Internship Report On A Unknown

Internship Report
On
Assessing Customer Satisfaction Level at Al-Arafah Islami Bank Ltd.
Laldighirpar Branch, Sylhet
Prepared ByMd.Bazlur Rahman Khan
ID No.: 073-116-020
BBA 13th Batch
Major in Accounting & Information Systems
Department of Business Administration
Metropolitan University, Sylhet
Supervised ByMd. Masud Rana
Assistant Professor,
Date of Submission- September 14, 2011
In The Name of
ALLAH,
The Beneficent, The Most Merciful
Dedicated to
My respective Parents
Who always Loved me Lot
Letter of Transmittal
September 12, 2011
Mr. Md. Masud Rana
Supervisor & Assistant Professor

Subject: Submission of the Internship Report
Sir,
It is my pleasure to submit my internship report titled Assessing Customer Satisf
action Level at
Al-Arafah Islami Bank Ltd. Laldighirpar Branch, Sylhet that has been prepared as
an integral
part of my degree requirement. I put my best effort to follow the instructions o
f you in preparing
this report.
The internship program was very much valuable to me as it helped me to gain expe
rience from
practical field. While preparing this report I went through extensive literature
survey and
interviewed with the bank officials and customers. It was a great learning exper
ience for me. I
tried to the maximum competence to meet all the dimensions required from this re
port. However
some of the aspects are unintentionally overlooked. It is hoped that you would i
gnore any
discrepancies considering my limitations.
I will highly appreciate if you kindly accept the report. Your positive action r
egarding this matter
would be very much helpful for our academic as well as professional career. Than
king you in
advance for your assistance and advice.
Sincerely yours,
Md.Bazlur Rahman Khan
ID No.: 073-116-020
BBA 13th Batch
Major in Accounting & Information Systems
iii
Date: September 13, 2011
Certificate of the Supervisor

I am very much pleased to declare that Md.Bazlur Rahman Khan, ID No. 073-116-020
, student
of BBA, Department of Business Administration, Major in Accounting & Information
Systems,
13th Batch, Metropolitan University, Sylhet, Bangladesh. He has completed his In
ternship Report
on Assessing Customer Satisfaction Level at of Al-Arafah Islami Bank Limited. Hi
s work is
satisfactory. Moreover, I am glad to inform that his report has been prepared un
der my active
supervision.
Now I am convinced to permit his Report before the respective panel of judges.
He has reviewed all the relevant information and collected latest data from the
different sources.
I hope that this Report will contribute in his career.
I wish all the best in his effort.
Md. Masud Rana
Assistant Professor
Metropolitan University, Sylhet.
Al-Hamra, Zindabazar, Sylhet-3100, Bangladesh
Phone: +880 821 713077,713078 Fax: +880 821 713304 E-mail: info@metrouni.edu.bd
www.metrouni.edu.bd
Established in 2003, Metropolitan University is approved by
the government of the Peoples Republic of Bangladesh and the University Grants C
ommission of Bangladesh.
v
ABSTRACT
The Islamic banking system has gained momentum worldwide. There are now 180 Isla
mic banks
& financial institutions operating in Asia, Africa, Europe and the USA with more
than 8000
branches with an estimated $170 billion. The popularity of Islamic banking syste
m is not limited
to the Islamic banks only. Increasingly large international conventional banks a
re showing
interest in the Islamic banking system as well. For instance, Citibank has estab
lished branches in
countries like Bahrain and Sudan to operate in accordance with Islamic Shariah pr
inciples.
The consequence of this is that Islamic banks operating in Islamic countries are
faced with strong
competition not only from Islamic banks but also from non-Islamic rivals. Though
the Islamic
banking system is different from the conventional banking system, there are some
similarities
between the two. For instance, an Islamic bank conducts its activities in accord
ance with the
Islamic Shariah principles that strictly prohibited any payment or receipt of int
erest. However,
the Islamic bank can also offer products and services which are similar to those
offered by a
conventional bank.
When competition intensifies and when banks start to offer more or less similar
products and
services, it is the customers satisfaction that can influence the performance of
an Islamic bank
and determines its competitiveness and success. Hence it is of paramount importa
nce to assess
the degree of customer satisfaction towards Islamic banks operating in Islamic c
ountries. In this
context, a number of questions can be raised. For example, in a country where th
e majority of the
population are Muslims and where both Islamic as well as conventional banks oper
ate, what are
the main factors that motivate customers to deal with either an Islamic bank or
a conventional
bank or both?, and to what extent customers are satisfied with their banks?
In this study, an attempt is made is to assess the degree of customer awareness
and satisfaction
towards Al-Arafah Islami Bank.
ACKNOWLEDGEMENT
All gratitude and thanks to almighty ALLAH the gracious, the most merciful and ben
eficent
who gave me courage to undertake and complete this task. I am very much obliged
to my ever
caring and loving parents whose prayers have enabled to reach this stage.
I am grateful to almighty ALLAH who made me able to complete the work presented
in this
report. It is due to HIS unending mercy that this work moved towards success.
I am highly indebted to my honorable supervisor Md. Masud Rana, Assistant Profes
sor,
Department of Business Administration, Metropolitan University, for his guidance
and cooperation that helps me immensely to prepare this report.
I would like to express my gratitude to Md. Haroon-Ur-Rashid, Vice President & M
anager, AlArafah Islami Bank Ltd. Laldighirpar Branch, for giving me the opportunity, appo
intment for
the internship program that I have completed, who help me without considering an
y business
purpose and also sharing his practical experience.
And last but not the least, I heartily thank to all officers of AIBL, Laldighirp
ar Branch for their
sincere co-operation and who helped me to learn about banking during my three mo
nths
internship. It would not be possible to prepare the internship report without th
eir help and
valuable advice and instruction.
I feel great pride and pleasure on the accomplishment of this report.
vii
EXECUTIVE SUMMARY
In a changing marketing environment, any commercial organization is required to
be customer
oriented. As customers in the banking industry are becoming more demanding and i
ncreasingly
mobile between competing financial providers, simply being customer-focused is n
ot enough.
Since customers are the driving force of Islamic financial institutions, hence c
ustomers
satisfaction is a very important aspect in the competitive market. Therefore, Is
lamic financial
institutions need to take seriously their products marketing aspect in consonanc
e with Islamic
business ethics.
Through this Internship report an attempt has been made to assess the customer s
atisfaction level
at Al-Arafah Islami Bank Limited (AIBL), Laldighirpar Branch, Sylhet. Basically
this report has
been developed from the basis of Primary and secondary data. The sources of info
rmation are
face to face interview with customer, the questionnaire, annual report of the ba
nk, different
websites, newspaper etc. My experience also helps me to prepare this report.
The objectives of my study is to know about what level the customers are assured
by
competence, courtesy, credibility and security by the bank and its employees, As
sess willingness
of employees to help customers & to provide prompt service, Know the ability of
employees to
perform promised service dependently and accurately etc..
Customer satisfaction is an ambiguous and abstract concept and the actual manife
station of the
state of satisfaction will vary from person to person and product/service to pro
duct/service. The
state of satisfaction depends on a number of both psychological and physical var
iables, which
correlate with satisfaction behaviors such as return and recommend rate. The lev
el of satisfaction
can also vary depending on other options the customer may have and other product
s/services
against which the customer can compare the organizations products/services.
A firms future profitability depends on satisfying customers in the present retai
ned customers
should be viewed as revenue producing assets for the firm (Anderson and Sullivan
1993;
Reichheld 1996; Anderson and Mittal 2000). According to Drucker (1954), the prin
ciple purpose
of a business is to create satisfied customers. Increasing customer satisfaction

has been found to
lead to higher future profitability (Anderson, Fornell, and Lehmann 1994), lower
costs related to
defective goods and services (Anderson, Fornell, and Rust 1997), increased buyer
willingness to
pay price premiums, provide referrals, and use more of the product (Reichheld 19
96; Anderson
and Mittal 2000), and higher levels of customer retention and loyalty (Fornell 1
992; Anderson
and Sullivan 1993; Bolton 1998). Increasing loyalty, in turn, has been found to
lead to increases
in future revenue (Fornell 1992; Anderson, Fornell, and Lehmann 1994) and reduct
ions in the
cost of future transactions (Reichheld 1996; Srivastava, Shervani, and Fahey 199
8). All of this
empirical evidence suggests that customer satisfaction is valuable from both a c
ustomer goodwill
perspective and an organizations financial perspective.
During my study, I used three techniques; i.e. face to face interview, deskwork
in different
departments and servqual instrument- the structured questionnaire of twenty diff
erent questions
to assessing the customer satisfaction of AIBL (Laldighirpar Branch). The data t
hat obtained
from the survey was than analyzed and interpreted by using statistical tools. Fr
om the
interpretation of survey result, a number of findings and recommendations were s
uggested that
may help the organization to take necessary steps to improve their service and g
et more satisfied
customers.
ix
Table of Contents
Title of the Report
Letter of Transmittal
Latter of Acceptance
Certificate of Internship from AIBL

Abstract
Acknowledgement
Executive Summary
Chapter 1- An Introduction to the Report........................................
........................................................ 1
1.1 Introduction ...............................................................
....................................................................... 2
1.2 Origin of the Report........................................................
.................................................................. 3
1.3 Background of the Report ...................................................
............................................................. 3
1.4 Objective of the Report ....................................................
................................................................ 4
1.5 Scope of the Report ........................................................
.................................................................. 5
1.6 Methodology of the Study....................................................
............................................................ 5
1.6.1 Primary Data Collection ..................................................
....................................................... 5
1.6.2 Secondary Data Collection ................................................
..................................................... 6
1.7 Limitations of the Report...................................................
............................................................... 6
Chapter 2- Overview of Al-Arafah Islami Bank Ltd..................................
......................................... 7
2.1 Introduction ...............................................................
....................................................................... 8
2.2 Al-Arafah Islami Bank Ltd...................................................
............................................................ 8
2.3 Vision of AIBL..............................................................
................................................................... 9
2.4 Mission of AIBL ............................................................
................................................................ 10
2.5 Commitments ................................................................
................................................................. 10
2.6 Pledges & Commitments of the sponsor director of AIBL ......................
...................................... 11
2.7 Special features of AIBL ...................................................
............................................................. 13
2.8 Form of Organization .......................................................
.............................................................. 14
2.9 Hierarchy of position in AIBL ..............................................
......................................................... 17
2.10 Shariah Board of AIBL ......................................................
......................................................... 18
2.11 Activities of Shariah Supervisory committee for the year 2010 ..............
................................... 20
2.12 Capital Market Services ...................................................
............................................................ 22
2.13 Position in the Stock Market ..............................................
.......................................................... 22
2.14 Progress Analysis .........................................................
................................................................ 23
2.15 Capital Adequacy & Reserve Fund ...........................................
................................................... 24
2.16 Deposits...................................................................
..................................................................... 26
2.17 Investment ................................................................
.................................................................... 28
2.18 Small & Medium Enterprise Investment ......................................
................................................ 30
2.19 Grameen Small Investment Scheme............................................
................................................. 31
2.20 Investment on Agricultural Sectors.........................................
..................................................... 33
2.21 Rural Agricultural Investment Scheme ......................................
.................................................. 34
2.22 Investment on Women Entrepreneurs .........................................
................................................. 35
2.23 Al-Arafah Solar Electricity Investment Scheme .............................
............................................. 36
2.24 Treasury Operations .......................................................
.............................................................. 37
2.24.1 Local Treasury ..........................................................
.......................................................... 37
2.24.2 Foreign Exchange Treasury ...............................................
................................................. 37
2.25 The International trade ...................................................
.............................................................. 38
2.26 Income.....................................................................
..................................................................... 39
2.27 Expenditure ...............................................................
................................................................... 39
2.28 Operating Profit...........................................................
................................................................. 40
2.29 Dividend ..................................................................
..................................................................... 41
2.30 Information Technology.....................................................
.......................................................... 42
2.31 Marketing & Business Development...........................................
................................................. 44
2.32 Audit & Inspection ........................................................
............................................................... 44
2.33 Rating Report .............................................................
.................................................................. 46
2.34 Human Resource ............................................................
.............................................................. 46
2.35 Training & Motivation .....................................................
............................................................ 48
2.36 Risk Management............................................................
............................................................. 49
2.37 Implementation of BASEL-II.................................................
...................................................... 50
2.38 Branch Network ............................................................
............................................................... 50
2.39 Cards & Retail Banking.....................................................
........................................................... 51
xi
2.40 Appointment of Statutory Auditor...........................................
..................................................... 51
2.41 AIBL at a Glance...........................................................
............................................................... 52
2.42 Corporate information for the Year 2010....................................
................................................. 53
Chapter 3- Products & Services of AIBL .........................................
...................................................... 54
3.1 Various deposit product of the bank in 2010.................................
................................................. 55
3.2 Investment modes of AIBL. ..................................................

......................................................... 58
3.3 SME Banking ................................................................
................................................................. 60
3.4 Microfinance ...............................................................
................................................................... 62
3.5 Corporate Social Responsibility.............................................
........................................................ 64
3.5.1 Conceptualization of CSR..................................................
................................................... 64
3.5.2 CSR Activities of AIBL....................................................
.................................................... 64
3.5.3 Some CSR Activities of AIBL in details ...................................
........................................... 65
Chapter 4- Customer Satisfaction based on theoretical aspect ...................
......................................... 68
4.1 Introduction ...............................................................
..................................................................... 69
4.2 Definition of Customer......................................................
............................................................. 69
4.3 Definition of Satisfaction .................................................
.............................................................. 70
4.4 Definition of Customer Satisfaction.........................................
...................................................... 71
4.5 Shariah Basis of Customer Satisfaction ......................................
.................................................. 71
4.6 CSA Role vis--vis Service Expectation........................................
................................................ 72
4.7 Sales Behavior Model Based on Islamic Business Ethics ......................
........................................ 74
4.8 Importance of Customer Satisfaction ........................................
..................................................... 77
4.9 Factors affecting Customer Satisfaction.....................................
.................................................... 79
4.10 Customer Satisfaction- A Critical component of profitability ..............
....................................... 81
4.11 Effect Customer Satisfaction on profitability..............................
................................................. 81
4.12 Consequences of Customer Satisfaction and Dissatisfaction .................
..................................... 83
4.13 Moving from Customer service to Customer satisfaction .....................

....................................... 84
4.14 Techniques used to measuring Customer Satisfaction ........................
........................................ 85
4.15 Steps in assessing Customer Satisfaction ..................................
................................................... 86
4.16 Customer Satisfaction in seven steps.......................................
..................................................... 87
4.17 To improve customer satisfaction, there have 3 principles of employee satis
faction .................. 88
4.18 Summary ...................................................................
................................................................... 91
Chapter 5- Assessing Customer Satisfaction at AIBL, Laldighirpar Branch, Sylhet.
........................ 92
5.1 Measuring Customer Satisfaction.............................................
...................................................... 93
5.2 Methods used in Assessing Customer Satisfaction at AIBL (Laldighirpar Branch
) ...................... 94
5.3 Analysis of Customer Satisfaction ..........................................
....................................................... 97
5.3.1 Gender Frequency..........................................................
....................................................... 97
5.3.2 Age Group Frequency.......................................................
.................................................... 98
5.3.3 Profession Frequency......................................................
...................................................... 99
5.3.4 Statements in the Tangible Dimension .....................................
.......................................... 100
5.3.5 Statements in the Reliability Dimension...................................
.......................................... 102
5.3.6 Statements in the Responsiveness Dimension ...............................
..................................... 104
5.3.7 Statements in the Assurance Dimension.....................................
........................................ 106
5.3.8 Statements in the Empathy Dimension ......................................
......................................... 108
5.3.9 Summary of the survey result for five dimensions .........................
.................................... 110
Chapter 6- SWOT Analysis........................................................
............................................................ 112
6.1 Introduction ...............................................................

................................................................... 113
6.2 SWOT Analysis...............................................................
............................................................. 113
6.2.1 SWOT Analysis of AIBL ....................................................
............................................... 114
Chapter 7- Findings of the Analysis ............................................
.......................................................... 117
7.1 Findings....................................................................
.................................................................... 118
7.1.1 Quantitative Findings.....................................................
..................................................... 118
7.1.2 Qualitative Findings......................................................
...................................................... 119
7.2 Problems & Limitations .....................................................
.......................................................... 120
Chapter 8- Recommendations & Conclusion ........................................
............................................... 121
8.1 Recommendations ............................................................
............................................................ 122
8.2 Conclusion..................................................................
................................................................. 124
Appendices......................................................................
......................................................................... 126
Appendix-I: Questionnaire ......................................................
........................................................... 127
Appendix-II: Survey Result......................................................
.......................................................... 130
Bibliography....................................................................
........................................................................ 136
xiii
CHAPTER
1
AN INTRODUCTION TO THE REPORT
1.1 Introduction
The Jews in Jerusalem introduced a kind of banking in the form of money lending
before the
birth of Christ. The word bank was probably derived from the word bench as d
uring ancient
time Jews used to do money -lending business sitting on long benches.
First modern banking was introduced in 1668 in Stockholm as Svingss Pis Bank, wh
ich opened
up a new era of banking activities throughout the European Mainland.
In the South Asian region, the Afghan traders popularly known as Kabuliawallas i
ntroduced
early banking system. Muslim businesspersons from Kabul, Afghanistan came to Ind
ia and
started money-lending business in exchange of interest sometime in 1312 A.D. The
y were
known as Kabuliawallas.
The financial system of Bangladesh consists of Bangladesh Bank (BB) as the centr
al bank, 4
nationalized commercial banks (NCB), and 4 government owned specialized banks, 3
0 domestic
private banks, 9 foreign banks and 62 non-bank financial institutions. The finan
cial system also
embraces insurance companies, stock exchanges and co-operative banks
The structure of the banking system has changed substantially over the last few
years. NCBs
role has gone down. Their share in total assets went down from 54 percent in 200
0 to 40 percent
in 2010. On the other hand, PCBs share went up from 27 percent in 2000 to 43 perc
ent in 2010.
The change reflects adoption and implementation of new policies for the banking
sector.
One important challenge that the banking sector is facing is the introduction of
information
technology in the banking system in an aggressive manner. This is required to im
prove
management efficiency, reduce operational cost, improve customer services, and i
ncrease
transparency.
Assessing Customer Satisfaction Level at AIBL (Ldp. Br.)

