Assignment On Law & Practice of Banking: Group 14 Department of Finance Jagannath University, Dhaka 29/03/2015

2015
Assignment
on
Law & Practice of Banking
Group 14
Department Of Finance
Jagannath University,
Dhaka
29/03/2015

Assignment
Submitted To
Sk. Alamgir Hossain
Lecturer
Department of Finance
Jagannath University
Submitted By
Group-14
SL Name ID
01 Md. Monoar Hossain B-120203005
02 Md. Saidul lslam B-120203060
03 Md. Shakhawat Hossain B-120203080
04 Md. Raju Ahamed B-120203091
05 Milon Saha B-120203108
Date: 29 March, 2015
Department of Finance 1 Jagannath university

Table of Contents
1.1 Bank.....................................................................................................................3
1.2 Commercial Bank.................................................................................................3
1.3 Islami bank...........................................................................................................4
1.4 Conventional Bank...............................................................................................4
1.5 Shahjalal Islami Bank Ltd.....................................................................................5
1.6 Activities of commercial bank.............................................................................5
1.7 Role of commercial bank in the economic development of Bangladesh..........10
1.8 Different types of deposit product offered by Shahjalal Islami Bank...............13
1.9 Different types of loan product offered by Shahjalal Islami Bank....................16
1.10 Distinction between conventional and Islamic bank......................................29
1.11 Necessary paper & document to create a bank account for personnel or
organization.............................................................................................................31

1.1 Bank
A bank is a financial intermediary and money creator that create money by

lending money to a borrower, thereby creating a corresponding deposit on the
bank's balance sheet. Lending activities can be performed directly by loaning or
indirectly through capital markets. Due to their importance in the financial system
and influence on national economies, banks are highly regulated in most
countries.
Most nations have institutionalized a system known as fractional reserve banking,

central banking, under which banks hold liquid assets equal to only a portion of
their current liabilities. In addition to other regulations intended to ensure
liquidity, banks are generally subject to minimum capital requirements based on
an international set of capital standards, known as the Basel Accords.
1.2 Commercial Bank
A financial institution that provides services, such as accepting deposits, giving

business loans and auto loans, mortgage lending, and basic investment products
like savings accounts and certificates of deposit. The traditional commercial bank
is a brick and mortar institution with tellers, safe deposit boxes, vaults and ATMs.
However, some commercial banks do not have any physical branches and require
consumers to complete all transactions by phone or Internet. In exchange, they
generally pay higher interest rates on investments and deposits, and charge lower
fees.
Professor Roger, “the bank which deals with money and money’s worth with a
view to earning profit is known as “Commercial bank.”

Professor Hart says, “ A banker is one who, in the ordinary course of business,
honours cheques drawn upon him by persons for and for whom he receives
money on current account.”
1.3 Islami bank
Islamic banking is banking or banking activity that is consistent with the principles
of sharia and its practical application through the development of Islamic
economics. As such, a more correct term for 'Islamic banking' is 'Sharia compliant
finance'.
Sharia prohibits acceptance of specific interest or fees for loans of money (known
as riba, or usury), whether the payment is fixed or floating. Investment in
businesses that provide goods or services considered contrary to Islamic
principles (e.g. pork or alcohol) is also haraam ("sinful and prohibited"). Although
these prohibitions have been applied historically in varying degrees in Muslim
countries/communities to prevent unIslamic practices, only in the late 20th
century were a number of Islamic banks formed to apply these principles to
private or semi-private commercial institutions within the Muslim community.
1.4 Conventional Bank
 “A bank is dealer in debt – his own and of other people” – Crowther
 “ We can define a bank as an institution whose debts are widely accepted

in settlement of other peoples’ debt to each other” – Sayers
 “A commercial bank is dealer in capital or more properly a dealer in money.

He is intermediate party between the borrower and the lender. He borrows

from one party and lends to another and the difference between the terms
at which he borrows and those at which he lends form the source of his
profit.” —-Prof. Gilbert
1.5 Shahjalal Islami Bank Ltd.
Shahjalal Islami Bank Limited (SJIBL) commenced its commercial operation in

accordance with principle of Islamic Shariah on the 10th May 2001 under the
Bank Companies Act, 1991. During last thirteen years SJIBL has diversified its
service coverage by opening new branches at different strategically important
locations across the country offering various service products both investment &
deposit. Islamic Banking, in essence, is not only INTEREST-FREE banking business,
it carries deal wise business product thereby generating real income and thus
boosting GDP of the economy. Board of Directors enjoys high credential in the
business arena of the country, Management Team is strong and supportive
equipped with excellent professional knowledge under leadership of a veteran
Banker Mr. Farman R. Chowdhury.
1.6 Activities of commercial bank
A: General Activities:
1. Receiving Deposits:
The first and foremost function of commercial bank is to receive or collect

