Chapter-1

1.1 Introduction
Bangladesh is one of the largest Muslim Countries in the world. The people of this country are
deeply committed to lead an Islamic way of life which is based on the principle of Holy Quran and
the Sunnah. The Al-Arafah Islami Bank which is established on June 18, 1995 is the true reflection
of this inner urge of its people which started functioning with effect from September 27, 1995. It is
committed to conduct all Financial Activities banking and Investment activities on the basis of
interest free profit and loss sharing system. In doing so it has unveiled a new horizon and unheard in
new silver lining of hope towards materializing a long cherished dream of the people Bangladesh for
doing their Banking transaction in line with what is prescribed by Islam. With the active cooperation
and participation of Islamic Development Bank (IDB) and some other Islamic Banks, financial
institutions and government bodies, Al-Arafah Islami Bank Limited has new earned the unique
position of a leading private commercial bank in Bangladesh. Al-Arafah Isalmi Bank Limited has
made a positive contribution towards the socio economic development of the country by opening 46
branches in which 16 authorized dealer throughout the county.

1
1.2 Objectives

General Objectives:

The main purpose of the study to know the overall financial operational performance of the Al-
Arafah Islami Bank Ltd. and fulfilling the practical requirements of the BBA program . The
objective of Islamic banking is not only to earn profit but also to do good and welfare to the people.
Islam upholds the concept that money, income and property belong to Allah and this wealth is to be
used for the God of the society.

Specific Objectives:

 To observe the General Banking & foreign exchange operation of AIBL and their
services review the techniques used by the bank to make it lucrative.
 An analysis and discussion of General Banking & foreign exchange services of the bank.
 To evaluate of the present performance of the bank regarding General Banking & foreign
exchange.
 To search the problems of this branch of AIBL.
 Determining the drawbacks of the existing foreign exchange system.
 Recommending some guidelines to improve the effectiveness of foreign exchange
services.

2
1.3 Methodology

To make the report more meaningful and presentable, two sources of data and information have been
used widely these are Primary Data and Secondary Data. Both primary and secondary data sources
were used to generate the report. But Most of the information collected from secondary sources.

Primary sources of data:

 Face to face conversation with the bank officers &staffs.

 Conversation with the clients.

 Different' manuals of AIBL

Secondary sources of data:

 Procedure manual published by the Al-Arafah Islami BankLtd.

 Files and documents of the branch.

 Annual reports of Al-Arafah Islami BankLimited

 Different papers of Al-Arafah Islami Bank.

 DSE library

 Bangladesh Bank Journals

3
1.4 Scope of the Report
As I was working in the Al-Arafah Islami Bank Limited, Islampur Branch, I got the opportunity to
learn different part of banking system. My supervisor divided my parts so that I can get the
opportunity to work in Foreign Exchange division to analysis the whole financial activities.

1.5 Limitation of the Report

The work is mainly based on interpreting primary data. There is insufficiency of Secondary data, but
for the purpose of the betterment of the present position of the bank’s accounting procedure,
collecting, interpreting and integrating primary data has been utilized.

Though a very comprehensive and a well-organized report has been tried to be produced but there
are still some limitations present here.

Since the time allocated for internship program is twelve weeks, it may have a coercive effect on this
study lowering the actual value and standard.

 The communication gap among the different personnel because of excessive workload.
 Inexperience about practical work.
 Because of sensitiveness, the department does not want to disclose information about the
financial situation, which leads to do report.
 Lack of accessibility to respondents.
 The bank authorities are so busy that they could not give me sufficient time for discussion
about Accounting Procedure and its problems.
 Dealing with some ambivalent information.
 Problems for lack of my research work
 Clients are not always interested to spend time for interviews.
 The main constraint was insufficiency of information, which is highly required for the study.
It was unable to provide some formatted documents and data for the study.
 Since the bank personnel were very busy, they failed to give me enough time to complete the
report.
 The clients were very busy. So, they were unable to give me much time for interview.
 Such a study carried out by me for the first time. So, inexperience is one of the main factors
that constituted the limitation of the study.

4
 Chapter-2

Overview of Al-Arafah Islami

Bank Limited

2.2 Background of Al-Arafah Islami Bank Ltd.

Al-Arafah Islami Bank Limited has been established and functioning with effect from 27th
September 1995 as a schedules commercial Bank of Bangladesh strictly based on Islamic
Shariah principles. Islamic Banking has been operating in more than 70 countries of the world
including Bangladesh through 218 institutions. It has in the meantime established its beneficial
approach and efficiency on operation.

Islamic Banking system has its inborn inner strength as follows:

 It gives a fixed percentage of investment income to the depositors. Therefore, in order

to give better rate of profit its investment portfolio is managed properly so that better
investment income can be earned and paid to the depositors.

 The Management cost is to be borne out of a fixed portion of investment income and
service charge earned by the bank. Therefore, efficient customer services and better
portfolio management are required to be ensured by the management.

 The depositors can calculate their interest income to be earned from conventional
banks and thereby make expenditure with consequential inflation which the depositors
of Islamic Bank cannot do as they cannot foresee profit income.

