...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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...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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...Welfare Services of Islamic Banks Introduction Welfare is a condition of having good health, comfortable living and pleasant working conditions (Hornby). Hence, it can be said that welfare services are those which ensure conditions of having good health, comfortable living and working conditions, which are generally one's basic needs. Islam views work as the primary means of earning and acquiring income and wealth. As such, a well-known example may be cited here, Recall a beggar who approached the Prophet Muhammad (Pbuh) for alms, he (the beggar) was asked to bring what he had in his house. Accordingly, the man brought a blanket. The Prophet (Pbuh) asked him to sell it out and buy an ax, which could then be used to cut wood from the jungle to sell at the market for income. Thus, instead of begging, he could be self-reliant which is more dignified life than begging. Therefore, in the Islamic way of life, productive and remunerative work (employment and self-employment) and consequently real income becomes the primary source for buying necessities such as food, clothing, shelter, household goods, transportation, fuel and medicines. But if real income is not sufficient to purchase necessities of life, then welfare services become essential in a society to maintain the minimum standard of living of the people. In fact, in every society, there are many people who lack the necessary income and, consequently, face inadequate lifestyles due to unemployment and under-employment. Their...
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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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...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 and services. The success of Islamic banks not only gave them enough floors in the field of banking but also encouraged at least one conventional bank to convert fully all its operations on Islamic principles...
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...Eng105 06/14/2011 Should The Islamic Cultural Center Be Built Next To The Ground Zero? The Lower Manhattan Extension remains to be the busiest spot on the globe for a couple of centuries. A home for hundreds of operating businesses, New York City’s financial district represents a strategic center of the world managed by IT geniuses, Investment Banking giants and other brilliant minds that push and pull the necessary buttons to control a massive and complicated mechanism called “The Global Economy” from their downtown offices. Consuming the whole city, contagious rush of the east coast misses only one place – The Ground Zero, a grave for thousands of people including around 300 Muslims, killed by Islamic terrorist group attack on September 11, 2001. In almost 10 years after the attack, the proposed construction of Islamic Center next to the American nation’s tragedy location became the heart of controversy that started with a small group of anti-Muslim activists who suggested the proposal was a scheme used by anti-American Muslims to conquer the site of the 9/11 attacks (Steve Rendall, Oct. 2010). However, according to the Community Center’s official web-site, the key points of the opponents turned out to be false: “Inspired by Islamic values and Muslim heritage, Park51 will weave the Muslim-American identity into the multicultural fabric of the United States. We will foster cooperation and understanding between people of all faiths and backgrounds through relevant programs...
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... conventional banks and Islamic banks. In simple words Islamic banks operate in interest free system. Prohibition of interest is ordained in Islam in all forms and intent. This Prohibition is strict, absolute and unambiguous. The Holy Qur'an in verse 278 of Surah Al-Baqarah states: "O ye who believe! Fear Allah and give up what remains of your demand for Riba, if ye are indeed believers." Verse 2: 279 says: "If you do it not, take notice of war from Allah and His Messenger. But if ye turn back, ye shall have your capital sums. Deal not unjustly and you shall not be dealt with unjustly." It therefore, follows that interest is prohibited as it leads to injustices and Islam is against all forms of injustices and exploitations and pleads an economic system, which aims at securing extensive socio-economic justice. The Islamic law of prohibition of Riba, which includes interest, was originally not based on economic theory but on Divine Authority, which considers the charging of interest as an act of injustice (Dr. Siddiqui). Islamic banks appeared on the world scene as active players two decades ago. But many of the principles on which Islamic banking is based have been commonly acceptable all over the world for centuries rather than decades, as it is evident that Islamic finance was practiced predominantly in the Muslim world throughout the middle Ages, promoting trade and business activities. In Spain and the Mediterranean and Baltic States, Islamic merchants became...
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...1.1Background A banking institution is indispensable in a modern society. It plays a pivotal role in the economic development of a country and forms the core of the money market in an advanced country. In recent times the banking sector over the world has been undergoing a lot of changes due to deregulation, technological innovation, globalization 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’...
