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INTERNSHIP REPORT ON

“Role of IBBL-Promoting

Import, Export Business and Inward Foreign

Remittance”

Submitted To Imranul Islam

Internship Supervisor

Assistant Professor

Department of Marketing

Patuakhali Science and Technology University

Date of Submission: 04.09.2012

Submitted By

Md. Shariful Islam

ID: 0703021

Reg. No: 01550

BBA 5th Batch, PSTU

Afjal Hossain

(Internship Co-supervisor)

Lecturer


Patuakhali Science and Technology

Md. Badiuzzaman

(External)

Dean

Faculty of Business administration and

Management


Imranul Islam

(Internship Supervisor)

Assistant Professor



University

Role of IBBL- Promoting Export, Import Business and

Inward Foreign Remittance (IBBL)

Date of Submission: September 23, 2012

Prepared By:

MD. Shariful Islam

ID: 0703021

Reg. Number: 01550

Session: 2007-08

Major in Marketing

Bachelor of Business Administration (BBA)

PATUAKHALI SCIENCE AND TECHNOLOGY UNIVERSITY

DUMKI, PATUAKHALI- 8602

Letter of Transmittal

September 23, 2012

To Imranul Islam

Assistant Professor



Subject: Submission of Internship Report on “Role of IBBL- Promoting Export, Import Business & Inward Foreign Remittance” Dear Sir, It is a great pleasure to present you my internship report as a partial fulfillment of BBA Program. I tried to give my best effort to prepare this report on “Role of IBBL- Promoting Export, Import Business & Inward Foreign Remittance” according to your guideline. I also tried to focus my best work sincerely to cover all aspects regarding the matter. Practical exposure is very essential for orientation with the real world’s working area. I have learned a sound knowledge and understand on the basic operation of the bank. I have thoroughly enjoyed in preparing this internship report which has contributed significantly to my understanding on the essentials and important practical knowledge. I express my special gratitude to you for dedicating your valuable time and helping me whenever needed. There may have some flaws preparing this report; hope that you will consider these flaws sympathetically.

Sincerely Yours,

-------------------------- Md. Shariful Islam ID: 0703021 Reg. No: 01550 BBA 5th Batch, PSTU

Acknowledgement

My first and cordial thanks to almighty Allah who invisibly helps us in every states of our

life and who has given me the opportunity to go through the total process of internship

and finally write a report in this regard.

I express my sincere gratitude to honorable supervisor Imranul Islam, Assistant Professor,

Patuakhali Science and Technology University, who guided, supervised me during the

study. His excellent attitude has greatly encouraged my work. I also thankful to my

honorable co-supervisor Afjal Hossain, Lecturer, Department of Marketing, without his

cordial help and suggestion it was tough for me to complete this work.

My endless thanks go to Course co-coordinator Md. Hedayet Ullah and also to Mohammad Zahidul Islam, official of IBBL, for being patient and supporting me during my internship program.

I am very much grateful to the executives of IBBL who extended their wholehearted

cooperation during my internship period. I would like to extend my gratitude to

Manager; Senior Principle Officer; Executive officer, General Banking; Officer, Foreign

Exchange; officer, Investment division.

I thank you all from the core of my heart.

Role of IBBL- Promoting Export, Import Business & Inward Foreign Remittance

Letter of Authorization

I, Md. Shariful Islam, hereby solemnly declare that the work presented in this internship report

submitted to the faculty of Business Administration and Management of Patuakhali Science &

Technology University for the partial fulfillment of the requirement for the Degree of Bachelor

of Business Administration (BBA). It is a record of original and independent work done by me

under the supervision of Imranul Islam, Assistant Professor, Faculty of Business Administration

& Management. This report has not been previously submitted to any other

University/organization for an academic qualification or certificate.

The work I have presented does not crack any existing copyright.

…………………………….

Md. Shariful Islam

ID: 0703021

Reg. No: 01550

Session: 2007-08

Major in Marketing

Faculty of Business Administration and Management



Executive Summary

Import, Export and Foreign Remittance are the three main functions of foreign exchange and

these are explicated very important position in the business portfolio of commercial banks. It is

not an exception in case of Islami Bank Bangladesh Limited. As a Shariah based Bank, meeting

the present day International business needs of the customers in a competitive environment

has been and is still a challenge for Islami Bank. From its inception in the early eighties, Islami

bank has covered good grounds. And, foreign exchange business has now become one of the

most important portfolio of the bank in respect of volume of fund deployed, generation of

return for the bank as well as maintaining the high image of the bank at home and abroad.

IBBL’s share in country’s import business touched double digit in the year 2007 with 10.78%,

10.00% at the end of 2009(161230 corer), 246281 corer in 2010, 301207 corer in 2011 and

156133 up to June 2012. In export side we can see that market share of IBBL maintains a steady

growth from the year 2001 and at the end of 2009 it reached double digit i.e. 10.60%, 178244

corer in 2011 and 98888 corer up to June 2012.It is also observed that in remittance business

IBBL witnessed tremendous growth in holding market share which was 8.52% in 2001, 25.59%

in 2009, 236607 corer in 2011 and 145013 corer up to June 2012

In remittance business IBBL hold more than ¼ of the total market share i.e. 25.59% at 2009 and

28% at the end of June 2012. IBBL gets this success due to system development, automation &

improvement in services as well as expansion of network in the source countries. And in export

business market share of IBBL shows steady growth but in import business market share shows

a small percentage fall in 2008 (9.64%) but again rise from 2009 and 11% at the end of June

2012 and

Foreign Exchange Business of IBBL is managed by 47 Authorized Dealer (AD) branches that are

supervised by its International Banking Wing which have five divisions equipped with SWIFT,

Internet Connections, Online Based and Integrated Dealing Room.


