...Journal of Islamic Banking and Finance Vol. 2, No. 1; March 2014 23 Islamic Banking Scenario of Bangladesh Salahuddin Yousuf1 Md. Ariful Islam2 Md. Rayhan Islam1 Abstract With an aim to explore the current Islamic banking scenario of Bangladesh, this study examines the key concepts of Islamic banking and its history in the world and in Bangladesh as well. This secondary data based research meets its objectives of reviewing relevant concepts, history and current performance of the Islamic banks of Bangladesh through both qualitative and quantitative approaches. From the establishment of first Islamic bank in 1983, this country has currently eight Islamic banks. Except one individual bank (ICBIBL), most of the Islamic banks show remarkable growth in their profitability in the last decade. One reason behind this consistent negative figure in profitability of this bank is the frequent change of ownership. But overall significant contribution of the Islamic banks in the banking industry is visible from the research. This paper provides up-to-date scenario of the Islamic banking in Bangladesh. Keywords: Islamic Banking, Riba, Performance, Banking Industry JEL-classification: E44 G10 G21 1. Introduction Islamic banking and finance is a creation of modern age. Capitalism argues, capital- one of the key factors of production, deserves fixed return whereas the entrepreneurs have to bear all the risks. The conflict of opinions with the Islamic values starts from this very...
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...the prospect and growth potentials of Islamic banks in Bangladesh as perceived by Islamic and conventional bankers. The study noted that there is a high demand for interest-free banking services from a segment of people in Bangladesh who have a strong desire to abide by the rules and principals set by Shariah. Along with religious requirement, economic exigencies provide a new outlook to the role of banking in promoting investment/ productive activities, influencing distribution of income and adding stability to the economy. The Islamic banking sector is, however, criticized on several grounds by the Conventional bankers. The banks are believed not to apply the rules of Shariah completely. Islamic banks are said to include interest in their dealings to compete effectively with the Conventional banks. Moreover, conventional banks offering Islamic banking as a parallel service are thought to do so only to add to their profitability, by attracting people who value the Shariah based system by enjoying the advantages of the special treatments from the Central bank. According to the survey, suitable and supportive legal framework would facilitate better growth of this sector. Moreover, the lack of an inter-bank money market and sufficient supportive and link institutions in the sector, act as impediments to growth of Islamic banking. Also, banks perceive the availability of training and education on Islamic banking to be inadequate in Bangladesh. To deliver superior services to the clients...
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...8th International Conference on Islamic Economics and Finance Prospects and Problems of Islamic Banking from Bank’s Perspective: A Study of Bangladesh Dr. Muhammad Z Mamun 1 This paper focuses on the prospect and growth potentials of Islamic banks in Bangladesh as perceived by Islamic and conventional bankers. The study noted that there is a high demand for interest-free banking services from a segment of people in Bangladesh who have a strong desire to abide by the rules and principals set by Shariah. Along with religious requirement, economic exigencies provide a new outlook to the role of banking in promoting investment/ productive activities, influencing distribution of income and adding stability to the economy. The Islamic banking sector is, however, criticized on several grounds by the Conventional bankers. The banks are believed not to apply the rules of Shariah completely. Islamic banks are said to include interest in their dealings to compete effectively with the Conventional banks. Moreover, conventional banks offering Islamic banking as a parallel service are thought to do so only to add to their profitability, by attracting people who value the Shariah based system by enjoying the advantages of the special treatments from the Central bank. According to the survey, suitable and supportive legal framework would facilitate better growth of this sector. Moreover, the lack of an inter-bank money market and sufficient supportive and link institutions in the sector, act...
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...1. Introduction 1.1 Background Bangladesh is the third largest Muslim country in the world with around 135 million populations of which 90 percent are Muslim. The people of this country are deeply committed to Islamic way of life as enshrined in the Holy Qur'an and the Sunnah. Naturally, it remains a deep cry in their hearts to fashion and design their economic lives in accordance with the percepts of Islam. The establishment of Islami Bank Bangladesh Limited on March 13, 1983, as the first of its kind in Southeast Asia, was the true reflection of this inner urge of its people. It was both a hope and a challenge to the Islam loving people of the country in general and the pioneers of the Islamic banking movement to make it a success. In the beginning there was some doubt in the minds of many people about the viability as well as the sustainability of the Islamic banking system. But the history of two decades of Islamic banking operation in Bangladesh not only removed this doubt from the minds of the people but also showed how a new banking concept based on Islamic values could so rapidly establish itself as the most modern, dynamic, and popular bank of the country. Within this short span of time the workforce of Islamic banks in Bangladesh in general and Islami Bank Bangladesh Limited, in particular, by their strong commitment and tireless effort have been able to prove the superiority of Islamic banking over conventional banking in every department of banking operations...
