Aims and Objectives
Chapter 1
IntroductionBanking sector is expanding its hand in different
financial events every day. At the same time the banking process is
becoming faster, easier and the banking arena is becoming wider. As
the demand for better service increases day by day, they are coming
with different innovative ideas & products. In order to survive
in the competitive field of the banking sector, all banking
organizations are looking for better service opportunities to
provide their fellow clients. As a result, it has become essential
for every person to have some idea on the bank and banking
procedure.
.
Private sector banks started functioning during the year 1983-84
with the objective of government policy to make sure effective and
meaningful participation of the private sector in the overall
national economy.
The perception of Islamic banking has been bloomed from the
inspiration of building up a society on justice in accordance with
basic socio-economic principles of Islam. The difference between
Islamic bank and conventional bank is on principles. The functions
of this type of bank are completely different.
This bank is established on Islamic Shariah and all types of
transactions are free from interest. Justified profit is the basis
of financial transaction of this bank. This bank is committed to
establish socio-economic justice. Islami Bank Bangladesh Limited is
the first interest free commercial bank in South-East Asia. The
bank has opened 176 branches covering important commercial
areas.
Islami Bank Bangladesh is a financial institution whose status,
rules and procedures expressly state its commitment to the
principle of Islamic Shariah. Consequently Islamic banks operate on
Islamic principles of profit and loss sharing, strictly avoiding
interest, which is the root of all exploitation and is responsible
for large-scale inflation and unemployment.
1.1 OBJECTIVES OF THE STUDY:
Primary objective:
As we know that 40% of our people living below poverty line and
the Islami Bank Bangladesh Limited believe in welfare banking, so
my primary objective is to know what the role of IBBL in
alleviating poverty from the societies.
Secondary objective:
In order to fulfill the primary objective the secondary
objectives are - to identify the poverty alleviating schemes of
IBBL
welfare services provided by IBBL
finding the problems and prospects of the schemes and
services
on the basis of the problems giving some recommendations
1.2. METHODOLOGY OF THE STUDY:
The study is performed based on the information extracted from
different sources collected by using a specific methodology. This
report is informative in nature. The methodology is
Data collection: Sources of data of this report can be divided
into two categories:
Primary Sources:
Face to Face conversation with the respective officers and
staffs.
Interviewing officers and staffs.
Sharing practical knowledge of officials.
Relevant file study provided by the officers concerned.
In-depth study of selected cases.
Secondary Sources:
Annual Report of IBBL
Audit Reports
Website
Relevant books, Research papers, Newspapers and Journals.
1.3. Limitations of the Study:
This study has suffered from certain constraints noted below:
Unpublished data have not considered for the study. The depth of
the analysis has been limited to the extent of information
collected from different sources.
As the poverty alleviating schemes are new, it is difficult to
find out the necessary data.
This study has been conducted within a limited time. So, time
constraint has played a key role for the whole study.
The annual report is published in 2006, so lack of up to date
data
Lack of cooperation of the respondents.
Chapter 2
Some information regarding the Islami Bank Bangladesh Ltd.
1. What is Islamic Banking
Islamic banking has been defined in a number of ways. The
definition of Islamic bank, as approved by the General Secretariat
of the OIC, is stated in the following manner. An 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 the receipt and payment of interest on any of its
operations(Ali & Sarkar 1995, pp.20-25). Shawki Ismail Shehta
viewing the concept from the perspective of an Islamic economy and
the prospective role to be played by an Islamic bank therein
opines: It is, therefore, natural and, indeed, imperative for an
Islamic bank to incorporate in its functions and practices
commercial investment and social activities, as an institution
designed to promote the civilized mission of an Islamic economy
(Ibid). Ziauddin Ahmed says, Islamic banking is essentially a
normative concept and could be defined as conduct of banking in
consonance with the ethos of the value system of Islam (Ibid).
It appears from the above definitions that Islamic banking is a
system of financial intermediation that avoids receipt and payment
of interest in its transactions and conducts its operations in a
way that it helps achieve the objectives of an Islamic economy.
Alternatively, this is a banking system whose operation is based on
Islamic principles of transactions of which profit and loss sharing
(PLS) is a major feature, ensuring justice and equity in the
economy. That is why Islamic banks are often known as
PLS-banks.
2.2. Some Key points about IBBL:
2.2.1. Bangladesh Bank License for IBBL operation:
The bank operates within the frame work of the existing banking
laws, rules and regulation subject to such minor adjustment that
may be considered for an Islami Bank to function. In addition to
the above all requirements of Banking Companies Ordinance 1962 (as
adapted in Bangladesh) as also the relevant position of Bangladesh
Bank Order, 1972 (P.O. No. 127 of 1972) and instructions issued
from time to time there under by Bangladesh Bank will also apply to
the bank.
2.2.2. Aims and Objectives
To conduct interest-free banking.
To establish participatory banking instead of banking on
debtor-creditor relationship.
To invest on profit and risk sharing basis.
To accept deposits on Mudaraba & Al-Wadeah basis.
To establish a welfare-oriented banking system.
To extend co-operation to the poor, the helpless and the
low-income group for their economic upliftment.
To play a vital role in human development and employment
generation.
To contribute towards balanced growth and development of the
country through investment operations particularly in the less
developed areas.
To contribute in achieving the ultimate goal of Islamic economic
system.
