This document provides an introduction and background on Islami Bank Bangladesh Limited (IBBL). Some key points: - IBBL was established in 1983 as the first interest-free bank in Bangladesh, inspired by the desire of Bangladeshis to conduct banking according to Islamic principles. - It has grown to be a leading private commercial bank in Bangladesh, with over 200 branches across the country. - IBBL aims to establish an equitable, welfare-oriented banking system and contribute to Bangladesh's economic development, including priority sectors and rural areas. - It has played an important role in industrial financing, employment generation, and providing services to low-income communities in Bangladesh.

1. 1.0 INTRODUCTION
Bangladesh is one of the largest Muslim countries in the world. The people of this country are
deeply committed to Islamic way of life as enshrined in the Holy Quran and the Sunnah.
Naturally, it remains a deep cry in their hearts to fashion and design their economic lives in
accordance with the precepts of Islam. The establishment of Islami Bank Bangladesh Limited on
March 13, 1983, is the true reflection of this inner urge of its people, which started functioning
with effect from March 30, 1983. This Bank is the first of its kind in Southeast Asia. It is
committed to conduct all banking and investment activities on the basis of interest-free profit-
loss sharing system. In doing so, it has unveiled a new horizon and ushered in a new silver lining
of hope towards materializing a long cherished dream of the people of Bangladesh for doing
their banking transactions in line with what is prescribed by Islam. With the active co-operation
and participation of Islamic Development Bank (IDB) and some other Islamic banks, financial
institutions, government bodies and eminent personalities of the Middle East and the Gulf
countries, Islami Bank Bangladesh Limited has by now earned the unique position of a leading
private commercial bank in Bangladesh.
1.1 Origin of report
This report is based on an internship program. My University arranges internship program in
attachment with students after the completion of theoretical courses of program of BBA. Each
intern must carry out a specific project, which is assigned by the concerned organization and
approved by the Internship and placement committee of my university, consequently a report
based on the project is to be submitted to the committee and IBTRA.
In this particular report, the author is an intern of the previously mentioned program and the
concerned organization is IBBL which are a prominent private and the first Bank of Bangladesh
that based on Islamic law?
In way of delegation, responsibility of carrying out the study has conferred upon the concerned
intern.
1.2 Background of the study:
Banking is on of the most important sectors for a country’s wealth building activities. At present
the modern business industrialization, foreign trade, investment almost all dependent on banks.
Now a day the Banking sector of Bangladesh is suffering the disease of default culture, which is
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2. consequence, or result of bad performance of most of the banks in Bangladesh. IBBL plays an
important role towards the growth, economic development and especially RDS of Bangladesh.
1.3 Objectives of the study:
The main objective of education is to acquire knowledge. To acquired knowledge, ultimately I
must do some practical application in addition to theoretical knowledge. Through this report, I
tried my level best to present my practical knowledge as well as to find out-
 Investment Policy of IBBL
 Investment Modes
 Different investment Schemes
 Differences between Conventional and Islamic banking systems
1.4 Scope:
IBBL, the shariah based commercial bank is under general special guidelines of the central bank
framed for the banking system as a whole and for bank of individual sectors. The concept of
Private sector bank i.e. IBBL in our country is not so old. IBBL is now giving emphasis to cerate
a constructive and meaningful competition with the private sector banking and NGO (who are
trying to develop rural life).
This study makes attempt to cover with in its scope all most all the significant aspects of rural
development scheme.
1.5 Methodology of the study:
Mainly I have collected data from two sources.
These two sources are as following.
 Primary source
 Secondary source
The primary sources of my information are:
 Field observation
 Investment opinion
 Questioning the concerned persons.
The secondary sources of my information are:
1. Annual report of lslami Bank Bangladesh Ltd
2. Desk report of the related department
3. Other manual information
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3. 4. Lecture in IBTRA
1.6 Limitations of the study:
There are some limitations in my study. I faced some problems during the study, which I am
mentioning them as below-:
i) Insufficient data: Some desired information could not be collected due to confidentially of
business.
ii) Lack of monitory support: Few officers sometime felt disturbed, as they were busy in their
job. Sometime they did not want to supervise me out of their official work. Sometimes the
officials were busy and were not able to give me much time.
iii) Other limitation: As we are newcomer, there is a lack of previous experience in this concern.
And many practical matters have been written from my own observation that may vary from
person to person.
2.0. Historical Background
In the early period of Islam, the financial transactions of that period were not at like as
today. As such, the very word banking was not used in that period. But all the transactions in
early period of Islam had been completed without resorting to interest. The Muslim world has
been in a state of degeneration for a number of centuries. The Muslim world has been in a state
of degeneration for a number of centuries. The social breakdown and weakness brought about by
this degeneration paved the way for foreign domination which led to further disintegration and
decline.
This decline is decline reflected in all aspects of Muslim life and has been accompanied by
poverty, reflected in all aspects of income and wealth, socioeconomic injustice, social
disharmony and loss of creativity. Nevertheless, the undeniable fact is that the Muslim masses
are intensely attached to Islam all over the Muslim world and sincerely crave for its revival and
supremacy. The intelligentsia has been always for interest-fee economy. But political
subjugation defeated them for long to succumb to interest-based economic system. However the
struggle for restoration but the early period of the present century received as good manifestation
for the cause of Islamic banking i.e. the Islamic economic system.
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4. During the 1930s revival for Islamic banking has been noticed gradually since literatures on the
interest-fee economy particularly interest fee banking have been developing. During the 1940s
after political independence from the colonial, most of the Muslim countries faced the struggle
for revival of Islamic economy particularly Islamic banking. And the 1970s took a new shape for
practical materialization of Islamic banks and financial institutions.
The first attempt to establish an Islamic financial institution took in Pakistan in the 1 950s. It was
a local Islamic bank in a rural area of erstwhile Pakistan (Wilson, 1983) it was an experiment
initiated by some pious landlords. They deposited found at no interest on the credit advanced, but
they had to pay a small service charge to cover the banks operational expense. The charge was
lower than the fate of interest. Although the experience was encouraging but two main factors
were responsible for its failure. First the deposits made were regarded by depositors (landlords)
as once and for all deposits. With the increasing number of borrowers the gap between capital
available and credit demanded was huge. Second, the bank staff did not have complete autonomy
over the
Bank’s operation and depositors showed considerable interest in the way their money was lent
out (Wilson, 1983).
The second attempt began in Egypt in 1963. It was established in a rural area of Nile Delta and
was called Mit Ghamr Saving Bank. This attempt may be called the first modem experiment with
Islamic banking without projecting an Islamic image, for fear of being seen as manifestation o
Islamic fundamentalism which was anihema to the political regime. The pioneering effort, led by
Ahmed El Najjar, took the form of a saving’s bank based on profit sharing in the Egyptian town
of Mit Ghamr in 1963. This experiment lasted until 1967 (Ready) 1981), by which time there
were nine such banks in the country. These bank which neither charged nor paid interest,
invested mostly by engaging in trade and industry, directly or in partnership with others and
shared the profits with their deposits (Siddiqi 1988)
Thus they function essentially as saving investment institutions rather than as commercial banks.
The experiment suffered by owing to changes the political atmosphere. Nevertheless, the project
revived in 1971 under the name of Nasier Social Bank. The Nasir Social Bank was declared an
interest-fee commercial bank, although its charter made no reference to Islam or shariah (Islamic
Law). The bank offered a full range or normal banking services and wide range of investment
activities through equity participation (Ashker-1 987).
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5. Islamic banking made its debut in Malaysia in 983, but not without antecedents. The first Islamic
financial institution in Malaysia was the Muslim Pilgrims Savings Corporation set in 1963 to
help people save for performing hajj. The reason for the establishment of this institution was the
contention of the Malaysian Muslims that money spent on pilgrimage must be clean and
untainted with Riba. Since this was not possible by putting money with the ordinary banks. And
as such, this desire led to the establishment of a special financial institution.
In 1969, this body evolved into the Pilgrims Management and fund Board or the Tabung Hajj as
it is now popularly known. The Tabung Hajj has been acting as a finance company that invests
the savings of would be pilgnms in accordance with Shariah, but its role is rather limited, as it is
a non-bank financial institution. The success of the Tabung l-Iajj, however, provided the main
impetus for establishing Bank Islam Malayasia Berhad (BIMB) which represents a full fledged
Islamic commercial bank in Malaysia. The Tabung Hajj also contributes 12.8 percent of BIMB’s
initial capital of M$80 million. BIMB has a complement of fourteen branches in several parts of
the country.
A significant development in Islamic Banking took place when a license for an Islamic bank was
issued by the Saudi Arabian government to the fifty-year old ‘Al-Rajhi Banking Investment
Corporation” and has since developed active relationships with major manufacturing and trading
companies in Europe and several US corporations.
Islamic Development Bank (IDB) was founded in 1975 as a multinational financial instruction
by the several Muslim countries. The purpose of this bank is to support social and economic
development in Muslim nations within an Islamic framework. The subscribers of the capital are
the founder governments and as such it was established on government treaty.
More seven Islamic Bank and Financial institutions had been established within three years of
establishment of IDB. These were (a) Dubai Islamic Bank (b) Kuwait Finance house, Kuwait (c)
Faisal Islamic Bank, Egypt & (f) Islamic Development Co. Sarjah.
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6. 2.1 Islami Bank Bangladesh limited: (IBBL)
Islami Bank Bangladesh limited was incorporation on 13.03.1983 and received its Banking
License on 28.03.1983. IBBL started functioning on 30.03.1983. The authorized capital of the
Bank is TK. 10000.00 million and paid up capital is TK 4752.00 million.
Inspired by the success of Islami Bank Bangladesh Limited 7 other Islamic Banks namely- Al-
Baraka BankBangladesh Ltd (Now ICB Islami Bank), Al-Arafa Islami Bank, Social Islami Bank
Ltd, Foysal Islami Bank(Now Sahamil Bank of Bahrain),Shajalal Islami Bank Ltd,Export Import
Bank of Bangladesh and First Security Islami Bank Ltd have been established in Bangladesh.
Prime Bank has established Islamic Branches.
2.2 Business Philosophy of IBBL
The philosophy of IBBL is to the principles of Islamic Shariah. The organization of Islamic
conference (OIC) defines an Islamic bank as “A financial institution whose status, rules and
procedures expressly state its commitment to the principles of Islamic Shariah and to the banning
of the receipt and payment of interest on any of its operations. The sponsor, perception is that
IBBL should be quite different from other privately owned and managed commercial bank
operating in Bangladesh, IBBL to grow as a leader in the industry rather than a follower. The
leadership will be in the area of service, constant effort being made to add new dimensions so
that clients can get “Additional” in the matter of services commensurate with the needs and
requirements of the country’ growing society and developing economy.
2.3 Mission and objective
⇒ To establish Islamic Banking through introduction of welfare oriented banking system.
⇒ To ensure equity and justice in the field of economic activity.
⇒ To achieve balance growth and equitable development through diversified investment
operation particularly in the priority sector and less developed areas.
⇒ To encourage socio economic up-liftmen and provide financial services to the rural and
low income community.
⇒ To establish a welfare-oriented banking system.
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7. ⇒ To extend co-operation to the poor, the helpless and the low-income group for their
economic uplift.
⇒ To pay a vital role in human development and employment generation.
⇒ To contribute towards balanced growth and development of the country through
investment operations particularly in the less developed area.
⇒ To contribute in achieving the ultimate goal of Islamic economic system.
2.4 Role and contribution of IBBL to Bangladesh Economy
Islami Bank Bangladesh Limited has many success stories of achievements. These are
summarized below:
 IBBL is the pioneer institution for introduction of Islamic Banking inBangladesh.
 The success of IBBL has imbibed other sponsors at home and abroad to establish Islamic
Banking in Bangladesh. Four national, one international Islamic banks have since been
established in the country. A private sector traditional bank has also established two full
fledged Islamic Banking branches. Several other existing and proposed traditional banks
hove also expressed their intention to introduce Islamic Banking.
 An IBBL has successfully mobilized deposits from a section of people who hither-to-
before did not make any deposit with interest based banks.
 The Islamic Banking products which are offered by IBBL through its 200 branches
located at important centers all over the country and spontaneous acceptance of those
products by the people proves the superiority of Islamic banking.
 IBBL’s market share of deposit investment and ancillary business is steadily increasing.
 IBBL, though still a tiny bank, handles more than 10% of country’s export and import
trade
 Among the contemporary commercial Banks IBBL’s position is first in respect of
mobilization of deposit, deployment of fund, earning profit and foreign remittance.
 Investment in industrial sector occupies nearly 33% of IBBL’s investment portfolio. This
is a unique example of industrial finance by a commercial Bank.
 More than 1.15,000 workers are employed in the industrial projects financed by IBBL.
IBBL has thus made significant contribution to solving unemployment problem of the
country.
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8.  Dhaka- the capital of Bangladesh being a Mega city- has acute transport problem. IBBL
has joined hands with an enterprising group to introduce a fleet of Premium Bus service,
which has attracted the attention of all section of the people and mitigated transportation
problem of the city to some extent.
 IBBL has introduced several other welfare oriented Investment schemes, such as Small
Transport Investment Scheme, Small Business Investment Scheme, Agriculture
Implements Investment Scheme, Poultry Investment Scheme, Household Durable
Investment Scheme, Housing Investment Scheme etc.
 IBBL launched a Rural Development Scheme for providing finance to drown-trodden
section of the populace- an area where no other Commercial Bank has extended any
finance. 1881’s mission is to reach to all 68,000 villages of the country as early as