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...Markets and Institutions ULAB 12/28/2011 Department: USB Section: 01 Islamic banking system Letter of Transmittal December 28, 2011 Shahriar Kabir Lecturer Financial Markets and Institutions ULAB Subject: Request to Accept Term Paper regarding “Islamic Banking System” Dear Sir, We are very pleased to submit the term paper on “Islamic Banking System”. We were assigned to prepare and submit this term paper as the partial fulfillment of the course Financial Markets and Institutions (Course Code: Bus 421). We have tried our best to prepare this term paper perfectly. Nevertheless, this paper has been suffered by time and other resource limitation. We will be obliged, if you kindly accept this term paper. We are ready to make you clear regarding any confusion or further clarification from this term paper. Sincerely yours, Nasrin Akter (On the behalf of all the group members) Table of contain Title | Page no | Executive summary ……………………………………....……4Introduction ……………………………………..….………….5History………………………………….…………….…...........5Features of Islamic bank………………………………………..6Who follow……………………………………………………...6Who are the customers ………………………………………….6Principles of Islamic banking……………………………………6Worldwide Islamic banking ……………………………………..7Activities of Islamic Banks...
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...BRAC University Journal, Vol. III, No. 1, 2006, pp. 35-52 COMPARATIVE ANALYSIS OF LOAN RECOVERY AMONG NATIONALIZED, PRIVATE AND ISLAMIC COMMERCIAL BANKS OF BANGLADESH Ezaz Ahmed Department of Management and Business BRAC University, Dhaka, Bangladesh and Ziaur Rahman IITM, Dhaka, Bangladesh and Rubina I. Ahmed Department of Business Administration East West University, Dhaka, Bangladesh ABSTRACT Bangladesh has a unique Banking system with multiple types of Banking with Nationalized Commercial Banks (NCBs), Private Commercial Banks (PCBs), Foreign Commercial Banks (FCBs), Islamic Commercial Banks (ICBs), Specialized Development Banks and the Cooperative Banks. Currently the magnitude of loan default is quite enormous in the Banking sector. However, the general perception and belief regarding the Islamic Banking is better recovery rate of loans and advances. This paper attempts to discuss the issues that govern the banking practices in Bangladesh and it also paints a picture of the lending practices followed by NCBs, PCBs and ICBs in Bangladesh. From the analysis presented in this case, it comes to light that ICBs lending practices with Islamic banking instruments mirrors the lending practices of conventional banks having synonymous counterpart products. The paper also unfolds some strategically weak links in the development of the banking sector, which has obstructed the overall economic development of the country. In this diversified Banking system, an attempt...
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...Banking system of Bangladesh Central bank: * Bangladesh bank Schedule bank: State-owned commercial banks: State-owned are functioning as nationalist. Here is the list - 1. Sonali Bank Limited 2. Janata Bank Limited 3. Agrani Bank Limited 4. Rupali Bank Limited Private commercial banks(PCB): * Conventional private bank 1. AB Bank Limited 2. Bangladesh Commerce Bank Limited 3. Bank Asia Limited 4. BRAC Bank Limited 5. Dhaka Bank Limited 6. Dutch Bangla Bank Limited 7. Eastern Bank Limited 8. IFIC Bank Limited 9. Jamuna Bank Limited 10. Meghna Bank Limited 11. Mercantile Bank Limited 12. Midland Bank Limited 13. Modhumoti Bank Limited 14. Mutual Trust Bank Limited 15. National Bank Limited 16. NCC Bank Limited 17. NRB Bank Limited 18. NRB Commercial Bank Limited 19. NRB Global Bank Limited 20. One Bank Limited 21. Prime Bank Limited 22. Pubali Bank Limited 23. South Bangla Agriculture and Commerce Bank Limited 24. Southeast Bank Limited 25. Standard Bank Limited 26. The City Bank Limited 27. The Farmers Bank Limited 28. The Premier Bank Limited 29. Trust Bank Limited 30. United Commercial Bank Limited 31. Uttara Bank Limited * Islamic private bank: 1. Al-Arafah Islami Bank Limited 2. Export Import Bank of Bangladesh Limited 3. First Security Islami Bank Limited 4. ICB Islamic Bank Limited 5. Islami Bank Bangladesh Limited 6. Shahjalal islami Bank...