Page | 2
Hence, the banking sector would play a vital role in the development of the coun
try and efficient
and sound banking management would led the country to reach at the highest peak
of success.
1.2 Origin of the Report
Bachelor of Business Administration (BBA) is one of the most commendable profess
ional
degrees. The main objective of BBA degree is to provide the students with the pr
actical aspects
of academic learning to the organizational setting. For the attainment of that p
urpose curriculum
and syllabus is designed in a manner so that students are facilitated to have pr
actical or empirical
working experience to some extent. Inclusion of internship is a proof of one of
the attempts. I am
a student of Metropolitan University, Sylhet. In BBA, my major subject is Account
ing &
Information Systems. For that consequence, I choose the banking sector for perfor
ming my
internship and the organization is the Al-Arafah Islami Bank Ltd. (AIBL) in this
regard.
My research topic is Customer Satisfaction Level at Al-Arafah Islami Bank Ltd.,
Laldighirpar Branch of Sylhet . My faculty supervisor Mr. Md. Masud Rana, Assista
nt
professor of the Department of Business Administration, approved the topic and a
uthorized me
to prepare this report as part of the fulfillment of internship requirement.
1.3 Background of the Report
With the rapid growing competition among nationalized, foreign and private comme
rcial banks
as to how the banks operates its banking operation and how customer service can
be made more
attractive, the expectation of the customers has immensely increased. Reciprocat
ing the
sentiment, commercial and private banks are trying to elevate their traditional
banking service to
a better standard, to meet the challenging needs and demands. Side by side, thes
e banks have
now concentrated their attention towards diversification of their products for b
etter performances
and existence. For the above circumstances, it has become necessary for Al-Arafa
h Islami Bank
Ltd, one of the leading commercial banks, to focus its attention towards the imp
rovement of the
Page | 3
customer service. That is why it is quite justified to make an in-depth study ab

out its operation
and evaluate the service provided by this bank and scope for its improvement. Th
e study may
help formulating policy regarding the ideas relating to the feelings of the cust
omers and bankers.
Furthermore, Al-Arafah Islami Bank Ltd executives who are actually executing the
policies
undertaken by the top management will have a chance to communicate their feeling
s and will
have the feedback about their dealing from the customers.
1.4 Objectives of the Study
Broad Objective:
The principal objective of this study is to determine the customerssatisfaction l
evel of Al-Arafah
Islami Bank Ltd., Laldighirpar Branch of Sylhet.
Specific Objectives:
The specific objectives of the study are toa. Know the ability of employees to perform promised service dependently and acc
urately.
b. Know to what level the customers are assured by competence, courtesy, credibi
lity and
security by the bank and its employees.
c. Measure to what extent the tangible appearances are satisfying customers.
d. Evaluate customers satisfaction in getting convenient banking hour, care & ind
ividual
attention.
e. Assess willingness of employees to help customers & to provide prompt service
.
f. Compute the unweighted overall satisfaction level of the customers & weighted
customer
satisfaction Index.
Page | 4
1.5 Scope of the Study

The report deals with measuring the satisfaction level of the customers of Al-Ar
afah Islami Bank
Limited, Laldighirpar Branch, Sylhet. These customers are the people who have ac
count in this
branch. The total population is not covered here. It is based on sample survey.
Thus, the
satisfaction level of the entire customers of Al-Arafah Islami Bank Limited or a
ny other branch
of the bank is not measured here and these will not be a part of the report. The
study was
conducted from 2nd of May, 2011 to 31st of July, 2011. Thus, the samples were se
lected from the
customers who came to bank in during this period.
AIBL has been chosen for three reasons. First, this Bank is a Shariah based bank
and is drawing
attention of millions of customers to its products and services. Second, this is
one of the largest
and strongly profitable among private commercial banks in Bangladesh. Third, it
offers a wide
range of products and services and has customers of different classes of the soc
iety.
1.6 Methodology of the Study
In order to conduct this internship report both primary & secondary data have be
en utilized.
1.6.1 Primary Data Collection
The primary data have been obtained through using following three techniques:
a. Face to face conversation with the employees.
b. Deskwork in different section/departments.
c. SERVQUAL Instrument: To get quantitative data on customer satisfaction direct
ly from
customers with a view to measure their level of satisfaction Ive interviewed 50 a
ccount
holders of Al-Arafah Islami Bank Ltd. having different profession & who lies in
different
age group using the SERVQUAL instrument. The interviews have been conducted usin
g
a structured questionnaire containing 20 questions representing the five dimensi
ons of
customer satisfaction measurement. A sample questionnaire has been annexed in th
e
appendix part. The period of the study lies in between 2nd May, 2011 to 31st Jul
y, 2011.
Page | 5
1.6.2 Secondary Data Collection

There have elaborations of different types of secondary data in my research. The
sources are of
those datas are:
a. Internal Sources:
Banks Annual Reports
Official Documents & Ledger records of Bank
Website of the bank
b. External Sources
Published literatures
Journals & Newspapers
Consultation of related books & publications.
Website Surfing
1.7 Limitations of the Report
The limitations of the report and the study are follows:

The report has been conducted within a short time frame.
The study is self-financed.
Only Laldighirpar Branch of the bank has been considered for the study.
The sample size does not represent the total population.
Samples were selected conveniently.
For the convenient of the study, non-probability samples have been used.
In many cases, up-to-date information is not published.
All weights given are judgmental.
Information regarding the competitors is difficult to get.
As time frame was short and the whole study was conducted by one person there is
chance of having error in any stage of data collection, data entry, data organiz
ing, data
sorting, data testing, data presentation, interpretation of result, etc.
Page | 6
CHAPTER
2
OVERVIEW OF AL-ARAFAH ISLAMI BANK LTD.
Page | 7
2.1 Introduction
Islami Banking System is becoming more and more attractive day by day to peoples
irrespective
of Nations, religious, colors and species. More than 300 Banks & financial insti
tutions are
serving Islami banking throughout the world. At present in our country 7 fully f
ledged Islamic
Banks are working successfully. And other traditional banks have Islami Banking
Wings
conducting Shariah based banking activities. Recent Development of Bangladesh Gov

ernment
Islamic Investment Bond (BGIIB) is the milestone for Shariah based banking practi
ces in
Bangladesh.
Al-Arafah Islami Bank Ltd. as the name implies a newly formed commercial bank in
Bangladesh. It has been incorporated in Dhaka, Bangladesh as a public limited co
mpany and its
Head Office of the Bank is located at Rahman Mansion, 161, Motijheel C/A, Dhaka1000.
In the world of consumerism the business organization of the world strive for th
e consumers
satisfaction as a number one business strategy whatever may be the product of th
e organization,
either service or non service. Service is the product of bank. There is a saying
that customer
service starts rights right from the stairs of the bank building. The guard at t
he door is first
person pep resents of the bank, receives a customer with wishes in smiling face.
2.2 Al-Arafah Islami Bank Limited
Islam provides us a complete lifestyle. Main objective of Islamic lifestyle is t
o be successful both
in our mortal and immortal life. Therefore in every aspect of our life we should
follow the
doctrine of Al-Quran and lifestyle of Hazrat Muhammad (Sm.) for our supreme suc
cess With the
objective of achieving success here & hereafter by pursuing the way directed by
Allah and the
path shown by His Rasul (SM), Al Arafah Islami Bank Ltd was established (registe
red) as a
private limited company on 18 June 1995. The inaugural ceremony took place on 27
September
1995. The authorized capital of the Bank is Tk.5000.00 million and the paid up c
apital is Tk.
Page | 8
4677.28 million as on 31.12.2010. Renowned Islamic Scholars and pious businessme

n of the
country are the sponsors of the Bank. 100% of paid up capital is being owned by
indigenous
shareholders.
A group of established, dedicated and pious personalities of Bangladesh are the
architects and
directors of the Bank. Among them a noted Islamic scholar, economist, writer and
ex-bureaucrat
of Bangladesh government Mr. A.Z.M Shamsul Alam is the founder chairman of the b
ank. His
progressive leadership and continuous inspiration provided a boost for the bank
in getting a
foothold in the financial market of Bangladesh.
A group of 20 dedicated and noted Islamic personalities of Bangladesh are the me
mber of Board
of Directors of the bank. They are also noted for their business acumen. The aut
horized capital of
Al-Arafah Islami Bank Ltd. is Taka 5000 millions and the paid-up capital is Taka
4677.28
millions. The equity of the bank stood at Tk. 9647.45 million as on 31 December
2010, the
manpower was 1711 and the number of shareholders was 49,386. It has achieved a c
ontinuous
profit and declared a good dividend over the years. High quality customer servic
e through the
integration of modern technology and new products is the tool of the bank to ach
ieve success.
The bank has a diverse array of carefully tailored products and services to sati
sfy customer
needs.
The Bank is committed to contribute significantly to the national economy. It ha
s made a
positive contribution towards the socio economic development of the country with
80 branches
of which 21 is AD throughout the country.
2.3 Vision of AIBL
To be a pioneer in Islami Banking in Bangladesh and contribute significantly to
the
growth of the national economy.

Page | 9
2.4 Mission of AIBL

Achieving the satisfaction of Almighty Allah both here & hereafter.
Proliferation of Shariah Based Banking Practices.
Quality financial services adopting the latest technology.
Fast and efficient customer service.
Maintaining high standard of business ethics.
Balanced growth.
Steady & competitive return on shareholders equity.
Innovative banking at a competitive price.
Attract and retain quality human resources.
Extending competitive compensation packages to the employees.
Firm commitment to the growth of national economy.
Involving more in Micro and SME financing.
2.5 Commitments
Ours is a customer focused modern Islamic Banking sound and steady growth in bot
h
mobilizing deposit and making quality Investment to keep our position as a leadi
ng
Islami bank in Bangladesh.
To deliver financial services with the touch of our heart to retail, small and m
edium scale
enterprises, as well as corporate clients through our branches across the countr
y.
Our business initiatives are designed to match the changing trade & industrial n
eeds of
the clients.
Page | 10
2.6 Pledges & Commitments of the Sponsor Director of AIBL

Whenever a new institution comes into existence, the sponsors claim that it woul
d be an
institution with difference. If a new institution does not have any novelty, why
it should at all be
brought into existence? The sponsors of AIBL in conformity with the tradition cl
aim that it
would be a bank with difference.
The sponsors and promoters of AIBL made a few firm pledges and commitments in th
e name of
Allah. These pledges and commitments have been included in the memorandum and ar
ticles of
Association (Article 159) of AIBL (pp 65-71) incorporated with Bangladesh Bank,
Registrar of
Joint Stock Companies, Securities & Exchange Commission, etc.
Some of those commitments, titled Agreements, Pledges and Commitments of the Prom
oters,
Sponsors & directors of AIBL are given below:
Objectives of the Sponsors
AIBL has not been set up with the objectives of economic welfare and financial b
enefit of the
sponsors and promoters in this world, on the contrary, they are desirous of welf
are in the next
world and Nazat in Akhirat which could be achieved more by rendering credit serv
ices by th
sponsors and bankers to others than any service to themselves.
Misuse of Power and undue Advantages
The sponsor directors shall not try to avail undue advantages of any kind from t
he bank for
themselves, or for firms, companies, institutions in which they have financial o
r other interest.
The facilities which are legal, just and due to them, that they will avail of sh
ould be transparent
and known to the Board of Directors leaving little scope for misunderstanding.
Page | 11
Inspiration for Qurbani of Nafsaniyyat or Self-interest

The promoters and sponsors of AIBL are imbued with the spirit of sacrifices and
Qurbani of the
family of Hazrat Ibrahim (A.) (PBUH), and which was rekindled by our beloved proph
et
Muhammed (S.) (PBUH) and Sahaba-i-Keram and thereafter by the Sufi saints who made
supreme sacrifices and Qurbani for preaching of Deen of Allah to all comers of t
he world,
particularly to this region.
Clean Banking is Ibadat
The sponsor directors agree to conduct clean banking under patronization of the
government, and
firmly believe that the association with this bank would be nothing but Ibadat and
that they
will act accordingly.
Environment of AIBL
Al-Arafah Islami Bank shall bear the mark of the Sunnah of our prophet Muhammed (
S.)
(PBUH), of our faith and conviction, our values and attitudes towards life and t
hat the entire
environment of Al- Arafah Islami Bank shall be in conformity with Sunnah, simple
in style,
noble and rich in thought, but dynamic and far reaching in impact, exemplary in
efficiency and
service to the customers.
Sunnah of Keeping Deposit as Amanat
The sponsors firmly and solemnly pledge and promise to hold the deposits and oth
er fund as
Amanat and sacred trust keeping in mind the Sunnah of our beloved prophet Muhammed
(S.)
(PBUH) who would hold the money and materials deposited with him even by the infi
elds in
great trust for which he earned the title of Al-Ameen.
Page | 12
2.7 Special Features of AIBL:

All activities of the bank are conducted according to Islamic Shariah where profi
t is the
legal alternative to interest.
The banks investment policy follows different modes approved by Islamic Shariah
based on the Quran & Sunnah.
The bank is committed towards establishing welfare oriented banking system, econ
omic
upliftment of the low-income group of people, create employment opportunities.
According to the need and demand of the society and the country as a whole the b
ank
invests money to different Halal business. The bank participates in different
activities
aiming at creating jobs, implementing development projects of the government and
creating infrastructure.
The bank is committed to establish an economic system resulting in social justic
e and
equitable distribution of wealth. It is committed to bring about changes in the
underdeveloped rural areas for ensuring balanced socio economic development of t
he
country through micro credit program and financing of SMEs as well.
According to Mudaraba system, the depositors are the partners of the investment
income
of the bank. About 70% of the investment income is distributed among the Mudarab
a
depositors.
To render improved services to the clients imbued with Islamic spirit of brother
hood,
peace and fraternity and by developing an institutional cohesion.
The bank is contributing to economic and philanthropic activities. AIBL English
Medium
Madrasah and AIBL library patronize by the Bank are two such examples.
Page | 13
Performance at a glance
(In Mil ion Taka)
56,000.00
48,000.00
40,000.00
32,000.00
24,000.00
16,000.00
8,000.00
0.00
2006
2007
2008
2009
2010
Shareholder Equity
1,690.18
2,037.50
2,705.74
3,564.73
9,647.45
deposit
16,775.30 23,009.10 29,690.12 38,355.50 52,973.97
Investment
17,423.20 22,906.40 27,742.58 36,134.08 53,582.96
Profit befor Tax & Provision
969.77
756.18
1,528.10
1,729.83
3,059.98
2.8 Form of Organization
Board of Directors
Chairman
: Badiur Rahman
Vice Chairman
: Sarker Mohammad Shameem Iqbal
Member
: Alhajj Md. Harun-ar-Rashid Khan
Alhajj Nazmul Ahsan Khaled
Alhajj Abdul Malek Mollah
Alhajj Hafez Md. Enayetullah
Alhajj Abdul Moktadir
Alhajj Ahamedul Haque
Page | 14
Alhajj Abdus Samad

Alhajj Abu Naser Mohammad Yeahea
Alhajj Abdus Salam
AlHajj Niaz Ahmed
Md. Ashik Hossain
Md. Rafiqul Islam
Mohammed Emadur Rahman
Mrs. Sabrina Farah Ahmed
Anwar Hossain
Dr. Momtaz Uddin Ahmed
Ex Officio Director : Ekramul Hoque (Managing Director)
Company Secretary : Md. Mofazzal Hossain

Executive Committee
Chairman
: Alhajj Abdus Samad
Vice-Chairman
: Alhajj Abdul Malek Mollah
Member
: Alhajj Md. Harun-ar-Rashid Khan
Alhajj Md. Nazmul Ahsan Khaled
Alhajj Hafez Md. Enayetullah
Alhajj Ahmedul Haque
Alhajj Abu Naser Mohammad Yeahea
Audit Committee
Chairman
: Sarker Mohammad Shameem Iqbal
Page | 15
Member
: Al-Hajj Niaz Ahmed
Dr. Momtaz Uddin Ahmed
Shariah Supervisory Committee
Chairman
: Mufti Abdur Rahman
Member
:Mufti Ruhul Amin
Moulana Abdul Basit Barkatpuri
Mufti Muinul Islam
Alhajj A. Z. M. Shamsul Alam
Badiur Rahman
Secretary
:Md. Abdur Rahim Khan
Page | 16
2.9 Hierarchy of Position in AIBL

Managing Director
Additional Managing
Deputy Managing Director Director
1
Deputy Managing DirectorDirector
2
Senior Executive Vice
Vice Chairman
President
Executive Vice President
Chairman
Senior Vice President
Vice President
Hierarchy
Assistant Vice President
Of
First Assistant Vice
AIBL
President
Senior Principal Officer
Principal Officer
Officer
Executive Officer
Senior Executive Officer
Page | 17
2.10 Shariah Board of AIBL

Shariah Board
Scholars of high repute with extensive experience in law, economics and banking
systems and
specializing in law and finance as prescribed by Islamic Shariah make up the AIBL
s Fatwa &
Shariah Supervision Board. The Board is appointed by the banks Board of Director
s. The
Shariah Board supervises the development and creation of innovative Shariah -compl
iant
investment and financing products and services. The Board is empowered to issue
fatwas on any
matter proposed to it by different business units of the bank. The Shariah audito
rs ensure that all
the transactions are carried out in strict compliance to Islamic principles of b
anking. This
framework along with a stringent compliance to rules has made AIBL the pioneerin
g
organization to practice Islamic finance in true letter and spirit. The name AIB
L has come to
signify innovation, financial dynamism, leadership and above all a complete assu
rance that all
the transactions are free from riba (interest).
The Boards Role
The Fatwa & Shariah Supervision Board oversees the application of different aspec
ts of
Shariah in the Bank. It also ensures that all transactions are in strict complian
ce with the right of
contradicting (fatwa) any violating procedures, if found. The Board of Directors
is obligated to
obey the fatwas, irrespective of whether a unanimous or a majority consensus sec
ured the
decision (clause ---- of the Banks Memorandum & Articles of Association).

Board meetings are held periodically or whenever the need arises. The rights of
the Board are
enshrined in Article Seven o the Banks Memorandum & Articles of Association (Cl
auses).
Important Duties of the Shariah Board
As an expert source on Islamic Principles (Including Fatwas), the Board through
a
representative, usually the General Secretary of the Board, supervises the Sharia
h
compliance of all the transactions in the Bank.
Page | 18
To devote time and effort to devising more Shariah -compliant transactional proce
dures,
templates and banking products that enable the Bank to adapt to market trends wh
ile
maintaining a high competitive edge in deposit procedures, investments, and bank
ing
services. At the same time, the Board gives its opinion on proposed new template
s, and
banking transactions.
Analyzing unprecedented situations that are not covered by fatwa, in the Banks
transactional procedures or those reported by different departments, branches an
d even
the customers. This is to ensure Shariah compliance before the Bank develops any
new
products or implements any new procedure.
Analyzing contracts and agreements concerning the Banks transactions, as submit
ted by
the Chairman of the Board of Directors or any department/branch within the bank
or
requested by the Board itself so that Shariah compliance can be evaluated and
maintained.
Ensuring Shariah compliance in the implementation of all banking transactions and
correcting any breaches.

Analyzing administrative decisions, issues and matters that require the Boards
approval.
Supervising Shariah training programmes for the Banks staff.
h
Preparing an annual report in the Banks balance sheet with respect to its Sharia
compliance.
The Fatwa & Shariah Supervision Board submits a complete annual report for the Bo
ard of
Director, summarizing all the issues referred to the Board, as well as its opini
on on the Banks
transactional procedures.
Page | 19
Shariah Supervisors
The Clause ---- of the Banks Memorandum & Articles of Association requires the
Board of
Directors to appoint a Shariah Supervisor, responsible for monitoring all the Ban
ks
transactional procedures and assuring Shariah compliance.
Also the General Secretary of the Fatwa & Shariah Supervision Board, the Shariah S
upervisor
handles queries about the Banks administration from staff members, shareholders
, depositors
and customers, liaises with the Shariah auditors and provides them with guidance.
He submits
reports and suggestions to the Fatwa & Shariah Supervision Board and to the Chair
man of the
Board of Directors. The position also calls for participation in the Banks trai
ning programmes.
Shariah Auditing
The supervisory function forms a part of the Shariah Supervision procedures, its
main task
being to check Shariah compliance under the guidance of the Shariah Supervisor.
The auditors continuously review the Banks transactional procedures to ensure a
dherence to the
framework created by the Fatwa & Shariah Supervision Board. The Shariah auditors s
ubmit
periodic reports to the Shariah Supervisor so as to monitor and maintain Shariah c
ompliance.
2.11 Activities of Shariah Supervisory committee for the year 2010
Shariah Supervisory committee consists of 6 members specialized in Fiqhul Muamala
t (Islamic
Commercial Law) according to guidelines given by the Bangladesh Bank to ensure w
hether all
banking operations are transacted in accordance with Islami Shariah i.e. Quran,
Sunnah, Ijma
and Iztihad.
Shariah Supervisory committee has by the grace of Almighty Allah managed to contr
ibute a lot
to run all the business activities of the Bank according to Shariah guidelines. H
onorable
Page | 20
members of the Shariah Council sat in 3 General Meetings and 2 emergency meeting
and 2 subcommittee meeting in the year 2010 to discuss the matters placed before them by
the Board and
management of the Bank to give directives and suggestions in the field of Shariah
principles.
Muraqibs of the Supervisory committee have visited all branches (78) of the Bank
during the
year to observe the Shariah compliance, give necessary instructions on the spot a
nd submitted
report to the Council. They have also submitted corrective measures to rectify t
he laws in
implementing Shariah guidelines into the banking operations.
The Shariah Supervisory Committee audited the Financial Statement for the year 20
10 from
Shariah point of view. After analyzing the Financial Statement the Shariah Supervi
sory
Committee identified Tk.12.83 million as doubtful income, Tk. 54.04 million as c
ompensation
realized in different branches and Tk.0.25 million and Tk.0.82 million as intere
st income
received from NOSTRO accounts of foreign correspondent Banks and Bangladesh Bank
F.C
clearing accounts respectively. Due to limitation in computer software of AIBL C
apital Market
Department the committee could not separate brokerage commission and margin prof
it income
earned from Shariah approved securities and interest based bank and financial ins
titution. As a
result the entire amount of Tk.313.32 million earned from brokerage was identifi
ed for the time
being as doubtful income and the Shariah Supervisory Committee in its 15th Board
Meeting
held in 22nd March 2011 has decided to finalize the Financial Statement for the
year 2010
keeping doubtful income amounting Tk. 313.32 million apart from basic income whi
ch will be
settled later on.
A library has been established in the Shariah Council Secretariat of Al-Arafah Is
lami Bank
having about 500 books on Quran, Hadith, Fiqh, Islamic Economics and Islami Ban
king.
Honorable members of the Council give Shariah guidelines to run the Banks operat
ions taking
necessary consultations and data from those books after exhaustive research and
study.
Page | 21
2.12 Capital Market Services