possible.
2.5 Shariah Council: Shariah Supervision
Shariah Council of the Bank is playing a vital role in guiding and supervising the implementation
and compliance of Islamic Shariah principles in all activities of the Bank since its very inception.
The Council, which enjoys a high status in the structure of the Bank, consists of prominent
Ulema, reputed banker, renowned lawyer and eminent economist.
Members of the Shariah Council meet frequently and deliberate on different issues confronting
the Bank on Shariah matters. They also conduct Shariah inspection of branches regularly so as
to-ensure that the Shariah principles are implemented and complied with meticulously by the
branches of the Bank.
2.6 SWOC analysis of IBBL
Strengths
 Sound profitability growth and high asset quality
 Experienced Management
 Honest, sincere and dedicated employee competency
 Wide market share and stable source of fund
 Largest network among PCBs
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9.  High attention on recovery of overdue and classified investment and pre-overdue
situation
 Close monitoring on investment clients
 High attention on individual’s performance
 High attention on making quality investment and quick disposal of proposal
 All the officials/manpower are dedicated and honest to serve its own duty
 As a whole the human resource is our main capital/assets of the wing
 Business Ethics of the wing is similar to the ethics and values of mass people of our
county
Weakness
 Traditional network system and lack of full-scale automation
 Lack of latest information system
 Lack of required ideas on Modern investment products
 Poor marketing of investments product
 Lack of required information specially on SME
Opportunity:
 Scope of market penetration through diversified investment products
 Increase awareness of Islamic banking among the clients
 Scope to develop new committed Entrepreneur
 Countrywide Branches having wide opportunities to access in different kinds of
Business.
Challenges/Threats:
 Market pressure for lowering of lending rate
 Challenges of new entries
 Challenges related to substitute organization
 Entrepreneurship development
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10. 2.7. Problems and prospects of Islamic banking in Bangladesh
Despite tremendous popular support spectacular success in terms of mobilization of deposit and
distribution of profit Islamic banking in Bangladeshi yet to achieve the desired level of success
due to the absence of appropriate legal framework for carrying
out Islamic Banking operations in the country. All the government-approved securities in
Bangladesh are interest bearing. Besides, Islamic Money Market in Bangladesh is yet to develop.
As a result the Islamic banks, which are committed to avoid interest, cannot invest the
permissible part of their Statutory Liquidity Reserve and Short Term Liquidity in those
securities.
Inspire of the present limitations, Islamic-banking system has tremendous potentiality and
prospect in Bangladesh. Firstly, the successful launching and needs to an Islamic Money Market
in the country. Thirdly Islamic banks have brought together many depositors and entrepreneurs
under their fold and coverage. These depositors and entrepreneurs so long avoided interest-
based banking on grounds of religious injunctions. The gradual and successful globalization of
Islamic banking coupled with growing awareness of the people about its financial and social
benefits makes it clear that the next century is going to be the century of Islamic banking.
3. Investment Mechanism of IBBL:
3.0 Investment Mechanism:
Investment operation of a Bank is vital importance the greatest share of total revenue is
generated from it, maximum risk is centered in it and the very existence of a Bank mostly
depends on prudent management of its investment Port-folio.
As such, for efficient deployment of mobilized resources in profitable, safe and liquid
investments, a sound, well-defined, well-planned and appropriate Investment Policy framework
is necessary prerequisite for achieving the goal of the Bank.
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11. The special feature of the investment policy of the Bank is to invest on the basis of profit-loss
sharing system in accordance with the tenets and principles of lslami Shariah Earning of profit is
not the only motive and objective of the Bank’s investment policy rather emphasis is given in
attaining social good and in creating employment opportunities.
Pursuant to the Investment Policy adopted by the Bank a 5-year Perspective Investment Plan’
has been drawn-up for the year 2004 to 208 and put into implementation. Recently a further 5-
year perspective investment plan has been drawn up for the year 2008 to 2012 and put into
implementation. The plan aims at diversification of the investment port-folio by size sector
geographical area, economic purpose and securities to bring in phases all sectors of the economy
and all types of economic groups of the society within the fold of Bank’s investment operations.
3.1 Objectives and Principles:
The objectives and principles of investment operations of the Bank are:
 To invest fund strictly in accordance with the principles of Islami Shariah.
 To diversity its investment portfolio by size of investment, by sectors (public and private)
by economic purpose, by securities and by geographical area including industrial,
commercial & agricultural.
 To ensure mutual benefit both for the Bank and the investment client by professional
appraisal of investment proposals, judicious sanction of investment close and constant
supervision and monitoring thereof.
 To make investment keeping the socio economic requirement of the country in view.
 To increase the number of potential investors by making participatory and productive
investment.
 To finance various development schemes for poverty alleviation, income and
employment generation with a view to accelerate sustainable soico-economic growth and
for upliftment of the society.
 To invest in the form of goods and commodities rather than give out cash money to the
investment clients.
 To encourage social upliftment enterprises.
 To shun even highly profitable investment in fields forbidden under Islamic Shariah and
are harmful for the society.
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12.  The Bank extends investments under the principles of Bai-Murabaha, Bai-Muazzal, Hire
Purchase under Shirkatul Meelk and Mudaraba. The bank is making sincere efforts to go
for investment under Mudaraba principle in near future.
3.2 Importance of Assessing of Investment Needs:
Assessment of Investment needs is necessary for the following reasons.
1. To detect actual Investment limit of Bank.
2. To detect actual Investment against obsolete trading items.
3. To assess the quality, quantity, price and marketability of the commodities
4. To ensure proper follow-up supervision d monitoring of the Investment.
5. To ensure capacity of the client in handling Investment activities.
6. To over come the situation of Division of found by the clients
7. To ensure trading instead of lending of money.
8. To ensure payment against delivery of goods.
9. To ensure actual buying and selling of goods.
10. To select proper & genuine Investment client.
11. To ensure viability/profitability of the project.
12. To ensure compliance of Shariah Principles.
13. To maintain discipline in the Investment port-folio of the Branch.
14. To secure the Investment.
15. To allow Investment for appropriate period.
16. To handle the Investment proposal efficiently.
17. To ensure investment for productive purpose.
18. To identify the tenure of investment to be made i.e. for short term /mid term /long
term.
19. To know the objective of Investment.
20. To ensure profitability of all concerned.
21. To ensure welfare of the society.
22. To ensure Business ethics.
23. To minimize the risk of investment.
24. To ensure national interest.
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13. 3.3 Induction of Investment Clients:
Why of an Induction?
Potential 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.
1. Preliminary discussion may have with the prospective client regarding his line of
business, experience & investment needs.
2. The past performance of the client to be studied and Branch’s track record of proposed
investment.
3. If the proposal found suitable the client may be asked to submit a formal application
along with necessary papers/documents.
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 area/beyond control should not be entertained.
The following factors/qualities Information may be considered at the time of selection of
investment client.
1. Brief history of financial/Credit transaction of the client.
2. Social and financial behavior of the client should be verified /assessed.
3. Ability of the client of utilization of credit I Investment fund.
4. Ability of the client regarding repayment of Investment.
5. Equity of the client.
6. Effect of National & international Economic problem/crisis.
7. Analysis of Investment Risk.
The above mentioned factors may be categorized under 5-C’s.
1. Character
2. Capacity
3. Capital
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14. 4. Collateral
5. Condition
1. Character
a) The Human Factor
 Personal Circumstances (nationality, age, health condition, etc.)
 Credit Track Record
 Technical Qualifications (including business experience).
 Capacity to deal with people (or to manage relationships).
b) Management Assessment
 Business Experience
 Management Succession
 Credit Discipline.
 “Lifestyle”.
C) Experience
Every account officer believes that experience
in business is an extremely strong test of credit
worthiness.
i. Age of applicant
ii. Years in current business/company
iii. Total number of year’s business experience
d) Succession
Stability of business leadership in the event of
the owner’s incapacity
i. Is spouse involved in the business
ii. Are adult children and/or relatives involved
in the business?
iii. Is there a succession plan in place?
e) Personal Finance/Credit Discipline
The objective is to measure the applicant’s
discipline in personal and business finance.
i. Credit cared bills payments
ii. Others : Power, telephone, Water bills
(business & personal)
iii. Existing relationship with other bank’s
lenders.
f) Lifestyle
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15. Lifestyle variables are an attempt to measure
integrity which is turn is (potentially)
positively correlated with investment/loan
repayment
i) Personal feed back from employees,
customers and suppliers.
ii) Personal feedback from neighbors,
community members and Bank personal.
iii) Membership in local or National industry
association.
iv) Membership in community or religious
institution.
2. Capacity:
a) The Performance Factor
 Deployment of Resources (How much is the Investment need and how will it be
used?)
 Profitability Prospects of the project and the Enterprise (How will the project
impact on the enterprise?)
b) Financial Assessment
 Profitability
 Liquidity
 Solvency
Profitability
Because of the deficiencies in measuring and
evaluating net income, the idea is to measure
the trend and not the absolute value
I) Sales growth
ii)Net income margin pattern
Liquidity
Current ratio is the only indicator measured as
an absolute value; the other two are measured
by the trend.
I) Current ratio
ii) Days receivables outstanding
iii) Days inventory holding
Solvency
There is a considerable high risk in making
Investment to highly leveraged organizations
I) Debt-Up-equity ratio.
ii) Operation cash flow to Investment
amount.
3. Capital:
The Financial Factor
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16.  Client’s stake in business.
 Solvency of the enterprise.
 Availability of reserve resources.
 Other sources of income.
4. Collateral:
The Security Factor
 Ensuring the Critical Success Factors of the Business.
 Quality of Collateral’s.
 Value of Collateral’s.
 Location of Collateral’s.
 Ease of Marketability of Collateral’s.
3.4 Present Status of Bank’s Investment Portfolio
1. The Bank should go for investment in large-scale dairy farming and other milk
processing projects and poultry farming which is not worth mentioning at present.
2. The quantum of Bank’s investment against fishing is very negligible. There is scope for
investment in:
 Shrimp culture.
 Sweet water fishery including pond fishery.
 Marine fishing.
3. The Bank’s investment for construction purpose shall continue to be made
Within the ceiling prescribed in the Plan.
4. Presently the Bank’s export Investment is mostly centered in readymade garments and
the Bank is yet to enter into the area of investment in major traditional and non-
traditional exportable items like jute & jute goods, frozen foods, hosiery products, tea,
leather and leather products knitwear (Textile), basic chemical products/pharmaceuticals,
electric goods (wires and cables), electronic goods/components, handicrafts, fruit juice
concentration projects (small and medium scale only), other.
5. Besides the existing items of import, the Bank should go for investment in import in the
following areas.
 CDSO being imported by edible refineries.
 Cotton yam.
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17.  Coal and hard coke.
 Fresh fruits.
 Spices.
 Dry fruits
 B.P. sheets
 Motor vehicles
 Bi-cycle spares
 Tyres & tubes
 Bitumen
 Other items
6. A. Investment against real estate of the Bank shall continue to be made within the
Ceiling prescribed in the plan.
B. The bank’s investment against agriculture, fishery, forestry, (other than working capital
investment) 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.
C. Bulk investment of all banks (nationalized commercial banks and private commercial banks)
is in the hand of limited number of borrowers, though the position of lslami Bank is to some
extent better, yet efforts need to be made for further diversification of investment by size of
investment accounts and concentration of investment in the hands of limited few clients is to be
avoided.
7. General investment shall be made in the following ways and under the following modes:
 Bai-Murabaha
 Bai-Murabaha Post Import
 Bai-Mujjal
 Hire Purchase
 Hire Purchase under Shirkat-ul-Melk
 Musharaka
 Mudaraba
 Bai-Salam
 Leasing
 Investment Auctioning
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18.  Any other mode found appropriate which conforms to the principles of Islamic Shariah.
 8. The following special Investment Schemes have been introduced:
TABLE 3: COMPOSITION OF THE INVESTMENT PORTFOLO
Sectors Proportion in %
Agriculture and Rural Investment 2%
Industrial Term Investment 18%
Industrial Working Capital 15%
Housing and Real Estate 10%
Electricity, Gas, Water & Sanitation 0.5%
Transaction & Communication Storage 5%
Import, Export & Local & Trade Selected Activities 40%
Household Durable Schemes 1.50%
About Storage 1%
Investment Schemes for Small Business 1.50%
Investment Schemes for Doctors 0.50%
Poultry & Dairy 0.50%
Rural Development Schemes 2%
Micro Industry Schemes 0.50%
Others Special Schemes 1%
Other productive Purpose 1%
Total 100%
3.5 Five years investment perspective plan
In accordance with the investment Policy, 5 year Perspective Plan from 2008 to 2012 is
formulated. Size-wise and sector-wise, allocation of estimated investable funds is made in
accordance with the weight age given in the investment:
Year Trade(1)
Special
scheme(2)
Agro base
industry(3)
Project
investment(4
)
Constructi
on(5)
Transport(6
)
2008 33% 3% 6% 47% 7% 2%
2009 33% 4% 5% 45% 8% 3%
2010 33% 5% 6% 42% 9% 3%
2011 35% 5% 6% 39% 9% 4%
2012 35% 5% 7% 36% 10% 5%
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19. 34%
3%
6%
48%
7% 2% 1
2
3
4
5
6
3.6 Year of Diversification of Investment-2009
This is one of the motto so Islami Bank to invest their deployable fund in a diversified way i.e.
diversification by size, sector, purpose and geographical area in order to ensure balanced growth
of the society equity and justice. With this view, the Management has adopted the slogan for the
year 2009 as “Diversification of Investment”
Why and where to Diversify
 70% of the total investment is concentrated to 0.36% clients which is not acceptable for a
Shariah compliant Bank. Moreover, it is alarming for an Bank from the risk point of
view.
 32% of total investment is concentrated in only Textile and RMG sectors.Such
concentration in limited is not desirable from the risk point of view
 Only 6.02% of the investment is made in the Rural Area which is contrary of equity
justice
Size wise investment Position (Considering number of client)
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
1 3 5 7 9 11 13
client
amount
Investment by Economic Purpose: (amount in Million as on 30.11.2008)
Sl NO Name of the Sector Amount outstanding % of share
19