ACRONYMS

IBBL : Islami Bank Bangladesh Limited

TT : Telegraph Transfer

PO : Payment Order

CA : Current Account

SB : Saving Account

GB : General Banking

FC : Foreign Currency

DD : Demand Draft

IBC : In ward Bill Collection

OBC : Out ward Bill Collection

ATM : Automated Teller Machine

IME : International Monetary Express

MT : Money Transaction

CC : Cash Credit

MD : Managing Director

DMD : Deputy Managing Director

EVP : Executive Vice President

AMD : Additional Managing Director

BTB : Back to Back

SWIFT : Society for World Wide Inter Bank Financial

. Transaction

MSA : Mudaraba Saving Account

ICCD : Internal Control and Compliance Department

IDB : Islamic Development Bank

SS Card : Specimen Signature Card


Table of Contents

Serial No Particulars Page No

01 Executive Summary 7 02 Acronyms 8

Chapter One –Introductory Part

03 Scope of the Study 12

04 Objectives of the study 12

05 Limitation of the Study 12

06 Methodology of the Study 13

Chapter Two- Short Profile of IBBL 07 Core Values of IBBL 15 08 Aims and Objectives of IBBL 15 09 Mission of IBBL 16 10 Vision of IBBL 16

11 Strategic Objectives of IBBL 16

12 Corporate Information of IBBL 17

13 Organization Structure of IBBL 18

14 Functions of IBBL 18

15 Advanced Services of IBBL 22

16 Awards and Recognitions Received by IBBL 24

Chapter Three – Basic Understanding of Export, Import and Foreign Remittance business of IBBL

17 Types of Foreign Trade of IBBL 26 18 Import Services and Financing Products of IBBL 27 19 LC 27 20 Export 28

21 Foreign Remittance 28

Chapter Four – MAIN PART OF THE REPORT 23 Import, Export and Inward Foreign Remittance

Target and Growth at a Glance 30

24 IBBL’s Contribution at Import Sector of Bangladesh 31 25 Contribution in Export 32 26 Contribution in Foreign Remittance 32

27 Comparative Performance of Top 16 Banks of Bangladesh in Remittance

33

28 Comparative Performance of IBBL in Foreign Remittance (National vs. IBBL)

34

29 Growth Rate of IBBL in Import, Export and Foreign Remittance

35


30 Initiatives Taken by IBBL to Foster Inward Foreign Remittance

38

31 CSR Activities of IBBL 39

Chapter Five- SWOT Analysis and Findings 32 SWOT Analysis of IBBL 41 33 SWOT Analysis of Foreign Exchange Department/

Business of IBBL 42

34 Findings of the Report 43

Chapter Six- Recommendation and Concluding Part

35 Recommendation 45 36 Conclusion 46 37 Reference 47 38 Appendix 48

Serial No Particulars Page No

01 Organizational Structure of IBBL 18

02 Investment Modes of IBBL 20 03 Time Limit of the Mode-wise Investment 20 04 Import Services and Financing Products 27 05 Import, Export and Inward Foreign Remittance

Target and Growth at a Glance 30

06 Ten Years Import Trend of IBBL 31 07 Last Five Years Contribution of IBBL in Export 32 08 Comparative Position of IBBL in Remittance 32

09 Comparison Among Top 16 Banks in Remittance 33

10 Foreign Exchange Business (National vs. IBBL) 34

11 Import, Export and Remittance Growth Rate of IBBL 35

12 Market Share of IBBL in Foreign Exchange 35

13 Growth in Import (National vs. IBBL) 36

14 Growth in Export (National vs. IBBL) 36

15 Growth in Remittance (National vs. IBBL) 37

16 SWOT analysis of IBBL 41

17 SWOT Analysis of Foreign Exchange Business of IBBL

42

List of Tables and Graphs


Scope of the Study As foreign exchange business is a crucial part of a bank’s performance, this report has covered foreign exchange performance of IBBL in different years and also compared this data with other banks. I have shown concerned data from December 2001 to July2012 for better evaluation of performance. Since the ultimate goal of this report is to examine the role of IBBL promoting export, import business & inward foreign remittance, I have tried my best to cover activities and initiatives of IBBL to foster and extent these sector. Anybody can easily make him known about IBBL’s recent foreign exchange activities and performance through this report.

Objectives of the Study

I have some broader and specific objectives to prepare this report. Broader Objective

To examine the role of IBBL in promoting export, import business and inward foreign remittance.

Specific Objectives

To know about the initiatives and reason of IBBL for being success in foreign exchange

To learn about foreign trade activities i.e. Export & Import

To find out performance of IBBL in Foreign Exchange Business.

To Know about Foreign Exchange Business under Islamic Shariah.

To be acquainted with the Export & Import required documents

Limitation of the Study Since very work has its limitation, this report is not an exception of that. I have faced some problems for preparing this report and these can term as limitation. Below are the lists of problems I have faced:

This is a vast work and requires huge understandability but the time was limited and it acts as an important hindrance for preparing this report.

