You are on page 1of 33

Internship Report

REPORT
ON
GENERAL BANKING
OF

AL-ARAFAH ISLAMI BANK LIMITED


(Agrabad Branch, Chittagong )

Submitted to:

Submitted by:

Internship Report

TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION OF THE REPORT
1.1
Introduction
1.2
Objectives Of The Study
1.3
Scope Of The Study
1.4
Methodology Of The Study
1.5
Limitation Of The Study

1
2
2
3
3

CHAPTER TWO: COMPANY PROFILE


2.1
Company Origin
2.2
Definition of Islamic Banking
2.3
Islamic Banking Concepts
2.4
Islamic Banking -- Movement throughout the World
2.5
Islamic Banking Movement in Bangladesh
2.6
Differences Between Islamic Banking & Conventional Banking

4
4
4
5
5
7

CHAPTER-3 AN OVERVIEW OF AL-ARAFAH ISLAMI BANK LIMITED


3.1
Historical background of AIBL
8
3.2
Corporate profile of AIBL
9
3.3
Vision & Mission of AIBL
10
3.4
Product & Services of AIBL
11
3.5
Shariah Board
11
CHAPTER-5 FINDINGS AND RECOMMENDATIONS
5.1
Major Findings
5.2
SWOT Analysis
5.3
Recommendations
5.4
Conclusion
Bibliography and References

32
33
34
35
36

Internship Report

Chapter One: INTRODUCTION


1.1 Introduction
Banks have influenced economies and politics for centuries. Historically, the primary
purpose of a bank was to provide investments to trading companies. Banks provided funds
to allow businesses to purchase inventory, and collected those funds back with interest
when the goods were sold. For centuries, the banking industry only dealt with businesses,
not consumers. Banking services have expanded to include services directed at individuals.
Like other services, bank also provide loan to its client. In some organization it is also
known as investment. At present this is the most important income sources for bank. Both
general public and the government are dependent on the services of banks as a financial
intermediary. Banks are established at profit-earning concern; they collect deposit at the
lowest possible cost and provide investments and advances at higher cost.
This investment activity is also used in the worldwide and get preference as a source of
income. Almost all the bank provides this service. Most of the bank works only for
investment department, for example, providing advice and information about investment,
help for investment sanctioning, give advice for running business and return of investment
amount. Sometimes they also work as intermediary for their client with other bank.
AL-Arafah Islami Bank Limited (AIBL) also provides investment to its clients. As it is
based on shariah principle, here investment activities are conducted with shariah principle
and that is why Profit rate is not fixed rather than estimated .
Banking sector is expanding in to different financial events every day. At the same time the
banking process is becoming faster, easier and the banking arena is becoming wider. So
the service of General Banking department of AL-Arafah Islami Bank Limited (AIBL)
should also be increased. In order to survive in the competitive field of the banking sector,
all banking organizations are looking for better service opportunities to provide their
fellow clients. As a result, it has become essential for every person to have some idea on
the bank and banking procedure.

Internship Report

1.2 Objectives of the Study


The objective of the practical program is to familiarize MTO with the real world situation,
to compare them with the business theories & at the last stage make a report on assigned
task. The main objective of this report is to have an overview about General Banking
activities of Al-Arafah Islami Bank Limited (AIBL). How the Bank performs its general
banking activities & providing facilities to its clients & to suggest improvement measure
for the development of the activities of Al-Arafah Islami Bank Limited (AIBL). In
addition, the study seeks to achieve the following objectives:

To know in the background of Al-Arafah Islami Bank Limited (AIBL).

To highlight the functions of general banking section.

To match theoretical study on general banking with the practical


details.

To observe the working environment in Islamic Banks.

1.3 Scope of the Study


In my report I have highlighted the general banking activities of the AIBL through the
knowledge gained while working in its Agrabad Branch, Chittagong. Before that, a brief
overview of the AIBL has been given to understand its mission, vision, management,
operations and activities by our mentors of AIBL Training & Research Institute. So the
scope of the report covers the comprehensive knowledge on the organization of AIBL.
Most importantly, I have tried to analyze and evaluate the general banking based on
adequate information contained in documents and interviews of banking officers.

Internship Report

1.4 Methodology Of The Study


In order to make the report more meaningful and presentable, two sources of data and
information have been used widely.
The primary sources of Data are:

Face to face conversation with the respective officer of the branch.


Face to face conversation with the clients.
Some relevant circular as provided by the officers concerned.
Observation.
The secondary sources of Data are:

Different books, articles etc. regarding For General Banking operations.

1.5 Limitation Of The Study


The following limitations are apparent in the report:

Time is the first limitation as the duration of the program was of 10(ten) Days
only.

Banking sector and its operation process is complex.

Insufficient supply of relevant books and journals to make a comprehensive


study

As the officers are very busy with their daily work, they could provide very
little time.