Al-Arafah Islami Bank Ltd. (AIBL) is a corporate member of Dhaka Stock Exchange
Ltd. &
Chittagong Stock Exchange Ltd. Membership Number of Dhaka Stock Exchange is 234
and
Membership Number of Chittagong Stock Exchange is 139. After obtaining stock bro
ker and
stock dealer registration certificates from Securities and Exchange Commission i

t started share
trading from 15th January 2009. Its functions includes:
(a) Share trading services in DSE,
(b) Margin facility through bai-muazzal system,
(c) Full services Depository participant services and
(d) Discretionary account services.
From the very beginning it succeeded to achieve clients satisfaction. As a resu
lt, it has been
included in the DSE Most Active 20 Members list from the first month of its trad
ing activities
and during the year 2010 it secured 3rd position in the list. Considering ongoin
g clients demand,
we have extended branches in Khulna, Sylhet, Chittagong, Barisal, Brahmanbaria,
Uttara,
Dhanmondi, Gulshan during the year 2010.
As per direction of Bangladesh Bank and SEC a subsidiary company named "AIBL Cap
ital
Market Services Ltd." has been formed to conduct our brokerage business separate
ly from the
bank. In the meantime DSE and CSE membership has been transferred to the subsidi
ary
company. We have applied to SEC for issuing Stock broker and Stock dealer regist
ration
certificate which is now under process.
2.13 Position in the Stock Market
Banks share sustained a steady strong position since its induction at Dhaka Sto
ck Exchange &
Chittagong Stock Exchange in 1998. In Dhaka Stock Exchange the face value of tak
a 10 of our
Page | 22
share was traded at taka 110.00 highest in 2010. The market trend of our banks
share in Dhaka
Stock Exchange between January 2010 to December 2010 is stated in the list:
Share price List

Month
Opening
High
Low
Closing
(Tk.)
(Tk.)
(Tk.)
(Tk.)
January
52.23
59.30
50.20
58.88
February
58.50
61.40
52.00
52.60
March
51.88
54.50
48.10
54.15
April
54.73
75.40
53.33
72.85
May
73.00
100.00
56.30
87.00
June
86.70
96.00
81.00
93.80
July
94.10
104.90
91.60
98.20
August
99.20
102.90
92.60
98.70
September
101.90
110.00
100.10
109.70
October
66.40
72.60
63.00
64.40
November
69.00
77.90
64.00
71.50
December
72.30
73.50
54.00
66.88
2.14 Progress Analysis
At the end of 2010, the number of depositors stood at 498,330 and the accumulate
d deposit was
Tk. 52,973.97 million. The total number of investors stood at 40,672 and total i
nvestment
extended to them was Tk. 53,582.96 million. During the year 2010 the total incom
e was Tk.
7,522.25 million and total expenditure was Tk. 4,462.30 million. At the end of t
he year the profit
before tax and provision stood Tk. 3,059.95 million.
Page | 23
2.15 Capital Adequacy & Reserve Fund

According to BRPD Circular the Bank will have to maintain Tk. 4,000.00 million C
apital &
Statutory Reserve by August 2011. In compliance with the new provision, the bank
has raised its
Capital & Reserve from Tk. 4,065.96 million in the year 2010 to Tk. 10,512.81 mi
llion in 2010
by declaring 30% stock dividend out of the profit of the year 2009 and issuing r
ight share worth
tk. 2,338.64. The paid up capital of the bank has stood at Tk. 4,677.28 million
at 31st December
2010. The total reserve fund has stood at Tk. 1,746.42 million in the current ye
ar against Tk.
1,223.18 million at 31st December 2009. In this account, the bank experienced a
growth of
42.78%. The Bangladesh Bank has fixed the ratio of capital adequacy against Risk
-Weighted
Assets at 9% or Tk. 2000 million whichever is higher. The capital adequacy ratio
of the Bank as
on 31.12.2010 is appended below:
Capital Adequacy Ratio
15
10
5
0
2006
2007
2008
2009
2010
CAR
10.71
10.92
11.21
11.25
14.49
Page | 24
A. Tier-1: Core Capital

(Amount in mil ion BDT)
Particulars
2010
2009
Paid-up Capital
4,677.28
1,798.95
Statutory Reserve
1,681.82
1,156.52
Retained Earnings
1,274.86
542.60
Minority Interest in Subsidiaries
1,948.89
Nil
Total Core Capital
9,582.85
3,498.07
B. Tier-2: Supplementary Capital
Provision for Unclassified Investment
897.66
533.53
Exchange Equalization Fund
Nil
2.06
Assets Revaluation Reserve
32.30
32.30
Total Supplementary Capital
929.96
567.89
Total Capital (A+B)

10,512.81
4,065.96
C. Capital Adequacy Ratio
14.49%
11.25%
Shareholders Equity
(In Mil ion Taka)
10000
8000
6000
4000
2000
0
2006
2007
2008
2009
2010
Shareholders Equity 1690.18 2037.5 2705.74 3564.73 9647.45
Page | 25
2.16 Deposits
The total deposit of the bank was Tk. 52,973.97 million at 31st December 2010 as
against Tk.
38,355.50 million at 31st December 2009 recording a growth of 38.11% of which Tk
. 115.05
million was bank deposit and Tk. 52,858.92 million was general deposit. The pres
ent strategy is
to increase the deposit base through maintaining competitive profit rates and ha
ving low cost of
funds to ensure a better spread with an average return on investment. The mix de
posit of the
bank on December 31, 2010 was as follow:
Deposit Growth
(In Mil ion Taka)
60000
50000
40000
30000
20000
10000
0
2006
2007
2008
2009
2010
Deposit 16775.34 23009.13 29690.12
38355.5
52973.97
Page | 26
Deposit Mix 2010

Nature of Deposit
BDT in Million
% of total
Deposit
Al-Wadeeah Current Deposit

6,667.08
13
Mudaraba Savings Deposit
7,227.52
14
Other Mudaraba Deposit
11,941.82
22
Mudaraba Term Deposit
26,325.03
50
Bills Payable
812.52
1
Total
52,973.97
100
Page | 27
2.17 Investment
The investment of the bank has stood at Tk. 53,582.96 million as on 31st Decembe
r 2010 as
against Tk. 36,134.08 (Net off PR) million in the previous year showing an incre
ase by 48.29%.
The investment portfolio of the bank is well diversified and covers a broad spec
trum of
businesses and industries including readymade garments, textile, edible oil, shi
p scraping, steel
& engineering, chemicals, pharmaceuticals, cement, telecommunication, constructi
on, health
care, real estate, education, transport and investment under consumer schemes. W
e have geared
up efforts to improve the recovery rate of disbursed investment and also taken a
dequate measures
for converting the classified investment into performing assets. As a result, cl
assified investment
of the bank could be kept at a low level far below the national average. It is 1
.14% in our bank as
on 31 December 2010. The bank gives top-most priority to the creation of quality
assets and does
appropriate risk grading while approving commercial, trade and project investmen
t to different
clients.
Page | 28
Sector wise Investment

Sectors
2010
2010
(Tk. In Millions)
(Percentage)
Agriculture,Fishing and Forestry
685.40
1.21
Industry
14,277.03
25.18
Construction
2,512.86
4.43
Water Works & Sanitary Services
102.27
0.18
Transport & Communication
1,535.76
2.71
Storage
17.99
0.03
Trade Finance
32,786.47
57.82
Miscellaneous
4,786.02
8.44
Total (Including Profit Receivable)
56,703.8
100
Less Unearned Profit on Investment
3,120.84
Total
53,582.96
Page | 29
2.18 Small & Medium Enterprise Investment

To ensure proper manifestation and rapid advancement of Small & Medium Enterpris
es, a
number of SME related schemes are running in this Bank. In the light of a unique
definition by
Bangladesh Bank, bank is giving priority over financing to three categories of e
nterprises viz.
Industry, Trade & Services. Investment up to December 2010 of SME Sector is Tk.
14,499.30
million on which outstanding is 12,754.30 million, which is 24.62% of total inve
stment portfolio.
Besides, to speed up SME investment flow and to include in people who are beyond
the range of
banking facilities, a scheme named Small Enterprise Investment Scheme (SEIS) i
s launched.
With this scheme, operation of collateral security free SME investment is runnin
g. 71 branches
of total 78 branches are under the operation. At the end of December 2010, numbe
r of security
free SME clients is One Thousand One Hundred Twenty Eight (1,128) and investment
is Tk.
Page | 30
341.60 million which outstanding is Tk. 274.02 million. Skilled and experienced
staff are
recruited in different branches to ensure proper expansion of collateral securit
y free SME
investment. We prior Area Approach Method when SME financing. The statistics as
on 31
December, 2010 is shown in the table:
Particulars
Status
Total SME Investment
Tk. 14,499.30 Million
Terms & Conditions
Stipulated by the Bank
SEIS Investment (Collateral Security Free )
Tk. 341.60 Million
Minimum Investment
Tk. 50,000.00
Maximum Investment
Tk. 700,000.00
Number of Clients
1,128 Persons
Number of Branches under the scheme
71
Rate of Profit
09 %
Supervision Fee
0.50 %
Maximum Duration
3 years
Repayment system
Monthly Installment
Recovery Rate
99.84%
Terms & Conditions
Soft
2.19 Grameen Small Investment Scheme
On the focus of socio-economic development of rural poor, a scheme named Gramee
n Small
Investment Scheme (GSIS) is running in the bank from the year 2001. At present,
Forty Four
(44) rural branches are included in this scheme and this number is increasing gr
adually. At the
end of December 2010, Tk. 200.70 million is disbursed to Eleven Thousand Nine Hu
ndred Sixty
Four (11,964) clients in different income generated programs which outstanding i
s Tk. 83.00
Page | 31
million. Functioning on the basis of Group and Samity, this scheme helps on soci
o-economic
development of farmers, labours, fishermen, micro-businessmen and small entrepre

neurs.
Another important objective of this scheme is to give priority to make economica
lly selfdependent of rural women entrepreneur. To get investment under this scheme, no c
ollateral
security is required. Repayment system is weekly installment basis. Basically, t
his scheme is one
kind of supervised credit system and skilled personnel are working in different
branches to
ensure proper as well as continuous supervision. The statistics as on 31 Decembe
r, 2010 is
shown in the following tableParticulars
Status
Total Investment
Tk. 200.70 Million
Minimum Investment
Tk. 5000.00
Maximum Investment
Tk. 30,000.00
Number of Clients
11,964 Persons
Savings by the Clients
Tk. 11.60 Million
44
Number of Samity
762
Number of Group
2497
Rate of Return
10%
Repayment system
Weekly Installment
Recovery Rate
99.97%
Number of Villages Covered
695
Terms & Conditions
Soft
Page | 32
2.20 Investment on Agricultural Sectors

To face the increasing food shortage of the country, bank is paying massive atte
ntion to invest on
agricultural sectors. The main items of agricultural sectors are- crops, fisheri
es, warehouse,
poverty alleviation, irrigation, livestock development etc. At the end of Decemb
er 2010, total
agricultural investment is Tk. 175.80 million of this fiscal year. At the end of
Fiscal Year,
Outstanding is 211.35 million. With collateral and without collateral both are p
racticed in
agricultural investment. The statistics as on 31 December, 2010 is shown in the
table:
Agricultural Investment
Particulars
Status
Investment Portfolio
Tk. 211.35 Million
Fisheries
Tk. 71.16 Million
Poverty alleviation
Tk. 63.99 Million
Development of Livestock
Tk. 32.41 Million
Warehouse of corps
Tk. 22.62 Million
Crops
Tk. 20.28 Million
Agricultural Machineries
Tk. 0.37 Million
Irrigation
Tk. 0.32 Million
Others
Tk. 0.20 Million
Number of Clients
7577 Persons
Rate of Profit
10% -13%
Recovery Rate
98.74%
Terms & Conditions
Page | 33
2.21 Rural Agricultural Investment Scheme

On the basis of socio-economic development of marginal and lessee farmers, an ag
ricultural
based programme named Rural Agricultural Investment Scheme (RAIS) is launched.
Development in countrys internal food production as well as socioeconomic secto
r of farmers
are the main focus of this programme. We have already listed One Thousand Five H
undred Fifty
Five (1555) farmers under this scheme and total investment is Tk. 27.10 million
on which
outstanding is Tk. 17.60 million. The statistics as on 31 December, 2010 is show
n in the table:
Particulars
Status
Total Investment
Tk. 27.10 Million
Minimum Investment
Tk. 5000.00
Maximum Investment
Tk. 100,000.00
Number of Clients
1555 Persons
24
Number of Samity
124
Number of Group
315
Rate of Profit
10%
Repayment system
Monthly/Weekly Installment
Recovery Rate
100%
Number of Villages Covered
128
Terms & Conditions
Page | 34
2.22 Investment on Women Entrepreneurs

Al-Arafah Islami Bank Ltd. is working with women entrepreneurs to make them capa
ble of
earning by connecting with countrys economic activities. We prior women entrepr
eneurs to
invest on various productive sectors. By the side of collateral secured investme
nt, collateral
security free investment is also considered in the question of women development
. The statistics
as on 31 December, 2010 is shown in the table:
Agricultural Investment
Particulars
Status
Tk. 685.80 Million
Terms & Conditions
SEIS (Women Entrepreneur)
Tk. 3.75 Million
Number of Clients
09 Persons
Rate of Profit
9%
Maximum Duration
3 years
Repayment system
Monthly Installment
Recovery Rate
100%
Terms & Conditions
Soft
Microfinance (Women Entrepreneur)
Tk. 196.05 Million
Number of Clients
9398 Persons
Rate of Return
10%
Recovery Rate
100%
Page | 35
2.23 Al-Arafah Solar Electricity Investment Scheme

A different type of investment scheme named Al- Arafah Solar Electricity Invest
ment Scheme
is launched in order to face the present electricity crisis and to spread the be
nefits of renewable
energy among the rural people. This program treats as a innovative step on the h
istory of Private
Banking Sector in Bangladesh. It also has unveiled the wide field of Green Banki
ng concept, the
burning issue. Solar Electricity Investment Scheme is running under the contro
l of SME
Department with the support of newly created Power & Technology Unit. Skilled En
gineers &
Solar Technicians are recruited in order to ensure the perfect technical support
. We have already
established Twenty Five Thousand Five Hundred Ninety Five (25,595) Watt Power of
electricity
among Four Hundred Seventy Four (474) families through Eleven (11) Rural Branche
s so far.
Besides, we have established One Thousand Twenty (1020) Watt Powered solar panel
for our
newly inaugurated South Jatrabari Branch to produce solar electricity for the br
anch use. We are

running this program with own funding as well as skilled personnel. The statisti
cs as on 31
December, 2010 is shown in the table:
Particulars
Status
Total Investment
Tk. 12.13 Million
Electricity Provided
25,595 Watt. Power
Number of privileged Family
474
11
Rate of Return
10%
Repayment system
Down payment & Monthly Installment Basis
Recovery Rate
100%
Terms & Conditions
Soft
Page | 36
2.24 Treasury Operations

AIBL Treasury included Local & Foreign Exchange money market operated under the
norms of
Islami Shariah principles and guideline of Bangladesh Bank which is the Core-bank
ing and one
of the best earning units of the Bank.
2.24.1 Local treasury
The Local treasury department operates its functions to maintain CRR & SLR match
ing with
total deposit flow & Investment requirements of the Bank. But it does not partic
ipate in the call
money market for complying of Islamic Shariah principles.
2.24.2 Foreign Exchange Treasury
The treasury environment is ever changing due to new market dynamics, products d
evelopments
as such new risks are evolving on a continuous basis. As per instructions & guid
ance of highly
skilled Management & Board of Directors, the Banks Treasury activities have bee
n expanding
gradually in local and Global Market through its active Dealing room on those pr
oducts
permissible under Islamic Shariah to cope with the changing & challenging market
situation.
The Bank has separated Treasury front Office (Dealing Room), Mid Office & Back o
ffice with
reporting lines each of the offices as per international best practices of Treas
ury Management. At
present, The Banks Treasury engages in providing competitive/live exchange rate
s, dealing with
Merchant & Corporate transactions, contribution to stabilize the Inter-Bank Mark
et, exploring
new avenues/opportunity to utilize funds at home and abroad, managing local curr
ency liquidity,
day to day management of risk associated with Treasury activities and thereby en
sures
profitability of the Bank.
The Management of the Bank has developed different strategies to check & control
s key issues
like Counterparty limit, Stop-Loss limit, daylight Limit, Management action trig
gers (MAT),
Page | 37
Open Position/Overnight limit, time & amount limit for reconciliation of Nostro
Accounts and
ensure adherence/compliance of these limits.

In order to globalize the Treasury activities, AIBL has in the meantime signed u
p agreement with
ICICI Bank, Mumbai & Mashreq Bank, UAE for direct dealing through Online. Treasu
ry is now
trying to build up capacity to cope with all possible exigencies to maximize ret
urns on
Investment & minimizing risks hence the Treasury has emerged as the main source
of non
funded income. The treasury has introduced Total Quality Management (TQM) system
to each
field of its activities.
2.25 The International Trade
AIBL is quite active in conducting International trade activities through financ
ing of Import,
Export and foreign Remittances business. It has at present a network of 78 Branc
hes throughout
the country out of which 21 branches are authorized to deal in Foreign Exchange
business. AIBL
has 24 Nostro Accounts 229 Relationship Management Application (RMA) with differ
ent
renowned Foreign Banks /Foreign Correspondents in 71 countries across the world.
At the end of
2010, the total Foreign Exchange portfolio (Import, Export & Remittances) was Tk
.92,408.40
Million showing a growth of 52.86% of this Bank in compare with the correspondin
g year. The
total export of the Bank was Tk. 23,546.10 million in 2009, which was increased
by 36.08 % to
Tk. 32,042.40 in 2010. Similarly, the amount of import has increased from Tk. 34
,074.80 million
in 2009 to Tk. 55,934.10 million in 2010 experiencing a growth of 64.15%. The In
ward foreign
remittances business of the Bank recorded a tremendous growth rate of 56.48% fro
m Tk.
2,832.28 million to Tk.4,431.90 million in comparison with last year due to star
ting live dealing
by Treasury & delivery of quality services to the clients.