deposits from the public in different forms of accounts e.g. current, savings,

term deposits. No interest is charged in the current account, lower rate of

interest is charged in the savings account and comparatively higher interest
rates charged in fixed deposits. Thus, commercial bank builds up customer
network.
2. Accommodation of loans and advances:
Commercial Bank attaches much importance to providing loans and

advances at higher rates than the deposit rates and thus earns profits on it.
Working capital is accommodated to the borrower for expansion and
smooth running of business. In the similar manner, commercial bank
extends financial accommodation for the development of agriculture and
industry. Credit accommodation is provided to the entrepreneurs for
reviving sick and old industries as per Govt. directives. Thus, commercial
bank also extends welfare services to the people at large.
3. Creation of Loan Deposits:
Commercial Bank not only receives deposits from public and

accommodates loans to public but also creates loan deposits. For example:
while disbursing loans as per sanction stipulation, the amount of loan is
credited to the borrower’s account. The borrower may not withdraw the
full amount at a time. The residual amount i.e. balance left in the account
creates loan deposits.
4. Creation of medium of exchange:
Central Bank has got exclusive right to issue notes. On the other hand,
Commercial Bank creates medium of exchange by issuing cheques. Like
notes, cheque is transferrable being popularly used in the banking
transactions.
5. Contribution in foreign trade:

Commercial Bank plays a vital role in expediting foreign exchange and

foreign trade business e.g. import, export etc. It contributes greatly in the
economy through import finance and export finance and thus, earn foreign
exchange for the country.
6. Formation of capital:
Commercial Bank extends financial assistance for the formation of capital in

the trade, commerce and industry in the country which expedites its
economic development.
7. Creation of Investment Environment:
Commercial Bank plays a significant role in creating investment

environments in the country.
B. Public Utility Activities:
In modern banking, commercial bank executes public utility services:
1. Remittance of Money:
Remittance of money to the public from one place to another is one of the
functions of commercial bank. Remittance is effected in the form of
demand draft, telegraphic transfer etc. through different branches and
correspondents home and abroad.
2. Help in trade and commerce:
Commercial Bank helps expand trade and commerce. In inland and foreign
trade customers are allowed credit accommodation in the form of letter of
credit, bill purchased and discounted etc.

3. Safe custody of valuables:
Commercial Bank introduces ‘locker’ services to the customers for safe

custody of valuables e.g. documents, shares, securities etc.
4. Help in Foreign Exchange business:
While opening letter of credit, commercial bank obtains credit report of the
suppliers and thus help expedite import and export business.
5. Act as a Referee:
Commercial Bank acts as a referee for and on behalf of the customers.
6. Act as an Adviser:
Commercial Bank provides valuable advice to the customers on different

products, business growth and development, feasibility of business and
industry.
7. Collect utility service bills:
As a social commitment, Commercial Bank collects utility service bills e.g.
water, electricity, gas, telephone etc. from the public.
8. Purchase and sale of prize bonds, sanchaya patra,

shares etc.
Commercial Bank undertakes to purchase and sale of prize bonds,

sanchaya patra, shares etc. as a part of social commitment.

9. Help people travel abroad:
Commercial Bank helps customers in traveling abroad through issuance of

traveler’s cheques, drafts, cash etc. in favor of the customers.
C. Agency Activities:
Besides above stated functions, commercial bank acts as a representative of the
customers.
1. Collection and payment:
Commercial Bank is engaged in collection and payment of cheque, bill of

exchange, promissory notes, pension, dividends, subscription, insurance
premium, interest etc. on behalf of the clients.
2. Purchase and sale of shares and securities:
Commercial Bank is entrusted with the responsibility of purchase and sale

of shares and securities on behalf of the customers.
3. Maintenance of secrecy:
Maintenance of secrecy is one of the most important functions of

commercial bank.
4. Act as a trustee:
Commercial Bank acts as a trustee on behalf of the customer.