In many cases, up to date information is not published

Internship Report

Chapter Two: COMPANY PROFILE


2.1 Definition Of Banking
Banking is the activities undertaken by banks; this includes personal banking (nonbusiness customers), commercial banking (small and medium sized business customers);
and corporate banking (large international and multinational corporations).Oxford
Dictionary of Finance and Banking.

2.2 Islamic Banking


Islamic banking refers to a system of banking or banking activity that is consistent with the
principles of Islamic law (Shariah) and its practical application through the development
of Islamic economics. Shariah prohibits the payment of fees for the renting of money
(Riba, usury) for specific terms, as well as investing in businesses that provide goods or
services considered contrary to its principles (Haraam, forbidden). While these principles
were used as the basis for a flourishing economy in earlier times, it is only in the late 20th
century that a number of Islamic banks were formed to apply these principles to private or
semi-private commercial institutions within the Muslim community.1
The General Secretariat of the Organization of Islamic Conference (OIC) in its Foreign
Ministers Conference held in Senegal in 1978 approved the definition of Islamic Bank as
A financial institution whose statutes 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.
1 financeinterestfree.blogspot.com/2011/03/introduction.html

Internship Report

It appears from the above definitions that Islamic banking is systems of financial
intermediation that avoids receipt and payment of interest in its transactions and conducts
its operations in a way that it helps to achieve the objectives of an Islamic economy.

2.3 Basic Differences


Conventional Banking

Between

Islamic

&

Internship Report

Source: www.google.com (Hatem Al Banna, MSc, CFC)

2.4 Corporate Profile Of Al-Arafah Islami Bank


Ltd.
Name of the bank
Status

Al-Arafah Islami Bank Limited


Private Limited Company.

Internship Report

Date of Registration
Opening Company
1st Branch
Registered Office

18th June, 1995.


27th September, 1995
Motijheel Branch, Dhaka
Peoples Insurance Building
36, Dilkusha Commercial Area
(6th - 9th Floor), Dhaka-1000
Tel:PABX : 7123255-7, 9568007, 9569353
Fax: 880-2-9569351
SWIFT : ALARBDDH
E-mail : aibl@al-arafahbank.com
Web : www.al-arafahbank.com
Mr. Badiur Rahman
Md. Habibur Rahman
Md. Mofazzal Hossain
Tk. 15000.00 Million
TK. 8,343.25 million

Chairman
Managing Director
Company Secretary
Authorized Capital
Paid-up Capital
Local

Partnership

of 100%

Capital
Equity

Tk.16,091.17 million

Deposit

Tk.140,980.55 Million

Investment

Tk.125,715.39 Million

Board of Directors

23
110
2387
58,466

Number of Branches
Number of Employees
Number of Shareholders

2.5 Company Origin


Al-Arafah Islami Bank Ltd is a banking company incorporated in the Peoples Republic
of Bangladesh with limited liability. Islamic ideology encourages us to succeed in life.
With the achieving of objective pursuing the way directed by Allah and the path shown
by His Rasul (SM), Al-Arafah Islami Bank Ltd was established (registered) as a private
limited company on 18 June 1995. The inaugural ceremony took on 27 September 1995.
The authorized capital of the Bank is Tk. 2500.00 million and the paid-up capital is Tk.
1153.18 million as on 31.12.2007. Renowned Islamic Scholars and pious businessmen of

Internship Report

the country are the sponsors of the Bank. 100% of paid up capital is being owned by
indigenous shareholders.
The bank is committed to contribute significantly to the national economy. It has made a
position contribution towards the socio-economic development of the country with 53
branches of which 17 is AD throughout the country.

2.6 Vision, Mission & Commitments


Vision

To be a pioneer in Islami Banking in Bangladesh and contribute significantly to the


growth of the national economy.

Mission

Achieving the satisfaction of Almighty Allah both here & hereafter.

Proliferation of Shariah Based Banking Practices.

Quality financial services adopting the latest technology.

Fast and efficient customer service.

Maintaining high standard of business ethics.

Balanced growth.

Steady & competitive return on shareholders' equity.

Innovative banking at a competitive price.

Attract and retain quality human resources.

Extending competitive compensation packages to the employees.

Firm commitment to the growth of national economy.

Internship Report

Involving more in Micro and SME financing.

Commitments

Ours is a customer focused modern Islamic Banking sound and steady growth in both
mobilizing deposit and making quality Investment to keep our position as a leading Islami

bank in Bangladesh.
To deliver financial services with the touch of our heart to retail, small and medium scale

enterprises, as well as corporate clients through our branches across the country.
Our business initiatives are designed to match the changing trade & industrial needs of the
clients.

