Social Islami Bank

5/22/2018 Social Islami Bank

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Part -01

Introduction

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1.1 Origin of the Report:

In the age of modern civilization bank is playing its spending role to keep the economic

development wheel moving. The corporation of the bank is needed in every economic activity. In

fact there is hardly any aspect of development activity where state inspired or otherwise wherebank do not have role to play.

Bachelor of Business Administration (BBA program consists of integrated theoretical and

practical method of learning. The internship program is an integral part of BBA. To fulfill this

purpose I was sent to !ocial Islami Bank limited (!IB"# $irpur Branch. %n the basis of working

e&perience for this period I have prepared this report.

As an intern of !ocial Islami Bank "imited I was provided with the topic Investment Activities

of Social Islami an! "imited# various rules and regulations# policies and procedures relation

to different banking activities have also been enumerated here.

1.$ Significance of the Report:

The prime reason of this study is to become familiar with the practical business world and to

attain practical knowledge about the Banking and 'orporate world# which is so much essential for

each and every student to meet the e&treme growing challenges in ob market. It is also known to

all of us that there is no alternative of practical knowledge and the practical knowledge is much

more durable and useful than the theoretical knowledge. This study will help us to get a true

picture of the practical business world# particularly of banking business and also to attain

practical knowledge on the various spheres of banking business. !o this study is of paramount

importance for each and every student regardless of his)her study area or discipline.

1.% Scope of the Report:

!cope of the report is mainly limited to the analysis of investment activities of !ocial Islami Bank

"imited. In order to conduct study on this main aspect the following aspects also come within the

scope of the study.

An overview of !ocial Islami Bank "imited

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An analysis of different modes of investment of !IB"

An analysis of sector wise investment of !IB"

!tatus of classified investment

1.& O'(ectives of the Report:

1.&.1 )eneral O'(ective:

The general obective of the report is to analyze the Investment Activities of !ocial Islami Bank

"imited (!IB".

1.&.$ Specific O'(ective:

The specific obectives of the study are given below+

To know the investment procedures of !ocial Islami Bank "imited.

To know about the status of total deposit and investment.

To analyze different mode wise investment of !IB" through trend analysis.

To analyze sector wise investment of !IB" through trend analysis.

To evaluate the classified loan and provision maintained by !IB" against classified loan.

To identify scope of improvement concerning investment activities of !IB".

1.* +ethodolog, of the Report:

In conducting this study the following methodology was adopted in collecting data and

information# preparing the reports.

1.*.1 Research esign:

This report is analytical in nature which briefly analyzes the ,Investment Activities of !ocial

Islami Bank "imited-. It has been administered by collecting secondary data. Annual report of

!ocial Islami Bank "imited was the maor secondary data sources in this regard. This study has

been conducted by collecting data for the period of years from *//0 to */11.

1.*.$ Sources of ata:


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The data are collected from the following sources.

Secondar, Sources:

Annual report of !ocial Islami Bank "imited.

2arious report related to study.

3eb base support from the internet.

1.*.% ools used for Anal,sis:

In order to analyze the investment activities of !IB"# trend analysis are used and 'omputer

software ($icrosoft 3ord# 4&cel and 5ower5oint are used for reporting purpose. Trend of

deposit# year wise investment# mode and sector wise investment and classified investment are

analyzed here.

1./ "imitation of the Report:

%n the way of my study in !ocial Islami Bank "imited# I have faced the following problems#

which may be termed as the limitation of the study. The maor limitations of this study are given

below+

"ack of available information about the business operation of !IB". Because of the

unwillingness of the busy key persons and the employees for this necessary data collection

became hard.

To complete the study# the time was limited by three months. It was really very short time

to know details about an organization like !ocial Islami Bank "imited.

!ufficient records# publications regarding customer service were not available as per

re6uirement.

There were some restrictions to have access to the information confidential by concern

authority.

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Part -0$

An Overvie

Of

Social Islami an! "imited


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$.1 istorical ac!ground of SI":

Social Investment an! "imitedan interest8free !hariah bank in Bangladesh incorporated as a

banking company on 9uly 1:: under the '%$5A;I4! A'T 1::7. It commenced banking

operations on ** ;ovember 1:: with an authorized capital of Tk 1#/// million divided into 1

million ordinary shares of T< 1#/// each. The initial paid up capital was Tk 11=.> million fully

subscribed by its = sponsors including Arab nationals. The paid up capital was enhanced

several times and stood at taka *>/ million on 1 ?ecember *///. The bank is listed with the

?haka !tock 4&change. In *///# total liabilities and shareholders e6uity of the bank stood at

taka.# >01.:: million.

$.$ Social Islami 'an! at a glance:

The bank has taken a renewed drive aiming at consolidating its business in more focused areas

covering !$4 and Agro8finance with emphasis on searching for alternative delivery channel

under which !$! banking and mobile based remittance payment systems that are gradually

introduced to disseminate the !IB" services to the doorsteps of the customers. The bank has

already introduced Internet banking and launched some new products to strengthen its business.

The products are !onali ?in# !ommridhir !opan# !onchoy 5rotidin# !wopner !hiri# !hukher

Thikana# !abu 'hhya# !abu !hayanho# !ubarnolata# !ubornarekha# !anchaita etc. and @amil

AT$ ?ebit card.

!IB" is a pioneer in introducing on8line banking among all the Islami Banks of the country with

state8of8the8art banking software# which will enable the bank to perform as any branch real time

banking service to the clients.

!IB" has set its strategy to convert all its banking activities from traditional branch8based

banking system to an ideal blending of both centralized processing unit ('5 and effective

operation of branch that based on modern essence of banking.

