Report Proposal of Investment Mechanism || IBAIS University

An Internship Report

ON

Investment Mechanism

of

Al-Arafah  Islami Bank Limited

An Internship Report

ON

Investment Mechanism

of

Al-Arafah  Islami Bank Limited

Submitted to

Dr. Sujit R. Saha

Department of Business Administration

IBAIS University

Submitted By:

Razia Sultana

ID No.xxxxxx

Program : BBA

Major : Finance

Batch : xxx

IBAIS University

Submission date: 28 March, 2016

Background Of the Study

Bangladesh is one of the largest Muslim countries in the world. The people of this country are deeply committed to lead an Islamic way of life which is based on the principle of Holy Quran and the Sunnah.

The Al-Arafah Islami Bank which is established on june 18, 1995 is the true reflection of this inner urge of its people which started functioning with effect from September 27, 1995. It is committed to conduct all Financial Activities banking and Investment activities on the basis of interest free profit and loss sharing system. In doing so it has unveiled a new horizon and unhered in a new silver lining of hope towards materializing a long cherished dream of the people Bangladesh for doing their Banking transaction in line with what is prescribed by Islam. With the active co- operation and participation of Islamic Development Bank (IDB) and some other Islamic Banks, financial institutions and government bodies, Al-Arafah Islami Bank Limited has new earned the unique position of a leading private commercial bank in Bangladesh. Al-Arafah Islami Bank Limited has made a positive contribution towards the socio economic development of the country by opening 61 branches in which 16 authorized dealer throughout the country. During my 3 months internship period at Kalatia SME Krishi Branch of Al-Arafah Islasmi Bank Limited, the experiences that I learned are expressed in my report.

Introduction

In today’s fast moving world, business is more complex and competitive. Banking is an essential industry. It is where we often wind up when were seeking a Opening to purchase a new automobile, tuition for college or trade school, financial advice on how to invest our savings, credit to begin a new business a safe deposit box to safeguard our valuable documents or even more commonly a checking account or Overall Banking System to keep track of when and where we spend our money.

Bangladesh is not exception in this case. Financial strategies for banking business are one of the most vital issues now in Bangladesh because, after liberation the government of the people Republic of Bangladesh formally took over the charge of administration of different banks. The banking institutions are the custodians of private savings and a powerful instrument to provide credit. They oblige resources of the country by accepting deposits and canalize them for industrial and national development by granting advances. Hence in order to implement the above- mentioned state policy.

The Government of Bangladesh decided to nationalize all the banks of the country. At that time all the existing 12 bank were nationalize and were converted into six new banks were completely denationalized (in 1983) and one partly denationalized and other three were kept under government ownership. In addition 8 new private commercial banks were permitted to function in the banking sector. Over the time there are 31 private commercial banks and 14 foreign banks now operating their business in Bangladesh. During the last six years many new banks have emerged to cater the needs of the customers. They are continuously trying to attract people towards them by offering new types of products and services to face completion and fresh challenges thrown by their rival. Efforts are made to satisfy customers. Need by providing superior value than their competitors.

Within these 8 years ago the bank has developed many attractive financial products and services at a pretty Profit rate to help the people for saving their money and for meeting Account Opening demand.

 Historical background of Al-arafah Islami Bank Limited

Al-arafah Islami Bank Limited (AAIBL) is a Banking Company registered under the Companies with its Head Office 36, Dilkusha C/A, Dhaka 1000, Bangladesh . The Bank started its operation from Date:.

 Al-arafah Islami Bank Limited is a highly capitalized new generation Bank with an Authorized Capital and Paid-up Capital of Tk.11000 million and Tk.4588 million respectively. The Paid-up Capital has been raised to 940 million and the total equity of the bank stands at 8425 million as on December 31, 2015. The Bank undertakes all types of banking transactions to support the development of trade and commerce of the country. AAIBL's services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units. Al-arafah Islami Bank Ltd. the only Bengali named new generation private commercial  bank was established by a group of winning local entrepreneurs conceiving an idea of creating a model banking institution with different outlook to offer the valued customers,  a comprehensive range of financial services and innovative products for sustainable mutual growth and prosperity. The sponsors are reputed personalities in the filed of trade, commerce and industries. 

The Bank is being managed and operated by a group of highly educated and professional team with diversified experience in finance and banking.  The Management of the bank constantly focuses on understanding and anticipating customers needs. The scenario of banking business is changing day by day, so the bank's responsibility is to device strategy and new products to cope with the changing environment. Al-arafah Islami Bank Ltd. has already achieved tremendous progress within only thirteen years. The bank has already ranked at top of the quality service providers & is known for its reputation. 

Al-arafah Islami Bank Ltd. offers different types of Corporate and Personal Banking Services involving all segments of the society within the purview of rules and regulations laid down by the Central Bank and other regulatory authorities. As per the provisions of Bangladesh Bank license, the Bank has offered initially its shares to public by Pre – IPO and subsequently sold shares to the public through IPO in the year 2004. The shares of the Bank are listed with both Dhaka Stock Exchange Ltd. & Chittagong Stock Exchange Ltd.

Review of the Literature.

The profit of a commercial bank depends primarily on the utilization of its fund. And the making of loan and advance is always profitable to a bank. As the bank mobilizes savings from the general people in the form of deposit, the most important task of it is to disburse the said deposit as loan or advance to the mass people for the development of commercial, industrial, who are in need of fund for investment.

A great bulk of problem loans and their ever deepen thrust on Bank credit has brought a gloomy situation in the cost of fund. Loan Default culture has started in Bangladesh mainly after the nationalization of banks. However, it was enhanced by the availability of huge amount of credit in the name of developing private and industrial sector. Industry set-up was shown as sick industry to get additional loan and relieve from interest.