Page | 38
2.26 Income
Investment income: The investment income was Tk. 4,143.30 million during the yea
r 2010
which registered a growth of 3.47% over the previous year. Investment income is
55.08% of the
total income of Tk. 7,522.25 million.
Income from other than investment: The bank has earned Tk. 3,378.95 million from
sources
other than investment like commission income, exchange income, locker rent etc.
in the current
year which is 44.92% of the total income. It indicates 159.70% growth over the y
ear 2009.
2.27 Expenditure
Profit paid to depositors: The Bank has paid the depositors Tk. 3,133.69 million
which is
75.63% of the investment income and 70.23% of the total expenditure for the year
2010. It
indicates 17.48% growth over the year 2009.
Page | 39
Administrative and Other Expenses: The administrative and other expenses were Tk
. 1,328.61
million during the year showing 46.25% growth over the year 2009. It is 29.77% o
f the total
expenditure.
2.28 Operating Profit
The bank earned operating profit of Tk. 3,059.95 million during the year 2010. T
he pre-tax profit
of the Bank during the year 2009 was Tk 1,729.83 million and thus the Bank attai
ned Positive
growth of 76.89% in respect of operating profit. The provision for income tax fo
r the year
amounted to Tk. 873.01 million and divisible profit available for appropriation
amounted to Tk.
1,819.05 million.
Page | 40
2.29 Dividend
The bank has been paying dividend every year since 1998 just after conversion of
a public
limited company. The Board of Directors of the Bank is pleased to recommend 26%
stock
dividend in the year 2010. Table of Historical Dividend Payment Percentage are a
s follows:
Year
Dividend (%)
2001
7.5% Cash
2002
20% Bonus
2003
16% Bonus
2004
15.50% Bonus
2005
26% Bonus
2006
35% Bonus
2007
20% Bonus
2008
30% Bonus
2009
30% Bonus
2010
26% Bonus
Page | 41
2.30 Information Technology

Al-Arafah Islami Bank Ltd. with the vision of becoming the leading Bank in the c
ountry both in
service and technical aspects have taken bold steps to full fill the requirement
s of the mass.
Banking sector is going through massive change with the advent of new technologi
es as well as
new ways and norms of banking. With information technology becoming the tool of
almost
every trade, IT Division at Al-Arafah Islami Bank took the challenge of giving t
he best possible
service to its users and customers alike. AIBLs pledge to adhere with the princ
iples of Islamic
Norms and ethics and combine them with todays technology threw a great challeng
e to the IT
division. It has been a while now that AIBL is providing True Centralized online
payment
services to its customers in all its branches.
With 78 online branches AIBL is committed to provide online facilities at any ne
w branch that is
added to the banks existing network. To keep pace with the growing customer need
s as well as
Page | 42
new technologies AIBL has taken a number of steps to facilitate clients while im
proving the
existing services and adding on new services. The bank is striving hard towards
the goal of
changing from brick to click bank while taking banking services to the people wh
o are not yet
under the banking umbrella.
To begin with AIBL takes pride using successfully a locally developed Core Banki
ng System
which it feels is major step in promoting our local talent. IT Division of the b
ank works day and
night with its partners finding ways to reduce costs without compromising with c
ustomer
experience.
By this time Bank can proudly announce that it is the part of Bangladesh Banks
recently
launched Automated Clearing House (BACH) and its Electronic Fund Transfer Networ
k
(BEFTN). AIBLs IT division has worked in tandem with Bangladesh Banks personne
l to make
the project successful and were among the first banks to successfully implement
and comply to
requirements provided by the Central Bank. With Allah Almightys grace AIBLs IT
Division has
rose to the occasion and extended its all out co-operation to the central Bank
in implementing
the new projects under the DIGITAL Bangladesh theme. Clearing is now completely
automated
along with Electronic Fund Transfer.
Under the guidance of the Central Bank AIBL has provided CIB information as data
with
minimum error to the Central Bank. The project is under way and IT Division is e
xtending full
support to CIB Cell of Bangladesh Bank.
Banks hand shake with the El-dorado project has facilitated the far flung custom
ers with means
to get access to their funds virtually in minutes which used to take not long ho
urs but days to
reach them.

Page | 43
In line with the banks strategy of taking the bank to the customers AIBL will be
launching its
ATM / POS services by April 2011. Internet Banking (e-Commerce), Mobile banking
(mCommerce) and other delivery channels will be available to customers in recent f
uture.
Bangladesh Bank coming up with guidelines for Internet and mobile fund transfer
the Bank is
ready to take the challenge and provide its customers the best possible experien
ce of technology
combined with safe and secure Banking.
Al-Arafah renews its pledge to combine the latest technology available with crea
m of bankers to
provide customers with an experience of hassle free banking where a customer can
pay his /her
utility bill even at dead of the night. Though AIBL have attained a lot in terms
of respect from
the banking industry and customers alike in terms of its ventures with technolog
y its
management is pledge bound to mix the latest trends in technologies with banking
to provide the
ultimate experience to its customers.
2.31 Marketing & business development
Competition has become severe, to ensure our market share and for business devel
opment of the
bank, this division has been formed at the end of the year headed by a senior ex
ecutive. This
division will identify business opportunities, develop strategic business plan,
Brand development
and management, Market research - development and management of new product, eve
nt
management and existing customer care.
2.32 Audit and Inspection
Experienced officials of Internal Audit and Inspection Division of AIBL conduct
regular audit
and inspection of the branches and Departments of Head Office for review of oper
ational
effectiveness and internal/external compliance requirements. In order to minimiz
e risk and to
Page | 44
detect the deficiencies/lapses, irregularities and reducing the risk, the Bank B
ranches and Head
office divisions are subject to the following audit and inspections every year:
a) Risk based comprehensive Audit & inspection all the branches once in a year.
b) Auditing of handling Foreign Exchange & Foreign Trade - quarterly basis.
c) Surprise inspection at regular intervals.
d) Auditing of each Division / Department of Head Office once in a year.
During the year 2010, Banks Audit Team undertook the following audit and inspec
tions:
Nature of Inspection
Nos. of branches/division
Comprehensive & Risk Based
Internal Audit & Inspection
60 (Branches)
Surprise Inspection
04 (Branches}
Internal Audit & Inspection (HO)
05 (Division/Dept.)
To preclude incidence of errors and their recurrences, more emphasis was given o
n spot
rectification of irregularities while auditing/inspecting a specific branches. I
n addition,
Concurrent Audit and Self Audit are also introduced in the branches.
Concurrent audit is a systematic and timely examination of financial transaction
on a regular
basis to ensure accuracy, authenticity and compliance with procedures and guidel
ines. Such
audits are conducted by the Incumbent In-charges and assigned officers of the br
anches to bring
down the irregularities at a minimum level instantly.
In 2010, Bangladesh Bank inspection teams inspected different Branches & divisio
n and
Department of Head office and also conducted Special Inspections on 06 Core Risk
areas in
Banking.
Page | 45
Muraqibs of Shariah Supervisory committee conducted inspection in all branches of

the bank
during the year to observe the Shariah compliance.
2.33 Rating Report
Credit Rating Agency of Bangladesh (CRAB) Limited has adjudged A2 (pronounced Si
ngle A
Two) rating in the Long Term and ST-2 rating in the Short Term for Al- Arafah Is
lami Bank
Limited.
Date of rating
: 22June, 2010
Validity
: 1 (One) Year
Definitions of A2 & ST-2 are given below:
A2 (Strong Capacity & High Quality) : Commercial Banks rated in this category ha
ve strong
capacity to meet their financial commitments but are somewhat more susceptible t
o the adverse
effects of changes in circumstances and economic conditions than commercial Bank
s in highrated categories. This level of rating is adjudged to be of high quality and is
subject to low credit
risk.
ST-2 (High Grade): Commercial Banks rated in this category are considered to hav
e strong
capacity for timely repayment. Commercial Banks rated in this category are chara
cterized with
commendable position in terms of liquidity, internal fund generation and access
to alternative
sources of funds is outstanding.
2.34 Human Resource
Human resource is our prime asset. It is neither the machine nor the technology
alone, but the
invaluable mix of man -machine interface that makes technology work. We strongly
believe
while the capacity of machine is limited, the potential of human being is unlimi
ted. The qualities
Page | 46
of loyalty to the company and to the customers, tenacity to learn more and the c
ommitment to
perform characterize our human resource. Our employees with outstanding quality
are rewarded
in the Bank. As a result, our staff morale is very high. They show good performa
nce in the Bank.
The management frequently communicates with the employees and listens to their n
ew ideas and
suggestions. A major factor behind our success in 2010 and in the preceding year
s is our
employees.
The Human Resource Division of Head Office is responsible for fixing principles
and policies
concerning personnel and certain areas of administration. The division is respon
sible for
employee relation, staffing succession, planning, training, employee benefits, c
ompensation and
their social security. The salary and compensation package for all levels of our
employees was
reviewed and revised last year to be competitive with all local private sector B
anks and financial
institutions in the country. It is targeted to attract and retain good performer

s in the Bank.
We recruited 480 fresh entrants and 15 experienced Bankers during the year 2010
through a
transparent recruitment process to fulfill the manpower requirement in the Bank.
The Bank also
sent 9 employees to BIBM, 07 employees abroad, 25 employees to Bangladesh Bank f
or training
in different fields to upgrade themselves with the latest techniques of modern b
anking. We have
1,711 staff in the Bank of whom 73 are executives, 1339 are officers and 299 oth
er staffs as on
December 31st 2010.
SL No.
Designation category
Number
1
Executives
73
2
Officers
1339
3
others
299
Total
1711
Page | 47
The Bank Plans to rationalize per-Branch employee by equitable Manpower distribu

tion of
human resource amongst the existing and future branches. As a part of social com
mitments Bank
accommodated 279 students from different renowned universities for doing interns
hip program
in our Bank during the year 2010. The Bank has recruited experienced new manpowe
r to
strengthen its large scale operations. Total manpower employed in the Bank inclu
ding Managing
Director is 1,711 at 31 December 2010; which was 1,296 at the end of the last ye
ar.
2.35 Training & Motivation
Training is one of the most effective and well recognized weapon in developing h
uman
resources. Training programs are being carried out for the Probationary Officers
, Assistant
Officers, Junior Officers, Branch Managers and Officers of different grades and
Executives by
Al-Arafah Islami Bank Training & Research Academy from its very inception. AIBT
RA sets
training-plans from the early hours of the year and every year a training calend
ar is prepared and
approved by the Management. Training Academy conducts training Courses / Worksho
ps
simultaneously at Dhaka as well as outside Dhaka. Training courses, workshops, I
n-house
training etc., are tabled and conducted on current day updated banking aspects c
oncerning new
ideas, procedures and techniques of banking. In the training sessions lecture me
thods as well as
discussions, group discussions, case study, exercise, practical works, simulatio
n method etc. are
followed. Training materials e.g., course folders, CD etc comprising hand-out ar
e delivered to
the participants. For enhancing effectiveness, modern training aids e.g. multime
dia projector,
power point presentation, flip chart etc. are used. For the purpose of assessing
trainees
knowledge and skill pre-course and post course evaluations are done. Evaluation
of the trainers
is also conducted secretly by the participants for making training more effectiv
e.
In 2010 total number of 1808 trainees were trained at training Academy through 4
4 training
courses / workshop consisting of 223 working days. A total 7091 executives/offic
ials have
trained on different subject through 8 outreach and 615 "In-house training at Br
anches". The
numbers of officials trained in 2010 is 5 times of the total manpower of the Ban
k; That is, in this
year each official has attended in an average of 5 (five) training programs. In
these programs
Page | 48
training sessions were conducted by resources persons from Bangladesh Bank, BIBM
and many
other government and private Bank and financial institutions besides Banks own
speakers. As a
general member of Bangladesh Institute of Bank Management (BIBM) 9 officers and
executives
have got training form that institution on different courses in this year. At th
e same time, some
other 25 officers and executives of the Bank have been trained in several traini
ng institutes
including Bangladesh Bank Training Academy and others.
Moreover, 7 executives of the Bank participated in training courses in India, Ne
pal, Singapore
and Malaysia in the year of 2010.
2.36 Risk Management
During their operations, Banks are invariably faced with different types of risk
s that may have a
potentially negative effect on their business. Risk Management in Bank operation
s includes risk
identification, measurement and assessment, and its objective is to minimize neg
ative effects on
Banks financial results. Considering the above, Banks are required to form a sp
ecial
organizational unit in charge of risk management. They have also required prescr
ibing
procedures for risk identification, measurement and assessment, as well as proce
dures for risk

management. Like Other Bank, to minimize potential risks, Al-Arafah Islami Bank
has also
taken different steps as per direction of Bangladesh Bank. As a part of those in
itiatives our Bank
has established a division named Risk Management Division whose main objective i
s to identify,
measure and control of various risks prevailing over various operation of our Ba
nk. Risk
Management Division (RMD) generally cover six core risk areas of Banking, vis; I
nvestment
(Credit) Risk, Foreign Exchange Risk, Money Laundering Risk, Asset Liability Man
agement
Risk, Internal Control & Compliance Risk and IT Risk. These divisions are functi
oning
independently according to guideline of Bangladesh Bank and required to report d
irectly to the
Managing Director of our Bank.
Page | 49
2.37 Implementation of Basel-II

Basel-II a new framework for calculating minimum capital requirement is structur
ed around
three pillars: minimum capital requirement (on credit risk, operation risk and m
arket risk),
supervisory review process and market discipline. Implementation of Basel-II fra
mework in
Bangladesh will integrate the risk management process of the bank and its capita
l adequacy
requirement. As per decision of the Basel II committee of Bangladesh Bank, all b
anks will start
implementing revised regulatory capital framework "Risk Based Capital Adequacy f
or Banks"
from January 2009. Following methodology of Basel II would be followed in Bangla
desh:
a) Standardized Approach against Credit Risk for calculating Risk Weighted Amoun
t
(RWA) supported by External Credit Assessment Institution (ECAIs)

b) Standardized Rule Based Approach against Market Risk and
c) Basic Indicator Approach for Operational Risk
To create awareness among the credit officers, the bank has arranged training pr
ograms on
Basel-II and its impact on selection of credit proposal. Moreover to comply with
the instruction
of Bangladesh Bank, the Bank has taken initiatives for quarterly reporting under
Basel-II to
Bangladesh Bank along with the existing capital adequacy rules and reporting.
2.38 Branch Network
AIBL started its working at 161, Motijheel C/A with a Branch named Motijheel Bra
nch on 27th
September,1995 was the first & main Branch of AIBL and has been operating throug
hout the
country. The Head Office of the Bank was situated at the same holding of Motijhe
el Branch
since its establishment but from 11 January, 2007 it has started its working at
its own premises
36, Dilkusha (6th, 7th, 8th & 9th floor), Dhaka-1000. The age of the Bank is onl
y 16 years and
during this short period of time, the Bank has established total 80 Branches ove
r the country and
made a smooth network inside the country. In 2010, the Bank got approval to open
10 (Ten) new
Page | 50
branches and 8 SME/Krishi Branches. The number of Branches as Division wise is m

entioned in
the following table:
Division
No. of Br.
Dhaka Division
43
Chittagong Division
13
Sylhet Division
7
Khulna Division
6
Rajshahi Division
7
Barisal Division
4
Total
80
2.39 Cards & Retail Banking
By the Grace of Almighty Allah, Bank is going to Launch & Commerce ATM / Debit c
ard
product within 1st quarter in the year of 2011 which will add new channel among
our
prospective clients for making round the clock cash transaction facility. We hav
e also plan to add
new products considering Islamic Shariah say VISA Islamic Card , VISA Debit Card,
Mobile
Banking, SMS banking etc to facilitate electronic banking services to all catego
ries of customers
and also to create new sector for earning profit which will buildup Banks image
in new
dimension. Hopefully we will be able to provide these services within next year
under the
dynamic guidance/leadership of the Board of Directors of the Bank and Management
.
2.40 Appointment of Statutory Auditor
In the 15th Annual General Meeting of the Bank M/S Hoda Vasi Chowdhury & Co. and
M/S
ACNABIN Chartered Accountants were appointed External Auditors of the Bank for a
term till
conclusion of the 16th Annual General Meeting. As per Bangladesh Bank Rule M/s H
oda Vasi
Chowdhury & Co. Chartered Accountants will be retired and M/S ACNABIN Chartered
Page | 51
Accountants are eligible for another terms. The Board has approved M/S Masih Muh
ith Haque &
Co. and M/S ACNABIN Chartered Accountants for re-appointment as External Auditor
s by the
shareholders till the 17th Annual General Meeting.
2.41 AIBL at a Glance
Particulars
2005
2006
2007
2008
2009
Authorized Capital
1000.00
2500.00
2500.00
2500.00
5000.00
Paid up Capital
677.94
854.20
1153.18
1383.81
1798.95
Reserve Fund
542.22
835.98
1091.95
905.33
1223.18
Shareholders Equity
1220.16
1690.18
2037.50
2705.74
3564.73
Deposit
11643.66
16775.34
23009.13
29690.12
38355.50
Investment
11474.41
17423.19
22906.37
29723.79
36134.08
Import
12631.60
1882.14
27042.72
32685.13
34074.80
Export
4932.90
914.27
12714.91
20176.64
23546.10
Total Income
1452.68
2172.48
2955.61
4387.26
5305.63
Total Expenditure
904.48
1202.71
2199.43
2859.16
3575.80
Profit before Tax
548.20
855.47
756.18
1528.09
1729.83
Profit after Tax
262.90
470.02
347.31
668.24
858.99
Income Tax
215.10
385.45
235.53
590.66
594.19
Total Assets
15336.89
21368.17
30182.32
39158.44
48515.79
Fixed Assets
208.00
215.11
334.48
396.76
466.30
Earnings per share (Taka)
387.80
550.24
30.12
48.29
47.75
Dividend per share
26.00%
35%
20%
30%
30%
Bonus
No. of Shareholders
5402
4487
12013
10664
11382
Number of Employees
771
912
1033
1080
1296
Number of Branches
41
46
46
50
60
Manpower per Branch
19
20
23
22
22
Page | 52
2.42 Corporate Information for the Year 2010

Date of Incorporation: 18th June
Date of Formal Inauguration: 27th Sept.
Authorized Capital: Tk. 500 Crore
Paid up Capital: Tk. 233.86 Crore (30.09.2010)
Statutory Reserve: Tk. 148.74 Crore (30.09.2010)

Total Equity: Tk. 461.88 Crore (30.09.2010)
Number of Branches: 78 (2010)
Number of Employees: 1700 (11.12.2010)
Page | 53
CHAPTER
3
PRODUCTS & SERVICES OF AIBL
Page | 54
3.1 Various Deposit product of the Bank in 2010

1. Mudaraba Term Deposit
Deposit starts from Tk.50000 or above is obtained under the aforesaid scheme for
tenure
of 3, 6, 12, 24 and 36 months and the same is withdrawal with profit at the end
of the
tenure.
2. Mudaraba Savings Deposit
Any person can open a Mudaraba Savings Deposit account by his/her name with a
minimum balance of Tk. 500. The account holder can operate this type of deposit
account
as their wish, i.e. they can deposit and withdraw any amount of money at any tim
e.
3. Short Notice Deposit (SND)
This account is generally for business organization. The owner of business opera
tes this
account. Here the owner can deposit any amount at any time, but he have to infor
m or
send a short notice to the bank authority before seven days of withdrawals.
4. Monthly Hajj Deposit

Hajj deposit at monthly installment from 1 (one) year to 20(twenty) years are ac
cepted
under the above scheme to enable the account holder to perform Hajj out of the
accumulated saving with profit.
5. Monthly Installment Term Deposit (ITD)
Deposit in monthly installment @ Tk.300/-, Tk.500/-, Tk.1000/-Tk.1500/- &
Tk.2000/- is obtained under the aforesaid scheme for a tenure of 5,8,10 and 12 y
ears and
the same is withdrawal with profit at the end of the tenure.
Page | 55
6. Monthly Profit Based Term Deposit (PTD)

Under the above scheme, deposit of Tk. 1.00 lac and multiple thereof are accepte
d for a
term of 5 (five) years and the bank gave profit thereon Tk. 885 per month per la
c and
proportionately on the rest amount of deposit under the category during the year
under
review. The aforesaid rate shall, however, be adjustable at the close of calenda
r year on
finalization of accounts.
7. Monthly Savings Investment (SID)
Deposit under the scheme is accepted by monthly installment and after expiry of
the
term; double amount of such savings is given as investment in feasible sectors b
y the
bank as per choice of the depositors without any collateral security. Any one by
saving
under the scheme can take business venture on utilization the amount saved under
the
scheme as well as availing bank investment.
8. One Time Hajj Deposit
Under the above scheme, fixed amount of Hajj deposits are accepted from the clie
nts for
particular term and as per rules profit is accumulated thereon per year in this
regard. As
and when the fixed deposit is matured, Hajj expenses are defrayed by the same. U
nder
the scheme, the guardians may also open Hajj account to enable their successors
to
perform Hajj. Highest amount of profit is paid in the above types of deposit by
the bank.
9. Under this scheme the bank has introduced saving bonds for Tk. 10,000/-, Tk.2
5,000/and Tk. 100,000/- for 3,5 and 8 years. After the completion of the tenure the de
posit.
(a) Al-Arafah Savings Bond (3 Years)
(b) Al-Arafah Savings Bond (5 Years)
(c) Al-Arafah Savings Bond (8 Years)
Page | 56
10. Marriage Saving Investment Scheme (MSIS)

Fixed monthly installment for a particular period is to be deposited to defray t
he expenses
of marriage and the bank allows double of saving or Tk.30,000/- which is higher
as
investment to procure ornaments, furniture, fixture etc., repayable in 24 monthl
y
installment without any collateral security.
There have some other deposit products of the bank11. Pensioners deposit scheme
12. Special Saving (Pension) Scheme
13. Cash WAQF
14. Lakhopati Deposit Scheme
15. Kotipati Deposit Scheme
16. Millionaire Deposit Scheme
17. Double Benefit Scheme
18. Triple Benefit Deposit Scheme