5. Economic Development and Welfare activities:
Commercial Bank contributes much for the welfare and economic

development of the country
1.7 Role of commercial bank in the economic

development of Bangladesh
 Commercial banks play an important and active role in the economic
development of a country.
 If the banking system in Bangladesh is effective, efficient and disciplined it

brings about a rapid growth in the various sectors of the economy.
 The following is the significance of commercial banks in the economic

development of Bangladesh:
1. Banks promote capital formation:

Commercial banks accept deposits from individuals and businesses, these
deposits are then made available to the businesses which make use of
them for productive purposes in the country.
The banks are, therefore, not only the store houses of the country’s wealth,
but also provide financial resources necessary for economic development
2. Investment in new enterprises:

Businessmen normally hesitate to invest their money in risky enterprises.
The commercial banks generally provide short and medium term loans to
entrepreneurs to invest in new enterprises and adopt new methods of
production.

The provision of timely credit increases the productive capacity of the

economy.
3. Promotion of trade and industry:

With the growth of commercial banking, there is vast expansion in trade
and industry.
The use of bank draft, check, bill of exchange, credit cards and letters of
credit etc. has revolutionized both national and international trade.
4. Development of agriculture:
The commercial banks particularly in developing countries are now
providing credit for development of agriculture and small scale industries in
rural areas.
The provision of credit to agriculture sector has greatly helped in raising

agriculture productivity and income of the farmers.
5. Balanced development of different regions:

The commercial banks play an important role in achieving balanced
development in different regions of the country.
They help in transferring surplus capital from developed regions to the less
developed regions.
The traders, industrialist etc. of less developed regions is able to get

adequate capital for meeting their business needs.
This in turn increases investment, trade and production in the economy.

6. Influencing economy activity:

The banks can also influence the economic activity of the country through
its influence on
a. Availability of credit
b. The rate of interest
If the commercial banks are able to increase the amount of money in

circulation through credit creation or by lowering the rate of interest, it
directly affects economic development.
A low rate of interest can encourage investment.
• The credit creation activity can raise aggregate demand which leads to
more production in the economy.
7. Implementation of Monetary policy:

The central bank of the country controls and regulates volume of credit
through the active cooperation of the banking system in the country.
It helps in bringing price stability and promotes economic growth with in

the shortest possible period of time.
8. Monetization of the economy:

The commercial banks by opening branches in the rural and backward areas
are reducing the exchange of goods through barter.
The use of money has greatly increased the volume of production of goods.

The non-monetized sector (barter economy) is now being converted into

monetized sector with the help of commercial banks.
9. Export promotion cells:

In order to increase the exports of the country, the commercial banks have
established export promotion cells.
They provide information about general trade and economic conditions

both inside and outside the country to its customers.
The banks are therefore, making positive contribution in the process of

economic development.
1.8 Different types of deposit product offered

by Shahjalal Islami Bank
 Mudaraba Monthly Income

Main Features
 Any individual may open this Account by depositing money a minimum

amount of Taka 50,000/- and multiples thereof at a time for three years
only. Monthly provisional profit shall be given to the Account just after
completion of minimum 30 days from the date of opening of the Account.
The profit amount shall be adjusted on completion of each accounting year
after declaration of final rate of profit

Required Documents
 Complete account opening form

 02 copies passport size photographs of account holder duly attested by
introducer
 1 copy photograph of nominee duly attested by the accountholder
 Identification proof like National ID Card/Passport/Chairman certificate
 Minimum deposit Tk.50000/-
 Introducer signature
 Mudaraba Double Money
This is a Deposit Scheme where the depositor gets a fixed amount of profit
every month without disturbance to the principle. The Scheme is designed
to attract:
The retirement benefits of service holders.
 The investment of Wage Earners who want to pay a fixed amount monthly
to their family’s dependents in Bangladesh from the profit of their
investment.
 The deposit of those persons who intend to meet the monthly expense of
their family from the income of their deposit.
 Investment of fund of Trusts and Foundations which award monthly
Scholarships / Stipends to students.
 Trusts and founders or other associations, which award monthly
scholarship/stipends to students etc.
 Additional Benefit:
 These MBDS allows you to enjoy loan facility up to 90% of your deposit
amount.
 Mudaraba Monthly Deposit

 Mudaraba Millionaire
The bank will receive deposit under the Islami Shariah policy
The accepted periods are:
12Years
15 Years
20 Years
25 Years
Features
Monthly Tk.600 Tk.1100 Tk.2170 Tk.3330

Installment
12 Years 1 million
15 Years 1 million
20 Years 1 million
25 Years 1 million
Other deposit are given below:
 Mudaraba Haji Deposit

 Mudaraba Housing Deposit
 Mudaraba Small Business
 Mudaraba Cash Waqf Deposit
 Mudaraba Lakhopoti Deposit
 Mudaraba Bibaho Deposit
 Mudaraba Mohor Deposit
 Mudaraba Shikhkha Deposit
 Mudaraba Special Term Deposit

