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Al-Arafah Islami Bank: Annual Report 2021

IM Insights
By IM Insights
2 years ago
Al-Arafah Islami Bank: Annual Report 2021

Hadith, Halal, Islam, Islamic banking, Mudaraba, Mufti, Murabaha, Salam, Shariah, Sukuk, Takaful, Waqf, Credit Risk, Investment Assets, Mannan, Net Assets, Participation, Provision, Receivables, Reserves, Sales, Specific Provision

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  1. 2021 Annual Report 2021 1
  2. 2 Annual Report 2021
  3. 2021 Annual Report 2021 3
  4. Allah has permitted trading and forbidden (Riba) usury. Surah 2 Al-Bakara-275 6 Annual Report 2021
  5. PAGE OF CONTENTS Qur ’anic Verses on Interest 04 Hadith on Interest 05 Opinion of other Religions and Great Men on Interest 06 Board of Directors 07 Executive Committee, Audit Committee, Shariah Supervisory Committee 08 Management Team 09 Vision, Mission and Commitments 12 Corporate Information 13 Notice of the 27th Annual General Meeting 15 5 Year Financial Highlights 17 Economic Impact Report 18 Value Added Statements 19 Chairman’s Address 23 Managing Director’s Address 27 Directors’ Report 39 Compliance on the Corporate Governance Code 66 Report of the Shariah Supervisory Committee 82 Implementation Status of Code of Integrity under National Integrity Strategy 84 Report of the Board Audit Committee 86 Activities of the Board Risk Management Committee in the year 2021 88 CEO and CFO’s Declaration to the Board 89 Dividend Distribution Policy 2021 90 Disclosure of Unpaid or Unclaimed Dividend 91 Auditors’ Report & Financial Statements for the year 2021 92 Disclosures on Risk Based Capital (Basel-III) 184 Auditors’ Report on the Financial Statements of AIBL Capital Market Services Limited 2021 200 Auditors’ Report on the Financial Statements of AIBL Capital Management Limited 2021 221 Branches of AIBL 236 Proxy Form 245 Annual Report 2021 7
  6. QURANIC VERSES ON INTEREST I am seeking refuge in Allah from Shaitan , the outcast (the cursed one). In the Name of Allah, the Most Gracious, the Most Merciful. “Those who consume interest cannot stand (on the Day of Resurrection) except as one stands who is being beaten by Shaitan into insanity.That is because they say, ‘Trade is just like interest’ whereas Allah has permitted Trading and has forbidden (Riba) Usury. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to (dealing in interest) those are the companions of the Fire; they will abide eternally therein”. (Surah 2 Al-Bakara : 275) “O you who believe! Be afraid of Allah and give up what remains (due to you) from (Riba) Usury, if you are (really) believers. If you do not do it, then take a notice of war from Allah and His Massenger (Rasul)”. (Surah 2 Al-Bakara : 278-279) 4 Annual Report 2021
  7. • “Jabir bin Abdullah (R) said that Rasul (Allah’s Messenger) (S) cursed the acceptor of (Riba) Usury and its payer, and the one who records it, and the witness; and he said They are all equal. (Sahih Muslim) • Abdullah Ibn Masud (R) has quoted a Hadith of Rasul (Allah’s Messenger) (S) as saying: Whenever adultery and usury become rampant in a community, it is inevitable that wrath of Allah will befall upon them. (Abu Yala) • Abu Huraira (R) has narrated that Rasul (Allah’s Messenger) (S) said: Allah as his unique right will not allow four categories of people to enter the heaven and also refrain them from taking taste of his bounties 1) Drunkard 2) Usury 3) Devourers of orphan’s wealth and 4) Disobedience of parents. (Mustadarake Hakim) • Abu Huraira (R) has narrated that Rasul (Allah’s Messenger) (S) said: you should protect yourself from 7(seven) destructive issues ‘what are those’? -asked his companions. He said those are 1) Join in worship others with Allah 2) Mesmerizing 3) Killing someone unlawfully 4) Usury 5) Devourers of orphan’s wealth 6) Flight from the battle field and 7) To charge against chaste women. (Sahih Al-Bukhari, Sahih Muslim and Sunan Abu Daud) • Samura Ibn Zundub (R) has narrated that Rasul (Allah’s Messenger) (S) said: I saw in a dream that two persons came to me and took me to a sacred place. Thereafter three of us proceeded to a river full to blood and saw that a man was swimming in the river and another was standing on the bank with huge rocks in front of him. When the swimmer approached the bank, the man standing on it hit the swimmer with the rocks so heavily that he receded to his original place. Whenever the swimmer tried to approach the bank of the river again, the standing person did the same as before. Rasul (Allah’s Messenger) (S) asked ‘who is this man in the river’ One of the angels said ‘He is a usurer’. (Sahih Al-Bukhari) HADITH ON INTEREST Annual Report 2021 5
  8. OPINION of other Religions and Great Men on Interest • Interest has been banned in the two books of Hazrat Musa (A.), which are considered as the scriptures of Jews. The 22nd line of Exodus goes as saying, ‘If you lend money to a poor man, don’t become money lenders and don’t realize interest from him.’ • Similarly in 23rd line of ancient scripture of the Jews entitled “Deuteronomy” states, ‘You don’t lend money to your brother for interest -i.e interest on money, interest on foodstuff and interest on anything lent.’ • Hebrewism is known as Musaic or Jewism. Musaic laws or commands of Musa are the basis of Hebrewism. Interest was totally prohibited in Musaic law. This rule was exclusively practiced by the Jews. In this ideology, there are clear directions on interest as other aspects of economics. In Hinduism, usury business was restricted within the ‘Baithayas’. • One Jew couldn’t take interest by lending money from another. But, taking interest was in practice by lending money to the people of other religions. • Some writers quoted from the book, ‘Talmud’ that the Hebrew prophets forbade interest not only from Jews but from all. (Eric Roll, A history of Economic Thought: Page 48) • Interest was prohibited from the beginning of the Christianity to the advent of the Reform Movement and from the Church under pope in Rome to the division of other Churches, Christ said, ‘Lend hopping for nothing again.’ (Luke VI 35, Hanley: History of Economic Thought 1964, Page 101) 6 Annual Report 2021
  9. BOARD OF DIRECTORS Chairman Alhajj Salim Rahman Vice Chairman Alhajj Abu Naser Md . Yeahea Member Alhajj Abdus Samad Alhajj Mohammad Abdus Salam Jb. Badiur Rahman Alhajj Mahbubul Alam Alhajj Nazmul Ahsan Khaled Alhajj Abdul Malek Mollah Hafez Alhajj Md. Enayet Ullah Alhajj Ahamedul Hoque Alhajj Niaz Ahmed Alhajj Mohammed Eamadur Rahman Alhajj Engr. Kh. Mesbahuddin Ahmed Alhajj Mohammed Haroon Alhajj Liakat Ali Chowdhury Alhajj Md. Anowar Hossain Alhajj Md. Harun-Ar-Rashid Khan (Nominee Director of China Builders & Machineries Ltd.) Alhajj Md. Rafiqul Islam Alhajj Md. Amir Uddin PPM Alhajj M. Kamaluddin Chowdhury Ex-Officio Director Managing Director & CEO Jb. Farman R. Chowdhury Company Secretary Jb. Md. Mahmudur Rahman Annual Report 2021 7
  10. BOARD OF DIRECTORS Executive Committee (EC) Risk Management Committee (RMC) Chairman Chairman Alhajj Abdus Samad Vice Chairman Alhajj Mohammad Abdus Salam Member Hafez Alhajj Md. Enayet Ullah Alhajj Ahamedul Hoque Alhajj Engr. Kh. Mesbah Uddin Ahmed Alhajj Liakat Ali Chowdhury Alhajj Md. Anowar Hossain Board Audit Committee (BAC) Jb. Badiur Rahman Member Alhajj Abdul Malek Mollah Alhajj Mohammed Haroon Alhajj Md. Rafiqul Islam Alhajj Md. Amir Uddin PPM Shariah Supervisory Committee Chairman Mufti Sayeed Ahmad Muzaddedi Member Chairman Alhajj Mahbubul Alam Member Alhajj Nazmul Ahsan Khaled Alhajj Mohammed Emadur Rahman Alhajj Md. Harun-Ar-Rashid Khan Alhajj M. Kamaluddin Chowdhury 8 Annual Report 2021 Mufti Muinul Islam Mufti Shahed Rahmani Mohammad Abul Hossain Al-Azhari Mawlana Mohammad Abdul Hai Nadvi Al-Hajj A.Z.M. Shamsul Alam Alhajj Salim Rahman Secretary Md. Abdur Rahim Khan
  11. Senior Management Team Managing Director & CEO Farman R. Chowdhury Senior Executive Vice President Kazi Mahmood Karim Md. Mujibul Quader Aktar Kamal Md. Monjurul Alam Mohammad Azam Engineer Md. Habib Ullah Md. Asaduzzaman Bhuiyan S. M. Kowsar Md. Idris Ali Md. Obaydul Islam Mohammed Hossain S. M. Abu Jafar Md. Aminul Islam Bhy. Md. Abdur Rahim Duary M. M. Saiful Islam Md. Mazharul Islam MANAGEMENT TEAM Deputy Managing Director S. M. Jaffar Shabbir Ahmed Md. Shafiqur Rahman Syed Masodul Bari Md. Mahmudur Rahman Muhammod Nadim FCA Abed Ahmed Khan Md. Abdullah Al-Mamun Executive Vice President M. Tariqul Islam Manir Ahmad Md. Manjur Hasan A. N. M. Mofidul Islam Md. Soheb Ahmed A. K. M. Amzad Hossain Md. Rajibul Islam Bhuiyan Md. Mostafizur Rahman Md. Nazim Uddin Senior Vice President Md. Sharif Uddin Pramanik Iqbal Hossain Ahmed Md. Golam Sarwar Md. Zakir Hossain Bhuiya M. A. S. Jalal Azad Md. Masudur Rahman Md. Sanaullah Md. Nizamul Hoque Chy. Md. Yahya Md. Showkat Islam Md. Sharif Chowdhury Kamal Hossain Md. Zakir Hossain Md. Abdur Rob Muazzem Hossain Mohammad Ullah Jalal Ahmed Director General & Principal (AIBTRI) Md. Abdul Awwal Sarker Md. Majiber Rahaman Monir Ahammad Md. Salamat Ullah Md. Abdul Mobin Md. Nazmul Huda Md. Lokmanur Rahman Md. Abdur Rahim Khan Md. Ferdous Hassan Md. Zahurul Hoque Mirza Mohidul Islam Mahbub Hasan Md. Shamsul Huda Babar Md. Rafiqul Islam Ashik Ahmed Siddikey Imroz Chowdhury Muhammed Alamgir Md. Aminul Islam Md. Jahangir Alam Md. Abu Musha Vice President Md. Abdur Rahim Sarder Md. Mizanur Rahman Md. Sultan Mahmud Md. Abul Kalam C. G. M. Asaduzzaman Md. Shah Jalal Sheikh Masudur Rahman Khalifa Ishtiaq Ahmed Md. Hablbullah Bahar (Susp.) Md. Mainul Islam Md. Asif Chowdhury Md. Hashim Uddin Ashraf Hossain Jashim Ahmed Chy Md. Azmal Hoque Md. Abdul Mannan Akhand S. M. Zabidul Haque Md. Jahangir Alam Md. Nahid Hossain Md. Kabir Ahamed Touhid Siddique Jahangir Alam Jalal Ahmad Md. Shamsul Kabir Md. Aminur Rahman Md. Shafi Mahmood Md. Ibrar Md. Ashraful Haque M. Shamsuddin Ahmed Md. Towhidul Islam Annual Report 2021 9
  12. A .F.M. Faisal Kabir Md. Shahid Hossain Md. Ataur Rahman Mohammad Abu Baker Siddique Senior Assistant Vice President Md. Zahid Hasan A. K. M. Fokhrul Islam Majumder Md. Nurul Karim Khandaker Nazmul Islam Md. Amjad Hossain Sharif Golam Kawsar Md. Shah Alam Motahar Uddin Ahmed Mohd. Salahuddin Mamun Md. Ashaduszzaman Md. Kamrul Islam Nur Mahbub Khan Md. Moklesur Rahman Khan Kazi Mohammad Sadik Md. Anowarul Alim Khan Md. Jamal Uddin Mahmud Abdul Malek Md. Abu Hanif Md. Reazul Hoque Mohammad Azizul Hoque Shahadat Ali Md. Mustafizur Rahman Md. Enayet Fakir A.M.M. Arif Billah Mithu MANAGEMENT TEAM 10 Annual Report 2021 Md. Golam Quddus Talukder Md. Mujibur Rahman Md. Momtazul Hoque Md. Golam Arfin Md. Zamshed Hossain Sarker Md. Mushfiqur Rahman Talukder Syed Ariful Bari Md. Shakhawat Ullah Md. Zahid Hossain Md. Monir Hossain Mirza Asma Ferdous Md. Mijanur Rahman Nashir Ahmed Md. Taslim Hossain Md. Humayun Kabir Mohammed Nizam Uddin Bhuiyan Md. Zakir Miah Md. Alauddin Md. Wares Uddin Mahmud K. M. Shahadat Husain Syed Ariful Islam Md. Asadur Rahman Khan Md. Abu Bakar Siddique Md. Kutub Uddin Mahbubul Amin Md. Ashiqur Rahman Syed Saleh Ahmed Md. Humayun Kabir Sardar Md. Zahurul Islam Patwary Md. Mahbubur Rahman Md. Ziaul Haque Malik Md. Syful Islam Md. Zahirul Haque A. K. M. Ariful Islam Md. Saiful Islam Asifur Rahman Md. Shahidul Islam Humayun Kabir Md. Maniruzzaman Md. Akber Hussain Md. Maynal Hossain Md. Iqbal Hossain Md. Abdur Rahman Bhy Mohammed Abul Kashem Md. Mohiuddin Khan Azad Md. Bashirul Islam Khondoker Monirul Hoque Mozammel Hoque Bhuiyan Md. Sohrab Hossain Assistant Vice President Md. Asaduzzaman Khan Md. Mahbubul Hoque Md. Rafiqul Islam Md. Mizanur Rahman Md. Kamruzzaman A.S.M. Gouch Uddin Siddiquee Md. Kamrul Islam Md. Delowar Hossain Md. Abul Hossain Md. Abdur Rahim Sarder Md. Yusuf Sharif Md. Abul Hossain Saju Mollah Khalilur Rahman Md. Ismail Hossain Gazi Abdur Rahman Aminy Md. Anowarul Quader Chy. Md Moinul Haque Md. Eleaus Md. Rafiqul Islam Mohammed Ishaque Md. Shamsul Areafin Md. Monirul Islam Bhuiyan Mostaque Ahmed Khandaker Saiful Islam A. K. M. Anwarul Haque Syed Zulfiquer Ali Mahbub Md. Masud Parves Md. Ali Farhad Munshi Sanaur Rahman Md. Bashir Uddin Md. Anisul Islam Mahmud Md. Imran Miah A. K. M. Tusher Shakhawat Hossain Syed Monirul Haque A. K. Md. Rezwan Mohiuddin Md. Mustahidul Bashar Md. Khairul Alom Md. Mizanur Rahman Bhuiyan A. K. M. Yunus Ali Kazi Md Elias Md. Abdul Mannan Md. Faruk Ahamed Khan Md. Raihan Uddin Md. Rafique Ullah Md. Zillur Rahim Md. Enamul Hoque Mohammad Elyas Mohd. Mahafujur Rohman Md. Shariful Alam Md. Golam Hossain Kazi Shafiqul Islam Md. Neyamat Ullah Md. Koysor Khan Md. Belal Uddin Md. Moniruzzaman Khan
  13. Md . Serajummuner Saif Mohd. Zulkar Naeen Md. Anisur Rahman Md. Nurul Karim Kh. Kamranur Rahman Shovon Md. Rabiul Alam Mollah Masum Billah Azadi A. K. M. Mijanur Rahman Himal Pasha Md. Mijanur Rahman Md. Moin Uddin Md. Mizanur Rahman Md. Murtaza Md. Rofiqul Islam Niaz Ahamad Rashed Asaduzzaman Bhuiyan Kazi Rokibul Anwar Yasmin Aziz Nilufer Yesmin Mohammad Oli Ullah Golam Mohiuddin Chy. Md. Zahangir Alam Md. Giasuddin Mridha Md. Abul Kalam Azad Md. Rabiul Basher Md. Abu Jafar Md. Ekramul Hoque Md. Abdul Basith Md. Faroque Miah Md. Abdus Shukur Mahmudur Rahman Chow. Mohammad Zakir Hossain Feroz Ahammed Md. Sanaul Haque Md. Shah Alam Md. Abul Hasan A. K. M. Tawhid Imtiaz Ahmed Md. Anwer Hossain Md. Anas Abdullah Md. Mizanur Rahman A. K. M. Mahbubul Alam Jalal Uddin Md. Abul Kalam Azad A. K. M. Arifur Rahman Ismail Hossain Md. Mahfujul Hoque Md. Nurul Huda Md. Ashraful Alam Md. Imteaz Hossain Md. Minhajul Islam Md. Istiaque Hasan Sk. Asadul Hoque Md. Javed Omar Md. Sakhawat Hossain Md. Amir Hossain Imtiazul Alam Md. Jahidur Rahman Khan Nayon Mohammad Ishaque Abu Zafar Md. Saleh Md. Shafiqul Islam Md. Abu Taher Muhammad Neyamat Ullah Md. Hasan Ali Md. Abdul Motin Patwary Mohammad Habibullah Md. Abdur rashed Syed Moazzem Hossain Md. Badir Uddin Md. Hannan Sheikh Md. Abdus Samad Md. Selim Reza Md. Fackrul Alam Bhuiyan K. M. Morshedur Rahman Md. Shariful Islam Sikder Ferdous Qurashi Salahuddin Ahmed Syed Tanveer Ahmed Md. Ashaduzzaman Md. Shakhawat Hossain Thakur Md. Kamrul Ahsan Jalal Uddin Ahmed Md. Mamunur Rahman Shariful Islam Md. Mazharul Alom Md. Amdadul haque Gazi Md. Iqbal Mahbubur Rahman Golam Kiubria D. M. Jahangir Rabbani Sarder Md. Saklain Ruhul Amin Md. Suleman Mdi Arifur Rahman Rubayet Ullah Md. Shazedul Islam Md. Rabiul Islam Muntasir Mahmud Chowdhury Md. Pearu Ashaduzzaman babu M.M. Rafikul Islam Abdullah-Al-Fahim MANAGEMENT TEAM Annual Report 2021 11
  14. Vision • To be a pioneer in Islamic Banking in Bangladesh and contribute significantly to the growth of the national economy. Mission • Achieving the satisfaction of Almighty Allah both here and hereafter. • Proliferation of Shariah Based Banking Practices. • Rendering quality financial services by leveraging latest technology. • Fast and efficient customer service. • Maintaining high standard of business ethics. • Balanced growth. • Steady and competitive return on shareholders’ equity. • Innovative banking at a competitive price. • Attract and retain quality human resources. • Extending competitive compensation packages to the employees. • Firm commitment to the growth of national economy. • Involving more in Micro and SME financing. 12 Annual Report 2021 Commitments • Ours is a customer focused modern Islamic Banking with sound and steady growth in both deposit mobilization and making quality Investment to keep our position intact as a leading Islami Bank in Bangladesh. • To deliver financial services with the touch of our heart to retail, small and medium scale enterprises, as well as corporate clients through our branches across the country. • To always align our business initiatives with the ever changing industrial and business needs of the clients. • To deliver product and services that creates value for the customers. • To conduct our business within well defined risk tolerance level.
