CHAPTER ONE – INTRODUCTION

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A bank is a financial institution licensed to receive deposits and make loans. Banks may also
provide financial services, such as wealth management, currency exchange, and safe deposit
boxes. There are two types of banks: commercial/retail banks and investment banks. In most
countries, banks are regulated by the national government or central bank.
Banks distribute the medium of exchange. Banking is a business. Banks sell their services to
earn money, and they must market and manage those services in a competitive field. Banks
are financial intermediaries that safeguard, transfer, exchange, and lend money and like other
businesses that must earn a profit to survive. Understanding this fundamental idea helps to
understand how banking systems work and helps understand many modern trends in banking
and finance.
The services banks offer to customers have to do almost entirely with handling money or
finances for other people. Banks are critical to our economy. The primary function of banks
is to put their account holders' money to use by lending it out to others who are in need of the
same.
Bangladesh Bank (BB) has been working as the central bank since the country's
independence. Its prime jobs include issuing of currency, maintaining foreign exchange
reserve and providing transaction facilities of all public monetary matters. Bangladesh Bank
is also responsible for planning the government's monetary policy and implementing it
thereby.
The Bangladesh Bank has a governing body comprising of nine members with the Governor
as its chief. Apart from the head office in Dhaka, it has nine more branches, of which two in
Dhaka and one each in Chittagong, Rajshahi, Khulna, Bogra, Sylhet, Rangpur, and Barisal.
This report has been prepared in the light of practical as well as theoretical knowledge. Also,
it is prepared under the guidance and supervision of the core teacher. During the internship
program, I have got a good idea about the bank and that is portrayed in the report.
1.1 Origin of the Study:
Practical orientation and evaluation of an organization’s performance is a part of the BBA
program offered by Metropolitan University. This report is a requirement of that practical
orientation. A bank is a service-oriented organization. So, the practical orientation has been
made as an integral part of the BBA degree requirement.

This report has been prepared as a requirement of the internship program under the BBA
program of Metropolitan University. I got the opportunity to work in one of the renowned
banking corporations of the country – Al Arafah Islami Bank Limited (AIBL).I was placed in

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the Zindabazar branch of Al Arafah Islami Bank Limited (AIBL) for my internship program
and prepare a report on the general banking practices of Al Arafah Islami Bank Limited
(AIBL). I got the opportunity to observe the banking practices in person, assist in different
departmental work, and attend an on the job training from working in all the departments of
the bank.
1.2 Rationale of the Study:
With the rapid growing competition among nationalized, foreign and private commercial
banks as to know how the banks operate its banking operation and how customer service can
be made more attractive, the expectation of the customer has immensely increased.
Reciprocating the sentiment, commercial/ private banks are trying to elevate their traditional
banking service to a better standard, to meet the challenging needs, demands.
Side by side these banks have now concentrated their attention towards diversification of
their products for better performances and existence. For the above circumstances, it has
become necessary for Al-Arafah Islami Bank Limited, one of the leading commercial banks,
to focus its attention on the improvement of the customer service. That’s why it is quite
justified to make an in-depth study about its operation and evaluate the service provided by
this bank and scope for its improvement.
The study may help to formulate policy regarding the ideas relating to the feelings of the
customers and bankers. Furthermore, Al-Arafah Islami Bank Limited executives who are
actually executing policies undertaken by the top management will have a chance to
communicate their feeling and will have feedback about their dealings with the customer.
1.3 Objectives of the Study:
The main objective of the study is to develop an understanding of practical banking activities
and to relate them with the theoretical knowledge acquired from the banks and university
respectively. Besides these, the specific objectives are the followings:
 To know the general banking activities of Al Arafah Islami Bank Limited.
 To understand the competitive strengths and weaknesses of the bank.
 To acknowledge the benefits for the clients and the employees of the banks because
the theoretical knowledge could not complete without practical knowledge.
 To study the operational efficiency of Al Arafah Islami Bank Limited to know the
different forms of accounts and schemes that can be opened and their benefits because
it is related to customer satisfaction level.
 To learn about the general system of the banking sector

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 If possible, to suggest ways and means for improvement in policy and techniques.
1.4 Methodology of the Study:
1.4.1 Data Collection:
The collection method of primary and secondary data differ since primary data are to be
originally collected, while in the case of secondary data, the nature of data collection work is
merely that of compilation.
There are several methods that have been used to collect primary data, they are as follows:

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

 Exposure tothe different desks of the bank.
 Relevant file study as provided by the officers concerned.

Secondary data may either be published data or unpublished data. Usually, published data are
available in:

 Various publications of the central, state and local governments.

 Various publications of foreign governments or international bodies and their
subsidiary organization.
 Technical and trade journals.
 Report and publications of various associations connected with business and industry,
banks, and stock exchange, etc.
 Annual reports and official website of Al Arafah Islami Bank Limited.
1.4.2 Data Processing:
Collected data is processed by the use of a computer system and Microsoft office software.
Detailed analysis, working variables and working definitions are embodied in the report.
1.5 Scope of the Study:
The report has been ready to cover different steps of General banking of Al-Arafah
IslamiBank Limited. I have tried to examine the foundation of segmentation, risk
management,advertisement and so forth with the bank workforce. I have also endeavored to
review and meteof saving money perfection of satisfactory data apprehended in accounts and
meetings ofmanaging an account officer. AIBL is an organization where they always habit all
the planningand functions of better-quality services to provide their customers. AIBL always
try to focus on theircustomer how they are satisfying.

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1.6 Limitations of the Study:
My study is based on primary and secondary data supplied by the interview to employees of
the company, official website and direct communication with the customers, thereby
limitation of those primary and secondary data might be the limitation of this study. I have
tried to find out the relationship between theoretical knowledge and practical implication. I
found some differences between what I learn in theoretical knowledge and what the practices
are. The report was completed under certain constraints which were:

 Difficulty in fill-up the opening form.

 Lack of information collected from the customer.
 The unwillingness of key individuals.
 Lack of accounts, incomplete and cloud data.
 Inconvenience in up-to-date data even with the help of the bank employees.
 Only three months were not lashings to purvey pertinent data from each employee of
the branch.
 I had to complete this report within a very short span of time which was not sufficient
for in-depth review.
 As the officers were busy with their daily work, they could not provide me adequate
time. Sometimes, they were not able to provide any help to this report due to the
pressure of workload.
 There is various information the bank officers did not provide due to security and
other corporate obligations.
 As I am a newcomer, there is a lack of previous experience in this concern. And many
practical matters have been written from my own observation that may vary from
person to person.
 This report does not represent the overall or complete functions of the bank.
 Limited availability of annual reports, official records and other published and
unpublished sources of data.
 Since I was confined to a few departments, only the related data of limited
departments are available.

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CHAPTER TWO – OVERVIEW OF BANKING
INDUSTRY

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2.1 Definition of Bank, Banker, and Banking
Banking occupies one of the most important positions in the modern economic world. It is
necessary for trade and industry. Hence it is one of the great agencies of commerce. Although
banking in one form or another has been in existence from very early times, modern banking
is of recent origin. It is one of the results of the Industrial Revolution and the child of
economic necessity. Its presence is very helpful to the economic activity and industrial
progress of a country.
2.1.1 Bank:
A bank is a financial institution or corporation which deals with money and its substitutes. It
also provides other financial services. Banks accept deposits and make loans and obtain a
profit from the difference in the interest paid to lenders (depositors) and charged
to borrowers, respectively.
It is formed for the purposes of maintaining current accounts, savings accounts and checking
accounts, issuing loans or advances or investment (Islamic mode) and credit, and dealing in
negotiable securities issued by governmental entities and corporations. It makes a link with
depositors and customers directly or indirectly.
The term ‘Bank’ has been defined in different ways by different economists. A few
definitions are:
According to Walter Leaf, “A bank is a person or corporation which holds itself out to
receive from the public, deposits payable on demand by cheque.” Horace White has defined a
bank, “as a manufacturer of credit and a machine for facilitating exchange.”
According to Prof. Kinley, “A bank is an establishment which makes to individuals such
advances of money as may be required and safely made, and to which individuals entrust
money when not required by them for use.”
According to John Harry, “Bank is an economic institution whose main aim is to earn profit
through exchange of money and credit instrument.”
According to R.P. Kent, “A bank is an institution, the principal function of which is collect
the unutilized money of the people and to lend it to others.”
According to W. Hock, “Bank is such an institution which creates money by money only.”
The Banking Companies Act of India defines Bank as “A Bank is a financial institution
which accepts money from the public for the purpose of lending or investment repayable on
demand or otherwise withdrawable by cheques, drafts or order or otherwise.”
Thus, it can be said that a bank is a financial institution which deals in debts and credits. It
accepts deposits, lends money and also creates money. It bridges the gap between the savers

