Chapter 2

Monitoring the flow 0f foreign remittance On Bangladesh the role of FSIBL

CHAPTER 1

introduction

WHAT IS INTERNSHIP?

Internship is a field project for a student of Business Administration

of final year that gives the student a chance to apply business theory

practically in any organizational environment. The objectives of

internship are:

1. Practical fulfillment of MBA program.

2. Application of theoretical knowledge into practice.

3. Gaining work experiences.

4. Having an exposure for searching a good job in future.

5. Knowing/understanding gap between theoretical knowledge and

practical situation.

Parts of Internship Report:

There are two parts of internship report. They are:

Part A: Organization Part.

Part-B: Project Part.

Prepared By Md Elias Alam 1


Background of the ReportThe report comprises of the organizational overview, operation of Banking in the different section such as General Banking, Investment, Foreign Trade/Exchange and Briefly analysis the performance of the Branch. Finally the report has been concluded with some recommendations.

During my two months study, I’ve tried my best to get knowledge about their overall banking operation with special emphasis on their performance.

The Banking Industry in Bangladesh is characterized by strict regulations and monitoring from the central governing body, the Bangladesh Bank. The main concern is that currently there are many banks for the market to sustain. As a result, the market will only accommodate those banks that can transpire the most competitive and profitable in the future. Currently the major financial institutions under the banking system include:

1. Bangladesh Bank2. Private Commercial Banks3. State Owned commercials Bank4. Islamic banks5. Non-bank financial Institutions, etc.

Of these, there are four state owned commercial banks (NCB), 5 specialized banks, 11 foreign banks, and 26 domestic private banks, 4

Islamic banks currently operating in Bangladesh.



FIGURE: 1Generally, the commercial banks and finance companies provide a myriad of banking products/services to cater to the needs of their customers. However, the Bangladesh banking industry is characterized by the tight banking rules and regulations set by the Bangladesh Bank, All banks and financial institutions are highly governed and controlled under the Banking Companies Act-1993.

The range of banking products and financial services is also limited in scope; all local banks must maintain a 4% Cash Reserve Requirement (CRR), which is non-interest bearing and a 16% Secondary Liquidity Requirement (SLR). With the liberalization of markets, competition among the banking products and financial services seems to be growing more intense each day. In addition, the banking products offered in Bangladesh are fairly homogeneous in nature due to the tight regulations imposed by the central bank. Competing through differentiation is increasingly difficult and other banks quickly imitate any innovative banking service.



Objective of the Study

The main objective of the study is to have knowledge about the investment management in the First Security Islami Bank Ltd. In order to study the credit management I have decided to study about the following facts:

1. To know about the Islamic banking system of First Security

Islami Bank Limited.

2. To know about the different schemes, policies, procedures

of FSIBL.

3. To know about investment policy of the Islamic banking

systems.

4. To about the credit policies and limitations of FSIBL.

5. To know about the monitoring and recovery system in

islami banking.

6. To observe the overall environmental situation of the Bank.

Scope of the Study

Scope means the area on which the study has to be done. The study is only related in First Security Islami Bank Limited, chawkbazar Branch, Chittagong. This report focuses on the Overview of the First Security Islami Bank Limited and mainly related with Lending Policy and recovery system.



Limitation of the Study

I have faced several problems during the preparation of this repot. Some of the limitations of this report are mentioned below:

a. Credit management is a big subject: Credit management is a big subject to cover wholly in this limited space. It required huge time and huge space to cover. So, I have covered only some important topics of credit management and furnished only the gist here.

b. Engaged in work: Every man of the branch was so busy in their work, so they were not able to provide sufficient time to make me clear about different topics.

c. Time constraint: I had to prepare this report within a period less than three months which was not enough to prepare such a report. Because collection and arrangement of information is a time consuming job. Then again I had to summarize those. So I had to work in haste.

d. Confidential matter: It is not possible to get all sorts of information due to official confidentiality.

e. Lack of practical knowledge: For the lack of practical knowledge, some short comings may be available in the report. Because in some cases I could not practically involved because of bank’s policy limitations and operational bindings.

The problems mentioned above are some of the major problems; I have faced during the preparation of this report. In spite of that, I have tried my level best to make the report as informative as possible.



CHAPTER 2

Methodology of the Study

Definition of Concepts & Assumption:

The term ‘Loan and Advance’ is used as the ‘Investment’ in the Islami

Banking system. Investment is the action of deploying funds with the

intention and expectation that they will earn a positive return for the

owner. Although, the term ‘Loan & Advance’ and ‘Investment’ are same,

they are differently used in Conventional banking system and Islami

Banking system. Because, there is no provision of charging interest in the

Islami Banking system. They charge a provisional rate on the investment

and charge the profit on the basis of weighted of the previous year’s

profit. And also the Islami Bank is operated on the basis of Mudaraba

basis. Mudaraba means trusteeship. The relationship between bank and

client is trustee. The client deposits his money to the bank with the

permission of using the money in a way which is legal and according to

the Shariah law.

As there is no provision of charging interest on the loan, the Islamic

Banking helps to invest the client’s money in various sectors and give

profit on the basis of agreement.



Methodology of the study

The methodology of the study can be discussed under the major heads:

Organization and development of the report:

The report is organized and developed under a mixture of both

descriptive and analytical framework.

Data Source:

The data sources used to prepare this report delineated as follows:

1. Primary Source:

a) Practical deskwork.

b) Face to face conversation with the officers and executives.

c) Face to face conversation with the clients.

2. Secondary Source:

a) Annual report of First Security Islami Bank Limited.

b) Prospectus of First Security Islami Bank Limited.

c) Bank’s financial statement.

d) Bank’s quarterly statement.

e) Bank’s daily affairs.

f) Broachers etc.



CHAPTER 3

ABOUT THE FIRST SECURITY ISLAMI BANK LIMITED



Definition of Bank:

We can define A bank as an institution, usually incorporated with power

to issue its promissory notes intended to circulate as money (known as

bank notes); or to receive the money of others on general deposit, to

form a joint fund that shall be used by the institution, for its own benefit,

for one or more of the purposes of making temporary loans and

discounts; of dealing in notes, foreign and domestic bills of exchange,

coin, bullion, credits, and the remission of money; or with both these

powers, and with the privileges, in addition to these basic powers, of

receiving special deposits and making collections for the holders of

negotiable paper, if the institution sees fit to engage in such business."

Generally there are two main way of operating commercial bank. They

are conventional banking and Islamic banking system.

Islamic Banking:

The Islamic banking has been defined in a number of ways. The definition

that is given approved by Organization of Islamic Conference is most

popular. According to The OIC, The Islamic bank is a financial institution

whose status, rules, and procedures expressly state its commitment to

the principle of Islamic Shariah and to the banning of receipt and

payment of interest on any of its operations.