Another vital limitation is confidentiality of data. I can’t manage and present some crucial data because of their confidentiality nature.

Unavailability of recent national data about gross foreign exchange acts as a hindrance. Banks authority wants an Intern to work in the general banking sector most which was

an hindrance to learn more about Foreign Exchange.


Methodology of the Report As it’s a vast work to prepare report on this decisive topic, I had to follow a planned and specific method. These methods are described below: Report Design This report has prepared and designed in a well shape to give its readers idea about Islamic Banking, give knowledge about Foreign Exchange business of Banks and finally make aware about role of IBBL in Import, Export Business and Inward Foreign Remittance. Data Collection Data is a major part of report preparation. For preparing this report I have collected data from both primary and secondary sources.

a) Primary sources of data:

I have collected primary data through conducting with officials of IBBL at my Branch. Their

information and valuable hints are used in this report actively.

b) Secondary sources data:

Following are the secondary sources of data:

Annual Reports of 2002-2011 of Islami Bank Bangladesh Ltd.

Manuals of Islami Bank Bangladesh Limited regarding Foreign Exchange

Journals / Newspaper articles relating performances of banks on earnings foreign

remittance

Islami Bank Bangladesh Limited Website- http://www.islamibankbd.com

Synopsis and training materials provided by Bangladesh Bank and Islami Bank Training

and Research Academy (IBTRA).

Data Analysis Collected data are analyzed in Tabular and Graphical format. Both Pie Chart and Bar chart are used to analyze performance and contribution of IBBL

http://www.islamibankbd.com/


Islamic banking refers to a system of banking or banking activity that is consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics. The General Secretariat of the OIC defines “An Islamic Bank is a financial institution whose statutes, rules and procedures expressly state its commitment to the principles of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operations.” As Bangladesh is one of the largest Muslim countries of the world, naturally the people of this country are sick for Islamic way of life and want to lead their life according to Quran and Sunnah. Since its incorporation Islami Bank Bangladesh Ltd. has been showing a promising and continuous success and now one of the leading private commercial bank of Bangladesh. This first generation bank has started their journey in Bangladesh on 13th March 1983is the true reflection of this inner urge of its people, which started functioning with effect from March 30, 1983. IBBL is the first Islamic shariah based bank in south-east Asia and perform their activities for the stable betterment of the society.

Core Values of IBBL IBBL has a different culture and value that is one of the central factors of its success. Below are some of the important values of the IBBL:

Trust in Almighty Allah Strict observance of Islamic Shari’ah Highest standard of Honesty, Integrity & Morale Welfare Banking Equity and Justice Environmental Consciousness Personalized Service Adoption of Changed Technology Proper Delegation, Transparency & Accountability

Aims and Objectives of IBBL IBBL has its distinctive aims and goals to foster economic growth of society according the Islamic principles

To replacement of interest by profit sharing and loss bearing

To establish justice in the economy

To establish participatory banking instead of banking on debtor-creditor relationship

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 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

Mission of IBBL To establish Islamic banking through the introduction of a welfare oriented banking

system and also ensure equity and justice in the field of all economic activities. Achieve balanced growth and equitable development through diversified investment

operations particularly in the priority sectors and less developed areas of the country. To encourage socio-economic upliftment and financial services to the low income

community particularly in the rural areas.

Vision of IBBL The vision of IBBL is to always strive to achieve superior financial performance, be considered a leading Islamic bank by reputation and performance.

IBBL’s goal is to establish and maintain the modern banking techniques, to ensure soundness and development of the financial system based on Islamic principles and to become the strong and efficient organization with highly motivated professional, working for the benefit of people, based upon accountability, transparency and integrity in order to ensure stability of financial systems.

IBBL will try to encourage savings in the form of direct investment. IBBL will also try to encourage investment particularly in projects which are more likely

to lead to higher employment.

Strategic Objectives of IBBL

To ensure customers' satisfaction.

To ensure welfare oriented banking. To establish a set of managerial succession and adopting technological changes to

ensure successful development of an Islamic Bank as a stable financial institution. To prioritize the clients welfare. To emerge as a healthier & stronger bank at the top of the banking sector and continue

stable positions in ratings, based on the volume of quality assets. To ensure diversification by Sector, Size, Economic purpose & geographical location wise

Investment and expansion need based Retail and SME/Women entrepreneur financing. To invest in the thrust and priority sectors of the economy.


To ensure lucrative career path, attractive facilities and excellent working environment.

To ensure zero tolerance on negligence in compliance issues both sharia’h and regulatory issues.

To train & develop human resources continuously & provide adequate logistics to satisfy customers’ need.

To be excellent in serving the cause of least developed community and area. To strengthen corporate culture. To ensure Corporate Social Responsibilities (CSR) through all activities. To promote using solar energy and green banking culture and ecological balancing.

Corporate Information of IBBL

IBBL is listed with Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. Authorized Capital of the Bank is Tk. 20,000.00 Million ($244.87 Million) and Paid-up Capital is Tk. 10,007.71 Million ($122.53 Million) having 60,550 shareholders as on 31st December 2011.