2.2.3. Corporate information of IBBL:
Date of Incorporation 13 March, 1983
Inauguration of First Branch (Local Office) 30 March, 1983
Formal inauguration 12 August, 1983
Listed in Dhaka Stock Exchange
Listed in Chittagong Stock Exchange 1985
1986
Share Capital ( Local and Foreign)42.62%, 59.38%
Authorized Capital Tk 5,000.00 Million
Paid Up Capital Tk 3801.60 Million
Investment Tk 174058.00 Million
Foreign Exchange Business Tk 287919.00 Million
Number of Branches 193(29.05.08)
Number of Shareholders 26488
Manpower8426
2.2.4. World Ranking of IBBL amongst Top 3000 International
Bank
Sl. NoYearRank
119982119
219992100
320001999
420011902
520021771
620031755
720041581
820054658
920061620
1020071490
2.2.5. Ranking of IBBL amongst Top 500 Banks of Asia
Sl. No.YearRank
11998465
21999443
32000437
42001414
2.2.6. Conventional banks Vs IBBL:
The distinguishing features of the conventional banking and
Islamic banking are shown in terms of a box diagram as shown
below:
Conventional BanksIslamic Bank
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 (investor) and the user of funds (entrepreneur)
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
system, it has become one of the service-oriented functions of the
Islamic banks to collect and 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. Its scope of activities is narrower when compared with an
Islamic bank.6. Its scope of activities is wider when compared with
a conventional bank. It is, in effect, a multi-purpose
institution.
7. It can charge additional money (compound rate of interest) in
case of defaulters.7. The Islamic banks have no provision to charge
any extra money from the defaulters.
8. In it very often, banks own interest becomes prominent. It
makes no effort to ensure growth with equity.8. It gives due
importance to the public interest. Its ultimate aim is to ensure
growth with equity.
9. For interest-based commercial banks, borrowing from the money
market is relatively easier.9. For the Islamic banks, it is
comparatively difficult to borrow money from the money market.
10. Since income from the advances is fixed, it gives little
importance to developing expertise in project appraisal and
evaluations.10. Since it shares profit and loss, the Islamic banks
pay greater attention to developing project appraisal and
evaluations.
Contribution of IBBL to Bangladesh Economy
Islami Bank Bangladesh Limited has many success stories of
achievements. These are summarized below:
IBBL is the pioneer institution of Islamic Banking in
Bangladesh.
The success of IBBL has imbibed other sponsors at home and
abroad to establish Islamic Banking in Bangladesh. Four national,
one international Islamic Banks have since been established in the
country. A private sector traditional bank has also established two
full-fledged Islamic Banking branches. Several other existing and
proposed traditional banks have also expressed their intention to
introduce Islamic Banking.
IBBL has successfully mobilized deposits from a section of
people who hither-to-before did not make any deposit with interest
based banks.
The Islamic Banking products which are offered by IBBL through
its 176 branches located at important centers all over the country
and spontaneous acceptance of those products by the people proves
the superiority of Islamic by the people proves the superiority of
Islamic banking.
IBBL market share of deposit investment and ancillary business
is steadily increasing
IBBL, through still a tiny bank, handless more than 10% of
country's export and import trade.
Among the contemporary commercial Banks IBBL's position is first
in respect of mobilization of deposit, deployment of found and
earning profit.
Investment in industrial sector occupies nearly 49.19% of IBBL's
investment portfolio. This is a unique example of industrial
finance by a commercial Bank.
More than 1.15,000 workers are employed in the industrial
projects financed by IBBL. IBBL has thus made significant
contribution to solving unemployment problem of the country.
Dhaka-the capital of Bangladesh being a Mega city has acute
transport problem. IBBL has joined hands with an enterprising group
to introduce a fleet of Premium Bus service, which has attracted
the attention of all section of the people and mitigated
transportation problem of the city to some extent.
2.2.7. Poverty alleviating schemes of IBBL
For the development of the distress people of the society and
alleviating their poverty, the IBBL has taken some special
investment schemes. These are
Rural Development Schemes ,
Household Durable Schemes,
investment schemes for Doctors,
transport investment schemes,
Micro investment schemes,
Agricultural equipment investment schemes.
Islami Bank foundation is also working for the welfare of the
people.
In the following chapters these schemes are described in
details
In the following table various welfare oriented investment
amount of IBBL is given
Sl no.Name of schemes20022003200420052006
1Rural Development Schemes432.04570.88789.971106.072242.22
2Household Durable Schemes886.79910.91878.76782.09699.95
3Investment schemes for Doctors97.21101.0185.5464.4233.38
4Transport investment
schemes.1822.382311.602442.162947.382698.88
5Car investment schemes28.2533.5830.3027.7523.54
6SME325.06395.75501.26629.81768.45
7Micro investment schemes, 6.6310.1017.1810.216.24
8Agricultural equipment investment
schemes13.6612.7614.6912.5311.94
9Housing investment schemes597.64661.56672.10609.78506.75
10Real state investment projects
2264.353418.854713.705859.756582.85
Sub-total (Investment
schemes)6474.018427.0010145.6612050.1913574.20
Total investment46280.1159007.4975858.5693644.15113575.07
Percentage of total investment13.99%14.28%13.37%12.87%11.95%
Chapter 3
Rural development schemes of IBBL
Bangladesh with its 40% people living below poverty line and 18%
living in absolute poverty is suffering from acute rural-urban
economic disparity coupled with illiteracy, lack of proper health
and sanitation facilities. The country's economy is basically an
agrarian one with vast majority living in rural areas.
The agriculture sector is unable to provide any further scope
for employment resulting in influx of rural population towards
urban areas. Rural areas are characterized by stagnant agriculture
and scanty industries. Underemployment and unemployment is a
regular phenomenon particularly in rural areas.
The vast human resources have remained unutilized due to lack of
education, proper training and concerted efforts to help grow the
rural economy. These results in uneven distribution of income which
causes serious set back in balanced geographical growth as well as
growth of GDP.
Islami Bank Bangladesh Limited was founded with the major
objective of establishing Islamic economy for balanced economic
growth by ensuring reduction of rural-urban disparity and equitable
distribution of income.
In view of the above, Branches of the Bank have been encouraged
to invest their deposits in their respective areas and in
particular for the economic enlistment of the rural people.
Accordingly, a Scheme in the name and style of 'Rural
Development Scheme' has been introduced to cater to the investment
needs of the agriculture and rural sector to create opportunity for
generation of employment and raising income of the rural people
with a view to alleviate poverty.