!IB" is 6uite conscious of its social business responsibilities and is always trying to participate in

various social programs in the country under its '! portfolio giving special emphasis on health#

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habitat C education. The bank ensures to provide better integrated idea of formal# informal C

voluntary banking in the same platform. !IB" has its uni6ue feature to mobilize capital through

'A!D 3AEF program.

!IB" lays emphasis on employment generated# environment friendly and green banking based

investment keeping an eye on e6uitable distribution of resources over geographical territory for

sustainable growth of macro economy of the country.

The BankGs continuous effort has been to increase the shareholdersG value# and be valued as a

compliant organization. The 'orporate Hovernance systems in !IB" ensure transparency and

accountability at all levels in conducting business. !IB" in its ourney towards continuous

e&cellence has changed its brand logo recently. 3e take pride in our new logo.

$.% 2ision of SI":

To be modern Islami bank in Bangladesh and to make significant contribution to the national

economy and enhance customers trust C wealth# 6uality# investment# employees value and rapid

growth in shareholders e6uity.

$.& +ission of SI":

Digh 6uality financial services the latest technology.

Fast# Accurate and !atisfactory customer service.

Balanced C sustainable growth strategy.

%ptimum return on shareholdersG e6uity.

Introducing innovative Islamic Banking products.

Attract and retain high 6uality human resources.

4mpowering real poor families and create local income opportunities.

5roviding support for social benefit organizations 8 by way of mobilizing fund and social

services.

$.* )oal of SI":

To be the best private commercial bank in Bangladesh in terms of efficiency# capital ade6uacy#asset 6uality# sound management and profitability having strong li6uidity.

$./ O'(ectives of Social Islami an! "imited:

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The ultimate goal of social Islami Bank limited is to develop a poverty free society#

where every person will eagerly participate in the social economic development

activities.

The create poverty free society by providing human development training and financialsupport to the huge idle human resources through engaging them in the innovative

productive development proects cooperatively.

To provide Banking facilities to people who are still remaining outside the Banking

ambit.

!IB" has created a J!ocial Fund# through collecting money from its profit and from the

interested persons# to improve the fate of the destitute people in the society and the Bank

invests thus fund in the different income generating proects according to the Islamic

rules.

$.3 Strategies and Policies of SI":

!ocial Investment Bank "imited operates all its Banking functions by maintaining the

policies and strategies set by the top management of the Bank. These policies and strategies

facilitate the Bank to achieve its corporate obectives. The policies and strategies are+

(1 To operate its all activities on Islamic !ystem.

(* To recruit local personal in the respective branches of the Bank so that they can

better communicate with clients and potential customers. In the region where the

branch locates. This will enable the Bank to attract more customers.

( To encourage fresher# energetic and self motivated personnel to enter the Bank so

that their efforts will make the Bank dynamic.

(7 To be closer to customers by establishing more branches in both rural and urban

areas# from which will ultimately contribute to the socio8economic development

of Bangladesh.

( To investment more money in the thrust sector such as real estate# agriculture

sector etc.

(> To grasp all walks of customers especially middle and lower income groups.

=


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(0 To determine Banks market share# the Bank compares its market share with

;ationalized 'ommercial Bank# Islamic Bank and overall Banking industry.

$.4 5ompan, +otto:

The motto of !ocial Islami Bank is ,9ourney Towards 4&cellence-.

$.6 7ature of usiness:

!ocial Islami Bank "imited give varies of product and services for all customers which include

deposit# making loan and advance# discount bill# conducting money transfer# foreign trade

transaction and other relevant activities and services are includes as keeping# collection#

acceptance and letter of credit.

$.10 7ature and "egal status of SI":

;ame of the company !ocial Islami Bank "imited

"egal Form !ocial Islami Bank "imited an interest8free !hariah bank

in Bangladesh incorporated as a banking company on

9uly 1:: under the companies act 1::7

'ommencement of 'ompany **nd;ovember# 1::

egistered %ffice 'ity 'entre# 1/ $otiheel ')A# ?haka81///

Telephone ;o. ==/8*8/:>1*//11**# :>*7*:Fa& ;o. ==/8*8::/1# :>=/:=

3ebsite www.siblbd.com

!3IFT !%I2B??D

48$ail infoKsibl.bd.com

'hairman $r. $d. Anisul Do6ue

$anaging ?irector $r. $uhammed Ali

Auditors !yful !hamsul Alam C 'o

'hartered Accountants# >)*)1 Bo& 'ulvert oad

(level8/># 5urana 5altan# 5hone8:>/*

Ta& Advisor =0# ;ew 4skaton oad# ?haka. 5hone8:1>7;o of Branches 0>

;o of AT$ Booth 17

;o of !$4 'entre 1/

;o of 4mployee 10

Authorized 'apital 1////.// $illion

5aid up capital >:.:* $illion

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!ource+ Annual eport of !IB"

Table *.1+ ;ature and "egal status of !IB"

$.11Organi8ation Structure:

There are different wing to consist the organizational structure of !IB". There are8

Board of ?irector

4&ecutive 'ommittee

Audit 'ommittee

!hariah !upervisory 'ommittee

$anagement Team

'ore ?ecision $anagement 'ommittee

$.1$ Organ gram of the SI":

oard of irector8This is a board of director of 1> members in the bank. The board of director

is the ape& body of the bank. It appears like this8

Source: Annual Report of SI"

9igure $.1 oard of irector

1/

5hairman

2ice-5hairman

irectors

+anaging irector

Secretar,


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Organ gram of SIBL:

!ources+ Annual eport of !IB"

Figure *.* %rgan gram of !IB"