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...RISK MANAGEMENT IN ISLAMIC BANKING AND FINANCE: THE ARAB FINANCE HOUSE EXAMPLE Bilal A. Fleifel A Thesis Submitted to the University of North Carolina Wilmington in Partial Fulfillment of the Requirements for the Degree of Master of Business Administration Cameron School of Business University of North Carolina Wilmington 2009 Approved By Advisory Committee Howard Rasheed Cetin Ciner William H. Sackley Chair Accepted By DN: cn=Robert D. Roer, o=UNCW, ou=Dean of the Graduate School & Research, email=roer@uncw. edu, c=US Date: 2010.01.21 15:02:51 -05'00' ________________________ Dean, Graduate School TABLE OF CONTENTS TABLE OF CONTENTS ..................................................................................................... ii ABSTRACT........................................................................................................................ vi ACKNOWLEDGMENTS .................................................................................................. vii DEDICATION .................................................................................................................. viii LIST OF TABLES .............................................................................................................. ix LIST OF FIGURES...............................................................................................................x GLOSSARY .............................
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...this report entitled – “Business Strategy”, a study on Fareast Islamic Life Insurance Co. Ltd. Insurance is a growing business in Bangladesh and has more and more scope to develop the economy of Bangladesh. In this report, we have tried our best to introduce the company and show their background, company policies, financial condition, performance and various analyses. 1.2 Objectives of the Study The report is the part of the Insurance sector that we are studying in our BBA course. The objective of the report is to present the practical view about the “Insurance Practices in Bangladesh”, that provides facility to the ends of the Individuals and to transform our modern social order. 3. Scope of the Study The scope of this report is limited to overall description of the company, its services and its financial performance analysis. The scope of the study is limited to organizational setup, functions and performance. Since FILIC is still its growth stage in Bangladesh; it has go to long way to achieve its destination. The report will mainly focus on what criteria FILIC maintaining before insuring and their claim settlement process. The will also emphasize on the financial ratios. 1.4 Methodology of the Study Selected Subject Matter We have asked to prepare a term paper on “Business Strategy”. We have chosen a general life insurance company named Fareast Islamic Life Insurance Co. Ltd. Methods Used to Collect Data ...
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...for the necessity of the use of money and the protection of the money. Bangladesh is now integral part of global market. As such there is an urgent requirement for Bangladesh to place the traditional banking pretties in harness with the global trades of a free market economy by following international Banking customs, practices and standards. Today clients of a bank in Bangladesh are exposed as well as interNational markets. They have to stay update with their practice and standards to meet the demands of achieving harmony in the high standards of a free economy. Rationale of the Study: Now a days banking sector have built up as the most important player of the economy. Economists have observed that loan is of the most important aspects of economic activity because of its great role in establishing various projects that generates production and thus generating employment. The only important aspect of loan is economic and social development in addition to achieving a suitable profit margin. Islamic banks consider loan as the basic motivation for community development and a means to get rid of social and economic problems through employment and operation of available resources, such as money and individuals. Especially after the financial crunch, Islamic banking and Islamic loan have proved to be more profitable and less risky. Since EXIM Bank is a Shariah based bank, the major portion of it assets consists of Loan. By analyzing the loan the productivity of a bank can be...
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...Principles and Practices of Investment Modes of Islamic Banking | | Abstract: The objective of the study is to gather practical knowledge regarding general banking system, investment and foreign exchange system and its operation. By pictorial description it is tried to find out the variation from various departments, particularly investment. Other objectives of the report are to identify the various types of existing services rendered by the SIBL. understand the prevailing mechanism of modes of finance of SIBL. Study the performance of modes of finance of SIBL. Highlight the major characteristics of modes of finance of SIBL. Understand the basic difference in relation to conventional bank. 1.1 Introduction: Today’s world is changing very rapidly as new business are emerging by placing the old ones. Towards the end of century, let alone a millennium, people feel a growing uneasiness about the future. Many countries suffer from chronic high employment, a persistent deficit and deteriorating purchasing power. Like the other business, banking practices are also changing at an incredible pace. Every decade calls upon company management to think freshly about its objectives, strategies and tactics. In the banking industry, community branch banks have long been the marketing channels through which customers deposit money and make payments. Banking plays an important role in the economy of any country. In Bangladesh Muslim consist more than 80% of its population. These people...