 SJIBL School Banking

 Mudaraba Money Spinning
1.9 Different types of loan product offered by

Shahjalal Islami Bank
1. Small & Medium Enterprise Investment:
The SME Sector has been declared by the Government as a priority sector.
In our country, Small and Medium Enterprises (SMEs) play the pivotal role
for employment generation, poverty alleviation and overall economic
growth of the country. It has been observed that fund is the major
constraint of this sector. Therefore, we need to inject more funds into this
sector in a very planned manner to boost-up this sector for the sake of
overall economic development of the country. Our country is labour
abundant and SMEs are typically labour intensive. So, the sector deserves
more investment facility for smooth functioning of the existing enterprises
and expansion of the same with a view to retain the workforce active as
well as creating more employment opportunities. Further, investment in
SMEs can be very effective in reducing poverty as well as ensuring long
term economic growth.
Shahjalal Islami Bank Limited (SJIBL) is a modern commercial bank governed

by the principles of Islamic Shariah, which is committed to implement and
materialize the economic and financial principles of Islam in the banking
sector. It has undertaken initiatives for investment in SME sector by
introducing a number of SME products in the market gradually with a view
to patronizing the trade, commerce and industrial entities with equity &
justice and to make effective contribution for creating employment

opportunities, which will ultimately help the nation for poverty alleviation
from the society.
2. Small Business Investment

Target groups
 Small Businessmen like Wholesaler, Retailer, Small Manufacturer/Producer

and Trader etc.
 Self-Employed Person like Doctors/Engineers/Professionals etc.
 Small & Cottage Industries.
 Other existing & new small business, micro & small industries and
commerce.
Mode of Investment
 Hire Purchase under Shirkatul Meelk (HPSM)
 Lease/Ijara
 Bai-Muajjal-Commercial-TR
 Bai-Muajjal (Term)
Ceiling of Investment
 The amount of investment shall be Tk 50,000/- to Tk 5,00,000/- (Taka fifty

thousand to Taka five lac).
 Maximum ceiling of the investment will be Tk 3,00,000/- (Taka three lac)

only for any region other than Dhaka & Chittagong Metropoliton Area.
However, investment may be extended beyond the ceiling at the discretion
of the Management.
 Bank investment-Client equity ratio where applicable shall be 60:40.

Tenure of Investment
 In case of HPSM, Lease and Bai-Muajjal (Term):
Maximum tenure will be 3 years i.e. 36 months (a period of 3 months may

be allowed as grace period to the deserving client)
 In case of Bai-Muajjal- Commercial-TR :
Maximum tenure will be 1 year i.e. 12 months and renewable on

satisfactory performance.
Rate of Profit/Rent
Rate of profit/rent is 15.00% p.a.
Fees
Application Fee of Tk 100/- (non refundable);
Processing Fee of Tk 500/- (non refundable);
Supervision Charge
Supervision charge will be @ 2.00% per annum.
Risk Fund
Risk fund will be @ 1.00% per annum.
Security
 General Security for each case:
I. Hypothecation of Stock/Equipment’s;
II. The stock/equipment’s should be duly and properly insured to cover the
risks of probable hazards;

III. 01 (one) post dated master cheque in favor of SJIBL covering the
investment;
IV. Postdated cheque against each installment/deal;
V. Trust Receipt(s) duly executed by the Client along with delivery order(s) for
each deal (in case of BMTR).
VI. Personal guarantee of the client, spouse and adult son(s) & daughter(s), if
any of the client
 Specific Security for the investment not exceeding Tk 2,00,000/-:
Personal guarantee from two persons having good financial means &
standing and acceptable to the Bank;
 Specific Security for the investment exceeding Tk 2,00,000/-:
I. Registered mortgage of immovable property owned by the client(s) or by a

third party acceptable to the bank having:
II. Forced sale value of double the amount of investment under the Bai-
Muajjal-Commercial-TR facility;
III. In case of HPSM, Lease and Bai-Muajjal (Term) investment, forced sale
value of collateral security should not be less than 1.50 times of the Bank’s
investment.
3. Household Durable Investment

Purpose
Facilitate investment to purchase household durables to the different low &

medium income honest businessman/professionals.