2.9 Sections and Their Functions


There are mainly three sections in AIBL, viz, General Banking Division Investment
Division and Foreign Exchange Division. These Divisions have small department or units
under them. The details of the important sections and subsections are described below.
General Banking Division
There are certain three sections working together to fulfill the target of the company.
(a) Customer Service
(b) Cash Department
(c) Accounts Department
These are discussed in the below
(a) Customer Service

Accounts opening
Issuance of Cheque Book
Issuance of Payment Order
Issuance of T.T
Issuance of D.D
Issuance of Online Transfer
Handling transfer transaction

Internship Report

Operation of clearing house


Executing customer standing instructions
(b) Cash Department
Different functions of cash department are:
Receiving cash from the depositors.
Payment of cash to the client as demanded.
Checking all areas of deposit slip whether it is clearly written or not (name, account no,
amount)
Verifying the payment cheque when to pay the money to the clients whether the

information is available or not like dale, amount, account no etc.


All the received and payment money must be written down in the receipt & payment

register along with account no


Cash register must be maintained by the Cash Officer.
Maintenance of daily cash balance.
Preparation of monthly cash balance.

(c) Accounts Department


Accounting of AIBL can be broadly classified in the following
two groups:
1) General Accounting
2) Investment Accounting
i) General Accounting: General Accounting includes accounting for-general and
administrative expense, funding operation and fixed assets. Activities of accounting
subsection includes

Registration of voucher.
Posting of voucher in the ledger.
Preparation of unadjusted trial balance
Preparation of adjustments (accrual of expenses and income)
Preparation of adjusted trial balance
Maintenance of accounts with Bangladesh bank & other banks

ii) Investment Accounting: The company maintains its books of account based on the
operating method of accounting according to Generally Accepted Accounting Standards in
conformity with one the provision of relevant regulations of Bangladesh Bank.

Internship Report

Collection of receipts i.e. rental, profit


Control of collection i.e. maintain cheque register.
Reporting of information regarding rental collection i.e. cash collection statement.
Acknowledgement to the Account holder i.e. statement of accounts.
Preparation of overdue statement i.e-overdue statement for BOD.
Activities regarding delinquent charge i.e.-billing.
Treatment of irregular investment Account.

Investment Division
Functions of investment divisions are:

Preparing the proposal


Issuance of sanction letter
Disbursing the payment
Prepare & posting voucher

Internship Report

Chapter Three: GENERAL BANKING SYSTEM


OF AIBL
3.1 BANK
A bank is a financial institution and a financial intermediary that accepts deposits and
channels those deposits into lending activities. A bank connects customers that have capital
deficits to customers with capital surpluses. Due to their critical status within the financial
system and the economy, generally banks are highly regulated in most countries. Most
banks operate under a system known as fractional reserve banking where they hold only a
small reserve of the funds deposited and lend out the rest for profit. They are generally
subject to minimum capital requirements which are based on an international set of capital
standards, known as the Basel Accords.

3.2 General Banking


General banking department is the heart of all banking activities. This is the busiest and
important department of a branch, because funds are mobilized, cash transactions are
made; clearing, remittance and accounting activities are done here.
Financial institution that mediates or stands between ultimate borrowers and ultimate
lenders is knows as banking financial institution. Banks perform this function in two waystaking deposits from various areas in different forms and lending that accumulated amount
of money to the potential investors in other different forms. General banking department
aids in taking deposits and simultaneously provides some ancillaries services.
General banking is the front-side banking service department. It provides those customers
who come frequently and those customers who come one time in banking for enjoying
ancillary services. In some general banking activities, there is no relation between banker
and customers who will take only one service form bank. On the other hand, there are

Internship Report

some customers with who bank are doing its business frequently. It is an important
department for all banks because it provides day-to-day service to the customers. Front
Desk is the important for general banking. Customers give their deposits and meet their
demand for cash by honoring cheques. Besides this a customer opens new accounts, remit
funds, issues bank drafts and pay orders etc.

3.3 Division Of General Banking


General Banking department is the heart of all banking activities. Since bank is confined to
provide the services everyday, general banking is also known as 'retail banking'. In AIBL,
Agrabad branch, the following sections are under general banking system or department:

Account opening section


Deposit section
Cash section
Remittance section
Clearing section
Account section
Dispatch Section

Account opening section


Account section is the most important section in the AL-Arafah Islami Bank Ltd, Agrabad
branch as it supplies all numerical data and information of the bank. Staff payments, total
assets and liabilities, various income and expenditure are shown in the statement prepared
by the accounts department. It deals with opening accounts which is the core of running
the bank.
Account opening is the gateway for clients to enter into business with bank. It is the
foundation of banker customer relationship .This is the most important function of the branch
because by opening accounts bank mobilizes funds for investment. Various rules and regulations
are maintained and various documents are taken while opening an account. A customer can
open different types of accounts through this department in AIBL. Such as:
1. Al-Wadeeah Current Account
2. Mudaraba Savings Account
3. Mudaraba Short Notice Deposit Account

Internship Report

Al-Wadeeah Current Account


Current account is purely a demand deposit account. There is no restriction on
withdrawing money from the account. It is basically justified when funds are to be
collected and money is to be paid at frequent interval. Some Important Points are as
follows

Minimum opening deposit of TK. 2000/- is required;

No interest is given upon the deposited money;

Minimum TK. 2000 balances must always be maintained all the time.