Al-arafah Islami Bank Ltd. was established to provide term loan and other financial assistance to accelerate the pace of development to small industry of Bangladesh, is also prone to such disappointing features of problem loans. The report mainly focuses on the credit operating system, their credit policies and procedures of loan supervision and recovery, especially their classified loans.

Objectives of the Study

Primary objective:  Primary objective is to learn the real world experience because I have gathered theoretical knowledge for BBA course and try to match real world experience with the theoretical knowledge.  

Secondary Objective:

•         To acquire the knowledge about the credit system of Al-arafah Islami  Bank Ltd.

•         To know about the organizational framework of the Al-arafah Islami Bank Ltd.

•         To highlight an overview of Al-arafah Islami Bank Ltd. during 2011-2012

•         To find out the SWOT Mix of the Al-arafah Islami  Bank Ltd.

•         To find out the Productivity, & Trend position of AAIBL during 2009-2013.

•         To enhance the recommendation to remove the problems of AL-arafah Islami Bank Ltd.

 Methodology of the Study:

•         This report is the reflection of three months internship program at the Al-arafah Islami Bank Limited at Kalatia SME branch, Kalatia Keraniganj,Dhaka. This study covered by both the primary as well as the secondary form of data was used to prepare the report. . To prepare this internship report I have collected data and information both from primary and secondary sources. I had observed the operations and worked with the officers at the same time. I had interviewed the AAIBL officials for getting more information.

•         For the analysis part, data have been collected from different statements and the annual report of the bank.

Sources of Information

The data collection method of study consists of both of primary and secondary sources. But majority of the information was collected from secondary sources.

     Primary sources:

•         Face to face conversation with the officer.

•         Direct observations.

•         Face to face conversation with the client.

      The secondary sources of information are given below:

•         Annaul report of the Al-arafah Islami Bank Limited during 2014-2015.

•         Outlets of Bangladesh Institute of Bank Management.

•         Website of the Al-arafah Islami Bank Limited.

•         Different publications of the Al-arafah Islami Bank Limited.

•         Theoretical books relating banking sector.

Scope of the Study

The report commences with the outline of the organization in focus, presenting the mission and vision, individual department job responsibilities, Credit Risk Analysis related issues are discussed in detail along with their results and possibilities. In this report is all the aspect of credit risk analysis has been discussed detailed by those the management can take decisions regarding modifying their plans for granting loans and can strengthen the relationship with the business environment as well as with the stakeholders and clients.

Rationale of the Study:

The BBA (Bachelor’s of Business Administration) internship program is required course for the students who are graduating from the Department of Business Administration, IBAIS university Students who have completed all the required courses are eligible to for this course. In this internship program, I was attached do my internship by rotation to all departments of Al-arafah Islami Bank Limited, Kalatia SME Krishi Branch, Kalatia, Dhaka. Both the academic and the organizational supervisor assigned me on this project. The report is on “Investment Mechanism of Al-Arafah Islami Bank Limited”.

Limitation of the Study

Three months is not enough to know about commercial banking operation through I have been received maximum assistance from the every individual of the AAIBL Kalatia SME Branch. Definitely, I could not produce an outstanding report for the time limitations. Due to the time limit, the scope and dimension of the study has been curtailed.

The Report is likely to have following limitations:

•         Since the ideal size of data could not be taken, suggested operating process may not be useful without appropriate modifications.

•         Due to shortage of time, the accuracy of information may not have been completely perfect.

•         The Operating Process is a theoretical suggestion. Only a practical application of this may justify its effectiveness that could not be done due to time limitation.

•         Lack of comprehension of the respondents was the major problem that created many confusions regarding verification of conceptual question.

•         Confidentiality of data was another important barrier that was faced during the conduct of this study. Every organization has their own secrecy that is not revealed to others. While collecting data on AAIBL, personnel did not disclose enough information for the sake of confidentiality of the organization.

•         Rush hours and business was another reason that acts as an obstacle while gathering data.

However, omitting this, the report will help us understand the Credit Operation departments of the bank.

Chapter Outline:

Chapter : 1	Introduction
Chapter : 2	An Overview of AAIBL
Chapter : 3	Investment Procedure and Guidelines of AAIBL
Chapter : 4	Analysis of Investment Portfolio of AAIBL
Chapter : 5	Case Study
Chapter : 6	Findings, Recommendation and Conclusion

Bibliography:

•           AIBL Annual report-2012.

•           AIBL Annual report-2013

•           Internship report.

•           Newspaper, repot & journal, Affairs.

•           Website- (http://www.aiblbd.com).

•           Website (http://www.google.com).

•           Brochure of AIBL (All types of Schemes and Manual).

•           “Introduction to Business” by Straub/Attend, 2nd Edition.

•           “An intergraded Approach to Business Studies” by Bruce R Jewwell.

•           “Customer Service Marketing” by Keller.

•           “Mapping the World of Satisfaction” by Barry Farder and Joyce Wycoff.

•           “Basic Business Communication” by Lasicar.

•           “Marketing of Banking Service” by the Indian Institute of Bankers.

•           “Bank strategic Management & Marketing” by Derek F. Channon.

References

1)         Frank K. Reilly and Keith C. Brown, “Investment Analysis Portfolio Management”, 7th Edition.

2)         AIBL Annual Report 2013

3)         AIBL Annual Report 2012

4)         AIBL Probaho (October-December 2013)

5)         www.al-arafahbank.com/

6)         www.facebook.com/alarafah.bd

7)         en.wikipedia.org/wiki/Islamic_banking

8)         www.bangladesh-bank.org/fnansys/bankfi.php