Objectives
The followings are the important objectives of IBBLs Rural
Development Scheme:1) To bring the poorer population within an
organizational framework by setting up certain rules and
regulations with a view to free them from the curse of poverty and
make them self-reliant, thereby converting RDS into a self-reliant
sustainable program; 2) To extend bank investment to agricultural
and non-agricultural sectors in the rural areas;3) To invest on
employment and income generation activities of the rural
population;4) To provide self-employment for distressed people;5)
Socio-economic development of the poor and distressed by
group/center formation;6) To bring both male and female to provide
employment under income generation activities and help them to
attain self-reliance step by step;7) To continue to support the
self-reliance drive of the poor in their search of capital
formation from savings they make out of their increased income;8)
To help reduce and eventually stop, through enhancement of their
income, the lending on high and exorbitant rates of interest by the
village money-lenders, the advance sale of crops, land and mortgage
of land by the poor at the time when they are most in need.9) To
follow an approach of comprehensive development side by side with
economic development; and10) To provide financing to develop
housing in the area.The followings are the important objectives of
IBBLs Rural Development Scheme:1) To bring the poorer population
within an organizational framework by setting up certain rules and
regulations with a view to free them from the curse of poverty and
make them self-reliant, thereby converting RDS into a self-reliant
sustainable program; 2) To extend bank investment to agricultural
and non-agricultural sectors in the rural areas;3) To invest on
employment and income generation activities of the rural
population;4) To provide self-employment for distressed people;5)
Socio-economic development of the poor and distressed by
group/center formation;6) To bring both male and female to provide
employment under income generation activities and help them to
attain self-reliance step by step;7) To continue to support the
self-reliance drive of the poor in their search of capital
formation from savings they make out of their increased income;8)
To help reduce and eventually stop, through enhancement of their
income, the lending on high and exorbitant rates of interest by the
village money-lenders, the advance sale of crops, land and mortgage
of land by the poor at the time when they are most in need.9) To
follow an approach of comprehensive development side by side with
economic development; and
10. To provide financing to develop housing in the areaTarget
Group
Farmers having land holding of maximum 0.50 acres.
Sharecroppers with consent from the landowners.
Persons engaged in off-farm activities having no land or land
up-to-maximum 0.50 acres.
Persons/farmers permanently residing in the selected
villages.
Persons having derelict pond will be eligible for investment for
re-excavation and fish cultivation.
Destitute women and distressed people will be provided
investment for mulch cows/poultry birds/ducks/goats etc. and other
suitable off-farm activities for raising their supplementary
income.
Avenues of investment: other than agricultural activities, seven
categories of non agricultural activities in the rural areas are
financed under the RDS program of Islami Bank Bangladesh Limited.
The categories and the types of activities financed under each
category are presented in following table
Investment Avenues, Higher limits and Duration:
Investment AvenuesHigher limitDurationRemarks
Crop productionTk.10000Highest 1(one)yearCrop of twelve
varieties
Fish cultivation in pondsTk.25000Highest 3(three)years
IrrigationTk.5000Highest 1(One)yearAccording to need
Agriculture and irrigation ImplementsTk.25000Highest
3(three)years10%borrower equity
All non-agricultural sectorTk.10000Highest 1(one)yearFor 343
non-agricultural items payable in weekly installment
Rickshaw ,van and rural transportTk.5000Highest 2(two)
yearsPayable in weekly installment
Hand Tube wellTk.3000Highest 3(three) years
House-building materialsTk.15000Highest 3(three) years
Documentation
To secure Bank's investment, the following documents have to be
executed:
Group guarantee form.
Deed of Agreement.
Usual charge documents.
Sanction and Disbursement
On the basis of the list submitted by the Field Officers, the
Investment Committee of the Branch carefully scrutinizes the
applications and sanction the investment at the Branch level. The
Investment Committee consists of Manager, Project Officer and the
Field Officer.
After sanction of the investment the Branch complete
documentation formalities and then disburse the amount with the
help of the Investment Officer and Field Officer. In all the cases
Branch must ensure strict adherence to the banking and Shariah
norms.
Appointment of Field OfficerField Officers are appointed by the
Head Office of the Bank. After recruitment, the Field Officers have
to undergo compulsory Foundation Training for a period of two weeks
so that they can perform satisfactory.
They are appointed well ahead of starting operation of the
Scheme in a Branch. The concerned Branch starts operation of the
Scheme after satisfactory completion of the base- line survey,
formation of the Groups, motivation of the Group members and
compliance of the Group disciplines etc.
The eligible criteria for the Field Officers are the
followings:
a. Young man with initiative and drive.
b. Minimum qualification: graduate or equivalent.
c. Willingness to work in the rural areas.
d. They are recruited as per Recruitment Policy of the Bank
under a separate Service Rules for the RDS Employees.
e. Their services are confirmed after one year on satisfactory
performance. The performance are considered satisfactory if rate of
recovery is 95% or above.
