Al-Arafah Islami Bank Limited

Prepared For: Prepared By: Mavericks

Name ID
MGT 351 Human Resource Management Anindita Touhid 1811339630

Shahid Hossain (ShH) Nazia Parveen 1811492630

Spring 2019 Md. Tanvir Ahmed Anik 1731469630

North South University Iffat Jerin 1711759630

Sanjida Sultana 1530436630

 HRM Activities of Al-Arafah Islami Bank Ltd

LETTER OF ACKNOWLEDGEMENT

In the name of “Allah”, the most beneficent and merciful who gave us strength and knowledge
to complete this assignment. This assignment is a part of our course “MGT 351 Human
Resource Management”.

We are grateful to our honorable faculty Mr. Shahid Hossain, Senior Lecturer, Department of
Management, North South University who gave us this opportunity to fullfil this report. His
sincere guidance, cooperation and valuable advice enabled us to overcome problems during the
entire course and preparation of this report.

We are thankful to Mr. Masum Mizan, First Assistant Vice President, Public Relations
Department of Al-Arafah Islami Bank Limited who has given his valuable time to talk with us
and provided us all the necessary information and suggestion regarding this report.

Finally, we would like to thank everyone who have helped and supported us to complete our
report effectively and moreover on time.

Anindita Touhid Iffat Jerin Md. Tanvir Ahmed Anik

Nazia Parveen Sanjida Sultana

 HRM Activities of Al-Arafah Islami Bank Ltd

EXECUTIVE SUMMARY

Al Arafah Islami Bank Ltd has been successfully operating since almost 24 years in
Bangladesh, since its inception on 18th June 1995. This report is based on HR related activities
of AIBL. We collected the necessary information through both online and offline resources.
Major problems that we faced during the research of this project are, 1) Setting an appointment
with a HR manager 2) Some information were not given to us as they consider it confidential.
Employees share a healthy environment in the workplace and employees follows Islamic terms
strictly and work accordingly. They recruit people both internal and externally for the top,
middle, low level managerial posts. Candidates go through a series of processes that involves
written examination, interviews etc. New employees go through executive development
workshop, prevention of money laundering and combating financing of terrorism workshop,
women executives’ development workshop for two and a half months where they are trained
to maintain the working standards of the bank which are held by Training and Research
Institute of AIBL. There is also a “Shariah implementation” course to make the employees
understand the values the bank has from the very beginning. But the bank follows no
discrimination among the people who are from different religion.
 HRM Activities of Al-Arafah Islami Bank Ltd

Contents
INTRODUCTION ..................................................................................................................... 1
METHODOLOGY .................................................................................................................... 1
LIMITATIONS .......................................................................................................................... 2
BACKGROUND OF THE COMPANY ................................................................................... 2
• History of the company............................................................................................................ 2.1
• Culture of interpersonal relationship ......................................................................................2.2
CURRENT HR SYSTEM OF THE COMPANY ...................................................................... 4
• Recruitment Process ................................................................................................................ 4.1
• Selection process ..................................................................................................................... 4.2
• Training and Development....................................................................................................... 4.3
• Benefits Offered ....................................................................................................................... 4.4
STRATEGIC HUMAN RESOURCE MANAGEMENT........................................................ 11
LEGAL COMPLICATIONS ................................................................................................... 13
CONCLUSION ........................................................................................................................ 13
REFERENCES ........................................................................................................................ 14
PHOTOGRAPHS .................................................................................................................... 14
 HRM Activities of Al-Arafah Islami Bank Ltd

INTRODUCTION

This report is about HR related activities like recruitment process, training and development
process, benefits offered and gratuity, provident fund policies of Al-Arafah Islami Bank
Limited which was founded in 1995 and is headquartered in Dhaka, Bangladesh and provides
commercial and consumer banking, trade finance, and other related custody and clearing
services in Bangladesh . It operates through a network of 165 branches. We collected
necessary information through setting up an appointment with the first assistant vice
president of AIBL and through their official websites and booklets.

While we used as much as accurate data and stats about AIBL as possible we also used our
own logic and sense of judgement to figure some crucial points for this report.