Socio-economic improvement of the country through improvement of life

style of the low & medium income people
Target groups
The permanent employees working in the following organizations aged

between 20 to 55 years and willing to avail investment under the scheme:
 Government Organizations.
 Semi-Government & Autonomous Organizations.
 Different Corporations.
 Multi-national Companies.
 Different local renowned Non-governmental Organizations.
 Different Banks and Financial Institutions (Including Shahjalal Islami

Bank Ltd.).
 Different Insurance Companies.
 Different renowned University, College, School & Madrasha besides

Government University, College, School & Madrasha.
 The persons serving in Military and Paramilitary.
 Acceptable persons to the Bank's Management.
Genuine businessman having valid Trade license, VAT certificate, TIN

certificate and Monthly Income evidenced by relevant documents may be
included as client.
Note
 In case of service holder minimum service length requirement is 3 years

which may be relaxed for the client having banking service;

 In case of businessmen minimum business experience requirement is 5

years that may be relaxed on special consideration.
Household Items
Air-Conditioner/Air- Electrical/Electronic IPS/UPS/Stabilizer/FAX/Cell-

Cooler goods Phone
Crockery Items Computer Washing Machine
Knitting Machine (Home
Furniture and Fixtures Non-Commercial Generator
useable)
Photo Copier Oven Refrigerator
Deep Fridge Two-in-one Three-in-one
CD/VCD/DVD Player Water Purifier Room Heater
Water Cooler Water Pump Typewriter
Camera Different Kitchen Kits Ornaments for marriage
Any other different household items.
Ceiling of Investment
 Maximum ceiling of the investment will be Tk 5.00 lac per client.
 Size of the investment will be fixed as such the monthly installment

against the investment would not exceed 25% of client’s monthly
salary/income.
Basic features of the Scheme
Mode of Investment : Hire Purchase under Shirkatul Meelk / Hire Purchase.
Period of Investment : Maximum 05 (five) years.

Client's Equity : Minimum 25%.
Profit & Charges:
Rate of Profit @16.00% p.a.
Service Charge @1.00% p.a. on approved limit to be realized upfront.
Risk Fund @1.00% to be realized at the time of disbursement.
Repayment Procedure: Monthly Installment basis.
Securities:
 The ownership of the item(s) shall be in the name of the Bank.
 One postdated master cheque, covering the facility amount (with profit).
 Post-dated cheques against each monthly installment.
 Personal guarantee from two persons having good financial means &
standing and acceptable to the Bank.
4. Car Purchase Investment Scheme

Maintaining a car now a day is no more a luxury, but an essential part of daily
working life to add speed to its performance and taking this as view Shahjalal
Islami Bank has introduced Car Purchase Investment Scheme. Potential users
of personal cars are requested to contact any of the branches of the bank for
availing the facility within shortest possible time at very easy terms.
Purchasable Car
Brand New or Reconditioned
 Private Car

 Microbus
 Jeep
Eligibility
 Age between 20 to 55 years
 Permanent employees of
a). Govt., Semi Govt. and Autonomous Bodies
b). Banks and financial institutions
c). senior teachers of University, Govt. School, College and Madrasha
d). Executives/Officers of Multinational Companies and renowned NGOs
 Worthy businessman having trade license, VAT certificate and TIN
 Professionals like Physicians, Engineers, etc.
Ceiling
Maximum Tk. 40.00 lac for brand new
Maximum Tk. 30.00 lac for reconditioned
Period
 Maximum 5 years for brand new
 Maximum 4 years for reconditioned
Down payment
 Minimum 10 % for brand new
 Minimum 20 % for reconditioned

Profit Rate
Most competitive in the market
Special Feature
 Registration cost and comprehensive insurance cost can be included in

the total cost
 % rebate, if all the installments are paid in due time
5. CNG Conversion Investment

Convert your vehicle into CNG system - reduce fuel cost - save money. Plan
to convert your car at CNG system. Worried about conversion cost? No
problem, Shahjalal Islami Bank is beside you to solve the problem. Yes, you
may avail investment facility of Shahjalal Islami Bank under CNG Conversion
Scheme at a very easy terms & Conditions. Interested vehicle owner are
requested to contact any of the branches of the bank for availing the facility
within shortest possible time.
Eligibility
 Any permanent salaried executives of Corporate Houses, Renowned Private

Companies, Banks, NBFI, Multi National Company(s), Renowned NGOs,
Government Office, Semi-Government and Autonomous Bodies.
 Self-employed persons like Doctors, Engineers, Charted Accountants, etc.
 Worthy businessman having trade license, VAT certificate and TIN.
Ceiling : BDT 40,000 to BDT 1,00,000.
Period: Maximum 18 months.
Profit Rate: Most competitive in the market.