20. 01 Agriculture 6915 3.33
02 Industrial working capital + project 99074 47.67
03 construction and real state 7968 3.83
04 transport 3508 1.69
05 trade of commodity 59245 28.51
06 special investment 4526 2.18
07 staff and others 16022 7.71
08 share and security 10578 5.09
Total 207836 100
Amount outstanding
2%
24%
2%1%
14%
1%4%3%
49%
Agriculture
Industrial working capital
+ project
construction and real
state
transport
trade of commodity
special investment
staff and othersIndustry wise Investment growth: 2004-2008
Particulars 2004 2005 2006 2007 2008
Textile 12896.57 17408.74 24337.82 35414.97 52388.73
Garments 4064.67 3959.42 5019.05 8694.3 10341.21
Others 18632 24695 33285 34679 44344
0
20000
40000
60000
80000
100000
120000
2004 2005 2006 2007 2008
Others
Garments
Textile
Investment by Geographic Area: (Fig in Million as on 30.12.2008)
Area/Zone Amount of investment % of share
Dhaka base branches 112550 58.83
Chittagong Zone 28845 15.08
20

21. Khulna Zone 13425 7.02
Bogra Zone 5943 3.11
Comilla Zone 5755 3.01
Sylhet Zone 2916 1.52
Rajshahi Zone 15148 7.92
Barishal Zone 2106 1.10
Mymenshing Zone 4615 2.41
Total 191303 100
Amount of investment
28%
8%
4%2%2%1%4%1%1%
49%
Dhaka base branches
Chittagong Zone
Khulna Zone
Bogra Zone
Comilla Zone
Sylhet Zone
Rajshahi Zone
Barishal Zone
Mymenshing Zone
Total
Investment by Areas (Urban and Rural): (Figure in Million as on 30.12.2008)
Sl No Area No of Clients Amount Outstanding %
1 Rural area 353652 11785.55 6.02
2 Urban area 93612 184132.20 93.98
Total 447264 195917.75 100
6%
94%
1 rural
2 urban
Investment in special scheme: (Figure in Million as on 30.12.2008)
Name of scheme 2004 2005 2006 2007 2008 % in 2008
RDS 790 1106 2242 2885 3060 19.03
HDS 879 782 700 743 670 4.2
For Doctors 86 64 33 24 18 0.1
Transport 2442 2947 2699 2624 3246 20.5
Car 30 28 24 31 43 0.3
Small Business 501 630 768 876 1079 6.8
21

22. Micro industries 17 10 6 36 32 0.2
Agriculture 15 13 12 14 25 0.2
Housing 672 610 507 485 434 2.7
Real state 4714 5860 6583 6903 7240 45.7
8%
9%
1%
24%
0%5%0%0%7%
46%
RDS
HDS
For Doctors
Transport
Car
Small Business
Micro industries
Agriculture
Housing
Real state
Growth of commercial investment: (Amount in million)
Sl No Year Total investment Trading % of share
1 2004 83893.63 26877.02 35
2 2005 102144.51 29284.21 31
3 2006 123950.4 28983.80 26
4 2007 174430 44860 25.71
5 2008 195917.75 64124.72 32.73
A comparative position of commercial investment against total investment
0
50000
100000
150000
200000
1 2 3 4 5
Total investment
Trading
Size wise commercial investment position:
22