 Since Islami Bank invests its fund in different Islamic Modes of Finance particularly in
Mudaraba and Musharaka and also accepts deposits on Mudaraba principle
Entrepreneurship as well as sense of belongingness to the Bank is developed.

 In buying &selling modes of financing like Murabaha, Bai-Muajjal, Izara, end uses is
ensured strictly as per principles of Islamic Shariah. Thus funds cannot be diverted for
other purpose.

 Islami Bank attaches importance to human resources development. As such the

employees are trained discreetly, in this regard on which the conventional Bank does
not give much importance.

5
2.3 Company Profile

Name of The Company Al-Arafah Islami Bank Limited

Nature of Business A public limited company registered in
Bangladesh on 18th June 1995, under the companies
Act 1994 and enlisted in
Dhaka Stock Exchange Ltd. & Chittagong Stock
Exchange Ltd.

Registered Office Head Office Peoples Insurance Building(6th – 9th

Floor) 36, Dilkusha Commercial Area Dhaka-1100,
Bangladesh.

SWIFT Code ALAR BD IS (means Branch Code)

E-Mail [email protected]

Webpage: www.al-arafahbank.com

6
2.4 Mission & Vision of AIBL
Mission:

 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.

Vision:

 To be a pioneer in Islami Banking in Bangladesh and contribute significantly to the growth of

the national economy

7
 2.5 Value &Commitments

Value

 AIBL values are based upon the fundamental principles that define our culture
and are brought life in our attitude and behavior. It is their values that make us
unique and seen from five basic principle:

 Excellence: The market is which AIBL operate is becoming increasing competitive

and their customers now have abundance of choice.

 Integrity: AIBL success depends upon trust. Their customers are society in
general expect us to process and steadfastly to high moral principle and
profession standard.

 Customer focus: AIBL need to understand fully the needs of their customers and
to adapt our product and service to meet these.

 Meritocracy: AIBL believes in giving opportunities and advantage to its employee

son the basic of their ability.

 Progressiveness: AIBL believes in the achievement of society through the

adoption of enlightened working practice innovative new product and process a
sprite of enterprise.

Commitments

 Theirs is a customer focused modern Islamic Banking with sound and steady growth in both
deposit mobilization and making quality Investment to keep our position intact as a leading
Islami Bank in Bangladesh.

 To deliver financial services with the touch of our heart to retail, small and medium scale
enterprises, as well as corporate clients through our branches across the country.

 To always align our business initiatives with the ever changing industrial and business needs
of the clients.

 To deliver product and services that creates value for the customers.

8
2.6 Objective of AIBL

Al-Arafah Islami Bank Limited is Islamic Banking institutions that operates with the objectives
implement and materialize the economic and financial principles of Islamic in the banking arena.
The objectives of AIBL are not only to earn profit, but also to do good and welfare to the people. The
main objectives of AIBL are listed below-

 To establish participatory banking instead of banking on debtor creditor relationship.

 To invest through different modes permitted under Islamic Shariah.
 To accepts deposits on profit loss sharing basis.
 To establish as welfare-oriented banking system.
 To extend co-operation to the poor, the helpless and the low income group for their economic
up liftmen.
 To play a vital role in human development and employment generation.
 To contribute towards balances growth and development of the country through investment
operations particularly in the less developed areas.
 To contribute in achieving the ultimate goal of Islamic economic system.
 To conduct interest free banking.

9
2.7 Special Characteristics

 All activities are conducted on interest-free system according to Islamic Shariah

Principles.
 Investment is made through different modes as per Islamic Shariah.
 Investment Income of the Bank is shared with the Mudaraba depositor according to an
agreed upon ratio ensuring a reasonably fair rate of return on their deposits.
 To introduce a welfare-oriented banking system and also to establish equity andjustice
in the field of all economic operations.
 Extend socio-economic and financial services to individuals of all economic backgrounds
with strong commitment in rural uplift.
 Plays a vital role in human resources development and employment-generation
particularly among the unemployed youths.
 Portfolio of investment and investment policy have been specially tailored to achieve
balanced growth and equitable development through diversified investment operation
particularly in the priority sectors and in the less developed areas of the national
economy.