Statistics of Rural Development Scheme (1998 to 2007)
YearBranch.Dis:UPVillMen:Women members (%)Amount of Accumulated
investmentInvestment InstallmentRecovery Rate.Savings
199825211755201940352%1.90-100%0.19
199927241806203335155%18.489.94100%0.91
200032271907633819062%60.3527.0199%3.50
2001453319812587513575%131.8649.4499%7.99
20025238102206214111587%326.74140.30100%22.97
20036945111336517431591%714.93272.6099%56.05
20046945125521420047093%1323.87371.0998%99.07
20058948140687530722593%2029.67432.0698%166.83
200712050190770043046594%2923.59557.9798%228.74
2007129612201002351672589%2884.66789.9799%323.10
PERFORMANCE OF RURAL DEVELOPMENT SCHEME: UP TO March
2008Sl.Areas of performanceNumber/Amount
01Total number of Branch of IBBL 190
02No. of Branch handling the Scheme 119
03No. of Village 7,788
04No. of District 60
05No. of Centre 14,256
06No. of Group 73,712
07No. of Male member 339,115
08No. of Female member 29,445
09Total number of Members 368,560
10No. of Client (Who availed investment) 259,064
11Cumulative disbursement 8,589.74
12Average size of investment 0.011
13Present outstanding 1,944.47
14Amount of overdue 6.68
15Percentage of Recovery 99%
16No. of account adjusted (Since inception) 707,401
17Adjusted amount (Since inception) 5,833.90
18Balance of personal savings 653.18
19Total waiver from inception 4.46
20Number of client under MEIS 1,808
21Cumulative disbursed under MEIS 88.18
22Present outstanding under MEIS 77.23
23No. of Field Officer 1,391
24No. of Tube-well provided (Since inception) 5,372
25Amount disbursed against Tube-well 9.98
26No. of Sanitary Latrine provided (Since inception) 3,042
27Amount disbursed against Sanitary Latrine 2.79
Islami Bank Bangladesh limited (IBBL) envisages an economic
system based on equity and justice. Taking into consideration that
majority of the population below poverty line lives in rual
Bangladesh, the Bank has devised a Rural Development Scheme (RDS)
with a view to creating employment opportunity for them and
alleviates their poverty through income generation activities.
The IBBL through its RDS project has been implementing
integrated programs for the landless poor, eager laborers and
marginal farmers aimed at meeting their basic needs and promoting
their comprehensive development. Consciousness among the poor needs
should be enhanced so that they can lift their position in the
socio-economic structure of the country. In order to consolidate
their economic base, invested money should be used in income
generating activities so the poorer section of the population can
become self-reliant. RDS works for the realization of that
objective.
Some Recent Field Experiences of RDS Hamid and Rahman (2001)
have recently evaluated the Rural Development Scheme of the IBBL
under the sponsorship the Islamic Bank Training and Research
Academy. Some results are given as under. 1. In Islami Bank, among
the total funds disbursed in 2000, the maximum amount (24.9%) has
gone to processing and manufacturing. In order of importance, the
other heads are trading (20.5%), agriculture and forestry (17.9%),
services (12.1%), and others. In the GB the picture is not very
different. Here, maximum amount of loan (36.9%) has gone to
processing and manufacturing sector, followed by services (23.3%),
trading (13.8%), livestock and fisheries (7.8%) and others. The
data as published by Credit and Development Forum (CDF) shows that
about 42 per cent of total funds of 369 NGOs including ASA, BRAC
and Proshika was distributed in the small business sector and
another 18 per cent to the livestock sector up to June 1988. 2.
Characteristics of EntrepreneurshipAs many as six major
characteristics have been identified for the entrepreneurs. These
are: He/She: (a) produces wholly new product (b) undertakes new
line of business (c) adopts new process of production (in the case
of old products)(d) goes for expansion of the existing business (e)
adopts new marketing techniques (f) generates new employment
opportunities. It can be seen from the Report that expansion of
business is the most dominating feature of entrepreneurship
development of the clients under discussion. In the IB as many as
60 per cent of the clients possessed this feature. In order of
importance other features include new line o business (16%) and
wholly new product (12%). In the GB, expansion of business accounts
for about 52 per cent of the total activities. Interestingly next
dominant feature of GB clients is that 40 per cent of them have
gone for new line of business. Other features are not worth
mentioning. For others category, only 17 per cent fall within the
category expansion of business. This is followed by generation of
new employment. The most dominating characteristic of this others
category is that as many as 65 cent do not possess any quality of
entrepreneurship development constitute only 7 per cent and 5 per
cent in the IB and GB, respectively. From the discussion of these
necessary characteristics, it may be concluded that both the IB and
the GB have contributions towards the development of small
entrepreneurs. 3. Practical work experiencesThe RDS members were
asked to give their experiences briefly in working with the IB.
Interestingly enough, about half of the members agreed that the
Bank Supervisors spoke about the Quran and the Hadiths. Many of
them categorically stated that they had learned many things about
Islam. It was good that they need not go to the Bank to collect
their loans or mix with unknown male persons in unknown places.
About one-fifth of the members said that the IB was quite flexible:
it did not put undue pressure for weekly instalment when the
members were in genuine difficulty. They also said that sometimes
the Bank Supervisors had gone to their residences to deliver the
goods (investments). This answer constitutes about 15 per cent of
the total responses. Some mentioned about the help and assistance
given by the IB at the time of their daughters marriages. Although
in terms of percentage it is very negligible, a few argued that the
IB did in fact take extra charge in terms of profit, where is then
the interest-free bank? they argued (!!!) 4. Expectations from the
IB A question was asked about their expectations from the IB. It is
shown that of the 15 answers noted, the most important one relates
to the amount of loan/investment given. They expected more loans
and more than one type of loans (like GB) simultaneously. This
constitutes 27.3 per cent of the total answers. Next important one
(17.3%) was the loans for housing, sanitary latrine, and tube well
for drinking water. Eleven per cent of the members very forcefully
argued that the IB must provided training facilities in tailoring,
hand-works, fish-culture and pisciculture works particularly for
the women. They alleged that because of lack of training they were
unable to make economic use of the sewing machine given to them.
