Modes of investment of Social Islami Bank Limited : a study on Dewanhat Branch, Chittagong
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SIBL is a commercial bank which is operated based on Islamic Shariah principles.SIBL incorporated in 5th July 1995 and being into its commercial operation on 22nd November with a view to provide exclusive service facilities to its client and accordingly meet the demand of banking service all over Bangladesh. This report gives a clear idea of Investment Mechanism of SIBL.In conventional bank the investors are assured of a predetermined rate of interest whereas SIBL promotes Risk & profit sharing between provider of capital (investors) and the user of funds (entrepreneur).SIBL invests its funds as per different modes of investment or financing by Islamic Shariah. The depositors of SIBL are business partners of it and they share the profit or loss of the business. For the better use of the depositor‟s fund the SIBL invests its fund as per different modes of investment or financing by Islamic Shariah. Most of the investments of SIBL are Bai Mode (Trading), Ijara Mode& and Share Mode. The objective of the Study is to analyze and discuss the various modes of investment and performance of SIBL.To do so I collected the information through secondary data such as- Brochures, Different text books and materials, Manuals of investment of SIBL and also got some information from employee by face to face conversation. From the finding I have analyzed some of the reason that could have been an influence : The investment of 2012 of this branch decreased compared to the investment of 2011. But the investment income of 2013 (From January to November) has crossed the investment income of 2012.The investment on different modes of this branch is fluctuating. But in some modes its investment is zero. Such as- In 2013 (from January to November) its investment on HPSM-SME and IBP modes its investment is zero. In 2013, the total collection of this branch in trading sector, car import sector, other import sector (such as food, chemical etc) & real estate investment sector the total collection is 100%. In these sectors this branch has recovered lone successfully. But in ship breaking sector, Air ticket business and service sectors total due are 30% and 20% and 70% respectively. Although the percentage of unclassified investment of Prepared By: Jahanara Begum, ID-14264043 this branch is very impressive but the percentage of the banks overall unclassified investment is very poor. The Bad & Loss investment of this branch is zero. In the banking sector, investment recovery process is systematic. We know that the most important modes of investment are Mudaraba & Musharaka, but the bank have no such strong application of that modes. But their application on Bai-Muajjal investment mode & Hire purchase under Shirkatul Melk is much better. From the findings I have provided here some recommendation. These are: 1. SIBL will have to take effective steps to remove the MISCONCEPTIONS of mass people that they hold about Islamic banking system. 2. SIBL should contribute more in micro credit investment sector. 3. SIBL should take necessary steps to collect the due amounts from ship breaking sector, air ticket business and service sectors. 4. SIBL should take necessary steps to reduce the percentage of classified investment. 5. SIBL should invest more in HPSM-SME and IBP modes. 6. The most important modes of investment are Mudaraba & Musharaka, but the bank has no such strong application of that modes. SIBL should increase the application of share mechanism. The bank must make a positive attempt to be more outward looking their goals and accept any failure on the other factors. the function that performs by this branch is very well and they give the better quality service. The characteristics of investment of Social Islami Bank Ltd are better than conventional banks. Social Islami Bank Ltd has both strengths and weaknesses. The major strength of SIBL is religious feelings of people and major weakness is absence of Islamic money market. This report starts with the background of the study &ends-up with some recommendations Social Islami Bank Ltd.