10
2.8 Organ gram of AIBL

11
2.9 Year Financial Performance of the Bank

Particulars 2015 2016 2017 2018 2019 Growth%

Income Statement
Investment Income 18,568.00 18,830.15 20,491.03 24,956.81 24,956.81 15.45
Profit paid on Deposit 11,073.01 9,957.73 11,784.20 16,256.61 16,256.61 14.44
Net Investment Income 7,494.99 8,872.42 8,706.83 8,700.20 8,700.20 17.32
Non Investment Income 2,511.94 2,791.54 3,557.36 3,769.39 3,769.39 7.11
Non Investment Expenses 3,646.78 4,152.93 5,308.42 6,160.70 6,160.70 3.63
Net Non Investment
Income (1,134.84) (1,361.39) (1,751.06) (2,391.31) (2,391.31) (1.87)
Profit Before Tax & 6,360.15 7,511.03 6,955.77 6,308.89 6,308.89 24.60
Provision
Provision For Investment 1,796.68 1,547.87 1,354.89 2,177.98 2,177.98 31.67
Profit Before Tax 4,563.47 5,963.16 5,600.88 4,130.91 4,130.91 20.87
Provision For Tax 2,097.59 2,613.76 2,431.38 1,674.11 1,674.11 53.24
(including Deferred Tax)
Profit After Tax 2,465.88 3,349.40 3,169.50 2,456.80 2,456.80 (1.19)
Balance Sheet
Authorized Capital 15,000.00 15,000.00 15,000.00 15000.00 15000.00 -
Paid up Capital 9,469.58 9,943.06 9,943.06 10,440.22 10,649.02 2.00
Reserve Funds & Other
Reserves 6,432.32 7,468.16 8,556.96 9,365.62 10,318.21 10.18
Shareholders’ Equity 19,236.07 21,337.48 22,520.68 23,483.22 24,148.21 2.83
(Capital & Reserve)
Deposits 169,887.08 199,703.92 244,806.26 266,205.48 297,241.81 11.66
Investment 162,503.14 196,519.38 235,905.23 261,874.13 288,486.02 10.16
Investment in Shares &
Securities 8,851.13 9,058.68 10,145.49 12,214.67 16,170.52 32.39
Fixed Assets 3,057.38 3,240.18 3,260.38 4,494.61 4,351.93 (3.17)
Total Assets (Excluding off-
balance sheet items) 229,106.66 272,900.04 319,255.29 338,465.30 381,051.81 12.58
Foreign Exchange Business
Import Business 107,049.80 118,786.60 156,700.00 168,573.80 171,611.70 1.80
Export Business 79,362.90 88,152.20 104,540.00 114,481.90 108,967.10 (4.82)
Guarantee Business 4,471.41 4,981.34 6,443.41 7,096.02 8,274.25 16.60
Inward Foreign 9,498.00 11,735.40 20,700.00 36,917.20 37,713.40 2.16
Remittance
Capital Measures
Core Capital (Tier-l) 18,244.48 20,359.39 21,459.85 22,379.93 22,817.41 1.95
Supplementary Capital 4,828.03 5,095.97 5,488.97 10,078.56 9,735.77 (3.40)
(Tier-ll)
Tier-l Capital Ratio 13.17 11.92 10.40 10.12 10.22 0.10
Tier-ll Capital Ratio 3.48 2.98 2.66 4.56 4.36 (0.20)
Total Capital 23,072.51 25,455.36 2 26,948.82 32,458.49 32,553.18 0.29
Total Capital Ratio 16.65 14.91 13.06 14.68 14.58 (0.10)
Investment Quality
Volume of Non-Performing
investment 7,713.67 8,994.98 9,921.51 12,690.72 14,100.41 11.11
% of NPIs to Total
Investment 4.66 4.54 4.10 4.79 4.82 0.03
Provision for Unclassified
Investment 1,090.27 1,352.83 1,723.04 1,891.00 2,157.28 14.08
Provision for Classified

12
Investment 2,100.27 2,586.67 3,096.15 3,946.09 6,022.03 52.61
Provision for Off Balance
sheet Exposures 346.75 449.88 570.42 689.80 778.50 12.86
Share Information
Number of Shares
Outstanding 946,958,50 994,306,428 994,306,42 1,044,021,750 1,064,902,185 2.00
3 8
Earning per Share (Taka) 2.25 3.07 3.15 2.35 2.28 (0.02)
Book Value per Share 20.31 21.46 20.88 20.80 21.13 0.33
(Taka)
Market Price per Share 14.70 15.90 24.10 19.90 17.20 (2.70)
(Taka)
Price Earning Ratio 6.53 5.18 7.64 8.48 7.56 (1.09)
(Times)
Price Equity Ratio (Times) 0.72 0.74 1.15 0.96 0.81 (0.14)
Dividend per Share
Cash Dividend (%) 10.00 20.00 15.00 15.00 13.00 (2.00)
Bonus Share 5.00 - 5.00 2.00 - (2.00)
Operating Performance Ratio
Net Profit Margin% 4.91 4.60 3.87 3.42 3.73 0.30
Investment /Deposit Ratio 88.59 88.50 89.95 89.87 88.93 (0.94)
Return on Equity (ROE)% 12.82 15.70 14.07 10.46 10.05 (0.41)
Return on Assets (ROA)% 1.08 1.23 0.99 0.73 0.64 (0.09)
Cost of fund % 9.18 7.92 7.50 8.70 9.02 0.32
Cost /Income ratio in
operating business (%) 36.44 35.60 43.28 49.41 44.82 (4.59)
Other Information
Number of Branches 129 140 154 168 182 8.33
Number of Employees 2,810 3,070 3446 3,682 3,795 3.07
Number of 44,427 36,695 30386 25,793 24,276 (5.88)
Shareholders