11

oard of irector

!hariah Board !ecretary!ecretary (S2P ;2P udgetar, 5ontrol

Budget $onitoring C eporting ?esk

Bill 5rocessing C 2ouching ?esk

4&penditure 5rocessing ?esk

Section $-9inancials > 5ontrols

'orporate Income Ta& C 2AT $anagement ?esk

!alary C employee Benefits ?esk

5rovident Fund# Hratuity# !ocial Insurance Fund %peration# $anagement C

eporting ?esk

Financial !tatements C eporting ?esk

!oftware %peration ?esk

Heneral "edger $anagement ?esk

Section %-Reconciliation

econciliation related data !orting# 5rocessing C eporting ?esk

econciliation# $onitoring# $anagement C eporting ?esk

Section &-Ris! +anagement

BA!4"8II C !tress eporting ?esk

$I! and 'asual eporting ?esk

A"$ (Asset "iability $anagement ?esk

Section *- Regulator, 5ompliance

eturn !ubmission ?esk

'ompliance ?esk (regular)casual

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Section /-5apital +ar!et operations and portfolio +anagement

5ortfolio ?esk

!4'Gs 'ompliance ?esk

International ivision:

International ?ivision deals with obs relating to bankGs foreign e&change operations#

correspondent banking arrangement# foreign remittance# ;%!T% Accounts management# F. 4&.

econciliation# %B !upport !ervice# 4?F !ervice# investment line arrangement and

relationship with BAF4?A# Bangladesh Bank and I'' on F. 4&. and international trade issues.

oard Audit ivision:

Board Audit 'ell was constituted with a view perform the duties in pursuant to the instruction

given by the Board Audit 'ommittee as per guidelines laid down in Bangladesh Bank B5?

circular ;o. 1* dated *.1*./*.

Functional)%perational Activities of the Board Audit ?ivision+

'ompliance position of Internal Audit eports# 3orking 5lan of the Internal Audit

submitted by Dead %ffice# Internal 'ontrol C 'ompliance ?ivision as well as to ensure

compliance of Bangladesh Bank inspection reports and places the above matters to the

meeting Board Audit 'ommittee.

To place before the Audit 'ommittee# the implementation position of the directives of

Bangladesh Bank of monthly process.

To prepare the summary of the reports the e&ternal auditors during finalization of the half

yearly C yearly accounts C to place the same the meeting Board Audit 'ommittee as

directed by the chairman # Board Audit 'ommittee#

To perform specific ob while the serious type of irregularities are apprehended in any

Branches as directed by the 'hairman# Board Audit 'ommittee.

Investment Ris! +anagement ivision:

I$? is trying its best effort to implement the doctrine of Islam in financial C economic sector

to ensure e6uality C ustice in trade and industry# alleviation of disparity# establishment of socio

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economic infrastructure# income generation and creation of employment as well# poverty

alleviation. Investment comprises a very large portion of Banks total activities.

Investment operation of a Bank is as such of vital importance as the maor revenue is generated

from it. As such# Bank has to be proactive in managing investment portfolios in order to

minimize possible losses and earn an acceptable level of return for the shareholders.

his division is comprises in to folloing to divisions:

a. Investment Approval

b. Investment Administration

Investment Approval:

Investment deals the approval process of all sorts of corporate and retail investment such as

3orking 'apital Finance# Trade Finance C Term Investment. A dedicated approval team is

working continuously for sound investment and to contribute on the growth of the Banks

business.

Investment Administration:

?espite a prudent investment approval process# investment may become trouble. To minimize

investment losses# Investment Administration process is strengthened and procedures and systems

should be in place that provides an early indication of the deteriorating financial health of a

borrower .Investment Administration consists of of e&perienced and skilled officials and

e&ecutives who are working for maintaining the sound investment portfolio.

ranches 5ontrol and )eneral an!ing ivision:

Branches control C Heneral Banking ?ivision (B'HB? is headed by one 4&ecutive 2ice

5resident (425 having ade6uate e&perienced and trained manpower to handle and supervise the

works of e&isting 0> branches# moreover# 1/ additional new branches are going to be opened

during the year*/1*. The key obective of the division is to assist branches to implement the

directives of Bangladesh Bank and our Bank relating to general banking works.

uman Resources ivision

Duman esources ?ivision plays a very vital part for any organization. !ocial Islami Bank

"imited has also such a division for planning and development of human resources of the Bank.

The Duman esources ?ivision of the Bank comprises of the following sections+

D policy !ection

1>


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ecruitment and Appointment !ection

Transfer C posting !ection

4mployee welfare !ection

Training C ?evelopment !ection

?isciplinary Action !ection

$iscellaneous !ection

$.1* Products and Services of Social Islami an! "imited:

!ource+ www.sibl.bd.com

Figure *.7 5roducts and !ervices of !ocial Islami Bank "imited+

10

Products > Services

Services

Products

Investment5roducts

?eposit

5roducts

48Banking

!IB" 'redit

'ard

$obileBanking

2isa Islamic'redit 'ard

Foreign

emittance

3estern nion
http://www.sibl.bd.com/http://www.sibl.bd.com/


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$.1/ ifferent epartments of Social Islami an!:


Figure *. Branch ?epartment of !ocial Islami Bank "imited+


Figure *.> Dead %ffice ?epartment of !ocial Islami Bank "imited+

1=

Branch ?epartment

Heneral BankingForeign

4&changeInvestment 'ashAccounts

Dead %ffice ?epartment

Heneral

BankingForeign

4&change

Investment 'ashAccount

sFA?

D

?
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Figure *.0 Investment ?epartment of !ocial Islami Bank "imited+

1:

Investment ?epartment

Islamic mode of

Investment

% eration

etail

$onitorin

ecover

isk

% eration

$onitorin

ecover

isk

% eration

$onitorin

ecover

isk

etail
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Part-0%

heoretical Aspects

*/


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%.1 Investment:

Investment is the purchase of a financial product of other items of value with an e&pectation of

favorable future returns. In general sense# the formation of new and productive capital or in the

form of new construction# plant and e6uipment. Investment generates physical assets.