  15. Chairman , Directors and Managing Director & CEO of AIBL are seen as they participated in the 26th Annual General Meeting CORPORATE INFORMATION Date of Registration 18 June, 1995 1st Branch Motijheel Branch, Dhaka Opening Ceremony 27 September, 1995 Authorized Capital 15,000.00 Million Paid-up Capital 10,649.02 Million Local Partnership of Capital 100% Equity 25,900.33 Million Number of Branches 201 Deposit 353,287.97 Million Investment 336,890.72 Million Number of Employees 4,247 Number of Shareholders 19,146 Annual Report 2021 13
  16. As part of its Corporate Social Responsibility (CSR), the Bank donated 75 thousand Blankets to Hon’ble Prime Minister's Relief Fund CORPORATE INFORMATION Auditors HUSSAIN FARHAD & CO. Chartered Accountants House# 15, Road # 12, Block # F Niketon, Gulshan-1 Dhaka- 1212 Shafiq Basak & CO. Chartered Accountants Shatabdi Centre (4th & 6th Floor) 292, Inner Circular Road Fakirapool, Motijheel Dhaka- 1000 Company Secretary Md. Mahmudur Rahman Registered Office Al-Arafah Tower, 63, Purana Paltan, Dhaka-1000. Tel : +88-02-44850005 PABX : 44850005-20 SWIFT : ALARBDDH E-mail : info@aibl.com.bd Website : www.aibl.com.bd 14 Annual Report 2021
  17. NOTICE OF THE 27th ANNUAL GENERAL MEETING (AGM) Notice is hereby given that the 27th Annual General Meeting (AGM) of the Shareholders of Al-Arafah Islami Bank Limited will be held on Thursday, August 11, 2022 at 11.30 a.m. virtually by using digital platform through the link https://aibl.bdvirtualagm.com (in pursuance with Bangladesh Securities and Exchange Commission’s Circular No. SEC/SRMIC/94-231/91 dated 31 March, 2021) to transact the following businesses and to adopt necessary resolutions : AGENDA Ordinary: 1. To receive, consider and adopt the Audited Financial Statements of the Company for the year ended December 31, 2021 along with the Reports of the Directors and the Auditors thereon. 2. To approve Dividend for the year ended December 31, 2021 as recommended by the Board of Directors 3. To appoint External Auditors of the Company for the term until the conclusion of the next Annual General Meeting and to fix their remuneration. 4. To appoint Certification Auditor of the Company as per Corporate Governance Code-2018 for the year 2022 and to fix their remuneration. 5. To re-elect of Directors under rotation. 6. To appoint Mr. Nasir Uddin as Nominee Director of China Builders and Machineries. 7. To appoint Mr. Anwar Hossain as Director of AIBL 8. Miscellaneous All Hon'ble Shareholders of the company are requested to make it convenient to join the meeting in time through the link https://aibl.bdvirtualagm.com By order of the Board Date: Dhaka June 06, 2022 (Md. Mahmudur Rahman) DMD & Company Secretary Phone: 44850027 NOTES: (1) Shareholders whose names appear in the Register of members as at the close of business on the ''Record Date'' i.e. June 8, 2022 will be eligible to join the Annual General Meeting (AGM) and entitled to the dividend, as approved. (2) A member will be eligible to join and vote at this virtual AGM may appoint a proxy to attend and vote on his/her behalf. Proxy Form duly stamped must be submitted at the Registered Office of the Company not later than 48 hours before the time of holding the meeting; (3) Pursuant to the Bangladesh Securities and Exchange Commission (BSEC) Notification No. BSEC/CMRRCD/2006-158/208/Admin/81 dated 20 June 2018. Link of the downloadable PDF copy of the Annual Report 2021 along with Notice, Proxy Form and Attendance will also be available in the company’s web-site (www.aibl.com.bd) amongst others are to be send to respective Member’s email address available in beneficiary owner (BO)account with the Depositary Participant (DP). (4) Concerned Depository Participants (DP) / Stock Brokers are requested to provide us with a list of their margin loan holders who hold AIBL shares, as on record date with the details of Shareholders’ name, BO ID, shareholding position, cash dividend receivable, tax rate etc. within July 31, 2022, along with the name of the contact person to the Share Department of the Company or at share@aibl.com.bd, otherwise dividends will be paid to bank accounts of the members whose name would appear on the ‘Record Date’. The DP / Stock Brokers are requested to provide us with their Bank Account name & number, routing number etc. to mentioned email address for receiving the dividends of their margin loan holders. (5) The shareholders will join the virtual AGM through the link https://aibl.bdvirtualagm.com The shareholders will be able to submit their questions/comments electronically before 30 (thirty) hours of commencement of the AGM through this link and also during the Annual General Meeting. In order to login for the virtual AGM, the shareholders need to put their 16-digit Beneficial Owner (BO) Number or Folio and other credentials as a proof of their identity. (6) The Board has appointed Jasmin & Associates, Chartered Secretaries as Independent Scrutinizer as per BSEC Order No-BSEC/CMRRCD/2009-193/30 dated 17th November, 2021 to ensuring voting rights of the Shareholders. (7) We would like to request to our Hon’ble Shareholders to update their BO Accounts with mailing address, contact number, Bank details, e-mail address and E-Tin numbers (12 digits) with their respective DPs (Depository Participants) before Record Date (8) Shareholders are requested to login to the system prior to starting of the meeting at 11.30 am on 11 August 2022, Thursday. On-line (real time) or e-voting option shall be opened at least 30 (thirty) hours but not exceeding 72 (seventy two) hours prior to start of general meeting and shall remain open up to the closure of general meeting. Any IT related guidance and help with the login process the respected members may contact at +8802 4485005-20, (Ext-212-215) visit www.aibl.com.bd website. (9) No gift or benefit in cash or kind shall be paid/offered to the Shareholders in the 27th AGM as per BSEC Circular No. SEC/CMRRCD/2006-193/154 dated 24.10.2013 Annual Report 2021 15
  18. Click the linkLogin Interface 27 fo mJKwtT xJiJre xnJ 63 /1, kMrJjJ kfij, dJTJÇ 3 ßxP¡’r 2021 27th AGM will be held on 11th August 2022 (Thursday) at 11.30 A.M. Login process activation on 10th August 2022 (Wednesday) at 10.30 A.M. To receive, consider and adopt the Audited Financial Statements of the Company for the year ended December 31, 2021 along with the Reports of the Directors and the Auditors thereon. To receive, consider and adopt the Audited Financial Statements of the Company for the year ended December 31, 2021 along with the Reports of the Directors and the Auditors thereon. Shareholders can do: Shareholders can submit Questions or Comments. Type your Question or Comments (English or Bangla) then click Submit Button. 16 Annual Report 2021 To receive, consider and adopt the Audited Financial Statements of the Company for the year ended December 31, 2021 along with the Reports of the Directors and the Auditors thereon.
  19. 5 YEAR FINANCIAL HIGHLIGHTS Figure in Million Particulars 2017 2018 2019 2020 2021 Income Statement Investment Income Profit paid on Deposit 20 ,491.03 11,784.20 24,956.81 16,256.61 28,811.65 18,604.42 26,331.28 16,556.64 23,446.01 13,072.79 Net Investment Income 8,706.83 8,700.20 10,207.23 9,774.64 10,373.22 6.12 3,557.36 5,308.42 3,769.39 6,160.70 4,037.57 6,384.18 3,655.46 6,742.33 4,250.17 7,129.25 16.27 5.74 (1,751.06) 6,955.77 (2,391.31) 6,308.89 (2,346.61) 7,860.62 (3,086.87) 6,687.77 (2,879.08) 7,494.14 (8.85) 12.06 40.66 Non Investment Income Non Investment Expenses Net Non Investment Income Profit Before Tax & Provision Provision For Investment Profit Before Tax Provision For Tax (including Deferred Tax) Profit After Tax Balance Sheet Authorized Capital Paid up Capital Reserve Funds & Other Reserves Shareholders' Equity (Capital & Reserve) Deposits Investment Investment in Shares & Securities Fixed Assets Total Assets (Excluding off-balance sheet items) Foreign Exchange Business Import Business Export Business Guarantee Business Inward Foreign Remittance Capital Measures Core Capital (Tier-l) Supplementary Capital (Tier-ll) Tier-l Capital Ratio Tier-ll Capital Ratio Total Capital Total Capital Ratio Investment Quality Volume of Non-Performing investment % of NPIs to Total Investment Provision for Unclassified Investment Provision for Classified Investment Provision for Off Balance sheet Exposures Share Information Number of Shares Outstanding Earning per Share (Taka) Book Value per Share (Taka) Market Price per Share (Taka) Price Earning Ratio (Times) Price Equity Ratio (Times) Dividend per Share Cash Dividend (%) Bonus Share Operating Performance Ratio Net Profit Margin% Investment /Deposit Ratio Return on Equity (ROE)% Return on Assets (ROA)% Cost of fund % Cost /Income ratio in operating business (%) Other Information Number of Branches Number of Employees Number of Shareholders Growth% (10.96) (21.04) 1,354.89 2,177.98 2,867.66 1,887.90 2,655.58 5,600.88 4,130.91 4,992.96 4,799.87 4,838.56 0.81 2,431.38 1,674.11 2,565.33 2,228.06 2,712.12 21.73 3,169.50 2,456.80 2,427.63 2,571.81 2,126.44 (17.32) 15,000.00 9,943.06 8,556.96 22,520.68 244,806.26 235,905.23 10,145.49 3,260.38 319,255.29 15,000.00 10,440.22 9,365.62 23,483.22 266,205.48 261,874.13 12,214.67 4,494.61 338,465.30 15,000.00 10,649.02 10,318.64 24,148.24 297,241.81 288,486.02 16,170.52 4,351.93 381,051.81 15,000.00 10,649.02 11,418.96 25,455.85 326,023.41 308,620.66 21,563.67 5,833.88 418,298.65 15,000.00 10,649.02 11,733.35 25,900.33 353,287.97 336,890.72 30,156.14 5,470.27 462,687.05 2.75 1.75 8.36 9.16 39.85 (6.23) 10.61 156,700.00 104,540.00 6,443.41 20,700.00 168,573.80 114,481.90 7,096.02 36,917.20 171,611.70 108,967.10 8,274.25 37,713.40 169,378.90 104,939.40 10,511.21 43,807.00 261,566.10 135,786.90 13,673.41 52,662.10 54.43 29.40 30.08 20.21 21,459.85 5,488.97 10.40 2.66 26,948.82 13.06 22,379.93 10,078.56 10.12 4.56 32,458.49 14.68 22,817.41 9,735.77 10.22 4.36 32,553.18 14.58 23,930.89 15,327.20 9.59 6.14 39,258.09 15.74 29,301.30 14,359.58 10.37 5.08 43660.88 15.46 22.44 (6.31) 0.78 (1.06) 11.21 (0.28) 9,921.51 4.10 1,723.04 3,096.15 570.42 12,690.72 4.79 1,891.00 3,946.09 689.80 14,100.41 4.82 2,157.28 6,022.02 778.50 11,769.58 3.80 2,787.10 6,436.96 935.50 16,566.84 4.81 3,084.10 8,173.23 1,093.40 40.76 26.58 10.66 23.01 16.88 994,306,428 3.15 20.88 24.10 7.64 1.15 1,044,021,750 2.35 20.80 19.90 8.48 0.96 1,064,902,185 2.28 21.13 17.20 7.56 0.81 1,064,902,185 2.41 22.35 22.20 9.22 0.99 1,064,902,185 1.96 22.73 26.60 13.57 1.17 (0.45) 0.38 4.40 4.35 0.18 15.00 5.00 15.00 2.00 13.00 - 15.00 - 15.00 - - 3.87 89.95 14.07 0.99 7.50 43.28 3.42 89.87 10.46 0.73 8.70 49.41 3.73 88.93 10.05 0.64 9.02 44.82 3.45 86.92 10.10 0.61 7.50 50.20 3.26 87.57 8.21 0.46 6.00 48.75 (0.19) 0.65 (1.89) (0.16) (1.50) (1.45) 154 3,446 30,386 168 3,682 25,793 182 3,795 24,276 184 3,866 22,142 201 4,247 19,146 9.24 9.86 (13.53) Annual Report 2021 17
  20. ECONOMIC IMPACT REPORT The effect that an event , policy change or market trend will have on economic factors, for example profit rate, consumer satisfaction and confidence, stock market activity or unemployment. Events such as regulatory changes supply shortage or national disasters can have a significant economic impact due to the way that they affect business activity. By analyzing the economic impact, we can understand how a bank adds value to the society. Economic impacts can be broadly categorized as: i) Direct Impact ii) Indirect Impact Direct Impact Direct impacts are the immediate economic effects resulting from the banks financial transactions. Bank’s direct contribution to the economy resulted in the creation of employment opportunities, payment of tax to the government and maximization of shareholders wealth. Indirect Impact Indirect impacts are the spill over economic effects that occur through Bank’s normal course of operations. Banks generate indirect impact by addressing the deficiency of capital in the economy by mobilizing deposit and channelizing the same to prospective investors. Through catering financial services, the Bank helped distributing the wealth among all the stakeholders for example shareholders received dividend, depositors and investors got profit, employees received compensation and other benefits, the under privileged reaped benefits out of CSR while the government earned tax revenue. In 2021, total value added by AIBL was BDT 10,258.24 million as against BDT 10,073.85 million in 2020. Bank’s direct contribution to the economy was BDT 2,712.12 million in the form of corporate income tax. The Bank distributed BDT 4,777.33 million for its total 4,247 officials in 2021 as against that of BDT 4,565.75 million for 3,866 in 2020. At the end of 2021, the Bank mobilized total deposits of BDT 353,287.97 million and aided the economy in meeting its growth target by deploying BDT 410,000.00 million as investment to different sectors of the economy. Apart from these, the Bank performed significant import and export business and other auxiliary businesses as well. 18 Annual Report 2021
  21. VALUE ADDED STATEMENT Value added is a measure of wealth created by the Bank through various business activities . The statement of value added shows the total wealth created and how it was distributed among stakeholders, including the Government, employees and shareholders. (BDT in Million) Particulars 2021 Income from Banking Service 2020 27,696.18 29,986.74 (14,782.36) (18,024.99) Value added by Banking Services 12,913.12 11,961.75 Provision for Investment & Off balance Sheet Items (2,655.58) (1,887.90) Total Value Addition 10,258.24 10,073.85 4,777.33 4,565.75 314.39 954.64 2,712.12 2,228.06 765.81 740.31 1,688.59 1,585.09 10,258.24 10,073.85 Cost of Services & Supplies Value Distributed To Employees To Statutory Reserve To Government as Income Tax Depreciation Retained Earnings Total Value Distributed Distribution of Value of Addition To Employees 7% 16% To Statutory Reserve 47% 26% 3% To Government as Income Tax Depreciation Retained Earnings Annual Report 2021 19
  22. ECONOMIC VALUE-ADDED STATEMENT Economic Value Added (EVA) indicates the true economic profit of the company. EVA is an estimate of the amount by which earnings exceed or fall short of the required minimum return for shareholders at comparable risk. EVA of the Bank stood at BDT 3,184.67 million as on 31 December 2021 as against that of BDT 2,862.36 million in 2020. (BDT in million) Particulars 2021 2020 Shareholders’ Equity 25,900.33 25,455.85 Total Income 27,696.18 29,986.74 Total Expenses 20,202.04 23,298.97 Corporate Tax 2,712.12 2,228.06 Capital charge 1,597.35 1,597.35 Economic Value Addition 3,184.67 2,862.36 2,712.12 1,597.35 Total Income 20,202.04 27,696.18 Total Expenses Corporate Tax Capital Charge * Capital Charge = Paid up Capital x Percentage of Dividend 20 Annual Report 2021
  23. Governor of Bangladesh Bank Fazle Kabir , Chief Guest of AIBL Scholarship Program 2019 along with the Board of Directors of AIBL, in a photo-session with 200 meritorious students, who availed the grant MARKET VALUE ADDED STATEMENT Market Value Added (MVA) is the difference between the equity market value of the company and the book value of equity invested in that company. Market Value Added Statement indicates how much wealth has been created for the capital providers in a particular period of time. A high market value addition indicates that the company has created substantial wealth for the equity holders. Market ValuParticulars Market Value of Total Equity Book Value of Total Equity Market Value Addition 2021 32,575.36 25,900.33 6,675.03 (BDT in million) 2020 27,186.95 25,455.85 1,731.10 Annual Report 2021 21
  24. Another significant milestone was achieved when AIBL opened its 200th branch at Jamalkhan , Chattogram on Monday, 20 December 2021. Chairman, Board of Directors along with other Members of the Board was present at the ceremony MARKET VALUE ADDITION (BDT in million) 32,575.36 27,186.95 Market value to Total Equity 2021 25,900.33 25,455.85 Book value to Total Equity 2020 Total number of share outstanding: 1,064,902,185 (1,064,902,185)* Market value per share: BDT 26.60 (22.20)* * Previous Year’s figures in brackets. 22 Annual Report 2021
  25. CHAIRMAN ’S ADDRESS Bismillahir Rahmanir Rahim All praises be to the Allah (SWT), Lord of the Universe and Peace and Blessings of Allah (SWT) be upon the Prophet Mohammad (SM) and his descendants and companions. Dear Shareholders, Assalamu Alaikum Wa Rahmatullahi Wa Barakatuh. AIBL closed the year 2021 relatively strongly, with a clear focus on our customers, shareholders and the future. Through important and ongoing investments in technology and with the introduction of new capabilities, we further strengthened the Bank’s ability to serve customers’ changing needs. We continued to support process of economic recovery and promote a more sustainable and inclusive future. As such we have been nominated as one of top 10 sustainable banks of the country. We have been able to successfully deliver a consistent dividend to shareholders and further strengthen our financial and capital positions. During 2021 the global economy demonstrated a strong recovery from the COVID-19 shocks, but the recovery process was very unequal among countries. It reflected sharp rebounds in some major and emerging economies owing to substantial fiscal support and substantial to reasonable access to vaccines. Economic recoveries diverged across countries and sectors, mainly because of the variation in nature of the pandemicinduced disruptions and extent of policy support. While advanced economies were rebounded, many of the world’s poorest countries were left behind. Additionally, a more contagious strains of coronavirus which had recently spread in different countries, particularly the emerging economies and developing economies, had further hindered the recovery process. However, all in all, the global outlook remains subjected to high uncertainty. Future developments will depend on the path of the pandemic, policy actions, the evolution of financial conditions and commodity prices, and the capacity of the economies to adjust with the health-related impediments. These drivers and their interaction with country-specific characteristics will determine the pace of the recovery in the days to come. We are certain that the crisis will be over soon. But the scars are likely to prevail for many years. We are experiencing changes in customer behavior, technology expectation as well as the working culture. Therefore, with the need of time we need to be ever ready to adopt changes, newer technologies and restructure our old system and practices for our own sustainability. Annual Report 2021 23