Organizational Structure of IBBL

Below figure shows the organizational structure of IBBL from top to bottom-

Functions of IBBL IBBL performs diversified activities and have got a strong base over this time. Islamic banks render almost similar services to their customers conventional banks do but differences exist in administering incentives for deposits and charging for capital investments, in so far as techniques of calculating the incentive or the cost of the capital are concerned. Like a conventional bank, the IBBL also accepts deposits from customers and provides loan. The bank invests its funds for short as well as long term deposits. IBBL also acts as a custodian of its customers and performs all foreign transactions on behalf of them.

The IBBL perform mainly four different types of functions:

General banking services, Investment Foreign exchange services RDS- Rural Development Scheme


a. General Banking Functions:

IBBL performs different general Banking functions. And while doing the below illustrious work

IBBL issue cheque-book, deposit account operating form, cash book, deposit account ledgers,

prepare statement of accounts and provide balance of different accounts.

a. Receive cash and provide payment

b. Deposit mobilization

c. Maintenance of ATM, Electronic Funds Transfer, Internet Banking, Phone Banking

Maintain Transfer Accounts

d. Collection of cheques and bills

e. Maintenance of accounts with Bangladesh bank and other banks

f. Maintenance of safe deposit lockers

g. Issue and payment of Demand Draft, Telegraphic Transfer and Payment Order

h. Executing customers standing instructions

i. And similar other activities

b. Investment Functions of IBBL: The Islamic Bank Bangladesh Limited invests its fund in various projects under different modes or techniques. The bank shows a good progress in investing its funds, since it started its business.


Investment Modes Islami Bank Bangladesh Limited follows different modes or techniques while investing their funds. It has been observed from the past record that the bank invests its funds mainly under –


c. Foreign Exchange Business:

Foreign exchange business includes export, import and foreign remittance, is crucial for a

countries economy. Foreign exchange business acquires a major portion of the revenue of IBBL.

We will broadly know about foreign exchange business of IBBL in the next chapter.

d. RDS- Rural Development Scheme 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. Major objectives of RDS:

To establish balanced economic growth To ensure reduction of Rural-Urban disparity

RDS at a glance (as on 30.06.2012)

Lunched in 1995

Total Disbursed BDT 49,043.08 million

Outstanding BDT 8,521.96 million

Investment Size BDT 15000-BDT 50000

No. of Groups 141,825

Villages Covered 14,338

Total Members 6,59,493

Female Members 85%

Rate of Recovery 99.62%

Area 1952


Advanced Services of IBBL

As countries leading bank IBBL always try to keep pace with the demand of time and make itself updated with newer technology based services. Islami Bank Bangladesh Limited has been devoted to serving its customers since inception. IBBL is committed to introduce new services and to make existing services faster and better than ever.

Here are examples of some of these services-

a) ATM Booth b) SMS Banking c) Internet Banking (iBanking) d) mCash e) SpotCash f) Remittance Card Service

a) ATM Booth Service

IBBL has introduced its ATM Banking service since 2000. Being the largest in online connectivity among the branches IBBL is capable of providing the better customer service to its clients.

Services

Cash Withdraw Fund Transfer Mini Account Statement Balance Inquiry

b) SMS Banking

IBBL SMS Banking IBBL has introduced its SMS banking service since 2008. Registration is required. SMS Facilities are applicable only for Online Branches.

Services

Multiple Account Registration

International Push- Pull Facility Account Balance (BAL ) Mini Account Statement (STM) Account Information (ACI)


c) Internet Banking (iBanking)

iBanking is a cornerstone of IBBL’s strategy, designed to accelerate its commitment to green banking and to enable customers to do banking at their own convenience.

IBBL has introduced two new services to all iBanking customers that reflect its continuous endeavor to put the strategy into action. Wherever you are, using iBanking now you can

Transfer funds (iTransfer) between IBBL accounts Purchase airtime / Recharge account (iRecharge) from all mobile operators in

Bangladesh.

d) mCash IBBL is going to launch mCash, similar service like bKash, within shortest possible time. mCash will provide easy and instant service to receive and send money. It will save time and will require no Bank account. e) SpotCash

SpotCash is a software of IBBL that integrates numerous websites to make instant cash out of foreign remittance.

f) Remittance Card Service

Islami Bank Bangladesh Limited has introduced ‘Islami Bank Remittance Card’ to send money from abroad. This card ensures the Non Residence Bangladeshi of safe and quick hassle free money transfer to their family.

Benefits

Can be received this card from any IBBL branch without any fee.

Draw money from any IBBL booth. Bank account is not necessary Maximum Tk. 50,000.00 from ATM booth and any number of amounts from bank counter can

be drawn. Utility Bill can be paid by Remittance Card. Balance inquiry from SMS or iBanking Service.

Transaction Limit

For Cash Withdrawal from ATM booth maximum amount is Tk. 50,000 in a calendar date. Any number of amounts from bank counters.


Awards and Recognitions Received by IBBL

As recognition of good performance IBBL won the following awards:

South Asian Federation of Accountants (SAFA) awarded IBBL as joint Winner in the

Corporate Governance Disclosure Award-2010.

South Asian Federation of Accountants (SAFA) also awarded IBBL with Certificate of

Merit in Banking Sector in the Annual Report for the year 2010.

The Institute of Cost and Management Accountants of Bangladesh (ICMAB), awarded

IBBL as the ICMAB National Best Corporate Award-2007 (First Position, Local Bank) and

ICMAB Best Corporate Performance Award – 2008 (Second Position, Private Commercial

Bank).