The same number of respondents expected financial assistance for
their daughters marriages. Contrary to normal expectation, about 6
per cent opined that IB should give financial assistance in kind,
and not in cash, and that they should not be allowed to speak lie
on this issue! There were people who wanted to learn about the
Quran and the Sunnah. Although not significant, there are other
interesting expectations as given in the Report. 5. SuggestionsThe
members of the RDS have given many interesting and important
suggestions for the increasing the number of clients. Perhaps very
consistently, the members have suggested that the IB should
increase the volume of credit. Through experience they were of the
opinion that peoples demand for money was very high. The lending
institutions gave fell short of their demands. Even the amount of
loan/investment given by the IB fell short of their demands. Even
the amount of loan/investment given by the IB fell short of the
amounts given by the other institutions, particularly, GB, ASA and
BRAC. Given the opportunities for proper utilisation, the bank
should also provide more than one type of loans (general loans,
housing loans etc.) simultaneously. This is treated as the most
appropriate weapon for increasing the number of clients under the
present clients under the present circumstances. Another very
important suggestion given by the members was to preach more about
the teachings of the Quran and the Sunnah. The added that the
Supervisors should say that the bank or the RDS was not for any
particular category of people but for every one who wanted to
improve her/his living standard by avoiding (interest). In order to
compete with other conventional lending institutions, the members
suggested that the rate of profit (many say interest) should be
comparatively lower and that should made clear to the members by
way of simple examples. Introduction of housing loans and the loans
for such things as latrine, education, tube wells and others would
definitely attract the general people to come within the umbrella
of the RDS. Many members have praised the behavior of the RDS
Supervisors: Some suggested that they should improve their
activities with more modern and appropriate tolls. Their numbers
should be increased. The members have also very consistently
insisted introduction of training program events for the women on
various important issues. Another no-negligible suggestion given by
the members was that they should be given outright grants in terms
of cash or food during the period of natural calamities such as
floods, earthquake and other catastrophic.
Chapter 4Some other special investment schemes of IBBL for
alleviating poverty
4.1. House - hold durables investment schemes:
Under this investment scheme in 31st December 2007 27010 people
have been given investment. The amount of total investment was
1371.31 million taka. On the other hand, in 2006, 27349 people were
given investment and the amount of investment and the amount of
investment was 699.95 million taka.
4.2. Investment in Small and Medium Enterprise:The Small and
Medium Enterprise creates enough employment opportunity and play a
vital role in socio economic development of the country .The IBBL
launched Small Enterprise and Consumer investment Division in 1st
January 2006.The objective of this scheme is to provide investment
facilities to the small entrepreneur. Besides this, the other two
division of IBBL ,Project Investment Division(PID) and General
Investment Division(GID),these two provides investment to the
medium scale entrepreneur
In 31st December 2006, the investment in SME sector of the bank
was 18902 million which was 16.64% of the total investment of the
bank .Investment in this sector proves that IBBL is trying to
create employment opportunity for the people and wants to increase
their per capita income.
Chapter 4Some other special investment schemes of IBBL for
alleviating poverty
4.1. House - hold durables investment schemes:
Under this investment scheme in 31st December 2007 27010 people
have been given investment. The amount of total investment was
1371.31 million taka. On the other hand, in 2006, 27349 people were
given investment and the amount of investment and the amount of
investment was 699.95 million taka.
4.2. Investment in Small and Medium Enterprise:The Small and
Medium Enterprise creates enough employment opportunity and play a
vital role in socio economic development of the country .The IBBL
launched Small Enterprise and Consumer investment Division in 1st
January 2006.The objective of this scheme is to provide investment
facilities to the small entrepreneur. Besides this, the other two
division of IBBL ,Project Investment Division(PID) and General
Investment Division(GID),these two provides investment to the
medium scale entrepreneur
In 31st December 2006, the investment in SME sector of the bank
was 18902 million which was 16.64% of the total investment of the
bank .Investment in this sector proves that IBBL is trying to
create employment opportunity for the people and wants to increase
their per capita income.
4.3 Small Business Investment Scheme
Bangladesh, a third-world developing country, is rich in natural
and human resources. Inspite of vast possibilities, the majority
people of the country live in hardship-below poverty line as these
resources are not being properly tapped, explored and exploited.
Physical labor is their only means of earning. A large segment of
this populace is active youth force. Many of them are efficient,
intelligent and energetic with initiative & drive and have
courage to take risks. But they can not uplift their socio-economic
condition due to poverty, lack of financial support and other
required facilities. Lack of capital compelled many small traders
to leave their profession. As a result the unemployment problem has
been increasing day by day, and the unemployment youths, finding no
avenues of employment, are getting themselves involved in
anti-social activities creating threat to the social life. Islami
Bank, as welfare oriented financial institution, is committed to
generate employment and bring about an overall improvement in the
socio-economic condition of the people and the quality of their
life. The Bank, to make effective contribution in this respect, has
taken-up a special program and introduced 'Small Business
Investment Scheme' to make the small traders, entrepreneurs and
neglected unemployed youths of urban and rural areas self-reliant
by providing them required financial support. The following
benefits will be achieved through implementation of this
Scheme.
Gradually it will help to alleviate poverty and minimize
unemployment.
It will help small traders and entrepreneurs to become
self-reliant and to improve their quality of life through capital
formation.
It will create opportunity for the unemployed youths to engage
themselves in in-come generating activities.
It will help to expand the market for locally produced goods by
increasing productivity of small traders and entrepreneurs.
Aims and objects To expand investment facilities for the small
traders and entrepreneurs in urban and rural areas with a view to
raise their level of income and to improve their quality of
life.
To inspire and encourage unemployed youths to establish small
business enterprises and thereby to create opportunities for
self-employment for ensuring social justice and welfare of the
people in large scale4.4. Agriculture Implements Investment
SchemeBangladesh is predominantly an agricultural country with vast
majority of people living in rural areas. Most of our people, for
their living, are dependent on agriculture. Agriculture still
contributes the lion share of the gross domestic product. But we
could not as yet become self-sufficient in food production. We
still import a bulk quantity of food grains from abroad to meet the
deficit. This reliance on import has made us dependent on others.
We must modernize our agriculture and establish more and more
industries in order to minimize imports.
We can bring about revolutionary changes in the agricultural
sector by adopting modern agricultural technology replacing the
age-old traditional way of cultivation and increasing the use of
fertilizer. This can only be done by collective efforts of both
public and private sectors.
