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BANK, Insurance AND NBFI Business in Bangladesh

'IBBL emphasises on need-based investment, not greed'

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Mohammad Abdul Mannan, Managing Director and CEO of Islami Bank Bangladesh Ltd (IBBL), the leading private commercial bank of the country shared his experience with The New Nation over the backdrop of establishing IBBL, its activities and achievements in the 33 years of journey. Senior Reporter Mohammed Badrul Ahsan has taken the interview.
NN : What were the initiatives for establishing Islami Bank in Bangladesh:
Mannan: The initiatives of establishing Islamic banking in Bangladesh had been taken firstly at government level. On 10th August, 1974, Bangladesh, as the founding member country, signed the IDB Charter at Jeddah, KSA. In this conference, led by the then Finance Minister Taaj Uddin Ahmed, inclusion of Bangladesh as the member of Islamic Development Bank (IDB) was confirmed. In 1981, after studying the functions of different Islamic banks in Middle Eastern Countries, the Research Director of Bangladesh Bank submitted a report recommending establishment of an Islamic bank in the country.
On the ground of the Govt. decision for allowing to establishment of banks under private sectors, an initiative has been taken to establish an Islamic bank under private sponsorship. In 1982, a delegation of IDB shown interest to participate in establishing a joint venture Islamic Bank in Bangladesh. On March 13, 1983 Islami Bank Bangladesh Limited had been incorporated under the Company Act- 1913. 19 Bangladeshi nationals, 4 Bangladeshi institutions, IDB and 10 banks and financial institutions and government bodies of the Europe and Middle East and IDB and two eminent personalities of Saudi Arabia joined hands to establish the bank. On 30th March of the same year, the business activity had been commenced. On August 12, 1983, the first branch of the bank, Local Office, was formally inaugurated.    
NN: What are the attainments of IBBL during its journey of 33 years?
Mannan: On the journey of excellence, Islami Bank passed its 33rd year of service and care in the perspective of shifting Islamic way of banking. IBBL is now the 939th bank of the 'World's best 1000 Banks' and awarded as the 'Best Managed Bank in Bangladesh' by the 'Asian Bankers' and 'the Corporate Award 2015' by ICMAB resemble the continuity of its excellence and appreciation of success.
Touching the success points one after another in rapid succession, Islami Bank has already become the largest commercial bank of the country, assuming galloping market shares in all service initiatives - especially in deposit, investment, export-import, remittance, industrialization, entrepreneur development and  women empowerment.
NN: Central Bank gives priority on financial inclusion. What achievements IBBL attained for financial inclusion?   
Mannan: Financial inclusion has been a built-in attribute of Islami Bank ever since its inception. This welfare inspired Bank is working for sustainable development through aide approach of financial inclusion. Islami Bank is serving 11.5 million customers through a nationwide network of 304 branches. This bank was the pioneer in inclusion of mass people in banking service by opening account with only Tk. 10.00 deposit, since 1994. We mostly serve the un-served people.
NN: Development of a strong SME sector is essential for sustainable growth of the economy. Tell us about IBBL exposure on the SME Banking.
Mannan: IBBL is a major contributor for developing a strong SME sector of the country. In 2015, IBBL's contribution in SME sector was 25 percent. IBBL has invested Tk. 1484860 million during last 10 years. In 2015 IBBL's SME Investment portfolio was Tk.64630 million. In 2016 IBBL's target for SME is Tk. 285000 million, which amounts to 25 percent of the national target. IBBL share in SME is 44 percent of its total investment.
NN: Why do people consider IBBL as pioneer of welfare banking in Bangladesh? Why do customers choose IBBL over other conventional Banks?
Mannan: Islami banking is much welfare. The principle of Islamic Shari'ah is to increase welfare and eradicate evil.  Islami bank is the promoter of welfare banking in this country. The bank is always trying to achieve the objectives of Shari'ah.  With a view to attaining "Makasid-al-Shariah" by emphasizing priority sector of the country, IBBL is diversifying its investment base, not confining its investment to limited number of people. This bank extends its investment portfolio in mitigating actual need of the people, not coup against the fulfillment of greeds of some people. For your kind information, from its inception to till date, IBBL never invested a single penny in tobacco industry and other like industries those are harmful for human health and also discouraged by our religion. So, you can easily understand why people choose IBBL over other conventional Banks.
NN: Remittance and RMG are the two pillars of Bangladesh economy. What role IBBL played in these sectors?
Mannan: Islami Bank is substantially contributing to national forex reserve through enhancing foreign remittance. During last 10 years, Islami Bank has mobilized foreign exchange worth US$ 33 billion. Remittance through banking channel earned national appreciation for IBBL which alone mobilizes 27% of total remittance.
Alongside, IBBL also has a vast contribution to Infrastructure and Industrialization of the country. As of 2015-16 fiscal year, more than 5000 industrial enterprises of the country are now run by IBBL finance. During last 15 years IBBL's investment was Tk. 1800 billion for industrialization. Of which, more than 1000 Garments factories and 25 percent Spinning Mills are run by Islami Bank finance. Country's 30 percent yarn is spun from these mills.
NN: What role IBBL is playing in poverty alleviation and rural development?
Mannan: To eradicate rural poverty, creating employment in the countryside, developing agriculture and agro-based enterprise, Islami Bank introduced RDS (Rural Development Scheme) in 1995. Enhancing rural life and livelihood and thus to bring qualitative change in rural life was the core objective of RDS. This unique rural initiative includes, in addition to generating rural job opportunities, some basic human development efforts like creating awareness, enhancement of skills and vocational aptitude, training, savings, various income generating activities, micro-investment and social security awareness etc. For the urban poor, Islami Bank is equally concerned.
NN: What are the achievement of IBBL in entrepreneurship development and women empowerment?
Mannan: Islami Bank is dedicated to entrepreneurship development and mass-scale employment generation through investing in trade and commerce and productive, labor-intensive the industrial sector. IBBL, in particular, is playing a pivotal role in contributing towards women's participation and empowerment. Up to June 2016, IBBL has disbursed Tk.12630 million in SME women Empowerment sector. Women entrepreneurs are given micro-investment up to Tk.5.0 million. More than 2.5 million unemployed persons have been added to the productive workforce of the country through the mills and factories financed by Islami Bank.
NN: Tell us something about the CSR activities of your Bank.
Mannan : Islami Bank is a socially responsible organization. It is basically a CSR-based initiative.  From the time of its foundation, Islami Bank is working for the poor, disadvantaged and helpless people through banking activities.  The 'Sadaka Fund' was formed in 1984 to that aim. Later 'Islami Bank Foundation' was formed to work with vivid intensity for the betterment of life and livelihood of the poor, miserable and deprived people.
Under its CSR activities, as an integral part of the Bank's essence of being, as many as 10.25 million people have been brought under various programs related to health, sports, disaster management and humanitarian purposes.
From the inception up to July 2016, the bank has spent Tk.4730.00 million on socially responsible sectors.
However, the IBBL MD in the eve of the interview also said, "We are not money based, we are backed by commodity. So scope of NPL (non-performing loan) in the bank is less than the international standard level."
According to him, as of last fiscal (2015-16), NPL of the bank was 4.6 percent which is under the international standard benchmark.

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