23. It is evident from the size wise commercial investment position that more than 50%
investment available by 64 big clients. They have been availing more than Tk.100.00
million each.
Range No. of clients amount % to commercial
investment
5.00-10.00 673 4667.77 11
11.00-50.00 381 8844.7 22
51.00-100.00 66 4851 12
Above 64 22294 55
Total 1184 40657.57 100
Size wise commercial investment
11%
22%
12%
55%
1
2
3
4
above 5-10 million, 11%
above 100 million, 55%
above 51-100
million, 12%$
11-50
million,22%
3.7 Investment Modes:
There are three types of Investment Mechanism which are:
• Bai Mechanism (Trading Mode)
1. Bai Murabaha
2. Bai Muajjal
3. Bai Salam
4. Bai Istishna’a
5. Bai As-Sarf
• Ijara Mechanism (Leasing Mode)
I .Hire purchase (ljarah)
2. Hire purchase under Shirkatul Melk
• Share Mechanisms
1. Mudaraba
2. Musharakah
3.7.0 BAI MECHANISM (TRADING MODE):
3.7.1 BAI MURABAHA:
23

24. Meaning
The terms “Bai-Murabaha” have been derived from Arabic words and (Bai and Ribhun). The
word means purchase and sale and the word “Ribhun” means an agreed upon profit “Bai-
Murabaha” means sale for on agreed upon profit.
“Bai-Mudarabaha” may be defined as a contract between a buyer and a seller under which the
seller sells certain specific goods permissible under Islamic Shariah and the Law of the land to
the buyer at a cost plus an agreed profit payable today or on same date in the future in lump-sum
or by installment. The profit may be either a fixed sum or based on a percentage of the price of
the good.
Types of Murabaha
In respect of dealing parties Bai-Murabaha may be of two types:
Ordinary Bai-Murabaha:
Ordinary Bai-Murabaha is a direct transaction between a buyer and a seller.Here the seller is an
ordinary trader who purchase goods from the market in the hopes of selling these goods to anther
party for a profit. In this case, the seller undertakes the entire risk of his capital investment in the
goods purchased. Where or not he earns a profit depends on his ability to find a buyer for the
merchandise he has acquire
Bai-Murabaha on order and promise:
This transaction involves three parties the buyer, the seller and Bank. Under this arrangement the
bank acts as an intermediary trader between the buyer and seller. In other words, upon receipt of
an order and arrangemetn to purchase product from the buyer, the bank will purchase the product
from the seller to fulfill the order.
Important feature:
I. A client can make an offer to purchase particular goods from the bank for a
specific agreed upon price, including the cost of the goods plus a profit.
24

25. II. A client make the promise to purchase from the bank that is he is to either satisfy
the promise or to indemnity any losses incurred from the breaking the promise
without excuse.
Ill. Documentation of the debt resulting from Bai-Murabaha by a guarantor or a
mortgage or both like other bent is permissible. Mortgage/ Guarantee/ Cash
security may be obtained prior to the signing of the agreement or at the time
singing the agreement
IV. Upon acquiring the goods the bank assumes the risk of ownership. In other words
the bank is responsible for damage, defects, and/ or spoilage to the merchandise
until such time that it is actually delivered to the buyer.
V. Stock and availability of goods is a basic condition for signing a Bai-Murabaha
Agreement. Therefore, the bank must purchase the goods as per specification of
the Client to acquire ownership of the same before signing the Bai-Murabaha
agreement with the Client.
VI. After purchase of goods the Bank must bear the risk of goods until those are
actually sold and delivered to the Client buyer, the Bank shall bear the
consequences of any damages or defects, unless there is an agreement with the
Client releasing the Bank of the defects, that means, if the goods are damaged,
Bank is liable, if the goods are defective, (a defect that is not included in the
release) the Bank bears the responsibility.
VII. The bank must deliver the specified to the Client on specified date and at
specified place of delivery as per Contract.
VIII. The Bank shall sell the goods at a higher price (Cost + Profit) to earn profit. The
cost of goods sold and profit mark-up therewith shall separately and clearly be
mentioned in the Bai-Murabaha Agreement. The profit mark-up may be
mentioned in lump sum or in percentage of the purchase/cost price of the goods.
But, under no circumstances, the percentage of the profit shall have any relation
with time or expressed in relation with time, such as month, per annum etc.
IX. The price once fixed as per agreement and deferred cannot be further increased.
X. It is permissible for the Bank to authorize any third party to buy and receive the
goods on Bank’s behalf. The authorized must be in a separate contract.
25

26. 3.7.2. BAI - MUAJJAL:
Meaning:
The terms “Bai and “Muajjal” are derived from Arabic words “Bai” and “Ajal”. The word “Bai”
means purchase and sale and the word “Ajal” means a fixed time or a fixe period. “Bai-Muajjal”
means sale for which payment is made at a future fixed date or within a fixed period. In short, it
is a sale on Credit.
Definition:
Bai-Muajjal may be defined as a contract between a buyer and a seller under which the seller
sells certain specific goods permissible under Islamic Shariah and the Law of the Country, to the
buyer at an agreed fixed price payable at a certain fixed future date in lump sum or in fixed
installment
Important Features:
I. Bank is not bound to declare cost of goods and profit mark-up separately to the
client.
II. Sport delivery of the item and payment is deferred.
Ill. Ownership and possession of the goods is transferred by the Bank to
the client before receipt of sale price.
IV. Client may offer an order to purchase by the Bank any specified goods and
committing himself to buy the same from the Bank on BaiMuajjal Mode.
V. It is permissible to make the promise binding upon the client to purchase from
the Bank. That is he is to either satisfy the promise or to indemnify the damage
caused by breaking the promise.
VI. Cash/Collateral Security should be obtained to guarantee the
implementation of the promise or to indemnify the damages.
VII. Mortgagee/Guarantee/Cash Security may be obtained before /at the time of
signing the agreement.
VIII. Stock and availability of goods is a pre-condition for Bai-Muajjal agreement. The
responsibility of the bank is to purchase the desired goods at the disposal of the
client to acquire ownership of the same before signing the Bai-Muajjal Agreement
with the client.
26

27. IX. The Bank after purchase of goods must bear the risk of goods until those are
actually delivered place of delivery as per contract.
X. The bank must deliver the specified goods to the client on specified date and at
specified place of delivery as per contract.
Xl. The Bank may sell the goods at a higher price than the purchase price to earn
profit.
XII. The price once fixed as per agreement and deferred can not be further increased.
3.7.3. BAI SALAM:
Bai-Salam is a term used to define a sale in which the buyer makes advance payment but the
delivery is delay until some time in the future, usually the seller is an individual or business and
the buyer is the bank. So, cash sale or sale on credit- the bank pays the agreed upon price at the
time to the contacts inception. The seller agrees to the delivery of the commodity some specified
date in the future.
Important feature:
Bai-Salam is a mode of investment allowed by Islamic Sharia in which
commodity(ies)/product(S) can be sod without having the said commodity (ies) /product(s) either
in existence or physical /constructive possession of the seller. If the commodity (ies)/product(S)
are ready for sale, Bai- Salam is not allowed in Shariah. Then the sale may be done either Bai-
Murabaha or Bai-Muajjal mode of investment.
I. Generally, industrial and agricultural products are purchased/sold in advance under Bai-
Salam mode of investment to infuse finance so that product is not hankered due to
shortage fund/cash.
II. It is permissible to obtain collateral security from the seller client to secure the
investment from any hazards viz non-supply/partial supply of commodity
(ies)/product(S), supply of low quality commodities /products.
III. It is also permissible to obtain Mortgage or Personal Guarantee from a third party as
security before the signing of the Agreement or at the time to signing the Agreement
IV. Bai-Salam on particular commodities products or on a product of a particular field or
firm cannot be affected (for Agricultural Product(s) only).
The seller (manufacturer) client may be made agent of the Bank to sell the goods
delivered to the Bank by him provided a separate agency agreement is executed between
the Bank and the Client (Agent). (CLASS NOTES, Hussain, Abul).
27

28. 3.7.4 ISTESHNA’A
The lsteshna’a is a contract in which the price is paid in advance at the time of the contract and
the object of sale is manufactured and delivered later. So, that it is a contract with a manufacture
to make the something and it is a contract on a commodity on liability with the provision of
work. The purchaser is called “Mustasnia” contractor and the seller is called “sania” maker or
manufacturer.
Important feature:
 lstisna’a is an exceptional mode of investment allowed by Islamic Shariah in which
product(s) can be sold without having the same in existence. In the product(s) are ready
for sale. lstisna’a is not allowed is Shariaf. Then the sale may be done either in Bai-
Murabaha or BaiMaajjal mode of investment, in this mode, deliveries of goods are
deferred and payment of price may also be deferred.
 It facilitates the manufacturer sometimes to get the price of the goods in advance, which
he may use as capital for producing the goods.
 It gives the buyer opportunity to pay the price in some future dales or by installments.
 It is a binding contract and no party or is allowed to cancel the lstisna’a contract after the
piece is paid and received in full or in part or the manufacturer starts the work.
 lstina’a is specially practiced in manufacturing and industrial sectors; however, it can be
practiced in agricultural and constructions sectors also (Class Note, Abul Hussain).
3.7.5 IJARA MECHANISM (LEASING MODE):
(1) HIRE PURCHASE /IJARAH
The term Ijarah has been derived from the Arabic works Ajr and Ujrat which means
consideration, return, wages or rent. This is really the exchange value or consideration, return,
wages, rent of service of an Asset. ljarah has been defined as a contract between two parties, the
Hiree and Hirer where the Hirer enjoys or reaps a specific service on benefit gains a specified
consideration or rent from the asset owned by the Hiree. It is a hire agreement under which a
certain asset is hired out by the Hiree to a Hirer against fixed rent or rentals for a specified
period.
28

29. (2) HIRE PURCHASE UNDER SHIRKATUL MELK:
Hire purchase under shirkatul Melk is a special type of contract which has been developed
through practice. Actually, it is a synthesis of three contracts: Shirkat, Ijara and sale. Shirkat
means partnership. Sharikatul Melk means share an ownership. When two or more persons
supply equity, purchase an asset, own the same jointly, and share the benefit as per agreement
and bear the loss in proportion to their respective equity, the contract is called Shirkatul contract.
Stages of Hire Purchase under Shirkatul Melk:
Thus, Hire Purchase under Shirkatul Melk Agreement has three stages:
 Purchase under joint ownership.
 Hire and
 Sale and /or transfer of ownership to the other partner Hirer.
Types of sale contract in hire purchase under shirkatul melk:
As per procedure of transfer of ownership and legal title of the part owned by the Bank is
transferred to the other partner, the sale contract may be of various, some of the major forms are
mentioned below:
Important Feature:
I. In case of Hire Purchase under Shirkatul Melk transaction the asset I property involved is
jointly purchased by the Hire (Bank) and the Hirer (Client) with specified equity
participation under a Shirkatul Melk Contract in which the amount of equity and share in
ownership of the asset of each partner (Hire Bank & Hirer Client) are dearly mentioned.
Under this agreement, the Hire and the Hirer becomes co-owner of the asset under
transaction in proportion to their respective equity participation.
II. In Hire Purchase under Shirkatul Melk Agreement, the exact ownership of both the Hire
(Bank) and Hirer (Client) must be recognized- However, if the partners agree and wish
that the asset purchased may be registered in the name of anyone of them or in the name
of any third party, dearly mentioning the same in the Hire Purchase Shirkatul Melk
Agreement. However, in IBBL, no third party registration shall be allowed.
29