Islami Bank Bangladesh Limited is a welfare oriented Bank. It
can play positive and important role in the economic development,
progress and uplift of the country by investing in the agricultural
sector. The Bank has, therefore, introduced "Agriculture Implements
Investment Scheme" to provide power tillers, power pumps, shallow
tube wells, thrasher machine etc. on easy terms to the unemployed
youths for self-employment and to the farmers to help augment
production in agricultural sector.
Objectives To create opportunities for self-employment of
un-employed rural youths. To help farmers to augment agricultural
production. To assist in the introduction and use of modern
technology in the agricultural sector. To play auxiliary role in
achieving self-sufficiency in food production. Types of Agriculture
Implements Power tillers thrasher Machine Any other agricultural
implements proposed by the branch and which has local demand. 4.4.
Transport Investment SchemeThe role of modern communication is most
vital for the socio-economic growth and uplift of a developing
country like Bangladesh. A sound and efficient communication
network is the pre-requisite for sustained development through the
expansion of trade, commerce and industry. In this backdrop the
demand for road and water transports has increased manifold
throughout the country. Moreover, the use of modern transports has
increased keeping pace with the rise of the standard of living of
the professionals. Considering all these facts, Islami Bank
Bangladesh Limited has introduced 'Transport Investment Scheme'.
Under this scheme investment on easy terms is being extended to the
existing successful businessmen in road and water transports and
potential entrepreneurs in this sector for different types of road
and water transports. Besides, Multinational companies, established
business houses and well to do officials and professionals can
become owner of various kinds of transports through Hire Purchase
under this scheme.
Aims and Objectives
To assist in the development of communication system of the
country.
To help overcome the existing transportation problem.
To assist solvent service-holders and professionals having fixed
income for acquisition of private cars and thus to help them to
improve their professional efficiency and the standard of living.
4.5. Micro Industries Investment Schemes
Bangladesh as a developing country has been trying for its
overall economic growth. One of the major problems confronting its
growth is lack of development of enterprises and potential
entrepreneurs who can create more job opportunities by establishing
new enterprises in the industrial sector. There are a number of
educated unemployed youths and also skilled & semi skilled
unemployed persons in the country. Besides, every year quite a good
number of youths are coming out of the general/technical
educational institutions to add to this already crisis ridden
employment market. Development programs and efforts will bring no
meaningful result unless and until income- generating employment
opportunities can be created for the growing number of unemployed
people including the educated unemployed youths. Establishment and
expansion of micro industries can play a vital role in creating
more employment opportunities as well as in the overall
socio-economic development of the country.
Islami Bank Bangladesh Ltd. has been appreciably participating
in this direction by financing industrial sector. With a view to
creating wider base for industries, the Bank has decided to launch
Micro Industries Investment Scheme through its Branches. This
scheme has been devised to cater to the investment needs of those
persons who intend to set-up new micro industrial ventures or to
restructure their old units by way of BMRE involving a total cost
of Tk.5.00 lac.
This is intended mainly to create new jobs for the educated,
skilled & semi skilled unemployed and also to encourage those
who remain outside the purview of investment due to shortage of
funds and insufficient collaterals. The scheme has been prepared
with easy terms and conditions to encourage the small
entrepreneurs, educated unemployed youths and skilled /semi skilled
persons to come forward for establishment of micro industries
commensurate with the local demand.
Sectors of Investment:
Different sectors including food and agriculture based
industries, plastic & rubber industries, forestry and furniture
industries, engineering industries, leather industries, chemical
industries, textile industries, recycling industries, service
industries, electrical accessories industries, computer technology
industries, paper products industries, handicrafts industries,
fishery & live stock farming, hollow bricks, roof tiles and any
other viable micro-industries have been identified for financing
under the Scheme4.6. Investment in Industrial sector
In the investment policy of IBBL industrial sector of the
country has given priority. The industrial investment of the bank
is increasing rapidly .IBBLs investment in industrial sector is
higher than other bank .The total investment of the bank in
industrial sector as on 31st December 2005 was 46063.51 million
taka and on 31st December 2006 it was 62642.10 million taka which
is 36% higher than the previous year. In the following table
investment in industrial sector by IBBL is given:
Sl no.DescriptionNo. of projectsPercentage of total numberAmount
of investmentPercentage of total investment
1Textile, spinning weaving
&dyeing14515.85%24337.8238.85%
2Steel, Re-rolling& Engineering424.59%7679.5812.26%
3Agriculture based industry14515.85%7336.6411.71%
4RMG& Parts of RMG26028.42%5019.508.01%
5Food & Beverage222.40%3787.746.05%
6Cement industry8.87%1489.442.38%
7Pharmacy industry8.87%1171.191.87%
8Poultry, poultry feed & Hatchery151.64%767.441.23%
9Sanitary Equipment1.11%431.78.69%
10Chemical, cosmetics& petroleum111.20%242.62.39%
11Printing & binding252.73%497.62.79%
12Power3.33%358.93.57%
13Ceramic & brick141.53%552.27.88%
14Health care(hospital &others)141.53%294.34.47%
15Plastic industry101.09%598.16.95%
16Petrol pump & CNG filling station181.97%126.99.20%
17Information technology2.22%10.11.02%
18Hotel & restaurant6.66%8.66.01%
19Others industry16618.14%7930.9312.66%
Total915100%62642.10100%
Chapter 5
Activities of Islami Bank Foundation
One of the distinguishing features of Islami Bank is that its
overall activities are directed towards the welfare of the society.
The Bank, since its inception, has dedicated itself for the uplift
and emancipation of the helpless and downtrodden people of the
society. With this end in view, the Bank has created a separate
fund, which was earlier known as Sadaqua Tahbil. In 1991, the
Sadaqua Tahbil was reorganized and enlarged under the new name of
'Islami Bank Foundation' with a fund of Taka 38.00 million in order
to conduct social-welfare activities on a wider scale. As one of
the leading non-government voluntary organizations of the country,
the Foundation has been working with unique and special Programs
for the welfare of distressed humanity and to make poor,
down-trodden, landless and asset-less people self-reliant.