There are different modes of Investment. They are given below+8

a $usharaka

b $urabaha ('ontract !ale

c Bai8$uaal (!ales under deferred payment

d Bai8 !alam (Advanced 5urchasee Bai8 Istisna

f Dire 5urchase under !hirkatul $eelk (D5!$

%.$ +odes of Investment:

3e see some modes of investment. ;ow# I discuss briefly.

a< +ushara!a =Partnership Profit Sharing


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Bai8$aual is a contract between Buyer and !eller under which the seller sells certain specific

goods ( permissible under !hariah and "aw of the country to the Buyer at an agreed fi&ed price

payable at a certain fi&ed future date in lump sum or within a fi&ed period by fi&ed installments.

d< ai-Salam =Advance Sale And Purchase


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ad-loss:If the loan is not paid on doubtful stage than it treated as a bad8loss. !erious doubts

e&its as to the recovery of such loans.

Part-0&

Investment Activities of Social Islamian! "imited

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&.1 Investment:

Investment is the commitment of a persons funds to derive future income in the forms of interest#

dividend# premiums# pension benefit or appreciation in the value of their capital. An investment is

the purchase of goods that are not consumed today but are used in the future to create wealth.

&.$ Investment +anagement of Social Islami an!:

Investment $anagement is the process of planning# organizing# monitoring# supervising and

follow8up to their bottom line. In general# investment is the current commitment of dollar for a

period of time in order to derive future payment that will compensate the investor for (1 the time

the funds are committed (* the e&pected rate of profit. Investment management is the dynamic

fields where a standard of long range planning needed to allocation the fund in diverse field and

to minimize the risk and ma&imize the return on invested fund. Therefore# 3hen analyzing the

investment management of social Islami Bank "imited# it is instruct to analyze its investment

policy# procedures and value of investment portfolio.

&.% Investment Polic, of SI":

!IB" will follow !hariah principles strictly while making investment decision# as it is a

!harahi based 'ommercial Bank.

!IB" will follow the principles of participatory economy with a human approach for

investment and banking of interest free basis with a view to empowering the family as the

basic social unit.

The sector) proposal# which have a scope of empowering the family# will get preference.

To promote new entrepreneurs !IB" will go for financing under $urabaha and$usharaka.

Investment to trade and commerce sector.

Investment to foreign trade (import and e&port.

!IB" will go for investment in following industrial sector considering the national

priority and risk factors+

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o 'ottage Industry

o Agro8based# agro processing and agro supportive industries.

o Fish canning# freezing and preservation units

o "eather and leather products.

o 5aper# paper products and printing and Te&tile linkage industries.

&.& Investment Process:

Application stage:

At this stage# the bank will collect necessary information about the perspective client. ?ocuments

that are necessary for getting investment of !IB" are prescribed below+

Trade "icense 5hotocopy.

Attested copy of partnership deed.

5rior three years audited balance sheet.

5rior three years business transactions statement.

Attested copy of $emorandum of Association ($%A and Articles of Association

(A%A for the oint stock company.

Attested copy of TI;.

?etailed summary of the sundry debtors and creditors.

!ummary of the personal movable and immovable assets.

Appraisal Stage:

At this stage the bank evaluates the client and his)her business. It is the most important stage.

Dowever# the contents are presented below+

'ompanys ) 'lient information.

%wners information.

"ist of 5artners)?irectors.

Business ) Industry Analysis.

3orking 'apital Assessment.

isk Hrade.

Insurance 'overage.

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Audit %bservation and !ecurity Analysis.

Sanctioning Stage:

At this stage# the bank officially approves the investment proposal of the respective client. The

following elements are given below+

Investment limit in million.

$ode and Amount of investment.

5urpose and period of investment.

ate of eturn

!ecurity.

ocumentation Stage:

At this stage# the bank usually analyze the re6uired documents are in order. The following

documents of the client are presented below+

Ta& 5ayment 'ertificate and 2AT certificate.

!tock eport.

Trade license.

"iability statement of other parties.

Three years net income.

5articulars of the proposal and properties.

'lient Information eport ('IB.

is'ursement Stage:

At this stage# bank decides to pay out money. Dere# the client gets his)her desired fund. The

important thing is that the client has to show his)her plan site.

Recover, Stage:

It is the final stage of investment processing of the !ocial Islami Bank Bangladesh "imitedL bank

will contract with the client continuously. If the bank feels that anything is going wrong than it

tries to recover its investment fund from the client.

&.* Investment Principle of Social Islami an!:

Investment principle is the important things of !ocial Islami Bank. In the competitive world# the

entire competitor has to fight strongly with other competitor. 4very business fight for higher

*>


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return but return is uncertain. They use different kind of mechanism that would be their main

shield. Dowever# investment principle acts as a fundamental truth or proposition serving as the

foundation for action. There have some principle of !ocial Islami Bank "imited. These are given

below8


Figure 7.1 5rinciple of !IB"

onest,-

The 6uality of the products and service are being honest.

ransparenc,8

It means that the !IB" give a positive transparent of any items that customer need.

;fficienc,8

The ratio of the useful work performed by a process to the total energy e&pended.

Accounta'ilit,8

*0

Donesty

Accountabilit

4fficienc

Technolo

!ecurit


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It means that e&plicable to the customer. If the customer does not understand the account

they would not to be encouraged to take the services.

Relia'ilit,8

If the banks fail to keeps relation perfectly with their customer than the customer do not

belief the banks. This principle helps to keep relied on the bank.

Innovation8

The main things of this principle are to change something established by introducing new

methods# ideas product and services. ?ay by day !IB" give new product for customer

services.

9le@i'ilit,8

!IB" uses the fle&ibility as capable of bending easily without breaking rules. !IB"

provides varies of product and service with patience.