30. Ill. The share Part of purchased asset owned by the Hire (Bank) is put at disposal! possession
of the Hirer (Client) keeping the ownership with him (Bank) for a fixed period under a
hire agreement in which the amount of rent per unit of time and the benefit for which rent
to be paid along with all other agreed upon stipulations are also to be dearly stated. Under
this agreement, the Hirer (Client) becomes the owner of the benefit of the asset but not of
the asset itself, in accordance with the specific provisions of the contract which entitles
the Hire (Bank) is entitled for the rentals.
IV. As the ownership of hired portion of the asset lies with the Hire (Bank) and rent is paid
by the Hirer (Client) against the specific benefit, the rent is not considered as price or part
of price of the asset.
V. In the Hire Purchase under Shirkatul Melk Agreement the Hire (Bank) does not sell or
the Hirer (Client) does not purchase the asset but the Hire (Bank) promise to sell asset to
the Hirer (Client) part by part only, if the Hirer (Client) pays the cost price equity I
agreed price as fixed for the asset as per stipulations within agreed upon period on which
the Hirer also gives undertakings.
VI. The promise to transfer legal by the Hire undertakings given by the Hirer to purchase
ownership of the hired asset upon payment part by part as per stipulations are effected
only when it is actually done by a separate sale contract.
VII. As soon as any part of Hire’s (Bank’s) ownership of the asset is transferred to the Hirer
(Client) that becomes the property of the Hirer and hire contract for that share I part and
entitlement for rent thereof lapses.
VIII. In Hire Purchase under Shirkatul MeIk Agreement, the Shirkatul Melk contract is
affected from the day the equity of both parties deposited and the asset is purchased and
continues up to the day on which the full title of Hire (Bank) is transferred to the Hirer
(Client).
IX. The hire contract becomes effective from the day on which the Hire transfers the
possession of the hired asset in good order and usable condition to the Hirer, so that the
Hirer may make the agreement.
X. Effectiveness of the sale contract depends on the actual sale and transfer of ownership of
the asset by the Hire to the Hirer, It is sold and transferred part by part; it will become
effective part by part and with the sale and transfer of ownership of every share / part.
The hire contract for that share I part wiU lapse and the rent will be reduced
proportionately. At the end of the hire period when the full title of the asset will be sold
30

31. out and transferred to the Hirer (Client), the Hirer will become the owner of both the
benefit and the asset consequently the hire contract will fully end.
Xl. Hire Purchase under Shirkatul Melk is a binding contract for the parties to it- the Bank
and the Client who are committed to fulfill meet their undertakings I obligations in
accordance with the relevant agreement.
XII. Under this agreement the Bank acts as a partner, as a Hire and at last as a seller ;on the
other hand the Client acts as a partner, as a Hirer and lastly as a purchaser.
XIII. Ownership risk is borne by both the Hire and Hirer in proportion to their retained
ownership equity.
XIV. Under this agreement the role of Hirer is one that of a trustee, the hired asset being a trust
property in his hands: he will manage, maintain the asset in favour of the interest of the
Hire at his own cast as the exact subject of hirer except in cases of any accident due to
any event entirely beyond control of the hirer and natural calamity/disaster (acts of Allah)
to be determined by the Bank after proper investigation within the knowledge of the
hirer.
XV. The Hirer is responsible for keeping the hired asset(s) in good condition throughout the
whole period of hire and if the asset is damaged 01- destroyed due to mismanagement,
corruption, negligence, transgressions, default, etc. of the Hirer, he shall be responsible to
compensate the Hire (Bank) for that. Of course, such mismanagement, corruption,
negligence, transgressions, default, etc. of the hirer shall be management, corruption,
negligence, transgressions, default, etc. of the hirer shall be determined by the Hire
(Bank) after proper investigation within the knowledge of the hirer.
XVI. The Hirer cannot, without obtaining prior written permission of the Hire (Bank) make
any changes in the exact item of the hire, and I or remove it from its place of installation
and transfer it to another location.
XVII. In a Hire Purchase under Shirkatul Melk agreement any stipulation may be made,
provided it is not against the nature and requirements of the contract itself, nor does it
violate the /this may be the last one divine laws of Islam and is also acceptable to both the
parties.
XVIII. Hire Purchase under S’nirkalul Melk facilities may be for medium-term or long-term
period which may be utilised for the expansion of production and services, as well as
housing activities. The duration of Hire Purchase under Shirkatul Melk contract shall not
exceed the useful life of the subject I asset of the transaction. The Bank should not
31

32. normally enter a Hire Purchase under Shirkatul Melk transaction for items with useful
life of less than two years.
XIX. Hire Purchase under Shirkatul Melk transaction facilitates the Client (Hirer) to get benefit
from the hired asset in exchange of rental and also to become full owner of the asset by
purchasing it part by part.
XX If, for any reason, the hire contract is revoked prior to the transfer of full title of
the asset to the Hirer, then the title of the asset will be shared by both Hire and Hirer the
Hirer will share that part of title which has been transferred to him against payment and
the Hire will share the remaining part
XXI The Hirer to secure the Bank (the Hire) will pledge I hypothecate I mortgage his portion I
part I share in the asset (acquired I to be acquired) and or any other asset I property of his
own I third party guarantor to the Bank to fulfil his all liabilities /commitments including
the accrued rental, if any.
3.7.6 SHARE MECHANISM:
3.7.8 MUDARABAH:
It is a form of partnership where one party provides the funds while the other provides the
expertise and management. The first party is called the Sahib-Al-Mal and the latter is referred to
as the Mudarib. Any profits accrued are shared between the two parties on a pre-agreed basis,
while capital loss is exclusively borne by the partner providing the capital.
Important features:
I. Bank supplies capital as Sahib-Al-Mal and the client invest if in the business with his
experience.
II. Administration and management is maintained by the client.
Ill. Profit is divided as per management.
IV. Bank bears the actual loss alone.
V. Client can not take another investment for that specific business without the permission
of the Bank (Class, Notes, Hussain, and Abul).
3.7.9 MUSHARAKA:
32

33. An Islamic financial technique that adopts “equity sharing” as a means of financing projects.
Thus, it embraces different types of profit and loss sharing partnership. The partners
(entrepreneurs, bankers) etc.) Share both capital and management of a project so that profits will
be distributed among them as per rations, where loss is shared according to ratios of their equity
participation.
Important feature:
I. The investment client will normally run and manage the business.
II. The Bank shall take part in the policy and decision making as well as overseeing
(supervision and monitoring) the operations of the business of the client. The Bank may
appoint suitable person(s) to run and manage the business and to maintain books of
accounts of the business property.
ill. As the investment client shall manage the enterprise, the Bank may pay more share of
profit to him than that of his proportionate capital contribution.
IV. Loss, if any, shall be shared on the basis of capital ratio (Class Notes, Abul Hussain).
3.7.10 Bai-Musharaka:
Induction of Client
 Hold preliminary discussion with the prospective client regarding his investment needs,
business experience, viability of the project and Shariah permissibility of the asset the
uses business and the uses of the asset.
 Brief him on the salient features of Bai-Musharaka mode of investment.
 Look to the past performance of the client.
 Ceck-up Head Office Current investment policy and Branch’s track record of Bai-
Musharaka lnvestmentof the items
 If the proposal is found permissible under Islamic principles and suitable, advise the
client to submit formal Application (F-I 67 A). If not found suitable, regret politely.
 Request potential client to open an Al-Wadia Current Account. Let him maintain the
Current Account Satisfactorily for a reasonable period. (This will generally mean six
months).
Application:
33

34.  Head Office Controlled Branches shall obtain Application from the Client in duplicate.
 Branches under Zone shall obtain Application from the clients in Triplicate.
 Application shall be obtained on F-I 67A as per specimen at page.... Deal Application
shall be obtained on F-136.
 Obtain and affix attested photograph(s) of the Proprietor /Partners/Directors Trustee
/Administrator on the top right hand corner of the application.
 Scrutinize the application of the client to see that:
• All columns are properly filled in.
• Particulars and information given therein are complete and correct in all respect.
• All required Documents/Papers as listed in the footnote of the application are
submitted.
• The client as per specimen signature with the Bank signs it. Enter the application
in the “Investment Proposal Received and Disposal
 Register”(853) as per specimen at and allot a Serial Number to it Initiate action for
Processing and Appraisal.
Categorization:
 Categorize the proposal as under:
 Bai-Musharaka Commercial
 Bai-Musharaka Industrial
 Enter the Application in the “Investment Proposal Received and Disposal Register (B-53)
and allot a Serial Number to it.
THERE ARE TWO OTHER MODES OF INVESTMENT WHICH HAVE LIMITED
IMPACT IN OUR COUNTRY:
(I) QUARD:
The word “Quard” is an Arabic word” which means loan or credit on advance. The literal
meaning of Quard is giving “Fungible goods” for use without any extra value returning those
goods. It must follow the principle of equal for equal return with homogeneous goods. Fungible
goods may be rice, oil, salt, money etc. In banking sector, money is used as quard. Quard is
Halal by Islam for not to pay any extra or interest in return.
34

35. Characteristics of Fungible goods
1. Goods which are vanished /converted for one time use.
2. No flow of service.
3. Service can’t be separated from the actual goods.
Characteristics of Quard:
o There should have fungible goods.
o Goods must be returned equally.
o There is no extra payment.
o Specific period for returning goods.
2. QUARD-E-HASANA:
Quard-E-Hasana also one kind of Quard which is given with the expectation of return or not
3.7.11 Special Schemes under Investment Modes:
 Household Durable Scheme:
In a developing country like Bangladesh people of middle and lower middle class especially
service holders with limited income find it difficult to purchase articles like refrigerator,
television, cot, almirah, wardrobe, sofa-set, pressure cooker, sewing machine etc. which are part
of modern and decent living. They can not enhance the standard and quality of life to the desired
level due to the constrain of their limited income. Is Bank Bangladesh Limited has, therefore,
introduced Household Durables
Investment Scheme which has already created great enthusiasm among the people
and received tremendous response from them.
Objectives:
 To assist the service holders with limited income in purchasing household durables.
 Increase standard of living and quality of life of the fixed income group.
 Creating service-holders way of life happy and honest.
Household articles:
35

