Recently Islamic banking system becomes so much popular that a major number of commercial bank’s in Bangladesh introducing their Islamic banking branches in all important areas. As the advancement of the satellite channel every one can know about the benefits of Islamic banking, and in Bangladesh more over 90% people believes in Islam. So for attracting the huge number of population every commercial bank’s of the country try to perform the Islamic banking. For the persons who are interested about the Islamic banking and for others it is need to know something about the Shariah based banking.

The Islamic banking concept is started from the golden stage of Islam. During the Islamic Golden Age, early forms of proto-capitalism and free markets were present in the Caliphate, where an early market economy and an early form of mercantilism were developed between the 8th-12th centuries, which some refer to as "Islamic capitalism".

Before establishment of the Islamic banking concept, some other issues was established to control that economy which include, bills of exchange, the first forms of partnership (mufawada) such as limited partnerships (mudaraba), and the earliest forms of capital (al-mal), capital accumulation (nama al-mal), cheques, promissory notes, trusts (see Waqf), transactional accounts and loaning. On the basis of these concepts the modern Islamic banking concept is established. In the early stage of 1946 the first Islamic banking concept is thinking by the Anwar Qureshi. On the basis of his proposed interest free banking at present we get this modern banking concept.

At present we define Islamic Bank as “An Islamic Bank is a Financial Institution whose statutes, rules, and regulations expressly state its commitments to the Principles of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operation” According to Islamic Banking Act 1983 of Malaysia: “An Islamic Bank is a company which carrying on Islamic Banking Business. …Islamic Banking Business means banking business whose aims and operations do not involve any element which is not approved by the Religion of Islam.” Riba and Shariah is the most common word of Islamic bank, let’s see what its means, The word "Riba" means excess, increase or addition, which according to Shariah terminology, implies any excess compensation without due consideration (consideration does not include time value of money).

The definition of riba in classical Islamic jurisprudence was "surplus value without counterpart", or "to ensure equivalency in real value", and that "numerical value was immaterial." And the Shariah is the Islamic rules enforced in the banking. The rules of Shariah are known as Fiqh al-Muamalat (Islamic rules on transactions).

The basic difference between the conventional banking and the Islamic banking are, the Islamic banking system is based on the profit loss based, where the conventional banking system is purely based on the interest based. In the conventional banking all liabilities are carried by the banks and the customers are not treated as their partner but in the Islamic banking system the customers are treated as the partners of the banks and for the all the liabilities are carried by the both the customers and the banks.

There are some principals of Islamic banks are available, which include

• The absence of interest-based (riba) transactions;
• The avoidance of economic activities involving oppression.
• The avoidance of economic activities involving speculation
• The introduction of an Islamic tax, zakat;
• The discouragement of the production of goods and services which contradict the Islamic value (haram)

With out this there are others differences are available, by seeing these one can easily differentiate the Islamic banking system from the conventional banking system, these includes, 

Conventional Banks

1. The functions and operating modes of conventional banks are based on fully manmade principles.
2. It does not deal with Zakat.
3. The investor is assured of a predetermined rate of interest.
4. A conventional bank has to guarantee all its deposits.
5. Lending money and getting it back with compounding interest is the fundamental function of the conventional banks.
6. It can charge additional money (penalty and compounded interest) in case of defaulters.
7. Very often it results in the bank’s own interest becoming prominent. It makes no effort to ensure growth with equity.
8. For interest-based commercial banks, borrowing from the money market is relatively easier.
9. Since income from the advances is fixed, it gives little importance to developing expertise in project appraisal and evaluations.
10. The conventional banks give greater emphasis on credit-worthiness of the clients.
11. The status of a conventional bank, in relation to its clients, is that of creditor and debtors.
12. It aims at maximizing profit without any restriction.

Islamic Banks

1. The functions and operating modes of Islamic banks are based on the principles of Islamic Shariah.
2. In the modern Islamic banking system, it has become one of the service-oriented functions of the Islamic banks to be a Zakat Collection Centre and they also pay out their Zakat.
3. In contrast, it promotes risk sharing between provider of capital (investor) and the user of funds (entrepreneur).
4. Islamic bank can only guarantee deposits for deposit account, which is based on the principle of al-wadiah, thus the depositors are guaranteed repayment of their funds, however if the account is based on the mudarabah concept, client have to share in a loss position.
5. Participation in partnership business is the fundamental function of the Islamic banks. So we have to understand our customer’s business very well.
6. The Islamic banks have no provision to charge any extra money from the defaulters. Only small amount of compensation and these proceeds is given to charity. Rebates are give for early settlement at the Bank’s discretion.
7. It gives due importance to the public interest. Its ultimate aim is to ensure growth with equity.
8. For the Islamic banks, it must be based on a Shariah approved underlying transaction.
9. Since it shares profit and loss, the Islamic banks pay greater attention to developing project appraisal and evaluations.
10. The Islamic banks, on the other hand, give greater emphasis on the viability of the projects.
11. The status of Islamic bank in relation to its clients is that of partners, investors and trader, buyer and seller.
12. It also aims at maximizing profit but subject to Shariah restrictions.

By considering all aspects it can be said that, the Islamic banking concept is well balanced for the both owners and the customers. And this concept is well structured for the development of the society and it is beneficiary for all groups of people, for the equal balance of the social economy and help to build the strong economic structure of the country.

- Article Written By: Md. Mahfuzur Rahman , BankInfoBd

Southeast Bank Limited expanded its branchnetwork further by opening its 63rd Branch at Oxygen Moore, Chittagong.