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and borrowers. Banks are not merely traders in money but also in an important sense,
manufacturers of money.
2.1.2 Banker
A banker is an employee of a bank or financial institution that services the financial needs of
the clients. These clients can be individuals or institutions, both with different needs. A
banker tries to maximize the profit of a bank while maintaining appropriate risk levels.
Essentially, bankers raise capital to make loans and investments. They charge interest and
fees for the services and seek profit on the investments. Institutions include small businesses,
large corporations and governments may seek regulatory advice, cash management solutions
outside investments and of course, loans. Individuals need basic banking services such as a
check or savings accounts, and sometimes larger needs such as buying a home.
2.1.3 Banking
In simple words, Banking can be defined as the business activity of accepting and
safeguarding money owned by other individuals and entities and then lending out this money
in order to earn a profit.    However, with the passage of time, the activities covered by the
banking business have widened and now various other services are also offered by banks. 
The banking services these days include the issuance of debit and credit cards, providing safe
custody of valuable items, lockers, ATM services and online transfer of funds across the
country or world.
2.2 Objectives of Bank
1. To establish as an institution for maximizing profits and to conduct overall economic
activities.
2. To collect savings or idle money from the public at a lower rate of interest and lend
public money at a higher rate of interest.
3. To create propensity of savings amongst the people.
4. To motivate people for investing money with a view to bringing solvency in them.
5. To create money against money as an alternative for enhancing the supply of money.
6. To build up capital through savings.
7. To expedite investments.
8. To extend services to the customers.
9. To maintain economic stability by means of controlling the money market.
10. To extend co-operation and advice to the Govt. on economic issues.
11. To assist the Govt. for trade& business and socio-economic development.

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2.3 Characteristics of Bank:
1. Deals with money: The Main Features of a bank is that it deals with all the money-related
transactions. For example, you can deposit your money in a bank account to save it securely,
and you will also get interested in the money that you will save in the account.
2. Provide loans: Banks make extra money by providing loans for different products to the
loan. The bank makes the extra money by lending money to the eligible person at certain
rates. Nowadays, banks provide loans for various requirements such as study loans, car loans,
home loans, personal loans, etc.
3. Identity: There are various banks that provide loans at different interest rates. Therefore,
each bank has a different name which helps the people to identify it easily and to differentiate
with other banks.
4. Withdrawal and Payment Facilities: A Bank provides various payment and withdrawal
services to customers so that they can receive their money hassle-free. Customers can
withdraw money using cheques and drafts and also from the ATMs installed by the banks at
different locations in the city.
5. Internet Banking Services: Nowadays, more and more banks are taking their business
online. It helps in making safe and risks free transactions, and there are fewer chances of
stealing taxes. There are specific terms for these types of transactions, such as internet
banking and mobile banking.
6. Increasing functionality: Like other industries, this sector is also focused on enhancing its
functionality. Banks have developed from just providing money lending, cash deposit, and
withdrawal services to providing loans and credit to cashless bank services to internet
banking.
7. Branches at Different Locations: People are not required to travel miles like the old
times to do banking. They can visit the nearest branch to them. Each bank is opening more
and more branches with the increase in the population so that they can satisfy their customers
properly by being near to them.
8. Bank Can Be a Company or an Individual Providing Banking Services: Usually, when
you hear about the word bank, you think about a large place where many people are working
and dealing with the money transactions. But it is not wrong to say that a bank can be a large
organization consists of hundreds of people or it can be a unit managed by a single person.
9. Commercialized: The bank uses our money to lend it to others or by investing it in
profitable businesses to make profits. If you think your money is sitting in a bank’s locker,

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then you are wrong. You might have digits of the money mentioned in your passbook, but
you might be rotating between one people to another to make more money to the investor.
2.4 Origin of Banking:
The word ‘Bank’ is widely and extensively used and circulated. The ‘Bank’ in English carries
the same meaning in Bengali. The origin of the English word ‘Bank’ came into being (when,
where and how) which could not be specifically identified. The history regarding the origin
of ‘Bank’, even after the twelfth century, is not also clear which has been based on guesses.
According to some writers the word ‘Bank’ was derived from ‘Banco’, ‘Bancus’, ‘Banque’ or
‘Banc’ all of which mean a bench upon which the medieval European Money Lenders and
Money Changers used to display their coins. Anyhow, this word has been in use from the
middle ages in connection with a bank. In the words of German writer W. Frankace, a long
stool or bench was said to be replaced by Bank, Bangke, etc. in the Scandinavian and Mid-
European countries. Again, Dutch and French words ‘Banque’, ‘Bangko’ were used to mean
stool or bench and in course of time the word ‘Bank’ came into effect.
In the Mediaeval age, Italian states were sound and solvent economically and commercially.
At that time a group of people used to conduct the business of transaction of money sitting on
a stool or bench which was replaced by ‘Banco’, ‘Banko’, ‘Banca’, ‘Bangk’, ‘Bancus’,
‘Banc’ etc. It is assumed that the word ‘Bank’ was originated from these words.Ata later age,
an English writer Maclead challenged the above concepts.His contention was that the money
lenders and money changers used to display their coins which were not termed as
‘Banco’,‘Banque’, ‘Banke’, ‘Banca’. However, Banco in Italy and Banke in German and
Australia were understood as public debt or issue of paper money. In his opinion, these words
were used for the purpose of the economic activities of different countries in Europe. Another
British writer Chamber, in his Dictionary, very clearly stated that the word ‘Bank’ is derived
from Banca and Banque. The French still use ‘Banque’ in place of the word ‘Bank’.

In the mid of twelfth-century Italian states were under political turmoil and in 1150 Venice
was afflicted with enemies. As a result, the Government introduced public debt/collective
credit/ forced subscribed loan at 5% compulsorily on the public for meeting the economic
crisis. During that time this loan was called Banke, Banco, Compara, Monte, etc. So many
thinkers think that the German word ‘Banke’ and the Italian word ‘Banco’ have been
transformed into the English word ‘Bank’.

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The Contributions of Goldsmith, Money-Lenders and the Businessmen
(a) The Goldsmiths: From the very ancient periods the Goldsmiths, over and above their
own activities, used to act as custodians of the surplus funds of the general people of the
society. For that reason, they were recognized as a symbol of honesty, sincerity, solvency,
and security. On receipt of money, they used to issue receipts and on the return of money,
they used to take acknowledgments. Later on, these receipts were treated deposit slip and
cheque respectively. The deposits receipts were undoubtedly acceptable and popular as notes
of the Goldsmiths and afterward converted into banknotes. Besides these, they used to lend
money with interest to the needy people and thus, the words interest and profit was
introduced. In the middle ages, the Goldsmiths became very rich and affluent. At one time
Goldsmiths used to deposit their money with the treasury of England. During the regime of
King, the First Charles, in 1640, the reserve funds of the Goldsmiths with London Tower
were confiscated and they had to pay penalty for taka two lacs pounds. Then they left the
gold business and got involved with the banking business. Thus, the Goldsmiths had a
definite role in the advancement of a modern bank.
(b) The Money-Lenders: The Money-Lenders also played an important role in the growth
and development of modern banking. They used to keep the surplus money of the people and
refund those in case of need. Later, they took it as a profession. They used to pay interest to
the depositors and earn interest on loans. They also used to take security, mortgage against a
loan. In Europe they were called Medici, Bengkuci, Piti, Missouri and in Indian subcontinent
Seth, Chetti, Multani, Kabuliwala were the Money-Lenders. In Europe, most of the Money-
Lenders were jews. Amongst them, Shylock of Italy was one of them. Besides, the Medici of
Lombardi was world-famous. Lombardi Street in London was recognized after the name of
Medici.Patheh Chand was also famous in India. Emperor Farook Shayar ornamented him
with the title of world banker.
(c) Businessmen: Business Class people also played a vital role in the growth and
development of modern banking. From the ancient periods, the Business Class was
trustworthy to the general people. They were honest, faithful and solvent. As a result, general
people used to deposit money to them for the safety and security of the fund. In the course of
time, they were involved in the money-lending business. The businessmen of seven-hills of
Rome were world-famous.

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2.5 History of Banking:
The history of banking began when empires needed a way to pay for foreign goods and
services, with something that could be exchanged more easily. Coins of varying sizes and
metals served in the place of fragile, impermanent paper bills.
These coins, however, needed to be kept in a safe place. Ancient homes did not have the
benefit of a steel safe, therefore, most wealthy people held accounts at their temples.
Numerous people, like priests or temple workers whom one hoped, were both devout and
honest, always occupied the temples, adding a sense of security.Historical records from
Greece, Rome, Egypt, and Ancient Babylon had suggested that temples loaned money out, in
addition to keeping it safe. The fact that most temples were also the financial centers of their
cities is the major reason that they were ransacked during wars.
Coins could be hoarded more easily than other commodities, such as 300-pound pigs, so there
emerged a class of wealthy merchants that took to lending these coins, with interest, to people
in need. Temples generally handled large loans, as well as loans to various sovereigns, and
these new money lenders took up the rest.