It appears from the definition that Islamic banking is a system of financial

intermediation that avoids receipt and payment of interest in its

transactions and conducts its operation ina way that it helps achieve the

objectives of an Islamic economy. And also it is operated on the basis of

Mudaraba theory. According to Mudaraba theory, the relationship

between bank and clients is not debtors-creditors, it is a relationship of

trusteeship.



The difference between Conventional and Islamic Banking are

shown in terms of a box diagram as shown below:

Conventional Banks Islamic Banks

1 The functions and operating modes of conventional banks are based on manmade principles.

1 The functions and operating modes of Islamic banks are based on the principles of Islamic Shariah.

2 The investor is assured of a predetermined rate of interest.

2 In contrast, it promotes risk sharing between provider of capital and the user of funds.

3 It aims at maximizing profit without any restriction.

3 It also aims at maximizing profit but subject to Shariah restrictions.

4 It does not deal with Zakat. 4 In the modern Islamic banking systems, it has become one of the service-oriented functions of the Islamic banks to collect an distribute Zakat.

5 Leading money and getting it back with interest is the fundamental function of the conventional banks.

5 Participation in partnership business is the fundamental function of the Islamic banks.

6 It can charge additional money in case of defaulters.

6 The Islamic banks have no provision to charge any extra money from the defaulters.

7 For interest-based commercial banks, borrowing from the money market is relatively easier.

7 For the Islamic banks, it is comparatively difficult to borrow money from the money market.

8 The conventional banks give greater emphasis on credit-worthiness of the clients.

8 The Islamic banks, on the other hand, give greater emphasis on the viability of the projects.

9 A conventional bank has to guarantee its deposits.

9 Strictly speaking and Islamic bank cannot do it.

10

The status of a conventional bank, in relation to its clients, is that of creditor and debtors.

10

The status of Islamic bank in relation to its clients is that of partners, investors and trader.

11

The conventional Banking system has the recycling system. They charge interest on interest.

11

In Islami Banking system, there is no recycling of interest. There is mark-up/rebate system.

1 In case of loan or credit, loss is 1 In case of investment, the



2 not bored by the investors. 2 loss is bored by the capital supplier.

History of the First Security Islami Bank

First Security Islami Bank Limited (FSIBL) was incorporated in Bangladesh

on 29 August 1999 as a banking company under Companies Act 1994

to carry on banking business. It obtained permission from Bangladesh

Bank on 22 September 1999 to commence its business. The Bank went

for public issue on 20 July 2008 and its shares are listed with Dhaka

Stock Exchange (DSE) and Chittagong Stock Exchange (CSE).The Bank

carries banking activities through its Ninety two (92) branches in the

country. The Bank converted its banking operation into Islamic Banking

based on Islamic Shariah from traditional banking operation on 01

January 2009 after obtaining approval from High Court, Finance

Ministry and Bangladesh Bank. The commercial banking activities of

the bank encompass a wide range of services including mobilizing

deposits, providing investment facilities, discounting bills, conducting

money transfer and foreign exchange transactions, and performing other

related services such as safe keeping, collections and issuing guarantees,

acceptances and letter of credit. The Bank and its first branch at the

busiest commercial hub of the country at 23, Dilkusha Commercial Area,

Dhaka. Branch Networks and Inter Division and Branch Coordination

All the 92 branches are computerized under distributed server

environment. Another few branches are planning to open within

December 2010. FSIBL has already started their on-line, SMS and ATM

banking facilities for their clients.

The Banking license for the Bank was issued by Bangladesh Bank on

August 29, 1999 was opened on October 25, 1999 by Mr. M. Saifur

Rahman, Ex-Honorable Finance Minister, Government of the People’s

Republic of Bangladesh as the chief guest. The Authorized Capital of the



Bank is Tk. 4,600,000,000 It’s paid up Capital and reserve reached at

present Tk. 2,300,000,000

The sponsors of the Bank are the leading business personalities and

eminent industrialists of the country having stakes in various segments of

the national economy.

Vision To be the premier financial institution in the country providing high quality products and services backed by latest technology and a team of highly motivated personnel to deliver excellence in banking.

Mission1. To contribute the socio- economical development of the country.2. Fast and accurate customer service.3. Balanced growth strategy.4. High standard business ethics.5. Steady return on shareholder’s equity. 6. Innovative banking at a competitive price.7. Attract and retain quality human resource.8. Firm commitment to the society and the growth of national

economy.

First Security Islami Bank Now at Present

Having started its operations as a commercial bank in 1999, First Security

Islami Bank is today a synonym of quality banking products. It has a

diverse array of carefully tailored products and services to cater the

needs of all customer segments. They have structured their operational

strategies to address the special and often complex needs of the

customers. In the growth graph, it has generated profit of Tk.



326,837,749 in the year 2012. The curve keeps soaring upward with

dawn of everyday. Today First Security Islami Bank is one of the leading

and one of the most successful banking institutions in Bangladesh with a

total asset base of Tk. 47,978,552,952 as on 31.12.2009. First Security

Islami Bank has now emerged as a major player in the financial sector.

Listed in both the Dhaka and Chittagong stock exchange since late 2008

with an IPO that raised the paid-up capital of the bank to Tk. 230,000,000

the current price levels of its shares and turnover in trading is evidence

of its high rating among investors. Banks are the pillars of the financial

system. Specially, in Bangladesh, the health of the banking system is

very vital because the capital market is little developed here. As the

banks are still the major sources of credit and exercise great influence on

the financial system, it is extremely important that the country’s banking

system should be in good health in the interest of investment activities,

meeting the needs of all kinds of finance and related matters. Over the

years, First Security Islami Bank Ltd. has built itself as one of the pillars of

Bangladesh’s financial sector and is playing a pivotal role in extending

the role of the private sector of the economy. The bank has a strong

branch network nationwide with 61 branches to effectively address the

needs of its cross- segment customer base.

Corporate Information

Name of the Company First Security Islami Bank Limited

Legal Form

A scheduled commercial bank incorporated

on august 29,1999 as a public limited

company under the companies act 1994 and

bank companies act 1991.

Commencement of

Business25th October 1999

Registered Office10, Dilkusha Commercial Area

Dhaka-1000.