  26. Like last year , in 2022 also we are keeping a vigilant eye on the international arena, particularly the Russia-Ukraine war. We are also keeping a close eye on our major allies like India, China and the USA. China being the factory of the world is the biggest supplier and the major development and strategic partner of Bangladesh. USA on the other hand is our largest export market while India is biggest trading partner in the region. Amiable relationship with all these countries will not only ensure a smooth trading route for us but also will establish a balance of power in the region. been able to maintain its risk-free liquidity and but also been able to maximize its earnings from the deployed fund. Bangladesh on the other hand has demonstrated strong economic fundamentals with a consistent GDP growth rate of above 6% over the last few years. Over the decade, this growth in GDP was supported by expanding domestic market and a significant growth in per capita income. In addition to the domestic demand, low-cost labor with growing skills provided Bangladesh with a potentially competitive advantages to attract labor-intensive industries and serve as a hub to cater the export demands. But this consistent trend was unfortunately heavily marred by the outbreak of covid 19. Bangladesh’s growth was substantially slowed down 3.51% in 2019-20. But showing much resilience Bangladesh’s economy is gradually turning around in the context of tackling various shocks inflicted by the corona virus. Overdue investments stood at Tk. 3993.40 million as on 31st December 2021 as against Tk. 5,959.36 million as of December, 31 last year. Total overdue decreased by Tk. 1,965.96 million during the year 2021 bringing the same to 1.16% of our total investment as against 1.92% in the previous year. Corporate Branch Managers, Zonal Heads and other Branch Managers are advised to take all precautionary measures so that the overdue investments are not inflated and income leakage remains under control. The banking sector as a whole is still heavily burdened with the legacy defaulted loans and investments. Pandemic has further worsened the impact. To keep the situation under control various liberal policy measures including disbursement of stimulus fund were introduced. These steps, no doubt, have arrested the further increase of NPLs but the real threat of toxic assets still remains. Given all the odds I would still say AIBL has performed reasonably well during the year 2021. Overall Performance By the grace of Almighty Allah (SWT) Al-Arafah Islami Bank has overcome the challenges of 2021 and made satisfactory profit and growth in most of the areas of business. The Bank took a strategy of quality growth of its assets by adhering to compliance in all spheres of operation particularly in respect of Shariah and regulatory laws and guidelines. As a continued policy, the Bank remained focused in all the key areas covering capital adequacy, good asset quality, sound management, good earnings and strong liquidity. The Bank’s operating profit stood at Tk. 7,494.14 million during the year. The return on equity recorded at 8.21% while earnings per share (EPS) stood at Tk. 1.96. Total assets of the Bank rose to Tk. 462,687.05 million during the year showing a growth of 10.61% over the previous year. Deposit of the Bank stood at Tk. 353,287.97 million registering an increase by Tk. 27,264.56 million during 2021 with a growth rate of 8.36%. Our Bank has always maintained investment-Deposit Ratio (IDR) at required level throughout the year. As a result, the bank has not only 24 Annual Report 2021 All along we have tried our best to make quality investments. In the process due attention was also given to portfolio diversification which helped us in mitigating various inherent and potential risks associated with the investments. Despite many other industries bottlenecks our investment portfolio has registered a healthy growth of 9.16% during the year. Rescheduled investments decreased by Tk. 985.60 million from Tk. 21,959.90 million to Tk. 20,974.30 million (Term investments by Tk. 11,875.90 million plus Continuous and Demand investments by Tk. 9,098.40 million) which was 6.09% of total Investment. Recovery against rescheduled investment during the year 2020 was Tk. 1,051.20 million. Classified investments increased by Tk. 6,818.41 million in 2021 from Tk. 11,769.58 million to Tk. 18,587.99 million representing 4.81% of total investment as against 3.80% in the previous year. During the year 2021, recovery& regularization against classified investment stood at Tk. 991.75 million while recovery against written off investments stood at Tk. 71.84 million recording a total recovery of Tk. 2,114.79 million which includes a recovery Tk. 1,051.20 million from the rescheduled investments. SME & Retail Banking Our Bank is now focusing on investment to SME and Retail sector in line with the policies and guidelines of Bangladesh Bank. During the year we have achieved above 100.89% of our set target in this area by providing investment to major three categories of enterprises viz. Industry, Trade and Services. Off-Shore Banking Unit (OBU) Al-Arafah Islami Bank Limited (AIBL) obtained the Off-shore Banking Unit (“the Unit”) License from Bangladesh Bank on 17 February, 2014 and commenced its operation from 22 May, 2014. Located at AIBL Motijheel Branch, 161, Motijheel Commercial Area Dhaka 1000, OBU is working as an independent unit. The principal activities of OBU include Mudaraba Investment under UPAS (Usance Payment at Sight) against Usance/Deferred L/Cs opened by an AD branch with the condition that payment will be made at sight by OBU of AIBL against acceptance of LC opening AD branches and Musharaka Documentary Bills in Foreign Currency (MOB F.C) against Accepted Local Export Bills
  27. to the eligible Deemed Exporters of our AD and Non-AD branches . Besides, OBU may also accept FC deposits from eligible customers. As per Bangladesh Bank guidelines the Books of Accounts of OBU is being maintained in foreign currencies of which the base currency is USD. Risk Mitigation Risk-taking is an inherent element of the banking business and indeed profit is the reward for successful risk taking i.e. mitigating the risk to a tolerable limit. Considering the above, Bangladesh Bank has issued necessary guidelines to all the scheduled banks and in line with that guideline we have taken necessary steps and measures including establishment of a separate division with skilled manpower. Subsidiary Companies As part of diversification of our business, we have established the following subsidiary companies, in addition to our normal banking business: AIBL Capital Market Services Limited AIBL Capital Market Services Limited was incorporated as subsidiary company of Al-Arafah Islami Bank Limited with an authorized capital of Tk. 10 billion and paid-up capital of Tk. 4 billion of which AIBL’s holding is 60.50%. The main objectives of the company are to carry out the business of Stock Broker and Dealer in the Capital Market. During the year 2021 the company earned Operating Profit of Tk. 140.74 million (before provision for investment and taxation) with Earnings per Share (EPS) of Tk.0.245. hard work of our AIBL colleagues, who deliver legendary experiences every day with dedication and care. We extend our appreciation to our shareholders for their ongoing support and thank our customers for the opportunity to serve them. We also acknowledge the supportive roles of our regulators – Bangladesh Bank, the Board of Directors and the Shariah Supervisory Committee. We will continue to work every day to maintain your support and trust. May Allah SWT bestow all HIS boundless blessings upon all of us. Ma-assalam Sincerely, Alhajj Salim Rahman Chairman Date: 11 August 2022 AIBL Capital Management Limited AIBL Capital Management Limited, a subsidiary company of Al- Arafah Islami Bank Limited, was incorporated with an authorized capital of Tk. 2 billion and paid-up capital of Tk. 500 million. The main objectives of the company are to carry out the business of Merchant Banking in all its aspects including Issue Management (IPO, Right Share Issue, and Bond Issue etc.), Portfolio Management, Underwriting, Corporate Advisory Services, Pre-IPO Placement, Investment Analysis and Research etc. During the year 2021 the company earned Operating Profit of Tk. 7.51 million (before provision for investment and taxation) with Earnings per Share (EPS) of Tk.0.099. AIBL Asset Management Co. Ltd AIBL Asset Management Co. Ltd. is another subsidiary company of AIBL with an Authorized Capital of Tk. 500 million and Paid up Capital of Tk. 100 million. Its main objective is to carry out the business of Asset Management, Portfolio Management, Capital Market Operation and other financial services. AIBL is holding 90% share in the company. The company is expected to start its operation soon. Conclusion As we close another year of change and progress, the Board of Directors thank our Managing Director and CEO for his steady hand at the helm, and the Senior Executive Team for their steady leadership throughout 2021. Most importantly, we want to recognize the determination and Annual Report 2021 25
  28. 26 Annual Report 2021
  29. MANAGING DIRECTOR ’S ADDRESS Bismillahir Rahmanir Rahim. To begin with, I must express my deepest gratitude to Allah (SWT) for keeping us secured and alive during this pandemic. With all HIS Blessings AIBL has been successfully able to sail through the COVID infected year of 2021 and at the same time greatly thankful to HIM for enabling us to do so. We also pray for all the souls who could not survive the onslaught of COVID 19 and left us for good. Dear Respected Shareholders Assalamu Alaikum Wa Rahmatullahi Wa Barakatuhu As we close 2021, the second year of major disruption in business inflicted by Covid-19, AIBL remains strong and well-positioned for the future. I sincerely thank Allah SWT for empowering us to face the adversities with due focus and courage. We relentlessly worked with excellence to advance our strategies and support the millions of families and businesses who have placed their trusts in us. Given the disruptive conditions I think the performance of AIBL is commendable. My colleagues have not only delivered for all stakeholders amongst all odds during this prolonged period of uncertainty but also been successfully able to identify new opportunities to drive sustainable and inclusive growth and contributed significantly to the economic recovery. As far as Bangladesh is concerned, I would say that the year of 2021 was a mixed blessing for our economy. It was in this year, the 50th anniversary of our independence, we received the good news from the UN about the approval of our graduation from LDC to Developing Country (DC). But this landmark achievement of elevation to developing country status will not come without its challenges as Bangladesh is likely to lose some of her advantages and concessions, she had previously been enjoying on the world stage. Not only that, Bangladesh faced a staggering blow caused by Covid 19 which dragged our GDP growth to its lowest level in three decades. In 2021, the surge of the delta variant saw an even more severe second wave of infections and deaths in the country. Despite being hit by multiple waves of the COVID-19 pandemic, quick and decisive actions like lockdowns by the authorities, supported by the external environment, the transmission chain was broken which led to a much Annual Report 2021 27
  30. quicker rebound to normalcy than Bangladesh ’s regional peers. The decision was a tough one, hitting manufacturing, exports and imports, and all other sectors and sub-sectors of the economy. But the measures seem to have paid off. Not only have cases and deaths dwindled over time, but the economy also seems to have rebounded, with positive indicators from the import-export sector, consumption, investment and infrastructure. This is clearly supported by the bodies like IMF, ADB and World Bank as they have projected us to grow by almost 7% both in 20-21 and 21-22 fiscal year. During the pandemic, we extended number of additional investments, payment deferrals and helped deliver government’s stimulus programs. The pandemic has also reinforced the need to accelerate efforts to create a more inclusive world and workforce. As a result, we have launched a new strategic department called ARDP which aims at enabling the unbanked, underbanked, remote and indigenous communities to access finance. We have focused on strengthening Anti Money Laundering Monitoring activities. We are in the process of introducing online learning platform for our employees. With the demand of time, we are continuously adopting to newer and newer technology as well to add value for our customers. Now let me give a picture in details how our bank has performed during the year 2021. Overall Banking Scenario Banks’ Deposits: Total Deposit (excluding interbank items) of the scheduled banks increased by Tk. 11,88,706 million representing 9.21% point to point growth from Tk. 14,093,430 million as on 31 December 2021 to Tk.1,29,04,724 million as on 31 December 2020. Islamic Banks’ Deposits: All Islamic Banks’ deposits stood at TK. 3,931,110 million during the year 2021 as against Tk. 3,269,222.40 million in the previous year 2020 and it increased by Tk. 6,61,887.60 million registering a growth of 20.24% in 2021. The share of Islamic Banks’ deposits as of 31 December 2021 stood at 27.89% as compared to at 25.33% on 31 December 2020. Banks’ Advances /Investment: Total Advances/ Investments (excluding bills) of the scheduled banks increased by Tk. 1,226,537 million representing 10.71% point to point growth from Tk. 11,449,073 million as on 31 December 2020 to Tk. 12,675,610 million as on 31 December 2021. Islamic Banks’ Investments: All Islamic Banks’ Investments stood at TK 3,534,480 million during the year 2021 as against Tk. 2,940,936.38 million in the previous year 2020 and the Investment increased by Tk 5,93,543.62 million registering a growth of 20.18% in 2021. The share of Islamic Banks’ Investments as of 31 December 2021 stood at 27.88% as compared to 25.69% on 31 December 2020. Operating Profit: Despite a tough start of the year 2021 Banks in Bangladesh managed to earn a reasonable amount of operating profit for the year. But The growth of profit was slim owing to low credit/investment demand, cautious lending/investment policy, lowering lending/ investment profit rates and the sluggish business environment. In terms of operating profit earned, Islami Bank Bangladesh Limited (IBBL) is the highest and thus topping the list of Banks. Al-Arafah Islami Bank Limited (AIBL) ended up being on 10th position in 2021. However in an apple to apple comparison (i.e. Islami to islami) AIBL is only second to IBBL, the oldest and biggest Islami Bank in Bangladesh. 28 Annual Report 2021 Deposits and Borrowings The total deposit and Borrowings of the bank reached Tk. 380,885.25 million recording 92.90% achievement of the Target of Tk. 410,000.00 million as on 31stDecember 2021 as against Tk. 348,814.37 million at 31st December 2020. The Deposits and Borrowings increased by Tk. 32,070.88 million registering a growth of 9.19% in 2020 as against national growth of 9.21%. Our deposit target for the year 2022 has been fixed at Tk. 435,000.00 million expecting growth of 14.21%. Major Business Ratios Major comparative business ratios i.e.Yield on Investment, Cost of Deposit & Borrowings, Spread, Cost of Admin, Cost of Fund, NonFunded Income and Net Spread for the year 2021 & 2020 are appended below: Particulars 2021 2020 Yield on Investment 6.50% 7.75% Cost of Deposit & Borrowings 4.02% 5.47% Spread 2.48% 2.28% Cost of Administration 1.98% 2.03% Cost of Fund 6.00% 7.50% Non- Funded Income 1.29% 1.39% Net Spread 1.79% 1.64% Deposit Mix Cost of Fund of the Bank, inter alia, depends on efficient management of Deposit Mix. Deposit Mix of the Bank is shown below: Deposit Mix Cost Free Deposit Low cost Deposit High Cost Total Achievement 2021 11.49% 30.05% 58.46% 100.00% Achievement 2020 11.87% 28.58% 59.55% 100.00% Plan and Strategies for Deposit Mobilization: Our plan and strategies for mobilizing deposits are given below, which shall be followed meticulously by all concerned. Deposit shall be mobilized giving due importance to deposit mix. For the year 2022 the mix of no cost, low cost and high cost deposit has been set at 14%, 31% and 55% respectively. • To increase the cost free and low-cost deposit, AIBL capitalizes on: - Better customer service. - Good business relationship with all the local industrialist, businessmen, professionals etc. - Focusing on small private/personal deposits for a solid deposit base. - Focusing on School Banking. - Opening of big Corporate Client Accounts having high volume transactions along with salary accounts. - Induction of Clients having large Foreign Exchange Portfolio so that cost free deposit i.e. margin account, FC held etc. may be maintained. - Opening of more FC Accounts to keep more current account balance. - Expediting the booking of more Current, Savings and SND Accounts. - Encouraging the opening of collection accounts of different service oriented institutions like DPDC, DESCO, PDB, NGOs, Schools, Colleges, Universities, Titas Gas, Bakhrabad Gas, Mosques, Madrasahs etc.
