Development and Performance
Performance rating is an of import pre-requisite for sustained growing and development of any state of affairs. It is customary in commercial Bankss to measure the pre-determined ends and aims, with the alterations ends and aims, the standards of reappraisal has undergone alterations overtime. Sing public presentation rating of the Islamic banking in Bangladesh “Banking Efficiency Model” has been taken into consideration.
Islamic Banking is a signifier of modern banking based on Islamic legal constructs ( Shari’a ) developed in the first centuries of Islam, utilizing risk-sharing as its chief method, and excepting funding based on a fixed, pre-determined return.
Muslim Banking believes in sharing net incomes and hazards in the concern alternatively of going creditors. In Islamic Banking the depositor, the Bank and the borrower all portion the hazards and wagess of funding concern ventures. This is unlike the interest-based commercial banking system, where all the force per unit area is on the borrower ; he must pay back his loan, with the in agreement involvement, irrespective of the success or failure of his venture. Islam encourages investing in order that the community may profit.
The Islamic values are reflected in Islamic economic rules. It is of import to understand these rules of Islam, which underpin Islamic Finance.
- Any preset payment over and above the existent sum of principal is prohibited.
Islam allows merely one sort of loan and that is qard-el-hassan ( literally good loan ) whereby the loaner does non bear down any involvement or extra sum over the money Lent.
- The Bank must portion in the net incomes or losingss originating out of the endeavor for which the money was financed.
Unlike the interest-based commercial banking system where all the force per unit area is on the borrower, Islamic finance is based on the belief that the depositor, the bank and the borrower should all portion the hazards and the wagess of funding concern ventures.
- Making money from money is non Islamically acceptable.
In Islam, money represents buying power, which is considered to be the lone proper usage of money. This buying power ( money ) can non be used to do more buying power ( money ) without undergoing the intermediate measure of it being used for the purchase of goods and services.
- Gharar ( Uncertainty, Risk or Speculation ) is besides prohibited.
Contracting parties should hold perfect cognition of the counter values intended to be exchanged as a consequence of their minutess and should be free from uncertainness, hazard and guess. Besides, parties can non predetermine a guaranteed net income based on the rule of ‘uncertain additions ‘ which does non even let an project from the client to refund the borrowed chief plus an sum to take into history rising prices.
- Investings should merely back up patterns or merchandises that are non out-or even discouraged- by Islam. Trade in intoxicant, for illustration would non be financed by an Islamic bank ; a real-estate finance could non be made for the building of a casino ; and the bank could non impart money to other Bankss on involvement.
IBBL ‘s World evaluation:
As per Bankers ‘ Almanac ( January 2001 edition ) published by the Reed Business Information, Windsor Court, England, IBBL ‘s universe Rank is 1771 among 3000 Bankss selected by them. This place was 1902 among 4500 selected Bankss as on January 1999 edition. IBBL ‘s state Rank is 5 among 39 Bankss as per evaluations made by the above Almanac on the footing of IBBL ‘s Financial Statements of the twelvemonth 2001.
The gradual procedure of Islamic station of the banking system in Pakistan started in February 1979 when the President of Pakistan announced that involvement was to be removed from the economic system within a period of three old ages ( CII 1980 ) . In 1977, the authorities had appointed the Council of Islamic Ideology ( CII ) with the duty of fixing a design of an interest-free economic system in the visible radiation of Islamic instruction. To help in this undertaking, CII set up a panel of economic experts and bankers dwelling of 15 extremely qualified economic experts, experient cardinal and commercial bankers and fiscal experts. Sing the complexness of the undertaking of extinguishing involvement from the economic system, the panel proposed a gradual attack. In the first interim study it recommended immediate remotion of involvement from those fiscal establishments whose minutess were comparatively less complex and from where involvement could be eliminated with the greatest easiness. Thus three of the specialised recognition establishments – the House Building Finance Corporation, National Investment Trust, and Mutual Funds of Investment Corporation of Pakistan were selected for taking involvement from their funding operations instantly ( Khan & A ; Mirakhore 1989, p.15 ) .
By the development of Islamic banking system of Bangladesh based on some chief merchandise which is created by Islamic bank followed by the Islamic jurisprudence.
As an Islamic bank, all of the merchandises and services provided by The Bangladesh Islamic Bank are harmonizing to Shari’a or Islamic rule. Below are among the constructs that are used for develop their public presentation in Banking Sector.
‘Musharaka ‘ in Arabic literally means sharing. Since Islam has prohibited involvement it can non be used for supplying financess of any sort. Musharaka is an ideal lternative for interest-based funding playing a critical function in an economic system based upon Islamic rules.
- Ijara ( Lease )
“ Ijara ” is a term of Islamic Fiqh. Literally, it means ‘to give something on rent ‘ . In Islamic law, the term ‘Ijarah ‘ is used for two different state of affairss. “ T o use the services of a individual on rewards given to him as a consideration for his hired services. ” The 2nd type of Ijarah is by and large used as a signifier of investing, and besides as a manner of funding. The difference between Ijarah and a sale is that in the latter instance the bulk of the belongings is transferred to the buyer.
In modern Islamic banking, the term refers to a purchasing and selling dealing between the bank ( or fiscal establishment ) and the client, whereby the former buys a belongings ( or an plus, e.g. a house ) at the predominating market monetary value and sells it to the client at a mark-up monetary value where payments are made by episodes over a period of clip agreed upon by both parties.
Al Wakalah means bureau, or deputing responsibility onto another party for specific intents and under certain conditions. Under the construct of Al Wakalah, the bank becomes your agent. You are so required to lodge the full sum of the monetary value of goods to be purchased or imported.