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...Table Of Contents Vision Statement Of Bank 2 Mision Statement Of Bank 3 Introduction 2 Heirarchy Of Askari Bank…………………………………………………………………………………………………………………………6 Hr Policies Of Askari Bank……………………………………………………………………………………………………………………… 7 Marketing Srategies Of Bank…………………………………………………………………………………………………………………..9 Company Profile 2 Company process 2 Company departmental functions 2 SWOT Analysis 2 Identification of a Main Problems and Findings 2 Recommendations 2 Activities Report…………………………………………………………………………………………………………………………………….37 Implementations 2 Conclusions 2 Appendix” 2 Web Resources 2 Acknowledgments All the praises are for the almighty “Allah” who bestowed me with the ability and potential to complete this Internship. I also pay my gratitude to the Almighty for enabling me to complete this Internship report within due course of time. Words are very few to express enormous humble obligations to my affectionate “Family Members” for their prayers and strong determination to enable me to achieve this job. I am heartily thankful to my “University” and specially to my Internship Incharge “Mr. Nisar Ahmad”, whose encouragement, guidance and support from the initial to the final level enabled me to develop an understanding of the subject. I also appreciate the cordial co-operation from all my concern Managers and Staff members in the different departments of Askari bank. * Ms. Rafia Alam Khan (Branch Manager/AVP) * Mr. Amir Akram Warraich (Manager Operations) * Mr. Junaid-uz-Zaman...
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...Abstract The retail banking industry in the United States has undergone intense change due to regulation since 2008. Retail banks are continually looking for ways to set themselves apart from their competition, as well as retain and grow their customer base. Banks now understand the value of building relationships with their customers and that they need to provide excellent customer service to them as a means of profitability and survival. Understanding the factors behind customer service and its effect on customer loyalty is an important issue for the retail banking industry. This brings up the question “Does customer service influence customer loyalty?” With that question in mind, the following review acknowledges the importance of customer service to customer loyalty and also looks at what factors influence loyalty. The examination takes a look at service and its quality, and the overall effect it has on customer satisfaction and customer loyalty. The findings conclude a direct association among customer service, service quality, customer satisfaction and consumer bank loyalty. Introduction It is generally agreed that the top 3 constructs of building loyalty are: customer service, service quality, and customer satisfaction. This is especially true in people centric service businesses such as retail banking. In today’s competitive business environment many banks are focusing their efforts on having a loyal customer base. Thus, the question arises, “Does customer...
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...Azad Jammu & Kashmir A Report submitted in partial Fulfillments of the Requirements For The Degree Of Bachelor In Business Administration EVOLUTION OF BANKING This history of banking is traced to as early as 2000 B.C. The priests in Greece Used to keep money and valuables of the people in temples. The origin of banking is also Traced to early goldsmiths. They used to keep strong safes for storing the money and Valuables of the people. The goldsmiths used to issue receipts for the money and other valuable assets deposited with them. These receipts could be used for settlement of Transactions because people had confidence in the integrity and solvency of goldsmiths. When it was found that these receipts were fully accepted in payment of debts; then the receipts were drawn in such a way that it entitled any holder to claim the specified amount of money from goldsmiths. A depositor who is to make the payments may now get the money in cash from goldsmiths or pay over the receipt to the creditor. These receipts were the earlier bank notes. The second stage in the development of banking thus was the issue of bank notes. BANKING IN PAKISTAN: I observed during my internship was that I came to known the historical background of Banking & Financial sector and its improvement and growth since the formation of Pakistan. At the time of partition there were only 631 bank branches in area which...
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