2.6 History of Banking in Bangladesh:

At the beginning of 1971, there were 1130 branches of 12 banks in operation in East
Pakistan. The foundation of the independent banking system in Bangladesh was laid through
the establishment of the Bangladesh Bank in 1972 by the Presidential Order No. 127 of 1972
(which took effect on 16 December1971). Through the Order, the eastern branch of the
former State Bank of Pakistan at Dhaka was renamed as the Bangladesh Bank as a full-
fledged office of the central bank of Bangladesh and the entire undertaking of the State Bank
of Pakistan in, and in relation to Bangladesh has been delivered to the Bank.
The rate of growth and development of the banking sector in the country was extremely slow
until 1983 when the government allowed to establish private banks and started the
denationalization process: initially, the Uttara Bank in the same year and thereafter, the
Pubali Bank, and the Rupali Bank in 1986. The growth pattern of banks during the period
1973-1983.There were no domestic private commercial banks in Bangladesh until 1982;
When the Arab-Bangladesh Bank Ltd. commenced private commercial banking in the
country. Five more commercial banks came up in 1983 and initiated a moderate growth in
banking financial institutions. Despite slow growth in a number of individual banks, there
had been a relatively higher growth of branches of nationalized commercial banks (NCBs)
during 1973-83. Their number had increased from 1512 in 1973-74 to 4603 in 1982-83.

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Financial sector reforms to strengthen the regulatory and supervisory framework for banks
made headway in 2006 although at a slower than expected pace. The overall health of the
banking system showed improvement since 2002 as the gross Non-performing Loans (NPL)
declined from 28 percent to 14 percent while net NPL (less Provision) reduced to 8 percent
from 21 percent. This led to significant improvement in the profitability ratios. Although the
Private Commercial Banks (PCB) NPL ratio registered a record low of 6 percent, the four
Nationalized Commercial Banks (NCB) position is still weak and showed a very high NPL at
25 percent. The NCBs have large capital shortfalls with a risk-weighted capital asset ratio of
just 0.5 percent (June 2006) as against the required 9 percent. For the PCBs risk-weighted
capital asset ratio stood at 10 percent.
2.7 Central Bank of Bangladesh:
Bangladesh Bank is the central bank of Bangladesh and is a member of the Asian Clearing
Union. The bank is active in developing green banking and financial inclusion policy and is
an important member of the Alliance for Financial Inclusion. Bangladesh Financial
Intelligence Unit (BFIU), a department of Bangladesh Bank, has got the membership of
Egmont Group. Bangladesh Bank is the first central bank in the world to introduce a
dedicated hotline (16236) for the general populace to complain about any banking related
problem. Moreover, the organization is the first central bank in the world to issue a "Green
Banking Policy".
On 7 April 1972, after the Independence War and the eventual independence of Bangladesh,
the Government of Bangladesh passed the Bangladesh Bank Order, 1972, reorganizing the
Dhaka branch of the State Bank of Pakistan as Bangladesh Bank, the country's central bank
and apex regulatory body for the country's monetary and financial system.
In 1982, the first reform program was initiated, wherein the government denationalized two
of the six nationalized commercial banks and permitted private local banks to compete in the
banking sector. In 1986, a National Commission on Money, Banking and Credit was
appointed to deal with the problems of the banking sector, and a number of steps were taken
for the recovery targets for the nationalized commercial banks and development financial
institutions and prohibiting defaulters from getting new loans. Yet the efficiency of the
banking sector could not be improved.At present it has ten offices located at Motijheel,
Sadarghat, Chittagong, Khulna, Bogra, Rajshahi, Sylhet, Barisal, Rangpur, and Mymensingh
in Bangladesh; total manpower stood at 5807 (officials 3981, subordinate staff 1826) as of 31
March 2015.

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2.8 Banks in Bangladesh:
The banking sector in Bangladesh consists of several types of institutions.
Bangladesh Bank is the central bank of Bangladesh and the chief regulatory
authority in the banking sector. Pursuant to Bangladesh Bank Order, 1972 the
Government of Bangladesh reorganized the Dhaka branch of the State Bank of
Pakistan as the central bank of the country and named it Bangladesh Bank with
retrospective effect from 16 December 1971. Other than the Central Bank itself,
banks in Bangladesh are primarily categorized into 2 types. They are Scheduled
Banks and Non-Scheduled Banks.
2.8.1 Scheduled Banks
Scheduled banks are licensed under the Bank Company Act, 1991 (Amended up to 2013).
Currently, there are 62 scheduled banks in Bangladesh.

2.8.1.1 State-owned banks (SOBs)

a. State-Owned Commercial Banks (SOCBs)

There are 6 state-owned commercial banks (SOCBs) that are fully or majorly owned by the
Government of Bangladesh.
1. Sonali Bank Limited
2. Janata Bank Limited
3. Agrani Bank Limited
4. Rupali Bank Limited
5. BASIC Bank Limited
6. Bangladesh Development Bank Limited
b. Specialized Banks (SDBs)
3 specialized banks are now operating which were established for specific objectives like
agricultural or industrial development. These banks are also fully or majorly owned by the
Government of Bangladesh.
1. Bangladesh Krishi Bank
2. Rajshahi Krishi Unnayan Bank
3. ProbashiKallyan Bank

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2.8.1.2 Private commercial banks (PCBs)
There is a total of 41 PCBs in Bangladesh are in operation right now. They are majorly
owned by private entities and classified into two types.
a. Conventional PCBs
In total 33 conventional PCBs are now operating in the industry. They perform the banking
functions in conventional fashion i.e. interest-based operations.
1. AB Bank Limited
2. Bangladesh Commerce Bank Limited
3. Bank Asia Limited
4. BRAC Bank Limited
5. City Bank Limited
6. Community Bank Bangladesh Limited
7. Dhaka Bank Limited
8. Dutch-Bangla Bank Limited
9. Eastern Bank Limited
10. IFIC Bank Limited
11. Jamuna Bank Limited
12. Meghna Bank Limited
13. Mercantile Bank Limited
14. Midland Bank Limited
15. Modhumoti Bank Limited
16. Mutual Trust Bank Limited
17. National Bank Limited
18. National Credit & Commerce Bank Limited
19. NRB Bank Limited
20. NRB Commercial Bank Ltd
21. NRB Global Bank Limited
22. One Bank Limited
23. Padma Bank Limited
24. Premier Bank Limited
25. Prime Bank Limited
26. Pubali Bank Limited
27. Shimanto Bank Ltd
28. South Bangla Agriculture and Commerce Bank Limited

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29. Standard Bank Limited
30. Southeast Bank Limited
31. Trust Bank Limited
32. United Commercial Bank Ltd
33. Uttara Bank Limited
b. Islami Shariah Based PCBs
There are 8 Islami Shariah-based PCBs in Bangladesh and they execute banking activities
according to Islami Shariah-based principles i.e. Profit-Loss Sharing (PLS) model.
1. Al-Arafah Islami Bank Limited
2. EXIM Bank Limited
3. First Security Islami Bank Limited
4. ICB Islamic Bank Limited
5. Islami Bank Bangladesh Limited
6. Shahjalal Islami Bank Limited
7. Social Islami Bank Limited
8. Union Bank Limited
2.8.1.3 Foreign Commercial Banks (FCBs)
In total 9 FCBs are operating in Bangladesh as the branches of the banks which are
incorporated abroad.
1. Bank Al-Falah Limited
2. Citibank N.A
3. Commercial Bank of Ceylon PLC
4. Habib Bank Limited
5. HSBC
6. National Bank of Pakistan
7. Standard Chartered Bank
8. State Bank of India
9. Woori Bank
2.8.2 Non-Scheduled Banks
Non-scheduled banks are licensed only for specific functions and objectives and do not offer
the same range of services as scheduled banks. There are now 5 non-scheduled banks in
Bangladesh.
1. Ansar VDP Unnayan Bank
2. Karmashangosthan Bank

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3. Grameen Bank
4. Jubilee Bank
5. Bangladesh Samabaya Bank Limited

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CHAPTER THREE – PROFILE OF AL-ARAFAH
ISLAMI BANK LIMITED

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3.1 Historical Background of Al-Arafah Islami Bank Limited (AIBL)
Islamic ideology encourages us to succeed in life here & hereafter. With the objective of
achieving success here & hereafter by pursuing the way directed by Allah and the path shown
by His Rasul (SM), Al-Arafah Islami Bank Limited was established (Registered) as a private
limited company on 18th June 1995. The inaugural ceremony took place on 27 September
1995. The authorized capital of the bank is Tk. 15000.00 million and the paid-up capital is
Tk. 9943.06 million as of 31st December 2016. Renowned Islamic Scholars and pious
businessmen of the country are the sponsorsof the bank. 100% of paid-up capital is being
owned by indigenous shareholders.
The bank is committed to contributing significantly to the national economy. It has made a
positive contribution towards the socio-economic development of the country by opening 154
branches on which 23 authorized dealers throughout the country.The equity of the bank stood
at Tk. 21, 337.48 million as 31 December 2016, the manpower is 3070 and the number of
shareholders is 36,695.
The bank conducts its business on the principles of Mudaraba, Bai-Muajjal, and hire purchase
transactions approved by Bangladesh Bank. Naturally, its modes and operations are
substantially different from those of another conventional commercial bank. There is a
Shariah council in the banks that maintains constant vigilance to ensure that the activities of
the bank are being conducted on the precepts of Islam. The Shariah council consists of
prominent Ulema, reputed bankers, renowned lawyers, and eminent economists.