The Institute of Chartered Accountants of Bangladesh (ICAB) awarded IBBL with 3rd

position under the catergory-1, Banking in the best published accounts and reports for

the year 2010, the Certificate of Appreciation for the year 2001 & 2010 and Certificate

of Merit for the year 2008.

The Global Finance, a reputed U.S.A. based quarterly Financial Magazine, awarded IBBL

as the best Islamic Financial Institution of the country for the years 2008, 2009, 2010 &

2011. The Global Finance also awarded IBBL as the best bank of the country for the year

1999, 2000, 2004 and 2005.

Exclusive economic weekly “The Industry” awarded IBBL as the Best Rated Bank Award-

2010.

The UAE Exchange awarded IBBL for mobilizing around 30% of total foreign remittance

of the country.


Import, Export and Foreign Remittance business of Bank’s are termed as Foreign Exchange.

Foreign Exchange actually have its broader shape; it means all kinds of transactions related to

foreign currency, as well as currency instruments such as Foreign Trade/International Trade,

Payment Order, Draft, MT, TT etc.

In another sense it can explain as, Foreign Exchange refers to the process or mechanism by

which the currency of one country is converted into the currency of another currency and,

thereby, involves the international transfer of money.

As an Islami Bank, IBBL has to abide by the principles of Islamic Shariah, its branches has to

follow the internal circulars of the bank in respect of import business and a guidebook. All of

IBBL’s AD Branches are instructed to follow a guidebook, provided by BB, at the time of foreign

exchange dealings. Any subsequent amendment, modification, addition/ foreign exchange

circulars issued by Bangladesh Bank and IBBL also to be followed by the AD Branches.

International trade is the exchange of goods from seller to buyer in accordance with the sales contract and the required flow of payment from buyer to seller. IBBL offer different trade products and services complying Shariah and law of the land.

Foreign exchange and Foreign Trade Operations can be categorized in following 4 areas- -Import Services and Import Finance -Export Services and Export finance -Foreign Remittance Services -Foreign Exchange Treasury Operations Import Services and Financing Products Import business involves transactions in foreign exchange. Import may be defined as bringing of

visible items to the country from abroad through letter of credit or LC, a form paying foreign

Currency to the exporting country.


Import Services and Financing Products

Service Principles Scope of Applications Basis

Wakalah Letter of Credit Safe Keeping Remittance

Commission Basis

Kifalah Letter of Credit Performance Bond Bid Bond Advance Payment Guarantee

Commission Basis

Financing Principles Scope of Applications Basis

Bai Murabaha Import Murabaha Import Bills Murabaha Post Import

Mark up basis

Sirkat Mudaraba Musaraka

Sharing Basis

Ijarah Hire Purchase Under Shirkatul Melk Rental Basis

Under Islamic Financing concept, there is trade financing whenever goods are acquired against a promise of a future payment, or price paid against the participation in future profits that may be earned from putting it into productive use. The need for trade finance arise when the buyer of goods wishes to defer the payment of the price or although less frequent, when the seller requires the advice payment of money.

LC

A letter of credit is a document that a financial institution or similar party issues to a seller of

goods or services which provides that the issuer will pay the seller for goods or services the

seller delivers to a third-party buyer. The issuer then seeks reimbursement from the buyer or

from the buyer's bank. The document serves essentially as a guarantee to the seller that it will

be paid by the issuer of the letter of credit regardless of whether the buyer ultimately fails to

pay. In this way, the risk that the buyer will fail to pay is transferred from the seller to the letter

of credit's issuer.


Export

Export is the process of selling visible and invisible goods and services outside the country

against letter of credit. Export Business occupies a very important position in the Balance of

Trade and Balance of Payment of the country. Export occupies an important position in the

foreign exchange business portfolio of the bank. In handling export business, certain Acts,

guidelines, & regulations have to be followed such as the Export Trade Control Regulation Act,

Guidelines for Foreign Exchange Transactions published by Bangladesh Bank and Export Policy

issued by Ministry of Commerce from time to time.

As a Shariah based Bank, IBBL’s export business should comply with the provisions/ principles

of Islamic Shariah.

Foreign Remittance

Money coming in and going out in between countries may be regarded as Remittance. Wage

Earners’ Remittance by Bangladeshi Expatriates plays a vital role on overall economy of the

country particularly on the Foreign Exchange Reserve position and also has its impact on the

Balance of Trade and Balance of Payment of the country.

Forms Remittance

a) Inward Remittance

b) Outward Remittance

As our concern is about Inward foreign Remittance, we will now only know about Inward

foreign Remittance.

Mainly the earnings of our brother working abroad termed as Inward Foreign Remittance. Inward remittances are considered the sum of workers’ remittances, compensation of employees, and migrants’ transfers. Workers' remittances refer to transfers in cash or in kind from migrants to resident households in the countries of origin. Usually these are ongoing transfers between members of the same family, with persons abroad being absent for a year or longer. Compensation to employees refers to the wages, salaries, and other remuneration, in cash or in kind, paid to individuals who work in a country other than where they legally reside


IBBL is now in the leading position in export, import and inward foreign remittance. As IBBL is the most solvent of Bangladesh, foreign buyers and dealer’s demands to have their export/import business processed through IBBL. On the other hand IBBL also very conscious and efficient to process and give importance on relating documents and making everything ready on time. IBBL is now the market leader of providing inward foreign remittance. Foreign remittance is now a vital segment of our economy and it keeps its imprint it different part of the economy. Our brave brothers leave their relatives and make contribution to the country, to their relatives and to remove unemployment. IBBL understands the economic and emotional importance of this sector and have made ready a strong wing to handle and provide instant service regarding this sector.

