Social Investment Bank Limited an interest-free Shariah bank in Bangladesh incorporated as a banking company on 5 July 1995 under the companies act 1994. It commenced banking operations on 22 November 1995 with an authorised capital of Tk 1,000 million divided into 1 million ordinary shares of Tk 1,000 each. The initial paid up capital was Tk 118.36 million fully subscribed by its 38 sponsors including 3 Arab nationals. The paid up capital was enhanced several times and stood at Tk 260 million on 31 December 2000. The bank is listed with the Dhaka Stock Exchange. In 2000, total liabilities and shareholders equity of the bank stood at Tk 5,671.99 million.
The bank provides all types of commercial banking services and it conducts business on the Islamic principles of musharaka, murabaha, bai-muazzal and hire purchase transactions. The broad-spectrum operational aspects of the bank have been set out to encompass three sectors - formal, non-formal and voluntary - in a comprehensive programme. In the formal corporate sector, the bank offers banking services through deposit and investment accounts, trade financing, collection of bills, money transfers, lease of equipment and consumers' durable, hire purchase and installment sale of capital goods, investment in low-cost housing and real estate management, and financing projects in agriculture, transport, education and health sectors. In the non-formal non-corporate sector, it is involved in opening and introducing various savings and investment schemes for the unemployed poor and the educated. In the voluntary sector, it is involved in the development and management of waqf and mosque properties, management of inheritance properties, and joint venture projects relating to religious affairs and charitable activities.
Total deposits of the bank amounted to Tk 4,863.21 million in 2000 compared to Tk 124.73 million in 1995 and included currency and other deposits, bills payable, term deposits and savings deposits. On 31 December 2000, the loans and advances in various sectors stood at Tk 3,522.24 million as against Tk 0.22 million in 1995. On 31 December 2000, the classified investments (loans and investment) of the bank amounted to Tk 173.1 million (4.91% of the total). Foreign exchange business handled by the bank in 2000 accounted for Tk 4,250 million, which comprised export servicing, import financing and remittance facilities. That year the assets of the bank were valued at Tk 5,672 million and the off-balance-sheet-items Tk 1,060.04 million. The bank started having net profits since 1998 and the net profit after adjusting all provisions for taxation and classified loans amounted to Tk 38.1 million. The profitability of the bank is severely affected by the fact that it has to maintain a substantial amount of provision for its classified loans each year.
The management of the bank is vested in a 27-member board
of directors headed by a chairman. There is a 5-member Shariah Council
of the bank to ensure the compliance of Islamic rules in its activities.
The bank has also a 13-member honorary foreign members' international
advisory council to advice it on international business affairs, particularly
in Islamic countries. In December 2000, the bank had 13 branches and in
all, 310 employees including executives of different cadres.
[S M Mahfuzur Rahman]