  31. Investments Total Investments of the bank stood at Tk . 344,431.81 million recording 93.34% achievement of the Target of Tk. 369,000.00 million as on 31st December 2021 as against Tk. 309,762.11 million on the same day of 2020. The investments increased by Tk. 34,669.70 million recording a 11.19% growth in 2021 as against national growth of 10.71%. The target for investment for the year 2022 has been fixed at Tk. 398,000.00million with anticipated growth of 19.12%. All the Branches, as they have done in the past, will give their best efforts to make quality investment complying with the Shariah principles and ensure constant follow up and supervision for maintaining the quality and ensuring timely recovery. All concerned are advised to adopt the following policies and strategies for quality investments- recording a growth of 4.15%. Target of International Trade for the year 2022 has been fixed at Tk. 530,000.00 million with 15.09% growth. • To motivate the valued clients with potential and satisfactory business reputation to route their business through us • To boost up SME and Micro investment • To encourage Women Entrepreneurs. • To ensure diversification of investment portfolio by size, sector, economic purpose and geographical area for minimizing risks of concentration as well as to ensure equitable deployment of fund • To make investment covered by adequate securities as stated in the norms of existing business discretionary powers • To change the nature, trend of investment depending on the economic activities • To sanction investment ensuring proper appraisal as well as actual need of the client Remittance Total remittance of the bank stood at Tk.52,662.10 million during the year 2021 as against Tk. 43,807.00 million, in the previous year. Our remittance business recorded 20.21% growth in 2021 over 2020. Target for Remittance business for the year 2022 has been fixed at Tk. 60,000 million and thus expecting a growth of 12.23%. Operating Profit The bank earned operating profit of Tk.7,345.89 million during the year 2021. The operating profit of the Bank during the year 2020 was Tk 6,661.09 million and thus the Bank attained growth of 10.28% in respect of operating profit. During this challenging year, it was unexpected to earn such a volume of profit. However, with the blessings of Almighty Allah (SWT), it was possible due to the prudent and timely decisions of the Policy Makers and quick implementation of such decisions by the Management along with efficient and effective fund management. Considering all the factors, Operating Profit target for the year 2022 has been fixed at Tk 8,300.00 million which equals a growth of approximately 19.62% from that of the previous year. Our plan and strategies for increasing operating profit are• to ensure quality investment • to arrest non-performing investment • to increase ancillary business • to increase cash recovery from nonperforming investment • to increase cash recovery from written off and rescheduled investment. • to comply 100% Shariah principles so that no-income shall be considered doubtful. • to control expenditure • focusing on off balance sheet income. International Banking Wing (IBW) We are now more capable and confident of handling Foreign Exchange Business. Presently, we have 26 AD Branches through which we have handled total foreign exchange business of Tk. 450,015.10 million during the year 2021 as against the Target of Tk. 419,000.00 million. Our Foreign Exchange business has increased by Tk.131,889.80 million Import Business Total import business of the bank for the year 2021 stood at Tk. 261,566.10 million as against Tk 169,378.90 million in the previous year. We recorded a 54.43% growth in import business in 2021 over 2020. Target for Import business for the year 2022 has been fixed at Tk. 300,000 million with an expected growth of 14.69%. Export Business Total Export business of the bank for the year 2021 stood at Tk. 135,786.90 million as against Tk. 104,939.40 million in year 2020 and thus recorded a growth of 29.40% over previous year. Our target for Export business for the year 2022 has been fixed at Tk 170,000 million with an expected growth of 25.20%. Treasury Operations: Worldwide mobility restrictions due to delta and omicron variants of covid-19 is damaging economies across the world, including financial markets and institutions in all possible dimensions. For banks in particular, globally imposed restrictions generates multifaceted crises like potential increase in default rates, liquidity and profit rate imbalance, low credit/deposit growth, policy restrictions from regulators. In line with the financial dynamics across the world, AIBL Treasury has played a pivotal role in overall fund management of the bank. Treasury team monitored inflows and outflows of all balance sheet contracts and profitably managed liquidity and unusual situations within the laid down policies and regulations of Bangladesh Bank. Treasury always focus to cater the needs of different treasury solutions in changing environments. For inherent principles, the bank has many limitations and cannot deal with conventional Treasury products like Govt. Treasury Bond, Treasury bill, Call Money, SWAP & Forward Contracts. In spite of all the limitations, Treasury team was committed to offer competitive price, excellent services and time befitting advices to the clients to best fit the changing environment. AIBL Treasury has separate designated desks to provide optimum Treasury solutions. Desks are as follows: • Foreign Exchange Desk • Money Market Desk • Asset Liability Management Desk and • Corporate Service Desk Foreign Exchange Desk Foreign Exchange Desk thoroughly monitored exchange rate movements, volatility & liquidity scenario of USD and other active currencies throughout the years. Treasury set exchange rates for merchant transactions, successfully managed Net Open Position (NOP), ensured optimum liquidity, quoted market-based exchange rates to the exchange houses and managed FC liquidity for our Offshore Banking Unit (OBU). The Foreign Exchange desk has maintained close liaison with a set of local and foreign counterparts for ensuring of Annual Report 2021 29
  32. FC liquidity around the calendar . AIBL Treasury successfully managed FC dealing of cross currencies through its trading platforms of world renowned banks. The Desk has also provided FC dealing solutions to the counterparty banks in our local market. Whole of the year they have performed 2,856 no. of USD/BDT & cross currency deals. FX Desk has contributed operating income of BDT 1,672.70 million from cross currency deals, exchange gains & FC funding. In 2021, Treasury Back Office (TBO) team has handled 112,724 nos FX transactions with turnover of USD 5.24 bio. FX transactions were being routed through 34 Nostro accounts in USD, EUR, GBP, CNY, CHF, JPY, AED & SAR currencies. TBO had relentlessly driven it’s all out effort for timely reconciliation of all of the nostro transactions aligned with Bangladesh Bank regulations. Money Market Desk Ensuring optimum liquidity of local currency to meet asset book requirement as well as earning optimum profitability from the mismatches between maturity buckets of deposits of the bank within regulatory requirements are prime responsibility of the Money Market Desk. AIBL Treasury Money Market Desk also maintained Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) of the bank efficiently. Our team has successfully managed liquidity as well as deployed surplus funds to the Islamic banks, Islamic windows & Islamic branches of conventional banks and leasing companies operated under shariah principles. In 2021, Government introduced Bangladesh Government Investment Sukuk (BGIS) first time & AIBL also participated in its first auction of BGIS for SLR maintenance. Foreign Exchange Risk Management Guidelines Guidelines on Asset Liability Management Wholesale Borrowing and Lending Guidelines Management Action Trigger Contingency Funding Plan Profit Rate Risk Management Guidelines Fund Transfer Pricing Policy Market risk and counterparty limits. Treasury Outlook of 2022 In 2021 BDT moved against USD from Tk.84.80 to Tk.86.00 resulting appreciation of almost 1.42% which was still overvalued compare to peer currencies. Most of the south Asian countries devalued their currencies significantly which has posed serious threat to our export destinations and country has faced negative growth of exports last year. Due to sporadic of, US-China trade war, Iran Crisis & BREXIT issues, to retain export earnings, BDT may be under pressure for devalue. Government has provided 2% incentive for inward remittances which has contributed in 1.49% growth during the calendar. Moratorium in investment repayment, injecting money by B. Bank from buying dollar from banks dampen money market round the year. But due to post Covid scenario, increases in private sector credit growth & bullish import growth may change overall liquidity position of the market and may lead to deepen the liquidity crisis. To cope up with the changing scenario banks have to introduce tech-based banking, spread Agent and Sub-Branch outlets countrywide and rush to retail depositors/investment clients. Asset Liability Management (ALM) Desk Off-Shore Banking Unit (OBU) Managing the risks that arises from maturity mismatches of Asset Liability of the bank is the prime responsibility of ALM Desk. Bank faces several risks like Liquidity Risk, Profit Rate Risk, Credit Risk and Operational Risk etc. ALM Desk mainly manages Liquidity Risk and Profit Rate Risk of the bank through day-to-day monitoring of market information & future outlooks. It prepares ALCO paper & conducts ALCO meetings each month where all issues related with ALM are discussed and instructions are given. Al-Arafah Islami Bank Limited (AIBL) obtained the Off-shore Banking Unit (“the Unit”) License from Bangladesh Bank on 17 February, 2014 and commenced its operation from 22 May, 2014. Located at AIBL Motijheel Branch, 161, Motijheel Commercial Area Dhaka-1000, OBU is working as an independent unit. The principal activities of OBU include Mudaraba Investment under UPAS (Usance Payment At Sight), HPSMFC (Hire Purchase Sirkatul Melk in Foreign Currency) against Usance L/C opened at AD branch with the condition that payment will be made at sight by OBU of AIBL against acceptance of LC opening AD branches and Musharaka Documentary Bills in Foreign Currency (MDBFC) against Accepted Local Export Bills to the eligible Deemed Exporters of our AD and Non-AD branches. Besides, OBU may also accept F.C deposits from eligible customers. As per Bangladesh Bank guidelines the Books of Accounts of OBU is being maintained in foreign currencies of which the base currency is USD. Comparative position of Off-shore Banking Unit; 2021 was a challenging year from Asset Liability point of view as Bangladesh Bank issued directives for deposit rate protection against inflation. Due to volatile movements of profit/interest rates of Asset and Liabilities in the market, it was a real challenge to maintain a reasonable spread. The ALM Desk was proactive to revise the profit rates of deposits aligning with market rates as well as ensuring liquidity. ALM Desk successfully recommended asset-liability slotting for maintaining a steady and reasonable spread for 2021. ALM Desk has properly maintained BASEL III ratios like Liquidity Coverage Ratio (LCR), Net Stable Funding Ratio (NSFR) leverage ratio, commitment and wholesale borrowing position within set limit of Bangladesh Bank. Corporate Service Desk We are providing customized treasury solutions to our corporate client’s matching with market practices from the Corporate Service Desk. Mainly our foreign trades clients seek market oriented timely solutions and appropriate advices for their FX portfolios. The main objective of the desk is to ensure maximum utilization of funds of corporate clients ensuring profitability of the bank as well as strengthening their trust on us. Besides all of its regular activities, Treasury has updated following guidelines which had been duly approved by our Board of Directors: 30 • • • • • • • • Annual Report 2021 PROPERTY AND ASSETS Dec.20 (Million USD) Dec.21 (Million USD) Growth Total Assets 153.82 248.88 61.80% UPAS 145.06 231.79 59.79% 8.76 14.71 67.92% MDBFC HPSM Machinery 0.00 2.38 100.00% Placement from Parent Bank 80.63 94.47 17.16% Borrowing from Overseas Banks 73.19 154.41 110.97% 0.78 1.03 32% Net Operating Income
  33. Foreign Remittance Division : Foreign Remittance Division is one of the most potential business segments of the bank which contributes overall growth of the Bank, increases the inflow of foreign currency, assists to build up low cost deposit and strengthens customer base of the Bank as well as upholds Bank’s image in home & abroad and also makes significant impact towards the sustainable development of the Bank. Foreign Remittance Division is procuring remittance from all the remittance hubs across the globe consisting more than 100 countries through 23 (twenty three) Remittance Arrangements with different exchange houses in abroad and local banks. customer got an umbrella during these campaigns. In order to increase remittance volume, the division has a plan to launch more promotional campaigns in 2022. 1. Remittance Achievement: New relationship management application (RMA): Total remittance of the bank stood at Tk. 5,266.21 crore during the year 2021 as against Tk. 4,380.70 crore, Tk. 3,771.34 crore, Tk. 3,691.72 crore and Tk. 2,070.28 crore in the previous year 2020, 2019, 2018 and 2017 respectively. Our remittance increased by Tk. 885.51 crore i.e. 20.21% in 2021 as compared to increases of Tk. 609.36 crore i.e. 16.16% in 2020, Tk. 79.62 core i.e. 2.16% in 2019, Tk. 1,621.44 core i.e. 78.32% in 2018 and Tk. 896.74 crore i.e. 76.41% in 2017 respectively. Target for Remittance business for the year 2022 has been fixed at Tk. 6,350.00 crore expecting growth 20.58%. Established new 08 RMA (Relationship Management Application) with global banks in 2021 in following regions: Performance of Foreign Inward Remittance -From 2017 to 2021: Remittance Commission Target Achievement Growth No. of Tr. Received USD (In Crore) (In %) (In %) (In Lac) (In Million) Year BDT (In Crore) 2017 2,070.28 251.89 421,704 1,500 138% 131.10 76.41 2018 3,691.72 441.22 684,045 3,000 123% 176.01 78.32 2019 3,771.34 446.45 698,640 5,000 75% 217.88 2.16 2020 4,380.70 516.19 693,537 4,250 103% 211.21 16.16 2021 5,266.21 618.68 827,851 5,400 97.52% 260.72 20.21 The Branches & Agent Banking Outlets of AIBL have procured foreign remittance BDT 3,653.79 crore in 2021 which is more than 24.22% of the previous year 2020 and procurement of foreign remittance through BEFTN (A/c Credit with other bank) was BDT 1,612.42 crore in 2021 which is more than 12.03% of the previous year 2020. 2. Remittance Drawing Arrangement: We have executed 04 (four) new remittance drawing arrangements with different exchange houses in Qatar, UK & Spain in 2021 and another 10 (ten) more exchange houses from different hubs of the world are under process. In order to boost-up remittance business the division is deploying all-out effort to establish new drawing arrangement with exchange houses in UAE, Oman, Bahrain, Kuwait, Qatar, Malaysia & across the globe. 3. Foreign Remittance Operation at Agent Banking Outlets: Our all-Agent banking outlets have been disbursing foreign remittance under the support of Foreign Remittance Division. Remittance achieved through Agent Banking Outlets during 2021 was BDT 1,426.87 crore which was 27.09% of total remittance. 4. Marketing & Promotional Activities: With a view to increase transaction of Moneygram, Al-Arafah Islami Bank executed promotional campaigns in Eid-ul-Azha 2021, under joint promotional campaign with Moneygram. Each Moneygram Overseas Banking Division: Overseas Banking Division of International Banking Wing is working continuously to enhance the business arena of the Bank at home and abroad by establishing Correspondent Banking Relationships with different renowned foreign and domestic Banks subject to compliance with AML-CFT regulations of Bangladesh Bank and other competent authorities. Performance of 2021 in this respect is as under: New Nostro Accounts: In 2021, we have opened new 01 (One) Nostro Accounts in the following currency as below: Name of the bank Currency City Country GBP London UK Commerz Bank New Credit line in2021: Sl no. Name of the bank 1 First Abu Dhabi Bank, UAE 2 Commercial Bank of Dubai, UAE 3 Exim Finance, Hong Kong 4 Ajman Bank, UAE Vessel Tracking Service in AIBL: Since 2019, we have been implementing web-based vessel tracking services from Lloyd’s List Intelligence (LLI), United Kingdom to prevent our import & export business from involving money laundering and terrorist financing risk as well as to comply with the requirement of Maritime Sanctions screening. Basic Tracker: Basic Tracker enables us to track all our swift payment messages from end-to-end in real time (some banks in between the transaction may be hidden/undisclosed), confirms if the beneficiary has been paid or not etc. Asset Quality Overdue investments stood at Tk. 3993.40 million as on 31st December 2021 as against Tk. 5,959.36 million as of December, 31 last year. Total overdue decreased by Tk. 1,965.96 million during the year 2021 bringing the same to 1.16% of our total investment as against 1.92% in the previous year. Corporate Branch Managers, Zonal Heads and other Branch Managers are advised to take all precautionary measures so that the overdue investments are not inflated and income leakage remains under control. Rescheduled investments decreased by Tk. 985.60 million from Tk. 21,959.90 million to Tk. 20,974.30 million (Term investments by Tk. 11,875.90 million plus Continuous and Demand investments by Tk. 9,098.40 million) which was 6.09% of total Investment. Recovery against rescheduled investment during the year 2020 was Tk. 1,051.20 million. Classified investments increased by Tk. 6,818.41 million in 2021 from Tk. 11,769.58 million to Tk. 18,587.99 million representing Annual Report 2021 31