19. Probashi Kallyan Deposit Pension Scheme
Page | 57
3.2 Investment modes of AIBL

The Total investment of the bank stood at Tk.5079.21 million against Tk.3728.41
million during
the corresponding period of last year. The percentage of increase is 36.23% as a
gainst 13.00% in
banking sector. The bank extends investments to the clients under the following
modes of
investment under Islamic Shariah:
Bai-Murabaha or simply Murabaha
The terms Bai-Murabaha have derived from Arabic words Bai and Ribhum. The word
Bai means purchase and sale and the word Ribhum means an agreed upon profit. So
Bai-Murabaha means sale for an agreed upon profit. It may be defined as a contra
ct
between a Buyers and a Seller under which the seller sells certain specific good
s
permissible under Islamic Shariah and the word Law of the land to the Buyer at a
cost
plus and agreed upon profit payable today or on some date in the future in lumpsum or
by installments. The profit may be either a fixed sum or based on a percentage o
f the
price of the goods.
Musharaka
The word Musharaka is derived from the Arabic word Sharikah meaning partnership.
Islamic jurists point out that the legality and permissibility of Musharakah is
based on the
injunctions of the Holy Quran, Sunnah and Ijma (consensus) of the scholars.
Musharaka transaction may be conducted in the following manner:
One, two or more entrepreneurs approach an Islamic Bank to request the financing
required for a project. The bank, along with other partners, provides the necess
ary capital
for the project. All partners including the Bank have the right to participate i
n the project.
Page | 58
The profit is distributed according to an agreed ratio. However, losses are shar
ed in
exactly the same proportion in which the different partners have provided the fi
nance for
the project.
Mudarabah
The term Mudarabah refers to a contract between two parties in which one party s
upplies
capital to the other party for the purpose of engaging in a business activity wi
th the
understanding that any profits will be shared in a mutually agreed upon. Losses,
on the
other hand, are the sole responsibility of the provider of the capital. The firs
t party
provides capital and the other party provides the expertise with the purpose of
earning
lawful profit (approved by Islamic law) which will be shared in a mutually agree
d upon
proportion.
Bai-Muajjal
The term Bai and Muajjal are derived from the Arabic words Bai and Ajal where
Bai means purchase and sale and Ajal means a fixed time or a fixed period. So BaiMuajjal is a sale for which payment is made at a future fixed date or within a f
ixed
period. In short, it is a sale on Credit. It is basically a contract between a b
uyer and seller
under which the seller sells certain specific goods, permissible under Shariah an
d law of
the country to the buyer at an agreed fixed price payable at a certain fixed fut
ure date in
lump-sum or in fixed installments.
Bai-Salam
The term Bai-Salam is used to define a sale in which the buyer makes advance pay
ment,
but delivery is delayed until sometime in the future. Usually the seller is an i
ndividual or
business and the buyer is the bank.
Page | 59
3.3 SME Banking

Small and Medium Enterprise (SME) is playing a significant role to the growth of
overall GDP
of the country. Of all industrial productions, a huge part stems from SME. In or
der to boost up
the small and medium enterprises of the country, Bangladesh Bank has recently ad
vised the
commercial banks to enhance the flow of investment and offered directives and po
licies to
supervise and monitor this sector.
As SME has emerged as a thrust sector, Al-Arafah Islami Bank Ltd. also considers
it important
to extend and enhance finance for the same. Keeping this idea in the forefront,
the bank has
prepared an integrated policies, methods and procedures for SME investment.
Purpose
To facilitate small and medium level entrepreneurs
To boost up the small business in the country
To facilitate the growth of agro-industries
To create employment
To broaden the base of Islamic Banking in the society
To encourage women entrepreneurs
Modes
Working Capital Investment
Bai-Muajjal
Murabaha / Murabaha TR
MPI / MPI- TR
Mudaraba
Musharaka
Page | 60
Fixed Capital Investment

HPSM (Equity required)
Mudaraba
Musharaka
Rate of Profit/ Rent
Working Capital Investment : 16% (On Reducing Balance Method)
Fixed Capital Investment
: 15% (On Reducing Balance Method)
Eligibility
Permanent resident of Bangladesh
The age must range between 25 years to 60 years
Physically fit and capable of working hard
Capable of reading & writing
Capable of managing his / her business successfully
Sufficient Infra-structure and skilled personnel
At least 02 (two) years experience in the applied business
Having Transparent CIB Report
Valid Licenses, such as- Trade License, VAT registration, TIN, NOC from Environm
ent
Department (where applicable)
Other terms and conditions stipulated by the bank
Securities against Investment
Personal guarantee of spouse/parents/other family members.
In case of limited companies, guarantees of all directors other than nominated d

irectors
shall be obtained.
Page | 61
Registered mortgage of immovable properties with registered Power of Attorney (f

or 2
lac and above).
Third party personal guarantee (at least one).
Post dated cheques for each installment and one undated cheque for full investme
nt value
including full mark-up profit.
Hypothecation on the inventory, receivables, advance payments, plant and machine
ry.
Bank may relax the security for investment amount up to 2 lac for the growth of
SME
investment.
3.4 Microfinance
The economy of Bangladesh mostly depends on rural development. Poverty stands in
the way of
the growth of this economy. Although a number of NGOs and financial organization
s work in
the sub-urban and villages with a view to alleviating poverty, a very few are fo
und working with
the compliance of Islamic Sariah. It is a national responsibility to alleviate a
bject poverty from
the rural area. To help change the socio-economic condition of the impoverished
people of the
villages, Al-Arafah Islami Bank Limited has initiated a project entitled "Krishi
O Grameen
Khudra Biniog Prokolpa (Microfinance). With this project, Bank is working for re
duction of
poverty, development in agricultural sectors, creation of job opportunities etc.
We hope this will
develop the socio-economic condition of a large segment of the rural folk.
It is a group based work. The main characteristics are:
This is a supervised investment programme

A group consists of 5 (five) members
8 (eight) groups make a Samitee. It means that a Samitee contains 40 members
Every group has a Group Leader and a Deputy Group Leader
Every Samitee has a Samitee Leader and a Deputy Samitee Leader
All members must attend the weekly meeting
Page | 62
Ceiling of Microfinance Investment is from Tk. 3,000 to Tk. 50,000.

Purpose
To facilitate rural entrepreneurs
To develop socio-economic condition of rural people
To save rural people from usury
To facilitate the growth of agro-industries
To create employment scope
To broaden the base of Islamic Banking in the rural society
To encourage women entrepreneurs
Modes
Working Capital Investment: Bai-Muajjal
Fixed Capital Investment: HPSM (20% Equity required)
Rate of Profit/ Rent
Working Capital Investment : 15%
Other Charges
Risk Fund : 1% of Investment Limit (Payable before disbursement)
Repayment
Weakly installment basis
Number of installment is 50 (2% of Investment per week).
Page | 63
3.5 Corporate Social Responsibility

3.5.1 Conceptualization of CSR
The modern era of CSR concept was evolved in 1950s when it was more commonly kno
wn as
social responsibility. CSR has been defined as "the integration of business oper
ations and values
whereby the interests of all stakeholders, including customers, employees, inves
tors, and the
environment are reflected in the organizations policies and actions. By CSR prac
tices an
organization can improve communication with the community and other stakeholders
, ensure
accountability and transparency in its operation, improve internal decision maki
ng and cost
saving, enhance corporate image, improve reputation and ability to enlarge marke
t share and
Enhancement of customer true worthiness, profitability and sustainable developme
nt.
3.5.2 CSR activities of Al-Arafah Islami Bank Ltd.
CSR is an integral part of corporate culture and ethics. AIBL respond positively
in every sphere
of social activities and delivering innovative solution to its valued customer a
nd in the same
manner AIBL also helping different areas of social activity through its CSR acti
vities. During the
year 2010 AIBL accomplished different humanitarian and social activities which i
nclude
allocation of fund Tk. 24.00 million for AIBL foundation to establish kidney dia
lysis center,
donation to liberation war Museuim Tk. 5 million, Bangladesh Olympic Association
Tk. 5
million, FBCCI Social Activity Tk. 1 million, Nimtali tragedy Tk. 0.42 million,
Pilkhana tragedy
Tk. 0.48 million and different hospitals and universities. Besides, AIBL have ta
ken a program to
develop manpower and make them self employed as well as assisting them for emplo
yment in
abroad.
Page | 64
3.5.3 Some CSR Activities of AIBL in details:

Staff Welfare Project
The Bank always keep a careful eye on the economic security and benefit of its s
taffs & officers.
The Bank operates a contributory provident fund, a social security & benevolent
fund and a
gratuity fund for its employees.
Al-Arafah Islami Bank Foundation
The Bank has a foundation performing philanthropic activities. Al-Arafah English
Medium
Madrasah, Al- Arafah Islami Bank Library and Al-Arafah Islami Bank Foundation Ki
dney
Dialysis Center are major three are of its philanthropic activities.
AI-Arafah English Medium Madrasah & School
Al-Arafah English Medium Madrasah & School, a promotional welfare project envisa
ged to
transform our future generation Akhirat-oriented and at the same time provide th
em with faith
based and modern education which would keep them in the mainstream of socio-econ
omic life
professionally established in 1998 by Al-Arafah Islami Bank Foundation. This is
the first English
Medium Madrasah & School in Bangladesh intended to foster the cause of Islamic e
ducation
providing O and A1 level education under Edexel, UK curriculum. Al-Arafah Engl
ish Medium
Madrasah & School is running a Hifz section along with its English medium curric
ulum. 10 Hifz
students successfully completed the Hifzul Quran course from this section in 201
0. At present
total 225 students are studying in this institute.
Since 1999 the institute is providing English medium education under Edexel, UK
curriculum.
Edexel, UK in Bangladesh agreed to train our teachers for O level course. Our i
nstitute became
the member of English Speaking Union launched by the British Ambassador in 2010
which is
patronised by Her Majesty the Queen of UK.
Al-Arafah English Medium Madrasah & School is a corporate member of British Coun
cil. Our
students are enrolled as members of Young Learner Center (YLC). We are allowed a
t a time to
Page | 65
borrow 25 books and educational DVDs for 7 weeks. Our students are taking part i
n all sorts of
competition program in British Council. In 2007 one of our girl students took pa
rt in art
competition on "Air Pollution" arranged by commonwealth through British Council.
In 2008 our
two students got B & C grade in essay competition arranged by British Counci
l. A group of our
students regularly goes to British council to join Young Learner Center to rea
d books and watch
educational movies.
Our students have also been participating in many Hand Writing competitions in N
ational level
since its inception. Our students won 3rd prize in 2008 at Dhanmondi local area
Hand Writing
competitions. 45 students took part in Hand Writing competition in 2008 arranged
by Ekushey
TV channel. Later it was telecast for viewers. Every participant got consolation
prize.
Some of our students joined International Scout moot on 28th December, 2002 in T
hailand.
Students of Al-Arafah English Medium Madrasah established English Language Club
in 2006 to
promote English Language in the Madrasah Campus. Clubs main motto is to increas
e Language
proficiency with correct pronunciation. Language Club Members are assigned to pr
omote the
habit of speaking English language among students. The Language Club is publishi
ng a
Language Magazine regularly. The Magazine contains 30 pages which encourage all
level of
students to write some articles for the magazine.
Al-Arafah Islami Bank Library
Library is the carrier & reservoir of knowledge. Al- Arafah Islami Bank has show
n that is not
only generates profit, but also contributes significantly in the field of provid
ing good source of
knowledge by establishing a public library at 32, Topkhana Road, Chittagong Bhab
an (1st floor),
Dhaka, thus strengthening social development. It harbours 22,000 books of refere
nce for the
researchers, students, professionals, bankers, physicians, engineers, politician
s, writers or
journalists, even for the kids. It is open to all throughout the year and well l
ocated & accessible
to everybody. It has procured some exceptional collection of books on religion,
economics,
Page | 66
banking, computer science, business administration, sociology, English & Arabic

language and
juvenile literature in Bangla, English, Urdu & Arabic, which are very rare.
Al-Arafah Islami Bank Foundation Kidney Dialysis Center
Al-Arafah Islami Bank Foundation established an International Standard Kidney Di
alysis Center
to deliver the dialysis therapy to increasing kidney patient in Bangladesh at re
duced price. AlArafah Islami Bank Foundation Kidney Dialysis Center is situated at Chattagram B
haban (1st
Floor), 32 Topkhana Road, Dhaka- 1000. National Professor Dr. M. R. Khan inaugur
ates this
philanthropic Dialysis Center on December 04, 2010. This center is capable to de
liver the
dialysis therapy to eight kidney patients daily in two shifts. Al-Arafah Islami
Bank Foundation
authority is committed to deliver the health care service to the underprivileged
people of
Bangladesh in near future.
Page | 67
CHAPTER
CUSTOMER SATISFACTION
4
BASED ON THEORETICAL ASPECT
Page | 68
4.1 Introduction
Superior service quality is widely acknowledged as a driver of perceived value,
which, in turn,
will enhance customer loyalty (Parasuraman and Grewal, 2000) and improve the pro
viders
image, sales and profitability (Buzzell and Gale, 1987; Gummesson, 1993). Becaus
e satisfaction
is basically a psychological state, care should be taken in the effort of quanti
tative measurement,
although a large quantity of research in this area has recently been developed.
Work done by
Berry, Brodeur between 1990 and 1998 defined ten Quality Values which influenc
e satisfaction
behavior, further expanded by Berry in 2002 and known as the ten domains of sati
sfaction. These
ten domains of satisfaction include: Quality, Value, Timeliness, Efficiency, Eas
e of Access,
Environment, Interdepartmental Teamwork, Front line Service Behaviors, Commitmen
t to the
Customer and Innovation. These factors are emphasized for continuous improvement
and
organizational change measurement and are most often utilized to develop the arc
hitecture for
satisfaction measurement as an integrated model. Work done by Parasuraman, Zeith
aml and
Berry between 1985 and 1988 provides the basis for the measurement of customer s
atisfaction
with a service by using the gap between the customers expectation of performanc
e and their
perceived experience of performance. This provides the measurer with a satisfact
ion "gap" which
is objective and quantitative in nature. Work done by Cronin and Taylor propose
the
"confirmation/disconfirmation" theory of combining the "gap" described by Parasu
raman,
Zeithaml and Berry as two different measures (perception and expectation of perf
ormance) into a
single measurement of performance according to expectation. According to Garbran
d, customer
satisfaction equals perception of performance divided by expectation of performa
nce.
4.2 Definition of Customer
The word derives from "custom," meaning "habit"; a customer was someone who freq
uented a
particular shop, who made it a habit to purchase goods of the sort the shop sold
there rather than
elsewhere, and with whom the shopkeeper had to maintain a relationship to keep h
is or her
"custom," meaning expected purchases in the future. A customer, also called clie
nt, buyer, or
Page | 69
purchaser, is usually used to refer to a current or potential buyer or user of t

he products of an
individual or organization, called the supplier, seller, or vendor. This is typi
cally through
purchasing or renting goods or services.
The word customer has neither been defined by the Negotiable Instrument nor by any
other
law. Therefore, in the field of banking it is not cleared yet. According to Page
t, the following
characteristics will be present:
a. There must be recognizable course or habit of dealing between the customer an
d a bank.
b. Dealing between him and the bank must be in the nature of regular banking bus
iness.
Zairi (2000) said, Customers are the purpose of what we do and rather than them d
epending on
us, we very much depend on them. The customer is not the source of a problem, we
shouldnt
perhaps make a wish that customers should go away because our future and our secur
ity will be
put in jeopardy.
The Kerala high court in the case of Central Bank of India Limited, Bombay vs. G
opinathan Nair
and others (1970) said, Broadly speaking, a customer is a person who has the habi
t of resorting
to the same place or person to do business so far as the banking transactions ar
e concerned. He is
a person whose money has been accepted on the footing that the banker will honou
r his cheques
up to the amount standing to his credit irrespective of his connection being of
short or long
standing In this study the customer means those persons who have at least one activ
e account
of any kind at Al-Arafah Islami Bank Limited (Laldighirpar Branch).
4.3 Definition of Satisfaction
Satisfaction is the contentment one feels when one has fulfilled a desire, need,
or expectation;
"the chef tasted the sauce with great satisfaction". Here in the study customers
agreement (agree
& strongly agree) with the surveys statements will indicate their satisfaction.
Page | 70
According to Hansemark and Albinsson (2004), satisfaction is an overall customer

attitude
towards a service provider, or an emotional reaction to the difference between w
hat customers
anticipate and what they receive, regarding the fulfilment of some need, goal or
desire.
4.4 Definition of Customer satisfaction
Customer satisfaction, a term frequently used in marketing, is a measure of how
products and
services supplied by a company meet or surpass customer expectation. Customer sa
tisfaction is
defined as "the number of customers, or percentage of total customers, whose rep
orted
experience with a firm, its products, or its services (ratings) exceeds specifie
d satisfaction goals.
Philip Kotler (2000) defined satisfaction as: a persons feelings of pleasure or di
sappointment
resulting from comparing a product are perceived performance (or outcome) in rel
ation to his or
her expectations.
Hoyer and MacInnis (2001) said that satisfaction could be associated with feeling
s of
acceptance, happiness, relief, excitement, and delight.
It is seen as a key performance indicator within business and is often part of a
Balanced
Scorecard. In a competitive marketplace where businesses compete for customers,
customer
satisfaction is seen as a key differentiator and increasingly has become a key e
lement of business
strategy.
4.5 Shariah - Basis of Customers Satisfaction
When competition intensifies, Islamic financial institutions start to offer more
or less similar
products and services. There is no doubt that the customers perception of satisf
actory service
provided by the CSA (Customer Support Advisors) will influence the performance o
f an Islamic
financial institution and determine its competitiveness and success. Therefore,

the need to be
customer-focused in the rapidly changing marketing environment has never been mo
re important
Page | 71
for Islamic banks and financial services than now. However, under the present ci
rcumstances,
when customers are becoming more demanding and increasingly mobile between compe
ting
financial providers, being customer-oriented is not enough. Islamic financial in
stitution and more
specifically their contact employees (CSRs) need to be perceived by their custom
ers as ethically
Islamic. Islamic financial institutions should offer a complete range of Sharia
hbased products
and services. Moreover, Islamic financial institutions should aim to satisfy the
ir customers by
letting them choose what is most suitable for them in line with Shariah. In oth
er words,
customers satisfaction from an Islamic financial institutions perspective is an
important issue.
Therefore, this article will highlight possible Islamic ethical sales behaviour
as may be perceived
by the customers of Islamic Financial Institutions.
4.6 CSA Role vis--vis Service Expectation
We seldom see that a CSAs behaviour reflect in the interaction between a CSA and
a customer
of an Islamic financial institution. Islamic ethics requires an individual to be
have according to
the rules of Islamic moral philosophy. It is a standard for judging the rightnes
s not of an action
per se, but of the action of one person relative to another, i.e. Islamic ethics
is a basis for
judgment in personal as well as collective interaction. It is some time observed
that unethical
sales behaviour as CSAs short-run conduct that enables them to gain at the expen
se of the
customers. Examples of such activities include lying or exaggerating about the b

enefits of a
product/service, lying about the competition, selling products/services that peo
ple do not need,
giving answers when the answer is not really known and adopting manipulative inf
luence tactics
or high-pressure selling techniques.
There are several distinct, separate objects based on which consumers will make
judgements of
their satisfaction. We frequently observe that the level of customers satisfacti
on, customers trust
and loyalty to the Islamic financial institutions core services like Islamic mor
tgages, Islamic
investment funds, Islamic insurance (takaful) and credit cards etc- depend on th
e CSAs
efficiency in terms of Islamic marketing ethics. There is no doubt CSAs are the
backbone of an
Page | 72
Islamic financial institution in the customers eyes because they are the frontli
ne service
employees. However, in some cases, the contact employees are also the service pr
oviders. Even
if some of the contact employees do not perform the service entirely, they may s
till personify the
Islamic financial institution in the customers eyes. Each of these customer cont
acts has the
potential of positively or negatively impacting customers satisfaction with the
services of Islamic
financial institutions or banks. More specifically, the services literature has
widely recognised
the importance of contact employees behaviour for customer satisfaction and loya
lty. For
example, customer satisfaction and repeated patronage may be determined solely b
y the quality
of the personal encounter.
It always happened that customers make a comparison between service expectations
and
performance that will result in either confirmation or disconfirmation. Customer
s expectations
are confirmed when an Islamic financial product or service performance exactly m
eet
expectations. Disconfirmation will be the result of a discrepancy between expect
ations and
performance. Positive disconfirmation occurs when product/service performance ex
ceeds prior
expectations, and negative disconfirmation occurs when expectations exceed perfo
rmance.
Confirmation and positive disconfirmation will be likely to result in satisfacti
on, whereas
negative disconfirmation leads to dissatisfaction.
Page | 73
Figure 1-Ethical sales behavior on customer satisfaction