METHODOLOGY

To complete this report we have followed a systematic study which include working, inspecting
and talking to the executives at different levels of the organization to know the present scenario
of the banking practice. To facilitate make the report more meaningful and presentable two
sources of data and information have been used widely-

The primary sources of data and information which are as follows-

• Relevant file study as provided by the officer’s concerned.

• Face to face conversation with the Executives and officers of bank.

The Secondary Sources of data and information which are as follows-

• Annual Report of Al-Arafah Islami Bank Ltd.

• Various books, articles, journals etc.
• Websites

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 HRM Activities of Al-Arafah Islami Bank Ltd

LIMITATIONS

The main problem we have faced while collecting information was fixing an appointment with
the HR manager. Also we have faced a lot of issues while collecting and gathering information
as our report is mainly based on the provident fund and gratuity policies of an employees which
is very personal.

BACKGROUND OF THE COMPANY

Al-Arafah Islami Bank is one of the prestigious bank of the country which runs totally under
Islamic conditions and terms. Their main objective is to earn success by following the ways
commanded by Allah and the path shown by his Rasul (SM). There is a council which looks
after all these terms. They helps in poverty reduction and development in agricultural sectors
through a project named as ‘Krishi o Grameen Khudro Biniyog Prokolpa’ . Their vision is to
be the pioneer of Islami banking of Bangladesh and to contribute vastly in the economic
development of the country. The bank proved a positive development in the country economy
by having more than 168 branches all over the country. The bank has an authorized capital of
tk15000 million whereas Tk 9469.58 million is paid up as on 31.12.15. It has near about 3700
employers and the number of shareholders is near to 26000 till 2018. Continues profit with the
declaration of great dividend is declared by the company at times. With best quality of customer
service and utmost dedication, the bank is successful to gain this position.

• History of the company

The company was established as a private limited company in 18th June, 1995. And it was
inaugurated on 27th September, on the same year. 20 dedicated Islamic personalities of
Bangladesh are the directors of the bank. The company’s head office is located at Motijheel,
Dhaka.

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 HRM Activities of Al-Arafah Islami Bank Ltd

• Culture of interpersonal relationship

The cultural interpersonal relationship means the relation or bond between the employees. A
good bond is very useful to work seamlessly in an environment. The members of every
company should improve their impersonal relation. The personal or core value of a company
helps to varies in the personal relation. As the Al-Arafah bank is an Islamic oriented bank, the
situation is different here. Everyone follows Islamic terms and work accordingly. Some of their
terms are discussed below-

• The employees are highly inspired to pray five times a day (according to the Islam).
But there is no discrimination among the employees who are from different religion.
They all work together with the goal of the best interests of the customers.
• It may seem the work inside the office is very mechanistic but actually the working
environment inside is very friendly environment oriented. The employees are very
friendly and helpful to each other; which is why the newcomers don’t feel much
pressure of the new environment and can easily cope up with.
• They appreciate women employees’ contribution in different managerial decisions
which is why the team bonding within the organization stays strong always.
• The new employees are welcomed warmly there and as a beginner they face a very
friendly environment to cope up with easily.
• When a problem arises and a junior executive is unable to solve it alone, all the others
from the department try to solve them together. Their participation and association
actions are praiseworthy.
• The employees are given a proper training in the Training and Research Institute of
AIBL to learn the rules and regulations to follow while working. And they also follow
the rules and regulations very strictly as they are instructed.

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 HRM Activities of Al-Arafah Islami Bank Ltd

CURRENT HR SYSTEM OF THE COMPANY

In this system we will talk about the recruitment process, selection process, training and
development of employees and what benefits the company will offer to its employees.

• Recruitment Process

In this process a company hires the most efficient candidates who are fit to do the job by
following different process. Mainly the HR dept. works on it and deals with problems related
to the recruitment process.

First of all they analyze the background and track record of the selected candidates carefully.
They check their criminal background, educational background and track records. By analyzing
it they recruit people.

Then they analyze the future performance of the employees. They forecast that how they will
work and will they be able to sustain in the organization. By seeing it they forecast how many
years he or she may serve the company.

If everything works well then they give appointment letter to the candidates as probationary
employee for 6 months. By seeing his or fer performance the organization will decide will he
or she be a permanent employee or not.