3.2 Islamic Banking Movement in Bangladesh

In August 1974, Bangladesh signed the Charter of Islamic Development Bank and committed
itself to reorganize its economic and financial system as per Islamic Shariah.
In January 1981, the then President of People’s Republic of Bangladesh while addressing the
3rd Islamic summit conference held at Makka and Taif suggested, “the Islamic countries
should develop a separate banking system of their own in order to facilitate their trade and
commerce.”This statement of the president indicated a favorable attitude of the Government
of the Peoples Republic of Bangladesh towards establishing Islamic banks and financial
institutions in the country.Earlier in November 1980, Bangladesh Bank, the country’s Central
Bank, sent a representative to study the working of several Islamic banks abroad.
In November 1982, a delegation of IDB visited Bangladesh and showed keen interest to
participate in establishing a joint venture Islamic bank in the private sector. They found a lot
of work had already been and Islamic bank was in already form for immediate introduction.

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Two professional bodies-Islamic Economics Research Bureau (IERB) and Bangladesh
Islamic Bankers Association (BIBA) made a significant contribution towards the introduction
of Islamic banking in the country.They came forward to provide training on Islamic banking
to top bankers and economists to fill- up the vacuum of leadership for the future Islamic
banks in Bangladesh. They also held seminars, symposiums, and workshops on Islamic
economics and banking throughout the country to mobilize public opinion in favor of Islamic
banking.
Their professional activities were reinforced by a number of Muslim entrepreneurs working
under the aegis of the then Muslim Business Society (now reorganized as Industrialist and
Businessmen Association). The body concentrated mainly on mobilizing equity capital for
the emerging Islamic bank.At last, the long-drawn struggle to establish an Islamic bank in
Bangladesh became a reality and Islami Bank Bangladesh Limited was established in March
1983 in which 19 Bangladeshi national, 4 Bangladeshi institutions, and 11 banks, financial
institutions and government bodies of the Middle East and Europe including IDB and two
eminent personalities of the Kingdom of Saudi Arabia joined hands to make the dream a
reality.
Later, other five Islamic banks, Islamic Insurance companies, and financial institutions were
established in the country. Some traditional banks opened Islamic Banking branches in some
major cities.

3.3 Vision, Mission, Commitments

3.3.1 Vision
 To be a pioneer in Islamic Banking in Bangladesh and contribute significantly to the
growth of the national economy.

3.3.2 Mission
 Achieving the satisfaction of Almighty Allah both here & hereafter.
 The proliferation of Shariah Based Banking Practices.
 Quality financial services adopting the latest technology.
 Fast and efficient customer service.
 Maintaining a high standard of business ethics.
 Balanced growth.
 Steady & competitive return on shareholders’ equity.

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 Innovative banking at a competitive price.
 Attract and retain the quality of human resources.
 Extending competitive compensation packages to the employees.
 A firm commitment to the growth of the national economy.
 Involving more in Micro and SME financing.

3.3.3 Commitments
 Ours is a customer-focused modern Islamic Banking making 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.

3.4 Schemes of AIBL

1. Al Wadiah Current Deposit (CD)
2. Mudaraba Short Notice Deposit (SND)
3. Mudaraba Saving Deposit (MSD)
4. Mudaraba Term Deposit (MTDR)
5. Monthly Profit Based Term Deposit (PTD)
6. Monthly Installment Based Term Deposit (ITD)
7. Al-Arafah monthly Hajj Deposit (MHD)
8. Al-Arafah Termed Hajj Deposit (THD)
9. Monthly Installment Based Marriage Savings Investment Scheme (MIS)
10. Al-Arafah Savings Bond (ASB)
11. Foreign Currency Deposit (FCB)
12. Pension Deposit Scheme (PDS)
13. Cash Waqf Deposit Scheme (CWD)
14. MudarabaLakhpoti Deposit Scheme (LDS)
15. Mudaraba Millionaire Deposit Scheme (MDS)
16. Mudaraba (Special) Pension Deposit Scheme (MSPDS)
17. MudarabaKotipoti Deposit Scheme (MKDS)
18. Mudaraba Double Benefit Deposit Scheme (MDBDS)

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19. Mudaraba Triple Benefit Deposit Scheme (MTDBS)
“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 the 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 a high standard of Integrity.
 To extend our customers' innovative 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 the welfare-oriented banking system.
 Ensure equity and justice in economic activities.
 Extend financial assistance to the 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:
1. To offer contemporary financial services in conformity with Islamic Shariah.
2. To contribute towards economic development and prosperity within the principles of
Islamic justice.
3. To facilitate the efficient allocation of resources.
4. To help to achieve stability in the economy.

3.5 Management
The company is managed by its Board of Directors consisting of 15 members. The Board
appoints an executive committee consisting of Sponsor Director (Chairman, Vice Chairman),
its member, Shareholder Director, Ex-officer Director, Company Sectary. The committee is
authorized to observe and review major day to day operational functions including
investment plans, budgets, and other investment activities.

21
The Board is also responsible for establishing the company’s policies and reviewing the
operational performance of the company including approval of large investment transactions
and major fund procurement. The Board appoints the Managing Director who is responsible
for managing the company’s overall operations within the framework of policies of the
company. The Board also appoints the Policy Committee of eight directors who formulate the
personnel policy.

3.6. Organization Structure of AIBL

Managing Director
Deputy Managing Director
Executive Vice President
Senior Vice President
Vice President
Assistant Vice President
First Assistant Vice President
Senior Principle Officer
Principle Officer
Senior Executive Officer
Management Trainee Officer
Executive Officer
Junior Officer
Assistant Officer

3.7 Departmentalization of AIBL

The organization has a “Pyramid Structure”. The Managing Director is the top. Under him,
there is one Additional Managing Director and two Deputy Managing Director who are
individually head of three wings. Under each wing, there are several divisions/departments.
Hierarchy is well defined and followsa specific chain of command. The wings head and
divisional head reporting directly to the Managing Director. The activities of various wings
are described below:

 Operations Wing: Headed by Additional Managing Director, this wing is responsible

for all General Banking operations and control to the Branches.
 Investment Wing: Headed by a Deputy Managing Director, this wing processes
Investment proposals received from different branches, analyze them and get approval
from the competent authority. This wing also responsible for monitoring the Bank’s
Investment portfolio.
 International Banking Wing: Headed by a Deputy Managing Director, this wing
processesthe foreign transactions, foreign exchange, foreign remittance, etc.

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There are many departments under different divisions headed by Executive Vice Presidents

 Audit Division: This division is responsible for the overall audit &inspection of the
Bank.
 Human Resources Division: This division is responsible for recruitment, training,
posting, promotion of employees and also for pays and perks.
 Financial Administration Division: This division is responsible for keeping books
and accounts of the Bank.
 Establishment and Common Services Division: All Establishment and engineering
works, common services and development works are done by this division.
 Departmentalization at the branch level: It is a group job on the basis of product or
customer flow. In my organization group job practice is being done in every
department for example in general banking there isa different group likeT.T section,
D.D section, P.O section, O.B.C section, Cash section, Accounts section, and IT
section.
A group of officers has been working in every section, they have been working as a team and
every member works towards its goal.

3.8 Hierarchy of AIBL
In AIBL, there is a system of hierarchy like top management to lower-level employees. In the
hierarchy, each level of lower employee is being controlled and supervised by the higher one.
In every division and department, every official has an office order in order to perform his
duties and which is duly supervised by his superior. The hierarchy may be mentioned as, the
board of directors, Managing Director, Divisional Heads, Departmental Heads, etc.

3.9 Job Analysis of AIBL

It means the number of subordinates a manager can manage efficiently and effectively in our
organization. Every department has a yearly manpower plan which plans are overviewed by
the management and if justified yearly manpower plan approved by the management, work-
load, dailies, the proposal received and disposal trend assesses its manpower needed.

3.10Job Specification of AIBL

Job specification involves an employee’s skill abilities and other credentials need to do the
job. In our organization, every employee has job specifications. Before preparation of office
order manager of respective division /department go through employees’ abilities,

23
performance, experience, etc. and decided job specification of employees who are working in
his division /department.

