|To provide Islamic banking services in accordance with the principles of Islamic Shariah, AB Bank established an Islamic Banking wing. The Bank’s Islamic Banking branch started functioning on December 23, 20014. The branch is known as AB Bank Islami Banking Branch, Kakrail, and is located at 82, Kakrail, Ramna, Dhaka. A competent Shariah Council consisting of Islamic scholars, Ulema, Fukaha and other Islamic bankers headed by Mr. M. Azizul Huq a prominent Islamic banker has also been formed to guide the Islamic banking affairs. A dedicated team of experienced Islamic bankers is working under the council’s active guidance. The Board of Directors as well as the Management of the bank are focused on promoting 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:
- Facilitate the Islamic banking system in the country
- Create new entrepreneurs and to arrange required finance for them
- Play effective role for socio economic development of the country
- 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 the above, Mudaraba Hajj Deposit Scheme and some other schemes are under process.
AB Bank Islamic 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 assets 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 transfers to the client as and when final payment of the account is made.
- Ijara or Leasing: This product is similar to HPSM (above). 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 products are 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 proceeds 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 scheme or project. Profit is shared between the Bank and 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:
AB Bank Islamic Banking has been continuously working on new initiatives, innovative services and products keeping in mind the actual needs of it’s valued clients and upholding the principles of Islamic Shariah.
- Opening of LCs
- Post -Import Finance
- Export bill purchase and negotiation
- Pre-shipment financing etc.