Website www.fsiblbd.com

SWIFT FSEBBDDH

Chairman Mr. Saiful Alam (Masud)

Managing Director Mr. A. A. M. Zakaria

No. of Branches 92

No. of SME Centers 05

No. of Employees 929

Stock Summary:

Authorized Capital Tk. 4,600,000,000

Paid up Capital Tk. 2,300,000,000

Face Value per Share Tk. 100

Position of the Bank:

According to Bangladesh Bank CAMELS rating FIRSTY SECURITY

Islami Bank Limited is a “A” class bank, which the only second one

as Bangladeshi bank. (Source: Exclusive Economic Weekly, INDUSTRY, Sunday 29 March,

2009)

Board of Directors

Prepared By Md Elias Alam

Alhaj Akkas Uddin Mollah Chairman

Alhaj Md FarooqVice Chairman

Alhaj Syed Nurul Arefeen Vice Chairman

Alhaj Syed Nurul Arefeen Vice Chairman

Farzana Parveen Director

Farzana Parveen Director

Rahima Khatun Director

Rahima Khatun Director

MS. Shamshad JahanDirector

MS. Shamshad JahanDirector

Atiqun NesaDirector

Atiqun NesaDirector

Md. Sharif Hossain Director

Md. Sharif Hossain Director

Alhaj A.K.M Ali JoharDirector

Alhaj A.K.M Ali JoharDirector

Shahidul IslamDirector

Shahidul IslamDirector

Alhaj Md. Wahidul Alam Seth Director

Alhaj Md. Wahidul Alam Seth Director

Mohammed Oheidul AlamDirectorMohammed Oheidul Alam

Director

Dr. Muhammad Loqman Director

Dr. Muhammad Loqman Director

Alhaj Md. Saiful AlamChairman

Alhaj Md. Saiful AlamChairman

Alhaj Late Hamidul HaqDirector

Alhaj Late Hamidul HaqDirector

A.A.M ZakariaManaging Director

A.A.M ZakariaManaging Director

15

http://www.fsiblbd.com/


Shariah Council

Shariah Council of the Bank is playing a vital role in guiding and

supervising the implementation and compliance of Islamic Shariah

principles in all activities of the Bank since its very inception. The Council,

which enjoys a high status in the structure of the Bank, consists of

prominent Ulema, reputed banker, renowned lawyer and eminent

economist.

Members of the Shariah Council meet frequently and deliberate on

different issues confronting the Bank on Shariah matters. They also

conduct Shariah inspection of branches regularly so as to ensure that the

Shariah principles are implemented and complied with meticulously by

the branches of the Bank.

Shariah Board


Mr. Muhammad AliManaging Director

Chairman

Mr.Sheika ( Mowlana)Mohammad Qutubuddin

Chairman

Mr.Sheika ( Mowlana)Mohammad Qutubuddin

Vice ChairmanMufti Sayeed AhmedVice Chairman

Mufti Sayeed Ahmed

Member Secretary Moulana M. Shamaun Ali.

MemberMoulana Abdus Shaheed Naseem

MemberProf. Md. Sharif Hussain

MemberProf. Md. Sharif Hussain

MemberAlhaj Md. Saiful Alam

Chairman,First Security Islami Bank Limited

MemberAlhaj Md. Saiful Alam

Chairman,First Security Islami Bank Limited

MemberMohammad Azharul Islam

MemberMd. Abdul Maleq

16


Division of First Security Islami BankAll policy formulation and subsequent executions are done in the Head Office. It comprises nine major divisions. They are described below:

1. Credit & Administration Division2. Treasury and International Division3. Internal Control and Compliance Division4. Human Resources & Logistics Division5. Marketing Division6. Merchant Banking Division7. Share Division &Information Technology Division

Organizational structure of First Security Islami Bank Ltd:


Deputy Managing Director

Senior –Executive Vice President

Vice President

Executive Vice President

Senior Vice President

First Vice President

Senior Assistant Vice President

Assistant Vice President

Senior Principal Officer

Principal Officer

Officer

Senior Officer

Junior Officer

First Assistant Vice President

Assistant Officer

Trainee Assistant Officer

Probationary Officer

Managing Director

18


First Security Islami Bank Ltd is one of the fastest growing banks among

all the private Commercial Banks in Bangladesh. The institution started

its function back on 25th October, 1999. As a branch of First Security

Islami Bank Ltd Jubilee Road Br. started its function on 9th August, 2001.

Management Hierarchy of FSIBL,

Different Departments involved in FSIBL,

There are various departments engaged in providing services to the

clients in the FSIBL, Jubilee Road Branch. These are:

1) Customer Care Department.

2) Cash Department.

3) Accounts Department.

4) Investment Department.

5) Foreign Department.

6) IT Department.

1. Customer Care Department:

Customer care department is one of the most important departments in

the Bank. The responsibility of this department is to provide necessary

information to the clients, to help opening the accounts, to receive all the

documents that are task of dispatching, issuing local remittance etc.

2. Cash Department:


VP

Principal Officer

Senior Officer

Officer Junior Officer

Assistant Officer

Trainee Assistant

Officer

AVP

19


It is another important department for the Bank. To receive money and

to give money according to the claim of the client with the proper

signature of the authorities. It is one of the most risky departments of

the bank, because all the cash transactions are happened in this

department. The vault of the bank is under this department.

3. Accounts Section:

Accounts department is the most important department in the FSIBL as it

supplies all numerical data and information of the bank. Credit Section,

Current deposit, Staff payments, Total assets and Liabilities various

income and expenditure are shown in the statement in the statement

prepared by the accounts department.

4. Investment Department:

Bank offers loans to the businessman, industrialist and other in consideration of its interest. But, according to the Shariah Law, interest taking is not allowed. So, in Islami Bank like First Security Islami Bank Limited, they called it investment. The Islami Banks invest the capital on behalf of clients and against this charge profit on the investment. There are various modes of investment like Murabaha, Musharaka, Bai-Muajjal, Bai-Salam etc.

Statements prepared by Accounts section:1. Sector wise balance position

2. Maturity balance sheet

3. Foreign currency statement

4. Branch Trail Balance

5. Liquidity position

6. Income expenses statement.

Products and Services



FSIBL carries out all traditional functions, which a commercial bank

performs. Such as, mobilization deposit, disbursement of investment,

investment of funds, financing of export and import business and trade

and commerce and so on. Product and services offered by FSIBL can be

visualized from the diagram in the following:

Products and Services of FIRST SECURTY ISLAMI BANK LTD.

1. General Productsa. Mudaraba Saving Account (MSD)b. Al-Wadiah Current Accountc. Mudaraba Short Term Deposit (MSTD)

2. Deposit Schemea. Mudaraba Term Deposit Scheme (MTD)b. Mudaraba Double Benefit Scheme (MDBS)c. Mudaraba Monthly Income Scheme

(MMIS)d. Mudaraba Monthly Saving Scheme

(MMSS)

3. Investment Schemea. Bai-Muajjal.b. Murabaha Wes Bills.c. Hire Purchase.d. Quard against TDR.e. Bills Purchase & Discount :

a) In-Land.b) Foreign

f. Loan against trust receiptg. Consumer credit schemes.h. Staff loan.

