Chapter-01
Introduction

1.1 Background of the study
The term “Islamic banking” refers to a system of banking or banking activity that is consistent with Islamic law (Sharia) principles and guided by Islamic economics. In particular, Islamic law prohibits usury, the collection and payment of interest, also commonly called rib in Islamic discourse. In addition, Islamic law prohibits investing in businesses that are considered unlawful, or haram (such as businesses that sell alcohol or pork, or businesses that produce media such as gossip columns or pornography, which are contrary to Islamic values).

Islamic banking has the same purpose as conventional banking to make money for the banking institute by lending out capital. But that is not the sole purpose either. The basic principle of Islamic banking is based on risk-sharing which is a component of trade rather than risk-transfer which is seen in conventional banking. Islamic banking introduces concepts such as profit sharing, safekeeping, joint venture, cost plus and leasing. There are three types of schedule commercial banks are in operation in our economy. They are Nationalized Commercial Banks, Local Private Commercial Banks and Foreign Private Commercial Banks. AIBL has discovered a new horizon in the field of banking area, which offers different General Banking, Investments and Foreign Exchange banking system. The authorized capital of the Bank is Tk.10000.00 million and the paid up capital is Tk. 7130.98 million as on 31.12.2012. Renowned Islamic Scholars and pious businessmen of the country are the sponsors of the Bank. 100% of paid up capital is being owned by indigenous shareholders. The equity of the bank stood at Tk. 14050.69 million as on 31 December 2012, the manpower was 2110 and the number of shareholders was 52739. It has achieved a continuous profit and declared a good dividend over the