13
2.10 Services provided by AIBL
The importance of mobilizations of savings for the economic development of our country can
hardly be over emphasized. We considered savings and deposits as lifeblood of the bank. More
the deposit, greater is the strength of the bank. The bank intends to launch various new savings
scheme with prospect of higher return duly supported by a well-orchestrated system of customer
services. The bank would cater to the credit needs of individuals as well as corporate clients.
Initial it will emphasize on trade finance, which would be short term and self-liquidating in
nature. Considering the importance of foreign trade in our national life, financing and handling
of export & import business and also handling of foreign remittance business would be given top
most priority. Moreover the bank operates all of its activities under the rules and regulations of
Islamic Shariah. The services provided by the Al-Arafah Islami Bank Ltd. are given bellow:-

1.General banking
 Different accounts open, issues of DD. TT. PO,
 Clearing,

 FD, Different Scheme etc.

2.Credit/advance
 SOD General loan
 House building loan
 Lease finance
 Hire purchase
 CC hypo
 Staff loan
 CCSetc.

3.Foreign exchange
 Export

 Import

 Remittance

14
2.11 Modes of Investment

1. Bai-Murabaha:

Bai-Murabaha may be define as a contract between a buyer and a seller under which the seller sells
certain specific goods (permissible under Islamic Shariah and the law of the land ) to buyer at a cost
plus agreed profit payable in cash or on any fixed future date in lump sum or by installments. The
profit marked up may be fixed in lump sum or in percentage of the cost price of the goods.

2. Mudaraba:

Moradabad refers to a contract between two parties in which one party supplies capital to the other
party for the carrying on some trade on the condition that the resulting profits are distributed in a
mutually agreed proportion and loss is borne by the provider of the capital.

3. Musharaka:

The word ‘musharaka’ is derived from the Arabic word ‘Sharikah’. That means partnership. It is a
partnership between two or more parties who trade woth a join capital. The profit is to be dividends
into a known and fixed percentage. All the partners including the bank have the right to participate in
the management.

4. Bai-Muajjal:

A contract in which the seller allows the buyer to pay the price of a commodity at a future date in
lamp sum or installment (which may be higher than the spot price) this is a sort of credit sale for
profit. Bai-muajjal is useful in financing requirements of industry and agriculture.

5. Bai- Salam:

Bai-Salam is a contract in which the buyer pays the agreed price of a commodity in advance and the
commodity is delivered to the buyer at a specified future price. This is useful mechanism for
agricultural products and industrial product.

15
 Chapter-3
Foreign Exchange division of AIBL

3.1 Foreign Exchange department

Foreign exchange can simply be defined as a process of conversion of one currency into another. In
ordinary sense “Foreign Exchange” means Foreign Currency, which refers to the rate of exchange
the price of one unit of foreign exchange in termFs of another currency. But in its complete sense,
foreign exchange means the mechanism or the media used and the rate at which these media are
exchange with another.

Foreign Exchange department of Al-Arafah Islami Bank Ltd. is one of the most important of all
departments. This department divided into three parts, the first one is the Import Department the
second part is the Export Department & the third part is Foreign Remittance Department.

Following flow chart depicts the multifarious functions usually done by the FED:

16
3.2 Import Procedure
To import, a person should be competent to be and importer. According to Import and Export
Control Act, 1950, the Office of Chief Controller of Import and Export provides the registration
(IRC) to the importer. In an international business environment, buyers and sellers are generally
unknown to each other. So seller of goods always seeks security for the payment of his exported
goods. Bank gives export guarantee that it will pay for the goods on behalf of the buyer if the
buyer does not pay. This guarantee is called Letter of Credit. Thus the contract between importer
and exporter is given a legal shape by the banker by 'Letter of Credit.

3.3 Functions of Import Section

The form IMP contains the followings—

 Name and address of the Authorizeddealers.

 Amount of remittance to be permitted (i.e./Camount)
 LCA form no. Date and value in Taka.
 Description of goods.
 Invoice value in foreign currency, (i.e./Camount)
 Country oforigin.
 Port ofshipment.
 Name of steamer /Airline
 Port ofimportation.
 Indenter’s name andaddress.
 Indenter's registration number with CCI & E and BangladeshBank.
 Full name and address of theapplicant.

17
3.4 Letter of Credit
A letter of credit is a letter issued by a bank (known as the opening or the issuing bank) at the
instance of its customer (known as the opener) addressed to a person (beneficiary) undertaking
that the bills drawn by the beneficiary will be duly honored by it (opening bank) provided
certain conditions mentioned in the letter gave been complied with.

3.5 Importer’s Application for L/C Limit Margin

To have an import L/C limit, an importer submits an application to the Department of Al-Arafah
Islami Bank Ltd. furnishing the following information:

1        Full particulars of bank account.

2        Nature of business.

3        Required amount of limit.

4        Payment terms and conditions.

5        Goods to be imported.

6        Offered security.

7        Repayment schedule.

Now if the officer thinks the application to open an L/C in not fit, the following entries are given to
realize the L/C, Charges, Postage and L/C margin.