Special Feature: No down payment requires
6. Overseas Employment Investment Scheme

We salute & pay regards to the wage earners, contributing to the growth of
national economy in terms of their remittance sent from abroad.
Is it your dream to go abroad for employment?
Yes, but cost of passage is the hindrance?
Shahjalal Islami Bank is here to make your dream true.
Please visit our branches & take the chances.
Eligibility
Any Bangladeshi Citizen intends to go abroad with employment under

genuine work permit Visa.
Investment Amount: Maximum Tk.3,00,000/-
Period: Maximum 36 months with 02 (two) months moratorium period.
Age: 18 years to 45 years
Repayment Mode: Equal monthly installments.
Profit Rate: 14.00% per annum
Special Condition
The client who wants to avail this facility must maintain F/c Account with
us till full adjustment of the facility.
Special Feature

No margin requires
Partial adjustment or Full Pre-payment of liability at any time allowed

without any early settlement charge.
7. Investment Scheme for Doctors

Doctors you know what's stopping you from performing check-up your
practice finances?
Whether you need to set up or renovate your Chamber, Clinic or Diagnostic

Center with necessary medical Equipment’s or to purchase personal
necessary medical Equipment’s
Don't miss out the opportunity to take Shahjalal Islami Bank's Investment
facility for doctors within shortest possible time.
Eligibility
Bangladeshi salaried or a self-employed Doctor having at least 2(two) years

professional experience.
Ceiling
 Maximum Tk.5,00,000/- for General Doctors.
 Maximum Tk. 1 0,00,000/-for Specialist Doctors.
Age : 25 to 60 years.
Repayment Mode: Equal monthly installment.
Profit Rate: Most : competitive within your reach.
Special Feature


without any early settlement charge
8. Investment Scheme for Executives

Do you want funds readily available to be granted for your any unforeseen
expenditures whenever you desire or need; be it a sudden vacation that
you plan with your family or urgent funds required for medical treatment
or purchase of furniture or house hold appliances, or house renovation &
interior decoration, marriage in family or advance rental payment, Higher
education & training?
Shahjalal Islami Bank Investment Scheme for executives is the answer to

your questions.
Eligibility
Any Bangladeshi salaried executives of Corporate Houses, Banks, NBFI,

Multi National Company(s), Government Office & Semi-Government Office
can avail this facility.
Investment Amount: Maximum Tk. 10,00,000/-
Age: 22 years to 60 years
Profit Rate: Most competitive within your reach.
Special Condition
Salary A/c & end service benefit. will be lien till full adjustment of the
liability.

Special Feature

9. Investment Scheme for Marriage

Do you want the best memories of the marriage day of yourself or your
loving daughter/ son/ sister/ brother to cherish?
Do you want to celebrate the marriage day with pride and joy?
But also want to make sure that all arrangements are made well in advance
& every comfort meticulously provided for?
Shahjalal Islami Bank Marriage Investment Scheme can give you the relief
for all.
Eligibility
Any Bangladeshi salaried or a self employed person having 2 (Two)

years professional experience
Investment Amount : Maximum Tk.3,00,000/-
Age : 25 years to 60 years.
Repayment Mode : Equal monthly installments.
Profit Rate: Most competitive within your reach.
Special Feature


10. Investment Scheme for Education

Children are the precious assets in one's life around which all dreams
cluster.
Do you dream in pursuing your children for higher education in the country
or in abroad to cherish the end result?
Is it, at the moment, out of your reach?
Shahjalal Islami Bank is here to make your dream true with Investment
Scheme for Education.
Eligibility
Any Bangladeshi credit worthy salaried or a self-employed person

can avail this facility for their Children.
Purpose of Investment
 To pay the Tuition fees.
 To pay the Hostel fees.
 To meet Travel expenses.
 Purchase of computer, books etc.
Investment Amount
In Bangladesh: Maximum Tk. 7,00,000/-

In Abroad: Maximum Tk. 15,00,000/-
Margin: - In Bangladesh: 10% margin.
- In Abroad: 20% margin.
Profit Rate: 14.00% per annum
Special Condition
Student file must be maintained with Shahjalal Islami Bank Ltd.
Special Feature

1.10 Distinction between conventional and

Islamic bank
Islamic Bank Conventional Bank
The functions and operating modes of The functions and operating modes of
Islamic banks are based on the principles conventional banks are based on fully
of Islamic Shariah. manmade principles (largely capitalism
theory).
It promotes risk sharing between The investor/lender is guaranteed of a
provider of capital (investor) and the predetermined rate of interest or
user of funds (entrepreneur). returns.
It also aims at maximizing profit but Unrestricted profit maximisation

subject to Shariah restrictions. illustrated by derivatives trading.