4. Servicesa. Western Union Money Transferb. First Solution & other money transferc. Locker Servicesd. Remittance- T.T., D.D., P.O, etc



CHAPTER 4

Foreign remittance



CLEARING DEPARTMENT

Before going to discuss about the functions of clearing department of

FSBIL, let us know what Clearing-House is actually.

Clearing-House:

A banker’s clearinghouse system, reciprocal claims of one bank

against others are offset & only the net balance of drawing on the

account of the debtor bank maintained with the Central bank. On

Bangladesh, the bank organized the clearinghouse where it has an

officer.

Types of clearing

Outward clearing:

When a particular branch receives instrument drawn on the other bank

within the clearing zone and send those instruments for collection

through the clearing arrangement is considered as Outward Clearing for

that particular branch. This branch is known as collecting branch.

Inward Clearing:

When a particular branch receives instruments, which are on themselves and sent by other member bank for collection is treated as inward 4.4

Local Remittance

Remittance:Demand draft or telegraphic transfer. These methods of remitting money

from one place to another are known as remittance. To facilitate the

need of customers, commercial banks transfer funds from one place to

another through By other way, we can say that – “Transfer of funds from

one place to another place without physical transfer of money”.

Remittance may be -

a) Within the country.



b) Outside the country.

Remittance has following advantage -

a) Convenience.b) Speed.c) Minimum cost.

Functions of Remittance section:

The functions of Remittance section –

Handling of all incoming and outgoing foreign and local

remittance is the major function for this department.

Handling of incoming and outgoing T.T.

Outstation cheque collection.

Demand draft handling.

Other miscellaneous work of the department.

Instruments of Remittance:

The most widely used instruments of inland remittance are:

Telegraphic Transfer (T.T).

Demand Draft (D.D).

Pay Order (P.O).

Security Deposit Receipt (S.D.R).

Telegraphic Transfer (T.T)

A telegraphic transfer is a method of remittance, which is effected by the

banker through a coded telegram attested by secret cheque signal, on

receipt of which, the paying office pay the amount to the payee by

crediting his account.



Issuance: The applicant fills up the relevant parts of the

prescribed application form in triplicate, duly signed

the same and gives it to the GB.

GB will fill up the commission part for the bank’s use

and request the applicant to deposit necessary cash or

cheque at the cash booth.

The first copy of the application form will be treated, as

debit ticket while the second copy will be treated as

credit ticket. The third copy will be handed over to the

applicant as customer’s copy.

GB will prepare telex in appropriate form, sign it and

send it to the telex operator for transmission of the

message.

GB will prepare necessary advice. Debit advice is send

to the clients if clients account is debited for the

amount of T.T.

T.T. confirmation advice is send to the drawee branch.

Credit ticket is used to credit the SJIBL general account.

.Demand Draft (D.D)

A demand draft (D.D) is an unconditional order of the banker’s one

branch to another to pay to the same person or order the amount

mentioned there in on demand.

A customer can purchase a Demand Draft (D.D) making amount payable

to any one including him.



Issuing formalities:

01. Filling of D.D application form.

02. Deposit to requisite funds with commission voucher to prepare:

03. Particulars of D.D:

a) Name of the issuing branch.

b) Date of purchase.

c) Name of the payee.

d) Amount in figures and words.

e) Drawee branch.

f) Authorized signature of two officers.

g) Test number (for above TK. 25000).

04. Make entry-particulars of D.D in D.D issuing register.

05. D.D advice to the drawee branch should dispatch on the issuing day.

06. Delivery of D.D signature of the applicant to be obtained on the

back page of counter foil of D.D.

07. Telegram/Telephone to the drawee branch, if the amount above TK. 1

lac.

D.D Cancellation:

01. An application from the D.D application requesting cancellation of

D.D.

02. Obtain the original D.D that issued.

03. Verify the signature of the applicant.

04. Realize cancellation charges.

05. Send the cancellation advice to the drawee branch.



Pay Order (P.O)

A Pay Order (P.O) is a written under issued by a branch of bank, to pay a

certain sum of money to a specific person or bank. It may be said as to

be a banker’s cheaque as it is issued by a bank and payable by itself. It is

a negotiable instrument and cannot be endorsed or crossed like D.D. For

issuing pay order SJIBL charges commission on the following rates:

o For TK. 1 to 1,00,000 the commission is TK. 50.

o For TK. 1,00,000 to 5,00,000 the commission is TK. 100.

o For TK. 5,00,000 to above, the commission is TK. 150.

01.Fill up payment order application form. It includes the following

things –

a) Name of the issuing bank.

b) Date.

c) Contact number.

d) A/C payee seal.

e) Payees name.

f) Amount in figure and word.

g) Signature of two authorized official.

02.Realization of the required fund + commission.

Comparative analysis of the total amount of depositOver the years 2005, 2006, 2007,2008,2009.

DepositYear In Taka (‘000)2005 4600002006 10162672007 12434752008 14256422009 1675246



Total Capital (taka in million)

Year Total Capital2006 1147.282007 1347.912008 2862.192009 3379.032010 4582.212011 5622.11


Total Capital

£ 4,582.21 million

4000.00

3000.00

1.0000.00

0.00

2.000.00

5000.00

2006 2007 2008 2009 2010

35.60%

2011

28


Remittance (taka in million)

Year Remittance2006 48.442007 3302008 585.842009 558.752010 843.472011 942.57

Foreign remittance

Foreign remittance of the bank stood at taka 843.47 million as of

December 31 2010 as against TK. 558.75 million in 2009. besides the

bank has taken initiatives to make remittance arrangements with some

leading exchange houses at abroad.


Remittance

Tk. 843.47 million

800

700

500

400

600

900

2006 2007 2008 2009 2010

60%

2011

300

200

100

0

48.44

330

558.844

558.75843.47

2007

29


Paid up capital (taka in million)

Year Total capital2006 900.002007 1000.002008 2300.002009 2300.002010 3036.002011 4000.00


Paid up Capital

Tk. 3,036 million

2000

1500

500

0.00

1000

2500

2006 2007 2008 2009 2010

32%

2011

3000

30


FIRST SECURITY ISLAMIC BANKBALANCE SHEET

AS AT 31 DECEMBER 2010

particulars Notes

2010 2009

Property & assetsCashIn handBalance with Bangladesh bank and its agent

34857543203

6121731464245369057

5033532439

4329077314600624708

Balance with other bank & financial institutionIn Bangladesh Out Bangladesh

4 1036199077

926081336110117741

731150321

494050218237100103

Investment in shares & securitiesGeneral investmentBills purchase & discounted

5 2859354561

2331134100528220461

1852026032

1610674000241352032

InvestmentGovernmentother

6 52123903164

476402386964483664468

38725874774

356164504933109424281

Fixed assets including premises, furniture &fixtures Other assetsNon banking assets

