Foreign Exchange Management Janata Bank Ltd

Topics: Islamic banking, Bank, Investment Pages: 68 (19203 words) Published: March 5, 2012

Islam is not only a religion but also a complete code of life and Islami Banking & finance is an integral part of life of a Muslim. Similarly Shari’ah Concept and principles are unavoidable code of business operations of the Bank. An Islami Bank is a financial institute whose status, rules and procedures expressly state its commitment to the principles of Islamic Shari’ah. * The main objectives of the bank are: a) To conduct interest-free banking, b) To establish participatory banking instead of banking on debtor-creditor relationship, c) To invest through different modes permitted under Islamic Shari’ah, and d) To accept deposits on profit-loss sharing basis. The mission of the bank is to establish Islamic Banking through the introduction of welfare oriented banking system and also ensure equity and justice. The functions of Islami Bank Bangladesh Limited are a) To maintain all types of deposit accounts. b) To make investment. c) To conduct foreign exchange business. d) To extend other banking services. * The special feature of the investment policy of the Bank is to invest on the basis of profit-loss sharing system in accordance with the tenets and principles of Islami Shari’ah Earning of profit is not the only motive and objective of the Bank’s investment policy rather emphasis is given in attaining social good and in creating employment opportunities. * There are three types of Investment Modes, these are :I) “Bai” Mode (Trading) ii) “Ijarah” Mode (Leasing) and iii) Share Mode. “Bai” Mode is further divided into four types: 1.Bai Murabaha 2.Bai Muazzal 3.Bai Salam 4.Bai Istishna’a. “Ijarah” Mode is further divided into two types: 1.Hire purchase (Ijarah) 2.Hire purchase under Shirkatul Melk. Share Mode is further divided into two types: 1. Mudaraba 2. Musharaka. * "Bai-Murabaha” may be defined as a contract between a buyer and a seller under which the seller sells certain specific goods (permissible under Islamic Shari’ah and the Law of the land), to the buyer at a cost plus agreed profit payable in cash or on any fixed future date in lump-sum or by go downs. “Bai-Muazzal” means sale for which payment is made at a future fixed date or within fixed period. In short, it is a sale on Credit. “Bai-Salam” is a mode of investment allowed by Islamic Shari’ah in which commodity(ies)/product(s) can be sold without having the said commodity (ies) /product(s) either in existence or physical /constructive possession of the seller. “Istisna'a” is a contract between a manufacturer/seller and a buyer under which the manufacturer/seller sells specific product(s) after having manufactured, permissible under Islamic Shari’ah and Law of the Country after having manufactured at an agreed price payable in advance or by go downs within a fixed period or on/within a fixed future date on the basis of the order placed by the buyer. * “Ijarah” has been defined as a contract between two parties, the “Hiree” and “Hirer” where the Hirer enjoys or reaps a specific service on benefit against a specified consideration or rent from the asset owned by the Hiree. Hire purchase under Shirkatul Melk is a special type of contract, which has been developed through practice. Actually, it is a synthesis of three contracts: Shirkat, Izara and sale. Shirkat means partnership. Shirkatul Melk means share an ownership. * “Mudarabah” is a form of partnership where one party provides the funds while the other provides the expertise and management. The first party is called the “Sahib-Al-Maal” and the latter is referred to as the “Mudarib”. “Musharaka” is an Islamic financial technique that adopts “equity sharing” as a means of financing projects. Thus, it embraces different types of profit and loss sharing partnership. The partners (entrepreneurs, bankers) etc. Share both capital and management of a project. * The main objectives and principles of investment operations of the Bank are: a) To invest...
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