The aims and objectives of the Foundation are to serve
distressed humanity, promote people oriented mass education, extend
health and Medicare facilities to the poverty-stricken people in
urban and rural areas, create facilities for productive
self-employment and develop human resources for improving economic
condition and quality of life, assist healthy growth of art,
culture and literature, science and technology, sports, research
and propagation of Islamic teachings. The Foundation has taken up a
number of schemes covering the whole of Bangladesh.
Educational Programs
Education is the backbone of a nation. Awareness building, skill
training, and access to information-all depend on education. But it
is regrettable that the rate of literacy is still very low in
Bangladesh. Most of the children are deprived of the light of
education due to poverty, lack of sufficient educational
institutions, non-availability of text books and equipments etc. In
a ward, the unfavorable socio-economic conditions are responsible
for this chaotic situation.
The Foundation has, therefore, taken up the following Programs
to improve the country's educational scenario:
Support to model Forqania Maktab
Scholarship /lump grant for poor and meritorious students
Financial support to educational institution
Income Generating Programs
Access to required finance and other related inputs may help
many to become self employed. In absence of such opportunity the
unemployed youths entangle themselves in various anti-social
activities. Islami Bank Foundation has, therefore, taken up the
following Self-employment projects:
Rickshaw
Sewing
Poultry keeping
Rural health work
Goat rearing
Small trade
Health and Medicare Programs
Health and Medicare facilities are the basic and fundamental
rights of each individual but most of the people of our country are
still deprived of it. The Foundation has, therefore, taken up the
following Programs to extend health, Medicare and sanitation
facilities to the urban and rural areas:
Establishment of Medical Centers
Supporting Charitable dispensaries
Lump-sum help for medical treatment
Tube well Installation
Sanitary Latrine construction etc.
Such Assistance is also extended to the members of Rural
Development Scheme (RDS) of IBBL. Under Health and Medicare
Programs preventive measures have also been taken. Special steps
have been taken for construction of sanitary latrines and
installation of tube wells in the villages covered under to whom
Islami Bank Bangladesh Ltd. is providing finance for income
generation activities.
Humanitarian Help Programs
These program aims at providing help to distressed people who
are unable to meet their basic needs like food, clothing, shelter
and medicine. The old widow and children without guardians get
preference. Besides, the program extends assistance to orphanages,
provide fund for the marriage of poor girls, assist indebted
people, help distressed wayfarers etc.
Relief and Rehabilitation Programs
Participation in relief and rehabilitation activities in natural
disasters and in emergency forms an important program of Islami
Bank Foundation. During calamities like flood, tornado, tidal surge
etc. the Foundation mobilizes its own people as well as donates to
the relief fund opened at the government level. The Foundation also
tries its best to extend hands of assistance and co-operation to
the Muslim brethren elsewhere in the world.
Dawah Programs
One important objective of Islami Bank Foundation is to
disseminate the true knowledge and teachings of Islam. The
Foundation has, therefore, taken up various schemes to enlighten
the common people as well as the elite and make them familiar with
the concept of Islam. Islamic research magazines and other Islamic
Literatures are being distributed among the Academicians,
Journalists, Justices, Lawyers, High Officials, Bankers,
Literatures and important Libraries and Institutions of the
country. The Foundation is also working among the prisoners for
their moral reforms.
Islami Bank Hospital
With the objective of providing low-cost curative services to
the less affluent segment of the society, the Foundation has so far
set up Hospitals at three Divisional Headquarters in Dhaka,
Rajshahi and Khulna. Services of eminent general practitioners and
specialists in various fields of treatment like Medicine, Surgery,
Gynae, Pediatric, E.N.T. Urology, Neuro-surgery, Skin, Orthopedic
etc. are harnessed in these hospitals. Standard diagnostic, medical
and surgical equipments are in used in these hospitals. The
Foundation plans to establish Hospitals at each Divisional
Headquarters of the country.
Islami Bank Medical College, Rajshahi
The number of Doctors in Bangladesh is not sufficient compared
to the total population. The Govt. Medical Colleges are also a very
few and a good number of meritorious students can not get admitted
into the Govt. Medical Colleges due to insufficient number of seat
capacities.
Though some private medical colleges have been established
mostly in and around the capital but the tuition fees and other
charges are so high that the students of poor and middle class
families can not afford it.
Keeping in view the objective to enable the students of poor and
middle class families to be a doctor, Islami Bank Foundation has
established a medical college in Rajshahi, a metropolitan city of
northern part of the country. In the meantime, the classes of the
students of 1st 2nd and 3rd batch are going in full swing. The
construction work of the hospital building at Naodapra, the own
site of the college, is also going on.
Community Hospital
Besides establishing Hospitals at the Divisional Headquarters,
IBF has a plan to assist local initiatives in setting up Hospitals
at District level. Establishment of Four such Hospitals is planned
during 1999.
Monoram: Islami Bank Crafts & Fashion
The project has been taken up as a sales outlet of home-made
garments, handicrafts and other items produced by the distressed
women. The main objective of the project is to create conducive and
healthy atmosphere in which women can contribute to the family
income by working within the limits of Shariah.
The other objective of this project is to develop designs of
women-wear, which will conform, to the principles of decency and
modesty as laid down by Islam and at same time compare well with
the modern-day-fashions.
Service Centre
To save the people of coastal and river belt from natural
disaster, erosion etc. a special project has been taken in the name
and style of "Service Centre". Under this program pucca structure
constructed in coastal areas, river belts and off-shore islands
would be used for integrated social development of the people as
well as provide safe shelters during natural calamities. Two such
Service centers (in Noakhali and Manikgonj) have already been
established.