3.11Designations of Employees of AIBL

Executives Officials Sub Staffs
 Managing Director (MD)  Senior Principal Officer  Messenger Cum
 Additional Managing Director  Principal Officer Guard (MCG)
(AMD)  Senior Executive Officer  Driver
 Deputy Managing Director (DMD)  Executive Officer  Tea Boy
 Executive Vice President (EVP)  Junior Officer  Cleaner
 Senior Vice President (SVP)  Assistant Officer
 Vice President (VP)
 Assistant Vice President (AVP)

3.12Departments and Their Functions

There are mainly two sections in AIBL, General Banking Division Investment Division, and
Foreign Exchange Division. These Divisions have a small department or units under them.
The details of the important sections and subsections are described below.

3.12.1 General Banking Department

There are certain three sections working together to fulfill the target of the company.
 Customer Service Section
 Cash Section
 Accounts Section

Customer Service Section Cash Section

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Different functions of customer service Different functions of the cash department
are: are:
 Accounts opening  Receiving cash from the depositors.
 Issuance of Cheque Book  Payment of cash to the client as
 Issuance of Payment Order demanded.
 Issuance of T.T  Checking all areas of deposit slip
 Issuance of D.D whether it is clearly written or not

 Issuance of Online Transfer  Verifying the payment Cheque when to

 Handling transfer transaction pay the money to the clients whether the
information is available or not like dale,
 Operation of clearinghouse
amount, account no, etc.
 Executing customer standing
 All the received and payment money
instructions
must be written down in the receipt &
payment register along with the account
number.
 The cash register must be maintained by
the Cash Officer.
 Maintenance of daily cash balance.
 Preparation of monthly cash balance.

Accounts Section
Accounting of AIBL can be broadly classified in the following two groups:
General Accounting Investment Accounting
General Accounting includes The company maintains its books of account
accounting for-general and based on the operating method of accounting
administrative expenses, funding according to Generally Accepted Accounting
operation and fixed assets. Standards in conformity with one the provision
Activities of accounting subsection of relevant regulations of Bangladesh Bank.
include:  Collection of receipts i.e. rental, profit
 Registration of voucher.  Control of collection i.e. maintain Cheque
 Posting of voucher in the ledger. register.
 Preparation of unadjusted trial  Reporting of information regarding rental
balance collection i.e. cash collection statement.

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 Preparation of adjustments  Acknowledgment to the Account holder i.e.
(accrual of expenses and income) –statement of accounts.
 Preparation of adjusted trial  Preparation of overdue statement i.e.-
balance overdue statement for BOD.
 Maintenance of accounts with  Activities regarding delinquent charge i.e.-
Bangladesh bank & other banks. billing.
 Treatment of irregular investment Account.

3.14 Investment Division

The main functions of investment divisions arepreparing the proposal, issuance of sanction
letter, disbursing the payment, and prepare & posting vouchers.

3.15 Human Resource Division

One of the major responsibilities of the human resource division is to enforce the Personnel
policy of AIBL. The section evaluates the performance of each employee twice a year and
maintains a detailed file on each employee.

3.16Monitoring
Monitoring activities can be summarized as follows:
Pre-Execution Activities Post-Execution Activities
 Review of documents and information  A weekly visit to clients’ office or factory
provided by the clients before financing to check the end use of fund
or opening of L/C or disbursement of the  Renewal of insurance coverage.
cheque;  Balance confirmation
 Review of security of unexpected
projects.

3.17 General Banking:

The 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 performed here.
Financial institution/intermediary that mediates or stands between ultimate borrowers and
ultimate lenders is known as banking financial institution. Banks perform this function in two
ways- taking deposits from various areas in different forms and lending that accumulated the

26
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 bankers
and customers who will take only one service from the bank. Perhaps, there are 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 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.
3.18 General Banking Sections
There are various sections in this department, which are as follows: -
1. Cash Section
2. Accounts Opening Section
3. Cheque Clearing Section
4. Remittance Section

3.18.1 Cash Section

The cash department is the most vital and sensitive organ of the branch as it deals with all
kinds of cash transactions. This department starts the day with cash in the vault. Each day
some cash that is opening cash Al-Arafah Islami Bank is transferred to the cash officers from
the cash vault. A net figure of this cash receipts and payments are added to the opening cash
Al-Arafah Islami Bank. The figure is called closing Al-Arafah Islami Bank. This closing Al-
Arafah Islami Banka is then added to the vault. And this is the final cash Al-Arafah Islami
Bank figure for the bank at the end of any particular day.
Functions of the Cash Department
Cash payment is made only against cheque. This is the unique function of
Cash Payment the banking system which is known as payment on demand. It makes
payment only against its printed valid Cheque.
It receives deposits from the depositors in the form of cash.So, it is the
Cash Receipt “mobilization unit” of the banking system.It collects money only its
receipts forms

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Cash payment or Cheque Cancellation Process
Step 1 Receiving Cheque by the employee in the cash counter
Verification of the followings by the cash Officer in the computer section
 Date of the Cheque (It is presented within 6 months from issue date)
 Issued from this branch
Step 2
 Amounts in figure and sentence does not differ
 Signature of the drawer does not differ
 The cheque is not torn or damage
Step 3 Gives pay cash seal and sends to the payment counter
Step 4 Payment officer makes payment

Books Maintained by This Section

It keeps account of cash Al-Arafah Islami Bank in the vault in
Vault Register
the bank.
Cash Receipt Register The cash receipt in the whole of the day is recorded here.
Cash Payment Register Cash payments are made in a day are entered here.
Cash calculation for the final entry in vault register is done here,
Rough Vault Register
as any error and correction here is not acceptable
Al-Arafah Islami Askance here is compared with the vault
Cash Al-Arafah Islami
register. If no difference is found, it indicates no error.
Askance Book

3.18.2 Account Opening Section

This section opens accounts. The selection of customers is very important for the bank
because the bank's success and failure largely depend on their customers. If a customer is
bad, they may create fraud and forgery by their account with the bank and thus destroy the
goodwill of banks. So, this section takes extreme caution in selecting its customer base.
Accounts Opening Process
Receiving filled up an application in banks prescribed form mentioning what
Step 1
type of account is desired to be opened.
Step 2 1.The form is filled up by the applicant himself/herself
2.Two copies of passport size photographs from individual are taken, in case of
firms photographs of all partners are taken
3.Applicants must submit required documents

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4.An applicant must sign the specimen signature sheet and give mandate
introducers signature and accounts numbers verified by the legal officer
Step 3 Authorized Officer accepts the application
Step 4 Al-Arafah Islam bank is deposited only cash is accepted
Step 5 An account is opened and a Cheque book and pay-in-slip book is given

Special Caution or the documents from the Account opener of the following types:
Partnership Partnership deed must be taken Mandate from the partners is essential
Firm indicating who will operate the account
 Certificate of Incorporation
Public Limited  Copy of Memorandum and Articles of Association
Company  Certificate of Commencement
 Copy of Resolution of the Board of Directors
 Certificate of Commencement is not necessary
Private Limited  Certificate of Incorporation
Company  Copy of Memorandum and Articles of Association
 Copy of Resolution of the Board of Directors

3.18.3 Foreign Remittance Section

This bank is an authorized dealer to deal in the foreign exchange business. As an authorized
dealer, a bank must provide some services to the clients regarding foreign exchange and this
department provides these services.
The basic function of this department is outward and inward remittance of foreign exchange
from one country to another country. In the process of providing this remittance service, it
sells and buys foreign currency. The conversion of one currency into another takes place an
agreed rate of exchange,which the banker quotes,one for buying and another for selling. In
such transactions, the foreign currencies are like other commodities offered for sales and
purchase, the cost (convention value) being paid by the buyer in home currency, the legal
tender.
3.18.4 Cheque Clearing Section:
This section receives all kinds of Cheques in favor of the client for clearing as part of their
banking service. After receiving the Cheque, it is necessary to endorse it and cross it
specially. Basically, the Cheques for clearing are of following types:
Types ExplanationClearing Clearing Process
Inward Party’s A/C______________ Dr.
Cheque received from the clearing
Clearing IFIC General Account ______Cr.
house, of our bank
cheque

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OBC Cheques of These cheques are directly sent to the
(Outward Bills another branch respective branch and request them to
for Collection) of AIBL within send IBCA. When IBCA comes, then
our the customer’s accounts are credited
clearinghouse for the amount of the cheque.
area
Clearing Cheques of These cheques are sent to clearing
cheque another bank house via the Motijheel Branch. When
within our drawee bank honors the cheques, then
clearinghouse the accounts of cheque depositors are
area. credited.
Outward OBC Cheques of These Cheques are cleared in two
clearing (Outward Bills another bank ways: Firstly, if any branch of our
for Collection) which is situated bank exists within the clearinghouse
outside the area of drawee bank, then we send the
clearing are Cheque to that branch of our bank and
that branch collects the proceeds
through clearinghouse formalities and
sends an IBCA to us. In a second way,
if there is no branch of our bank, then
we directly send the Cheque to the
drawee bank and request them to send
the proceeds by TT, MT, or DD or by
in any other means
Inward Bills These Cheques are settled by sending
for From another branch of Al-Arafah IBCA, i.e. debiting depositor's account
Collection Islami Bank and crediting the sender’s branch
(IBC) account.
these Cheques are settled debiting
From another bank outside the
depositors account and sending DD,
clearinghouse
MT, TT in favor of sender’s bank