  34. 4 .81% of total investment as against 3.80% in the previous year. During the year 2021, recovery& regularization against classified investment stood at Tk. 991.75 million while recovery against written off investments stood at Tk. 71.84 million recording a total recovery of Tk. 2,114.79 million which includes a recovery Tk. 1,051.20 million from the rescheduled investments. Plan and Strategies to Improve the Asset Quality• to ensure constant supervision and follow-up for timely recovery of investment and prevent it from becoming overdue afresh. • to fix individual target from very beginning of the year for recovery of non-performing investment. • to give special attention on top classified investment clients for early settlement/ adjustment/regularization. • to keep constant, follow up & monitoring to ensure timely recovery of installment against rescheduled investment. • to address chronic NPI clients by taking effective steps and applying prudence. • to initiate necessary steps to settle the court cases quickly and even the cases can be settled outside the court through persuasion and mutual understanding. • to be more vigilant to keep NPI at the lowest possible level. • to deploy level best efforts for recovery of Written off investment including legal action. • to keep a close eye on the SMA bucket so that SMAs, do not graduate to classified accounts. Ancillary Business The ancillary business contributes a lot in the overall profitability of the Bank. We have earned Tk 3,299.11 million from Commission Income during the year 2021 as against Tk. 2,627.55 million during 2020. The target for our ancillary business during the year 2022 has been fixed at Tk. 3,800.00 million with an anticipated growth of 15.18%. As our objective is to cover our entire Salaries and Allowances out of ancillary income, we have no other alternative but to maximize our ancillary business. Capital Adequacy Ratio (CAR) As per Bangladesh Bank requirement, Bank has to maintain a Capital of 12.50% of its Risk Weighted Assets or Tk. 4,000.00 million whichever is higher. Accordingly, we have maintained our capital with full compliance. As on 31.12.2021 our Eligible Capital (Solo Basis) stood at Tk. 41,358.68 million as against Tk. 37,486.33 million in December 2020, Tk. 30,802.44 million in December 2019, Tk. 30,564.17 million in December 2018 and Tk. 25,104.77 million in December 2017, recording a growth of 10.33 % in 2021, 21.70 % in 2020, 0.78 % in 2019, 21.75% in 2018, and 5.91% in 2017. Risk Weighted Assets (RWA) of Tk. 282,442.94 million (Consolidated Basis) and Tk. 270,110.22 million (Solo Basis) recording a Capital Adequacy Ratio (CAR) of 15.46% (Consolidated Basis) and 15.31% (Solo Basis) in December 2021 as against 15.07 % in 2020, 13.88% in 2019, 14.38% in 2018, 12.28% in 2017, 14.41% in 2016 and 15.30% in 2015. In the year 2021 AIBL issued Mudaraba perpetual Bond for Tk. 5,000.00 million that meet the qualifying criteria for Tier- 1 Capital as per Basel III Guidelines. 32 Annual Report 2021 In the year 2015 AIBL issued Mudaraba Subordinated Bond for Tk. 3,000.00 million, in the year 2018 for Tk. 5,000.00 million and in the year 2020 for Tk. 5,000.00 million that meet the qualifying criteria for Tier- 2 Capital as per annex 4 of Basel III Guidelines. Outstanding balance of AIBL Mudaraba Subordinated Bond was Tk.9,600 million as at 31-12-2021. Money Laundering and Terrorist Financing Prevention We all know that the initial focus of anti-money laundering regime was the intersection of organized crimes and drugs. But in course of time the focus was widened to include proceeds from many criminal activities. Today, everywhere in the world, AML has many goals. With the increased globalization of financial system money laundering has evolved into an activity affecting the societies, financial system and the economy as a whole. Thus, it has become a global phenomenon. It is a danger not just to the global economy but also to national security. All the countries in the world have come to a common platform with a common goal to create an infrastructure which would make the criminals think twice before involving into money laundering activities. Bangladesh accordingly enacted to different laws for combatting money laundering and terrorist financing. Banks are being constantly alerted by the regulators about the evils of ML. As the criminals use the banks as the main vehicle of their criminal activities, responsibilities of bankers have widened over time by manifold as well. Money laundering techniques are always evolving, and as a result, AIBL authority has taken strong steps to fight the evil. Combating Money Laundering activities have been an integral part of the duties of every banker these days. We are constantly updating ourselves with the rules and regulations of AML/CFT. Nevertheless, it becomes hard to keep up with the culprits. They have always been finding out newer ways to bypass the rules and thus the vigilant eyes of the bankers and other Law Enforcing Agencies. Of late, the COVID-19 pandemic has changed the way of our lives exhaustively. Keeping in line with the new normal, criminals have also adopted newer ways of laundering money. Criminals are exploiting vulnerabilities opened up by the COVID-19 pandemic, increasing the risks of Cyberattacks, money laundering, and terrorist financing activities. This pandemic has forced us to leverage technology to our best. At the same time also exposed us to newer AML/CFT risks. Our Management has been principally watchful concerning our IT network, non-public data, third party risk, and Cyber security incident response plans and to focus additional efforts on staff training and awareness. Prominent activities we have done in the year 2021: • The Board has agreed to introduce an automated AML monitoring system and approved installation of monitoring software this year. • Introduced TBML guidelines and ensuring compliance thereof. • Nominated Zonal and Divisional anti-money laundering compliance officer so that every department, divisions, zones remain active in preventing money laundering. • Circulated the new methods of records keeping (22 comprehensive data files) for sound AML/CFT compliance. •Circulated the common lapses in regard to AML/CFT Risk Management for awareness on branch level compliance. • Conducted 04 Central Compliance Committee meetings and adopted multi-level resolutions for strengthening compliance campaign of the Bank • 58 STR/SAR submitted to BFIU and 358 STR settled by branches •Conducted AML/CFT related in-house and out-reach virtual training programs for the employees of the Bank and Agent Outlets
  35. •Delivered information on AML/CFT regarding correspondent Banking and vice versa •Submitted total 435465 CTR successfully in 2021 (report submitted Monthly) through the GoAML web portal • Corresponded about 164217 letters in number with BFIU and Branches • 191 Branches were inspected by the Audit and Inspection Division on AML/CFT compliance • Total 20 branches on AML/CFT compliance conducted virtual evaluations under the pandemic (COVID-19) situation through MLTFP Division Additionally, we have been and will remain vigilant and aware of AML & CFT compliance issues and perform the following functions, among others, in a more meticulous way: • Obtain correct and complete information in all Account Opening Forms, KYC, Transaction Profile (TP), etc. both for regular and walking customers • Due Diligence and Enhanced Due Diligence (EDD) for all customers, as the case may be. • Follow the rules for Customer Acceptance Policy of the Bank. •Review abnormal, meaningless and suspicious transactions/ activities and timely report the same as STR/SAR to the competent authority. • Regularly and accurately review the Online Cash Transactions. • Ensure auto screening of both UN, Local and other Sanction Lists • Do an acceptable price verification before opening LCs and monitor ship tracking closely. • Monitor inward and outward foreign remittances. • Obtain proper documents in support of the declared ‘Source of Fund’. • Ensure proper preventive measures and safeguards against Trade Based Money Laundering. • Strictly follow BFIU instruction in case of dealing with Politically Exposed Persons (PEPs), Influential Persons (IPs), High Officials, and Topmost of International Organizations. • Officials to be more cautious in maintaining secrecy regarding correspondence with BFIU. • To identify, assess and mitigate the risk of Money Laundering & Terrorist Financing, follow the Risk Register attached to ML & TF Risk Management Guidelines of the Bank. • Conduct Quarterly Meetings (at least) at Branch level as per instructions of BFIU’s Master Circular No. 26 dated 16/06/2020. • To transform the Central Compliance Committee (CCC) to a more effective and robust one. •Human Resources Division (HRD) have been advised to ensure Employee Screening Mechanism as per BFIU’s instruction. • Agent Banking Division to be watchful on AML & CFT compliance regarding Agent Banking and Agent outlets. • Overall compliance of AML & CFT issues of the Bank though will be supervised by Money Laundering and Terrorist Financing Prevention Division but it is a duty of every employee of the Bank. • Knowledge of AML & CFT compliance issues are essential for all employees. As such AIBL, Training & Research Institute (AIBTRI) ensure knowledge enhancement through In-house and Outreach training, BAMLCO training, TBML, and Lead Bank Training, workshops, seminars (both physical & virtually), etc. for capacity building. • Ensure awareness regarding adverse media news on AML/CFT • Credit Card department have been alarted to remain extra cautious regarding usage foreign currency over the allowable yearly limit • Do a proper KYC and due diligence while onboarding merchants for doing E-Commerce business • Remain extra vigilant regarding cyber threats Shariah Compliance Our Bank is based on Islamic Shariah and therefore strict adherence to Shariah principles is the core strategy of our banking business. So, we have no other alternative but to comply with Shariah rules in all our activities under the guidance of our competent Shariah Supervisory Committee. Besides, we must understand the Maqasid al-Shariah and disseminate the same to our portfolio management. Our Shariah Supervisory Committee contributes a lot to run all the business activities of the Bank in accordance with Islamic Shariah. During the year 2021, Shariah Secretariat of the Bank under the direct supervision of the Shariah Supervisory Committee undertook different programs for Shariah compliance in the Bank. Al-hamdulillah, during the year 2021, a total of 201 branches (which includes 17 new branches as well) were inspected under the Shariah Supervisory Secretariat by the Shariah Secretary & Muraquibs. As per their report, investment Income of Tk. 9.42 million of 201 Branches and Head Office ID. has been segregated as Doubtful Income. Financial Inclusion Financial inclusion is a delivery of financial/banking services at an affordable cost to the vast sections of disadvantaged and low-income segments/group of society. Financial inclusion means that households and businesses have access and can effectively use appropriate financial services. Such services must be provided with responsibility and sustainability, in a well-regulated environment. Actually, financial inclusion means not only opening account but also deliver to financial services to each person with an affordable cost where the clients can deposit or withdraw their money with comfortable process like cash, check, debit/credit card, mobile banking, agent banking & internet banking etc. According to the Bangladesh Bank guidelines, Al-Arafah Islami Bank Ltd. has already started various schemes and initiatives to include the un-banked marginal people as the process of financial inclusion. The important initiatives are as follows: Agent Banking Agent Banking services is one of the important dimensions of banking services in Bangladesh which is provided through engaged agents under valid agency agreement. Agent is the owner of one or more than one outlet(s) who conducts banking transactions on behalf of the bank. This type of banking is comparatively a tremendous idea that can help the formal banking sector reach out to the marginalized people of the society through agents. It is playing a pragmatic role in paving the way for financial inclusion, which is a tool for inclusive economic growth and financial development of a country. We have launched 571 Agent Banking outlets through 397 Agents as on December 2021 with a view to bringing the un-banked population under banking services. As on December 2021, total accounts of Agent Banking are 5,02,855 . We have already covered 227 Upazillas under 55 Districts. With some restrictions and limitations, most of the Annual Report 2021 33
  36. banking services are available in agent banking operation . In Agent Banking, most of the beneficiaries are living in rural areas and were totally un-banked at the earlier. But now, their total deposit is Tk. 31,016.72 Million and the figure is increasing rapidly. Clients are opening accounts, depositing and withdrawing their expected money, getting foreign remittance from their relatives, paying their utility bills and getting other banking services spontaneously. This is one of the appropriate examples of financial inclusion in Bangladesh. Agent Banking Performance At a Glance (As on 31-12-2021) Taka in Million Particular Total Number of Agent Total Number of Outlet Number of Rural Outlet Number of Urban Outlet % of Rural Outlets Among Total Outlets Number of Covered Upazilla Number of Covered District % of Area Coverage Among 64 Districts Number of Accounts Number of Male Customer Number of Female Customer Number of Others Account % of Female Customer Deposit of Agent Banking Cost Free Deposit Low Cost Deposit High Cost Deposit % of Cost Free & Low-Cost Deposit Number of Foreign Remittance Amount of Foreign Remittance Number of Utility Bills Collection Amount of Utility Bills Collection Amount of Investment in Outlet Area Through Branch Year 2020 Year 2021 Growth 264 400 353 47 397 571 502 69 50.38% 42.75% 42.21% 46.81% 88% 88% - 185 48 75% 3,25,582 1,82,090 1,35,894 7,150 41.74% 23,524.42 854.73 7,865.11 14,804.63 37.07% 1,64,392 8,494.70 39,50,120 2,387.80 227 55 86% 5,02,855 2,62,697 2,31,533 8,625 46.04% 31,016.72 1,156.61 11,477.92 18,382.21 40.73% 2,35,580 14,268.73 60,30,907 4,079.04 22.70% 14.58% 54.45% 44.27% 70.38% 20.63% 31.85% 35.32% 45.93% 24.17% 43.30% 67.97% 52.68% 70.83% 99.14 1657.62 1572 % Al-Arafah Rural Development program (ARDP) Bangladesh has made remarkable progress in reducing poverty, supported by sustained economic growth. To keep up this progress a stronger and larger rural economy is crucial for employment generation and poverty alleviation. Financial services play a critical role in reducing poverty. Permanent access to financial services can help poor people to take control of their lives. Believing this fact and also containing the idea that rural people are bankable, we initiated our Islamic Microfinance Program on the year 2001 as Grameen Small Investment Scheme (GSIS). This program is reformed and revamped as ‘Al-Arafah Rural Development Program (ARDP)’ in late 2020 with a view of ensuring the financial inclusion of rural people and to unlock the considerable economic potential of rural areas. Functioning on the basis of Group and Samity, this program helps on socio-economic development of farmers, labours, fishermen, micro-businessmen and small entrepreneurs. Another important objective of this program is to give priority to create and patronize economically self-dependent rural women entrepreneurs. Rural microfinance comes with its own set of challenges. Unlike cities, 34 Annual Report 2021 rural populations are dispersed over large areas with poor infrastructure which increases transaction, information other costs significantly higher to offer financial products. Hence, we have tailored our banking solutions through various types of Deposit & Investment products to meet specific needs of rural people which are describe below. Deposit Schemes: Under the Al-Arafah Rural development Program (ARDP), members will operate a Mudaraba Savings Deposit (MSD) account for their personal and business transaction and monthly deposit-based saving scheme (ITD) for becoming financially self-sufficient and to build his own capital. Members could avail investment against their savings anytime. Our tailored deposit products are as under: • Al Wadiah Current Deposit Account (CD) (ARDP) • Mudarabah Savings Deposit Account (MSD) (ARDP) • Mudarabah Membership Savings Account (MSD) (ARDP) • Mudarabah Monthly Profit Paid Term Deposit 3 Years (ARDP) • Mudarabah Monthly Deposite Scheme (5,10 Years) (ITD) (ARDP) • Mudarabah Term Deposite (3,6,12 months) (MTDR) (ARDP) Investment Schemes: The investment schemes are without collateral/security and can be obtained easily. Repayment system is weekly/monthly installment basis. These are supervised investment schemes and skilled ARDP employees working in different branches ensure continuous processing and supervision of the same. Some of the popular Investment Schemes are: • Bai-Muazzal (ARDP) • Group or Samity based Unsecured Investment Scheme. Installment payable in weekly/ monthly ranging from Tk.10,000/- to Tk. 100,000/. Investment Tenure: 1 year. • In the case of bank deposit lien, 100% or equal amount of money is disbursed. Cottage, Micro, Small and Medium Enterprises Investment (CMSME) Cottage, Micro, Small and Medium Enterprises (CMSME), works as the platform for job creation, income generation, and development of forward and backward industrial linkages and fulfillment of local social needs. MSMEs occupied a unique position in the economy of Bangladesh. Here, the MSMEs account for about 45% of manufacturing value addition. They account for about 80% of industrial employment, about 90% of total industrial units and about 25% of total labour force. In the light of the definition given by Bangladesh Bank, Al-Arafah Islami bank Ltd. has put utmost priority over CMSME financing in three categories of enterprises viz. Industry, Trade & Services. CMSME Investment at a glance Figure in Million Description Total CMSME Portfolio 2021 2020 110641.00 100196.89 32.12% 34.41% Target of CMSME Investment 70000.00 60000.00 Total CMSME Disbursement 65984.19 61005.39 94.26% 101.67% % of CMSME Portfolio to Total Portfolio % of Achievement Investment on Women Entrepreneurs About 50% of the populations of Bangladesh are women. Women participation in the mainstream of economic activities especially in
  37. the productive sectors is crucial for attaining sustainable economic growth , poverty reduction and women’s empowerment. But women participation in economic sector is inadequate and the number of women entrepreneurs is very low compared to that of their male counterparts. Al-Arafah Islami Bank Ltd. is working with women entrepreneurs to make them capable of earning by connecting with country’s economic activities. We give priority to women entrepreneurs to invest on various productive sectors. By the side of collateral secured investment, collateral security free investment is also considered in the question of women development. Description BDT in Million Total SME Portfolio in Women Entrepreneurs 4571.60 Amount of Disbursement to Women Entrepreneurs 3371.28 Agricultural Investment Agricultural Investment is dealt by Agricultural Department functioning under the control of SME Investment Division. To face the increasing food shortage of the country, bank is paying massive attention to invest on agricultural sectors. The main items of agricultural sectors arecrops, fisheries, warehouse, poverty alleviation, irrigation, livestock development etc. At the end of December 2021, total agricultural investment portfolio is Tk. 5729.00 Million for the fiscal year 20202021. With collateral and without collateral both are practiced in agricultural investment. The Achievement of 2020-2021 is as follows: (Figure In Million) Sector wise Agricultural Disbursement Current Fiscal Year Frequency During 2020 a) Crops 511.20 449.40 b) Fisheries 1096.4 1099.50 c) Crop Storage 562.80 681.90 2296.40 2252.00 92.70 41.50 f) Irrigation Tools 188.20 278.40 g) Agricultural Tools 224.10 281.70 b) Livestock Development e) Poverty Alleviation h) Others Grand Total 645.60 644.60 5617.40 5729.00 To promote agricultural sectors properly, our collateral free agricultural schemes are: Rural Agricultural Investment Scheme (RAIS) & Khamarbari Investment Scheme. Those schemes are running in all rural Branches. Skilled and experienced staffs are recruited in the concerned branches to ensure proper development of marginal farmers. Rural Agricultural Investment Scheme (RAIS) On the basis of socio-economic development of marginal and lessee farmers, this agricultural based programme named ‘Rural Agricultural Investment Scheme (RAIS)’ is running in this Bank. Development of country’s internal food production as well as socio-economic sectors of farmers is the main focus here. We have already listed 1975 farmers under this scheme and total investment is Tk. 82.50 million of which outstanding is Tk. 39.30 million. Al-Arafah Khamerbari Investment Scheme To make a priority to invest in the crop sector of Bangladesh, we have launched the product named: “Al-Arafah Khamerbari Investment Scheme (Khamerbari)”. With this product, we work for farmer’s community surrounding the Branch. Our field officials motivate farmers to grow the potential corps based on their previous farming experience. This scheme is an innovative action to develop the crop sector of Bangladesh. We have disbursed 1.87 million investments among 150 farmers under this scheme so far. Growing spices at a lowest profit rate (4%) As per instruction of Bangladesh Bank, and to increase the production of different types of spices like Pulse, Oil-seed, Spice and Maize, we started investment at a lowest rate of profit (only 4%) to the marginal farmers. We have disbursed 30.90 million investments among 557 farmers under this sector so far. Mudaraba Animal Husbandry Scheme In the concept of Islamic Finance, Mudaraba is a special kind of partnership business, where one partner gives money to another and at the end of business cycle, the profit will be distributed between both the parties as per previously signed agreement. The investment comes from the first partner who is called “Saheb-ul-maal”, while the management and work is an exclusive responsibility of the other, who is called “Mudarib”. All the losses will be contributed by the fund provider. In this scheme, Bank shall purchase cows, goats etc. on behalf of client under the limit of sanction amount. Clients shall responsible for daily maintenance of that animal as per terms and conditions. After a certain time, that animal will be sold in current market rate and then the profit shall be distributed as on previous agreement. In this scheme, we have already disbursed Tk. 27.97 million for fattening of 484 Cows and 12 Buffalos among 187 farmers so far. This was a great achievement we think. This is a special scheme in the banking sector of Bangladesh. Branding & Public Relations Improvements in branding and media relations were priorities during the year 2021. In response to the overwhelming expansion in Bank’s business, we extended our publicity to fulfill the market demand. We brought new dimension in our branding and publicity for establishing a positive image of the Bank. We acquired encouraging national attention towards AIBL throughout the year with our all-around activities. More than 54 news items of the Bank were broadcasted in 640 news coverage through 20 different TV Channels during the year 2021. We continued news branding on 7 major satellites TV channels such as Channel-i, Bangla Vision, ATN Bangla, ATN News, Desh TV, DBC TV and ETV. Promotion in the television media got a major hike during the Ramadan in this year. In 11 major TV channels which included NTV, Bangla Vision, Bangla TV, Independent TV Jamuna TV, Channel-9, Boishakhi TV, SA TV, News 24, Gazi TV, Ekattor TV and many more. The Bank sponsored 13 different programs to encourage true Islamic values. The initiative was praised by the stakeholders and positively put an effect on business. Positive branding was one of the vital supports that led the Bank to hold a firm position in the market. The Bank proved its engagements with people by sponsoring several occasions. Banking Fair, SME Fair, School Banking Conference, Anti-Money Laundering Conference, Fair of Chittagong Metropolitan Chamber of Commerce & Industry and Annual Report 2021 35