In the modern Islamic banking system, it It does not deal with Zakat.
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.
Participation in partnership business is Lending money and getting it back with
the fundamental function of the Islamic compounding interest is the
banks. Understanding the venture is fundamental function of the
therefore essential. Embedded know- conventional banks. Money is a
your-customer orientation. commodity and the motivation.
Islamic banks have no provision to It can charge additional money (penalty
charge any extra money from the and compounded interest) in case of
defaulters except for compensation defaulters
(typically such proceeds is given to
charity). Rebates early settlement at the
Bank's discretion.
Due importance to the public interest/ Often, lenders/banks interest becoming
maslahah. Its ultimate aim is to ensure forefront. It makes no effort to ensure
growth with equity. growth with equity
For the Islamic banks, it must be based For interest-based commercial banks,
on a Shariah approved underlying borrowing from the money market is
transaction. relatively easier.
Since it shares profit and loss, the Islamic
Since income from the advances/loans is
banks pay greater attention to fixed, it gives little importance to
developing project appraisal and developing expertise in project appraisal
evaluations and evaluations. Risks are transferable at
a price (and sometimes incremental).
Greater emphasis on the viability of the The conventional banks give greater
projects. emphasis on creditworthiness of the
clients where credit equals to
‘commodity pricing’.
The status of Islamic bank in relation to Relationship is often defined as that of
its clients is that of partners, investors creditor-debtor.
and trader, buyer and seller.
Islamic bank can only guarantee deposits A conventional bank has to guarantee all
for deposit account, which is based on its deposits.

the principle of al-wadiah, thus the

depositors are guaranteed repayment of
their funds, however if the account is
based on the mudharabah concept,
client have to share in a loss position.
1.11 Necessary paper & document to create a

bank account for personnel or organization
FOR PERSONAL
Al Wadiah Current Deposit Accounts
 Minimum deposit Tk.5000/-
 02 Copies passport size photographs of every operators duly attested by
introducer
 Signature of Introducer
Mudaraba Savings Account (MSA)

 02 copies passport size photographs of account holder duly attested by
introducer
 Initial deposit Tk.2000/-

 Introducer signature
Mudaraba Term Deposit Accounts (Mtd)

 Other documents approximately same as savings account.
 Mudaraba Term Deposit Account shall be opened for a fixed period varying
from 90 days, 180 days, 360 days or above and are payable at a fixed date
of maturity.
 Mudaraba Term Deposit Accounts can be opened with a minimum deposit
of Tk.2,000/.
FOR SOLE PROPRIETORSHIP

1. Registration Certificate (in case of registered unit)
2. Certificate/license issued by the municipal authorities under shop &
establishment Act.
3. Sales and Income tax returns.
4. CST/VAT certificate.
5. Certificate/registration document issued by the sales tax/professional tax
authorities.
6. License issued by the Registering authority like certificate of practice
issued by Institute of chartered accountants of India, Institute of
company secretaries of India, Indian Medical Council, Food and Drug
Control authorities, etc.
7. Existing Bank statement from the current banker, for a minimum period
of 6 months.
8. Registration / licensing document issued by the Central Government or
State Government Authority / Department.
9. Importer Exporter Code (IEC) issued by the Office of Directorate General
of Foreign Trade (DGFT) etc., (Any two of the above documents would
suffice. These documents should be in the name of the proprietary
concern.)

FOR PARTNERSHIP FIRMS

1. Registration Certificate, if the firm is registered.
2. Partnership Deed.
3. Power of Attorney granted to a partner of an employee of the firm to
transact business on its behalf.
4. Attach Proof to identify and proof of address of the main partners and
persons holding the PA apart from the above.
5. Attach Proof of Legal name, telephone number of the firm and partners
apart from the above.
FOR LIMITED LIABILITY PARTNERSHIP

1. Copy of the LLP agreement.
2. Copy of the Incorporation document and DPIN of the designated partners.
3. Copy of the certificate of Registration issued by the ROC concerned.
4. Copy of LLP-IN issued by the ROC.
5. Copy of the Resolution to open an account and list of authorized person/s
with the specimen signatures to operate the account duly attested by
Designated Partners.
6. Copy of PAN allotment letter.
FOR COMPANIES
1. Certificate of incorporation and DIN.
2. Memorandum & Articles of Association.
3. Resolution of the Board of Directors to open an account and list of officials
authorized to operate the account.
4. Identification of authorized signatories should be based on photographs
and signature cards duly attested by the company.