Islami Bank Physiotherapy and Disabled Rehabilitation Centre
In Bangladesh there are a great number of unfortunate disabled
persons who have no other means to maintain themselves without
resorting to beggary. The burden of the society might be lessened
and these people can be helped to become self-reliant through
imparting special skills. Keeping this in view, Islami Bank
Foundation has decided to rehabilitate these unfortunate disabled
persons through establishing a centre named "Islami Bank
Physiotherapy and Disabled Rehabilitation Centre" This Centre while
making temporary arrangement for food and shelter for the disabled,
will arrange for health check up, physiotherapy and occupational
therapy and look for job placement through internship in various
factories and trading houses.
Islami Bank Institute of Technology
The large number of unemployed youth of the country may be
turned as assets through taking up Human Resource Development (HRD)
Program.
The youths with skills in various sectors of technology may
become self-employed in the land and can also get employment
opportunities abroad. Islami Bank Foundation has, therefore,
established 3 Technical Institutes, two in Dhaka and another in
Bogra, which are rendering training facilities in Computer,
Secretarial Science, Driving, Electrical, Refrigeration and Air
Conditioning, Radio & TV, Tailoring and Garments etc.
Centre for Development Dialogue
Alongside with the governmental efforts at National level and
multilateral and bi-lateral institutions at the international
level, Non Govt. Organizations (NGOs) in different parts of the
world especially in the developing countries are playing increasing
role in experimentation with Development models.
Most of the organizations unfortunately, try with development
techniques from a standpoint, which often turn antagonistic to the
belief and social norms of the people. The renowned foreign and
national NGOs have their established training centre(s) where they
train their own people and also rent out the facilities to others.
Islami Bank Foundation has decided to establish a training centre
of its own named "Center for Development Dialogue" which will
create opportunity for imparting training facilities for its own
staff members as well as the staff members of other development
organizationsChapter 6Findings of study
After discussing some schemes and social welfare activities of
Islami Bank Bangladesh Limited which are contributing to poverty
alleviation, I have found some problems of those schemes and
activities. These are:
1. In case of rural development schemes of IBBL the target group
are farmers owning land up to 0.50 acres of land. So there are no
investment facilities for the landless people. But the number of
landless people is large in rural areas.
2. The people who are not the permanent resident of the project
area will not get invest under RDS .Determining the permanent
resident is a troublesome work.
3. Most of the poverty alleviating schemes and welfare
activities of IBBL are not known by the people. So there is a lack
of advertising and awareness among people.
4. As IBBL has less branches in rural areas, The Rural
Development Schemes of IBBL is not as popular as like Grameen Bank
or other NGOs program.
5. The poverty alleviating activities specially the RDS is new
schemes. On the other hand, many NGOs are working in that field to
reduce the rural poverty .So the RDS face a tough competion.
6. The investment schemes of IBBL needs lots of papers and
documents which are hazardous for the rural people as most of them
are illiterate.
7. The modes of investment of IBBL are different from the
conventional banks. But most of the people of our country are
familiar with the conventional banking system. As a result, the
modes of investment are not clear to rural as well as urban
people.
8. Lack of proper step in observation that the poor people who
are taking the loan from IBBL are using it for productive purposes
and their real income are really increases as a result of taking
the loan.
9. Lack of Research and Development work for the Rural
Development Schemes.
Chapter 7: Concluding Part
Recommendation Some special investment schemes need to be
launched for the landless rural people.
In order to make people aware about the investment schemes and
modes of investment various kinds of seminars, workshops, road
shows in rural and urban areas need to be arranged.
More branches should be opened in rural areas. The field
officers of the Rural Development Schemes must make the rural
people understand about the documentation process of taking
investment .They must be cordial about it.
More research work needs to be done in the Islami Bank Training
&Research Academy in order to improve the Rural Development
Schemes.
The access of the target groups to productive resources,
services and markets needs to be ensured. The target group must be
organized, mobilized and planning mechanism must be oriented toward
those groups. More work needs o be done to clarify the factors that
undermined the success of particular projects , with a view to
providing practical operational models that can be used to project
design and implementation.
Moreover proper management of schemes needs to be ensured.
Conclusion:
Islamic bank Bangladesh limited is a bank which operates it(s
activities according to Quaran and Sunnah. It(s banking activities
based on profit \ loss sharing. It does not create any illegal
pressure on client. The strength of islami bank Bangladesh limited
are - employees of Islamic Bank Bangladesh Ltd. are honest because
they strongly believes in Islamic rules and Allah and they do not
take any types of bribe form clients. So believes of people are
increasing on the activities of Islamic bank Bangladesh limited.
Many people of Bangladesh are involving with IBBL for doing their
daily financial activities. It has a bright future because it has
got huge customer then other conventional bank in Bangladesh that
are based on interest.
The weaknesses of Islamic bank Bangladesh limited are - although
it is getting bright future but it does not operate it(s activities
100% based on Islamic shariah. Because still there is not existed
an Islamic environment in the economic activities of Bangladesh. It
is performing it(s daily financial transaction with other financial
institution that are not based on Islam. In this case, it is
involving with some unislamic activities unintentionally. On the
other hand every client is not 100% honest. So they are taking
investment form IBBL and after maturity, they are showing loss on
that project intentionally. So IBBL is losing some profit form
their investment .For this reason, Islami bank Bangladesh limited
has closed it(s bai - mechanism. Now it is not providing investment
under this mechanism.
Threats of Islamic bank Bangladesh limited are - at this time,
many financial institutions have commenced their financial
activities according to Islamic shariah. This type of organization
will create more competition in the financial market. So it is a
threat for Islamic bank Bangladesh limited.
As the poverty alleviating activities of IBBL is new Islami bank
needs to popularize it
After all, although it is facing some problem, it has a bright
future and day-by-day it is enhancing it(s financial activities
over the country. Many organizations are following to IBBL and they
are starting their business based on Islamic shariah in the economy
in Bangladesh.