No restriction in maintaining deposits

Types of current account that are provided by the bank are as follows:
Current Account for Individual.
Joint Current Account.
Proprietorship Current Account.
In case of opening a proprietorship current account, a copy of the valid trade license and
personal TIN must be submitted.
Limited Company current Account
To open a limited company current account, the requirements are the followings:

A certified copy of memorandum and articles of association.


Certificate of incorporation
Certificate of commencement of business (mandatory if public limited)
List of directors.
Board resolution.
List of names and specimen signature of those persons authorized to open
the account duly certified by the chainman /managing director.

Internship Report

Mudaraba Savings Account


Saving Accounts are designed especially for the group who have tendency to save. They
have been paid a fixed interest on their savings. There are two types of savings account in
this bank.

Individual Savings Account


Joint Savings Account

This deposit is primarily for small-scale savers. Hence, there is a restriction on


withdrawals in a month. Heavy withdrawals are permitted only against prior notice.
Minimum opening deposit of TK.500 is required. Minimum TK. 500 balance must always
be maintained all the time. The depositor is obligated to maintain a balance of at least TK.
2,000 for the sake of earning interest. One limitation considering the savings deposit
account is depositors can draw only twice a week if they want to get interest on the
deposited money. If a depositor draws more than twice a week s/he will not receive any
interest for that month. The interest rate for this account is 4%.
Mudaraba Short Notice Deposit Account
Normally various big companies, organizations, Government Departments keep money in
MSND-account. Before withdrawing, the depositor must inform the bank. The deposit
should be kept for at least seven days to get interest. The interest offered for MSND is less
than that of savings deposit. Interest is calculated based on daily minimum product.
Minimum opening deposit of TK. 5000/- is required.

Account Opening Procedure


This section opens accounts. Selection of customer is very important for the bank because
banks success and failure largely depends on their customers. If customer is bad they may
create fraud and forgery by their account with bank and thus destroy goodwill of bank.
K Y C (know Your Customer)
For opening A/C the following things are mandatory

Commissioner certificate
Two copy passport size photo of client.
One copy nominees photo
Sign of introducer is verified

Internship Report

Step 1

An Introducer who has an account in the bank is required to open account. Officials of
the bank concerned with account opening will be contacted for the purpose of opening
account

Step 2

Mentioning what type of account is desired to be opened to the officials and taking the
particular form

Step 3

The from is filled up by the applicant himself/ herself.


Two copies of passport size photographs from individual are taken and one
copy passport size photograph of nominee is taken; in case of firms
photographs of all partners are taken.
Applicant must submit required documents.
Applicant must sign specimen signature in required places.
Introducer's signature and accounts number - verified by officer.

Step 4

Authorized officer accepts the application.

Step 5

Minimum balance is deposited - only cash is accepted.

Step 6

Account is opened and a cheque book and a deposit book are given.

Table: Account Opening Procedure

3.4 Products And Services Of AIBL

Al wadiah current account (CD)


Mudaraba short notice deposit (MSND)
Mudaraba savings deposit (MSD)
Mudaraba term deposit receipt (MTDR)
Monthly installment based term deposit (ITD)
Monthly profit based term deposit (MPTD)
Al-Arafah monthly Hajj deposit (MHD)
Al-Arafah term Hajj deposit (THD)
Monthly installment based marriage savings investment scheme (MIS)
Al-Arafah savings bond (ASB)
Foreign currency deposits (FCD)
Pension deposits Scheme (PDS)
Cash deposit waqf deposit scheme (CWD)
Mudaraba lakhpoti deposit scheme (LDS)
Mudaraba millionaire deposit scheme (MDS)

Internship Report

Mudaraba (special) pension deposit scheme (MSPDS)


Mudaraba kotipoti deposit scheme (MKDS)
Mudaraba double benefit deposit scheme (MDBDS)
Mudaraba triple benefit deposit scheme (MTBDS)

Allah has permitted trade and forbidden interest (verse 275 of sura Al-baraka). And as
such Al-Arafah Islami Bank Limited operates with the objectives and commitment to
implement the economic and financial principles of Islam in banking arena blending
Islamic values and modern technologies with a view to achieve complete success in this
world and hereafter

To Provide quality service to our customers.