18
3.6 Parties Involved in a Letter of Credit

Importer Who applies for L/C

Issuing Bank It is the bank which opens/issues a L/C on behalf of the importer.

Confirming Bank It is the bank, which adds its confirmation to the credit and it, is done at the
request of issuing bank. Confirming bank may or may not be advising bank.

Advising or Notifying Bank It is the bank through which the L/C is advised to the exporters. This bank is
actually situated in exporter's country. It may also assume the role of confirming
and / or negotiating bank depending upon the condition of the credit.

Negotiating Bank It is the bank, which negotiates the bill and pays the amount of the beneficiary-
The advising bank and the negotiating bank may or may not be the same.
Sometimes it can also be confirming bank.

Accepting Bank It is the bank on which the bill will be drawn (as per condition of the credit).
Usually it is the issuing bank.

Reimbursing Bank It is the bank, which would reimburse the negotiating bank after getting payment -
instructions from issuing bank.

The following papers are required when opening a new L/C

1. Certificate of Board of Directors.

2. Resolution of Commencement.
3. Resolution of Board of Directors.
4. Confidential report to be obtained from their previous bank.
5. Report/ Inquiry to be obtained from CIB of Bank.
6. Credit Report to be obtained from correspondent bank, internationally reputed agency introspects to
the supplier.
7. LRA to be made in case of big liability.
8. Valid Import Registration Certificate (IRC).
9. Trade License.
10. TIN Certificate.
11. VAT Certificate.
12. Three (3) copies declaration by the importer that they have paid/ submitted return of income tax of
proceeding last year.
13. Membership Certificate of Chamber of Commerce Industry.
14. Membership Certificate BGMEA (Incase of Garment Ind.)
15. Banded warehouse license (Incase of Export Oriented Industry).
16. LCA From.
17. Insurance cover note.
18. Proforma Invoice/ Indent.
19. Application for opening of L/C duly billed in and signed.
20. IMP form duly signed.

19
21. Memorandum and Article of Association of the company.
22. Certificate of incorporation with RJSC.
3.7 Documents Used in Foreign Trade

3.7.1 Bill of exchange

A Bill of Exchange is an instruction by the exporter (drawer) to the importer or the importer’s
bank to make payment of the amount mentioned in it. A Bill of Exchange is a negotiable
instrument and is governed by the Negotiable Instruments Act. The bill under a letter of credit
may be drawn in the issuing bank or another drawee bank but not on the importer. If the credit
nevertheless calls for a bill on the applicant, the bank will consider such bills as additional
documents. The various types of bills are:

3.7.2 D/A and D/P bills

A usance bill may be on D/A or D/P terms. If it is on D/a terms (Documents against acceptance), the
collecting bank is to deliver the documents to the drawee on the acceptance of the bill by him. The
payment will be made by the drawee on the due date of the bill. For the period from the date of
acceptance to the date of payment, the bank remains unsecured. If it is a D/P bill (Documents against
payment), the documents will be delivered to the drawee only on payment until which time they are
retained by the bank. Therefore, the bank retains control over goods until payment is received.

3.7.3 Inland and foreign bills

A bill, which is drawn in Bangladesh and made payable in or drawn upon any person resident in
Bangladesh, is an inland bill. Thus, an inland bill must fulfill both the conditions that (i) it is drawn
in Bangladesh and (ii) it is payable in Bangladesh or drawn on person resident in Bangladesh (even
though payable abroad).  Any bill that does not fulfill either of the conditions is a foreign bill. Thus,
a bill drawn in Bangladesh, payable at a place outside Bangladesh by a person resident outside
Bangladesh and a bill drawn at a place outside Bangladesh, but payable in Bangladesh are foreign
bills.

3.7.4 Marine Insurance Policy

The loss or damage to goods during the voyage or shipment would affect any one or more parties
involved in the transaction, viz., the importer, the exporter, the shipping company and the bank
which has paid against the documents covering the goods. Marine insurance offers the desired cover
against loss of or damage to the goods during the transaction. It allows free flow of international
trade by absorbing an important uncertainty connected with it.

Marine insurance may cover the ship (hull insurance) or the goods (cargo insurance). The
consideration for which a marine insurance contract is undertaken is the ‘premium’.  The insurance
may be for either partial loss or total loss. The applicant must submit the insurance cover note and
the money receipt with other relevant documents to the advising bank.

20
3.7.5 Invoices

Various types of invoices are required in L/C. Brief descriptions of those invoices are given below:

Commercial Invoice:

A commercial invoice is a statement containing full details of the goods sipped. The general contents
of a commercial invoice used in foreign trade are:

 Names and addresses of the seller and buyer;

 Details of goods shipped-quantity, quality, description and value;
 Packing details and packing marks;
 Price and amount payable by the buyer;
 Terms of trade-FOB, CFR OR CIF, etc;
 Details of freight charges, insurance premia and other chargers;
 Reference to the sale contract in fulfillment of which the shipment is made;
 Name of the vessel in which the goods are shipped; and
 Reference to the license number under which the import is made.