Refers to an investing on your behalf by a more skilled individual. It takes the signifier of a contract between two parties, one who provides the financess and the other who provides the expertness and who agree to the division of any net incomes made in progress.
In a Mudaraba contract, the expert who manages the investing is known as Mudarib.
The footings “ Bai ” and “ Muajjal ” are derived from the Arabic words ‘Bai ‘ and ‘Ajal ‘ . The word ‘Bai1 agencies purchase and sale and the word ‘Ajal ‘ means a fixed clip or a fixed period. “ Bai-Muajjal ” is a sale for which payment is made at a hereafter fixed day of the month or within a fixed period. In short, it is a sale on Credit.
Bai-Muajjal may be defined as a contract between a purchaser and marketer under which the marketer sells certain specific goods allowable under Islamic Shariah and the Law of the state to the purchaser at an in agreement fixed monetary value payable at a certain fixed hereafter day of the month in ball amount or within a fixed period by fixed installments. The marketer may besides sell the goods purchased by him as per order and specification of the purchaser.
During 2008 Bangladesh ‘s stable economic environment assisted better gaining growing in banking sector. Bangladesh has reported GDP growing of 6.2 % in FY2008, compared with 6.4 % in FY2007. At terminal of 2008, mean rising prices reduced to 8.90 % , compared with 9.11 % during 2007. Interest rate exhibited an increasing tendency, with 90 yearss Treasury Bill at 7.92 % during December 2008 ( December 2007:7.63 % ) .
With favor of stable concern growing in 2008, the fiscal public presentation indexs of IBBL. showed better betterment over the old twelvemonth. During 2008, the net net income after revenue enhancement of the bank improved by 87.39 % accounting to TK. 2,674.80 million from TK. 1,427.36 million.
The big Investment exposure of IBBL stood at Tk. 54,722.15 million dwelling funded Tk. 46,142.80 million and 50 % of non-funded investing at Tk. 8,579.35 million dwelling 28 histories, whereas this was Tk. 37,413.70 million dwelling 21 histories in FY2007. Total outstanding investing including off-balance sheet exposure stood at Tk. 237,191.99 million. Consequently the big investing of the bank stood at 23.07 % , which was below the prescribed bound. All big investing exposures were in unclassified position.
Role and part of IBBL to Bangladesh Economy
Islami Bank Bangladesh Limited has many success narratives of accomplishments. These are summarized below:
- IBBL is the innovator establishment for debut of Islamic Banking in Bangladesh.
- The success of IBBL has imbibed other patrons at place and abroad to set up Islamic Banking in Bangladesh. Four national, one international Islamic Bankss have since been established in the state. A private sector traditional bank has besides established two full fledged Islamic Banking subdivisions. Several other bing and proposed traditional Bankss have besides expressed their purpose to present Islamic Banking.
- IBBL has successfully mobilized sedimentations from a subdivision of people who hither-to-before did non do any sedimentation with involvement based Bankss.
- The Islamic Banking merchandises which are offered by IBBL through its 118 subdivisions located at of import centres all over the state and self-generated credence of those merchandises by the people proves the high quality of Islamic banking.
- IBBL ‘s market portion of sedimentation investing and accessory concern is steadily increasing.
- IBBL, though still a bantam bank, handles more than 10 % of state ‘s export and import trade.
- Among the modern-day commercial Banks IBBL ‘s place is first in regard of mobilisation of sedimentation, deployment of fund and earning net income.
- Investing in industrial sector occupies about 33 % of IBBL ‘s investing portfolio. This is a alone illustration of industrial finance by a commercial Bank.
- More than 1.15,000 workers are employed in the industrial undertakings financed by IBBL. IBBL has therefore made important part to work outing unemployment job of the state.
- Dhaka- the capital of Bangladesh being a Mega city- has acute conveyance job. IBBL has joined custodies with an enterprising group to present afleet of Premium Bus service, which has attracted the attending of all subdivision of the people and mitigated transit job of the metropolis to some extent.
- IBBL has introduced several other public assistance oriented Investment strategies, such as Small Transport Investment Scheme, Small Business Investment Scheme, Agriculture Implements Investment Scheme, Poultry Investment Scheme, Household Durable Investment Scheme, Housing Investment Scheme etc.
- IBBL launched a Rural Development Scheme for supplying finance to drown-trodden subdivision of the populace- an country where no other Commercial Bank has extended any finance. IBBL ‘s mission is to make to all 68,000 small towns of the state every bit early as possible.
- IBBL has contributed a singular sum of million Taka as income revenue enhancement to the Government Exchequer on its net net income over the last 18 old ages, at the enterprise and thrust of IBBL, several Universities in Bangladesh, have introduced Courses on Islamic Banking and finance.
- IBBL has organized a good figure of national and international Seminars on Islamic Banking and Economics. Importantly, IBBL sponsored a Seminar at Dhaka with a position to organizing an Muslim Park Market.
- Due to changeless persuasion of IBBL the Government has granted licence for constitution of an Islamic Insurance Company. By now two- ( 2 ) Islamic Insurance Companies have started concern.
- IBBL has earned repute in the state as a corruptness free establishment.
- IBBL is held in high regard in the banking circle as a good managed bank.
- Under the leading of IBBL, Bangladesh Association of Banks ( BAB ) has been formed. This is a platform to air out the point of views on banking issues of the private sector Bankss. IBBL has taken inaugural to organize an Association of Islamic Banks in Bangladesh for promotion of the causes of Islamic banking.
- IBBL has established a foundation called Islami Bank Foundation for transporting out societal public assistance activities. The foundation has taken up a figure of strategies covering the whole of Bangladesh.