To set high standard of Integrity.
To extend our customers innovation services acquiring state-of-the-art technology
blended with Islamic principles, and bring total satisfaction to our clients and

employees.
To expand Islamic banking through welfare oriented banking system.
Ensure equity and justice in economic activities.
Extend financial assistance to poorer section of the people, and
Achieve balanced growth & equitable development.

The primary objective of Al-Arafah Islami Bank Ltd is to promote, foster and develop the
application of Islamic principles, law and tradition to the transaction of financial, banking
and related business affairs and to promote investment companies, enterprise and concerns
which shall themselves be engaged in business as are acceptable and consistent with
Islamic Principles, law and tradition. But the objectives of Al-Arafah Islami Bank Limited
in the context of its role in the economy are as follows:

To

Shariah
To contribute towards economic development and prosperity within the principles

of Islamic justice.
To facilitate efficient allocation of resources.

4. To help achieving stability in the economy.

offer

contemporary

financial

services

in

conformity

with

Islamic

Internship Report

Types of deposit accounts and their formalities


Current Account
In this kind of account a customer can deposit his money and can write one or more
cheque to withdraw their money. For doing this notice is not required. He can deposit
whenever he/she wants to and also can withdraw it whenever he/she wants to.
In the name of individual
The client has to fill up a light green account opening form. Terms and conditions are
printed on the back of the form. The form contains the declaration clause, special
instruction etc. two copies of passport size photographs duly attested by the introducer are
affixed with the form.
In Joint Name
In this type the formality is same as individual account, but the special instruction clause
either or survivor or former or survivor claused is marked. Information needed in case
of Limited company.
Proprietorship Account

Limited Company

Introduction of the account.


Two photographs of the signatory .
One photograph of the nominee
Seal of Signatory
Valid copy of Trade License.
Rubber stamp.
TIN number certificate.
Identity (Copy of passport or National ID).
Permission letter from DC/ Magistrate (in case of newspaper)

Internship Report

Introduction of the account.


Two photographs of all the signatories.
One photograph of the nominee (If nominee exists)
Seal of Signatory.
Valid copy of Trade License.
Board resolution of opening A/C duly certified by the

Chairman/Managing Director.
Certificate of incorporation.
Certificate of Commencement (In case of Private limited

company).
Certified (joint stock) true copy of the Memorandum and Article of
Association of the Company duly attested by Chairman or

Managing Director.
List of directors along with designation & specimen signature.
Latest certified copy of Form - xii (to be certified by register of

joint stock companies) (In case of Directorship change).


Rubber Stamp (Seal with designation of each person)
Certificate of registration (In case of Insurance Company Obtained from department of Insurance from the Peoples Republic o

Club/ Societies Account

Introduction of the account.


Two photographs of the Signatories .
One photograph of the nominee
Board Resolution for Opening A/C duly certified by President/

Secretary. List of Existing Managing Committee.


Registration (if any).
Rubber Stamp.
Permission letter from Bureau of N.G.O. (In case of N.G.O. A/C).

Closing of an account
The closing of an account may happen,

If the customer is desirous to close the account,


If the Al- Arafah Islami Bank finds that the account is inoperative
for a long duration.

A customer may close his/her account any time by submitting an application to the
branch. The customer should be asked to draw the final check for the amount standing to

Internship Report

the credit of his/her account less the amount of closing an other incidental charge and
surrender the unused cheque leaves. The account should be debited for the account
closing charge etc. and the authorized officer of the bank should destroy unused check.
In case of joint account the application for closing the account should be signed by the
joint account holders. The fee for closing of an account is TK.230 and Tk550 for savings
and current account respectively.

3.5 Various Scheme Of AIBL


AIBL offers different sorts of attractive schemes in its Agrabad branch. These are given
below:
Monthly Installment Term Deposit
The savings amount is to be deposited within the 10th of every month. In case of holidays
the deposit amount is to be made on the following day. The deposits may also be made in
advance.Deposit in monthly installment of @Tk200/-,TK.300/-, TK.500/-, TK.1000/TK.1500/- TK.2000/-,Tk3000/-,Tk4000/- and Tk5000/- is obtained under the aforesaid
scheme for a tenure of 2, 3, 5, 8, 10, and 12 years and the same is withdrawal with profit at
the end of the tenure. Generally, withdrawal is not advised before mature year, but if it is
withdrawn before the above term, then interest will be paid at savings rate. However, no
interest will be paid if the deposit is withdrawn within 1 year of opening the account.
Mudaraba Term Deposit Receive (MTDR)
It is a kind of fixed deposit. Now MTDR rate less than previous years. A profit is given
according to terms. It has the terms of 1 month, 3months, 6 months ,12 months, 24 months
36 months. If one wants to withdrawn its deposit amount before maturity then the bank is
not bound to provide profits. For 1 month rate of profit 3.50%, for 3 months the rate of
profit 6.30%, for 6 months 6.50% profits, for 12 months 6.50% profits, for 24 months
6.50% profits, for 36 months 6.50% profits.
Mudaraba double and triple the money schemes