  38. many more people-related gatherings were sponsored by the Bank . These activities tightened the relationship with clients and uplifted Bank’s faithful image. Our presence in the print media also was bold as we had 1350 Press Release items published in more than 60 different leading Newspapers and Media throughout the year. Besides, more than 700 advertisements took place in 115 different publications during that year. This year the Bank went into Electronic Media vastly. Besides, promotion in social media and put utmost focus on Digital Media via Online Portals, Facebook, YouTube etc. With a new rebranded outfit, AIBL started serving more smartly and dedicatedly at every point of service throughout the country. Unexpectedly, this year the Promotional planning was struck by the negative effect of global pandemic caused by COVID-19. But the Bank had to modify its plan according to the situation. Moreover, during the adverse circumstances, Bank made its’ promotion through client service more effective and efficient in 2021. We must remember that, a satisfied client is the best advertiser of the Bank. So, all our promotional steps will be focused to make our customers feel that they are banking with their own bank with all the modern facilities, when they are with Al-Arafah Islami Bank Limited. Branding Summary of AIBL in 2021 SL NO. Branding Details Frequency During 2021 1 TV News Items 2 3 TV Channel Coverage TV Branding (throughout the year) TV Branding during Ramadan PR Published Print media covered Promotional Advertising Publications used 54 events 640 coverage 21 channels 7 channels 4 5 6 7 8 13 programs 11 channels 1350 times 60 media 700 advertisements 115 publications Information Technology The technology is of great use in banking sector, it has changed the banking industry from paper and branch based banks to digitized and network services. Meaning it has played a very big role in reducing fraud in banks which protects its clients. Banks are investing heavily in digital banking technology, in which customers use mobile, web or digital platforms to use banking services. Artificial intelligence solutions, such as chatbots, often assist customers in simple tasks such as making payments. As such bank can enhance business processes, make managerial decision, and workgroup collaborations which strengthen their competitive positions in rapidly changing and emerging economies. Every bank is providing their financial services, DATA analysis & classifications, making the ultimate decision with a truly automation system accomplished by the ICT division. AIBL started its Automation journey from 2006 and lived their Online Operation in the 2008 that has been going on successfully since inception. Beside Core Banking System (CBS) we are also using the below tech based services to automate, secure and faster our internal activity as well as to offer the better services to our valued customers: i.RTGS; ii.BEFTN; iii. BACH, iv. ISS Report, v. BPA, vi. CIB, vii.goAMLCTR, viii. RIT Reporting, ix. i-Banking, x. Sylvia (HRMS), xi. Agent Banking, xii. Utility Bill Collection, xiii. Sanction Screening, xiv. FATCA Compliance, xv. SWIFT, xvi. Asset Management, xvii. Centralized Anti Virus Management, xviii. Mail Server, xix.OBU, xx.Treasury, xxi. ATM 36 Annual Report 2021 Service, xxii. Mobile ATM Service, xxiii. Debit Card, xxiv. Credit Card, xxv. SMS Alert etc. Recently AIBL has launched Islamic Wallet which a Shariah based Mobile Financial Services of Al-Arafah Islami Bank Limited which has gone through the most rigorous security, compliance standards and all regulatory requirements. Islamic Wallet promises to provide the most innovative services that can be provided in Mobile Financial Services industry of Bangladesh. It is fast, secure and affordable way to send & receive money from anywhere at any time. In addition to ‘send and receive money’, it provides a total eco-system where people can derive the best use of money. This wallet will be considered as new and innovative payment system to cater all kinds of banking needs for ensuring the maximum convenience of customers specially those who do not have access to banking services. Services offered by Islamic Wallet • Cash In, Cash Out, Person to Person (P2P) • Fund Transfer from Card and Bank Account. • Person-to-Business payments (P2B) such as utility bill payment, airtime top-up, insurance premiums, loan installments, merchant payments etc. • Business-to-Person payments (B2P) such as payroll, commission disbursement, etc. • Government-to-Person (G2P) payments such as subsidies, freedom fighter allowances, social welfare payments, endowments, etc. • Person-to-Government (P2G) payments such as government duties, taxes, fees, etc. • Ticketing Service • Tuition Fees Payment There are some Technology based initiatives taken by the bank management to improve the customers’ services with a view to becoming the best bank in Bangladesh: 1. To become one of the best three Technologically advanced banks in the country within next 3 years 2. To ensure 100% Regulatory Compliance by taking highest possible ICT security measures. 3. To partner with various government & non-government entities so that the unbanked community of the society are brought under formal banking channel through MFS. 4. Full-fledged Internet Banking along with E-Commerce and Payment Gate way will be starting very soon. 5. Introduce Sub Branch Services as per Bangladesh Bank guideline. Card Division Card Division of Al-Arafah Islami Bank Limited has diversified range of products and services since the beginning to fulfill the customers’ needs by strictly maintaining the Shariah Principals. More than 3.00 lac AIBL card holders including Debit Cards, Credit Cards, Instant Cards, Pre-Paid Cards and Hajj Cards are using AIBL own 200 ATMs as well as any banks’ ATMs through NPSB network & MasterCard enable ATMs. The bank issues technologically advanced EMV Chip Cards to provide vast and secured services to our valued customers throughout the time 24/7. We are providing effective and efficient card services among the customers with nominal service charges and maintenance fees which a positive marketing tool. We have travel card which does not require to maintain any bank account and it could be used for overseas travelling time with foreign currency. We have Instant Card for account holders which is being issued from branch premises instantly at the time of account opening. We are planning to introduce International Debit Card within shortest possible time to facilitate duel currency in Debit Cards as per Bangladesh Bank policy.
  39. Bank is offering discount facilities for both Debit & Credit Card holders & Equal Monthly Installment (EMI) facilities for Credit Card holders for the last few years to grab the market trends. We have a long list of EMI and discount partners including all renowned furniture manufacturers, branded electronic chain shops, lifestyle retailers, leading hospitals, popular restaurants, hotels & resorts, e-commerce shops, mobile & computer shops, tours & travels outlets, local airlines, auto care shops, motorcycle shops, super shops, etc. We are working on to launch contactless card with more security within this year. For Platinum Credit Card holders, we have complementary airport lounge facilities at Hazrat Shahjalal International Airport, Dhaka and MasterCard designated airports all over the world. We are ensuring smooth online transactions for our card holders of AIBL through various security measures such as by using “MasterCard SecureCode”. Bank is conducting promotional activities for cards through social and print media and has designed a lucrative webpage in its main website. Card Division is working round the clock to provide efficient and outstanding services to our valued customers by using advancement technologies. Sustainable Finance Unit SFU of Al-Arafah Islami Bank Ltd. (AIBL) looks after the activities of Green banking, Sustainable Finance and Corporate Social Responsibility. Here the main driving forces are environment, society and governance. It aims at sustainable development, maintaining higher growth of the economy, decreasing the inequality of a society and mitigating the environmental degradation. From this perspective, different following activities are done through this Unit: Green Banking a. In-house Activities: Under implementation of Green Office Guide, we organized (i) All our meeting among branches, higher authority, Board of Directors and even Annual General meeting through online platform. (ii) Many of our workshop and training session under the program of awareness and capacity building were also successfully done through online platform. b. Greening the Banking operation: (iii) At present we newly introduced banking services through mobile app and Islamic Wallet Mobile Financial Services facilitating accounting opening from home, easy money transfer, payment of bill, mobile top-up, merchant payment and inclusion of rural area under banking service. (iv) Recently we also introduced Internet Banking facilitating all transactions and for availing other banking services to our valued clients through internet staying at home. (v) Under Business Process Automation (BPA), we now circulate all our letters, instructions, Investment proposal and Sanction through shared digital platform, email and IP message. c. ESRM (Environment and Social Risk Management): Considering all the social and environmental aspects as per ESRM Guidelines we have done Environment and Social Risk Rating (ESRR) at the time of processing all the investment proposals properly. Scheduled monitoring and inspections have also been done time to time. d. Green and Sustainable Finance: Green finance as a part of Green Banking makes great contribution to the transition to resource-efficient and low carbon industries i.e. green industry and green economy in general. Already we are financing in 68 green products on priority basis. To facilitate refinance in green products/projects/initiatives, we have signed agreement on the following issues with Bangladesh Bank: i) Islamic Refinance scheme for Green Products: Under this scheme any client can avail refinance for any of 52 green products/projects/initiatives at single digit profit rate. ii) Green Transformation Fund (GTF): It includes 200 million US Dollar and 200 million Euro from which manufacturer-exporters can get refinance in foreign exchange against import of capital machineries and accessories relevant to environment-friendly/green attributes specified by BB and industrial raw materials. Ever since the inception of Green Banking, AIBL has financed in diversified Green areas like LED Bulb/Tube Assembly Plant, ETP Construction, Recycling Waste and Green Brick Manufacturing etc. In the last quarter of 2021 total Green Finance disbursement was BDT 2004.76 million. On the other hand, we have also achieved tremendous progress in sustainable finance. The most significant issue is that AIBL has been recognized as one of the top ten most sustainable banks in Bangladesh by Bangladesh Bank in 2021. In the last quarter of this year our sustainable finance is BDT 6163.71 million. To take this more ahead, recently we signed agreement with Bangladesh Bank titled as follows: iii) Refinance Fund for Technology Development / Upgradation of Export Oriented Industries: Export-oriented industries can avail refinance under this fund at the lowest profit rate for upgradation of capital machinery to enhance their production efficiency. Corporate Social responsibility (CSR) by Al-Arafah Islami Bank Ltd. (AIBL) As part of CSR, AIBL always responds to any emergency of the country/society/institution/individual on priority. In 2021 AIBL has done Some mentionable CSR activities such as: a.) Donation of BDT. 5.00 crore to Prime Minister’s Relief Fund due to COVID-19 Pandemic. b.) Besides, AIBL by its own management has distributed foods and health safety items of BDT 2.55 crore to people of different areas of the country affected by the COVID-19 Pandemic. c.) AIBL has donated Tk. 10.00 Lac to prize giving ceremony of National Hifzul Quran Recitation Competition in 2021 which will act as motivation to Hifz students for further improvement of quality and standard of holy Quran recitation to an international level. Our main priority sectors of CSR are education, health, food security, shelter, prevention of environmental disaster and special attention for the advancement of research/literature/culture. In 2021 our total expenditure in CSR is BDT 149.60 million which is shown sector wise in the table below: (Amount in Million BDT) Sl No. 1 2 3 4 5 6 Particulars Health Education Disaster Management Cultural Activities Environmental Protection Others Total 2020 16.81 10.07 8.51 6.68 15.26 226.81 284.14 2021 87.10 6.50 0.00 0.00 56.00 0.00 149.60 Annual Report 2021 37
  40. Education Scholarship Program : Being aligned with government initiatives to achieve Sustainable Development Goal (SDG), AIBL has also taken step to promote quality education which is the 4th most prioritized goal of SDG. In 2018, we successfully begun the program titled “Al-Arafah Islami Bank Education Scholarship-2018” for underprivileged meritorious students who completed HSC. In 2021 this program scenario is as follows: Number of Students 199 Present institute of study Students are covered from different educational institutions such as Public Universities, Medical Colleges, Engineering Universities, Agricultural Universities, Science and Technology Universities, Open University, National University, Private University etc. Total Scholarship (BDT in Million) 7.17 Human Resources Well educated and skilled manpower is the best capital of an organization particularly in banking institution. We put utmost importance on recruitment and development of human resources. In recruiting process, we put emphasis on attracting talented youngsters. A total of 437 employees in different categories/ranks joined our fleet during the year 2021 raising our total employees to 4,247 which includes 334 Executives as on 31.12.2021. We have nominated 65 employees in different outside training courses viz. BIBM, BBTA, BAB etc. in 2021 and they have completed the courses successfully. We motivate and facilitate our deserving employees to complete international standard professional degrees like CDCS, CSDG and ACAMS. Presently, we have 65 CDCS, 3 CSDG and 10 CAMS officials of which 1 officials completed CDCS and 3 officials CAMS during the year 2021. Activities of AIBTRI Training is an accepted and effective mechanism for human resources development. Training involves the development of skills that are usually necessary to perform comprehensive banking activities. It brings positive changes in Knowledge, Skills, Attitude (KSA) and building confidence of the human capital, so that they can be efficient in performing their duties and responsibilities. Al-Arafah Islami Bank Training & Research Institute (AIBTRI) relentlessly working to respond to the need for capacity building of all the officials for achieving the goal of the bank. At present banking activities are being operated by complying with the management of 6 core risks, Green/Sustainable finances and Environment Risk Management, Basel-III and Islami banking guidelines etc. So, building of capacity, vis-à-vis efficiency and acquiring absolute knowledge of all the officials of the bank on the aforesaid Core Risks and Islami Banking guidelines is very important now-a-days. So, a Training Policy Guidelines 2018 was approved by the Board of Directors of the bank. The purpose of the Training Policy Guidelines is to create awareness and to equip the employees with proper knowledge on all the existing and new issues/products/banking laws/ rules/ regulation/Islamic banking and core risk management guidelines of Bangladesh Bank and other regulators. Training position in 2021: AIBTRI conducted a total number of 113 Training Courses/Workshops/EDPs and Outreach Training Programs where 9,449 participants attended during the period from January to December, 2021. AIBTRI conducted a total of 12 (Twelve) courses and 86 (Eighty-Six) workshops which includes 11 (Eleven) outreach training programs (OTP) and 3 (Three) EDPs during the year 2021. 38 Annual Report 2021 Credit Rating Credit Rating Information and Services Limited (CRISL) has adjudged the following rating for Al-Arafah Islami Bank Limited: Long Term AA (pronounced Double A Two) Short Term ST-2 Based on Audited Financial Statement 2020 Date of Rating 18 July 2021 Validity 17 July 2022 Outlook Stable Year-wise Comparative Rating Position: Date of Rating 30 June 2021 30 June 2020 30 June 2019 30 June 2018 30 June 2017 Long Term AA AA AA AA AA Short Term ST-2 ST-2 ST-2 ST-2 ST-2 Outlook Stable Stable Stable Stable Stable Interpretation: AA+, AA, AA- (Double A) (High Safety): Securities rated in this category are adjudged to be of high credit quality and offer higher safety. The level of rating indicates a security with sound credit profile and without significant problems. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. ST-2 (High Grade): High certainty of timely payment. Liquidity factors are strong and supported good fundamental protection factors. Risk factors are very small. Concluding Remarks In 2022, our proven business model, which has so far delivered consistent earnings for us, our long-term strategies and prudent investments we are making will allow us to introduce new products and services, offer sound and timely advice to our customers and continue to drive the process of growth. We will also invest in our communities, promote inclusion and work with all of our stakeholders to address society’s biggest challenges. My confidence in the future comes from my confidence in my colleagues. It is not just what they have delivered this year that matters, but how they delivered – with care, dedication and compassion for each other and those we serve. I would like to thank you, our shareholders, our customers, my Board of Directors, Bangladesh Bank and last but not the least my AIBL colleagues for their tremendous efforts, continued support and trust in AIBL. (Farman R. Chowdhury) Managing Director & CEO Date: 11 August 2022