Securit,8

!IB" is very secure for the customer from other bank. I have already complete internee

program and I heard our past internship student.

echnolog,8

Technology is the application of scientific knowledge that helps to perform the work very

efficiently. 3ithout technology our company will breakdown or hampered. !IB" bring new

technology day by day.

&./ +odes of Investment of SI":

+usha!ara-

This mode of finance is represented by two or more financiers in contributions of e6ual or

une6ual ratios of capital to establish a new proect or to participate in an established one and all

partners are entitled to share the total profits of the venture according to ratio as mutually agreed

upon allowing for managerial skills to be remuneratedL but the losses are shared e&actly in

proportion to capital proportion.

There are two types of $usharaka contracts+

'onstant (permanent

*=


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?ecreasing (diminishing 5articipation.

Important 9eatures:

The bank is not guaranteed a fi&ed return on its participation.

Banks benefits in financing fi&ed assets or working capital or both lie in the profit

sharing scheme between the banks and venture.

5rofits are shared pro8rata with e6uity and are calculated for this purpose# after

allowing for management fees and before depreciation and provisions# as non8cash8

items

+ura'aha-

It is suitable for investment for financing industry# agriculture# trade or any other sectors. It

enables the client) investor to obtain finished goods# raw materials# machinery or e6uipment from

the local market or through import by opening letter of credit under $urabaha. $urabaha is one

kid of sale transaction. nder this system of investment# a sale transaction is taken place between

client and bank. $urabaha sale is also one kind of absolute sale# which is divided into four kinds

in respect of price. These are given below+

argain Sale:!elling of commodity at a price already agreed upon irrespective of

its purchased price.

alia Sale =respective Sale


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Shir!at: !hirkat means partnership. !hirkatul $eelk means share in ownership.

3hen two or more persons supply e6uity# purchase an asset# own the same ointly

and share the benefit as per agreement and bear the loss in proportion to their

respective e6uity# the contract is called !hirkatul $eelk contract.

I(arah ="easing


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It is a contract with a manufacturer to make something and it is a contract on a

commodity on liability with the stipulation of work.

nder this contract# the first parties agree to contract) manufacturer particular products

and deliver it to second party against a predetermined price. The price may not be

re6uired to pay in advance. It may be paid in installments# or can even be deferred until

the desired product is delivered.

Part -0*

Anal,sis

1


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*.1 Anal,sis of Investment activities of Social Islami an! "imited:

In %rder to analyze the investment activities of !IB"# Trend analysis is used. Trend of deposit#

investment# mode wise and sector wise investment# and trend of other investment related aspects

are analyzed in this study.

*.$ ear Bise eposit of Social Islami an! "imited:

?eposit is the blood of a bank. Bank 'ollects deposit at lower profit and makes investment at a

higher profit. Therefore in analyzing the investment activities of a bank it is essential to know the

deposit performance of the bank.

0

10000

20000

30000

40000

50000

60000

70000

80000

2007 2008 2009 2010 2011

Deposit

(InMillionTaka)

Year

Trend of Deposit from 2007-2011

Trend of Deposit from

2007-2011

!ource+ Annual report of !IB"

Figure .1 Trend of ?eposit from *//08*/11

*


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Interpretation:The above graph shows an upward trend in total deposit mobilization of social

Islami Bank "imited from *//0 to */11. From *//08*/11 the total deposit of social Islami Bank

was increased. In *//0 the total deposit was 1::1./ million but in */11 it was :/=.=

million. It was possible due to the superior customer service delivery at the branch level and

e&pansion of branches in the urban areas.

*.% Investment to eposit Ratio:

Investment to ?eposit atioMTotal Investment)Total ?eposit

Table .18Investment to ?eposit atio

84.00%

86.00%

88.00%

90.00%

92.00%

94.00%

96.00%

98.00%

2007 2008 2009 2010 2011InvestmenttoDepositRatio

Year

Investment to Deposit Ratio

Investment to Deposit

Ratio

ear Investment to eposit Ratio

$003 44.%4C

$004 60.&$C

$006 6/.04C

$010 6$.04C

$011 6&./*C


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Figure .* Investments to ?eposit atio

Interpretation:From the figure it is seen that the investment to deposit ratio was fluctuating.

Investment to deposit ratio of !IB" in *//0 was ==.=N# in *//= was :/.7*N and in *//: was

:>./=N but in */1/ it was decreased at :*./=N. It became increased in */11 at :7.>N.3e know

that the greater this ratio increase the li6uidity risk of the firm.

*.& ear Bise Investment of Social Islami an! "imited:

Year Total Investment(In Million TK)

Grot! Rate

2007 16440.26 7"#$%

200& 19951.30 21"#'%

200 26580.58 ##"2#%

2010 36680.28 #&"00%

2011 '#0&"'& $"7%

!ource+ Annual report of !IB".

Table .* Oear wise Investment of !ocial Islami Bank "imited

Figure . Trend of Investment from *//08*/11of !IB"

7


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Figure .7 Trend Hrowth ate of Investment from *//08*/11

Interpretation: The above graphs show an upward trend of investment and growth rate of

investment of !IB". The amount of investment was 1>77/.*> $illion T< in *//0 and :/=.=$illion T< in */11.This is good sign for the bank# if this investment can be recovered properly.

*.* +ode ise Investment Portfolio of SI" in $011:

The !IB" uses different mode to make its investment. The different modes used by the !IB" in

*/11 are showing below.