Therefore, customer expectations regarding the core service are highly dependent
on the CSAs
presentation in the service encounter. If the CSA behaves according to Islamic e
thics, they are
more likely to provide realistic expectations about the core service, and are le
ss likely to push the
customer into buying a service that a customer does not need. Consequently, thes
e actions may
result in confirmation or even positive disconfirmation between expectations and
service
performance, thus resulting in customer satisfaction with the core service.
4.7 Sales Behavior Model Based on Islamic Business Ethics
Islamic ethical sales behavior, as perceived by the customers, is proposed to di
rectly influence
level of customer satisfaction by core service (H1) to high level of satisfactio
n (H2) as well as
loyalty (H4) to Islamic financial institutions or banks. As for the indirect eff
ects, it is suggested
that the customers satisfaction with core service (H1) influences the satisfacti
on of customers
loyalty(H4) level to Islamic banks. These two variables, in turn, lead to custom
ers trust (H3).
Finally, customers trust (H3) directly influence the increase of customers loyal
ty (H4) to Islamic
banks. Details are explained in the following:
Page | 74
1. Customer Satisfaction with the Core Service (H1)

The customer satisfaction with CSAs increased when the customer felt the advisor
had been fair
in the transaction something, which is associated with Islamic ethical sales beh
aviour. The figure
1 shows that the perceived ethical standard of CSAs had a positive impact on cus
tomer
satisfaction. In some service settings, discriminate validity between satisfacti
on with the CSA
and the Islamic financial institution should not be necessarily expected. Taking
this matter into
account, we some times see that in a service context the CSA and the selling Isl
amic financial
institution or banks products are often indistinguishable in the mind of the cus
tomer. Hence, a
positive association exist between core service and level of customer satisfacti
on with an Islamic
financial institution.
2. High Level Customer Satisfaction (H2) Leads to Trust (H3) and Loyalt y (H4)
Research in services marketing has widely shown that customer satisfaction leads
to customer
loyalty. For instance, in the mainstream literate on marketing, there are many e
xamples that
whether customers had replaced their insurance policies or allowed them to lapse
depended on
their prior satisfaction with the whole life coverage. Similarly, the core-servi
ce satisfaction is
positively associated with repurchase intentions. Furthermore, customer satisfac
tion with Islamic

financial institutions has a significant and positive effect on loyalty. A few l
iterature on
customers of Islamic financial service industries provide evidence of the positi
ve influence of
customer satisfaction both with the Islamic financial institution as service pro
vider and the core
service on customer intention to use the facilitys services again, and recommend
the service to a
friend.
With respect to the relationship between satisfaction with the Islamic bank and
trust in the bank,
the later may be viewed from a global perspective as an overall impression of th
e Islamic
financial system. There is a long-term orientation in this variable, since trust
is also
conceptualised as a cumulative process that develops over the course of repeated
, successful
interactions. Satisfying encounters are hypothesised to reinforce customers trus
t in Islamic
Page | 75
financial institutions. A highly satisfying experience with the Islamic financia

l institution may
not only reassure the customer that their trust in the service provider is well
placed, but also
enhance the trust and loyalty.
3. Customer Trust (H3) to Islamic Banks
Customers trust relate to a belief on the part of customers that the obligations
of Islamic financial
institutions are fulfilled. In other words, the customers believe and feel that
a CSA of an Islamic
financial institution selling products can be relied upon to behave in such a ma
nner that the longterm interest of the customers will be served. Therefore, trust in an Islamic fi
nancial institution
may be defined as customer confidence in the quality and reliability of the serv
ices offered by
the Islamic financial institution. This conceptualisation of trust corresponds t
o the concept of
post-trust that derived from the principles of muamelat based on Islamic busines
s ethics. Service
employees (such as CSAs) with whom the customers interact, confirm and build tru
st in the
Islamic financial institution or detract from its reputation and ultimately dest
roy trust. Figure 1
suggest that Islamic ethical sales practices, as perceived by Islamic financial
service customers
have increased customers trust (H3) in CSAs.
Therefore, there is a positive association between Islamic ethical sales behavio
ur and customers
trust (H3) in the Islamic financial system. This can be explained by taking into
account the
important role of salespeople (CSAs) in the service setting. It means CSAs of Is
lamic financial
institutions are always working as their backbone. Consequently, if the behaviou
r of the CSAs of
a financial institution is perceived by customers as Islamic, the institution is
also likely to be
perceived as Islamic, because customer perceptions of contact employees will aff
ect their
perceptions of the Islamic financial institution.
4. Customer Loyalty (H4) to Islamic Bank
An important consideration in a service financial institutions customer base is
the degree to
which its customers are loyal. Based on the principles of Islamic marketing ethi
cs, customers
Page | 76
loyalty to Islamic financial institutions is conceptualised as a combination of

a customers
intention to maintain an ongoing relationship with Islamic financial institution
s, and their
willingness to recommend Islamic financial institutions to other consumers. Cust
omers
perceptions of face-to-face interaction with CSAs have traditionally been consid
ered one of the
most important determinants for loyalty.
Islamic ethical sales behaviour is likely to play a major role in developing cus
tomer loyalty. On
the other hand, unethical sales behaviour is a short-run, expedient perspective
devoid of any
sense of social responsibility. Islamic ethics encourages sellers to foster long
-term relationships
with buyers. Building based upon the principles of equity, justice and welfare;
Islamic ethical
sales behaviour can be considered to be an investment in the equity formulation.
If customers
feel they are being treated unfairly by the CSA (because of unethical behaviour)
, perceptions of
inequity will emerge which in turn may translate into a desire of the customer t
o leave the
relationship with the Islamic financial institutions as represented by the CSA.
Therefore, it may
be stated that the greater the CSAs Islamic ethical behaviour as perceived by th
e customer, the
greater the customer loyalty to Islamic financial institutions.
4.8 Importance of Customer Satisfaction
The key to business performance is the ability to satisfy and retain customers (
Johnson &
Gustafsson, 2000). Customer satisfaction is important because it says something
about the
companys current condition. However, even more importantly, customer satisfaction
says
something about the companys future. It reveals if customers will return to the c
ompany in the
future (Fornell, 2007, p. 45). It does not matter how productive a company is if
their customers
are not satisfied with their offerings. They will simply take their business els
ewhere. Satisfied
customers, on the other hand, are more likely to return in the future. A single
unsatisfied
customer can send more business away from your company than 10 satisfied custome
rs.
Customer satisfaction and thus customer consumption are the center of business.
All parts of
Page | 77
business (employment, prices, profits, production, economic growth etc.) are dep
endent on
customers consuming products (Fornell, 2007; Johnson & Gustafsson, 2000).
Satisfied customers are not only the sum total of the value of all other company
assets virtually all costs and revenues have some relationship, however weak
or indirect, to customer acquisition and customer retention (Fornell, 2007, p.
66).
To create long-term profit and shareholder value, companies need to think of cus
tomers as
investors and an economic asset. It is the customers that bring financial revenu
e to companies.
Hence, customers are companies greatest asset (ibid.).
Understanding the needs of the customer is critical.
A business relationship, just like any other relationship, relies on both people
getting their needs
met. No matter what type of business, all customers want the same thing. They wa
nt to feel
welcomed and appreciated by the staff. They dont want to get the impression tha
t they are just
being used by the company for money. Small interactions like "Thank you" and a n
ice smile can
go a long way toward customer satisfaction.
Make sure all employees operate with the same principles.
A big part of customer satisfaction is reliability. If customers come to expect
a certain mode of
behavior from the business, employees should deliver it to them each and every t
ime. Customers
want to be able to rely on the employee. They expect consistent delivery times a
nd support. By
training the employees to treat all customers with the same respect, than custom
ers will all have

the same experience with the company, which will increase customer satisfaction.
Page | 78
Be honest when the business doesnt meet expectations.

Customer satisfaction is at its most important when something goes wrong in the
chain of
delivery. Whether a customer was double charged or didnt receive what she order
ed, employees
need to handle the situation with the utmost care. Employee should apologize and
take steps to
rectify the situation. The phrase "the customer is always right" is at the core
of a good customer
satisfaction strategy. It doesnt matter whether or not the customer misread the
instructions or
made the mistake; the employee should take steps to make the customer happy.
Customer satisfaction is the foundation of a good business.
Satisfied customers will make a great foundation for return business, and they m
ay also bring in
their friends and associates. It is said that- customers are the heart of any bus
iness. It is the
companys responsibility to Keep them satisfied, and encourage them to tell their
friends about
their experiences with the business.
4.9 Factors affecting customer satisfaction
Many factors affect customer satisfaction. According to Hokanson (1995), these f
actors include
friendly employees, courteous employees, knowledgeable employees, helpful employ
ees,
accuracy of billing, billing timeliness, competitive pricing, service quality, g
ood value, billing
clarity and quick service. This is shown in Figure belowAssessing Customer Satisfaction Level at AIBL (Ldp. Br.)
Page | 79
Friendly
Courteous
Employees
Employees
Helpful
Knowledgeable
Employees
Employees
Quick Service
Overall
Accuracy
Customer
of Billing
Satisfaction
Billing
Billing
Clarity
Timeliness
Good
Service
Competitive
Value
Quality
Pricing
Figure 2- Factors that Affect Customer Satisfaction
In order to achieve customer satisfaction, organizations must be able to satisfy
their customers
needs and wants (La Barbera and Mazursky, 1983). Customers needs state the felt d
eprivation
of a customer (Kotler, 2000). Whereas customers wants, according to Kotler (2000)
refer to the
form taken by human needs as they are shaped by culture and individual personali
ty.
The single most important factor that affects customer satisfaction is employee s
atisfaction,
says Howard J. Ross, president of a Maryland-based consulting firm. Employees who
feel
satisfied and happy at their jobs naturally tend to be more helpful and consider
ate toward
customers. Its simple logic. If I like my job and the company I work for, Im going
to
communicate to customers that we have a good product.
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4.10 Customer Satisfaction a Critical Component of Profitability

Exceptional customer service results in greater customer retention, which in tur
n results in higher
profitability. Customer loyalty is a major contributor to sustainable profit gro
wth. To achieve
success, there must make superior service second nature of the organization. A s
eamless
integration of all components in the service-profit chain employee satisfaction,
value creation,
customer satisfaction, customer loyalty, and profit and growth links all the cri
tical dynamics of
top customer service.
Sadly, mature companies often forget or forsake the thing that made them success
ful in the first
place: a customer-centric business model. They lose focus on the customer and st
art focusing on
the bottom line and quarterly results. They look for ways to cut costs or increa
se revenues, often
at the expense of the customer.
They forget that satisfying customer needs and continuous value innovation is th
e only path to
sustainable growth. This creates opportunities for new, smaller companies to emu
late and
improve upon what made their bigger competitors successful in the first place an
d steal their
customers.
Organizations are increasingly interested in retaining existing customers while
targeting noncustomers; measuring customer satisfaction provides an indication of how success
ful the
organization is at providing products and/or services to the marketplace.
4.11 Effect of Customer Satisfaction on Profitability
Customer satisfaction does have a positive effect on an organizations profitabili
ty. According to
Hoyer and MacInnis (2001), satisfied customers form the foundation of any succes
sful business
as customer satisfaction leads to repeat purchase, brand loyalty, and positive w
ord of mouth.
Coldwell (2001): Growth Strategies International (GSI) performed a statistical an
alysis of
Page | 81
Customer Satisfaction data encompassing the findings of over 20,000 customer sur
veys
conducted in 40 countries by Info Quest. The conclusion of the study was:
A Totally Satisfied Customer contributes 2.6 times as much revenue to a company
as a
Somewhat Satisfied Customer.
A Totally Satisfied Customer contributes 17 times as much revenue as a Somewhat
Dissatisfied Customer.
A Totally Dissatisfied Customer decreases revenue at a rate equal to 1.8 times w
hat a
Totally Satisfied Customer contributes to a business.
Zairi (2000): There are numerous studies that have looked at the impact of custom
er satisfaction
on repeat purchase, loyalty and retention. They all convey a similar message in
that:
Satisfied customers are most likely to share their experiences with other people
to the
order of perhaps five or six people. Equally well, dissatisfied customers are mo
re likely to
tell another ten people of their unfortunate experience.
Furthermore, it is important to realize that many customers will not complain an
d this
will differ from one industry sector to another.
Lastly, if people believe that dealing with customer satisfaction/complaint is c
ostly, they
need to realize that it costs as much as 25 percent more to recruit new customer
s.
Aaker (1995) said that the strategic dimension for an organization includes beco
ming more
competitive through customer satisfaction/brand loyalty, product/service quality
, brand/firm
associations, relative cost, new product activity, and manager/employee capabili
ty and
performance (Figure).
Page | 82
Customer Satisfaction /
Brand Loyalty
Product / Service
Quality
Brand / Firm
Associations
CURRENT
LONG TERM
PERFORMANCE
PROFITS
Relative Cost
New Product Activity
Manager/Employee
Capability &
Performance
Figure 3- Performance Measures Reflecting Long-Term Profitability
4.12 Consequences of Customer Satisfaction and Dissatisfaction
The consequences of not satisfying customers can be severe. According to Hoyer a
nd MacInnis
(2001), dissatisfied consumers can decide to:
discontinue purchasing the good or service,
complain to the company or to a third party and perhaps return the item,
or, engage in negative word-of-mouth communication.
Customer satisfaction is important because, according to La Barbera and Mazursky
(1983),
satisfaction influences repurchase intentions whereas dissatisfaction has been se
en as a primary
reason for customer defection or discontinuation of purchase.
Page | 83
4.13 Moving from customer service to customer satisfaction

Companies often use the term customer service and customer satisfaction intercha
ngeably, but
they are very different.
Customer service is what an organization provides to its customers and is relati
vely easy to
measure. Typical measures include response time, time required to provide servic
e, ability to
address a customers issues on the first call, procedures for handling customer
complaints or
returns, etc. Customer service is important and companies should examine all the
ways in which
they touch their customer, the service they provide and their measures to contin
uously improve
that service.
Customer satisfaction, on the other hand, is how the customer feels about the se
rvice they receive
and the company that provided it. It is the customers perception and emotional
response, and the

company has no direct control over it. It is harder to measure and even harder t
o improve.
Most companies assume there is a direct relationship between customer service an
d customer
satisfaction, which is often the case. But there is no guarantee that good custo
mer service will
create high customer satisfaction. Good technical service delivered with an atti
tude can leave a
customer dissatisfied. Timely replacement of a defective product can be listed a
s good customer
service, but the customer may still be unwilling to trust the company with futur
e business.
The reverse is also true. Difficult situations can be converted into extraordina
ry customer
satisfaction, if the customer is handed with care and sensitivity. Some companie
s train
employees in how to use poor service issues as an opportunity to turn a situatio
n around and
create a raving fan.
Page | 84
4.14 Techniques used to measuring Customer Satisfaction

The Kano model is a theory of product development and customer satisfaction deve
loped in the
1980s by Professor Noriaki Kano that classifies customer preferences into five c
ategories:
Attractive, One-Dimensional, Must-Be, Indifferent, Reverse. The Kano model offer
s some
insight into the product attributes which are perceived to be important to custo
mers.
SERVQUAL or RATER is a service-quality framework that has been incorporated into
customer-satisfaction surveys (e.g., the revised Norwegian Customer Satisfaction
Barometer) to
indicate the gap between customer expectations and experience.
J.D. Power and Associates provides another measure of customer satisfaction, kno
wn for its
top-box approach and automotive industry rankings. J.D. Power and Associates ma
rketing
research consists primarily of consumer surveys and is publicly known for the va
lue of its
product awards.
Other research and consulting firms have customer satisfaction solutions as well
. These include
A.T. Kearneys Customer Satisfaction Audit process, which incorporates the Stage
s of
Excellence framework and which helps define a companys status against eight criti
cally
identified dimensions.
For Business to Business (B2B) surveys there is the InfoQuest box. This has been
used
internationally since 1989 on more than 110,000 surveys (Nov 09) with an averag
e response rate
of 72.74%. The box is targeted at "the most important" customers and avoids the
need for a
blanket survey.
Page | 85
4.15 Steps in Assessing Customer Satisfaction

Develop a listing and categorize your customers. This will include:
a. External customers-those that use your services (directly and indirectly).
b. Internal customers-all organizations have components that serve other compone
nts.
These are internal customers.
Suppliers-traditionally, you are a customer to them but by thinking of them as a
customer,
and of the information and access they need to meet their contracts with you, yo
u will
gain dividends in your own services.
Categorize your products or services.
Determine what needs and wants your services or products meet.
Determine what sets your service apart from others?

Establish a customer orientation to include:
Customers should be encouraged to tell you about any problems,
Customers should know their rights and responsibilities from the beginning,
Customers should know how to take advantage of their rights,
Customers should feel in control.
Customers should know precisely who to contact
Carefully scrutinize how your customers reach you and what barriers they encount
er:
a. How does your telephone system work? What are average wait times? How many
times is a caller referred before finding someone able to answer the question?
b. Where are you offices located? Are they convenient for customers to find? Is
parking
available?
c. What languages do your customers use?
d. What does your reception area look like? Pleasant or foreboding? How long mus
t
people wait?
What printed material do you have that describes your agency or organization? Do
es it
successfully inform existing and potential customers?
Page | 86
How well are you using information technology to increase customer satisfaction?
a. Do you have a web site?
b. Do you know how much and what kind of traffic comes to the site?
c. Does it provide address, telephone, fax and e-mail information?
d. Does it have a search feature?
e. Does the language on the site meet the language need of your customers?
These are some of the considerations that an organization should make as it star
ts to understand
and improve customer satisfaction.
4.16 Customer Satisfaction in seven steps

Its a well known fact that no business can exist without customers. Therefore, a
business can go
long run when its customer get value from the organization & if they are satisfi
ed. An
organization make its customers satisfied if follow seven (7) steps:
1. Encourage Face-to-Face Dealings
2. Respond to Messages Promptly & Keep Your Clients Informed
3. Be Friendly and Approachable
4. Have a Clearly-Defined Customer Service Policy
5. Attention to Detail (also known as The Little Niceties)
6. Anticipate Your Clients Needs & Go out Of Your Way to Help Them Out
7. Honor Your Promises
Customer service, like any aspect of business, is a practiced art that takes tim
e and effort to
master. All you need to do to achieve this is to stop and switch roles with the
customer.
Page | 87
4.17 To Improve Customer Satisfaction, there have 3 Principles of Employee

Satisfaction
If youve ever coveted a J.D. Power award for Customer Service Champions, or if ke
eping the
customer service satisfaction (CSAT) scores high at your company falls under you
r job
description, this post is for you. Improving CSAT scores, and ultimately, drivin
g business by
creating products and services that keep satisfied customers coming back for mor
e is no easy
task. Providing adequate training for your customer service representatives is n
ecessary, for sure,
but theres more to the CSAT picture than simply a well-trained employee.
How about a well-trained, happy employee? Now thats a step in the right direction
. Lets look at
three principles for improving employee satisfaction, which will positively infl
uence customer
satisfaction.
Principle #1: Understand the link between employee satisfaction and customer sat
isfaction
A widely researched topic in the customer service industry connects customer loy
alty and
employee satisfaction. Case studies and company profiles repeatedly show that fo
r employees to
provide not just good customer servicebut great customer servicethey must first be
driven
by loyalty and enthusiasm from their employer. In other words, you cant force dev
otion or
commitment on your employees, but you can foster it by creating a culture that i
nvites pride and
ownership in the job and company.
To see the concept visually, the below graph, courtesy of MetricNets research on
call center
metrics, aptly illustrates the connection between employee satisfaction and cust
omer satisfaction:
Page | 88
Principle #2: Create a great work environment

