Islami Banking Branch
To provide the Islamic banking services in accordance with the principles of Islamic Shariah, AB Bank has established Islamic Banking Wing and started its functioning by opening full-fledged Islamic banking branch on 23.12.2004. The branch is known as AB Bank Islami Banking Branch, Kakrail, and is situated at 82, Kakrail, Ramna, Dhaka. Prominent Islami Banker Mr. M. Azizul Huq has joined the Bank as its Islamic Banking Consultant. A dedicated team of experienced Islamic bankers is working under his active guidance both at head office and branch level. A competent Shariah Council consisting of Islamic scholars, Ulema, Fukaha and Islamic bankers headed by Mr. Shah Abdul Hannan, a prominent Islamic scholar and former Secretary, Government of Bangladesh has also been formed to guide the Islamic banking affairs. Board of directors as well as management of the bank are very much interested to promote Islamic banking system in the bank aiming at opening more Islamic branches in the near future. AB Bank has already obtained membership of Islamic Banks Consultative Forum (IBCF) and Central Shariah Board for Islamic Banks of Bangladesh.
The goals and objectives of Islamic banking Wing are as under:
- To facilitate the Islamic banking system in the country
- To create new entrepreneurs and to arrange required finance for them
- To play effective role for socio economic development of the country
- To give assistance in launching welfare oriented economic system under Islamic values
Under this wing AB Bank extends the following Islamic banking services:
- Deposit services
- Investment services
Under Deposit services the following services are being rendered:
* Mudaraba Savings Account
* Mudaraba Short Noticed Account
* Mudaraba Term Deposit Account (with different terms)
* Mudaraba Monthly Profit Account
* Al-Wadiah Current Deposit Account
* Mudaraba Deposit Pension Scheme
Besides Mudaraba Hajj Deposit Scheme and some other schemes are under process.
AB Bank Islmic Banking Wing provides investment facilities for project finance, working capital finance, SME finance, consumer / retail baking finance etc. under following modes:
Hire-Purchase under Shirkatul Melk (HPSM):
Under this mode the Bank and the client procure asset such as machinery, land , car etc. on equity participation basis. The Bank rents out its portion of assets to the client for a certain period. The client pays the rental with a part of principal amount on monthly / quarterly basis. The client gets its proportionate ownership with the payment of monthly / quarterly installments. On maturity, total ownership of the assets automatically goes to the client as and when final payment of the account is made.
Ijara or Leasing: It is more or less like the HPSM. In this case equity participation may or may not exist. Ownership of the asset is not automatically transferred to the client with the payments of installments. On maturity, the bank transfers the ownership to the client on payment of certain transfer fees.
Bai-Muajjal / Bai-Murabaha: These modes are applicable for working capital finance. Under these schemes bank purchases goods / raw materials as per requirement of the client. In case of Bai-Muajjal bank receives the sales proceed on deferred payment basis. On the other hand in case of Bai-Murabaha Bank receives the sale price at the time of delivery of the goods / raw materials. Before handing over the goods / raw materials the bank generally keeps the same in its custody under pledge.
Musharaka : Under this mode the Bank and clients jointly participate in a project, in a scheme or project. Profit is shared between the Bank & the concerned client as per pre-agreed ratio. On the other hand loss is shared according to capital ratio.
Mudaraba: Under this mode bank finances the scheme as a Shaheb-Al-Maal (owner of the capital). Profit is shared between the two sides as per pre-agreed ratio.
Sector of Investment:
Islamic Banking Wing of the bank finances in all sectors i.e., Industry, business, Agriculture, Real Estate etc. if purpose of the investment is permissible under Islamic Shariah.
Limit of Investment:
Investment is offered to the extent of single borrower exposure limit as fixed by the Bangladesh Bank from time to time.
Islamic Banking Wing provides the following services at its foreign trade desks:
> Opening of LCs
> Post -Import Finance
> Export bill purchase and negotiation
> Pre-shipment financing etc.
AB Bank Islamic Banking Wing has been continuously trying to expand it’s service horizon keeping the necessity of valued clients in view and upholding the principle of Islamic Shariah.