7 573610332

2169188462

376477387

1259491999

Total assets 8 63619797799

47978552952

LIABLITIES & CAPITAL

Deposits and other accounts

56344959167

42423092722

Other liabilities 3354827146 2690049475

Total liabilities 59699786313

45113142197

Capital/shareholder equity 3920011486 2865410755

Total liabilities & shareholder equity

63619797799

47978552952



First Security Islamic Bank ltd.Highlights

For the year ended 31 December 2010

particulars 31.12.2010 31.12.2009Paid-up-capital 3036000000 2300000000

Total capital fund 4582217485 3379035832

Capital surplus 29266485 267692742

Total assets 63619797799 47978552952

Total deposit 56344959167 42423092722

Total investment 52123909164 38725874774

Total contingent liabilities & commitment

8859668340 5971673066

Investment deposit ratio 92.51 91.28

Percentage classified investment 2.61 2.14

Profit before tax & provision 1203600731 750837749

Amount of classified investment 1361392000 830515000

Provision kept against classified investment

542894000 507694000

Provision surplus 13658789 53834571

Cost of fund 8.90 9.28

Profit earning assets 56040956802 41371529125

Non Profit earning assets 7578840997 6607023827

Return on investment 9.24 2.79

Return on assets 1.89 1.56

Income from investment 264208027 53510527

Earning per share (tk.) 2.33 1.42



First Security Islamic Bank ltd.Statement of Fixed AssetsAs at 31 December 2010

COST DEPRECIATION

Particulars 2009 Addition during The year

Sales/Transfer duringThe year

Balance as on

2010

Balance as on

2010Jan.

Charge during theyear

AdjustmentSales/transfer

2010Dec.

Written down 2010 Dec.

Building 66227032 63953943

- 130180975

376990

1646781 - 2023771

128157204

Furniture & fixture

240090047

108041386

- 348131433

66587335

23233404

- 89820739

258310694

Office equipment

178410030

80889916

- 259299946

65294951

29916812

- 95211763

164088183

Vehicles 37845372 6631850 - 44477222

13843196

7586526 - 21429722

23047500

Books 78837 3442 - 82279 71459 4069 - 75528

6751

Total 2010 522651318

259520537

- 782171855

146173931

62387592

- 208561523

573610332

Total 2009 297374998

235410820

- 522651318

113006566

41544826

8377461 146173931

376477387

-



C HAPTER 5

DIFFERENT SOURCEOF FOREIGN REMITTANCE



Remittance?

A remittance is a transfer of money by a foreign worker to his or her

home country.Remittances are playing an increasingly large role in

the economies of many countries, contributing to economic growth and

to the livelihoods of less prosperous people (though generally not the

poorest of the poor). According to World Bank estimates, remittances

totaled US$414 billion in 2009, of which US$316 billion went to

developing countries that involved 192 million migrant workers. For

some individual recipient countries, remittances can be as high as a

third of their GDP. As remittance receivers often have a higher

propensity to own a bank account, remittances promote access to

financial services for the sender and recipient, an essential aspect of

leveraging remittances to promote economic development. The top

recipients in terms of the share of remittances in GDP included many

smaller economies such as Tajikistan (45%), Moldova (38%), and

Honduras (25%).

FOREIGN REMITTANCE:

Foreign Remittance refers to the transfer of funds from one country to

another, which may be within the country or between two countries

through banking channel, post office or the informal channel.

According to the “Foreign Remittance Regulation Act, 1947’’“Foreign

Remittance’’ means purchase and sale of freely convertible foreign

currencies. Purchase of foreign currencies constitutes inward foreign

remittance & sale of foreign currencies constitutes outward foreign

currencies.



Foreign remittance is very important for the country as valuable foreign

remittance is involved in the transfer mechanism. From the year 1990,

financial liberalization has been started which is still going on. Due to

liberalization, restrictions on foreign remittance become ease.

Bangladesh taka is convertible for current account transactions on March

24, 1994 with the view to achieve better exchange rate management

system. And from April 1994 Bangladesh Government has accepted the

status of Article V111 of international monetary fund.

National Credit & Commerce Bank Ltd. Plays an important role in foreign

remittance activities both inward & outward. In NBL main components of

foreign remittance are T.T, M.T & Draft.

The Role of remittance

The increasing attention paid to the question of migrant

remittances comes from the realization of the important role

they play in poverty alleviation and, circumstances permitting,

economic development more broadly. The former is most obvious

in the way the circumstances of individuals are directly

transformed; the latter operates via a collective response much

dependent on the existence of institutions that can leverage

remittances to create true ‘development finance’.

Individual poverty alleviation

Remittance payments directly alleviate the poverty of the

individuals and households to whom they are sent. The ways in

which remittances alleviate the poverty of individuals are, in the

‘first round’ of effects, direct and fairly obvious. They include the

following.

‘Survivalist’ income supplementation. For many recipients,

remittances provide food security, shelter, clothing and other basic

needs.



Consumption ‘smoothing’ Many recipients of remittances,

especially in rural areas, have highly variable incomes.

Remittances allow better matching of incomes and spending, the

misalignment of which otherwise threatens survival and/or the

taking on of debt.

Education In many developing countries, education is expensive

at all levels, whatever the formal commitments of the State.

Remittances can allow for the payment of school fees and can

provide the wherewithal for children to attend school rather than

working for family survival.

Housing The use of remittances for the construction, upgrading

and repair of houses is prominent in many widely different

circumstances.

Health Remittances can be employed to access preventive and

ameliorative health care. As with education, affordable health

care is often unavailable in many remittance recipient

countries.

Social spending Day-to-day needs include various ‘social’

expenditures that are culturally unavoidable. Remittances can

be employed to meet marriage expenses and religious obligations

and, less happily but even more unavoidable, funeral and related

costs.



Types Foreign Remittance :

One is inward & another is outward remittance.We can see it by the following figure:

REMITTANCE

a).Foreign Remittance b).Local Remittance

1. Foreign Outward 1. Demand Draft

2. Tele Transfer

2. Foreign Inward 3. Pay Order

Sources of Foreign Remittance :

The foreign remittance is divided into two types:

1) Inward Foreign Remittance

2) Outward Foreign Remittance

Sources of Inward Foreign Remittance :

Export proceeds

Remittance by expatriate Bangladesh

Commissions earned by local business people

Foreign loans & grants, donation & gift



Sources of Outward Foreign Remittance:

Payment of import liabilities

Payment of consular fees & commissions etc

Foreign travel quota through travelers Cheque

Educational expenses for students abroad

All other payments sent abroad in foreign currency

Foreign Inward Remittance :

Foreign Inward Remittance refers to the currency/remittance in foreign

currency that is received from abroad to our country. In case of Foreign

Inward Remittance, TT, MT, Draft etc are drawn in local bank by the

foreign banks of exchange houses. When a local bank purchases foreign

bills, TCs & cash currency is also known as inward remittance. A local

bank also receives indenting commission of local firm, trademarks,

patent fee etc.