36.  Furniture like Almirah, Sufa set, wardrobe, etc.
 Electric & electrical equipment like television, refrigerator, gas cooker,
 Air conditioner PC, washing machine, electric generator IPS, UPS, etc.
 Construction of dwelling house like corrugated iron skeet, cement, rod, wood etc.
 Motor cyde/By-cycle, Sewing machine etc.
 Power generator, motor pump/power pump etc.
 Gold ornaments
 Tube-wells.
 Mobile Phone set
 Medical Engineering Equipment Machinery.
 Educational equipment /machinery, books etc.
 Any other items considered by the bank suitable.
Amount:
 For doctors, Engineers, Architects, Chartered Accountants, FCMAs the Ceiling of the
investment of the Bank will be —
 Dhaka City: Maximum Tk. 3,00,000.00
 Other Metropolitan Cities: Maximum Tk. 2,00,000.00
 Other Municipal Areas: Maximum Tk. 1,00,000.00
 For depositors of Mudaraba Term Deposit & Mudaraba Savings A/Cs:
 Maximum Tk. 2,00,000 by liening their A/Cs :For others : Tk. 1,00,000.00
 NCOs of Bangladesh Armed Forces, Teachers of Primary Schools, Private School &
Colleges and other professionals : Maximum Tk. 35,000.00
 For students: Maximum Tk. 40,000
 For personnel of IBBL: Maximum Tk. 75,000
Maturity of investment:
 Maximum 2 years for beneficiaries except bank’s personnel
 Maximum 3 years for Bank’s personnel.
Mode of Investment: Bai - Muazzal:
Equity:
36

37.  Minimum 25% of the total value of the articles. The client shall have to deposit the
amount of equity in his Mudaraba Savings /lnvestment Account with the concerned
branch before the disbursement of investment.
 Minimum 10% of the total value of the articles for Bank’s personnel.
Guarantors:
 For beneficiaries except Bank’s personnel, there should have two guarantors, one may be
the Boss /colleague in the same level or upper level and the guarantors may be
husband /wife’s parents, brothers etc.
 For Bank’s personnel, no needs of guarantor.
Charges:
 For beneficiaries except Bank’s personnel, charges are induced as
Profit charge — 13.5%
Supervising — 4.00%
Risk charge — 2.00%
Total — 19.5%
 For Bank’s personnel, profit charge is 11 % only.
Disbursement:
 After sanction of investment and deposit of required equity by the client, the Branch shall
supply to the concerned investment client the desired articles within seven days by
procuring them by way of pay- order/cheque/draft etc. favouring the supplier.
 For ensuring the ownership of the Bank over the goods, all papers and documents related
to the procurement of the goods shall remain in the name of the Bank and Bank’s sticker
shall remain affixed over the same. The ownership shall be transferred in favour of the
client after full adjustment of the dues to the Bank.
Risk Fund:
A risk fund shall be created under this Scheme by charging the investment account @ 2% at a
time against total investment at the rate of I % per annum for 2 years. In case of any genuine
37

38. damage or if the concerned client totally incapable to the Bank, then the amount shall be covered
or adjusted from the risk fund
Other Terms & Conditions:
 The concerned Branch of the bank shall take possession of the goods supplied to the
client in case of his failure to repay 3 (three) installments consecutively.
 The client shall bear all necessary expenses relating to license, registration, insurance etc.
of the goods supplied.
 The client shall bear cost of all maintenance, repair and preservation.
 The client shall bear cost of all maintenance, repair and preservation.
 The client shall use and handle the goods with utmost care and he will be liable to pay for
any damage of the articles in his possession due to his negligence, carelessness and
inefficient use. In case of total damage and destruction of the goods or if it becomes
irreparable, the client shall be liable to pay immediately the balance amount of Bank’s
investment including profit.
 The client shall use the goods supplied to him personally and under no circumstances he
shall let-out or transfer the possession of the goods to others without prior written
permission from the Bank.
 The client shall be bound to allow the Bank’s Authorized agent and representative to
inspect the goods as and when require.
 The client, before availing the investment facility, shall execute Bai-Muajjal agreement
and other documents as per investment rules and procedure of the Bank.
 The client must keep the Branch abreast and informed about any change in his official
and residential address.
3.7.12 Investment Scheme for Doctors:
One of the fundamental rights of every man is to receive necessary Medicare facilities. Majority
of our people are denied and deprived of this right and a large number of our children are vilified
and suffer from malnutrition and ill health. Subsequently they become victims of various
diseases due to lack of education and knowledge about health care and preventive measures.
Medicare facilities as a whole are very limited in the country. Although medical facilities are
38

39. available to some extent in the cities and towns, majority of the people of the rural area die
without Medicare and treatment after prolong sufferings from various diseases.
A good number or newly graduated doctors from Medical Colleges are unemployed. Many of the
medical graduates are waiting for job because the opportunity for Government service is limited.
If these young doctors could be self-employed by extending investment facilities, they could
make modem facilities available at the door-steps of rural people.
Besides, experienced and specialist physicians who are providing Medicare facilities to the
people in different towns with their limited and outdated medical equipment will be able to
improve the standard of their techniques of treatment and also make the modem treatment
facilities available to more people, if investment facilities are extended to them for procurement
of modern and improved medical equipment. The constitution of Bangladesh had made it
obligatory to ensure good health for all and the movement is also committed to ensure good
health for all by 2020 years.
In view of the above facts, lslami Bank Bangladesh Limited has taken the initiative an introduced
the” Doctors Investment Scheme” to ensure modem treatment and medical facilities available to
the people through extension of Bank’s investment facilities for self-employment of newly
graduated doctors and at the same time extending investment facilities to the established medical
practitioners to procure modern and sophisticated medical equipment.
Objectives
1. To provide investment facilities for establishment of chambers, clinics, pharmacies and
procurement of medical equipment by the unemployed medical graduates and thus to
provide self-employment.
2. To assist newly passed unemployed medical graduates to establish clinics by way of
formation of groups by 5 doctors.
3. To assist experienced and established physicians to procure improved and modern
medical equipment and thus to improve the standard and techniques of treatment.
4. To assist specialists and consultant physicians to procure specialized medical equipment
for extending improved treatment to the people.
39

40. Areas of Investment:
1. Establishment cost of Chambers, Pharmacies & Clinics. Procurement of medical
equipment and purchase of Motor Cycle for visiting patients in rural areas in case of
newly passed medical graduates willing to settle in district and Thana towns under self-
employment.
2. Procurement of modem medical equipment by experienced and established doctors.
3. Procurement of modem and sophisticated medical equipment and appliances by
specialists and consultant physicians.
4. Cost of establishment of clinics, purchase of machinery, equipment, accessories and other
goods in case of establishment of dinics by a group of doctors.
Investment Mode:
 Hire purchase Shirkatul Melk: For purchasing of medical equipment and accessories,
motro-cycle and other goods.
 Bai-Muazzle: For purchasing chamber, establishment of clinic and Medicines.
Equity:
 New doctors (under self employment scheme: maximum 10%
 Established specialized doctors: minimum 20%
 Established clinic /diagnostic centre minimum 30%
3.7.13 Small Business Investment Scheme:
Bangladesh a third-wood developing country is rich in natural and human resources. Inspite of
vast possibilities, the majority people of the country live-in hardship-below poverty tapped,
explored and exploited. Physical labor is their only means of earning. A large segment of this
populace is active youth force. Many of them are efficient, intelligent and energetic with
initiative & drive and have courage to tale risks. But they cannot uplift their socioeconomic
condition due to poverty, lack of financial support and other required facilities. Lack of capital
compelled many small traders to leave their profession. As a result in our country not only
40

41. unemployment problem increased but also the young generation is involved in anti-social
activities; thus creating threat to the social life.
Aims and objects:
 To expand investment facilities for the small traders entrepreneurs in urban and rural
areas with a view to raise their level of income and to improve their quality of life.
 To inspire and encourage unemployed youths to establish small business enterprises and
thereby to create opportunities for self- employment for ensuring social justice and
welfare of the people in large scale.
 To extend investment facilities to those small entrepreneurs who could not avail credit or
investment facilities from any bank or financial institutions or otherwise deprived of from
such investment facilities.
Eligibility of the Clients:
 Investment clients must be permanent residents of the command area of the branch
through which they intend to avail investment facilities and they must have valid trade
license and shops or selling centers.
 Small business and entrepreneurs who are already engaged in trade and business but can
not run their operations smoothly for shortage of fund! capital valid to avail investment
facilities under the Scheme.
 In vestment shall also be extended to those poor and asset-less unemployed who are
honest, efficient, physically and mentally capable with drive and initiative, especially
those who have ability to run business.
 Besides the above categories, investment facilities under this Scheme shall also be
extended to small and cottage industries and service sector.
Investment Area:
All branches of the Bank are eligible to extend investment facilities under this scheme within 10
(ten) kilometres radious of the respective branch. However, for the deserving and justifiable
cases the Management may extend the command area upto a raious of 20 (twenty) kilometres.
Sectors of Investment:
41

