Islami Banking Services in conventional Banks

A comprehensive study of AB Bank Islami Banking Branch

Saleh MD. Arman

BBA Program, (2009)
Roll No. 87

Supervisor
Dr. Altaf Jalil
Professor
Department of Management Studies
Faculty of Business Studies
University of Dhaka

November, 2010
November 24, 2010

To
Professor Dr, Altaf Jalil
Department of Management Studies
Faculty of Business Studies
University of Dhaka

Subject: Submission of Internship Report

Dear Sir

I have completed my internship at AB Bank Limited (ABBL). I placed at AB Bank Islami

Banking Branch, Kakrail, Dhaka. It is a great chance for me to present this report on the topic of
Islami Banking Services in Conventional Bank- A comprehensive study of AB Bank Islami
Banking Branch which included the thoughts of overall performance of Islami Banking of
ABBL on the point of view of employees and clients. This internship program was a great
experience as it provided me with exposure to the real life and practical experience.

Working for this report during my internship program has definitely enriched my
knowledge and experience in practical field. Despite some limitations Ive tried my best to
prepare this report as a decent one.

Thank you for your guidance and constant supervision to fulfill this report.

Sincerely Yours,

Saleh MD. Arman

BBA 12th Batch, ID. No.- 87 , Section-A
Department of Management Studies
Faculty of Business Studies
University of Dhaka

Preface
I would like to thank my internship program supervisor Dr. Altaf Jalil for his prudent guidance
and instruction that enabled me to accomplish the internship report successfully.
I would like to thank the Manager of AB Bank Islami Banking Branch (Kakrail, Dhaka) for
giving me the opportunity to execute my internship program at the bank and for allowing my
access in necessary information for preparing this report. I would also like to express my
immense gratitude to all of the officers of AB Bank Limited who not only helped me a lot to
prepare this report but also helped me with their guidance and by sharing their invaluable
knowledge throughout my entire internship program.

Table of Contents
3

Executive Summary

Chapter One - Introduction

1.1 Introduction and Background of the study

1.2

1.2 Objective of the study

1.2

1.2.1 General objective

1.2

1.2.2 Specific Objectives

1.2

1.3 Scope of the Study

1.3

1.4 Historical Background

1.3

1.5 Research Methodology

1.3

1.6 Limitation of the Study

1.4

1.7 Acronym and Definition

1.5

1.8 Report Preview

1.7

Chapter Two Concept of Islami Banking

2.1 Concept of Islami Banking

2.2

2.1.1 Definition

2.2

2.1.2 Present Scenario of Islamic Finance in the world

2.2

2.2 Islami Banking in Bangladesh

2.2

2.3 Islami Banking Performance in 2009

2.4

2.4 Guideline of Bangladesh Bank regarding Islami Banking

2.6

Chapter Three - Organizational Profile

3.1 About AB Bank Limited (ABBL)

3.2

3.2 AB Chronicles

3.2

3. 3 Vision Statement

3.2

3.4 Mission Statement

3.2

3.5 Motto

3.3
4

3.6 Strategic Priorities

3.3

3.7 Core Values

3.3

3.8 Corporate Profile

3.4

3.9 Group Corporate Structure

3.5

3.10 Corporate Governance of ABBL

3.6

3.11 Key Financial Data

3.7

3.12 Products of ABBL

3.8

3.12.1 Deposit Products

3.8

3.12.2 SME products

3.8

3.12.3 Consumer Credit Scheme

3.9

3.13 Human Resource Management

3.9

3.14 Network of Branches

3.9

3.15 AB Bank, Mumbai Branch

3.10

3.16 Performance of ABBL (Rating)

3.10

Chapter Four Islami Banking Services of ABBL

4.1 Islami Banking Division

4.2

4.2 Deposit Products of ABBIBB

4.2

4.3 Investment Products of ABBIBB

4.3

4.4 Other Banking Services

4.4

4.5 performance

4.4

4.6 Achievement regarding benchmark

4.5

4.7 Future Plan

4.5

Chapter Five Analysis and Findings

5.1 Framework of the Analysis

5.2

5.2 The Rating Scale

5.3
5

5.3 The Cut-off Score

5.3

5.4 Analysis of Data

5.4

Statement 1

5.6

Statement 2

5.7

Statement 3

5.8

Statement 4

5.9

Statement 5

5.10

Statement 6

5.11

Statement 7

5.12

Statement 8

5.13

Statement 9

5.14

Statement 10

5.15

5.5 Findings

5.17

5.5.1 Quantitative Findings

5.17

5.5.2 Qualitative Findings

5.18

Chapter Six Conclusion and Recommendation

6.1 Conclusion

6.2

6.2 Recommendation

6.2

Work Cited

Appendix

List of Figures
6

Figure 1: Operating Profit (Million BDT)

3.6

Figure 2: Return On Equity (%)

3.6

Figure 3: Earnings Per Share (Million BDT)

3.6

Figure 4: Net Asset Value Per Share (Million BDT)

3.6

Figure 5 : Return On Assets (%)

3.7

Figure 6 : Market Price Per Share (DSE) (BDT)

3.7

Figure 7 : Profit After Tax (Million BDT)