Internship Report

These schemes have been introduced to provide an opportunity to people for safe deposits.
Under this scheme double scheme (DBDS) duration is 11 years 2 months interest rate is
7%, triple scheme (TBDS) duration is 18 years 1 month interest rate is 7%.
Lakhopoti Scheme
Savings helps capital formation. Lakhopoti scheme has been introduced with a view to
encourage saving habit amount the people. Under this scheme depositing monthly
installment of only TK. 2500 for 3 years/ TK. 1430 for 5 years/ TK. 800 for 8years/
Tk.600 for 10 years/ Tk.455 for 12 years one can cash on maturity a sum of TK 100000.

Millionaire Scheme
Under this scheme depositing monthly installment of only TK. 2020 for 20 years/ TK.
3245 for 15 years/ TK. 4530 for 12years/TK. 5850 for 10years/ Tk.9300 for 7 years/
Tk.11500 for 6 years/ Tk.14240 for 5 years/ Tk.18100 for 4 years/ Tk.25000 for 3 years
one can cash on maturity a sum of TK 1000000.

Kotipoti Scheme
Under this scheme depositing monthly installment of only TK. 20150 for 20 years/ TK.
25230 for 18 years/TK.32440 for 15 years/TK.42600 for 12 years/TK. 58475 for
10years/TK. 93100 for 7years/ Tk.114700 for 6 years/ Tk.142100 for 5 years/ Tk.180950
for 4 years/ Tk.249800 for 3 years one can cash on maturity a sum of TK 10000000.
Monthly Hajj Deposit
Hajj deposit at monthly installment from 1 (one) year to 20(twenty) years are accepted
under the above scheme to enable the account holder to perform Hajj out of the
accumulated saving with profit.
Onetime Hajj Deposit
Under the above scheme, fixed amount of Hajj deposits are accepted from the clients for
particular term and as per rules profit is accumulated thereon per year in this regard. Under

Internship Report

the scheme, the guardians may also open Hajj account to enable their successors to
perform Hajj. Highest amount of profit is paid in the above types of deposit by the bank.
Savings Investment Deposit
Deposit under the scheme is accepted by monthly installment and after expiry of the term.
Double amount of such savings is given as investment in feasible sectors by the bank as
per choice of the depositors without any collateral security. Any one by saving under the
scheme can take business venture on utilization the amount saved under the scheme.
Mudaraba Pension Benefit Deposit Scheme (PTD)
It has 2 and 3 yearly schemes. It will give a 12.6% profit on the amount of deposit. It is tax
exempted.

Cash Section
All sorts of transaction considering cash are taken in to care in the cash department. Cash
is deposited in the name of concern in the Bank and disbursed to the client by the
department.
The functions of a cash department are described below
1)Functions of cash department

Cash Payment

Cash Receipt

1. Cash payment is made only against cheque.


2. This is the unique function of the banking system which is known as payment
on demand
3. It makes payment only against its printed valid cheque.
1. It receives deposits from the depositors in form of cash.
2. So it is the Mobilization Unit of the banking system.
3. It collects money only its receipts forms.
Table: Functions of cash department

2) Cash payment or cheque cancellation process

Internship Report

Step a)

Receiving cheque by the employee in the cash counter

Step b) Verification of the following by the cash officer in the computer section
Step c)

Date of cheque (it is presented within month from issue date) issued from the

branch amounts in figure and sentence written does not differ signature of the drawer does
not differ cheque is not torn or damage.
Step d)

Gives pay cash seal and sends to the payment counter

Step e)

Payment officer makes payment

Remittance section
The major function of commercial Banks is mobilization of fund other then these banks
provide ancillary services to its clients. Clients need to remit money from one place to
another for their business or purposes. Banks fulfill this need of customers by means of
remittance service. Money can be remitted domestically or internationally which knew as
local remittance and foreign remittance respectively.
The main instruments used by AIBL of remittance of funds are

1.
2.
3.
4.

PO (pay Order)
DD (Demand Draft)
(TT)Telegraphic Transfer
MoneyGram

P.O (Pay Order)


Pay orders are the safest way of making payments, as they are drawn on the bank issuing
them. So there is no scope of forgery. It can be issued in favor of a customer holding an
account, by debiting his account and crediting bills payable liability A/C. The account
payees submit the pay order in their specific banks. The banks then send the pay order to
the clearing house where these are received by the respecting issuing banks. The issuing
banks verify the pay order, which are then send back to the respecting banks and payment
made by debiting the payable account.
AIBL charges different amount of commission on the basis of Payment Order amount. The
bank charges for pay order are given in the following chart:

Internship Report

Total amount of PO

Commission

Tk.1to 10000

TK. 10.00

TK. 1 0,001. 00-TK. 1,00,000.00

TK.20.00

TK. 1, 00,001. 00-TK. 5,00,000.00

TK. 30.00

TK. 5, 00, 001. 00 and Above

TK. 50.00

Vat 15% of principal amount


Table: Charges for Pay. Order
DD (Demand Draft)
Demand Draft is very much popular instrument for remitting money from one corner of a
country another. The instrument is basically used for transfer and payment. Difference
between pay order and demand draft is in terms of place only P.O is used for remitting
money within the cities whereas D.D is used for the country. D.D too constitutes current
liability on the part of bank. At IBBL D.D is not sold people other than its customers.
Charges of DD
Service charge

Tk. 1 to Tk. 10000 = 107

Above Tk. 10000 = 1Tk. For every 1000

Telegraphic Transfer
Telegraphic transfer is one of the fastest means of transferring money from one branch to
another from one to another. The TT issuing bank instructs its counterpart by tested telex
message regarding remittance of money. No instrument is given for TT unless both parties
have account, as money is transferred.
Charges for issuing TT
Telephone charge Tk.307

Internship Report

Services charge

Tk. 1 to Tk.10000

=> Tk.107

Above Tk.10000

=> 1 Tk. For every 1000

MoneyGram
AIBL uses MoneyGram to take the remittance sent from abroad. The rate at which this
service is provided is only known to the Head office.

Clearing Section
Cheques, Pay Order (P O), and Demand Draft (DD) Collection from other banks on behalf
of its customer is a basic function of a Clearing Department. Clearing is a system by which a
bank can collect customers fund from one bank to another through clearing house.
Clearing House is a place where the representatives of different banks get together to
receive and deliver Cheques with another banks. Normally, Bangladesh Bank performs the
Clearing House in Dhaka, Chittagong, Rajshahi, Khulna & Bogra. Where there is no
branch of Bangladesh Bank, Sonali bank arranges this function. Previously Everyday
clearing house took in a place in Bangladesh Bank once in the morning called morning
house (1st house) another in the evening called return house (2nd house).But now with the
modern online system the process has been computerized and there is no need to go in
those two houses.
Types of Clearing
Inward Clearing: The Cheque or instruments of Al Arafah Islami Bank Ltd that are
submitted to other banks for collections of money of bills are called inward clearing.
Outward Clearing: The Cheque or instruments of other banks that are submitted to the Al
Arafah Islami Bank Ltd for collection is called outward clearing.

Dispatch Section

Internship Report

In dispatch section, the main job is keep record on inward and outward document. If any
document came into bank for various purposes from different organization or bank head
office or another branch but also if any document ,application go outward from bank these
all the record are included in dispatch section (examples: document letter of credit, joining
application , a/c reopening, A/c closing, letters from other organizations etc.).

Internship Report

Chapter Four: DISCUSSIONS


4.1 SWOT Analysis
In SWOT analysis two factors act as prime movers.
Internal factors which are prevailing inside the concern which include strengths
and weakness
On the other hand another factor is external factors which act as opportunity and
threat.
From the SWOT analysis we can figure out ongoing scenario of Al-Arafah Islami Bank
Ltd.
STRENGTHS

WEAKNESS

Wide Image.
Enthusiastic employee.
High deposit.
Excellent Management.
High commitment of customer.
AIBL banks has strong non-interest
earning base.
Qualified & experienced human
resource.
Satisfactory Environment.
Wide product line.

It has high cost fund.


It has highly exposed dependency on
term of deposit.
Inadequate IT infrastructure.
Inadequate delegation of power.
The bank has limited ATM service.
Officers have limited experience and not
enough trained.
Marketing policy is not well setup.

OPPORTUNITIES

THREATS

Increasing demand of client finance.

Lacking of customers awareness


regarding Islamic banking
At present most of the banks are
following the Islamic banking policy as
another part of their regular Banking
system.
Similar types of retail banking products.
Certain Bangladesh Banks rules and
regulations.
It has increased competition for the
market for public deposit.
Market share for lowering interest rate.
Deteriorated export, import and
guarantee business due to indecent
competition as well as economic slump.
Entrance of new private commercial
banks.
Young, energetic, dynamic, talent and
smart work force of competitors.
Govt. imposes high rate of taxes and vat.

Investment potential of Bangladesh.


Good prospect of more export import
business.
Relationship management.
Complacency among rival firms.
It has credit card business.
It has scope of market penetration
through diversified products and wide
banking network.
It has regulatory environment favoring
private sector development.
Develop relations and correspondence
with foreign banks.
More concentrated Banking based on
Islamic Banking.