  41. Bismillahir Rahmanir Rahim All praise is to be the Almighty Allah , Lord of the Universe and blessings of Allah be upon the Prophet Mohammad (SM) and his descendants & companions Dear Shareholders, Assalamu Alaikum Wa Rahmatullahi Wa Barakatuhu. Board of Directors’ Report The Board of Directors of the Bank takes the privilege to welcome you all to the 27th Annual General Meeting and has the pleasure of placing before you the Annual Report and the financial statements comprising the Balance Sheet, Profit & Loss Account, Cash Flow Statement and Statement of Changes in Equity of the Bank along with the report of the Auditors and Shariah Supervisory Committee for the year ended 31 December 2021. Economy Analysis World Economy Outlook After rebounding to an estimated 5.5 percent in 2021, global growth is expected to decelerate markedly to 4.1 percent in 2022, reflecting continued COVID-19 flare-ups, diminished fiscal support, and lingering supply bottlenecks. The near-term outlook for global growth is somewhat weaker, and for global inflation notably higher, than previously envisioned, owing to pandemic resurgence, higher food and energy prices, and more pernicious supply disruptions. Global growth is projected to soften further to 3.2 percent in 2023, as pent-up demand wanes and supportive macroeconomic policies continue to be unwound. Although output and investment in advanced economies are projected to return to pre-pandemic trends next year, in emerging market and developing economies (EMDEs)— particularly in small states and fragile and conflict -afflicted countries—they will remain markedly below, owing to lower vaccination rates, tighter fiscal and monetary policies, and more persistent scarring from the pandemic. Various downside risks cloud the outlook, including simultaneous Omicron-driven economic disruptions, further supply bottlenecks, a de-anchoring of inflation expectations, financial stress, climate-related disasters, and a weakening of long-term growth drivers. As EMDEs have limited policy space to provide additional support if needed, these downside risks heighten the possibility of a hard landing. This underscores the importance of strengthening global cooperation to foster rapid and equitable vaccine distribution, calibrate health and economic policies, enhance debt sustainability in the poorest countries, and tackle the mounting costs of climate Annual Report 2021 39
  42. change . EMDE policy makers also face the challenges of heightened inflationary pressures, spillovers from prospective advanced-economy monetary tightening, and constrained fiscal space. Despite budgetary consolidation, debt levels—which are already at record highs in many EMDEs—are likely to rise further owing to sustained revenue weakness. Over the longer term, EMDEs will need to buttress growth by pursuing decisive policy actions, including reforms that mitigate vulnerabilities to commodity shocks, reduce income and gender inequality, and enhance preparedness for health- and climate-related crises. Regional Prospects: Growth in most EMDE regions in 2022-23 is projected to revert to the average rates during the decade prior to the pandemic, with the exception of East Asia and xx Pacific. This pace of growth will not be enough to recoup output setbacks during the pandemic, however. By 2023, annual output is expected to remain below the pre-pandemic trend in all EMDE regions, in contrast to advanced economies, where the gap is projected to close. The pace of recovery will be uneven across and within regions, with downside risks dominating the outlook. On a per capita basis, the recovery may leave behind those in economies that experienced the deepest contractions in 2020, such as tourism-reliant island economies. Half or more of economies in East Asia and Pacific, Latin America and the Caribbean, and the Middle East and North Africa, and two-fifths of economies in Sub-Saharan Africa, will still be below their 2019 per capita GDP levels by 2023. This edition of Global Economic Prospects also includes analytical pieces on the features and implications of global commodity price cycles, the impact of the COVID-19 pandemic on global income inequality, and the experience with past coordinated debt restructurings. Commodity Price Cycles: Drivers and Policies. Commodity prices soared in 2021 following the broad-based decline in early 2020, with prices of several commodities reaching all-time highs. In part, this reflected the strong rebound of demand from the 2020 global recession. Energy and metal prices generally move in line with global economic activity, and this tendency has strengthened in recent decades. Looking ahead, global macroeconomic developments and commodity supply factors will likely continue to cause recurring commodity price swings. For many commodities, these may be amplified by the transition away from fossil fuels. To dampen the associated macroeconomic fluctuations, the almost two thirds of EMDEs that are commodity exporters need to strengthen their policy frameworks and reduce their reliance on commodity-related revenues by diversifying exports and, more importantly, national asset portfolios. Impact of COVID-19 on Global Income Inequality: The COVID-19 pandemic has raised global income inequality, partly reversing the decline that was achieved over the previous two decades. Weak recoveries in EMDEs are expected to return between-country inequality to the levels of the early 2010s. Preliminary evidence suggests that the pandemic has also caused within-country income inequality to rise somewhat in EMDEs because of particularly severe job and income losses among lower-income population groups. Over the medium and long term, rising inflation, especially food price inflation, as well as pandemic-related disruptions to education may further raise within-country inequality. Within country inequality remains particularly high in EMDE regions that account for about twothirds of the global extreme poor. To steer the global recovery onto a more equitable development path, a comprehensive package of policies is needed. A rapid global rollout of vaccination and redoubled productivity-enhancing reforms can help lower between-country 40 Annual Report 2021 inequality. Support targeted at vulnerable populations and measures to broaden access to education, health care, digital services and infrastructure, as well as an emphasis on supportive fiscal measures, can help lower within-country inequality. Assistance from the global community is essential to expedite a return to a green, resilient, and inclusive recovery. Resolving High Debt after the Pandemic: Lessons from Past Episodes of Debt Relief. In the pandemic-induced global recession of 2020, global debt levels surged. The rise in debt has led to several countries initiating debt restructurings, while many others are in or at high risk of debt distress and may also eventually need debt relief. Historically, several umbrella frameworks coordinated debt relief to multiple debtor countries from multiple creditors on common principles. They offered substantial—but protracted—debt stock reductions that were typically preceded by a series of less ambitious debt relief efforts. The G20 Common Framework provides a structure to initiate debt restructuring for low income IDA eligible countries, but largely avoids the issue of outright debt reductions. Future umbrella frameworks for debt restructuring will face greater challenges than those in the past due to a more fragmented creditor base. Bangladesh Economic Outlook Bangladesh economy has been consistently performing well with above 6 percent of GDP growth since FY 2010-11 to up until COVID-19 outbreak. The growth rate was elevated to 8.15 percent in FY 2018- 19. Unfortunately, country’s economic growth was slowed due to the negative impact of COVID-19 pandemic. According to the provisional estimates of BBS, growth rate achieved in FY 2019-20 is 3.51 percent. In FY 2020-21, the estimated GDP growth target is 5.47 percent. According to provisional estimate of BBS, per capita GDP and per capita national income stood respectively at US$ 2,097 and US$ 2,227 in FY 2020-21. The domestic savings stood 24.17 percent of GDP, and national savings stood at 30.39 percent of GDP for the same period. The gross investment stood at 29.92 percent of GDP in FY 2019-20 where public investment and private investment accounted for 8.67 percent and 21.25 percent of GDP, respectively. In FY 201920, the inflation rate was 5.65 percent. Of this, the food inflation was 5.56 percent and nonfood inflation stood at 5.85 percent. The inflation rate for FY 2020-21 was 5.4 percent. But the actual inflation rate reached at 5.56 percent which was slightly higher than the estimate. The food inflation was 5.73 percent and nonfood inflation reached at 5.29 percent. Yet the Government’s continuous efforts to keep up the food supply chain uninterrupted during COVID-19 pandemic worked well and helped to keep the inflation under control. Banking sector analysis After the independence, banking industry in Bangladesh started its journey with 6 nationalized commercialized banks, 3 State owned specialized banks and 9 Foreign Banks. In the 1980’s banking industry achieved significant expansion with the entrance of private banks. Now, banks in Bangladesh are primarily of two types: Scheduled Banks: The banks which get license to operate under Bank Company Act, 1991 (Amended up to 2013) are termed as Scheduled Banks. Non-Scheduled Banks: The banks which are established for special and definite objective and operate under the acts that are enacted for meeting up those objectives, are termed as Non-Scheduled Banks. These banks cannot perform all functions of scheduled banks.
  43. There are 61 scheduled banks in Bangladesh who operate under full control and supervision of Bangladesh Bank which is empowered to do so through Bangladesh Bank Order , 1972 and Bank Company Act, 1991. Scheduled Banks are classified into following types: State Owned Commercial Banks (SOCBs): There are 6 SOCBs which are fully or majorly owned by the Government of Bangladesh. There are now 5 non-scheduled banks in Bangladesh which are: • Ansar VDP Unnayan Bank, • Karmashangosthan Bank, • ProbashiKollyan Bank, • Jubilee Bank, • Palli Sanchay Bank A. Private Commercial Banks (PCBS): There are 43 private commercial banks which are majorly owned by the private entities. PCBs can be categorized into two groups: B. Conventional PCBS: 33 conventional PCBs are now operating in the industry. They perform the banking functions in conventional fashion i.e interest based operations. C. Islami Shariah Based PCBS: Al-Arafah Islami Bank Limited Exim Bank Limited First Security Bank Limited Islami Bank Bangladesh Limited ICB Islami Bank Limited Shahjalal Islami Bank Limited Social Islami Bank Limited Union Bank Limited Standard Bank Limited Global Islami Bank Limited Overall Banking Scenario Banks’ Deposits: Total Deposit (excluding interbank items) of the scheduled banks increased by Tk. 11,88,706 million representing 9.21% point to point growth from Tk. 14,093,430 million as on 31 December 2021 to Tk.1,29,04,724 million as on 31 December 2020. Islamic Banks’ Deposits: All Islamic Banks’ deposits stood at TK. 3,931,110 million during the year 2021 as against Tk. 3,269,222.40 million in the previous year 2020 and it increased by Tk. 6,61,887.60 million registering a growth of 20.24% in 2021. The share of Islamic Banks’ deposits as of 31 December 2021 stood at 27.89% as compared to at 25.33% on 31 December 2020. Banks’ Advances /Investment: Total Advances/ Investments (excluding bills) of the scheduled banks increased by Tk. 1,226,537 million representing 10.71% point to point growth from Tk. 11,449,073 million as on 31 December 2020 to Tk. 12,675,610 million as on 31 December 2021. Islamic Banks’ Investments: All Islamic Banks’ Investments stood at TK 3,534,480 million during the year 2021 as against Tk. 2,940,936.38 million in the previous year 2020 and the Investment increased by Tk 5,93,543.62 million registering a growth of 20.18% in 2021. The share of Islamic Banks’ Investments as of 31 December 2021 stood at 27.88% as compared to 25.69% on 31 December 2020. Operating Profit: Despite a tough start of the year 2021 Banks in Bangladesh managed to earn a reasonable amount of operating profit for the year. But The growth of profit was slim owing to low credit/investment demand, cautious lending/investment policy, lowering lending/ investment profit rates and the sluggish business environment. In terms of operating profit earned, Islami Bank Bangladesh Limited (IBBL) is the highest and thus topping the list of Banks. Al-Arafah Islami Bank Limited (AIBL) ended up being on 10th position in 2021. However, in an apple to apple comparison (i.e. Islami to islami) AIBL is only second to IBBL, the oldest and biggest Islami Bank in Bangladesh. Islami Banking Practices Islami Banking System is becoming more and more attractive day by day to peoples irrespective of nations, religious, colors and species. More than 300 Banks & financial institutions are serving Islami banking throughout the world. At present in our country 10 fullfledged Islamic Banks are working successfully. And other traditional banks have Islami Banking Wings conducting Shariah based banking activities. Recent Development of Bangladesh Government Islamic Investment Bond (BGIIB) is the milestone for shariah based banking practices in Bangladesh. Al-Arafah Islami Bank Limited With the objective of achieving success in life here & here after following the way directed by the Holy Quran and the path shown by Rasul (SM) Al-Arafah Islami Bank Ltd was established(registered) as a public limited company on 18 June 1995. The inaugural ceremony took place on 27 September 1995. The authorized capital of the Bank is Tk. 15,000.00 million and the paid-up capital is Tk. 10,649.02 million as on 31.12.2021. Renowned Islamic Scholars and pious businessmen of the country are the sponsors of the Bank. 100% of paid up capital is being owned by local shareholders. The equity of the bank has stood at Tk. 25,900.33 million as on 31 December 2021, the manpower was 4,247 and the number of shareholders was 19,146. It has achieved a continuous profit and declared a good dividend over the years. High quality customer service through the integration of modern technology and new products is the tool of the bank to achieve success. The bank has a diverse array of carefully tailored products and services to satisfy customer needs. The Bank is committed to contribute significantly to the national economy. It has made a positive contribution towards the socio-economic development of the country with 201 branches of which 26 is AD throughout the country. We are pledge-bound to convert the Bank into an Islami Bank on global standard which will be dynamic in actions, progressive in ideas, honest in dealings, correct in judgment, futuristic in attitude, fair in approach, polite in behavior and devoted to high quality service to customers. Our aims are for boosting modern management, advanced technology, good profitability and steady growth transparency. We are also firmly committed to disclosure and compliance to shariah and regulatory authorities. Today the bank is an agile organization which promotes innovation, encourages improvement, values sense of urgency and develops people who accept challenges and turns them into opportunities. Annual Report 2021 41
  44. Performance at a glance (In Million Taka) 2019 3,53,287.97 7,494.14 6,687.77 2020 25,900.33 3,26,023.41 25,455.85 24,148.21 6,308.89 2018 24,148.21 2,61,874.13 2,66,205.48 6,955.77 2017 23,483.22 2,35,905.23 22,520.68 2,44,806.26 Operating Profit 2,88,486.02 2,97,241.81 Investment 3,08,620.66 Deposit 3,36,890.72 Shareholders’ Equity 2021 Special Features of Al-Arafah Islami Bank Ltd. • All activities of the bank are conducted according to Islamic Shariah where profit is the legal alternative to interest. • The bank’s investment policy follows different modes approved by Islamic shariah based on the Qur’an & Sunnah. • The bank is committed towards establishing welfare-oriented banking system, economic upliftment of the low-income group of people, create employment opportunities. • According to the need and demand of the society and the country as a whole the bank invests money to different ‘Halal’ business. The bank participates in different activities aiming at creating jobs, implementing development projects of the government and creating infrastructure. • The bank is committed to establish an economic system resulting in social justice and equitable distribution of wealth. It is committed to bring about changes in the underdeveloped rural areas for ensuring balanced socioeconomic development of the country through microcredit program and financing of SME’s as well. • According to Mudaraba system, the depositors are the partners of the investment income of the bank. About 70% of the investment income is distributed among the Mudaraba depositors. • To render improved services to the clients imbued with Islamic spirit of brotherhood, peace and fraternity and by developing an institutional cohesion. The bank is contributing to economic and philanthropic activities. AIBL English Medium Madrasah, AIBL library and Al-Arafah Islami Bank Foundation Kidney Dialysis centre patronizes by the Bank are such examples. Activities of Shariah Supervisory committee for the year 2021 Al-hamdulillah, Shariah Supervisory committee consists of 7 members specialized in Fiqhul Muamalat (Islamic Commercial Law) according to guidelines given by the Bangladesh Bank to ensurewhether all banking operations are transacted in accordance with Islami Shariah i.e. Qur’an, Sunnah, Ijma and Iztihad. Shariah Supervisory committee has by the grace of Al-mighty Allah managed to contribute a lot to run all the business activities of the Bank according to Shariah guidelines. During the year 2021 with some unavoidable circumstances our Honorable Members of the Shariah Supervisory Committee sat in 3(Three) General Meetings and 1(one) Emergency Meeting to discuss the matters of the Bank to give opinions & directives and given solutions thereof from the view point of Shariah Principles. 42 Annual Report 2021 Muraqibs of the Supervisory committee have visited all branches of the Bank during the year to observe the Shariah compliance, give necessary instructions on the spot and submitted report to the Council. They have also submitted corrective measures to rectify the laws in implementing Shariah guidelines into the banking operations. They identified Tk 9.42 million as doubtful income of the branches of the Bank. Besides, after analyzing balance sheet, the Supervisory committee identified Tk. 275.81 million as compensation realized in different branches and Tk. 0.01 million, Tk. 1.00 million as interest income received from NOSTRO A/Cs of foreign correspondent bank and Bangladesh Bank FC Clearing Account respectively. As a result, it is advised to finalize the Balance Sheet of 2021 keeping doubtful in-come apart from basic income and spend after tax the same on the basis of Shariah prescribed modes. At Last, as per Shariah Inspection Report of 2021, the Doubtful Income of the Bank has been reduced comparatively and we hope that this reducing figure will be continued andnecessary steps would be taken time to time, Insha-Allah. A library has been established in the Shariah Council Secretariat of AlArafah Islami Bank having about 500 books on Qur’an, Hadith, Fiqh, Islamic Economics and Islami Banking. Honorable members of the Council give Shariah guidelines to run theBank’s operations taking necessary consultations and data from those books after exhaustive research and study. May Allah give us tawfiq to do all activities at His pleasure, Ameen. AIBL Capital Market Services Ltd. AIBL Capital Market Services Limited is a subsidiary company of Al-Arafah Islami Bank Limited. The Company is incorporated under the company’s Act, 1994 as a public limited company by shares with an authorized Capital of BDT 10 billion (10,000million) and paid up capital of BDT 4 billion (4,000.00 million) to provide stock brokerage services. The paid-up capital of the company is subscribed by Al- Arafah Islami Bank Limited and other individuals at the ratio of 60.50:39.50. During the year 2021 the company earned Operating Profit (Before provision for investment & taxation) of Tk. 140.74 million with Earning per Share (EPS) Tk. Tk.0.245. AIBL Capital Management Limited AIBL Capital Management Limited (AIBLCML), a Subsidiary of AlArafah Islami Bank Limited, was incorporated under the companies Act, 1994 on October 25, 2011 with a view to run and manage the operations of Merchant Banking Services with an authorized Capital of BDT 2 billion (2,000 million)and paid up capital of BDT 500 million (500 million). It aims to be one of the leading Merchant Banks of the country by rendering quality Merchant Banking Services with a high level of professional expertise and integrity. During the year 2020 the company earned Operating Profit (Before provision for investment & taxation) of Tk. 7.51 Million with Earning per Share (EPS) Tk. 0.099. AIBL Assets Management Limited AIBL Assets Management Limited (AIBLAML), a Subsidiary of AlArafah Islami Bank Limited, was incorporated under the companies Act, 1994 on January 01, 2014 with a view to run and manage the operations of Assets Management services with an authorized Capital of BDT 500 billion (500 million) and paid up capital of BDT 100 million (100 million). It aims to be one of the leading Assets Management Services of the country by rendering quality Management Services with a high level of professional expertise and integrity.