Inward Remittance can be classified into two groups :

I}.Visible Inward Remittance such as export proceeds.

II}.Invisible Inward Remittance such as family maintenance, constancy

fee etc.

Purpose of Inward Remittance : Family maintenance

Donation

Indenting commission

Gift

Foreign investment

Export proceeds

Others

Foreign Outward Remittance:

Remittance that is made from our country to abroad is called Outward

Remittance. This remittance includes issuance of TT, MT, FDD issued by

local banks on foreign banks. Further it includes rate of foreign currency,

notes, Tic`s, reimbursements against import, bills retired etc.

Outward Remittance can be classified into two groups:

I. Visible Outward Remittance such as payment against import.



II. Invisible Outward Remittance such as membership fee,

subscription fee etc.

Purposes of Outward Remittance:

Traveling purpose.

Educational purpose.

Attending seminar & workshop.

Medical treatment.

Business travel quota.

Evaluation fee.

Membership fee.

Pre-shipment fee.

Advertising of Bangladeshi commodities.

In case of purchase of foreign currency, an applicant must be made

to an authorized dealer & if necessary requires to Bangladesh Bank. The

prescribed application from like IMP from & for other types of remittance

TM form is needed for payment against import.

Modes of Foreign Remittance:

T.T (Telegraphic Transfer)

M.T (Mail Transfer)

D.D (Demand Draft)

T.C (Travelers Cherub)

P.O (Pay Order)



Besides this foreign Inward Remittance also includes remittances on

account of export, purpose of bills, purpose of T.C Foreign currency notes

& coins, cheque issued on foreign banks in favor of beneficiaries in

Bangladesh etc.

4.2.The remittance process involves the following four modes:

Cash RemittanceDollar/Pound

Sell

Bank sells Dollar/Pound for using in abroad by the purchaser. The maximum amount of such sell is mentioned in the Bangladesh Bank publication of `Convertibility of Taka for Currency Transactions in Bangladesh’

PurchaseBank can purchase dollar from resident & non –resident Bangladeshi & Foreigner. Most dollars Purchased comes from realization of Export Bill of Exchange.

Traveler`sCheque (TC)

Issue of TC

TC is useful to traveler abroad. Customers can Ancash the TC in abroad from the drawer bank. TC is alternative to holding cash & it provides better security than holding cash in hand.

Buying of TC

If any unused leaf of TC is surrendered bank buys it from the customer. All payments are made in local currency. Banks generally buy only those TC.

Telex Transfer

Outward TTIt remits fund by tested TT via its foreign correspondence bank in which it is maintaining its NOSTRO Account.

Incoming TTIt also makes payment according to telegraphic message of its foreign correspondence bank from the corresponding VOSTRO Account.

Foreign Bank issue Demand Draft in favor of purchaser or any other according to instruction of purchaser. The payee



Demand Draft can collect it for the drawer bank in which the Issuing bank of Demand Draft holds its NOSTRO Account. Bank also makes payment on DD drawn on this bank by its foreign correspondence bank through the VOSTRO Account.

Various Modes of Foreign Remittance

Modes of Inward Remittance:

T.T

Cable or telex instructions of payment are called as Telegraphic Transfer,

where a foreign bank issue a T.T in favor of some one in Bangladesh, it

credits the amount, received form the remitter to the NOSTRO A/C of its

correspondent bank. On receipt of the T.T the paying bank in Bangladesh

will make payment of the proceeds of the T.T in foreign currency or in

equivalent Bangladesh Taka to the beneficiary.

M.T

M.T is an instrument issued by a remitting bank to the paying bank

advising in writing to make payment of certain amount to specific

beneficiary.

D.D

A demand draft is a negotiable instrument issued by a bank drawn on

other bank with the instruction to pay a certain amount to beneficiary on

demand.

T.C

It is an instrument issued by the Banks/ Company’s payable to the

purchaser on presentation.



P.O

A pay order is a written under issued by a branch of bank, to pay am

certain sum of money to a specific person or a bank. It may be said as to

be a banker’s cheque as it is issued by a bank & payable by itself.

Modes of outward remittance :

TT

Local banks can draw telegraphic transfer to those banks with which they

have accounting relationship & message should contain test & brief

description of the beneficiary.

FDD

Any authorized dealer branches can issue foreign drafts draw on the

bank with which they have an accounting relationship.

Foreign Currency, Notes

Authorized dealer branches are permitted to safe foreign currency notes

as per ceiling fixed by Bangladesh Bank.

TC

Authorized dealer branches can sale Travelers cheques as per the

ceiling fixed by Bangladesh Bank.



CHAPTER 6

CONTRIBUTION OF FOREIGN REMITTANCe



Broader concerns: remittances and economic development

Remittance income does not benefit just individual recipients; it

benefits the local and national economies in which they live. Indeed,

the spending allowed by remittances has a multiplied effect on local

economies—as funds subsequently spent create incomes for others 9

and stimulate economic activity generally. Beyond such multiplier

effects, however, are other factors conducive to economic growth and

stability. Remittances can provide receiving countries with much-needed

foreign exchange.Adding to the appeal of remittance flows to local and

national economies is the fact that their frequency and magnitude tend

to be counter-cyclical. Economic distress in the home country—precisely

the scenario least conducive to other financial flows such as FDI—

inspires migrant workers to increase the volume of funds they remit.

The increasing attention paid to the question of migrant

remittances comes from the realization of the important role

they play in poverty alleviation and, circumstances permitting,

economic development more broadly. The former is most obvious

in the way the circumstances of individuals are directly

transformed; the latter operates via a collective response much

dependent on the existence of institutions that can leverage

remittances to create true ‘development finance’.



Individual poverty alleviationRemittance payments directly alleviate the poverty of the

individuals and households to whom they are sent. The ways in

which remittances alleviate the poverty of individuals are, in the

‘first round’ of effects, direct and fairly obvious. They include the

following.

‘Survivalist ’ income supple mentation. For many recipients,

remittances provide food security, shelter, clothing and other basic

needs.

Consumption ‘smoothing’ Many recipients of remittances,

especially in rural areas, have highly variable incomes.

Remittances allow better matching of incomes and spending,

the misalignment of which otherwise threatens survival and/or the

taking on of debt.

Education In many developing countries, education is expensive

at all levels, whatever the formal commitments of the State.