Internship Report

4.2 Specific Responsibilities Of The Job


During my internship period I did lots of jobs, which were totally new top me. I got
practical job experiment on my internship. The specific jobs which I need to attempt most
of the time are following

Entering credit data into different excel templates


Putting seal and signature
Dealing with the clients as per the demand of clients and officials
Responding to the queries in details about different types of deposit schemes and

accounts
Preparing form of different deposit scheme and account
Inspecting the form boxes and making form as per need
Filling up the important unfilled terms on a form
Filling the used, closed and pending forms
Finding and delivering cheque books
Giving guidelines to fully fill a deposit scheme or account opening form
Informing clients about account balance and transaction
Delivering ATM cards

4.3 Finding Of The Study


Findings from the above discussions are given below.

When any customer comes to open an account, the banker should demand everything
necessary to open that account. But in many cases, accounts are opened without those.

When a joint stock company comes to open an account if the company happens to be
an existing one, the banker should demand copies of the balance sheet and profit
&loss account, which will reflect the financial growth of the company and its
soundness. But in practice companies and the bankers as well don't even bother

Internship Report

Officers of the bank are mostly competent. AIBL provides training but the facility isnt
sufficient especially for the lower level officers.

The bank offers very few service charges which is very good for the customers.

They are connected through telecommunication network for providing any branch
banking services to the customer.

Like most of the private banks, AIBL also imposes a target deposit for collection
upon its employees. Every employee has to go out for the purpose of deposit
collection, which they call "development purpose". It is an effective method no question
about it, since many banks of our country rely on this method. But sometime affect
negatively and cause job dissatisfaction. Officers of the desk, where workload is very
high, hardly get the chance to go out for development purpose and always feel that
their duties for the organization would not be evaluated unless they can show a good
amount of deposit collection against their name.

The cash counters are congested which hamper day to day teller activities and action
become delayed.

Recently offering locker service has become popular among banks. But AIBL does not
provide it. It can provide different online banking services like transferring money from
one account to another account or collecting bank statements using internet by the
customers themselves. But after starting, they have closed the aforementioned services.

All the services offered by the bank are similar and lying face down to limitation by
its competitors. Long established services may ease to satisfy fully the changing
needs of the customers.

In the client assessment, it was exposed that clients are very price-conscious. Price
plays both an economic and physiological role in the banking sector. Especially

Internship Report

customers of Al- Arafah Islami Bank who comes from largely middle class income
groups are likely to be very price responsive.

AIBL has not got a strong marketing policy. Very few initiatives have been taken to
be known among public through advertisement.

Lengthy procedure in handling simple general banking transaction such as issuing of


D.D,P.O,

Though AIBL using banking software named ABABIL but it is not highly
appreciated by the employees.

AIBL does not have enough ATM booths like other banks use to have which is great
problem for the customers.

4.4 Recommendation
With a view to ensure exciting services and opening up the new window of
progression as well as uplift, I would like to present the Al-Arafah Islami Bank Ltd.
with several recommendations like:
Online service should expand in more meaningful way to cover all the
functions of bank which will accelerate the international trade as well as
economic development;
All the branches of AIBL should have the facilities of the foreign
exchange
Branches should have the required autonomy in order to customized its
services to the local needs
All SWIFT Workstations should bring under the facilities of online
network.
Currency exchange rate should be competitive and it should fix with due
local consideration.
L/C margin should also be as competitive as possible.
Foreign Exchange Department should well equipped with required
human resources

Internship Report

Company should open more new branches in economically profitable


areas.
It should have certain marketing policy to attract customers. It should
run more positive and meaningful promotion campaign. Modern software
system needs to be introduced to make the banking process more efficient.

Time consumed at service level should be minimized at optimum level.


Evaluate customers needs from their perspective and explain logically the
shortcomings.

Proper training should be conducted at regular interval on application of


Shariah.

4.5 Conclusion
Islamic Financial Institution like AIBL is in their infancy as compared to conventional
institutions. Conventional institutions have reached the present status after centuries of
evolution based on their innovation in meeting customers needs. For this purpose these
conventional institutions spent substantial sums on research and development. Islamic
Banking movement emerged in a very competitive environment. Their survival hinges
very much on maintaining depositors confidence after effective support by Islamic
investors of financial institutions require that depositors funds be rewarded with good
returns.
Al-Arafah Islami Bank Ltd. has introduced a new dimension in the field of
innovative and benevolent banking in our country. The bank has successfully made a
positive contribution to the economy of Bangladesh with in very short period of time. Its
profit is gradually increasing. It plays a great role in collecting scattered Deposit, Loan
settlement and International Trade etc. The Bank ensures quality services to the customers.
On the other hand it is facing several competitions from other key players like Islami Bank
Bangladesh Ltd., Prime Bank Ltd., Social Investment Bank Ltd., Mercantile Bank Ltd.,
and Shahjalal Bank Ltd. To face that competition the bank should think to start new
services and to take different types of marketing strategy to get more customers in this
competition market of banking.

You might also like