...------------------------------------------------- A Report On Comparative Performance Study of Conventional and Islamic Banking in Bangladesh Course Title: THEORY AND PRACTICES OF BANKING IN BANGLADESH Course Code: FBK 312 Submitted To: Md. Nur Nabi Assistant Professor Department of Finance and Banking Faculty of Business Administration and Management Patuakhali Science and Technology University Dumki, Patuakhali- 8602 Submitted by: Group: C (Level: 3, Semester: I) Session: 2012-2013 Faculty of Business Administration and Management Patuakhali Science and Technology University Dumki, Patuakhali- 8602 Date of Submission: 09th May 2015 ------------------------------------------------- Roll No | Registration No | Name of the Students | Signature | 1203051 | 03596 | Nusrat Jahan Rupa | | 1203053 | 03598 | Nusrat Yesmin | | 1203054 | 03599 | Nisath Salsabil Urmi | | 1203056 | 03601 | Mehedi Hasan | | 1203057 | 03602 | Hasan Shahria Nayeem | | 1203060 | 03605 | Khondokar Tanveer Ahsan | | 1203061 | 03606 | Sume Akter | | 1203062 | 03607 | Rased Amer Sohag | | 1203065 | 03610 | Nusrat Jahan Pinki | | 1203067 | 03612 | Rasel Miah | | ------------------------------------------------- Group Member Details ------------------------------------------------- ------------------------------------------------- ATTENDANCE REPORT 1) Level : 3 2) Semester : I 3) Course Code : FBK-312 4) Course Title : THEORY AND PRACTICES OF BANKING IN BANGLADESH 5) Date Of Presentation...
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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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...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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...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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...INTRODUCTION Foreign exchange refers to the financial transaction where currency value of one country is traded into another country’s currency. The whole process gets done by a network of various financial institutions like banks, investors and governments. The exchange rate varies according to the value of each country’s currency which is based on the health of that particular country’s economy. Any individual or company engaged in overseas business should be aware of the risks of currency fluctuations. Customers without commercial contracts expressed in domestic currency (or fixed by an agreed rate of exchange) are fully exposed to what is known as an exchange risk. Exchange risk may arise because of exchange rate movements in the period from the original commercial contract, to the time of settlement of the domestic equivalent of the foreign currency amount. Foreign exchange risk management is designed to preserve the value of currency inflows, investments and loans, while enabling international businesses to compete abroad. Although it is impossible to eliminate all risks, negative exchange outcomes can be anticipated and managed effectively by individuals and corporate entities. Businesses do so by becoming familiar with the typical foreign exchange risks, demanding hard currency, diversifying properly and employing hedging strategies. No countries of the world can produce all their necessary commodities and services. So it has to buy the commodities and services which it...
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...Banking Sector Performance, Regulation and Bank Supervision Chapter-5 32 other hand, PCBs' deposits in 2006 amounted to Taka 955.5 billion or 51.3 percent of the total industry deposit against Taka 731.3 billion or 47.0 percent in 2005. FCBs' deposits in 2006 rose by Taka 38.2 billion or 33.9 percent over the previous year. The DFIs' deposits in 2006 were Taka 100.2 billion against Taka 89.5 billion in 2005 showing an increase of 12.0 percent over the year. Aggregated Balance Sheet 5.4 Assets: Aggregate industry assets in 2006 registered an overall increase by 17.8 percent over 2005. During this period, NCBs' assets increased by 3.1 percent and those of the PCBs' rose by 22.9 percent. Loans and advances played a major role on the uses of fund. Loans and advances amounting to Taka 1543.6 billion out of aggregate assets of Taka 5.2 In 2006 the nationalized commercial banks (NCBs) held 32.7 percent of the total industry assets as against 37.4 percent in 2005. Evidently, NCBs' domination in this area is showing a declining trend, while PCBs' share rose to 47.7 percent in 2006 as against 45.6 percent in 2005. The foreign commercial banks held 11.8 percent of the industry assets in 2006, showing a satisfactory increase by 4.5 percentage points over the previous year. The DFIs' share of assets was 7.8 percent in 2006 against 9.7 percent in 2005. 5.3 Total deposits of the banks in 2006 rose to Taka 1860.6 billion from Taka 1554.7 billion in 2005 showing...
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...Risk Management in Islamic and Conventional Banks: A Differential Analysis Salman Ahmed Shaikh* Dr. Amanat Ali Jalbani Abstract Islamic banking is interest-free banking which makes it necessary for Islamic banks to take active part in the operations of the business, i.e. share profits as well as losses. Banks including Islamic banks prefer to take minimum risk. On the surface, it may seem that Islamic banks face more risk and hence, will have more volatile or even negative returns on their assets. This paper analyzes the risk management procedures of Islamic banks by giving a differential analysis of risk management discussing only the unique characteristics of risk management in Islamic Banking. The usual credit assessment procedures and BASEL are not discussed. This paper looks at the comparative performance of Islamic banks and conventional banks by using ROE as the benchmark. Keywords: Risk management, commercial banking, Islamic banking, price risk 1. Introduction 1.1. Background of the Study Islamic Banking was first introduced in 1959 in Egypt. Since then, Islamic Banking is growing rapidly throughout the world and has been introduced in more than 60 countries of the world so far. Global financial players like Citibank, ABN AMRO, American Express Bank, HSBC, etc. are also participating in Islamic Banking and Financial Industry. However, skepticism still surrounds Islamic Banking keeping into view the earlier demise of BCCI. Profit and loss sharing...