Proforma Invoice:

A Proforma Run contains all the details in a commercial invoice. The word 'profit run' is different from the
commercial inventory by appearing. This is not a sales proof. The following operations may be required in the
following forms:

It may be the basis of which the contract of sale is concluded later. When the product is sent on a
consignment basis, a profit invoice that is sent to the vendor's agent can be used only; It acts as a guide
for the price of the product thatthe agent sells.
It may be used support a tender a sale contract

21
3.8 Export Procedure
Entering into an Export contract

In order to avoid disputes, it is necessary to enter into an export contract with the overseas buyer. For
this purpose, export contract should be carefully drafted incorporating comprehensive but in precise
terms, all relevant and important conditions of the trade deal.

There should not be any ambiguity regarding the exact specifications of goods and terms of sale
including export price, mode of payment, storage and distribution methods, type of packaging, port
of shipment, delivery schedule etc. The different aspects of an export contract are enumerated as
under :

 Product, Standards and Specifications

 Quantity
 Inspection
 Total Value of Contract
 Terms of Delivery
 Taxes, Duties and Charges
 Period of Delivery/Shipment
 Packing, Labeling and Marking
 Terms of Payment– Amount/Mode & Currency
 Discounts and Commissions
 Licenses and Permits
 Insurance
 Documentary Requirements
 Guarantee
 Force Majeure of Excuse for Non-performance of contract
 Remedies

Arbitration, It will not be out of place to mention here the importance of arbitration clause in an
export contract Court proceedings do not offer a satisfactory method for settlement of commercial
disputes, as they involve inevitable delays, costs and technicalities. On the other hand, arbitration
provides an economic, expeditious and informal remedy for settlement of commercial disputes.
Arbitration proceedings are conducted in privacy and the awards are kept confidential. The
Arbitrator is usually an expert in the subject matter of the dispute. The dates for arbitration meetings
are fixed with the convenience of all concerned. Thus, arbitration is the most suitable way for
settlements of commercial disputes and it may invariably be used by businessmen in their
commercial dealings.

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3.9 Export Pricing and Costing
Export pricing should be differentiated from export costing. Price is what we offer to the
customer.Cost is the price that we pay/incur for the product. Price includes our profit margin, cost
includes only expenses we have incurred. Export pricing is the most important tool for promoting
sales and facing international competition. The price has to be realistically worked out taking into
consideration all export benefits and expenses. However, there is no fixed formula for successful
export pricing. It will differ from exporter to exporter depending upon whether the exporter is a
merchant exporter or a manufacturer exporter or exporting through a canalizing agency. You should
also assess the strength of your competitor and anticipate the move of the competitor in the market.
Pricing strategies will depend on various circumstantial situations. You can still be competitive with
higher prices but with better delivery package or other advantages.

Your prices will be determined by the following factors:

 Range of products offered

 Prompt deliveries and continuity in supply
 After-sales service in products like machine tools, consumer durables
 Product differentiation and brand image
 Frequency of purchase
 Presumed relationship between quality and price
 Specialty value goods and gift items
 Credit offered
 Preference or prejudice for products originating from a particular
 Aggressive marketing and sales promotion
 Prompt acceptance and settlement of claims
 Unique value goods and gift items

The exports form Bangladesh is subject to export trade control exercise by the Ministry of
Commerce through Chief Controller of Export and Imports (CCI & E). No exporter is allowed to
export any commodity permissible for export from Bangladesh unless he is registered with CCI & E
and holds valid Export Registration Certificate (ERC). The Export Registration Certificate (ERC) is
required to be renewed every year. The Export Registration Certificate (ERC) is to be incorporated
on EXP forms and other documents connected with exports.

23
3.10 Formalities and Procedure
1. Export Receipt L / C: Obtain export L / C form export issued by the importer.

2. Submission of export documents: After supplying the product to the exporter, all the documents
required by the collecting bank will be submitted.

3. Checking the export documents: After checking the document near the banker to verify the
documents according to the lock / C terms.

4. Discussion of export documents: If the bank accepts the document and gives the exporters a
standard draft and forward documents to provide bank called a compromise bank. If the bank does
not buy L / C, the bank generally acts as a collecting bank.

5. Revenue earning: This time the issuing bank payment is realized.

6. Report to Bangladesh Bank: According to the instructions of the Bangladesh Bank, the bank
should report the latest payment to the respective division of Bangladesh Bank.

7. PROGRESS PROJECT CERTIFICATE (PRC) Issue: To get cash assistant to the bank, the
supplier / exporter will have to issue the export certificate of export L / C.

3.11 Papers Requirement for new Export

 Export Realization Certificate (ERC).
 Trade License.
 Membership Certificate Form Chamber/ EPB.
 Account To Be Maintained With Bank.
 Export L/C Contract.
 EXP Form To Be Certified.
 TIN Certificate.
 VAT Certificate.
 Memorandum and Article of Association of the Company.
 Confident Credit Report to Be Obtained of the Importer.
 Registered Partnership Deed In Case of Partnership Concern.