3.19Payment Oder:
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. A pay order is issued only within the Members of the
Bangladesh bank clearing house (Dhaka Metro). 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 clearinghouse where these are received by the respecting issuing banks. The
issuing banks verify the pay order, which is then sent back to the respecting banks and
payment made by debiting the payable account. AIBL charges a different amount of
commission on the basis of the Payment Order amount. The bank charges for pay order are
given in the following chart:

The total amount of PO Commission Vat

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Upto Tk. 10,000.00 Tk. 15.00 Tk3.00
Tk. 1 0,001.00-Tk. 1, 00,000. 00 Tk.25.00 Tk. 4.00
Tk. 1, 00,001.00-Tk. 5,00,000.00 Tk. 50.00 Tk. 8.00
Tk. 5,00,001.00 and Above Tk. 100.00 Tk. 15.00
Table: Charges for Payment Order

3.20 Online Transaction

Clients of any branch of AIBL can draw money from any branch of AIBL. This is a superior
service for the clients of AIBL than others. The online charge is Tk.50 from Tk.50001 to
200,000 and less than that is free. Customers have to pay VAT @15% on online
commission/charge. From 200,000 to above the fee is 100. In case of a deposit, less than Tk.
100,000 is free. Above Tk.100, 000, charges applicable.

3.21Electronic FundsTransfer (EFT)

 Electronic funds transfer (EFT) is the electronic exchange or transfer of money from
one account to another, either within a single financial institution or across multiple
institutions, through computer-based systems.
 The term covers a number of different concepts:
 Cardholder-initiated transactions, where a cardholder makes use of a payment card
 Direct deposit payroll payments for a business to its employees, possibly via a payroll
service bureau
 Direct debit payments, sometimes called electronic checks, for which a business
debits the consumer's bank accounts for payment for goods or services
 Electronic bill payment in online banking, which may be delivered by EFT or check
 Transactions involving the stored value of electronic money, possibly in a private
currency
 Wire transfer via an international banking network
 Electronic Benefit Transfer

3.22Automated Clearing House

Automated Clearing House (ACH) is an electronic network for financial transactions in the
United States. ACH processes large volumes of credit and debit transactions in batches. ACH
credit transfers include direct deposit payroll and vendor payments. ACH direct debit
transfers include consumer payments on insurance premiums, mortgage loans, and other
kinds of bills. Debit transfers also include new applications such as the point-of-purchase

31
(POP) check conversion pilot program sponsored by NACHA-The Electronic Payments
Association. Both the government and the commercial sectors use ACH payments.
Businesses increasingly use ACH online to have customers pay, rather than via credit or debit
cards.

3.23Cheques
Cheques are a type of bill of exchange and were developed as a way to make payments
without the need to carry large amounts of money. While paper money evolved from
promissory notes, another form of a negotiable instrument, similar to cheques in that they
were originally a written order to pay the given amount to whoever had it in their possession.
Technically, a cheque is a negotiable instrument instructing a financial institution to pay a
specific amount of a specific currency from a specified transactional account held in the
drawer's name with that institution. Both the drawer and payee may be natural persons or
legal entities. Specifically, cheques are order instruments, and are not in general payable
simply to the bearer but must be paid to the payee.
3.24Fixed Deposits
Fixed deposits are a high-interest-yielding Term deposit offered by banks. The most popular
form of Term deposit is Fixed Deposit, while other forms of term Deposits are Recurring
Deposit and Flexi Fixed Deposits.
To compensate for the low liquidity, FDs offer higher rates of interest than savings accounts.
The longest permissible term for FDs is 10 years. Generally, the longer the term of deposit,
the higher is the rate of interest but a bank may offer a lower rate of interest for a longer
period if it expects interest rates will dip in the future.

3.25SME Banking
Small and Medium Enterprise (SME) is playing a significant role in the growth of the overall
GDP ofthe country. Of all industrial productions, a huge part stems from SME. In order to
boost up the small and medium enterprises of the country, Bangladesh Bank has recently
advised the commercial banks to enhance the flow of investment and offered directives and
policies to supervise and monitor this sector. As SME has emerged as a thrust sector, Al-
Arafah Islami Bank Ltd. also considers it important to extend and enhance finance for the
same. Keeping this idea in the forefront, the bank has prepared an integrated policies,
methods, and procedures for SME investment.

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3.25.2Modes
Working Capital Investment Fixed Capital Investment
 Bai-Muajjal  HPSM (Equity required)
 Murabaha/Murabaha TR  Mudaraba
 MPI/MPI- TR  Musharaka
 Mudaraba
 Musharaka

Rate of Profit/ Rent

Working Capital Investment Fixed Capital Requirement
16% (On Reducing Balance Method) 5% (On Reducing Balance Method)

3.25.3 Eligibility
 Permanent resident of Bangladesh
 The age must range between 25 years to 60 years
 Physically fit and capable of working hard
 Capable of reading & writing
 Capable of managing his / her business successfully
 Sufficient Infra-structure and skilled personnel
 At least 02 (two) years’ experience in the applied business
 Having Transparent CIB Report
 Valid Licenses, such as- Trade License, VAT registration, TIN, NOC from
Environment Department (where applicable)

3.26 ATM Services

AIBL has 143 Plus ATM booths nationwide, which is growing gradually. In 2017, AIBL had
installed the country’s first solar-powered ATM booth at Uttara.
Most of these 140 Plus ATMs are located at important locations of the country. As a result,
customers can withdraw cash, inquire account balance and get mini-statements on a 24×7
basis, to satisfy their banking needs. AIBL uses world-famous NCR branded ATM Machines.
Our ATMs can accept MasterCard, Maestro, Cirrus, Visa, and Plus cards. Being a member
bank of the National Payment Switch of Bangladesh (NPSB), AIBL ATMs can accept cards
from other National Payment Switch Bangladesh (NPSB) member banks as well.
To provide improved and effective customer service, AIBL is widening its ATM network by
deploying new ATM booths at prominent and useful locations for the customers.

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ATM Booth Information
Division No. of ATM Booth
Dhaka Division 72 Booth
Chittagong Division 30 Booth
Sylhet Division 07 Booth
Khulna Division 12 Booth
Rajshahi Division 09 Booth
Barisal Division 09 Booth
Rangpur Division 04 Booth
Total 143 Booth

3.27 Cards
Al-Arafah Islami Bank Limited offers a broad range of Islamic Credit Card designed to suit
all your needs. Whether you are looking for a Debit Card for your day to day transactions, a
Prepaid Card to plan your expenses, or an Islamic Credit Card offering a combination of
flexibility and benefits, we have the right solution for your needs.

3.27.1 La-Riba Islamic Credit Card

 La-Riba Platinum Card
 La-Riba Gold Card
 La-Riba Silver Card

3.27.2 Debit Card

 Instant Card
 Fast Cash
 MasterCard Debit Card

34
CHAPTER FOUR – KNOWLEDGE GAINED
FROM BBA PROGRAMME

35
4.1 Benefit from Internship
Firstly, an internship program helps me to gain work experience in a field of interest and in a
professional setting. The internship program helps are based on short term commitments (3
months) and through this period of time. I have the opportunity to try out and understand
whether this sort of work would be a choice of career for the future. This is also a good way
to apply classroom learning in practice with the hope that a job can be secured at the end of
the internship period.
4.2 Actual Task Part
In the period of my three months internship program, I got a position and some duties in Al
Arafah Islami Bank Limited, Zindabazar Branch. My observation and responsibilities were in
the General Banking Department like opening different types of Deposit Pension Schemesor
FDR account. From September 04, 2019 to December 04, 2019, I worked with Mr. Kazi
Taher-A-Mustafa of Al Arafah Islami Bank Limited, Zindabazar Branch who works in the
GB section. At that time, I mainly worked in the Customer Service Department &observed
the rules and regulations of Deposit Schemes and the procedure which they followed in the
Deposit Section.
4.3 Job Responsibilities
There were several responsibilities carried out by me in the general banking division of Al
Arafah Islami Bank Limited (Zindabazar branch). Every day I used to start my job at
10:00am and it ended at 06:00pm. Within this time, different types of the job were performed
by me and those are given below.
4.3.1 Accounts Opening& Updating
Account opening is the most important issue in General Banking. It is the first phase of
customers who are going to get services from the bank. Before the opening of any account, it
is very important to know the target customers of the bank. The targeted customers may be an
individual, partner, joint-stock companies, trustee/clubs/associates and different types of
institutions. It is also important to know why the customer wants to open an account at this
branch. To reveal a customer’s purpose of opening the account is pretty tricky. If the account
opening officer is experienced and intelligent, he can easily expose the purpose of opening an
account from the customer himself/herself.
 Helping the client in filling up the account opening form.
 Helping the client by opening different types of FDR account
 Generating unique ID & A/C number of clients through ABABIL software