42. A) Livestock Rearing of cow, beef fattening, raising and rearing of goats and sheep, poultry,
ducks and pigeons.
b) Fishery Fish cultivation: excavation, re-excavation and leasing of ponds for cultivation of
fish.
c) Agro-processing: Cane bamboo and choir products, just bags and jute products, spices,
ghee, molasses, flour making; oil extraction, sugarcane crushing, paddy and pulses
husking, bee-keeping and honey collection and processing and handicrafts etc
d) Manufacturing Garments making, various types of workshops, container making (plastic,
metal, glass etc), and repairing of rickshaw van and hood of rickshaw, furniture making,
quilt and related products making, boat buildign and repairing blacksmith works bobbin
making (plastic, metal etc) manufacturing of spare parts for handloom, candle making, oil
seed crushing machine making, basket making, household steel iron implements making
manufacturing of various iron products (wire nail, wire net etc) rope making , cap making
; chanachur preparation, adhesive making , making and repairing of bullock-buffalo cart,
tanga, ice-cream, school and other vans.
e) Trading/shop keeping Rice-paddy, pulse, salt, pepper, vegetables, molasses, firewood,
timber, chicken, fish, dry fish, cattle, banana, onion, betel-nut, seasonal fruits, bamboo,
milk, fertilizer, tea, potato: coconut, spices, stationary, goods, grocery items, lungi,
clothes, saree, mustard seeds and oil, brick, spareparts, ginger, oil, cake, leather, just
products, second-hand clothes, cotton, peanut, cotton bags, yam, choir, bamboo made a )
products, slippers and shoes, seeds and plants, pottery products, seasonal agriculture
products, utensils, wheat, coconut oil, restaurant and hotel honey sugarcane, stove, silver,
fish feed, cattle feed, garlic, various food items, crockery, medicine, hardware, iron and
steel items, sweetmeat, bicycle, rickshaw, rickshaw van parts, glass, watch, electrical
goods, books under wears, gamsa, towel, shocks, handkerchief, leather goods, aluminum
and other household items, homeo-medicine, optical, bakery item etc.
f) Transport Purchase of rickshaw, rickshaw van, bullock cart, tanga, country boat and
motorized boat.
g) Services Laundry, flour mil1 repairing shop and workshop, pumping shop, spice
grinding, mill, paddy-pulse husking mill, saw mill, dying and printing, signboard shop,
yarn twisting factory, watch repairing shop, television, radio and other electronics
repairing shop, refrigerator repairing shop; mustered oil processing shop.
h) Agriculture Implements and Forestry purchase of hand tube wells, farming and
plantation; vegetable garden, sugarcane, litchi garden, mango and jack-fruit, betel nut,
42

43. guava, pineapple and fruit garden; purchase of seed and sapling, silk cocoons, bee-
keeping, honey collection and processing.
i) Miscellaneous Computer for printing, packing, training and other purposes (except
trading), Photostat machine, graphic camera & contact machine for graphic printing,
machineries of repairing & manufacturing, any other machines for tailoring shop,
machineries for ball pen industry, any other machineries or equipments deemed suitable
by the Branch for income generating activities.
Maturity of Investment:
 For HPSM: Maximum 24 months
 For Bai-Muajjle: Maximum 12 months
Equity
 For HPSM: Maximum 20% on the total value of equipment I transport
 Bai-Muajjle (Tk): Not applicable
Security:
For Investment up to Tk. 30,000.00
 Hypothecation of existing and future stock of goods. Ownership of machines &
equipments shall remain in Bank’s name.
 Personal guarantee of financially sound respectable 2 (two) persons! prominent
businessmen acceptable to the Bank shall have to be given.
 Collateral security may relax considering the feasibility of investment and client’s ability
and sincerity. For Investment over 1k. 30,000.00
 Hypothecation of existing! Future stock of goods. Ownership of machines & equipments
shall remain in the Bank’s name.
 The client shall have to give mortgage of immovable properties to the Bank.
Risk Fund:
43

44. A risk fund is made by bank yearly at a fixed rate on total value of this type of
investment. In case of default of client, this fund is used for adjustment.
3.7.14 Housing Investment Scheme:
One of the basic human needs is to have a house to live in. Housing has now become an acute
problem in the country, especially in the towns, cities and metropolis. With their limited income,
it has become almost impossible on the part of the lower middle class, middle class and
sometimes, even for upper middle class to solve their housing problem. To meet this basic
human need, Islami Bank Bangladesh Limited is committed to contribute to this end to provide a
peaceful and happy.
Objectives:
 To extend the benefits of the investment of the Bank under the Scheme to different
sections of the people.
 To assist in solving the existing housing problem of the country.
 To assist the service holder of professionals with fixed income to arrange for house of
their own.
 To extend and investment facilities of the Bank to every nook and corner of the country,
by size of investment, by sector of investment and on the basis of geographical area.
 To make investment facilities easily available under Islamic Shanah to those people who
do not want to avail investment facilities from interest-based financial institutions.
Target Area:
At the initial stage, the Scheme is being implemented in:
 Dhaka metropolitan area.
 Chittagong metropolitan area.
 Rajshahi metropolitan area.
 Khufna metropofitan area.
 Sylhet metropolitan area.
Later on the Scheme will be implemented in other district headquarters and business areas in
phases.
Scope of Investment
44

45.  Investment is to be extended to build new houses on the client’s own land, to purchase
built houses /apartments mats and for extension! completion of the house
constructed/under construction.
 The building to be constructed on the land must be as per approved plan of the competent
authority of that area, viz. RAZUK, COAI ROA, KOA etc.
 The amount of investment will be limited to the following:
a) For construction of new building on clients own land: Maximum 60% of the
total investment will be mode by bank, which do not exceed Tk. 30, 00,000
b) For purchase of apartment/ftat/ready-made house: maximum 50% of the total
investment wil[be made by bank, which exceed Tk. 20,00,000.
 If any client intends to provide the following securities to the Bank duly discharged!
Completing necessary formalities by him, Bank may allow further or additional
investment in excess of the aforesaid ceiling to the extent of 100% of the value of the
securities: TOR & Mudaraba Savings Bond of Islami Bank Bangladesh Limited,
TOR/Fixed Deposit of any scheduled Bank, Wage Earners Bond, ICB Unit Certificates,
and National/Defense Savings Bonds! Sanchaypatra etc., Sank Guarantee from any
scheduled Bank.
Mode of Investment: HPSM
Period of Investment
 The maximum period of investment shall be generally 15 years.
However, the period of investment shall be determined on the basis of the proposal of the
client, the amount of investment (for which the client has applied) and the ability of the
project or client to repay the dues.
 Reasonable gestation period for construction be allowed considering the size of
construction and Bank’s investment.
Rent for Bank:
Bank’s Rent the Bank, in accordance with its normal practice shall decide rent on the
investment. The clients, who will repay the entire dues in time or before the stipulated
time by way of payment of all due installments regularly, they will be allowed rebate on
the rent.
45

46. 3.7.15 Real state Investment Program:
Professionals, Service-holders, Businessmen, Real Estate Developer and other categories of
people who are not entitled for availing investment facilities under Housing Investment Scheme,
shall be eligible under this program Investment is to be extended to build new houses and for
extension. Completion of the house already constructed, commercial building, shopping
complex, flat apartment etc
3.7.16 Transport Investment Program:
Under this scheme, investment in being allowed to the existing successful businesspersons and
potential entrepreneurs in this sector for all types of road and water transport with simple and
easy terms and conditions. The bank is also extending investment facilities
to multinational companies, established, business houses and well to do officials and
professionals for acquisition of private cars, microbus and jeeps.
3.7.17 Car Investment Scheme:
Car is considered as on essential mode of transport in the modern society, particularly by a
section of the officials, business houses and business executives and established professionals for
movement in discharging their duties and responsibilities punctually and efficiently. Many of
these categories of people cannot purchase a car on payment of entire purchase value at a time
out of their own sources. To meet this need Islami Bank has introduced the ‘Car Investment
Scheme’ for the mid and high ranking officials of government and semi-government
organizations, corporations; executives and directors of big business houses and companies arid
also for persons of different professional groups on easy payment terms and conditions.
Objectives:
 To meet the demand of senior officials of different organizations, established business
houses and companies and persons of various professional groups who essentially need a
car but cannot afford to purchase on payment at a time.
 To assist the above categories of persons to procure a car on easy payment terms and
conditions and thus become its proud owner.
46

47.  To assist in minimizing transport problem in the private sector and help the mid and high-
ranking officials and professionals with fixed income in the improvement of their
standard of living.
 To extend the range of Banks investment facilities to various sections of people in line
with the ideals of the Bank.
 To diversify the investment portfolio of the Bank by size, sector and volume.
Beneficiaries:
Permanent senior officers/executives of the following organization Category-A
 Government Organizations.
 Semi-Government Organizations/Autonomous Bodies/Corporations.
 Banks.
 Commissioned Officer of Armed Forces, BDR, Police and Ansars. eachers of the
Universities, Government Colleges.
Category-B
 Executives/Directors of big companies and business houses of repute.
 Member of all ‘other professional groups having good income.
The clients, in both the categories, must be within age group of 27-50 years with minimum 6(six)
years unexpired service in case of service holders. In all cases the clients must have sufficient
capacity to pay the installments in due time to the satisfaction of the Bank. The Bank reserves the
right to regret the sanction of any proposal not found suitable.
Client’s Equity
Minimum 30% of the purchase cost of the vehicle. The amount of equity shall
have to be deposited with the Bank before disbursement of Bank’s investment.
Period of Investment
Period of investment is maximum 4 (four) years from the date of disbursement or delivery of the
vehicle to the client, whichever is earlier.
Mode of Investment:
a. Hire Purchase
b. Hire Purchase under Shirkatul Meelk.
Bank’s Charges
47

48.  Rate of Return: 13% per annum or the rate to be determined time to time.
 Risk Fund: 1 % per annum (2% per annum where the supervising agents not engaged).
 Supervising Charge: I % per annum. Nil, where supervising agents not engaged.
Insurance: The vehicle shall be covered by first party (comprehensive) insurance covering all
possible risks throughout the investment period at the cost of the client. The client shall have to
ensure timely renewal of insurance and payment of premium.
Registration: The car shall have to be registered in the name of the Bank only. After payment of
the entire investment of the Bank including the charges etc., the car shall be transferred in the
name of the client.
Maintenance: The client shall have to maintain the vehicle properly for ensuring its normal
operation and shall be solely responsible for loss/damage, if any, as long as it is in his possession
irrespective of risk covered by insurance policy. Accordingly, repairing and maintenance cost of
operation during investment period, renewal of blue book, tax token, fitness and insurance shall
have to be borne by the client.
Inspection: For the purpose of inspecting the status, operation and custody of the vehicle, the
Bank or its authorized agent has the right, at all reasonable time, to enter into the house, office,
factory, garage or the premise of the client where the vehicle is kept.
3.7.18 Rural Development Scheme of IBBL:
Islami Bank Bangladesh limited (IBBL) envisages an economic system based on equity and
justice. Taking into consideration that majority of the population below poverty line lives in rual
Bangladesh, the Bank has devised a Rural Development Scheme (RDS) with a view to creating
employment opportunity for them and alleviates their poverty through income generation
activities.
The IBBL through its RDS project has been implementing integrated program for the landless
poor, eage laborers and marginal farmers aimed at meeting their basic needs and promoting their
comprehensive development. Consciousness among the poor needs to be enhanced so that they
can firm ups their position in the socio-economic structure of the country. In order to consolidate
their economic base, invested money should be used in income generating activities so the
poorer section of the population can become self-reliant. RSD works for the realization of that
objective.
48