S" +odes of Investment $011= a!a in

+illion7 /.*=N

3 %thers *:.*= 1/./N

otal *%604.*4 100C


Table . $ode wise Investment in !ocial Islami Bank "imited


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0.73% 5.38%

53.11%22.05%

8.40%

0.28%

10.05%

Investment *ortfolio of 2011

!s"ara#a

!ra$a"a

%ai-!a&&a'

(ire-)!r*"ase +ir#at!'

ee'#

,!ard

Iara"

.t"ers

Figure . Investment 5ortfolios in */11

Interpretation: The above graph shows that investment portfolio of !ocial Islami Bank

"imited in */11. The highest percentage of investment was made in Bai8$uazzal mode and !IB"

invested .11N of its total investment in this mode. The !IB" made **./N of its investment in

Dire 5urchase !irkatul $eelk. $urabaha and Euard mode respectively represent .=N and

=.7/N of total investment.

*./ rend of different modes ise investment:

a< +ura'aha+$urabaha is one of the most well known investments permissible under Islamic

!hariah and widely used by all countries where Islamic systems of banking are functioning.

$urabaha finance combines financial e&perience with business e&perience.

Year +mo,nt of Investment Grot! Rate

200& 2097.67 (7"&2)%

200 2650.10 2$"##%

2010 2942.14 11"02%

2011 2&&"&& (1"7)%

Table .7 Investment of !IB" in $urabaha

>


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Figure .> Investment of !IB" in $urabaha

Figure .0 Hrowth ate of Investment of !IB" in $urabaha

Interpretation:Though there is an upward trend in investment in $urabaha mode# growth rate

of investment in this mode is not upward. Hrowth rate in *//= and */11 are negatives though

growth rate were positive in *//: and */1/.

'< +ushara!a:$usharaka is another type of financing mechanism used by Islamic Banks.

This mode of finance is represented by two or more financiers in contributions of e6ual or

une6ual ratios of capital to establish a new proect or to participate in an established one and all

partners.


200& 235.42 22"$#%

200 302.44 2&"$%

2010 335.19 10"&2%

2011 ##"#7 17"#$%


Table . Investment of !IB" in $usharaka

0


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Figure .= Investment of !IB" in $usharaka

Figure .: Hrowth rate of Investment of !IB" in $usharaka

Interpretation: The above graphs show the trend of Investment in $usharaka mode and

growth rate of investment in this mode of !ocial Islami Bank "imited from *//=8*/11. There

was an upward trend of investment but growth rate of $usharaka mode was fluctuating. In *//=

the growth rate of this mode was **.>N and in *//: it was *=.7>N but in */1/ and */11 it was

decreased.

c


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Table .> Investment of !IB" in Bai8$uazzal[

Figure .1/ Investment of !IB" in Bai8$uaal

Figure .11 Hrowth rate of Investment of !IB" in Bai8$uaal

Interpretation: The above graphs show the trend of Investment in Bai8$uaal mode and

growth rate of investment in this mode of !ocial Islami Bank "imited from *//=8*/11. There

was an upward trend of investment but growth rate of Bai8$uaal mode was fluctuating. In *//=

to *//: the growth rate of this mode was respectively *.1=N and >./N. But in */1/ it was

decreased.

d< ire-Purchase under Sir!atul +eel!:Dire purchase under !hirkatul $eelk is a special

type of contract that has been developed through practice


200& 5431.47 1'"%

200 6542.97 20"$%

2010 7462.75 1"0'%

2011 11&&"1 '"#1%


Table .0 Investment of !IB" in Dire85urchase under !irkatul $eelk

:


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Figure .1* Investment of !IB" in D5!$

Figure .1 Hrowth rate of Investment of !IB" in D5!$

Interpretation:There was an upward trend of investment but growth rate of D5!$ mode was

fluctuating. In *//= to *//: the growth rate of this mode was respectively 1.77N and */.7>N.

But in */1/ it was decreased at 17./N and it was increased in */11.

7/


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e< Duard: Funds advanced by Islamic Bank under Euard Dasana are for humanitarian and

welfare. Dowever# parties differ in this respect. The purpose of these loans is to help the needy

society to become independent as to raise their income and standard of living with the passage of

time.

!ource+ Annual eport of !IB"Table .= Investment of !IB" in Euard

Figure .17 Investment of !IB" in Euard

Figure .1 Hrowth ate of Investment of !IB" in Euard

Year +mo,nt of Investment Grot! Rate200& $'1"'0 #"2&%

200 1&07"' 11"70%

2010 2&2$"0' '$"#1%

2011 '2&"2& $0"2#%

71


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Interpretation:The above graphs show that investment of Euard mode is an upward trend but

its growth rate is fluctuating. In *//0# its growth rate of Euard was :.*=N but in *//=# its

growth rate of Euard was 11.0/N.

*.3 Sector Bise Investment Portfolio of SI" in $011:

S" Sector Bise Investment $011

1 'ommercial "ending %$.0$C

$ 4&port Financing 4.$3C

% Douse Building Investment &./&C

& $icro Investment 0.0%C

* !taff investment 1*.&$C

/ Te&tile Industries 6.6&C

3 'onsumer Investment !cheme 3.&3C4 Food and Allied Industries %.14C

6 Agricultural Industries $.$&C

10 'onstruction Industries %.%1C

11 %ther Investment 1%.&4C

otal 100C


Table .: !ector 3ise Investment 5ortfolio of !IB"

32.02%

8.27%

4.64%0.03

15.42%

9.94%

7.47%

3.18%

2.24%

3.31%13.48%

e.tor /ise Investment in 2011/ommer*ia' endin

port inan*in

(o!se !i'din Investment

i*ro Investment

+taff investment

Teti'e Ind!stries

/ons!mer Investment +*"eme

ood and ''ied Ind!stries

ri*!'t !ra' Ind!stries

/onstr!*tion Ind!stries

t"er Investment

Figure .1> !ector 3ise Investment 5ortfolio of !ocial Islami Bank "imited

7*


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Interpretation: The figure shows that !ocial Islami Bank provides *./*N investment in

'ommercial "ending whereas they disburse :.:7N in Te&tile industries# 1.7*N in !taff

investment# and =.*0N in 4&port financing.