Import, Export and Inward Foreign Remittance Target and Growth at a Glance

Source: Synopsis and Educational Material Provided by IBBL (Table/Graph: 1)


IBBL’s Contribution at Import Sector of Bangladesh IBBL has been showing a continuous success in import, export and inward foreign remittance. IBBL has been taking a significant portion of national import, export and inward foreign remittance. To evaluate IBBL’s role in these sectors we have assess performance in numerical figure. Now let’s have a look on these data through tabular and graphical presentation: Ten years Import Trend of IBBL

Source: IBBL’s Web Site(Table/Graph: 2)

In the above figure we see that IBBL has shown a continuous growth from 2002 to 2008 but suddenly a negative figure in 2009 and again comeback again from 2010.


Last Five Years Contribution of IBBL in Export

Now have a look on IBBL’s role in Export-

Export Performance of IBBL (Last Five Years) (Table/Graph: 3)

In export, IBBL has immense contribution from 2009 to 2011 but in recent year it has shown a slower performance. In 2010 and 2011 IBBL plays a vital role in the economic sector most.

Role of IBBL in Inward Foreign Remittance (Last nine Years) Below chart shows the role of IBBL in Remittance (Table/Graph: 4)


To Measure the Role Played By IBBL in Promoting Foreign Remittance, Now Have a Look on Comparative Data of Different Banks in Inward Foreign Remittance Here we see that IBBL has capturing the market share very impressively. One can use the term “aggressively” here by seeing the performance of IBBL in Inward Remittance. IBBL alone dominates more than 26% of the market share now.

Source: IBBL’s Web Site (Table/Graph: 5)

(Table/Graph: 6) This one graph is enough, I think, to measure the role of IBBL in the overall Foreign Exchange sector. It seems, from the graph, IBBL is the only institution providing Foreign Remittance service. Where IBBL is running like a hoarse, others are walking like an old man there.

26.07%

10.08%

9.74% 7.94%

6.06% 4.67%

0.0416

4.16%

2.76%

2.62%

2.11% 1.97%

1.78%

1.78% 1.07%

1.00%

Share of Remittance in among Top 16 Banks

IBBL

Sonali

Agrani

Janata

National

Barc

Uttara

Southeast


Foreign Exchange Business-National vs. IBBL (Market Share-2001-2009)

If we can examine the comparative figure of national and IBBL, it will be easy for us to

understand the role of IBBL. So now have a look on these figures-

Figure in million Tk.

Period

Import Export Remittance

National IBBL Share

(%)

National

(Approx)

IBBL Share

(%)

National

(Approx)

IBBL Share

(%)

2001 492140 25907 5.26 319115 16082 5.04 115908 9879 8.52

2002 495200 33788 6.82 314540 16673 5.30 164845 14670 8.90

2003 606720 46237 7.62 361850 21738 6.01 184851 16668 9.02

2004 722440 59804 8.28 461530 29151 6.32 212860 23669 11.12

2005 890220 74525 8.37 547550 36169 6.61 273043 36948 13.53

2006 1108170 96870 8.74 733720 51133 6.97 377924 53819 14.24

2007 492140 137086 10.78 811520 66690 8.22 452640 84143 18.59

2008 1745698 168329 9.64 929270 93920 10.11 621131 140420 22.60

2009 1683432 161,230 10.00 999587 106424 10.60 745040 194716 25.59

Source: Annual Business & Development Conference 2010(Table/Graph: 7)

Above data shows that IBBL's share in country's import business touched double digit in the

year 2007 with 10.78% and it has become 10.00% at the end of 2009 (and at the end of July’12

the growth rate was 12%).

In case of export we can see that market share of IBBL maintains a steady growth from the year

2001 and at the end of 2009 it reached double digit i.e. 10.60%. It is also observed that in

remittance business IBBL witnessed tremendous growth in holding market share which was

8.52% in 2001 and it has become 25.59% in 2009 (and at the end of July’12 the growth rate was

0%). In remittance IBBL has shown an impressive success.


IBBL’s Growth Rate in Import, Export and Inward Foreign Remittance

Below graph shows IBBL’s growth rate in Import, Export and Inward Foreign Remittance. For better understanding data are presented here from 2001 to June’12.

(Table/Graph: 8) Here we see that IBBL has really a bad performance in 2009 but comeback again from

Market Share of IBBL in Countries Foreign Exchange Business



2001 2002 2003 2004 2005 2006 2007 2008 2009

National Growth 11.30% -1.43% 15.40% 27.54% 18.63% 34.00% 16.10% 21.05% 7.57%

IBBL Growth -4.78% 3.67% 30.37% 34.10% 24.07% 41.37% 30.00% 41.00% 13.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

Growth in Export (2001-09):National Vs IBBL

2001 2002 2003 2004 2005 2006 2007 2008 2009

National Growth 6.07% 0.62% 22.52% 19.07% 23.22% 24.48% 14.16% 28.97% -3.57%

IBBL Growth 2.29% 30.42% 36.84% 29.34% 24.61% 30.00% 42.00% 23.00% -4.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

Growth in import (2001-09):National Vs IBBL

It is important to mention here that in remittance business IBBL is in the boom with holding

more than ¼ of the total market share i.e. 25.59% at the end of 2009. It is observed that in export

business market share of IBBL shows steady growth but in import business market share shows a

small percentage fall in 2008 (9.64%) which is now 10.00% in 2009.