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...Administration International Islamic university Chittagong Dhaka campus INTERNSHIP REPORT ON PRODUCTION & FINANCIAL PERFORMANCE OF STATE OWNED ENTERPRISES (SOEs) IN BANGLADESH Supervised by: Mohd. Mohsin Assistant professor in Finance Dept. of Business Administrative International Islamic university Chittagong Dhaka campus Prepared by: Mukter Hossain ID: B071515 24th Batch, BBA Major in Finance & Banking Dept. of Business Administration International Islamic university Chittagong Dhaka campus Letter of Transmittal May 22, 2011 To Mohd. Mohsin Assistant Professor in Finance Department of Business Administration International Islamic University Chittagong Dhaka Campus Subject: Submission of internship Report. Dear Sir, Here is my report on “Production & Financial Performance of State Owned Enterprises in Bangladesh” It has been a pleasure as well as a challenge on my part to work on this report that has enabled me to know about Production of State Owned Enterprises and their Financial Performance. I wish you would be to kind to accept my internship without placement report and help me to complete my degree. Sincerely your’s, Mukter Hossain ID. No. B071515 Major in Finance & Banking IIUC, DC Letter of Acceptance Mukter Hossain, ID. B071515, Batch 24th, BBA program has submitted the report on “Production & Financial Performance of State owned Enterprises (SOEs) in Bangladesh”. He has completed his report...
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...Internship Report A Demand-Supply Analysis of the Islamic Banking system in Bangladesh and the role of SCB Saadiq to meet the discrepancies, if any Prepared for: Dr. Neaz Ahmed Professor Prepared by: Ivdad Ahmed Khan Mojlish Roll: 43 Batch: BBA 13th June 24, 2009 Institute of Business Administration University of Dhaka June 24, 2009 Professor G M Chowdhury Chairman Internship & Placement Program Institute of Business Administration (IBA) University of Dhaka Subject: Submission of Internship report Dear Sir: I am very pleased to submit my Internship report on "A Demand-Supply Analysis of the Islamic Banking System in Bangladesh and the role of SCB Saadiq to meet any discrepancies, if any" for your review. This report has been prepared for Standard Chartered Saadiq under the supervision of Mr. Zia Hassan Siddique, Branch Manager SCB Saadiq. He has helped me a lot with all the support I required to complete this report. My faculty advisor was Mr. Neaz Ahmed, Professor, Institute of Business Administration, University of Dhaka, who has supervised me at every stage while carrying out this project. It was a great pleasure for me to have the opportunity to work on this project. I will be glad to clarify any discrepancy that may arise. Sincerely, Ivdad Ahmed Khan Mojlish Roll: 43, Batch: BBA 13th Institute of Business Administration University of Dhaka Acknowledgement First and foremost, I thank the Almighty Allah for letting me successfully...
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...International Journal of Islamic Financial Services Vol. 2 No.1 REGULATION OF ISLAMIC BANKING IN BANGLADESH : ROLE OF BANGLADESH BANK Abdul Awwal Sarker As regards the supervision and inspection of the banks in Bangladesh, an equal treatment is being followed for all banks including the Islamic ones by the Bangladesh Bank. In some cases, Bangladesh Bank has given some special provision for the Islamic banks. Yet, for the smooth development and operation of the Islamic banking, Bangladesh Bank should devise the separate regulatory and supervisory guidelines for the Islamic banks and non-bank Islamic financial institutions. 1. Banking System of Bangladesh The banking system of Bangladesh is composed of a variety of banks working as Nationalized Commercial Banks (NCBs), Private Banks, Foreign Banks, Specialised Banks and Development Banks. However, 28 out of 50 banks in Bangladesh are private, of which only 5, namely Islami Bank Bangladesh Limited, Al-Baraka Bank Bangladesh Limited, Al-Arafah Islami Bank Limited, Social Investment Bank Limited, and Faysal Islamic Bank of Bahrain E.C. have been operating as Islamic banks. Besides these full-fledged Islamic banks, two conventional banks in the private sector namely the Prime Bank Limited and Dhaka Bank Limited, have opened two full-fledged Islamic banking branches and Islamic Banking Counter respectively to deal with the Islamic banking business parallel to their conventional operations. The operations and accounts of these...
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...International Journal of Islamic Financial Services Vol. 1 No.3 ISLAMIC BANKING IN BANGLADESH: PERFORMANCE, PROBLEMS & PROSPECTS Md. Abdul Awwal Sarker Islamic banks can provide efficient banking services to the nation if they are supported with appropriate banking laws, and regulations. This will help them introducing PLS modes of operations, which are very much conducive to economic development. It would be better if Islamic banks had the opportunity to work as a sole system in an economy. That would provide Islamic banking system to fully utilize its potentials. Studies show that Islamic banks can not operate with its full efficiency level if it operates under a conventional banking framework, their efficiency goes down in a number of dimensions. The deterioration is not because of Islamic bank’s own mechanical deficiencies. Rather it is the efficiency-blunt operations of the conventional banking system that puts obstructions to efficient operation of Islamic banks. This does not mean that the survival of Islamic banks operating within the conventional banking framework is altogether threatened. Evidences from Bangladesh indicate that Islamic banks can survive even within a conventional banking framework by which over from PLS to trade related modes of financing. The Genesis of Islamic Banking in Bangladesh At birth, Bangladesh inherited an interest based banking system, which was introduced here earlier when the country was a part of British Colony. Since its...