Dr. Zaidi Sattar, Director of the Southeast Bank Limited formally inaugurated the Branch as Chief Guest. In the inaugural ceremony, among others Shahid Hossain, Deputy Managing Director, S M Mainuddin Chowdhury, Senior Executive Vice President & Head of Information Technology, Anowar Uddin, Executive Vice President, Mir Ahmed Bin Islam, Senior Executive Vice President & Head of Oxygen Moore Branch, industrialists, businessmen, customers, educationists, local elites, and bank's other officials were present.

From now on, modern commercial banking services and credit facility shall be extended to the customers of the Branch. Besides, the hard-earned money of the Bangladeshi expatriates working abroad shall be handed over speedily to their beneficiaries at a competitive exchange rate from the Branch.

Source: The Financial Express, Bangladesh/5th Dec 2010

Mr. Mohammad Abdullah has assumed the Office of the Managing Director of IFIC Bank Limited with effect from 1st December, 2010. Prior to this assignment, he was the Deputy Managing Director of the Bank.

Mr. Abdullah has 37 years of banking experience to his credit. He started his career with Agrani Bank in the year 1973 as Probationary Officer and held different positions there. He joined IFIC Bank Limited in March, 1986 as Assistant Vice President and was entrusted with many important assignments of the Bank including Head of International Division. He also held the position of General Manager, Pakistan Operations of the Bank and was posted at Lahore and Karachi for 10 years. He attended many seminars/ workshops/training courses on Banking and Finance at home and abroad. He is a fellow of the Institute of Bankers, Pakistan.

Source: Prothom Alo, Bangladesh/5th Dec 2010

Mutual Trust Bank Ltd. (MTB) has recently launched four (4) new retail loan products viz., Personal loan, Auto Loan, Home Loan and Home Equity Loan for individual customers. Anis A. Khan, MTB Managing Director & CEO, launched the new MTB products at a simple ceremony held on December 2, 2010 at MTB Centre, Gulshan in Dhaka. Among others, MTB Deputy Managing Director Md. Ahsan-uz Zaman, Head of Business – Retail Banking Gazi Yar Mohammed and other MTB senior officials were present at the event. A press conference was also arranged where the objectives of launching the products and the features thereof were explained to a large number of journalists from the print and electronic media. "MTB is gradually diversifying its products and services with tailor-made features catering to the changing needs of the market and launching of these four new retail loan products is the manifestation to this endeavor" said MTB Managing Director & CEO Anis A. Khan while addressing at the event.

All the four loan products have been designed with competitive features and meant for salaried individuals, businesspersons, landlords, self employed professionals like practicing doctors, architects, engineers, Chartered Accountants, consultants and IT professionals.

Earlier on November 29, 2010, MTB organized a day long orientation program for its Direct Sales Executives (DSE) at which MTB vision and mission, code of conduct, product features and fundamentals of direct sales were presented to the sales team to enable them to present the products to individual customers in an effective manner.

The photo shows Anis A. Khan, Managing Director & CEO of Mutual Trust Bank Ltd. (MTB), launching four (4) new retail loan products of the bank at a simple ceremony held on December 2, 2010 at the Corporate Head Office of the bank at MTB Centre, Gulshan in the city. Among others, MTB Deputy Managing Director Md. Ahsan-uz Zaman, Head of Business – Retail Banking Gazi Yar Mohammed and other senior officials of the bank are also seen.

Source: http://www.mutualtrustbank.com/info_news_details.php?newsid=524

The present traditions of banks are now being changed, the banks now run for the retail customers besides the corporate customers. Moreover the number of banks and their branches in every city is increasing day by day so at present every bank tries to knock in every single person of each city. In our country a good number of the people are middle class, to meet their need every bank try to reach this class of people with the variety of segmented loans. Like the other banks, Prime Bank retail loans help the middle income group and help them to fill there desire and give theme a new way to live. Prime Bank retail loan include the house hold durable loans, education loan, car loan, any purpose loan, marriage loan, advance against salary, hospitalization loan, travel loan, doctors loan, CNG conversion loan with a simple condition. For getting the consumer loan from the Prime Bank, one may need to fill the application form and also required the other documents, after that no inquire is needed for the loan and the customers can get the loan with in the shortage possible time. The first stage of credit assessment and approval process is a customer application. The application must provide adequate information to enable the bank to assess the credit. As a minimum, the application must request for sufficient information to verify the existence of the individual and to facilitate the collection effort, including skip tracing and security checks. The information in the application must also established “Know your Customer” (KYC). Specific information should include;

- Telephone and address contact details
- Employment/business details.
- Income details
- Income & Expenditure Statement
- Personal Net worth Statement
- Residence details
- Credit references and guarantors details

All application must be checked for complete information so that initial review of the application enables the selection of better proposal for accelerated processing and quick reflection of those that do not meet minimum criteria of the product. However, application should not be rejected purely on the basis of incomplete information if the proposal merits consideration appropriate follow up should be initiated. After the application the bank officers scrutinizes the applications, than after the assessment the loan proposal is sent to the head office to check and approved the loan. After satisfaction of the application the higher authority approved the loan and sent it to the specific branch to conduct the next process.

The loan is sanction to the customer by the branch after completing the disbursement process. And to complete the whole process the Prime Bank takes a few days which may be the model for the others. The interest of the consumer loan in between 15% to 18% and the any purpose loan of the Prime Bank gives the freedom to the customers to use the amount in any purpose. More over the variety of the segmentation of the Prime Bank’s retail loan and overall performance makes them to become one of the most successful bank of Bangladesh with in the short time.

- Article Written By: Md. Mahfuzur Rahman, BankInfoBd