Comparative Growth of foreign Exchange Business (National vs. IBBL)

Import

(Table/Graph: 10) Above graph shows that IBBL’s growth in import business is faster than national growth from

year 2001 to year 2009 but in 2009 the growth of IBBL is negative (-4%) where nation growth (-

3.57%) is also negative.

Export

(Table/Graph: 11)


2001 2002 2003 2004 2005 2006 2007 2008 2009

National Growth 13.65% 42.22% 12.14% 15.15% 28.27% 38.41% 19.77% 38.27% 19.40%

IBBL Growth 29.24% 48.50% 13.62% 42.00% 56.10% 45.66% 56.00% 67.00% 39.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

Growth in Remittance (2001-09):National Vs IBBL

IBBL shows slower growth from 2001 to 2005 and comparatively better growth rate in 2006 and

2008. In 2009 export growth of IBBL again fall.

Remittance


Observed data shows that the year 2003 was slow-moving year for both national & IBBL

remittance. After that IBBL always maintains good growth for the year 2004 to 2009. Though

the growth of IBBL remittance decreased in 2006 & 2009 it was well ahead of national growth.

Data Source:

Annual Business & Development Conference 2010

Synopsis and Educational Material Provided by IBTRA Different Publications and Brochures of IBBL


Initiatives Taken by IBBL to Foster Inward Foreign Remittance Nothing comes without anything. There have huge sacrifice, plan and dynamism to be in this successful position of IBBL. IBBL has dedicated and honest work force. Now let’s have a on initiatives taken by IBBL.

SpotCash To provide quick payment of foreign remittance IBBL has made integrated software named spot cash. IBBL is the most technologically update modern Bank and all of its branches are in the coverage of online. So, by this integrated software IBBL can easily and smoothly give payment of foreign remittance.

Affiliation with Almost All of the Currency Bearer Houses: IBBL has affiliation with almost all of the companies and houses that bears currency. So it can give payment from all countries. Here are list of some of this affiliates:

Western Union

Money Gram

Xpress Money of U

IME

AE exchange

Prabha

Merchant Trade

EzRemit of Bahrain exchange

Habib Express of Habib Qater International exchange Company

May back

Turbo Cash of Zenj exchange

NBL Quick Pay

Cash Express of Al Ansari exchange Est.

Ceylinco Fast Cash of Seylon Bank Ltd


Remit Master

And some other houses

E-Mail based SpotCash:

E-Mail based SpotCash Arrangements with 33 (thirty three) Banks /

Exchange Houses.

CSR Activities of IBBL

IBBL is the pioneer of performing CSR activities for Banks in Bangladesh. Islami Bank Bangladesh Limited is dedicated itself towards the welfare of the society. It has formed a separated foundation named “Islami Bank Foundation” with fund more than Taka 38.00 million in order to conduct social-welfare activities on a broad scale. Since then, Islami Bank Foundation is carrying the social welfare, education, health and Medicare activities on behalf of Islami Bank Bangladesh Limited (IBBL).

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.

Islami Bank Foundation has some special projects for CSR activity, these are:

Islami Bank Hospital

Islami Bank Medical College, Rajshahi

Community Hospital

Monoram: Islami Bank Crafts & Fashion

Service Centre

Islami Bank Institute of Technology

Islami Bank International School and College

Islami Bank Physiotherapy and Disabled Rehabilitation Centre

Centre for Development Dialogue

Bangladesh Sangskritic Kendra (Cultural Centre)


S= Strength Run according to Shariah

Honesty

Dedicated Employees

Strong employee bonding and belongings

Hospitable Working Environment

Strong Financial Position

W= Weakness Limited Number of Employees

Average corporate identity

Fail to face the dilema- Quality vs. Quantity

O= Opportunity Large size of markat

Most of the peoples are Muslim here

Non-Muslims are also dealing activities through IBBL

T= Threat Emergenceof newer Islamic Banks

Negative Propagation against IBBL

SWOT

Analysis of IBBL

SWOT Analysis of IBBL


•Introduction of New Islamic Banks/Branches

•Volatile Foreign Exchange Market

•Entering forth generation Bank Concentrated on remittance business

•Growing and unexploited market

•People have faith on IBBL

•Affiliation with Saudi Arabia, largest foreign remittance earning countey

• Higher Exchange Rate

• Lower number of employees than necessary

•Most solvent Bank in Bangladesh

•Have a positive image

• Have special Foreign Remittance Wing

Strength WEAKNESS

Threat Opportunity

SWOT Analysis of Foreign Exchange Department/Business of IBBL


Findings Below are the findings of this report-

IBBL is the largest Inward Foreign Remittance collector and distributor of the country. It

has vast online network and branches to provide quick service.

There have always gatherings of customers/clients in almost all branches of IBBL that

kills time of people. Sometimes IBBL officials have to be irritated with their clients to

manage these huge gatherings.

IBBL provides payment almost all of the Foreign Remittance Houses. So anybody can

send money through IBBL from ant part of the world.

In overall Foreign Exchange, IBBL had slower performance in 2008 and 2009 and those

years national Foreign Exchange performance was also slow.