*.4 rend of ifferent Sector Bise Investment of SI":

a< 5ommercial "ending:

ear Percentage of otal Investment

$004 14.00C

$006 $*./$C

$010 $3.3$C

$011 %$.0$C


Table .1/ 'ommercial "ending Investment

Figure .10 'ommercial "ending of !ocial Islami Bank "imited

Interpretation: The graph shows an increasing trend of investment of !ocial Islami Bank

"imited in 'ommercial "ending. This indicates that !IB" has increased its investment in

commercial lending.

7


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'< Staff investment:

ear Percentage of otal investment

$004 4./4C

$006 1&.4*C

$010 1$.6/C

$011 1*.&$C


Table .11 !taff Investment of !IB"

Figure .1= !taff Investment of !ocial Islami Bank "imited

Interpretation:The graph shows that !taff investment of social Islami Bank from *//= to */11

was fluctuating. 5ercentage of staff investment was respectively =.>=N and 17.=N in *//= and

*//: but in */1/ it was decreased at 1*.:>N.It has increased at 1.7*N in */11.

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c< ouse uilding and 5onstruction Industries:


$004 1%.0%C

$006 1&.&6C

$010 1*.&C

$011 3.6*C


Table .1* Douse Building and 'onstruction Industries of !IB"

Figure .1: Douse Building and 'onstruction Industries of !ocial Islami Bank

Interpretation: The graph shows that from *//=8*/1/ its investment was increased

from17.7:N to 1.7/N. But in */11 its investment was decreased at 0.:N. There is a

fluctuating trend of investment of !IB" in Douse Building and 'onstruction.

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d< Agricultural and 9ood Industries:


$004 &.04C

$006 *.&$C

$010 /.1$C

$011 1&.%3C

!ource+ Annual eport of !IB"P

Table .1 Agricultural and Food Industries of !IB"

0.00%2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

2008 2009 2010 2011+0ri.,lt,ral12oodInd,stries

Year

Investment in +ri.,lt,ral and ood Ind,stries

ri*!'t !ra' and ood

Ind!stries

Figure .*/ Agricultural and Food Industries of !ocial Islami Bank

Interpretation:This is upward trend of investment in Agricultural and Food Industries of

!IB". The percentage of total investment in Agricultural and Food industries was increased from

*//0 to */11. Bank should try to continue this investment.

7>


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*.6 )eographical "ocation-ise Investment Portfolio of SI" in $011:

Division In Million Taka *er.entae

D!aka 37100.28 68.82%

3!ittaon 11592.34 21.50%

-4l!et 251.25 0.47%

Ra5s!a!i 2814.04 5.22%

K!,lna 1904.80 3.53%

Ranp,r 245.250 0.45%

6arisal 0.604775 0.001%

Total 53908.58 100.00%

!ource+ Annual eport of !IB" in */11

Table .17 Heographical "ocation8wise Investment 5ortfolio of !IB" in */11

68.82%

21.50%

0.47%5.22% 3.53%

0.45%

0.001%

Georap!i.al 7o.ation-ise Investment

D"a#a

/"it taon

+'"et

Ra-s"a"i

"!'na

Ranp!r

arisa'

Figure .*1 Heographical Investment of !IB" in */11

Interpretation:The above figure shows that !ocial Islami Bank "imited distributes a large

portion of fund in ?haka division. In ?haka division the bank invest near about >=.=*N where

bank distributed *1./N in 'hittagong division and .**N in ?. It has been viewed that only

/.//1N of their geographical credit distribution goes to Barisal and /.7N in angpur.

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*.10 5lassified Investment:

In $illion Taka

ear $003 $004 $006 $010 $011

5lassified

Investment

411.06 43%./4 4&4.6& 13&*.*3 $11/.1%


Table .1 'lassified Investment of !IB"

0

500

1000

1500

2000

2500

2007 2008 2009 2010 2011

3lassifiedInvestement

(InMillionTaka)

Year

Year /ise 3lassified Investment

ear ise /'assified

Investment

Figure .** Amount of 'lassified Investment in !ocial Islami Bank

Interpretation:Above graph shows the total classified investment of !ocial Islami Bank

limited from *//= to */11. The graph shows increasing trend of classified investment. This

upward trend of classified investment is not good for the company.

7=


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*.11 5lassified Investment as percentage of otal Investment:

ear $003 $004 $006 $010 $011

5lassified

Investment

as C of total

investment

&.6%C &.%4C %.16C &.3/C %.6%C


Table .1> 'lassified Investment as N Total Investment of !IB"

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

2007 2008 2009 2010 2011

3lassifiedInvestment

Year

Year /ise 3lassified Investment as % of Total Investment

ear ise /'assified

Investment as % of

Tota' Investment

Figure .* 'lassified Investments as N of Total Investment in !ocial Islami Bank "imited

Interpretation:From above the graph it is seen that the classified investment as percentage of

total investment !ocial Islami Bank was fluctuating year by year. From *//0 to *//: was

decreased. In */1/# as percentage of classified investment is highest at 7.0>N.This indicates that

the bank has decreased its efficiency in managing its investment# which is unfavorable for the

bank.

7:


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*.1$ ad "oss as percentage of 5lassified Investment:

ear $003 $004 $006 $010 $011

ad "oss

as C

5lassified

investment

1.10C 1.14C $.13C %.00C %./3C


Table .10 Bad "oss as N of 'lassified Investment of !IB"

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

2007 2008 2009 2010 2011

6ad7ossas%of3lassified

Investment

Year

Year /ise 6ad oss as % of 3lassified Investment

ear ise ad oss as

% of /'assified

Investment

Figure .*7 Bad "oss as N of 'lassified Investment in !ocial Islami Bank "imited

Interpretation:This indicates that the portion of Bad loss out of the classified investment has

increased year by year. This upward trend of Bad "oss as a percentage of classified investment is

not good for the bank. This indicates that Banks efficiencies in recovering classified investment

has reduced.

