com
www.bangladesh-bank.org.bd
Appendices:
 Statement of Affairs of Al-Arafah Islami Bank limited as on: 31/12/2011

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