49. Objectives:
The followings are the important objective of IBBL’s Rural Development scheme:
 To bring the poorer populating within an organizational framework by setting up certain
rules and regulations with a view to free them from the curse of poverty and make them
self reliant, thereby converting RDS into a self reliant sustainable programs.
 To extend bank investment to agricultural and non-agricultureal sectors in the rural areas.
 To invest on employment and income generation activities of the rural population.
 To provide self-employment for distressed people.
 To provide self-employment for the poor and distressed by group/center formation.
 To bring both male and female to provide employment under income generation activities
and help them to attain self-reliance step by step.
 To continue to support the self-reliance drive of the poor in their search of capital
formation from savings they make out of their increased income.
 To help reduce and eventually stop, through enhancement of their income, the lending on
thigh and exorbitant rates of interest by the village money lenders, the advance sale of
crops, land and mortgage of land by the poor at the time when they are most in need.
 To follow an approach of comprehensive development side by side will economic
development and
 To provide financing to develop housing in the area.
Selection of Ideal Village
For creating an ideal village, one/more villages to be selected within to km of each specified
branches area. While doing this considers the following matters.
 Easy transportation
 Having agricultural non-agricultural sectors.
 Majority of low income holder
After primary selection, baseline survey will be done in that village.
Mode of Investment
 Bal Muajjle (TR)
 Mudaraba (TR)
 Bai-Murabaha (TR)
49

50.  HPSM
 Musharakah
 Bai-Salam
Profit on Investment and other charges:
Clients should carry specific rate of profit on net investment of bank, supervision fee & risk
fund.
Security:
o For every member: Pejsonal guarantee from other member of his Ther group
should be provided for each investment scheme.
o For cultivation of fish in pond and purchase of equipment for agriculture and
irrigation: Assisted security is taken
3.7.19 Agriculture Implement Investment Scheme:
Bangladesh is predominantly an agricultural country with vast majority of people living in rural
areas. Most of our people for their living are dependent on agriculture. Agriculture still
contributes the lion share of the gross domestic product. But we could not as yet become self-
sufficient in food production. We still import a bulk quantity of food grains from abroad to meet
the deficit. This reliance on others we must modernize our agriculture and establish more and
more industries n order to minimize imports.
We can bring about revolutionary changes in the agricultural sector by adopting modern
agricultural technology replacing the age-old traditional way of cultivation and increasing the use
of fertilizer. This can only be done by collective efforts of both public and private sectors. Islami
Bank Bangladesh Limited is a welfare oriented Bank. It can play positive and important role in
the economic development, progress and uplift of the country by investing in the agricultural
sector. The Bank has, therefore, introduced “Agriculture Implements Investment Scheme” to
provide power tillers, power pumps, shallow tube wells, thrasher machine etc. On easy terms to
the unemployed youths for self-employment and to the farmers to help augment production in
agricultural sector
Objectives:
50

51.  To create opportunities for self-employment of un-employed rural youths.
 To help farmers to augment agricultural production.
 To assist in the introduction and use of modern technology in the auricular sector.
 To play auxiliary role in achieving self-sufficiency in food production.
Items of Agricultural Implements:
 Power tillers
 Power pump
 Thrasher Machine
 Shallow Tube well
 Any other agricultural implements proposed by the branch and which has local demand.
 These implements may be of any popular brand. Any locally manufactured brand, which
has large demand, is also acceptable. The choice of investment clients shall be given
preference in this regard.
Investment Area
Investments are allowed under this Scheme through all branches of he Bank except the branches
located in the metropolitan areas. The command area of the concerned branch is within 15 miles
radius from its location.
Period of Investment: 2 (Two) years
Mode of Investment: Hire Purchase Shirkatul Melk
Client Equity:
Generally the investment client shall have to pay 20 % of the cost of agriculture implements
equipment as equity. Equity shall be 10% if the Bank undertakes any special project under the
supervision of any registered NGO approved by the Bank. The client shall have to bear the cost
of installation of the agriculture implementsequipment and related expenses.
Risk Fund
Risk Fund Under this scheme a risk fund shall be created by debiting the concerned investment
account an amount equal to 2%of the Bank’s investment at a time at the rate of I % per annum
for 2 years.The risk fund will be utilized for the following purposes:
51

52. I. For meeting the cost of repair of the implements supplied if there is any damage of the
implements due to accidents during operations.
2. To cover the loss if any against the investment subject to approval from
the head office.
3.7.20. MICRO Industries Investment Schemes:
Bangladesh as a developing country has been trying for its overall economic growth. One of the
major problems confronting its growth is lack of development of enterprises and potential
entrepreneurs who can create more job opportunities by establishing new enterprises in the
industrial sector. There are a number of educated unemployed youths and also skilled & semi
skilled unemployed persons in the country. Besides, every year quite a good number of youths
are coming out of the general/technical educational institutions to add to this already crisis ridden
employment market.
Development programs and efforts will bring no meaningful result unless and until income
generating employment opportunities can be created for the growing number of unemployed
people including the educated unemployed youths. Establishment and expansion of micro
industries can play a vital role in creating more employment opportunities as well as in the
overall socioeconomic development of the county.
Islami Bank Bangladesh Ltd. has been appreciably participating in this direction by financing
industrial sector. With a view to creating wider base for industries, the Bank has decided to
launch “Micro Industries Investment Scheme” through its Branches. This scheme has been
devised to career to the investment needs of those persons who intend to set-up new micro
industrial ventures or to restructure their old units by way of BMRE involving a total cost of Tk.
5.00 lac.
This is intended mainly to create new jobs for the educated, skilled & semi unemployed and also
to encourage those who remain outside the purview of investment due to shortage of funds and
insufficient collateral. The scheme has been prepared with easy terms and conditions to
encourage the small entrepreneurs, educated unemployed youths and skilled Semi skilled persons
to come forward for establishment of micro industries commensurate with the local demand.
Objectives: The main objectives of the scheme are as follows:
52

53. 1. To create income generating employment opportunities through establishment of new micro
industries and BMRE of existing units by providing necessary investment facilities.
2. To encourage establishment of micro industries in different areas of the country by potential
entrepreneurs like educated unemployed youths, technically qualified and skilled I semi skilled
persons
3. To encourage wage earners to utilize their hard-earned money in the country by providing
additional investment needs for establishment of micro-industries.
4. To provide investment facilities for self-employment of the unemployed and under employed
persons having education, knowledge, skill, experience and initiative to undertake micro
industrial enterprises.
List of Micro Industries:
Food and Agriculture Industries: Bakery & Confectionery, Mills, Oil Mill, Flour Mill, Dal Mill,
Chira Mill, Ice Factory, Farm, Beef Fattening, Dairy (small! medium), poultry, Fish
Farm/shrimp Culture, Hatchery (Shrimp and other fishes) poultry Feed! Fish Feed, Food
products, Lozenge, Chanachure etc, Food products (Jam, Jelly and other types of fruit processing
I canning). Dried Fish, Coconut Products, Mill Processing & Pasteurization Plant.Plastic &
Rubber industry Polythene, Plastic & Rubber products, Rubber Tread, PVC products.
Forestry & Furniture Industries: Furniture, wooden furniture, steel furniture, Cane Furniture,
PVC Furniture, etc. Woodwork saw Mill, Nursery.Engineering Workshop (Mech/Automobile
workshop, welding etc.). Spare parts manufacturing, wire nails Wire, Netting Nut-Bolts etc.,
Filter Aluminum products, sanitary goods.
Leather industries: Leather products, Footwear etc.
Chemical Industries: Sop (Both washing & toilet soap), Chemical Products, Cosmetics
industries, Leather and Textile chemical.
Textile industries: Silk Yarn, Weaving (Power Loom! Hand Loom), Ready-made Garment’s
Garment Accessories etc. shoe, Lace, & Tape etc. Hosiery,
Dyeing & Printing: Screen Printing, Specialized silk, Screen, Printing, Block
Printing, Batik Printing, Handloom products
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54. Recycling Industries: Waste Cotton Refiner, Waste Plastic Recycling chapels, plastic toys etc.
Waste Paper and Polyphone Recycling
Service Industries: Service shop (Radio/ Two-in-One/T.V./Computer etc.).
Electrical Accessories industries: Electrical items (Fan, Bulb, and Motor Parts etc.) Decoration
Light shades
Computer Technology: Computer Training centre, Development and assembling of Hard Ware
Soft ware technology.
Paper Products Industries: Printing presses, Packaging! Board! Packing
Materials, Graphic Scan, Printing Process Studio etc. Handmade paper /Office Stationery
Mirpur silk Weavers /Investment Scheme
The scheme has been taken up to assist the silk weavers of Mirpur area particularly in respect of
requirement of working capital, BME of existing unit by adding further machinery’s. To develop
new entrepreneurs and to assist the workers for getting further training for producing products of
various modem design and for modernization of the Silk sector.
3.7.21Comparative analysis of 5 private sector Banks from different angles as on
31.12.2007:
(Amount in Million Taka)
sl particulars IBBL NBL IFIC ABBL CITY
1 2 3 4 5 6 7
1 Year of Establishment 1983 1983 1983 1983 1983
2 Equity
a) Paid up capital 3801.60 1208.21 670.72 743.26 1188
b) statutory reserve 3026.5 1213.26 952.04 1356.91 896.95
c) Gen. Reserve and other reserve 6893.71 1733.74 954.13 2070.26 553.65
d) Provision on U/C Investment 2005.72 514.91 342.35 566.67 500.8
e) Exchange equalization 38.41 41.37 125.85 47.97 16.90
f) Total equity 15765.94 4711.49 3045.09 4785.07 3156.30
3 Total deposit 166325 47961 29900 53375 40540
a) cost bearing deposit 145392 38370 23953 45817.6 32914
b) % to total deposit (3.a/3) 87.41% 80% 80.11% 85.84% 81.19%
c) cost free deposit 20933 9591 5947 7557.4 7626
d) % to total deposit (3.c/3) 12.59% 20% 19.89% 14.16% 18.18%
e) Deposit per Branch (3/36) 894.22 474.86 433.33 751.76 488.43
F) Deposit per employee (3/23) 19.74 19.72 14.97 30.94 20.36
4 Total Investments 165286.32 44236.1
4
32217.1
4
49799.9
5
34339.08
a) General investment (Loans and advance) 144920.61 36475.7
5
28361.4
5
40915.3
5
26788.47
b) % of total investment (4.a/4) 87.68% 82.46% 88.03% 82.16% 78.01%
54