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...Chapter-5 Banking Sector Performance, Regulation and Bank Supervision 5.1 Bangladesh Bank (BB) continued to focus on strengthening the financial system and improving functioning of the various segments. The broad parameters of the reforms undertaken during the year comprised ongoing deregulation of the operation of institutions within the BB's regulatory ambit, tightening of prudential regulation and improvement in supervisory oversight, expanding transparency and market disclosure, all with a view to improving overall efficiency and stability of the financial system. The following paragraphs highlight the recent regulatory and supervisory Table 5.1 Banking system structure 2006 Bank Number Number of types of banks branches SCBs DFIs PCBs FCBs Total 4 5 30 09 48 3384 1354 1776 48 6562 Total assets 786.7 187.2 1147.8 284.9 2406.7 % of industry assets 32.7 7.8 47.7 11.8 100.0 Deposits measures initiated by BB for banks and financial institutions and also the industry statistics of the banking sector and the performances trends. A. Banking Sector Performance 5.2 The banking sector of Bangladesh comprises of four categories of scheduled banks. These are state-owned commercial banks (SCBs), state-owned development finance institutions (DFIs), private commercial banks (PCBs) and foreign commercial banks (FCBs). The number of banks remained (billion Taka) 2007 % of Number Number of Total deposits of banks branches assets 35.2 5.4 51.3 8.1 100.0 4 5 30 09 48 3383 1359 1922...
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...ISLAMIC BANKING SYSTEM & PRODUCTS Name Course Instructor Institution Date Islamic banking Introduction Over the past decades, Islamic banking has expanded into a distinctive and fast growing competitive substitute to conventional banking in many countries. Despite the rapid expansion of the Islamic banking system in recent years, little is however understood of how it differs from conventional banking systems, especially in the non Muslim world. Although Islamic banking works in accordance with the Islamic laws (shariah), in other countries, they are allowed to operate incomparably with the conventional banks that are interest based. The desire of Muslim communities to reorganize their social economic activities, and revival of financial institutions such as Zakah on an interest free basis can be said to be the main drivers to the development of Islamic baking over the past (Wilson, 1994: 110). Nevertheless, Islamic banking is not a religious product as it may insinuate, but it can rather be understood as a series of growing financial products that are developed with the aim of meeting the requirements of Islamic culture and its people (Sole, J. A., 2007: 6). Thus theses systems have developed so as to enable Muslims to invest savings and equally raise finance without compromising their religious and ethical practices. In order to comprehend the fundamental principles of operation of the Islamic banking system, it is thus necessary to understand what it is. There is...
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...[pic] On A Study of foreign exchange operation of Islami Bank Bangladesh Limited Acknowledgement At the very beginning I would like to thank Almighty Allah for giving me the strength to finish the project within the schedule time. During the preparation of this report I have received generous help from many individuals which I would like to mention with my deepest gratitude. First of all, I must take this opportunity to thank “Islami Bank Bangladesh Limited” for giving me the opportunity to complete my internship program in their organization. It was really a great opportunity to work on this topic, and which is really an important and exceptional report. I tried to dedicate my best trying and resources. But “Too Error is Human”, I am not exception to this, I have some limitations, also. My ultimate constraint was time, I invested beyond this report. If I could give more times, I could make it better in the point of view of doing “Discovery of Information”, “Recommendation” etc. Al last, I just want to say that I tried my best to make it realistic. I am extremely sorry for my limitations and constraints that had impact in making the “Internship Report” efficient and effective. [pic] |Topics ...
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...etc. Bangladesh banking sector is lagging far behind in adopting these changes. Bank plays an important role in the business sectors and in the industrialization of a country. Basically the banks take deposits from the customers against interest and lend it to the borrowers against interest cessation period. Under these circumstances of bank offers different interest rates and other options to the customers to remit and deposit their money. These options are very common among all the banks, but only the customer services and other facilities vary from bank to bank. 1.2Objectives of the study The objective of the study is to fulfill the requirement of BBA program well as the aim thirst of this study is to test whether the considered bank's activities, specially the loans & advances, are unequal to the conventional Banking system. Other objectives are: To fulfill the requirement for the award of the degree To gather overall knowledge about system To know the project investment scenario of FSIBL To evaluate the historical performance of operational efficiency of Islamic banks in Bangladesh To compare and contrast among the Islami banks’ performance 1.3 Methodology We have adopted both mathematical and descriptive analysis to find out the basic differences between the Islamic Banking system & Conventional Banking system. There are a lot of descriptive analyses that have also played a significant role in detecting my target finding. In my report we have considered Islami Bank Bangladesh...