24
3.12 Preparation of Exports Documents
 Bill of exchange or Draft.
 Bill of Lading.
 Invoice.
 Insurance Policy/ Certificate.
 Certificate of Origin.
 Inspection Certificate.
 Consular Invoice.
 Packing List.
 Quality Control Certificate.
 GSP Certificate.
 Photocopy-sanitary Certificate.

3.13 Export Financing

 Export Cash Credit (ECC).
 Packing Credit (PC)
 Back-to-Back Credit Facility (BTB).
 Foreign Documentary Bills Purchased (FDBP).

25
3.14 Processing and Opening of Back-to-Back Letter of Credit
An exporter desired to have an Import L/C limit under Back-to-Back arrangement. In that case the
following papers & documents are required:

 Full Particulars of Bank Account.

 Balance Sheet.
 Statement of Assets & Liability.
 Trade License.
 Valid Bonded Warehouse License.
 Membership Certificate.
 Income Tax Declaration.
 Memorandum of Articles.
 Partnership Deed.
 Resolution.
 Photographs of Al Directors.

On receipt of above documents and papers the Back-to-Back Letter of Credit opening section will
prepare a credit report. Branch must obtain sanction from Head Office for Opening Back to Back
L/C.

Back-to-Back Letter of Credit opened without Head Office concern because of valued clients of the
Bank. In that case an officer of Foreign Exchange Department will send a Post to the Head

3.15 Export Cash Credit (ECC)

Export Cash Credit (ECC) is extended to the companies who are involved in exporting goods and
services. Export Cash Credit (ECC) is provided to procure raw materials, Packing List, Wages,
Salaries, Utility etc. the quantum of Export Cash Credit (ECC) is usually 75% of the export L/C.

3.16 Packing Credit (PC)

Packing Credit (PC) is granted to export oriented industry usually garments industry to finance their
expenses for Utility, Salaries, Wages etc. the quantum of packing credit is usually 10 % to 155% of
the value of the export L/C.

3.17 Back-to-Back Credit Facility (BTB)

26
Back-to-Back Credit Facility (BTB) is issued to import raw materials for export –oriented industry
usually of garments. The primary security of Back-to-Back Credit (BTB) is export L/C usually the
quantum of Back-to-Back Credit (BTB) L/C is 75% of the value of Master L/C.

3.18 Foreign Remittance

This bank is authorized dealer to deal in foreign exchange business. As an authorized dealer, a
bank must provide some services to the clients regarding foreign exchange and this department
provides these services.

The basic function of this department are outward and inward remittance of foreign exchange
from one country to another country. In the process of providing this remittance service, it sells
and buys foreign currency. The conversion of one currency into another takes place an agreed
rate of exchange, which the banker quotes, one for buying and another for selling. In such
transactions the foreign currencies are like am other commodities offered for sales and purchase,
the cost (convention value) being paid by the buyer in home currency, the legal tender.

3.19 Remittance Procedure of Foreign Currency

There are two types of remittance:
1. Inward remittance
2. Outward remittance.

Inward Foreign Remittance:

Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D, and
bills, T.C. etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign
exchange is to be reported to Exchange control Department of Bangladesh bank onForm-C.

Outward Foreign Remittance:

Outward remittance covers sales of foreign currency through issuing foreign T.T. Drafts,
Travelers Check etc. as well as sell of foreign exchange under L/C and against import bills.

27
 3.20 Formalities for opening foreign currency (FC) Account:

The AD may without prior approval of the Bangladesh Bank open Foreign Currency (FC)
account in the name of:
1. Bangladesh national residingabroad.
2. Foreign nationals residing abroad/ in Bangladesh and also foreign firms
3. Registered abroad and operating in Bangladesh and abstract foreign missions and
their expatriate employees.
4. Resident of Bangladesh nationals working with the foreign / international
organization operating in Bangladesh provided their salary in paid in foreigncurrency.
Foreign exchange earned through business doves or service rendered in Bangladesh cannot
be put into theseaccounts.
No payment in foreign currency (FC) may be made to any resident in Bangladesh out of the
foreign currency (FC) account.
All citizens of Bangladesh and other persons are residing to Bangladesh who became the
owner of any foreign currency (FC).
Papers required:

 Application duly billed in and signed.

 Photograph (two copies).

 Passport photocopy.

 Work permit from board investment. (In case of foreign nationals).

28
 Chapter: 4
Foreign Exchange Performance Analysis

4.1Historical performance of AIBL

Here is a sum of historical performance of AIBL of Islampur Branch:

Particulars 2016 2017 2018 2019 2020

Deposit (In Crore) 166.67 174.13 170.73 182.40 165.24
Investment (In Crore) 102.71 218.18 230.52 235.78 234.53
Import (In Crore) 8.79 9.11 9.80 14.90 10.50
Export (In Crore) 2.87 1.96 2.54 2.73 1.81
Investment Profit (In lakh) 82.95 181.55 198.26 201.56 81.28
Profit before Tax and Provision 623.55 864.81 914.15 956.36 1192.01
(In lakh)
Profit after Tax and Provision (In 77.31 103.51 148.53 135.19 117.03
lakh)
AIBG Profit (In lakh) 51.22 (26.84) (26.55) (25.02) (27.30)
AIBG Rate - 8.00% 8.50% 9.50% 5.50%
Remittance (In lakh) 420.27 333.44 393.16 685.21 383.71