• Selection process

This process is one of the most vital stage of a company. By this process a organization selects
its employees. If they choose wrong employee then the organization will suffer both
economically and financially. Al-Arafah Islamic Bank Ltd. uses a mixture of a selection
processes.

First they take a written exam by which they can determine the intellectual level of the
candidate. From it they sort out a number of qualified employees for interview. For recruiting

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 HRM Activities of Al-Arafah Islami Bank Ltd

senior, executive level officers there is no written exams. They give interview to the specific
dept. and then sit in a panel interview with the board of directors.

They even recruit people from different educational background other than business studies.
Such as they recruit or make deal with engineering farms to develop and maintain their IT
system and ATM or internet banking services. Even for designing new office they do the same.

• Training and Development

In this process we will see that how Al-Arafah Islamic Bank ltd. trains the selected new and
current employees and why.

From 1996 the organization is giving emphasis on how to develop and trains its employees. As
a banking company this organization has to deal with various type of activities and manage
some risks such as, asset-liability related risk, internal control, compliance risk management,
telecommunication risk and money laundering etc. They also have to maintain green banking
standards, BASEL-III etc. As they are a Islamic bank so they have to carefully operate banking
activities by Sharia standards. In this process every employee have to be very expert in their
works. That’s why they need training the most.

They maintain two types of processes to train an employee such as, Traditional Training
Process and Creative Process. Traditional training process includes training about-

• Public speaking
• Discussion
• Presentation
• Workshop
• Seminar

Creative training process includes-

• Case studies
• Team discussion
• Panel meeting
• Report

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 HRM Activities of Al-Arafah Islami Bank Ltd

• Debate
• Role playing
• Simulation gaming
• Management game
• Project visit
• Study, learn and write
• Planning
• Video conferencing

To evaluate how successful training was and how participants performed, Al-Arafah Islamic
Bank ltd. uses some criteria. Participants are evaluated by marking them in 100. For attendance
10 mark is allocated, for key-point presentation 10 marks, for dress code 5 marks and for
written exam 75marks are allocated. The participants can evaluate speakers to base on their
quality presentation which contains 3 marks, experience and instruction which contains 4
marks, training environment which contains 3 marks, ending session 5 marks and benefits
from training 5 marks. Within every 2 or 3 years the executive managers and officers must
train themselves and get developed for the betterment of the organization.

• Benefits Offered

Al-Arafah Islamic Bank ltd. provides its employees by a number benefits such as, Festival
Bonus, performance based bonus, Annual leave, promotion of an employee position, maternity
leave, sick leave, medical benefits, provident fund, gratuity fund etc.

 Festival Bonus- This bonus is given twice a year. Mainly in the occasion of two EIDs
the organization offers these bonuses. Basic salary of one full month is added with the
initial salary. Such as if one employee have a total salary of 117000 taka then he will
get a bonus of 54000 taka as it is the basic salary of him.
 Performance based bonus- A portion of profit gained by Al-Arafah Islamic Bank ltd.
will be distributed among the employees based on their contribution. They analyze the
performance of the employee by a software so that they can allocate the bonus properly.
This is done to motivate the employees.

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 HRM Activities of Al-Arafah Islami Bank Ltd

 Annual leave- Employees will get a specific number of days for their annual leave.
After working whole year they get a leave to enjoy with their companions. It also
motivates the employees. They can take money instead of leave. They can spend 15
working days as annual leave.
 Promotion of an employee-They get a increment of 7.5% on their basic salary .Every
1-2 years of service there is a high chance for the employee to get promoted. Their
salary and bonuses will get increased too.
 Maternity leave- Every female employee who is pregnant can be entitled to this leave.
The employee will get a paid leave of 6 months. Such as, she can take the leave before
three months of her delivery date and three months after the delivery and she will get
6 months of salary will all the bonuses she is titled to. She can extend this leave to more
6 months but she will not get paid and her job is secured as it is mandated by law.
 Sick leave- This benefit is eligible for every employee during any type of sickness.
They can take 2 days of leave each month but if the leave get more than 3 days a month
without any type of strong reason then money from salary will get deducted.
 Provident fund- For every employee it is very important because after retirement or
resigning from the company they should get an amount of payment as they have served
the company and it is mandated by law which is described in the Income Tax Ordinance
1984. After probationary period of six months when the employee is recruited
permanently he or she will contribute 10% from his salary and the employer will match
it by 100% from the first day as per the policy of the bank. Now we will see a
calculation of an employee’s provident fund and how much he will get after 5 years.