So it makes sense that happy employees make for happier customers. The research
backs up a
fairly intuitive concept. But to create an environment filled with smiling, cust
omer-serving
employees, simply offering your agents a great parking spot if they are chosen a
s employee of
the month isnt going to cut it. Neither is offering $.25 cent sodas out of the co
mpany soda
machine. We could write a book on creating a great work environment (actually, w
e did!and
we wrote a training program, too), but for brevitys sake, lets take the example of
one company,
New Belgium Brewery in Colorado, that has a 97% employee retention rate. Why? Th
e
employees, quite simply, like their jobs. The happy staff at New Belgium are als
o productive,
motivated employees that sell a product customers like.
What exactly makes New Belgium employees so happy? Yes, they get to sample the b
eer they
produce, but the management at New Belgium has taken deliberate steps to foster
a loyal
workforce through the following principles:
Page | 89
Encourage employees to have ownership: The employee-owned culture at New Belgium

means that employees participate in major decisionsthey vote on everything from n
ew
technology purchases to new staff positions.
Reward employees for loyalty: How about a custom-made cruiser bike after a year
of
service and a trip to Belgium after 5 years of service?
Create policies employees can be proud of: The Company has a strict policy of
environmental stewardship and does things such as turning waste into livestock f
eed and
using wind-powered electricity.
Lead by example: The founders of New Belgium are committed to sound business
practices and stewardship in their community. They believe in what their company
stands
for, and they hire employees who reflect the companys values.
Principle #3: Create an environment that encourages low turnover
Weve written previous posts about how customer service starts with your staff, an
d weve
mentioned the importance of adequate employee screening, training, and paying fa
ir wages. Its a
topic worth repeating.
Turnover, quite simply, is expensive, a huge drain on time and company resources
, and leads to
overall low morale. There are many contributors to high turnover, including inad
equate training,
poor employee screening methods, and a rushed hiring process. If you think payin
g lower wages
will save your company money in the long-run, first consider the costs of employ
ee turnover.
According to recent data, replacing an employee can cost anywhere from 30% to 15
0% of an
employees annual salary and benefits. Therefore, if you have an employee making $
40,000 a
year, you could be paying between $12,000 and $60,000 just to hire a replacement
.
Even with a focused customer service skills training program, there are greater
forces at play
when improving employee satisfaction and creating a culture that drives high cus
tomer
satisfaction rates. If you, or other powers-at-be in the company are downplaying
the importance
Page | 90
of employee satisfaction, examine your employee culture before attempting to fix

your customer
satisfaction rates.
4.18 Summary
There are a number of guidelines that an agency may want to remember when addres
sing
improving and quantifying customer satisfaction information. These include:
State clearly what is being measured and how the measure is derived or calculate
d.
Explain why the measure is relevant to the program or service being provided.
Identify the data source(s) used to calculate the measure and indicate how often
the data
are updated, including basic information on how and when the data were collected
and
where the data can be obtained.
Include a supplemental attachment with information and explanation of data sourc
es,
specific agency contacts, methodology, and other information required to evaluat
e agency
data for legislative audit purposes.
Develop systematic data retention schedules, which will allow interested parties
to verify
and further analyze customer satisfaction data.
Adhere to guidelines for valid survey research including appropriate designs for
data
collection, questionnaire development, sampling and analysis.
For purposes of routine management or quality improvement, any comments from cus
tomers
may be useful, but casual comments or unrepresentative samples do not constitute
adequate
measures of customers satisfaction with state agencies or their programs.
State agencies should develop standard questions that they use consistently from
year to
year to assess and report customers satisfaction. Without consistent wording of
questions, it is impossible to monitor performance over time.
Page | 91
CHAPTER
ASSESSING CUSTOMER SATISFACTION AT
5
AIBL, LDP BR. SYLHET
Page | 92
5.1 Measuring Customer Satisfaction

With the phenomenal increase in the countrys population and the increased deman
d for banking
services; speed, service quality and customer satisfaction are going to be key d
ifferentiators for
each banks future success. Thus it is imperative for banks to get useful feedba
ck on their actual
response time and customer service quality aspects of retail banking, which in t
urn will help
them take positive steps to maintain a competitive edge. Organizations are incre
asingly
interested in retaining existing customers while targeting non-customers; measur
ing customer
satisfaction provides an indication of how successful the organization is at pro
viding products
and/or services to the marketplace. Lord William Thomson Kelvin (1824-1907) said
, "If you
cannot measure it, you cannot improve it." So to improve customer satisfaction l
evel,
measurement of customer satisfaction is must. Satisfied customers are central to
optimal
performance and financial returns. In many places in the world, business organiz
ations have been
elevating the role of the customer to that of a key stakeholder over the past tw
enty years.
Customers are viewed as a group whose satisfaction with the enterprise must be i
ncorporated in
strategic planning efforts. Forward-looking companies are finding value in direc
tly measuring
and tracking customer satisfaction (CS) as an important strategic success indica
tor. Evidence is
mounting that placing a high priority on CS is critical to improved organization
al performance in
a global marketplace. With better understanding of customers perceptions, compa
nies can
determine the actions required to meet the customers needs. They can identify t
heir own
strengths and weaknesses, where they stand in comparison to their competitors, c
hart out path
future progress and improvement. Customer satisfaction measurement helps to prom
ote an
increased focus on customer outcomes and stimulate improvements in the work prac
tices and
processes used within the company. When buyers are powerful, the health and stre
ngth of the
companys relationship with its customers its most critical economic asset is it
s best predictor
of the future. Assets on the balance sheet basically assets of production are go
od predictors
only when buyers are weak. So it is no wonder that the relationship between thos
e assets and
future income is becoming more and more tenuous. As buyers become empowered, sel
lers have
Page | 93
no choice but to adapt. Focusing on competition has its place, but with buyer po
wer on the rise, it
is more important to pay attention to the customer.
Requirement of ISO 9000:2000 Measurement of Customer Satisfaction is a new signi
ficant
addition to the new ISO9000: 2000 standard. Organizations certified to this stan
dard are now
required to identify parameters that cause customer satisfaction or dissatisfact
ion and
consciously measure them.
Clause 8.2.1 in ISO 9000: 2000 states: "As one of the measurements of the perfor
mance of the
Quality Management System, the organizations shall monitor information relating
to customer
perception as to whether the organization has met customer requirements. The met
hods for
obtaining and using this information shall be determined." The requirement has b
een there in the
QS 9000 standard clause 4.1.6 which says: "... Trends in customer satisfaction a
nd key indicators
of customer dissatisfaction shall be documented and supported by objective infor
mation. These
trends shall be compared to those of competitors, or appropriate benchmarks, and
reviewed by
senior management."
5.2 Method used in Assessing Customer Satisfaction Level at
AIBL
(Laldighirpar Branch)
The Customer Satisfaction Measurement Model
There are various models that are used in measuring the level of customer satisf
action. I have
calculated the Customer Satisfaction Index (CSI). Because, it looks pretty smart
er as it shows the
satisfaction level as one number and this measure model considers various parame
ters and this is
easy to calculate. The Customer Satisfaction Index represents the overall satisf
action level of that
customer as one number, usually as a percentage. Plotting this Satisfaction Inde
x of the customer
against a time scale shows exactly how well the supplier is accomplishing the ta
sk of customer
satisfaction over a period of time.
Page | 94
The Questionnaire/ Instrument

I have followed the process of face to face interview in measuring the customers
satisfaction
level. Because, it was convenient for me as I have passed much time at the bank
during my
internee program. The information collection was performed by using RATER or SER
VQUAL
Instrument.
In the mid eighties, Parasuraman, Zeithaml and Berry (1988, 1991) conducted exte
nsive studies
in different industries and developed the SERVQUAL instrument: a 22-item scale w
ith a set of
service quality dimensions to quantify a customers assessment of a companys servic
e quality.
Five key dimensions of service quality reliability, responsiveness, assurance, e
mpathy and
tangibles have been identified and form the foundation on which a lot of other s
tudies on
service quality have been built. By the early nineties the authors had refined t
he model to the
useful acronym RATER.
SERVQUAL is an empirically derived method that may be used by a services organiz
ation to
improve service quality. The method involves the development of an understanding
of the
perceived service needs of target customers. These measured perceptions of servi
ce quality for
the organization in question, are then compared against an organization that is
"excellent". The
resulting gap analysis may then be used as a driver for service quality improvem
ent.
SERVQUAL takes into account the perceptions of customers of the relative importa
nce of
service attributes. This allows an organization to prioritize. And to use its re
sources to improve
the most critical service attributes.
The data are collected via surveys of a sample of customers. In these surveys, t
hese customers
respond to a series of questions based around a number of key service dimensions
.
The methodology was originally based around 5 key dimensionsAssessing Customer Satisfaction Level at AIBL (Ldp. Br.)
Page | 95
Tangibles- Physical evidence of the service: appearance of physical facilities,

tools and
equipments used to provide the service, appearance of personnel and communicatio
n materials.
Reliability- The ability to perform the promised service dependably and accurate
ly: consistency
of performance and dependability, service is performed right at the first time,
the company keeps
its promises in accuracy in billing and keeping records correctly, performing th
e services at the
designated time.
Responsiveness- The willingness and/ or readiness of employees to help customers

and to
provide prompt service, timeliness of service: mailing a transaction slip immedi
ately, setting up
appointments quickly.
Assurance- The knowledge and courtesy of employees and their ability to convey t
rust and
confidence: competence (possession of the required skills and knowledge to perfo
rm the
service), courtesy (consideration for the customers property, clean and neat ap
pearance of public
contact personnel), trustworthiness, security (safety and confidentiality).
Empathy- The provision of caring, individualized attention to customers: informi
ng the
customers in a language they can understand, Understanding customers specific n
eeds,
providing individualized attention.
The Rating Scale
Customers responses have been recorded by using 5 point Likert Scale or Technique
where
the customer were asked to evaluate each statement to rate their degree of agree
ments or
disagreements with each of 22 statements. These degrees of agreements or disagre
ements were
plotted on the 5 point Likert Scale where point 1 indicates Strongly Disagree and
point 5
indicates Strongly Agree with the statement.
[Strongly Disagree]
[Strongly Agree]
1
2
3
4
5
Figure 1- 5 Point Likert Rating Scale
Page | 96
5.3 Analysis of Customer Satisfaction

50 customers were surveyed as sample (from the population size of almost two tho
usand) under
the study to measure the satisfaction level of the customers of Al-Arafah Islami
Bank Limited
(Laldighirpar Branch). The demographic information of samples is as follows:
5.3.1 Gender frequency
Table 1: Samples Frequency Distribution based on Gender
Gender
Frequency
Percentage
Cumulative
Percentage
Male
36
72%
72%
Female
14
28%
100%
Total= 50
Page | 97
5.3.2 Age Group frequency

Table 2: Samples Frequency Distribution based on Age Group
Age Group
Frequency
Percentage
Cumulative
Percentage
18-25 Years
14
28%
28%
26-33 Years
18
36%
64%
34-50 Years
15
30%
94%
51-Above
3
6%
100%
Total= 50
Page | 98
5.3.3 Profession frequency

Table 2: Samples Frequency Distribution based on Profession
Profession
Frequency
Percentage
Cumulative
Percentage
Business
21
42%
42%
Service Holder
15
30%
72%
Student
12
24%
96%
Others
2
4%
100%
Total= 50
Page | 99
5.3.4 Statements in the Tangible Dimension

Explanation- The statements under this group denotes the Physical evidence of th
e service.
Aspects relating to tangible dimension of service quality were asked in 4 differ
ent questions.
Survey Result- The summary of survey result of this dimension is shown by the fo
llowing tableTable 1: Tangible Dimension
Statements
Strongly Disagree Average Agree Strongly Total
disagree
agree
1. AIBL has modern looking
0
0
7
31
12
50
equipment and technologies
that better satisfy your
needs.
2. Your bank has convenient
0
0
13
24
13
50
business hours.
3. The employees of the bank
0
1
7
21
21
50
appear neat.
4. Materials associated with

0
0
10
30
10
50
the service (pamphlets or
statements) are visually
appealing at AIBL.
Total
0
1
37
106
56
200
Page | 100
Interpretation of the Result- There is four (4) statements in the Tangible dimen
sion and a
number of Two Hundred (200) responses acquired. Among those two hundred response
s- fifty
six (56) customers are strongly agree, one hundred six (106) customers are agree
, thirty seven
(37) customers are average and only one (1) customer is disagree with above four
statements.
Out of four statements, the third statement employees of the bank appears neat, ac
quire the
highest position as twenty one (21) customers are strongly agree, twenty one exp
ress agree,
seven (7) customers express average opinion and only one (1) customer is disagre
e. Second
statement bank has convenient business hours appears in the 2nd position, where th
irteen (13)
customers are strongly agree, twenty four (24) customers are agree and thirteen
(13) customer
expressed average opinion. First statement modern looking equipment and technolog
ies of
tangible dimension exists near to the second position. And ten (10) customers ex
press strongly
agree, thirty (30) express agree, ten express average opinion against the fourth
statement
Materials associated with the service (pamphlets or statements) are visually appe
aling. No
customers express their opinion as disagree and strongly disagree to the first,
second and fourth
statement.
Page | 101
5.3.5 Statements in the Reliability Dimension

Explanation- Four attributes were grouped in this dimension and the respondents
were asked to
express their opinions. The attributes implies that The ability to perform the pr
omised service
dependably and accurately.
Survey Result- Summary of the survey result of this dimension is shown by the fo
llowing tableTable 2: Reliability Dimension
Statements
disagree
agree
5. When AIBL promises to do
0
0
17
27
6
50
something by a certain time,
it does so.
6. When you have a problem,
0
1
12
26
11
50
employees give appropriate
solution of your problems.
7. Your bank completes your
0
0
12
20
18
50
transactions rapidly.
8. AIBL insists on error free
0
0
10
23
17
50
records.
Total
0
1
51
96
52
200
Page | 102
Interpretation of the Result- In the Reliability dimension, four (4) statements

were grouped and
Two Hundred (200) responses collected. Among those two hundred responses- fifty
two (52)
customers are strongly agree, ninety six (96) customers are agree, fifty one (51
) customers are
average and only one (1) customer is disagree with this dimension.
Out of four statements, the third statement bank completes your transactions rapi
dly, stands in
the highest position as eighteen (18) customers are strongly agree, twenty (20)
express agree,
twelve (12) customers express average opinion and no customer express their opin
ion as
disagree. Second statement appropriate solution of your problems and fourth statem
ent AIBL
insists on error free records appears near the top position where fourth statemen
t is in 2nd place
and second statement is in 3rd place. In strongly agree category, seventeen (17)
customers put
their opinion against fourth statement and eleven (11) customers put opinion aga
inst second
statement.
Page | 103
First statement of the dimension promises to do something by a certain time, it d

oes so stands
in the lowest position among the four statements. On this statement, six (6) cus
tomers are
strongly agree, twenty seven (27) are agree and seventeen (17) customers give th
e average
opinion. No customers put their perception as disagree and strongly disagree to
the first, third
and fourth statement.
5.3.6 Statements in the Responsiveness Dimension
Explanation- Four attributes were grouped in this dimension and those attribute
refers to the
willingness and/ or readiness of employees to help customers and to provide prom
pt service,
timeliness of service.
Survey Result- Results acquired from the respondents against different statement
of
responsiveness dimension is given belowTable 3: Responsiveness Dimension
Statements
disagree
agree
9. Guidance at the entrance of
0
0
16
22
12
50
the branch is satisfactory.
10. Employees in AIBL give

0
0
14
24
12
50
you prompt service.
11. Employees in AIBL are
0
0
12
21
17
50
always willing to help you.
12. Employees in AIBL pardon
0
0
17
24
9
50
for making you wait.
Total
0
0
59
91
50
200
Page | 104
Interpretation of the Result- There is four (4) statements in the Responsiveness

dimension and
Two Hundred (200) responses gathered where fifty (50) customers are strongly agr
ee, ninety one
(91) customers are agree, fifty nine (59) customers give average opinion.
Among four statements, the third statement Employees are always willing to help, s
tands in the
top as seventeen (17) customers are strongly agree, twenty one (21) express agre
e, twelve (12)
customers express average opinion. A number of twelve (12) customer express thei
r opinions as
strongly agree to both the first and second statement of this dimension. Again,
second statement
acquires the opinion as agree and average from twenty four (24) customers and fo
urteen (14)
customers, where the first statement acquires the number twenty two (22) and six
teen (16) in
regular order. Only nine (9) customers put strongly agree opinion to the last st
atement. There
have no any customers who give their opinion under disagree and strongly disagre
e category.
Page | 105
5.3.7 Statements in the Assurance Dimension

Explanation- Aspects relating to tangible dimension of service quality were aske
d in 4 different
questions. The objective of these four questions is to know about courtesy and k
nowledge of
employees and their ability to convey trust and confidence.
Survey Result- The summary of the survey result of this dimension is shown by th
e following
table.
Table 4: Assurance Dimension
Statements
disagree
agree
13. The behavior of employees
0
0
19
22
9
50
in AIBL installs confidence
in you.
14. You feel safe in your
0
0
11
19
20
50
transactions with AIBL.
15. Employees in AIBL area
0
0
18
25
7
50
consistently courteous with

you.
16. Employees in AIBL have
0
0
20
23
7
50
the knowledge to answer
your questions.
Total
0
0
68
89
43
200
Page | 106
Interpretation of the Result- Four (4) statements in the Assurance dimension and
two Hundred
(200) responses collected. Among those responses- forty three (43) customers are
strongly agree,
eighty nine (89) customers are agree, sixty eight (68) customers expressed avera
ge perception.
As twenty (20) customers give strongly agree opinion to the second statement Cust
omers feel
safe in transaction, and as its the highest number for strongly agree category tha
n other
statements of assurance dimension, therefore it stands in top position. Nineteen

(19) customers
put their opinion as agree and the rest eleven (11) give average opinion to the
statement.
In the first statement, the number of customer who expressed their perception as
strongly agree,
agree and average category is accordingly nine (9), twenty two (22) and nineteen
(19). Third and
fourth statement stands near the first one as seven (7) customers give strongly
agree opinion to
both the statement.
Page | 107
5.3.8 Statements in the Empathy Dimension

Explanation- The Empathy dimension refers to the degree of the provision of cari
ng,
individualized attention to customers.
Survey Result- Summary of the survey result of this dimension is shown by the fo
llowing table.
Table 5: Empathy Dimension
Statements
disagree
agree
17. Service charges of AIBL
0
0
9
22
19
50
are
reasonable
as
comparatively to other
banks.
18. AIBL has your best
0
0
29
16
5
50
interests at heart.
19. The employees of AIBL
0
0
15
18
17
50
understand your specific
needs.
20. AIBL has employees who
0
0
9
29
12
50
give
you
individual
attention.
Total
0
0
62
85
53
200
Page | 108
Interpretation of the Result- Empathy dimension is the combination of four (4) d

ifferent
statements. A total number of two Hundred (200) customer responses to those four
questions.
Among those respondents- fifty three (53) customers are strongly agree, eighty f
ive (85)
customers are agree, sixty two (62) customers expressed average perception. In t
his dimension,
there have no any response to disagree and strongly disagree category.
Nineteen (19) customers express their perception as strongly agree for the first
statement of this
dimension. And the next three statements achieve same perception from five (5),
seventeen (17)
and twelve (12) customers accordingly. Third and fourth statement more or less s
tands near the
first statement. But in the second statement, large number of respondents shows a
verage
perception which indicates that the bank should pay more attention to this area
of customers
interest and desires.
Page | 109
5.3.9 Summary of the survey result for five dimensions is shown in the following
tableTable 6: Summary of Five Dimensions
Dimension
Strongly
Disagree
Average
Agree
Strongly
Total
disagree
agree
Tangible
0
1
37
106
56
200
Reliability
0
1
51
96
52
200
Responsiveness
0
0
59
91
50
200
Assurance
0
0
68
89
43
200
Empathy
0
0
62
85
53
200
Total
0
2
277
467
254
1000
Page | 110
The statistics shows that four hundred sixty seven (467) customers express their
perception as
Agree which is the highest number than rest four categories. Just two customer w
ere disagree
among which one is disagreed to the tangible dimension and another one is in rel
iability
dimension. From the above statistics it can be said that the overall performance
of the bank is
satisfactory. But it should pay more attention to their service quality which ma
y lead to get more
highly satisfied customer and to compete with other banks.
Page | 111
CHAPTER
6
SWOT ANALYSIS
Page | 112
6.1 Introduction
It has always been important for a business to know and understand how it fits i
n and interacts
with the surrounding environment on both an internal (office/factory/shop enviro
nment) and
external view (how business operates with the outside world).Researching the env
ironment will
benefit the company and management team by putting in a position to develop a st
rategy for both
the long and short term. The most influential way of doing this is to perform a
SWOT analysis of
the company.
The SWOT analysis comprises of the organizations internal strength and weakness a
nd external
opportunities and threats. This analysis can be performed on a product, on a ser
vice, a company
or even on an individual. It helps to identify where the company is strong and w
here is
vulnerable, where company should defend and where it should attack. SWOT analysi
s gives an
organization an insight of what they can do in future and how they can compete w
ith their
existing competitors. This tool is very important to indentify the current posit
ion of the
organization relative to others, which are playing in the same field and also us
ed in the strategic
analysis of the organization.
6.2 SWOT Analysis
The acronym for SWOT analysis stands forStrengths
Weaknesses
Opportunities
Threats
Page | 113
6.2.1 SWOT Analysis of AIBL