29
4.2 Export Performance of branch
The total export earnings in 2017 were Tk.2.87 crore and in 2020 it was Tk.1.81 crore. So it
is seen that the export earnings was 1.59 times in 2020 than 2017, which is shown below
graphically:

Export Growth
3.5

3 2.87
2.73
2.54
2.5

2
Crore tk

1.81

1.5

0.5

0
2017 2018 2019 2020

year

30
4.3 Import Performance of Branch
The total Import earning in 2017 was Tk.9.11 crore and in 2020 it was Tk.10.50 crore. So it
is seen that the Import earnings was 1.15 imes in 2020 than 2017, which is shown below
graphically:

Import Growth
16 14.9
14

12
9.8
10 9.11
crore tk

6
4.5
4

0
2017 2018 2019 2020

Year

31
4.4 Remittance situation

Remittance Position
800

700 685.21

600

500
tk in lakh

393.16 383.71
400
333.44
300

200

100

0
2017 2018 2019 2020

Year

32
 Chapter: 5
Learning Points, SWOT Analysis
and Findings
Learning’s

Staying the internship period of 3 months at Al-Arafah Islami Bank – Islampur Branch as an
Internee was extensively experiencing. I have gone through a lot of new situations, experienced a
very new environment and learned about professional life.

5.1 Learning’s From Organization

In the processing of collecting, gathering, synchronizing information and preparing this report; I
have learned many banking procedures, facts such as Account opening, closing, Profit taking,
transferring also dealing with different types of customers & situations.

5.2 Learning’s From Internship Program

The learning’s form Internship program was a new experience since such event is very new in a
Student’s life. I have learned to study a bank’s documents and prepare an affiliation report.
Within the period, I had to deal with different designated employees & stuffs of the branch and
several types of clients. I faced several types of situation, some made me happy, some sad, some
anger etc. Through this ups and downs, I have come to know what is the environment of an
office and how to deal with it. This experience surely made me prepared for my next corporate life.

33
5.3 SWOT Analysis of Islampur Branch:
SWOT analysis provides an opinion and adjustment whether the organizations current position is
satisfactory or not.

SWOT at a glance of Islampur Branch:

Strength:
Human Factor

Opportunity: Threats:
Getting new
clients SWOT Robbery

weakness:
High cost of
Fund

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Strengths:
Wide image.

Enthusiastic Employee. 
Excellent Management 

Human factor and innovation power.
Satisfactory Environment

Weaknesses:
It has high cost fund.

The advertising and promotional activities of this branch are up the mark. 

It has highly exposed dependency on term deposit. 

They have not set up proper network system. 

The bank has limit ATM service.

IT Division is not strong because the branch put due importance to utilization of
technology-based service to the customers.

Infrastructure Cost.

Opportunity:
Complacency among rival firms.
Getting new clients.
More physical presence.
Maintain a good relationship with client.

Threats:
Lacking of customers awareness regarding Islamic banking
Increase number substitute service in the market.
Stiff competition.
Lake of enough technology for the branch.
Certain Bangladesh Bank‟s rules and regulations.
Rude Customer.
Robbery.

35
5.4 Overall Findings:

They have not sufficient efficient employees to operate different department in the
Branch’s they should increase efficient employees in different department. 

Staff meetings and departmental meetings at the branch level does not held or very few
which is very essential to develop service quality as well as problem solving. But this
practice is very few. So it may create major problem in future. 

Technology that they are using for their banking system is not up to date. 

There is a gap between the customers and bankers. Customers are unaware about the
moral of Islamic Banking System. Sometimes they are not familiar with the rules of
Islamic Banking. 

Advertising and promotion are the weak points of Al-Arafah Islami Bank Limited. Islampur
branch is also outers‟ promotional service.

Some international and local savings bonds give high rate of returns. AIBL does not buy
these because it is against the rules of Islamic Banking System. So the branch is also
following the rule.




36
 Chapter-6
Recommendation and Conclusion

Recommendation

 AIBL should concentrate in increasing its profit earning capacity.

 It should develop effective marketing strategy to attract new customers.

 Raising the capital, statutory reserve and increase the investment.

 The number of branches should be increased.

 Expand and diversify customer base.

 Upgrade Online Banking.

 Recruit more skilled employees regularly.

 Bank should introduce independent ‘Marketing Department’

 Few branches are not under online banking system, so all the branches should confirm on
line banking system.

 More meetings, seminars, symposiums and get-together should be organized by the

Branches to develop the awareness among the clients of the Bank about Islamic Banking
and its advantages.

 Ensure stable dividend.

 Ensure high level customer service.

 The Bank should follow Islami Sharia strictly in every of its operation.

 Bank should introduce ATM system.

 Should introduce one-stop service Centre.

 Bank should increase their office space and take more care in interior decoration.

 Bank should increase their office space and take more care in interior decoration.
37