5. Power of Attorney, if granted, to its managers, officers of employees to

transact business on its behalf.
6. Copy of PAN allotment letter.
7. List of directors and copy of Form 32 (if directors are different from AOA).
8. Certified true copy of Certificate of commencement of business (public
limited company).
9. Attach Proof of the name of the company, Principal place of business,
mailing address of the company, Telephone/Fax number apart from the
above. (Telephone bill)
FOR TRUSTS/ASSOCIATION/CLUB/SOCIETY
1. Certificate of Registration, if registered.
2. Power of Attorney granted to transact business on its behalf, if any.
3. Any document listing out the names and addresses of the trustees, sellers,
beneficiaries, and those holding power of Attorney, and other key officials
involved in the day to day management of the trust to the satisfaction of
the bank.
4. Resolution of the managing body of the foundation.
5. Declaration of Trust/Bye Law of society/Bye-law of Association/Bye-law of
club.
6. Attach the Proof of name and address of the founder, Manager/director
and the beneficiaries, telephone/fax number, Telephone bill, Utility bill
apart from the above.
FOR HUF
1. The PAN card of the HUF/PAN Intimation letter/GIR No./Form 60/HUF

Declaration and Identity and Address proof of the Kartha.
Note:
1. All the persons related to the account and authorized to operate the
account must provide separate identity and address Proof in conformity
with the details furnished in the application form.
2. Original and photo copy are to be produced. Originals will be returned after
verification at the Branch.

Assignment On Law & Practice of Banking: Group 14 Department of Finance Jagannath University, Dhaka 29/03/2015

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Assignment On Law & Practice of Banking: Group 14 Department of Finance Jagannath University, Dhaka 29/03/2015

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2015

Law & Practice of Banking

Date: 29 March, 2015

Department of Finance 1 Jagannath university

Department of Finance 2 Jagannath university

A bank is a financial intermediary and money creator that create money by

Most nations have institutionalized a system known as fractional reserve banking,

1.2 Commercial Bank

A financial institution that provides services, such as accepting deposits, giving

Department of Finance 3 Jagannath university

1.3 Islami bank

1.4 Conventional Bank

 “A bank is dealer in debt – his own and of other people” – Crowther

 “ We can define a bank as an institution whose debts are widely accepted

 “A commercial bank is dealer in capital or more properly a dealer in money.

Department of Finance 4 Jagannath university

1.5 Shahjalal Islami Bank Ltd.

Shahjalal Islami Bank Limited (SJIBL) commenced its commercial operation in

1.6 Activities of commercial bank

The first and foremost function of commercial bank is to receive or collect

Department of Finance 5 Jagannath university

term deposits. No interest is charged in the current account, lower rate of

2. Accommodation of loans and advances:

Commercial Bank attaches much importance to providing loans and

3. Creation of Loan Deposits:

Commercial Bank not only receives deposits from public and

4. Creation of medium of exchange:

5. Contribution in foreign trade:

Department of Finance 6 Jagannath university

Commercial Bank plays a vital role in expediting foreign exchange and

Commercial Bank extends financial assistance for the formation of capital in

7. Creation of Investment Environment:

Commercial Bank plays a significant role in creating investment

B. Public Utility Activities:

In modern banking, commercial bank executes public utility services:

2. Help in trade and commerce:

Department of Finance 7 Jagannath university

3. Safe custody of valuables:

Commercial Bank introduces ‘locker’ services to the customers for safe

4. Help in Foreign Exchange business:

Commercial Bank acts as a referee for and on behalf of the customers.

Commercial Bank provides valuable advice to the customers on different

7. Collect utility service bills:

8. Purchase and sale of prize bonds, sanchaya patra,

Commercial Bank undertakes to purchase and sale of prize bonds,

Department of Finance 8 Jagannath university

9. Help people travel abroad:

Commercial Bank helps customers in traveling abroad through issuance of

1. Collection and payment:

Commercial Bank is engaged in collection and payment of cheque, bill of

2. Purchase and sale of shares and securities:

Commercial Bank is entrusted with the responsibility of purchase and sale

Maintenance of secrecy is one of the most important functions of

Commercial Bank acts as a trustee on behalf of the customer.

Department of Finance 9 Jagannath university

5. Economic Development and Welfare activities:

Commercial Bank contributes much for the welfare and economic

1.7 Role of commercial bank in the economic

 If the banking system in Bangladesh is effective, efficient and disciplined it