Every organization is composed of some internal strengths and weaknesses and als
o has some
external opportunities and threats in its whole life cycle.
StrengthsAIBL provides its customer excellent and consistent quality is every service;
Financially sound company;
Utilizes state of the art technology to ensure consistent quality and operation;
AIBL provides its works force an excellent place to work;
Company name recognized on a National/Regional/Local level;
The company already achieved a good will among the client;
Charges on different services are comparatively low in AIBL than other banks;
The bank has research and training division;
Fully computerized accounts maintenance;
Well decorated and air conditioned facilities;

AIBL has a well-diversified pool of human resources, which is composed of people
with
high academic background. Also, there is a positive demographic characteristicmost
employees are comparatively young in age yet mature in experience;
Excellent transport links (ease of access to/from the Company).
WeaknessesLacks well trained human resource in some area;
Lack of one stop service to the customer;
AIBL have no any ATM service or booth;
Taking less promotional activities than any other banks;
The procedure of credit facility is to long compare to other banks;
Employees are not motivated in some areas;
Page | 114
Initiate modern banking like Credit Card facilities, SMS banking, I-banking;
Rented premises (Adding to costs).
OpportunitiesEmergence of online banking will open more scope for AIBL;
AIBL can introduce more innovative and modern customer service;
Bangladesh is developed by improving economic condition. The banking sector play
ing a
vital role for this. With the change in the economy and increase in the populati
on,
demand for banking service is also increasing;
Many branches can be opened in local remote area as its high demand;
AIBL can recruit experienced, efficient and knowledgeable officers and staffs as
it offers
good working environment.
Threats-
The worldwide trend of mergers and acquisition in financial institutions is caus

ing
problems;
Frequency taka devaluation and foreign exchange rate fluctuation is causing prob
lem;
Lots of new banks are coming in the scenario with new service;
Some conventional banks are now a days starting Islamic banking service/window;
Local competitors can capture huge market share by offering similar products;
Restless political condition in Bangladesh, such as strike, boom blast, etc. thr
eats the
prosperity of bank;
As well as customer satisfaction authority must have to conscious about the empl
oyee
satisfaction otherwise excessive labor turned will be a threat to the organizati
on;
Number of potential competitors is increasing day by day;
Rising cost of Wages (Basic wage, etc);
Large and increasing competition;
Existing product becoming unfashionable or unpopular.
Page | 115
As previously stated, SWOT analysis is used primarily to evaluate the current po

sition of the
business to determine a Management strategy for the future. It should also help
to look at how
management can do this by looking closely at companys Weaknesses and Threats that
have
identified. Great care needs to be taken when planning a strategy not to disturb
the balance of
Strengths as management could find that their Strengths suddenly become a Weakne
ss if they
dont use them.
The way that SWOT has been introduced is the simplest way that it can be found.
It can be used
further to analyze the business (depending on its size) on a local, national and
global level. This

analysis will also help the management to forecast and prepare for the future ac
curately to give
realistic objectives and tasks.
Page | 116
CHAPTER
7
FINDINGS OF THE ANALYSIS
Page | 117
7.1 Findings
The findings from the survey can be listed under following two head-
Quantitative findings
Qualitative findings
7.1.1 Quantitative Findings
The quantitative findings that are found by analyzing the customersresponse throu
gh
SERVQUAL instrument are as followsFrom the analysis it is showed that, among the fifty (50) respondents there is o
nly
fourteen female customers which is short in number in compare with thirty six (3
6) male.
This result says that, the bank provide less attention to female customers and a
s well as
there have no any separate service desk for them.
The survey result of age group distribution indicates that, young and old age cu
stomers is
only 14% and 3% respectively which is less than other two age group. It is happe
ned
because of lack of prompt service.
Result from profession distribution it is shown that there is only 12 students w
ho visit the
bank. This number is small rather than other profession. It is because of less o
r no
product or service for students.
Ability of employees to perform promised service dependently & accurately- Accor
ding
to customers response, performance of all the dimensions listed under Reliability
head
(acting according to promises, sincerity in problem solving, performing the serv
ice right
at the first time, providing service at the promised time & insistence on error
free record)
are quite. So, the employees are able to perform promised services dependently a
nd
accurately.
Responsiveness of employees to satisfy customers- According to customers respons
e,
statements under Responsiveness head (guidance at entrance, prompt service, will
ingness
to help, seeking pardon for late) are satisfactory. Although the average result
is
Page | 118
satisfactory, there is a large number of customer who says that guidance at entr
ance and
seek pardon for making wait is average that it is neither satisfactory nor dissa
tisfactory.
Assurance of competency, courtesy, credibility & security- From customers point o
f
view, all dimensions listed under Assurance head (employees behavior instill
confidence in customers, safe felling in transactions, consistent good courtesy
of
employees & having decent knowledge of employees in answering customers queries)
are quite satisfactory. So, on average the customers are assured enough by compe
tence,
courtesy, credibility and security of the employees and the bank.
Tangible appearances in satisfying customers- Customers of the bank are well sat
isfied
with all types of tangible appearances (equipments, materials, physical faciliti
es &
employees) inside the bank. And these factors made the tangible dimension to sta
nd top
among all other dimensions.
Performance in personal care, understanding customers & offered banking hour- Fr
om
the survey result it is found that the employees of AIBL have the short interest
of
customers in their heart. Other statements of Empathy dimensions such as service
charges and individual interest is satisfactory from the customer point of view.
So, from the quantitative analysis it is found that although in some dimensions
customers are not
properly satisfied, the overall result is pointing to a satisfactory level of cu
stomerssatisfaction at
Al-Arafah Islami Bank Limited, Laldighirpar Branch. There are some points where
it needs to
improve performance to increase the level of customer satisfaction. These are- h
olding best
interest of customer, provide service as promised, providing information exactly
when service
will be provided, providing quick service, response timely to customers, etc.
7.1.2 Qualitative Findings
The key informants believe that the customers can be made more satisfied by prov
iding them
quick service. They also think that most of the customers deal with lower level
officers of
Page | 119
General Banking & SME department. Customers of the bank are increasing day by da
y. It will
not be possible to serve customers then as they serve today. To make provide the
m prompt
service without creating any queue more employees are needed under General Banki
ng
department. This will help them to carry on every day time consuming works like
voucher
sorting properly and thus there will be no pending works. They also believe that
as the bank
provides online services, it should use a better internet service or make contac
t with such a better
internet service provider which can help the employees to provide quick and smoo
th service to
the valued customers.
7.2 Problems & LimitationsDuring collecting of information and data from AIBL & making report for this pro
ject the
following problems have been followed:
Decision making process is very lengthy and sometimes it creates problems, which
is
unexpected to the customers. Most of the cases Head Office control the decision
making
and it is centralized.
The total number of employees in comparison with needed is short. This is hamper
ing the
daily operation of the Bank. For an example, Laldighirpar Branch General Banking
is
suffering from shortage of employee.
Lack of proper explanation of records and document records keeping system.
In many cases, there have lack of communication between different levels of empl
oyees.
Page | 120
CHAPTER
8
RECOMMENDATIONS & CONCLUSION

Page | 121
8.1 Recommendations
It was an interested experience to do internship in Al-Arafah Islami Bank Limite
d. The staff was
highly cooperated and due to their help I learned big deal about modern banking.
I suggest that
such an internship program highly integrative for the students of business admin
istration so that
the students should be enquired with the knowledge of practice world .I do summa
rize that it
would be a great help to me in selection of job or future field of work.
It is very difficult for me to recommend with a practical experience of just alm
ost 3 months. On
the basis of interviews, study and observation I would like to put some suggesti
ons, which will
enable the bank to compete with other banks more effectively & efficiently. The
suggestions areMaintenance of Time Slots for Each Customer to Serve: While employees deal with
customers they can maintain standard time or time slots for each customer they h
andle
and for each work they do. This consciousness will help to perform works quickly
and to
serve more customers.
Bank should give more attention to female customers and set up separate service
desk for
them.
As it is an Islamic bank there should be appoint female staff for provide prompt
service to
female customer.
Setup Electronic Calling Machine for Cash Counter- Most of the time there is a r
ush in
the cash counter. To manage proper queue and to manage this rush properly settin
g up of
Electronic Calling Machine can be effective.

Setting up of Query Desk/ Information Booth/ Reception Booth: A conventional que
ry
desk or reception booth or information booth can serve customers who make a phon
e or
come at banks for simple query and this can reduce customers rush to the officers
table.
The employees should response more attractively and try to provide prompt servic
e to
customers of different age.
There need to start more separate and special service for students. Now-a days ma
ny
banks provides student support service who wants to go abroad for higher study.
Page | 122
Decision Making- Decision making power should be decentralized effectively so th

at
business can promptly be enhanced.
Appointment of more Employees under General Banking Department: More appointed
employees can simplify the works of general banking and can serve the customers
well.
This will also help to ensure no work pending and no customer un-served. Appoint
ment
of more employees under this department will also reduce the workload of existin
g
employees and will help to improve their morale.
Employee Training Workshops- Employees should be trained by arranging workshops
time to time. Because this can release them from monotony, increase their knowle
dge and
morale.
Appointing Female Employees- To understand the female customers specific needs
woman employees can be effective and a separate desk for women can improve the
Islamic image of the bank and will secure the motto committed to cordial service
.
The employees should be signed jobs for specific period and than they should shi
fted to
other department so that they gain knowledge of other jobs.
Bank should properly advertise and Communicate to public about the services prov
ided
by it, so that more customers will be attracted.
System and operations should be more defined and organized. IT draw backs should
be
improved.
Lockers, ATM, all these facilities should be provided to attract more customers.
In a competitive financial market, their products & services need to focused mor
e on
customers needs then simply offering what the customers are offering
They should do more marketing activities to improve their presence in the minds
of the
target market and also the potential target market. As we see that, Media covera
ge of
DBL is not so strong. To attract new clients, they should go for mass media cove
rage.
Page | 123
8.2 Conclusion
During the three months internship program in Al-Arafah Islami Bank Limited in L
aldighirpar
branch at Sylhet, almost all the desk have been observed more or less. This inte
rnship program,
in first, has been arranged for gaining knowledge of practical banking and to co
mpare this
practical knowledge with theoretical knowledge. All departments and sections are
not covered in
the internship program; so it is not possible to go to the depth of each activit
ies of branch
because of time limitation. However, highest effort has been given to achieve th
e objectives of
the internship program.
Al-Arafah Islami Bank ltd. is a non government commercial Bank in Bangladesh, wh
ich started
its business from 1995. It is a unique combination of Shariah and Islamic banking
. Among non
government commercial banks, Al-Arafah Islami Bank Ltd. is a milestone for econo
mic
development. It has been playing an important role to eradicate the unemployment
problem in
Bangladesh. Over 1,700 employees and 11,000 shareholders are getting benefit fro
m this
organization. But most of the people in our country have misconception about Isl
amic banking
specially Al-Arafah Islami Bank Ltd. and other Islamic banks. They cannot find a
ny difference
in its operation between conventional commercial Banks and Islamic Banks because
they have
no clear idea about the activities as well as investment mechanism of Islamic ba
nks.
The Bank is committed to run its activities as per Islamic Shariah and thus it ha
s different
investment(credit) modes, different repayment schedules, different disbursement
procedure,
different mark up system. And also has a different Investment policy. People are
getting more
benefit from the dealings of Islamic banking because here quarterly interest is
not charged and
there is no possibility of interest to be converted into principal. For ensuring
more benefit, more
facility from Islamic banks like AIBL we have to be honest and more sincere to r
epay the taken
money from these banks in time.
Page | 124
Developing a customer satisfaction program is not just about carrying out a surv
ey. Surveys
provide the reading that shows where attention is required but in many respects,
this is the easy
part. Very often, major long lasting improvements need a fundamental transformat
ion in the
organization, probably involving training of the staff, possibly involving cultu

ral change. The
result should be financially beneficial with less customer churn, higher market
shares, premium
prices, stronger brands and reputation, and happier staff. However, there is a p
rice to pay for
these improvements. Costs will be incurred in the research surveys are made. Tim
e will be spent
working out an action plan and in implementation of development process. Trainin
g may well be
required to improve the customer service. The implications of customer satisfact
ion surveys go
far beyond the survey itself and will only be successful if fully supported by t
he echelons of
senior management.
Page | 125
APPENDICES
Page | 126
Appendix I
Questionnaire for analyzing
Customer Satisfaction Level at Al-Arafah Islami Bank Ltd., Laldighirpar Branch, S
ylhet.
Age:
18-25 26-33 34-50 51Gender:
Male
Above
Female
Profession:
Businessman Service holder Student Other

Please show the extent to which you believe AIBL has the feature described in th
e statement.
Write number (1, 2, 3, 4, 5) that best shows your perceptions.
Point
1
2
3
4
5
Level of
Strongly
Disagree
Average
Agree
Strongly
satisfaction
disagree
agree
Statements in the Tangible Dimension
Statements
Strongly Disagree Average
Agree Strongly
disagree
agree
21. AIBL has modern looking
equipment and technologies that
better satisfy your needs.
22. Your bank has convenient
business hours.
23. The employees of the bank
appear neat.
24. Materials associated with the
service
(pamphlets
or
statements)
are
visually
appealing at AIBL.
Page | 127
Statements in the Reliability Dimension

Statements
Agree Strongly
disagree
agree
25. When AIBL promises to do
something by a certain time, it
does so.
26. When you have a problem,
employees give appropriate
solution of your problems.
27. Your bank completes your
transactions rapidly.
28. AIBL insists on error free
records.
Statements in the Responsiveness Dimension
Statements

Agree Strongly
disagree
agree
29. Guidance at the entrance of the
branch is satisfactory.
30. Employees in AIBL give you
prompt service.
31. Employees in AIBL are always
willing to help you.
32. Employees in AIBL pardon for
making you wait.
Page | 128
Statements in the Assurance Dimension

Statements
Agree Strongly
disagree
agree
33. The behavior of employees in
AIBL installs confidence in you.
34. You feel safe in your
transactions with AIBL.
35. Employees in AIBL area
consistently courteous with you.
36. Employees in AIBL have the
knowledge to answer your
questions.
Statements in the Empathy Dimension

Statements
Agree Strongly
disagree
agree
37. Service charges of AIBL are
reasonable as comparatively to
other banks.
38. AIBL has your best interests at
heart.
39. The
employees of AIBL
understand your specific needs.
40. AIBL has employees who give
you individual attention.
Thank you very much for your time, co-operation & patience
****************************************************
Page | 129
Appendix II
Survey Result
1. AIBL has modern looking equipment and technologies that better satisfy your n
eeds.
Level of Satisfaction
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
7
31
12
50
2. Your bank has convenient business hours.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
13
24
13
50
3. The employees of the bank appear neat.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
1
7
21
21
50
4. Materials associated with the service (pamphlets or statements) are visually
appealing at
AIBL.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
10
30
10
50
Page | 130
5. When AIBL promises to do something by a certain time, it does so.

Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
17
27
6
50
6. When you have a problem, employees give appropriate solution of your problems
.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
1
12
26
11
50
7. Your bank completes your transactions rapidly.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
12
20
18
50
8. AIBL insists on error free records.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
10
23
17
50
9. Guidance at the entrance of the branch is satisfactory.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
16
22
12
50
Page | 131
10. Employees in AIBL give you prompt service.

Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
14
24
12
50
11. Employees in AIBL are always willing to help you.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
12
21
17
50
12. Employees in AIBL pardon for making you wait.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
17
24
9
50
13. The behavior of employees in AIBL installs confidence in you.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
19
22
9
50
Page | 132
14. You feel safe in your transactions with AIBL.

Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
11
19
20
50
15. Employees in AIBL area consistently courteous with you.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
18
25
7
50
16. Employees in AIBL have the knowledge to answer your questions.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
20
23
7
50
17. Service charges of AIBL are reasonable as comparatively to other banks.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
9
22
19
50
Page | 133
18. AIBL has your best interests at heart.

Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
29
16
5
50
19. The employees of AIBL understand your specific needs.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
15
18
17
50
20. AIBL has employees who give you individual attention.
Strongly
Disagree
Average
Agree
Strongly
Total
Disagree (1)
(2)
(3)
(4)
Agree (5)
0
0
9
29
12
50
Gender Distribution:
Male
36
Female
14
Total
50
Page | 134
Profession Distribution:
Business
21
Service holder
15
Student
12
Others
2
Total
50
Age group Distribution:
18-25 y
14
26-33 y
18
34-50 y
15
51-Above y
3
Total
50
Page | 135
BIBLIOGRAPHY
Page | 136
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Kotler, P., (2000), Marketing Management. 10th ed., Prentice-Hall, New Jersey.
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Fornell, C. (2007), The Satisfied Customer Winners and Losers in the Battle for
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Document Outline
1. Front Pages of the Report (Secured).pdf
2. Body of the Report (Secured).pdf

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Metropolitan University, Sylhet

Certificate of the Supervisor

of a business is to create satisfied customers. Increasing customer satisfaction

Certificate of Internship from AIBL

3.2 Investment modes of AIBL. ..................................................

4.13 Moving from Customer service to Customer satisfaction .....................

6.1 Introduction ...............................................................

Assessing Customer Satisfaction Level at AIBL (Ldp. Br.)

customer service. That is why it is quite justified to make an in-depth study ab

1.5 Scope of the Study

1.6.2 Secondary Data Collection

The limitations of the report and the study are follows:

conducting Shariah based banking activities. Recent Development of Bangladesh Gov

4677.28 million as on 31.12.2010. Renowned Islamic Scholars and pious businessme

growth of the national economy.

2.4 Mission of AIBL

2.6 Pledges & Commitments of the Sponsor Director of AIBL

Inspiration for Qurbani of Nafsaniyyat or Self-interest

2.7 Special Features of AIBL:

Alhajj Abdus Samad

Company Secretary : Md. Mofazzal Hossain

2.9 Hierarchy of Position in AIBL

2.10 Shariah Board of AIBL

decision (clause ---- of the Banks Memorandum & Articles of Association).

correcting any breaches.

2.12 Capital Market Services

stock dealer registration certificates from Securities and Exchange Commission i

Share price List

2.15 Capital Adequacy & Reserve Fund

A. Tier-1: Core Capital

Total Capital (A+B)

Deposit Mix 2010

Al-Wadeeah Current Deposit

Sector wise Investment

2.18 Small & Medium Enterprise Investment

development of farmers, labours, fishermen, micro-businessmen and small entrepre

2.20 Investment on Agricultural Sectors

2.21 Rural Agricultural Investment Scheme

2.22 Investment on Women Entrepreneurs

2.23 Al-Arafah Solar Electricity Investment Scheme

anch use. We are

2.24 Treasury Operations

ensure adherence/compliance of these limits.

Assessing Customer Satisfaction Level at AIBL (Ldp. Br.)

2.30 Information Technology

Assessing Customer Satisfaction Level at AIBL (Ldp. Br.)

Muraqibs of Shariah Supervisory committee conducted inspection in all branches of

institutions in the country. It is targeted to attract and retain good performer

The Bank Plans to rationalize per-Branch employee by equitable Manpower distribu

dures for risk

2.37 Implementation of Basel-II

(RWA) supported by External Credit Assessment Institution (ECAIs)

branches and 8 SME/Krishi Branches. The number of Branches as Division wise is m

2.42 Corporate Information for the Year 2010

Statutory Reserve: Tk. 148.74 Crore (30.09.2010)

3.1 Various Deposit product of the Bank in 2010

4. Monthly Hajj Deposit

6. Monthly Profit Based Term Deposit (PTD)

10. Marriage Saving Investment Scheme (MSIS)

18. Triple Benefit Deposit Scheme

3.2 Investment modes of AIBL

3.3 SME Banking