Remittances can allow for the payment of school fees and can

provide the wherewithal for children to attend school rather than

working for family survival.



Housing The use of remittances for the construction, upgrading

and repair of houses is prominent in many widely different

circumstances.

Health Remittances can be employed to access preventive and

ameliorative health care. As with education, affordable health

care is often unavailable in many remittance recipient

countries.

Social spending Day-to-day needs include various ‘social’

expenditures that are culturally unavoidable. Remittances can

be employed to meet marriage expenses and religious

obligations and, less happily but even more unavoidable, funeral

and related costs.

Influence in Foreign remittance in Bangladesh economy

Foreign remittance is very important for the country as valuable foreign

remittance is involved in the transfer mechanism. From the year 1990,

financial liberalization has been started which is still going on. Due to

liberalization, restrictions on foreign remittance become ease.

Bangladeshi taka is convertible for current account transactions on

March 24, 1994 with the view to achieve better exchange rate

management system. And form April 1994 Bangladesh Government has

accepted the status of Article VIII of international monetary fund.

One possibility is that given the government banks efforts to keep the

exchange rate steady Bangladesh see the possibility of getting a higher

return on taka deposits (13-15%) in Bangladesh, compared.

To dollar or other currency deposits abroad (1-2%) and they are sending

their money for these higher returns. Of course, the risk is higher in

Bangladesh and so it might be more Bangladeshi who are taking this risk



than foreigners, but the possibility that something like this might be

happening, and thus bringing in hot money which could leave the

country if the underlying interest rate differentials changed or other

factors changed.

The risk adjusted returns, even after allowing for possibility of exchange

restrictions or risk of nationalization might still be positive and

significant. Another possibility. Since all foreign remittance that

Bangladesh gets is considered to be white money and there are no

questions asked about source of funds, and there are no taxes on it as

well, at least on entry, there might be people in Bangladesh who earn

through non-documented sources evade taxes and then just whiten the

money by taking it out through bangle and bringing it back as foreign

currency. I. made Rs 10 million form my work in Bangladesh, but evaded

paying taxes on it, which is not uncommon in Bangladesh but now need

to whiten the money so that I can bring into legitimate and documented

economy send the money, Through hundi, to UAE and then have it

remitted back tome in dollars. I. do pay some transaction cost for it, but

all of the money gets legitimacy and so the transaction cost is a small

amount to pay for this whitening.

Now the FBR cannot do anything about it either. If this happens the

question really is about the size of such flows. How big are they and do

they help us explain the growth in foreign remittance or a significant part

of it? There is the further question of what impact this has on our GNP

figures and so on, but that is of more academic interest and not related

to the question at hand. Foreign remittance is, right now, saving us from

major troubles. If our import bill starts increasing.

Which can if oil prices go higher or remain high, or if our imports start

picking up, then remittance flows become even more important to keep

us in good stead? Given our budget. Deficits and debt stock, these flows

are the main source of foreign capital for us. And remittance has been

showing robust and sustained growth. But it is not clear where this

growth is coming from. This is essential for us to understand if we are to Prepared By Md Elias Alam 49


figure out whether the increased flows are good for us or not and how to

ensure that they continue if they are. And if they are not hypotheses but

if there is any Truth to them, and that is an empirical question.

This year we are expecting more than $10 billion in foreign remittance.

A very large number of Bangladesh are currently working & living in

countries that are not their home, and sending funds regularly back to

their families in Bangladesh. Foreign remittance is making a huge

Contribution towards macroeconomic stability, or any semblance of it, in

Bangladesh currently. It is allowing us to keep foreign reserves looking

ok & keeping Exchange rate steady.

Right now our import bill, due to economic Slowdown, is also low & this,

in addition to the remittance inflows, is giving the breathing space that

we see on foreign account side. With large deficits, large debt stock, few

international lenders willing to give us loans, existing IMF programmer

held in abeyance, this breathing space is important. But there are

interesting things to think about regarding remittance Flows as well.

Remittance started increasing substantially only a few Years ago. Initially

it was speculated that the significant increases in Remittance were the

result of one time increases where Bangladesh were,

After 9/11 & the crack down on Handy as well as harder living conditions

outside of BANGLADESH, shifting back their wealth & savings to

Bangladesh. This was specially the case as remittance increases even

when the world Economy went into a recession. But if this was indeed

the case increases in remittance should have stopped & things should

have gone to pre increase days. But to the contrary, we continue to see

healthy growth in remittances. This calls for some explanation and

someone, State Bank research department or other macroeconomic

researchers, should look into this. It is important to understand what sort

of money is coming in as remittance & why because in some cases this

might not be the kind of money.



BANGLADESH wants to attract too much of: if it is hot Money and is

coming in for speculative reasons, for example, it could flow out as easily

as well & this could get the economy in really hot waters. So we should

be looking at who is sending the money, what is the source of the

Bangladesh one can speculate & have hypotheses as to why this could

be happening. It is not the case that the world economy has improved or

there is a boom in the countries where Bangladesh live &/or a lot of new

jobs have been created for Bangladeshis, so How do we make sense of

healthy growth rates in remittances?

Remittance Boost in Bangladesh Economy:

The amount of money sent home has reached a new record high in

Bangladesh the amount of money sent home by Bangladesh living

abroad has reached a new record high, according to the Central Bank of

Bangladesh. In August, the total sum of money sent home reached a

historic peak of $ 937m-up 30% from a year ago.

The boost to the Bangladesh economy comes despite the global

recession Hitting overseas jobs. Remittances are the country’s second –

highest Revenue earner after exports.

The are an estimated 6.5 million Bangladeshis living and working Abroad,

mainly in the Middle East, South East Asia, Europe and the United States.

Millions at home are dependent on money sent by their expatriate

Relatives- money that has been credited for the decline in poverty in the

country.’’ This is the highest monthly remittance we have received in our

History,’’ said Ziaul Hasan Siddiqui, deputy governor of the central Bank.

“ The figure also shows that the global recession had little impact on the

flow of remittance to Bangladesh although job opportunities in the major

markets have declined in recent months.’’ Many other countries have

reported a sharp decline in remittances during the economic downturn.

But analysts say money Bangladesh are in low-end jobs and so the

recession has not hit them as hard as it has affected blue collar workers. Prepared By Md Elias Alam 51


The increase in remittance could also be partly due to two upcoming

religious.

However, the upward trend may not continue for long, as overseas

employment has fallen in past months due to declining demand. The flow

of migrant workers returning home has also increased. The government

of Bangladesh has identified seven new countries including Lebanon,

Sudan, Romania and Greece – to send workers to.