IBBL alone holds ¼ of the Inward Foreign Remittance market now and it is increasing.

Comparatively, IBBL has better performance in Import than Export.

SpotCash is the integrated software of IBBL that makes payment system easy, smooth

and quick. SpotCash integrates numerous websites at one place for smooth work.

IBBL’s growth in Import, Export and Inward Foreign Remittance in more higher than that

of National. IBBL takes place in people’s heart through their fair services and CSR

activities. So people prefer IBBL most.

IBBL gets different award for its contribution in Import, Export Business and Inward

Foreign Remittance Sector.

Most of the customers like this bank as their money are used according to the Islamic rules

and Shariah.

IBBL plays most significant role among all the banks in Bangladesh to promote Import,

Export Business and Inward Foreign Remittance


Recommendation Almost all of the things have some fault; IBBL is not an exception here. BY staying roughly two months on the job training, I have some suggestion and recommendations for IBBL-

IBBL can develop automated service for foreign trade to reduce gatherings of people.

Because almost all of the branches of IBBL face huge gatherings in foreign exchange

department.

Enable capacity to meet all types of unique needs of the client’s in the changing pattern

of world trade, as IBBL is lagging behind in some form of services like – bKash.

Charge of transferring money from one district to another without online banking should be

reduced

Employees dynamism and quality should be developed so that one employee can serve

any of the departments, if need.

Number of employees at different branches should be increased to improve service

quality and to provide quick service

Initiatives have to be taken to remove rumors of the critics as some people think Islami

Bank do nothing different than conventional banks.

Initiatives have to be taken to make the customers more acquainted with the online banking

system of the bank to reduce hurdles.

IBBL can arrange different program to make people aware about Islami Banking and

prevailing differences between conventional bank and Islami Bank

Proper warmly greetings, more polite and helpful behavior could bring the highly satisfied

customer. But employees of IBBL have to come up with large customers, so they can’t be

polite with their customer in some of the cases.

Export of non-traditional items should be encouraged

IBBL should open more ATM booths to meet customer needs and to meet the competition

Necessary steps should be taken for improvement of responsiveness to the customers

IBBL can decorate its branches more attractively to grab more customers


Conclusion Foreign Exchange business is an important part for commercial banks and so commercial banks

treats this section carefully. IBBL has SWIFT facilities and can provide Foreign Exchange services

efficiently and quickly. No country is sufficient enough to meet its need and to Import and

Export foreign exchange/remittance is very important. Delay in opening LC suffers a country’s

consumers most. And Inward Foreign Remittance has great contribution in our economy and in

people’s livelihood. IBBL plays a vital role in all this three sectors. As a Shariah based Bank,

meeting the present day International business need of the customers in a competitive

environment has been and is still a challenge for Islami Bank. From the very inception in the

early eighties, Islami bank has covered good grounds.

And, foreign exchange business has now become one of the most important portfolio of the

bank in respect of volume of fund deployed, generation of return for the bank as well as

maintaining the high image of the bank at home and abroad.

IBBL is and will remain in first position, I hope, in Import, Export and Inward Foreign Remittance

in Bangladesh as well to achieve its mission to spread the Islamic Banking throughout the world

economy system.


Reference

Raquib A. “Emergence of Islamic Banking in Bangladesh and related Financial issues”

(Sabdarup, 34,North Brook Hall Road, Bangla Bazar,Dhaka-2006),pp-20-37.

Islami Bank Bangladesh Limited, 2007, 2009 and 2011, five years performance at a

glance

Brochures of Islami Bank Bangladesh 2011

Islami Bank Bangladesh Limited Website- http://www.islamibankbd.com

“Study of Foreign Exchange Function of Islami Bank Bangladesh Limited”,

www.assignmentpointbd.com

http://www.islamibankbd.com/


Appendix

Murabaha (Cost plus profit): The word ‘Murabaha’ means a cost-plus Profit contract. In

this system of financing the bank agrees to purchase for a client who will then

reimburse the bank in a stated time period at an agreed upon profit margin. The mark-

up price that the bank and the buyer agree to is mainly based on the market price of the

commodity. Thus the bank earns a profit without bearing any risk.

Bai Murabaha or Bai Muajjal: Selling of goods to the client is done under Murabaha. In

bai muajjal profit amount may not be disclosed.

Add confirmation: Sometimes the beneficiary of the L/C may ask for add confirmation

to all L/C by an internationally, reputed in the beneficiary’s country.

Compliance Department: Obtaining Periodic Statements from branches & sending it to

the Bangladesh Bank and other concerned authorities/bodies, Bill of entry, FBC, Non-

payment & other unsettled issues and compliance of all issues of Bangladesh Bank and

other bodies, Performance analysis etc.

Advising Bank: It is the correspondent bank, of the issuing bank of the credit, through

which the credit issued by the opening bank is advised at seller’s country.

Back to Back L/C: is a type of import L/C either in inland or in abroad, which open

against lien on valid export L/C.

Documentary Credit: is a conditional bank undertaking given by bank (issuing bank) at

the request of a customer (applicant) or on its own behalf to pay a seller (Beneficiary)

against stipulated documents provided all the terms and conditions of the Credit is

compiled with.

internship pstu main

Documents

reached double

covered good

educational

ibbls web

shariful islam

south asian

small percentage

annual business