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...General Banking Operations General banking provides the foundation of banker – customer relation ship through openingaccount. This is the busiest department and the daily transactions of concerned to thecustomers for drawing or depository money , selling of the instrument to them for remittance purpose, collection of their instruments providing other services to them and keep customer section busy.Usually the following sections/departments are involved to perform the general bankingoperations: ˃ Cash Section ˃ Bills & Remittance Section ˃ Clearing and Collection Section ˃ Accounts Section Mudaraba The word 'Mudaraba' has been derived from Arabic word 'Darb'/'Darbun' which means“Travel”. Thus the word ‘Mudaraba’ means travel for undertaking business.Mudaraba is a form of partnership in profit whereby one party provides capital and the other party provides skill and labour.The provider of capital is called ‘Shahib-al-Mal’ or the ‘Rabb-ul-Mal’ (the financier or owner of the fund) and acts like a sleeping or dormant partner while the provider of skill and labour is called ‘Mudarib’ (entrepreneur/organizer) who provides the entrepreneurship andmanagement for carrying on any venture, trade, industry or service with the objectives of earning profits.Both the parties share the profit as per pre-agreed ratio and the losses, if any, being borne bythe provider of capital i.e. ‘Shahib-al-Mal’ except if it is due to breach of trust, misconduct,negligence or violation of the...
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...An Internship Report On Audit Procedure of UHY Syful Shamsul Alam & Co. and A Comparative Analysis on IFRS (IAS) and AAOIFI on Financial Reporting Issues Department of Finance Faculty of Business Studies University of Dhaka An Internship Report On Audit Procedure of UHY Syful Shamsul Alam & Co. and A Comparative Analysis on IFRS (IAS) and AAOIFI on Financial Reporting Issues (As partial fulfillment of BBA Program) Submitted To Department of Finance University of Dhaka Supervised By Taher Jamil Lecturer Department of Finance University of Dhaka Submitted By Md. Rased Mosarraf ID: 16-062 Department of Finance University of Dhaka Date of Submission: May 22, 2014. Letter of Transmittal May 22, 2014. Taher Jamil Lecturer Department of Finance University of Dhaka Subject: Submission of internship report. Dear Sir, I have the pleasure to submit an Internship Report after completing a successful three month Internship attachment at a CA firm named “UHY Syful Shamsul Alam & Co.” on “Audit Procedure of UHY Syful Shamsul Alam& Co. and A Comparative Analysis on IFRS (IAS) and AAOIFI on Financial Reporting Issues”. I have concentrated my best effort to achieve the objectives of the report and hope that my endeavor will serve the purpose. The practical knowledge and experience gathered during report preparation will immeasurably help in my future professional life. I will be obliged if you kindly approved this endeavor...
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...Abstract The objective of this study is to have practical knowledge on the Retail Banking services provided by the Private Conventional Banks and the Islamic banks in Bangladesh. Today, banks realize the importance of Retail Banking and its potential to help them acquire new customers, retain existing ones and maximize their lifetime value. this report provides an overall view of Retail Banking services in Bangladesh. the services provided by Private Conventional Banks and the Islamic banks are mentioned. Followed by are the products that are being used to provide these services. A trend of the retail banking services is done in the analysis part of this report. The Islamic banking concept is being adopted by some of the Private Commercial Banks to generate better understanding of the customer for product development, segmentation, appropriate targeting, campaign management and maintenance of long term profitable and mutually beneficial relationships with customers. The concept of Islamic Banking has been implemented on a vast scale. To meet the objective of the report a trend analysis of the retail deposit indicators,retail deposits and loans and advances is done in the fifth part of the report. there growth is also shown with line graphs. A comparison is also made between the PCB's retail banking services and that of IB's. In part six findings are listed and some recommendations are also made accordingly. Table of Contents Sl No | Topic | Page No. | 1.0 | Introduction1...
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...PERFORMANCE OF Islamic bank Versus CONVENTIONAL BANK (A COMPARATIVE STUDY) A RESEARCH REPORT SUBMITTED by SAAD SIDDIQ to University of Karachi in partial fulfillment of the requirement for the degree of BUSINESS ADMINISTRATION In MARKETING This thesis has been accepted for the faculty of UNIVERSITY OF KARACHI ACKNOWLEDGMENTS Thanks to Allah the All Merciful the all Benevolent for providing me the strength, courage, direction and skills to learn, acquire knowledge, and the ability to accept and meet challenges. Second I would like to thank all those people who have helped me in performing this research study.. I would like to give credit for those who gave their precious time to conduct the interview session and to those who filled the questionnaires. I would like to express my sincere gratitude to my supervisor Sir Mehmood Qasim for providing me his precious time, guidance, and instructions all along in order to materialize my content for the report.I am also thankful to my parents who accommodated me during those long hours of work in my project development and all the friends and colleagues who helped me out in my times of weakness and encouraged me. I am hopeful that the effort will be fruitful for the students to come in KU after us. Once again, I am very thankful to all people who have been involved in this thesis report directly or indirectly. Abstract This project compares the performance of Islamic banks and conventional bank in Pakistan...
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