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...theoretical knowledge, practical experience is provided to business graduates & internship is the well practiced mechanism in this regard. The internship program is an integral part of the BBA program. As a student‟s of BBA program of different universities, everyone has to submit a report after completion of internship program. We were assigned to Islami Bank Bangladesh Limited to complete the program. As a student of BBA, internship is an academic requirement. For doing internship we were sent to the Islamic Bank Bangladesh, New Market Branch, Dhaka under the supervision of Mohammad Ali Biswash, SPO, Islami Bank Bangladesh Limited, New market Branch, Dhaka. The completion of our general class for internship program in Islamic Bank Training and Research Academy (IBTRA), the IBTRA authority gave us the selecting topics‟ for preparing the internship report. Our supervisor Mohammad Ali Biswash, SPO, Islami Bank Bangladesh Limited, New market Branch, Dhaka, also support us to prepare a report on Islamic Bank Bangladesh Limited with special focus on “Different modes of investment of Islamic Bank Bangladesh and loans & Advances of conventional Bank”. That is why we have made this report with this topic. 2 1.2 Objectives of report The specific objectives aimed for this report are: To fulfill the partial requirement of BBA program under the guidance of supervisor. To...
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...[pic] ASA Tower, 23/3 Bir Uttam A.N.M. Nuruzzaman Sarak, Shymoli,Dhaka. 1207. Internship Report On “Modes of Investment of IBBL” Submitted To Dr. Md. Abdul Hye Professor & Dean Faculty of Business ASA University Bangladesh (ASAUB) Submitted By Sheikh Refath Jessan ID. No: 091-12-0293 Section: ACT-6A Major: Accounting Batch: 6th Program: BBA ASA University Bangladesh (ASAUB) Date: December 30, 2012 December 30,2012 Dr. Md. Abdul Hye Professor & Dean, Faculty of Business ASA University Bangladesh (ASAUB). Dear Sir: SUBMISSION OF INTERNSHIP REPORT I have the pleasure to submit the internship report on ‘Modes of Investment of Islami Bank Bangladesh Limited (IBBL)’ for your kind perusal and evaluation. It is a matter of immense pleasure for me to have the opportunity to prepare internship report on, ‘Modes of Investment of Islami Bank Bangladesh Limited (IBBL)’. I am grateful to you for allowing me to carry out such work and necessary co-operation and assistance from you during my report. I believe that the knowledge and experiences acquired while conducting this study will help me in many ways and the readers as well in future. I have tried my best to accommodate my ideas and findings as specifically as you asked about within the time frame and resources available I would like to mention that there might be some errors in the report...
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...Issues And Problems of Islamic Banking An overview on the review of problems | | The Islamic banks face a number of challenges. First, they have not yet been successful in devising an interest-free mechanism to place their funds on a short-term basis. They face the same problem in financing consumer loans and government deficits. Second, the risk involved in profit-sharing seems to be so high that most of the banks have resorted to those techniques of financing which bring them a fixed assured return. As a result, there is a lot of genuine criticism that these banks have not abolished interest but have in fact only changed the nomenclature of their transactions Khan (1989). Third, the Islamic banks do not have the legal support of central banks of their respective countries (except in Pakistan and Iran), which exposes them to great risks. Fourth, the Islamic banks do not have the necessary expertise and trained manpower to appraise, monitor, evaluate and audit the projects they are required to finance. As a result, they cannot expand despite having financial liquidity.The future of Islamic banks hinges, by and large, on their ability to find a viable alternative to interest for financing all types of loans. They should recognize that their success in abolishing interest has been only partial and they have yet to go a long way in their search for a satisfactory alternative to interest. Simultaneously, Islamic banks need to improve their managerial capabilities by training...
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...any country. In Bangladesh Muslim holds the majority of the population. Though, no Islamic banking but only traditional banking system was developed here till 1983. However, interest is absolutely prohibited in Islam. The main aim of traditional banking is to earn profit by borrowing and lending money in exchange of interest. As a result there is an unfair competition among the bankers and among the customers. The people of this country are profoundly committed to Islamic way of life as enshrined in the holy Qur‟an and the Sunnah. Naturally, it remains deep 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 erect from March 30, 1983. Now, a question may arise- „what is Islami Banking?‟ According to OIC- “Islamic bank is a financial institution whose status, rules and procedures expressly state its commitment to the principle of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operations.” This bank is the first of its kind in South-East Asia. It is committed to conduct all banking and investment activities on the basis of interest fee 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...
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