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 Updating client information in the Bank ABABIL software.
 Helping the client in filling up the deposit (Initial) receipt at the time of account
opening.
 Writing the instrument in case Of FDR accounts.
 Updating account opening form.
 Writing MTDR bloc.
Opening an account is the first step to be a customer of Al Arafah Islami Bank Limited and
enjoying different services of it. For depositing and withdrawing money from The Al Arafah
Islami Bank and having other services, an account is mandatory for every individual and
institutional customer. So, my responsibility was to give premium quality services and
attempt to sustain our customer for a long time with Standard.
4.3.2 Receive Cheque Requisition
A cheque requisition is received from the customer for giving a new checkbook containing a
specific number of pages mentioned by the customer. I received the cheque requisitions
throughout the day and sent the list to the head office at the end of the day.
4.3.3 Pay Order Issue
Pay order has been issued to serve the customer who wants to send money, not in cash rather
in a cheque. It reduces the cash-carrying risk. I filled up the pay order slip to help out the
customers.
4.3.4 Cheque Book Requisition & Delivery
Writing cheque book requisition against new & old account by the following process: In new
account entry the cheque register A/C number, customer name full block letter, and mobile
number & then give them their requisition slip with their serial number.
When a client comes to the bank to avail of their checkbook as per their requisition, then the
checkbook is delivered to him or her by the following process: Finding out the checkbook in
the checkbook issue registry book based on the date of new cheque book arrivals. Writing the
first and last leaf number in the requisition form which is usually attached to the checkbook
taking off the requisition form. Providing a checkbook by keeping the signature of the client.
4.4 Application of Knowledge gained during the BBA program
Application of Knowledge gained during the BBA program has helped to accomplish each
task:
I have studied four years of BBA (Bachelor of Business Administration) program to acquire
knowledge ofthe business area. I learnedthe various method of business and activities of a

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business. I will describe now that how the knowledge gained during the BBA program has
helped me to accomplish each task properly
5.4.1 Principles of Accounting/Cost Accounting and Intermediate Accounting
I learned after studying principles of accounting that how to prepare journal, ledger, balance
sheet and income statement, etc. The double-entry system is the only scientific and reliable
for maintaining accounts. But the single-entry system is not complete and accounts are not
maintained properly. I noticed that the bank also follows the double-entry system for accurate
and proper accounts. I didn’t ask the supervisor during banking hours that what are a journal,
ledger, balance sheet, and income statement. But a new employee of the bank was in trouble
withaccounting-related content. Because of various educational background employee was in
the bank. Debit and Credit system is familiar for me and it was so easy how to debit and
credit. The cost accounting course is designed to give knowledge about the overall cost
recording, cost summarizing and cost reporting process. During my internship, I noticed how
the bank control cost and reduce the cost of production. I was familiar with cost control and
cost reduction techniques so that I didnot feel any trouble in the bank.
4.4.3 Business Law
Every business has to follow some rules and regulations by the government. I noticed that
Bangladesh banks suggested and imposed some laws for all the private commercial banks
and City Bank limited has also following Bangladesh Banks laws. If there is no law for banks
then banks will involve illegal activities and crimes. Before my internship, I knew that all
institutions have some laws because I studied Business Law. From the business law course, I
learned about the law of the negotiable instrument.
4.4.4 Principles of Marketing
Financial success often depends on marketing ability. Finance, operations, accounting, and
other business functions will not really matter if there is not sufficient demand for products
and services so the company can make a profit. When I was in banks as an intern, I was able
to identify who are seller, buyer, customer, user, and consumer, etc. because I was introduced
with those in my marketing classes. Most of the decisions are taken by the head of the bank,
only the top of the bank can make decisions. The power of the branch head is given from the
head office. Advertising is a very important tool to attract more customers and target market.
The bank advertises time to time and attracting customers. As a BBA student, I knew how to
advertise properly and techniques of advertising. The bank follows a strong and effective
marketing strategy and focuses on customer satisfaction. Principles of Marketing helped me
to accomplish each task.

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4.4.5 Business Communication
Business communication is very important for business; it helps how to communicate with
others. If anyone works in an organization, they must respect the formal channels of
communication. This does not mean that there should be no informal communication. All
decisions come from head office and the only manager has the power to control the branch.
We learned when studied business communication that how to work in a group. In group
work, I realized that I dealt with various levels of officers and helped them when needed. It’s
really hard to deal it senior and junior level officers because we need to know how to
communicate with them. But it was pretty good for me, I knew from the business
communication course how to communicate. Body language is also another essential factor in
an organization.
4.4.6Banking and Insurance
I did my internship in a bank and Banking & Insurance course was very helpful for me
because this course is bank related. In this course, I was introduced to types of banks,
functions of a bank, private commercial banks, foreign and nationalized banks. When I
worked in the bank it was easy for me to do my assigned tasks only because I studied this
subject. This course study helps us to get exposure to the operational environment in
Banking, Insurance and other related firms in the financial service sector. I observed that
various educational background employees are always in trouble when they work. They are
not familiar with the operational activities of banks.
4.4.7Business Environment
The word “Environment” refers to the aspects of the surroundings. Therefore, Business
Environment may be defined as a set of conditions – Social, Legal, Economic, Political or
Institutional that are uncontrollable in nature and affects the functioning of an organization.
When we studied this subject, I learned about Technological environment, Political
environment, Social-Cultural, and Global environment, etc.
4.4.8Management Information & Control System
This subject helped very much because when I studied this course I learned about the
organization, management, and technology. When I was in the bank, I easily recognized what
are management and technology and organization. I also learned how to manage hardware
and software assets. All works in a bank are done by computer and they use various kinds of
software. It was very easy for me to operate a computer and software. Telecommunication is
very essential for a bank and I had knowledge about telecommunication after studying this
subject. I observed that Al-Arafah Islami Bank Limited uses a telecommunication system for

39
daily operation. Without the internet, it is not possible to provide internet banking to its
customers. I studied the internet and the new information technology infrastructure so I did
not face any problem during my internship period. I also have studied many other subjects
which also helped me to accomplish each task during the internship.
4.4.9 Financial Analysis & Control
From the course, Financial Analysis and Control learned how to find out the ratios. Such as
ROA, EPS, asset turnover, quick ratio, current ratio, etc. for this course I learned how to use
MS Excel which is helped me to make the internship report and financial analysis.
4.4.10Other Courses
I have also gained knowledge from the course Introduction to business, English Language I
& II which is very helpful to learn English. Business Math I & II from this subject I gained
knowledge about mathematics. Mathematics is the subject that we have to study well in every
situation we need math. This subject is necessary for all. Principles of Finance are the most
important subject to Finance & Banking students. I have learned from this subject annuity,
debt ratio, EBIT, find out the ratios, etc. another subject which helped me in Computer
Application. Micro Economics & macro Economics from this course I have learned about the
inflation of the economy.Development Accounting, Intermediate Accounting,
entrepreneurship development, business policy & strategy, Ethics & professionalism which is
helped me in my practical life.

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CHAPTER FIVE – FINANCE AND BANKING
SYSTEM OF AIBL

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5.1 Finance System of AIBL:
Al-Arafah Islami Bank Limited has some good deals for its customers who require large
amount of money for their business operation. AIBL is currently serving some renowned
brands in Sylhet as its customers through some schemes. AIBL calls them investment
schemes. Some of the schemes are depicted below:
Consumer Investment Scheme (CIS)
In order to increase the living standard of people these schemes are running in the bank. The
main purpose of this scheme is giving investment facility to people for purchasing household
articles.
 Collateral: If the investment is cross 3lack to 10 lacks, Taka sufficient collateral will
be obtained as per bank policy.
 Other Securities: Personal guarantee, Post-dated cheques for monthly installment,
Personal guarantee of relatives, Hypothecation of purchased asset.
 Investment Parameter: Consumer products such as TV, AC, Furniture etc.
 Mode of Investment: Bai-Muajjal (CIS).
 Investment Amount: Without collateral 3lack with collateral up to 10lack.
 Rate of Return: 15%
 Repayment Duration: Minimum 1 month Maximum 48 months
Consumer Financial Scheme
This scheme is only for professional like Doctor, Lawyer, and Engineers. The main purpose
of this scheme is to support them for purchasing different equipment based on their
profession. To apply for this scheme customer must have to 3 years unexpired of service and
for self-employed minimum 2 years business record.
 Collateral: Personal guarantee, Postdated cheques for monthly installment,Personal
guarantee of relatives, Hypothecation of purchased asset, ICB certificates,
Insuranceover bank assets, Collateral security will be obtained as per bank policy.
 Investment parameter: To construct new building or rebuild old structure.
 Mode of investment: HPSM (CIS).
 Investment amount: Maximum 2 lack.
 Rate of return: 15% (Stipulated by the bank)
 Repayment system: Maximum 60 months (Monthly Installment basis)