/


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*.1% Provision against 5lassified Investment of SI":In $illion Taka

ear $003 $004 $006 $010 $011

Amount of

Provision

1$/.4*/ $64.$3/ $/6.&%* &43.&6$ /61.6&3


Table .1= 5rovision against 'lassified Investment of !IB"

0

100

200

300

400

500

600

700

800

2007 2008 2009 2010 2011*rovision+0ainst3lassifiedInvestment(MillionTaka)

Year

+mo,nt of *rovision +ainst 3lassified

Investment in I67

mo!nt of )rovision

ainst /'assified

Investment in +I

Figure .* Amount of 5rovision against 'lassified Investment of !ocial Islami Bank "imited

Interpretation: This is an upward trend in provision against classified investment e&cept in

*//:. In *//= it was T< 1*>.=> million and it end of */11 it become T< >:1.:70 million. This

is not good for the company.

1


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*.1& Return on Investment:

ear SI"

$003 1$.%1C

$004 1%.00C

$006 11.0&C

$010 10.00C

$011 1$.00C


Table .1: eturn on Investment of !IB"

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

2007 2008 2009 2010 2011

Ret,rnonInvestment

Year

Ret,rn on Investment of I67

Ret!rn on

Investment of +I

Figure .*> eturn on Investment of !ocial Islami Bank "imited

Interpretation: The above graph shows that of eturn on Investment of !ocial Islami Bank

from *//0 to */11 have in a fluctuating situation. In *//0 and *//= the return on investment was

respectively 1*.1N and 1.//N# but in *//: and */1/ it has decreased and it has slightly

increased in */11.

*


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Part -0/

9indingsE 5onclusionAnd

Recommendation


54/58

/.1 +a(or 9indings:

The analysis of investment activities of !ocial Islami Bank "imited reveals the following maor

findings.

This is an upward trend in total deposit mobilization of !IB" over the years.

Investment of !ocial Islami bank is increasing year by year. It carries positive sign for the

company if the investment can be recovered properly.

This is an upward trend in investment in $uharaba# $ushkaraha# and Dire85urchase

!irkatul $eelk mode though growth rate of investment in these modes is fluctuating.

This is an increasing trend of investment in 'ommercial "ending# Agricultural and Food

Industries. But investment in $icro sector is very insignificant.

!ocial Islami Bank "imited distributes a large portion of fund in ?haka division. But they

invested very insignificant amount fund in Barisal and angpur in */11.

Trend of bad loss as percentage of classified investment in increasing though classified

Investment as percentage of total investment of the bank is fluctuating over the years.

This is an upward trend in provision against classified investment e&cept in *//:.

The return on investment of !ocial Islami Bank "imited from *//:8*/1/ have in a

fluctuated situation.

7


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/.$ 5onclusion:

Banking sector is the chief financial intermediary in a country. It is very challenging institution

and in age of globalization and free trade# the process and the system of running a bank is

changing. !ocial Islami Bank already managed itself with this changing environment. The bank

strategies are clear and concise. Their return is pretty good. If the bank goes this way# one can

e&pect that in near future !ocial Islami Bank may become one of the top performers.

!ocial Islami Bank "td. is a non government commercial bank in Bangladesh# which was startedits business from 1::. In order to have an insight into how effective it is doing its investment

activities# this study is conducted. The study reveals that there is an upward trend in its deposit#

investment. Dowever there has fluctuating trend in classified investment# provision against

classified investment# return on investment and increasing trend in bad loss as percentage of

classified investment. Therefore# bank should concentrate on recovery process in order to reduce

its bad loss and provision against classified investment.

From the discussion it can be concluded that !ocial Islami Bank playing an important role in the

economic development of the country and it has a prospect to hold a leading position in the

banking sector. It should increase promotional activities to reach to the people easily and it

should perform its investment activities in most effecting manner. Thereby it can play a leading

role in the banking sector in Bangladesh.


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/.% Recommendation:

The maor findings from the analysis investment activities of !IB" re6uire the following

recommendations that may help the !IB" to improve its investment performance and to be a key

member in the banking sector of Bangladesh.

The deposit mobilization of !IB" has increased over the years. Bank should develop new

savings instruments to maintain and improve its deposit mobilization rate.

The Investment of !ocial Islami bank is increasing year by year. Bank should try toimprove this investment trends by enlarging its investment sector giving special attention

to the recovery of loan.

There is an upward trend in investment in Bai8$uazzal# Dire85urchase !irkatul $eelk#

$uharaba# and $ushkaraha. Bank should concentrate on other modes also.

Bank should concentrate more on $icro Finance because most of people are poor. If they

get this opportunity they can easily maintain their livelihood.

!ocial Islami Bank limited is focusing more on ?haka division to provide investment

facilities and bank should continue this investment. Bank should concentrate on other

divisions also to increase their investment.

To reduce the increasing trend in Bad loss as a percentage of classified investment#

proper and effective monitoring system should be developed.

Bank should follow accurate !hariah based policy. In our country# it is 6uite difficult but

they should overcome it.

Bank should strictly follow the principles of sound investment.

>


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i'liograph,

Be'site:

.infoFsi'l.'d.com

333.!IB"B?.'%$

Articles:

Banking $anuals of !IB".

Annual Report:

Annual eport of !IB" */11

Annual eport of !IB" *//=# */1/

0
http://www.siblbd.com/http://www.siblbd.com/


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=

Social Islami Bank

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