A Performance Measurement Of Deposit Schemes Finance Essay

Maestro of Social Science plan requires a six months undertaking assigned by the supervisor of the undertaking. As a pupil of MSS of Economics Discipline, Khulna University Bangladesh, I took the chance to make my undertaking in Al-Arafah Islami Bank Limited, Khulna Branch. Islamic banking has emerged as a new world in Bangladesh. Bangladesh is the 3rd largest Moslem state in the World which 90 per centum are Muslim. Al-Arafah Islami Bank Ltd. basically has emerged to carry through the demand of Muslims to bask banking products/services in conformance with Islamic Principles. However, Al-Arafah Islami Bank Ltd is deriving popularity among the non-Muslims consumers around the state. The bank is offering a complete set of Islamic banking, funding, and puting and correspondence services. Al-Arafah Islami Bank Limited by and large aims to advance and develop the application of Islamic rules, jurisprudence and traditions to dealing of fiscal, banking and related concern personal businesss. It is besides to advance Investment Company to be engaged in such concern activities that are acceptable and consistent within the Shariah percept. AIBL, by making so, will safeguard the Islamic communities and societies from activities that are forbidden in Islam.

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Aims of the Survey:

The survey has the undermentioned aims:

Main aim: The chief aim of the survey is to happen out the public presentation Measurement of sedimentation strategies of Al-Arafah Islami Bank Ltd, Khulna Branch.

Supportive aims:

To be familiar with the different types of sedimentation merchandises of AIBL.

To analyse 3 twelvemonth ‘s clients growing of the bank

To analyse 3 twelvemonth ‘s net income payment growing of the bank

To place and propose Scopess of betterment in sedimentation direction of the bank.

Rational of the Survey:

The term Islamic banking is a bombilation word in the present banking universe. The popularity of this banking is increasing twenty-four hours by twenty-four hours. In maintaining with this, the conventional commercial Bankss are opening Muslim banking window side by side their involvement based banking. The chief difference between these two types of bank is involvement. In conventional banking, payment an reception of money is wholly depend on involvement. Here money is considered as the trade good. But reception and payment of involvement is purely prohibited in any of the operations of Muslim banking. AIBL collects sedimentations by Al-Wadia and Mudaraba method. All these investing procedure is performed based on net income and loss sharing. For this ground the popularity of Muslim banking among the spiritual and non spiritual communities of the state is increasing twenty-four hours by twenty-four hours. Even, a few yearss ago Indian authorities has approved Muslim banking system in India. As it is a firing issue I have selected this subject so that I can demo the public presentation of different sedimentation strategies of AIBL.

Scope of the Survey:

Deposit Section, is an epoch of acute competition among Bankss. The chief undertaking of any bank is to roll up sedimentation from rescuers and impart it to the borrowers. Al-Arafah Islami Bank Ltd. performs its banking activities as per sharia law which allows net income but non involvement. It takes sedimentations from the people and makes net income making concern, which is shared with the depositors. Measurement of sedimentation strategies public presentation is of import for all parties ; depositors, bank directors and regulators. In a competitory fiscal market sedimentation strategy public presentation measuring provides signal to depositors or investors whether to put or retreat to put or retreat financess from the bank. Similarly it flashes way to bank directors whether to better its sedimentation services to better its finance.

1.5 Restrictions of the Survey:

In composing the study, I suffer from some restrictions which many of them consider heavier comparative to their disadvantages. some such disadvantages are:

Time restraint

Bank Policy did non allow me to acquire & amp ; unwrap some information.

Literature Reappraisal:

Literature reappraisal is a thing related to the research subject. Literature reappraisal performs several of import maps. They are as follows:

It provides recognition to those who have laid land work for the research.

It exhibits the apprehensions of the theoretical research issues related inquiries.

It shows the ability to measure relevant literature and information.

It indicates the ability to incorporate and synthesise the bing literature.

It provides new theoretical penetrations or develops new theoretical account as conceptual frame work.

I have tried difficult to roll up paperss or information from relevant Books, Articles, Newspapers and Journals every bit good as citations of reputed writers to enrich my undertaking study. They are as follows:

The debut of interest-free and equity-based funding by the Islamic banking system is based on the rules of Islamic economic sciences.

The purpose of Islamic banking, as observed by Molla ( 1988 ) ,

“ is non merely the riddance of involvement based minutess and the debut of the zakah ( part to hapless ) system but besides the constitution of merely and balanced societal order free from all sorts of development ” .

World Development Report ( 1989 ) ,

“ Muslim Bankss offer rescuers hazardous open-ended common fund certifications alternatively of fixed-interest sedimentations. ( This is non unlike co-operative Bankss and common in the West, where sedimentations earn variable involvement and dual as equity ) . Troubles arise on the lending side. Agreements to portion net incomes and losingss lead to considerable jobs of monitoring and control, particularly in imparting to little concern ” .