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GramenSmall Investment Small Scheme (GSIS)
In order to socio-economic development of rural poor this scheme is introduce in
2001.Mainly rural branches are working for this scheme. The specialty of this scheme is
group-based investment scheme
 Collateral: Free
 Investment parameter: Manufacturing, service, Trade (Micro-level)
 Mode of investment: HPSM (GSIS) & Bai-Muajjal (GSIS).
 Investment amount: Maximum 50,000
 Rate of return: As Stipulated by the bank
 Repayment system: Maximum 50 weeks (weekly Installment basis)
House finance investment Scheme
This scheme is only for the Bangladeshi resident. In order apply for this investment customer
must have to submit his/her nationality versification. The customer must have the ability to
repay bank investment.
 Collateral: Registered mortgage, verified site plan, Power of attorney of land,
Personal guarantee, Postdated cheques for monthly installment, Personal guarantee of
relatives, Hypothecation of purchased asset.
 Investment parameter: To construct new building or rebuild old structure.
 Mode of investment: HPSM (CIS).
 Investment amount: Maximum 70 lack.
 Rate of return: 15% (Stipulated by the bank)
 Repayment system: Maximum 240 months (Monthly Installment basis)
5.2 Employees of AIBL
5.2.1 Branch Manpower Position of AIBL
Sl Employee Name Designation Department
1 A S M Gouch Uddin Siddiquee AVP Manager
2 Mohammed Abdal Ahmed Chowdhury FAVP Operations Manager
3 Md Mufijur Rahman PO Investment
4 Monjur-A-Malak PO GB-in-Charge
5 Kazi Taher-A-Mustafa PO GB
6 Abul Hasnat Md Mahmud PO GB
7 Md Abdul Mannan SEO Cash-in-Charge
8 S M MasudulAkter Islam SEO Cash
9 Abu Zafar Md Sadequl Islam EO GB
10 Abu Saleh Md Maidul Islam EO Cash
11 Md Alhas Uddin FO GSIS

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12 Md Abu Jayed Miah FS GSIS

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CHAPTER SIX – FINDINGS,
RECOMMENDATIONS& CONCLUSION

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6.1 Findings:
 Few numbers of exporter and importer: The number of exporter and importer who
operate through this bank is not enough to achieve the goal. If the bank wants to
increase its total foreign business then it should increase total export, import, and
remittance. So, they need to increase exporter and importer.
 Lack of efficient employees: They have not sufficient efficient employees to operate
the foreign exchange department in the bank.  So, they should increase efficient
employees in this department.
 Very few branches level meeting is held: Staff meetings and departmental meetings at
the branch level does not hold or very few which is very essential to develop service
quality as well as problem-solving. But this practice is very few. So, it may create a
major problem in the future.
 Lack of modern PC and comprehensive banking software: PC Bank is not modern and
comprehensive banking software. It does not provide adequate support for providing
the services. It is not user-friendly and management should consider replacing the PC
Bank system with a more comprehensive banking system.
6.2 Recommendations:
In order to get a competitive advantage and to deliver quality service, top management should
try to modify the service.
 While opening a new account, AIBL must demand more valuable documents from
new customers. It would be very helpful and safe for both the Bank and the
customers.
 It seems to me that day-by-day customer’s cooperation is increasing. Individual
employee has to handle different types of job. But that is pock-a-back for an
employee. As a result, it might be happening any big mistake by the employee and
service is also time-consuming and the customer has to suffer from this situation.
Maybe it would be the reason for employee’s de-motivation as well as the customer’s
dissatisfaction.
 They should also focus on the marketing aspects to let customers know about their
products and offerings and more promotions should be given to attract a new
customer.
 The bank should offer more facilities to the customers such as credit visa card, ATM
machine, etc.

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 AIBL must develop an electronic banking system to moderate the service.
Technology advantage of a bank ensuring its competitive edge in the market place can
only be achieved by efficient manpower. It is a market share to reduce its operating
costs and to generate new revenue. The electronic banking system also allows
increased access to the financial system by its customers.
 As soon as possible the bank should sort more branches in Dhaka city as well as the
other cities of the country.
 Nowadays,the world is going very fast. Now, most of the banks open online customer
service system. So, in order to compete in the world market, they should adopt an
online banking system.
 One of the business strategies is promotion. A successful business depends on how
they can promote their products or service to the customer. AIBL should focus on
itspromotional activities. In this connection to improve the business status bank
should introduce a more promotional program.
 In the general banking department, it is necessary to implement a modern banking
process instead of the traditional system. Be more computerized.
 In addition, with the present service, they should include more services. It is badly
needed to provide more service to the customer in order to complete it in the market.
 Database networking is the most modern technology to transfer data from branch to
branch head opposes and vice versa. So, they must use this technology in the IT
department of the bank.
 As the clients are not in favor of the introducing system, if possible, the rule of
introducing to open an account should be changed. Because many people face in
problem to arrange an introducer in the time of opening account.
 The bank can offer its customer better service if all of its department is computerized
and incorporated under the local area network.
 At the entry passion, the bank should enroll more expert people, to augment quality
service.
 They need to provide more training facilities, a more computerized system, and a
strong network connection.
 They need a systematic process in the cash counter to give customers well and fast
facilities.
 Time consumed at the service level should be minimized at an optimum level.

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6.3 Conclusion:
Banks have their own unique strategy, which leads to their objectives. Some wish to grow
faster and achieve some long-range growth. On the other hand, some banks want to lead a
quiet life minimizing risk and convey an image of a sound-bank. AIBL is pretty new in its
operation. AIBL has established goodwill through innovative products and services.
Technology development has opened up a new dimension in the development of creative
products, efficient services, and customer satisfaction. The bank must cope with this
technological advancement in its present status. Though there are some drawbacks in some
sectors of Al- Arafah Islami Bank Ltd., still modern banking technology and employee and
employer sincerity may lead to increased profit. The progress of AIBL in Bangladesh is
depended on the environment, structure, special features offered by the bank, a rapid increase
of deposit, investment, profit, dividend on behalf of a short time, the public response over the
bank. The aim of the internship program is to gain knowledge of practical banking and to
compare this practical knowledge with theoretical knowledge. During the 3months internship
program, it is not possible to go to the depth of each activity of division because of time
limitations. So, the objectives of the internship program have not been fulfilled with complete
satisfaction.
However, the highest effort has been given to achieve the objectives of the internship
program. I think this report may show a guideline to AIBL for its future planning and its
successful operation to achieve its goal in the competitive environment.

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References

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 Ahuja, R. (2009). Research Methods. Jaipur: Rawat Publications.
 Alam, M. N. (2000). Islamic Banking in Bangladesh: A case study of IBBL.
International Journal of Islamic Financial Services, 1(4).
 Al-Arafah Islami Bank Limited. (2015). Islamic Banking: Shariah Guidelines (3rd
ed.). Dhaka, Bangladesh: Al-Arafah Islami Bank Limited.
 Al-Arafah Islami Bank Limited. (2018). Shariah Manual. Dhaka: Al-Arafah Islami
Bank Limited.
 Al-Arafah Islami Bank Limited. (2019). Annual Report 2018 - Al-Arafah Islami Bank
Limited. Retrieved December 05, 2019, from Al-Arafah Islami Bank Limited:
https://www.al-arafahbank.com/For%20Web%20AIBL%20Annual%20Report
%202018-compressed.pdf
 Ali, S. A., & Howlader, R. A. (2005). Banking Law and Practice. Dhaka: Mowla
Brothers.
 Debnath, R. M. (2013). Banks & Legal Environment (3rd ed.). Dhaka: Lotus
Publications.

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MD : Managing Director
DMD : Deputy Managing Director
EVP : Executive Vice President
SVP : Senior Vice President
VP : Vice President
AVP : Assistant Vice President
FAVP : First Assistant Vice President
BB : Bangladesh Bank
BCD : Bearer Certificate of Deposit
OB : Online Banking
BBLC : Back to Back Letter of Credit
BL : Bill of Lading
AWCD : Al Wadiah Current Deposit Account
MTDR : Mudaraba Term Deposit
ITD : Installment Term Deposit
SND : Short Notice Deposit
MSD : Mudaraba Savings Deposit
STD : Short Term Deposit
PTD : Profit Term Deposit
IBC : Inward Bills for Collection
OBC : Outward Bills for Collection
LC : Letter of Credit
CC : Cash Credit
DD : Demand Draft
OD : Over Draft
TT : Telegraphic Transfer
PO : Pay Order
PAD : Payment Against Document
LTR : Loan against Trust Receipt
LIM : Loan against Imported Merchandise
SOD : Secured Over Draft

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