3.7

Figure 8: Cost Income Ratio (%)

3.7

Figure 9: Deposits and Loans (Million BDT)

3.7

Figure 10 : Shareholders Equity (Million BDT)

3.7

Figure 11: Classified Loans (Million BDT)

3.7

Figure 12 : Assets Employed

3.7

Figure 13: Deposit Mix 2009

3.8

Figure 14: Deposits (in Million BDT)

3.8

Figure 15: SME Business (BDT TK. In crore)

3.8

Figure 16: SME Profile (BDT Tk. In Crore)

3.8

Figure 17: Consumer Credit Portfolio 2009

3.9

Figure 18 : HR highlights for employees

3.9

Figure 19: Operating Profit (INR in Million)

3.10

Figure 20: Net Interest Income (INR in Milion)

3.10

Figure 21 : IBB Profit (In Million BDT)

4.4

Figure 22 : IBB Deposits and Investments (In Million BDT)

4.4

Figure 23 : Likert Scale

5.3

Figure 24: Satisfaction Score and Loyalty, indifference, defection zone

5.3

Figure 25:Gender ratio among sample

5.4

Figure 26 : Ratio based on Age Group

5.5

Figure 27 Samples Profession Cluster

5.5

Figure 28: Respondents' response according to their thought regarding popularity 5.6
Figure 29: Respondents' response according to judging the Lucrative product

5.7

Figure 30 : Respondents view regarding launching Islami Banking by ABBL

5.8

Figure 31: Respondents view in regard to performance of Islami Banking.

5.9

Figure 32 : Respondents' response on having services by ABBIBB

5.10

Figure 33: Respondents' response regarding the demand for new products

5.11

Figure 34: Respondents' response for demanding more Islami Banking Branches 5.12
Figure 35: Respondents view for the requirement of workshop

5.13

Figure 36: Respondents' response for promoting Takaful

5.14

Figure 37: Respondents' response for judging Islami Banking as a career option

5.15

List of tables
Table 1 Market Share of business and major Indicators

2.3

Table 2 : Islami Banking Performance chart

2.5

Table 3: Productivity of the Employee

3.9

Table 4: Network of Branches of AB Bank (including Mumbai Branch)

3.9

Table 5: Rating of AB BANK by CRAB

3.10

Table 6: Achievement in 2010 (up to 14.9.10)

4.5

Table 7 : Samples Frequency Distribution based on Gender

5.4

Table 8 : Samples Frequency Distribution based on Age

5.4

Table 9: Samples Frequency Distribution based on Profession

5.5

Table 10: Survey upshot of the Statement 1

5.6

Table 11: Survey upshot of the statement 2

5.7

Table 12: Survey upshot of the statement 3

5.8

Table 13: Survey upshot of the statement 4

5.9

Table 14: Survey upshot of the statement 5

5.10

Table 15: Survey upshot of the Statement 6

5.11

Table 16: Survey upshot of the Statement 7

5.12

Table 17: Survey upshot of the statement 8

5.13

Table 18: Survey upshot of the Statement 9

5.14

Table 19: Survey upshot of the Statement 10

5.15

Table 20: Calculation of Grand Mean

5.16

Executive Summary

AB Bank limited(ABBL) is the first Private Bank of Bangladesh. Since 1982, they render all
type of Banking services to the clients. Their service ranges from deposit collection to do
business in the Hong Kong. In recent Time, ABBL plan to open a subsidiary at the United
Kingdom. In recent time Bank has good diversified its service coverage during last couple
of years by opening new branches at different strategically important locations across
the country offering various service products both investment & deposit. Adequate capital,
good quality of asset, smooth growth, enough liquidity, well performance in CSR, etc.
backs up its strong position in Credit Rating for consecutive years.

In recent time, in the financial arena, Islamic Finance achieve a tremendous growth. Researchers
predict that, within 2020, the mainstream Banking of OIC members, would be the Islamic
Banking. Islami Banking operates here since 1983, and now the most growing market in Banking
sector. Besides 7 full-fledge Islamic Banks, some of the conventional Banks now engaging in
rendering Islami Banking Services either Branch Banking or, Window Banking. ABBL operates
Islami Banking Services through their only one full-fledge Islami Banking Branch.

My report is based on the Islami Banking services of Conventional Banks in our country, and, in
this regard, I have studied the Islamic Banking services of ABBL, which is mainly a
conventional banks. I took face to face interview with a questionnaire of 10 statements of 40
peoples consists of clients and employees of AB Bank Islami Banking Branch. I have measured
their response on the basis of Likert Scale. I have determined the mean of every response, and
calculated the Grand Mean of all response. The grand mean is 4.31. To analyze the system I
measured the cut-off score and found that, the responded view is more than, 80%, i.e., the system
is satisfactorily performs and surveyed people think that, ABBL performs well in rendering
Islami Banking services.

I have found from my quantitative analysis that, the performance of ABBL in rendering Islami
Banking services is satisfactory from the point of view of clients and employees, albeit, they
have limited access. Bank needs more products, more branches, more training for employee
about Islamic Finance, and committed for interest- free transaction in every sphere of Banking
Services.
10