Basic Salary- 54,560

Company policies: 1. Deduction of 10% from Basic salary

2. 100% matched by the company

3. Annual increment 7.5%

4. 6 months of probationary period.

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 HRM Activities of Al-Arafah Islami Bank Ltd

PF Year-1

Basic Salasry- 54,560

Employee contribution (54,560*10%)*12= 65,472

Employer contribution 100% of employee contribution= 65,472

Total 130,944

PF Year-2

Basic Salary-54,560+(54,560*7.5%)= 58,652

Employee contribution (58,652*10%)*12=70,382.4

Employer contribution 100% of employee contribution= 70,382.4

Total 140,764.8

PF Year-3

Basic salary- 58,652+(58,652*7.5%)= 63,050.9

Employee contribution (63,050.9*10%)*12= 75,661.08

Employer contribution 100% of employee contribution=
75,661.08
Total 151,322.16

PF Year-4

Basic Salary- 63,050.9+(63,050.9*7.5%)= 67,779.72

Employee contribution (67,779.72*10%)*12=81,335.661

Employer contribution 100% of employee contribution= 81,335.661

Total 162,671.322

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 HRM Activities of Al-Arafah Islami Bank Ltd

PF Year-5

Basic salary- 67,779.72+(67,779.72*7.5%)= 72,863.199

Employee contribution (72,863.199*10%)*12= 87,435.84

Employer contribution 100% of employee contribution=
87,435.84
Total 174,871.68

PF after 5 years= (130,944+140,764.8+ 151,322.16+162671.322+ 174,871.68)

=760,573.962 or, 760,574

Gratuity Fund: This fund is also operated by the Board of trustees. It is a fund which is given
to the employee after a certain year or service to the organization. In Al-Arafah Islamic Bank
ltd the policy of gratuity fund is divided into two phases. In the first phase employee will be
entitled to the fund if he or she serves the company for at least 7 years which has the gratuity
rate of 1%. And in the second phase the employee will be entitled to the fund after 18 years of
service and the gratuity rate will be 2%.

Now we will see the calculation of the first phase-

Company policy- 1. Gratuity rate is 1%

2. Increment rate is 7.5%

3. Service duration 7 years

Year 1 basic 54,560

Year 2 basic 54,560+(7.5% of 54.560)

=58,652
Year 3 basic 58,652+(7.5% of 58,652)
=63,050.9
Year 4 basic 63,050.9+(7.5% of 63,050.9)
=67,779.72
Year 5 basic 67,779.72+(7.5% of 67,779.72)
=72,863.199

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 HRM Activities of Al-Arafah Islami Bank Ltd

Year 6 basic 72,863.199+(7.5% of 72,863.199)

=78,327.94
Year 7 basic 78,327.94+(7.5% of 78,327.94)
=84,202.54
Gratuity after 7 years (84,202.54*7*1)
=589,417.78

Now we will see the calculation of second phase-

Company policy- 1. Gratuity rate is 2%

2. Increment rate is 7.5%

3. Service duration 18 years

Year 8 basic 90,517.73

Year 9 basic 97,306.56
Year 10 basic 104,604.552
Year 11 basic 112,449.89
Year 12 basic 120,883.632
Year 13 basic 129,949.90
Year 14 basic 139,696.14
Year 15 basic 150,173.35
Year 16 basic 161,436.35
Year 17 basic 173,544.08
Year 18 basic 186,559.89
Gratuity after 18 years of service (186,559.89*18*2%)
=6,716,155.886

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 HRM Activities of Al-Arafah Islami Bank Ltd

STRATEGIC
HUMAN RESOURCE MANAGEMENT

Management is mainly the only process that can provide an official discipline within a
company which helps the all official works to run smoothly. It is the human resource
management officers who actually lead the other employees to have that discipline within the
corporation. Same goes for Al-Arafah Bank. For last 22 years managing not only the right
banking processes but also the discipline within the company maintaining the quality and fixed
goal in all the 168 branches is impressive and praise worthy. Hiring the capable ones, training
them to maintain the discipline, making right strategy for the right work and implementing
them are the responsibilities of HR which they have been fulfilling in a right way for such a
long time. Otherwise handling so many branches around the world, keeping the 5th position
among 57 banks all around the country and keeping the work process within standard is really
difficult. They even managed to shift their head office to their own 17 floored Al-Arafah tower
within 2 months without hampering the system.