The state will seek to open diplomatic missions in those countries, to

look for job opportunities, Bangladesh received $ 1.823 billion during the

July - August period of the previous fiscal, 2009-10, registering an 18.19

percent growth over the

Remittances also help Bangladesh in making the balance of payments

favorable, or make up the deficit between total export & import. For

example, in 2008, Bangladesh exported $13.97 billion worth of goods &

services & in turn imported $19.59 billion worth of goods & services.

This gave a deficit of $5.62 billion in Bangladesh Balance of payment

(BOP). Remittance has been a key driver of economic growth & poverty

reduction in Bangladesh. The migrants send back billons of dollars & the

country can then use these resources for investment for industrial

development, improvement of educational facilities & services & extend

& improve its health services.

The money that is sent back is also beneficial to the families & to the

country in that it helps reduce poverty & also allows for investment in

small businesses & chances for furthering education.

Make fund transfers abroad through an integrated Banking system.

Allows for quick & efficient payments to ensure that the funds reach the

Destination fast & safe. Foreign remittance can be defined as the

purchase & sale of freely convertible foreign currencies as admissible

under.



Bangladesh Scenario: Remittance and Foreign Exchange reserve

Foreign exchange reserve and remittance marked an

important milestone in Bangladesh economy in last couple of

years and in 2010-11 they sent 11.65 billion US dollar. In ten years,

foreign currency reserve grew from $1 billion to cross the $10 billion

mark this year for the first time. Both foreign exchange reserve and

remittance were broadly immune to the global recession that has been

lingering for around two years now. Surprised at the successes , experts

also cautioned the government against any inflationary pressure that

may be caused by the achievements in remittance and foreign

exchange reserve. A few years ago, Bangladesh received remittance

of $2 billion to $3 billion annually. The amount crossed $5 billion in

fiscal 2006-07. The remittance inflow was $10.99 billion in the last fiscal

year with a growth of 13.41 percent. In the year 2010 the main reasons

behind the increase in foreign exchange reserve are a decline in import

and the boost in remittance. Normally import increases every year but

the trend is negative now. Bangladesh Bank Governor Dr Atiur

Rahman told: "Banking sector is much active now. And so remittance

increased. Many exchange houses and bank branches opened in

different countries to send remittance. With the cooperation of

NGOs, the system of remittance delivery to the recipients has

improved. Now we Think of introducing payment through mobile

phones." (Source: The Daily Star) If we analyze the date we find in the

last 10 year on an average 35% of Import payment could be meet up

with inward remittances.



SWOT ANALYSISBy the SWOT Analysis and other above discussions, observation some

findings has come forward, those are given below:

1. The bank is mostly dependent on deposit scheme.

2. Import department of FSBL (jubilee Road Br.) is performing better

than the export department. It is said on the basis of efficiency but on

the basis of number of L/C against export L/C.

3. Discrepancies are occurring much in Import department than Export

Department.

4. No initiative package for promoting export dept. where as different

credit facilities are available for import dept.

5. The bank is not emphasizing in Foreign Exchange” where as other

competitors are aggressively looking for this sector.

6. The bank has no ATM facility.

7. There has no any marketing department



8. In spite of not good reputation this bank is less interested in doing

their advertisement of branch products, packages and other facilities

where as other competitors are using hard advertisement strategies.

CHAPTER 6

Recommendation & Conclusion



Recommendations

The existing credit policy is good enough to run the bank. But as the

competition is increasing day by day the bank should take some

measures so that they can distinguish it from the others. The credit

management of First Security Islami Bank Ltd. can follow the following

suggestion to improve their performance and distinguish from others:

1. Giving authority to the Branch officials to take decisions to sanction

a loan. Right now, for every loan decision is made by Head office.

But to faster the speed of loan sanction the branch should be

authorized to take decision.

2. Rebate charge on loan should be increased so that more

customers are attracted to make loan.

3. The period of loan should be extended.

4. The bank management can give permission to its branches to

design or change lending products on the basis of local demand.

5. The bank should recruit some young and energetic executives to

ensure timely recovery of disbursed consumer credit loan.

6. The clients of loan should be facilitated with online Banks and

other benefits.

7. FSIBL should upgrade its website regularly and provide details

information of loan Scheme.



8. FSIBL Bank may also promote its loan program through different

advertising tools i.e. TV adds, News paper adds etc.

9. The Bank management can reduce the interest rate. Because of

high interest rate, some good loans turn to bad loans. But if the

interest rate decreases than the default loan will also decrease.

10. To risk grade the credit, the bank can follow other models besides

the credit risk grading model. Because the credit risk grading

model is not hundred percent up to the mark.

11. The bank management should always be concerned about the

change in industry so that they can notice the change and take

proper actions to adopt the situation.

The credit management of Southeast Bank Ltd. can follow the

abovementioned suggestion to improve their performance so that they

can be competitive in the market and can gain some competitive

advantage.

Conclusion

Banking has become the inspirable part of social transaction. From

the very early age it had taken in our society in the non-institutional

form. After the Second World War as a financial product lending had

been fully structured and institutionalized in USA and other developed

countries. Now banking sector play an important role in modern society

and private commercial bank has competitive, diversified and dynamic

compared to traditional banking system. In banking sector FSBL is a

name of trust, to improve the life style of the people, to develop the

business environment. Day by day its area of serving is increased all

over the country through setting up new branch at new place.

FSBL take a vital part in export and import business of Bangladesh

through their regulatory services and best quality services. The economy

of any country depends with the import and export position of the

country. By observing the banking system in FSBL chawkbazar Branch

for one month it is clear to me without bank involvement that kind of

work cannot be possible.



FSBL is providing opportunity of gaining practical knowledge for the

students like internship program. During the period of my internship

program I tried my best to understand the concern. However it is also

concern that this period of time was not enough to understand

everything of the concern. If any one wants to work in banking sector he

must have to know about all the department in a bank because one

department works related with another department works. I wanted to

know about the credit section of the bank because bank’s main earnings

depend with that section. But I can’t because of the limited period. Even

though I tried my best level to make the informative, this report contain

many errors, there may be some printing mistakes no doubt for this

reason I apologize.

Bibliography:

1. Annual Report of First Security Islami Bank Limited.

2. Prospectus of First Security Islami Bank Limited.

3. Web Site Of First Security Islami Bank Limited:

www.fsiblbd.com.

4. ‘Amader Barta’- A quarterly news bulletin, First Security Islami

Bank Limited.

5. ‘Industry’- A Weekly supplement- Special Supplement on

CAMELS Rating.

6. Various Web Sites related to Islami Banking Systems.

7. ‘Islamic Financial System’-By Md. Nusrat e Aziz- First Edition,

September, 2006

8. Previous Internship Reports.

9. UCPDC-600, 2007 Revision.


Chapter 2

Documents

Transcript of Chapter 2