Ahmed ( 1994 ) argues that,

“ Elimination of involvement does non intend zero-return on capital. Rather, Islam forbids a fixed preset return for a certain factor of production i.e. one party holding assured return and the whole hazard of an entrepreneurship to be shared by others. The writer besides observed that it is the capital entrepreneurship that Shares both the existent part and the existent profitableness. The Islamic bank follows the rule of equity based investing. The Islamic banking system besides proposes that resources can be contracted on the footing of venture capital and hazard sharing trades. The thought of equity-based investing banking is non new to the fiscal market. If we look into history it may be observed that capital, as loan capital every bit good as venture capital played a great function in advancing industrial and economic development of assorted states of the universe. For illustration, during the 19th and 20th centuries investing Bankss played a great function in Gallic tradition while in British theoretical account of banking equity based Investment was limited. Similarly in Germany equity-based investing was being practiced by commercial Banks during that period. Even the banking crisis in the western universe during the great depression in the 30 ‘s or the 80 ‘s proposed two-tire banking i.e. hundred percent sedimentation banking and the equity-based investing banking ” .

Harmonizing to Alam ( 1999 ) ,

“ In the modern fiscal market an surrogate agreement for engagement of capital and entrepreneurship started with the coming of Islamic Banking in the 70 ‘s ”

Khan ( 1986 ) , in the IMF staff Paper, observed Islamic banking as ;

“ Indeed it is truly evident that the Islamic theoretical account of banking based on the rule of equity engagement bears a dramatic resemblance to proposals made in the literature on the reform of banking system in many states. The Islamic System may good turn out to be better suited to seting to floor that consequence in banking crises and break on the payment mechanism of the state. In an equity-based system that exclude predetermined involvement rate and does non vouch the nominal value of sedimentations, daze to plus place are instantly absorbed by alterations in the values of the portion sedimentations held by the populace in the Bankss. Therefore, the existent value of assets and liabilities of Bankss in such a system will be equal at all points in clip. In the more traditional banking system since the nominal value of sedimentations is fixed, such dazes can do a recreation between existent assets and liabilities. It is non clear if this would be right and how long the procedure would take. ”

A survey by OECD of the European states, Paris, ( 1983 ) reveals the fact that,

“ Interest-free banking is a fresh signifier of finance and they are non merely seeking to give involvement another name but that legal instruments within the model of Shari’ah exist which permit profitableness on a different, albeit Qoranically acceptable footing. Muslim Bankss belong to the category of equity-participation bank ” .

In this respect Ahmad ( 1994, ) in his survey quoted the thought as ;

“ They supply equity in the signifier of venture capital to investors whose portion is their inventiveness and their labour. Second, they supply equity in the signifier of equity capital participants in the type of undertaking, which in general has bulk stockholders. They may be ideally suited to run into the demand for equity capital in developing states where the concern hazard is peculiarly high every bit good as in the industrialised states where the development of new procedures and new undertakings involves high hazard and requires big sum of venture capital ”

Scharf ( 1983 ) , in his survey entitled ‘Arab and Islamic Bank ‘ conducted by Development centre, Organization of Economic Cooperation and Development ( OECD ) , highlighted the Islamic banking rules and chance as follows ;

“ Muslim banking is seeking to develop the relationship between finance on one manus and industry and commercialism on the other. This new relationship is the footing of the Islamic economic system being set up. Though Muslim rules have yet to be put to the trial in the competitory of international finance, the two systems are similar in that they both strive for closer ties between fiscal intermediation and economic plus creative activity. Muslim Bankss could do a utile part to economic growing and development peculiarly in a state of affairs of recession, stagflation and low-growth degree because the nucleus of their operation is oriented towards productive investing All states both in the North and in the South, need more venture capital. Loan capital is available, peculiarly from industrialised states but at high involvement rates. However, even from enlargement and invention, this has acted as a brake on productiveness and economic growing in the North. Thus practical and immediate cooperation possibility exists between Islamic Bankss and endeavors all over the universe. The intermediation procedure remains to be to the full developed ‘ . About the possibility of presenting an interest-free funding system through Islamic banking rule Scharf ( 1983 ) besides argues that the constitution Islamic Financial System based on the rule of Shari’ah is non merely executable but besides profitable. Western states today realize the truth that involvement is an intolerable load for the development states ” .

Due to that, as observed by Ahmad ( 1994 ) ,

“ Canada has already waived of all the involvement. Australia has made a similar move. President Mitterrand of France has officially suggested in the Group-7 meeting that at least 30-35 per centum of the present involvement component of the debt should be waived off ” .


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