There must be some human resource management strategies that the HR and the employees as
well are following to keep the standards up. Even after struggling a lot financially they managed
to keep their standards up through following those strategies. And they are generous enough to
share the strategies. Let’s have a look at those-

The HR of Al-Arafah bank not only distributed the whole 17 floored head office among
different departments properly but also kept all kind of necessary arrangements for both
employees and customers. For example, in 15th floor there is conference room, rest room, gym,
and canteen; in 17th floor there is a health center and full time security and logistic support in
each floor; 2 floors underground for parking and distributed departments inside the Al-Arafah
tower. The security is really strong for employees, customers and guests but it’s not bothersome
or hectic.

The bank has a Training and Research Institute where the new employees go through a training
of 2 and a half months where they are trained to maintain the working standards of the bank.

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 HRM Activities of Al-Arafah Islami Bank Ltd

The bank had its own money laundering and terrorist financing prevention workshop to prevent
any kind of corruption act within the corporation. They are willing to have more to keep the
bank corruption free.

The bank has its own CL reporting provisioning and SMSME database reporting process.

As the bank started as a religious rules based bank to provide the Muslim customers a Halal
saving process, it maintains the goal from the very beginning by improving the use of
technology and image as the developed world requires. So there is a “Shariah implementation”
course to make the employees understand the values the bank has from the very beginning. But
the bank follows no discrimination among the people who are from different religion.

Executive development workshop, prevention of money laundering and combating financing

of terrorism workshop, women executives development workshop are held by Training and
Research Institute of AIBL(Al-Arafah Islami Bank Limited).

The bank has been giving importance to both Male and Female employees’ sayings or advices.
Even they have been holding the annual closing ceremonies, reunion ceremonies,
complimentary dinner ceremonies, prize giving ceremonies as well as volunteer works, welfare
contributions, student’s scholarships etc to encourage the employees and the customers to stay
loyal towards the bank.

Handling all these works together and maintaining the standard not just seem difficult, it
actually is difficult. But using different strategies the HRM department has been keeping the
whole bank in a right way for such a long time. The human resource management department
of AIBL seems like an example of how to make proper strategies and implementing them.

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 HRM Activities of Al-Arafah Islami Bank Ltd

LEGAL COMPLICATIONS

• If an employee gets fired then he/she might get deprived of many organizational
facilities immediately. But in case of provident fund the employee will get the full
amount that was counted for him/her.
In case of gratuity, if the employee gets fired before the eligible time period for gratuity
(6 years) then he/she won’t get the gratuity amount. But if he/she gets fired after the
eligible time period of gratuity then he/she will get the gratuity amount. And if the
employee gets fired after 18 years then the gratuity rate for him will be 1% instead of
2%
• If an employee dies then his/her spouse with recommended documents as proof can get
the money of both gratuity and provident fund. If the spouse is not here then with the
written consent of the employee before death or the spouse, the successors of the
employee can receive the amount.

CONCLUSION

The AIBL has been trying to operate its business successfully in Bangladesh since 1995. AIBL
has already developed an image of goodwill among its clientele by offering its excellent
services. The success has resulted from dedication, commitment and dynamic leadership of its
management over the periods. Friendly working conditions, ethically developed procedures are
a good mix for any corporate functioning, which AIBL Bank handles really well. The
confidentiality shown by the human resource department is quite impressive, as we had to work
really hard to collect any information. However, during the short span of time of its operation,
the bank has successfully grabbed a position as progressive and dynamic financial institution
in the country. If the bank goes this way, it is expected that in the near future AIBL may become
one of the top performers in the banking sector.

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HRM Activities of Al-Arafah Islami Bank Ltd

REFERENCES

1. Interview: Interviewee- Mr. Masum Mizan

Email: masum.mizan@yahoo.com
Phone: 01711992829
Date: 9th April 2019
2. https://www.al-arafahbank.com/profile.php

PHOTOGRAPHS

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