  45. Opening 22 .60 22.60 21.00 21.90 21.30 24.10 23.00 22.80 26.30 26.10 26.70 26.40 High 23.40 23.00 22.70 22.20 26.00 24.80 23.40 30.10 27.10 28.10 29.20 27.40 Low 21.50 20.40 20.20 21.00 21.20 23.40 21.50 22.60 25.70 25.90 25.90 26.20 Closing 22.60 21.00 21.90 21.30 24.10 23.00 22.80 26.30 26.10 26.70 26.40 26.60 Progress Analysis At the end of 2021, the number of depositors stood at 2,541,170 and the accumulated deposit was Tk. 353,287.97 million. The total number of investors stood at 170,904 and total investment extended to them was Tk 336,890 million. During the year 2021 the total income was Tk. 27,696.18 million and total expenditure was Tk.20,202.04 million. At the end of the year the profit before tax and provision stood Tk. 7,494.14 million. Capital Adequacy & Reserve Fund According to BRPD Circular the Bank will have to maintain Tk.4,000.00 million Capitals from 1st July 2011. In compliance with the new 2018 2019 2020 15.31 15.07 Capital Adequacy Ratio As% 2017 Position in the Stock Market in the list: Month January February March April May June July August September October November December In the year 2015 AIBL issue Mudaraba Subordinated Bond Tk. 3,000.00 million, in the year 2018 for Tk. 5,000.00 million and in the year 2020 for Tk. 5,000.00 million that meet the qualifying criteria for Tier 2 Capital as per annex 4 of Basel III Guidelines. The paid up capital of the bank was at Tk.10,649.02 million at 31st December 2021.The total reserve fund has stood at Tk.11,733.36 million in the current year against Tk. 11,418.96 million at 31st December2020. In this account, the bank experienced a growth of 2.75%. The Bangladesh Bank has fixed the ratio of minimum capital adequacy (MCR) against RiskWeighted Assets at 12.50% or Tk. 4,000 million whichever is higher. 13.88 Position in the Stock Market Bank’s share sustained a steady strong position since its induction at Dhaka Stock Exchange & Chittagong Stock Exchange in 1998. In Dhaka Stock Exchange the face value of taka 10 of our share was traded at taka 30.10 highest in 2021.The market trend of our bank’s share in Dhaka Stock Exchange from January 2021 to December 2021 is stated in the list: In the year 2021 AIBL issued Mudaraba perpetual Bond for Tk. 5,000.00 million that meet the qualifying criteria for Tier- 1 Capital as per Basel III Guidelines. 14.38 The principal activities of OBU are to provide Mudaraba Investment against payment of import bills under UPAS (Usance Payment at Sight) and Musharaka Documentary Bills in foreign currency (MDB F.C) to its customers. Total finance under UPAS in 2021 was USD 231.79 million and under MDB FC was USD 14.71 million. Our Plan and Strategies for Foreign Exchange Business• to diversify our import and Export portfolio for minimizing potential risks • to ensure routing of all import and export business of our clients through us • to induct best import and export clients from the market • to boost cash import business • to give special attention for remittance service at branch level • to maintain a progressive growth, we have to enhance our capacity by acquiring professional and technical knowledge & skill. provision, the bank has raised its Capital from Tk. 43660.88 million to Tk. 39,258.09 million (Consolidated Basis) and Tk.41,358.68 million to Tk. 37,486.33 million (Solo Basis). Outstanding balance of AIBL Mudaraba Subordinated Bond Tk. 9,600 million as at 31st December 2021. 12.28 Off-shore Banking Unit (OBU) The Bank obtained the Off-shore Banking Unit (“the Unit”) License on 17 February’14 vide letter # BRPD (P- 3)744(121)/2014-934 from Bangladesh Bank. The Bank commenced operation of this unit from 22 may 2014. The Off-shore Banking Unit is governed under the rules and guidelines of the Bangladesh Bank. Its office is located at AIBL Motijheel Branch, 161, Motijheel Commercial Area, Dhaka 1000. 2021 The Consolidated and Solo Basis capital adequacy ratio of the Bank as on 31.12.2021 are appended below: Consolidated Basis a) Core Capital (Tier-I ) 2021 (Tk. in million) 2020 Paid up Capital 10,649.02 10,649.02 Statutory Reserve 10,649.02 10,334.63 Retained Earnings 1823.37 1,732.14 AIBL Perpetual Bond 5000.00 - Non Controlling Interest Total Less Good will and other Intangible assets Total Core Capital b) Supplementary Capital (Tier-II ) Provision for Unclassified Investment Assets Revaluation Reserve AIBL Sub Ordinate Bond 1694.59 1,655.73 29,816.00 24,371.52 514.70 440.63 29,301.30 23,930.89 4,759.58 542.17 9600 4,127.20 542.17 11,200 (542.17) (542.17) Less: Revaluation Reserves for Fixed Assets, Securities & Equity Securities. Total Supplementary Capital 14,359.58 15,327.20 Total Capital (a+b) 43,660.88 39,258.09 c) Capital Adequacy Ratio 15.46% 15.74% Annual Report 2021 43
  46. Deposit Mix Solo Basis (Tk. in million) a) Core Capital (Tier-I ) Paid up Capital Statutory Reserve Retained Earnings AIBL Perpetual Bond Total Less Good will and other Intangible assets Total Core Capital b) Supplementary Capital (Tier-II ) Provision for Unclassified Investment Assets Revaluation Reserve AIBL Sub Ordinate Bond Less: Revaluation Reserves for Fixed Assets, Securities & Equity Securities. Less: Excess Amount over Maximum Limit of T-2 Total Supplementary Capital Total Capital (a+b) c) Capital Adequacy Ratio 2021 2020 10,649.02 10,649.02 1823.37 5000.00 27,941.17 514.70 27,426.47 10,649.02 10,334.63 1,616.11 22,599.76 440.63 22,159.13 Products a) Al Wadia Current Account 4759.58 4,127.20 542.17 542.17 9600.00 11,200.00 (542.17) (542.17) 427.37 13,932.21 15,327.20 41,358.68 37,486.33 15.31 15.07% 175,485.12 d) Mudaraba Term Deposit 68,093.14 e) Bills Payable 4,059.48 Total 353,287.97 Products Taka in Million % of Total a) Cost Free deposit 40,592.79 11.49% b) Low Cost Deposit 106,163.03 30.05% c) High Cost Deposit 206,532.15 58.46% Total 353,287.97 100.00% Deposit Mix as % Cost Free Deposit Low Cost Deposit High Cost Deposit 25,900.33 2019 62,011.04 c) Other Mudaraba Deposit Deposit Mix (%) 25,455.85 23,483.22 24,148.21 22,520.68 2018 43,639.19 b) Mudaraba Savings Deposit Shareholder’s Equity (BDT In Million) 2017 Taka in Million 2020 2021 Deposits The total deposit of the bank was Tk. 353,287.97 million at 31st December 2021 as against Tk. 326,023.41 million at 31st December 2020 a growth of 8.36 % of which Tk 1,933.63 million was bank deposit and Tk. 351,354.34 million was general deposit. The present strategy is to increase the deposit base through maintaining competitive profit rates and having low cost of funds to ensure a better spread with an average return on investment. 12% 58% 30% Various deposit product of the Bank in 2021: Sl.No 1. Types of Deposit Mudaraba Term Deposit a. 36 Months b. 24 Months c. 12 Months d. 06 Months e. 03 Months f. 01 Month 2017 2018 2019 2020 3,53,287.97 3,26,023.41 2,97,241.81 2,44,806.26 2,66,205.48 Deposit Growth (BDT In Million) 2021 The mix deposit of the bank on December 31, 2021 was as follows: 44 Annual Report 2021 2. Mudaraba Savings Deposit 3. Short Notice Deposit (SND) 4. Monthly Hajj Deposit 5. Monthly Installment Term Deposit (ITD) 6. Monthly Profit Based Term Deposit (PTD) 7. Monthly Savings Investment (SID) 8. One Time Hajj Deposit 9. Al-Arafah Savings Bond (3 Years) 10 Al-Arafah Savings Bond (5 Years)
  47. 11 . Al-Arafah Savings Bond (8 Years) 12. Marriage Saving Investment Scheme (MSIS) 13. Pensioners deposit scheme 14. Special Saving (Pension) Scheme 15. Cash WAQF 16. Lakhopati Deposit Scheme 17. Kotipati Deposit Scheme 18. Millionaire Deposit Scheme 19. Double Benefit Scheme 20. Triple Benefit Deposit Scheme 21. ProbashiKallyan Deposit Pension Scheme 22. Mudaraba Savings Deposit-Student, 23. Farmers, Freedom fighters. AIBL Mudaraba Subordinated Bond: AIBL Mudaraba Perpetual Bond’ of Tk. 5,000.00 million: AIBL Mudaraba Perpetual Bond’ of Tk. 5,000.00 million issued in 2021.To raise Additional Tier-1 Capital through issuance of AIBL Mudaraba Perpetual Bond in order to strengthen its capital base in accordance with Bangladesh Bank’s Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework in line with Basel III). AIBL 1st Mudaraba Subordinated Bond’ of Tk. 3,000.00 million: AIBL Mudaraba Subordinated Bond’ of Tk. 3,000.00 million issued in 2015. The total profit/ return on the bond (for bond holders) will be calculated by Benchmark Mudaraba Term Deposit Profit rate of the issuer plus a predetermined additional profit rate. The Benchmark Mudaraba profit rate will be issuer’s prevailing highest Mudaraba term deposit profit rate in 6-12 months tenor; to be applied semiannually. The highest prevailing published Mudaraba Term Deposit profit rate in 6-12 months tenor of the issuer will be applicable in semi annual profit rate fixation. Investors are getting an additional profit rate of 2.50% per annum to be paid semi annually along with the benchmark profit by the issuer. The Mudaraba Bond will be redeemed at the end of 3rd, 4th, 5th, 6th and 7th year of maturity at 20% of the bond value respectively. In the mean time 80% of the Bond amount was redeemed at the end of 31st December 2021. The issue has been proposed to be transferable but will not be listed with any bourses. The Standard Chartered Bank is the lead arranger of this issue and Green Delta Insurance Company Limited is the trustee. AIBL 2nd Mudaraba Subordinated Bond’ of Tk. 5,000.00 million: AIBL 2nd Mudaraba Subordinated Bond’ of Tk. 5,000.00 million issued in 2018. The total profit/ return on the bond will be calculated 1.25 times of highest 6 (six) month term Mudaraba Term Deposit profit rate for the preceding 180 days. After each financial year-end, the Issuer will give adjustment to the Bondholders if there is any additional profit reported in the respective financial year for Mudaraba Term Deposit Profit Rate for 6 months tenor. The Benchmark Mudaraba profit rate will be issuer’s prevailing highest Mudaraba term deposit profit rate in 6-12 months tenor; to be applied semiannually. The highest prevailing published Mudaraba Term Deposit profit rate in 6-12 months tenor of the issuer will be applicable in semi annual profit rate fixation. The Mudaraba Bond will be redeemed at the end of 3rd, 4th, 5th, 6th and 7th year of maturity at 20% of the bond value respectively. In the mean time 20% of the Bond amount was redeemed at the end of 31st December 2021. The issue has been proposed to be transferable but will not be listed with any bourses. The Prime Bank Investment Limited is the lead arranger of this issue and Green Delta Insurance Company Limited is the trustee. AIBL 3rd Mudaraba Subordinated Bond’ of Tk. 5,000.00 million: AIBL 3rd Mudaraba Subordinated Bond’ of Tk. 5,000.00 million issued in 2020. The total profit/ return on the bond will be calculated as the average Rates of 6 months of Full-fledged Shariah based banks collected from latest available “Announced Profit Rate Chart of those Banks (Deposit Rate)” published by Bangladesh Bank in its website at the beginning of any Profit Payment Period with an additional profit rate of 2.00% per annum. After each financial year-end, the Issuer will give adjustment to the Bondholders if there is any additional profit reported in the respective financial year for Mudaraba Term Deposit Profit Rate for 6 months tenor. Payment of profit will be Semi-annually not later than 60 days from expiry of 6 (six) months and 12 (twelve) months of each year from the issuance of Bond. The Mudaraba Bond will be redeemed at the end of 3rd, 4th, 5th, 6th and 7th year of maturity at 20% of the bond value respectively. The issue has been proposed to be transferable but will not be listed with any bourses. The Prime Bank Investment Limited is the lead arranger of this issue and Green Delta Insurance Company Limited is the trustee. The details of Implementation Schedule of Mudaraba Subordinated Bond are stated as under: Instrument Name AIBL 1st Mudaraba Subordinated Bond AIBL 2nd Mudaraba Subordinated Bond AIBL 3rd Mudaraba Subordinated Bond Amount in Million BDT Particulars Term Deposit with other Banks (from Bond money received). 1,500/- Disbursement to the Investment Clients of AIBL against Bond money received 1,500/- Term Deposit with other Banks (from Bond money received). 2,500/- Disbursement to the Investment Clients of AIBL against Bond money received 2,500/- Term Deposit with other Banks (from Bond money received). 2,500/- Disbursement to the Investment Clients of AIBL against Bond money received 2,500/- Investment The investment of the bank has stood at Tk. 336,890.72 million as on 31st December 2021 as against Tk. 308,620.66 (Net off PR) million in the previous year showing an increased by 9.16%. The investment portfolio of the bank is well diversified and covers a broad spectrum of businesses and industries including readymade garments, textile, edible oil, ship scraping, steel & engineering, chemicals, pharmaceuticals, cement, telecommunication, construction, health care, real estate, education, transport and investment under consumer schemes. We have geared up efforts to improve the recovery rate of disbursed investment and also taken adequate measures for converting the classified investment into performing assets. As a result, classified investment of the bank could be kept at a low level far below the national average. It is 4.81% in our bank as on 31 December 2021. Annual Report 2021 45
  48. 3 ,,36,890.72 3,08,620.66 Administrative and Other Expenses: The administrative and other expenses were Tk. 7,129.25 million during the year showing 5.74% growth over the year 2020. It is 35.29% of the total expenditure. Total Income & Expenditure (In Million Taka) 5,663.50 178,629.90 24,653.90 2,807.70 11,341.30 1,753.80 116,420.52 3,960.30 345,710.92 8,340.20 Construction Water works & Sanitary Service Transport & Communication Storage 0% 1% Trade Finance Miscellaneous Income Investment income: The investment income was Tk. 23,446.01 million during the year 2021 which was growth of -10.96% over the previous year. Investment income is 84.65 % of the total income of Tk. 27,695.18 million. Income from other than investment: The bank has earned Tk. 4250.17 commission income, exchange income, locker rent etc. in the current year which is 15.35% of the total income. It indicates 16.27% growth over the year 2020. Expenditure Profit paid to depositors: The Bank has paid the depositors Tk. 13,072.79 million which is 55.66% of the investment income and 64.71% of the total expenditure for the year 2021. It was -21.04% growth over the year 2020. 46 Annual Report 2021 2014 2015 27,696.18 20,202.04 29,986.74 23,298.97 24,988.60 336,890.72 Industry 52% 7% 32,849.22 Operating Profit (BDT in million) 2013 2016 2017 2018 2019 2020 2021 Agriculture, Fishing and Forestey 1% 2% 3% 28,726,20 Operating Profit The bank earned operating profit of Tk. 7,494.14 million during the year 2021. The operating profit of the Bank during the year 2020 was Tk.6,687.77 million and thus the Bank attained growth of 12.06% in respect of operating profit. The provision for income tax for the year amounted to Tk. 2,712.12 million and divisible profit available for appropriation amounted to Tk. 1,688.59 million. 2012 34% 2021 7,494.14 Agriculture, Fishing and Forestry Industry Construction Water works & Sanitary Service Transport & communication Storage Trade Finance Miscellaneous Total (Including Profit Receivable Less Unearned Profit on Investment Total 2020 6,687.77 Taka in million 2019 7,860.62 Sectors 2018 6,308.89 Sector wise Investment 2021 2017 6,955.77 The bank gives top-most priority to the creation of quality assets and does appropriate risk grading while approving commercial, trade and project investment to different clients. 7,511.03 2021 6,360.15 2020 22,417.31 2019 4,948.56 2018 4,755.54 2017 Total Income 17,092.62 24,048.39 Total Income 6,333.45 2,35,905.23 2,61,874,13 2,88,486.02 Investment Growth (BDT In Million) International Banking Wing (IBW) International Trade We are now more capable and confident of handling Foreign Exchange Business. Presently, we have 26 AD Branches through which we have handled total foreign exchange business of Tk. 450,015.10 million during the year 2021 as against the Target of Tk. 419,000.00 million. Our Foreign Exchange business has increased by Tk.131,889.80 million recording a growth of 4.15%. Target of International Trade for the year 2022 has been fixed at Tk. 530,000.00 million with 15.09% growth. Import Business Total import business of the bank stood at Tk. 261,566.10 million during the year 2021 as against Tk. 169,378.90 million, Tk. 171,611.70 million and Tk. 168,573.80 million in the previous year 2020, 2019 and 2018 respectively. Our import business increased by Tk. 92,187.20 million i.e. 54.43% growth in 2021 as compared to decrease of Tk. 2,232.80 million i.e. -1.30% growth in 2020 and increase of Tk 3,037.90 million i.e. 1.80% in 2019 respectively. Target for Import business for the year 2022 has been fixed at Tk. 300,000 million with an expected growth of 14.69%.
  49. Remittance Business Growth Tk in million Import Business Growth Tk in million 2017 2018 2019 2020 2021 Import 1 ,59,042 1,68,573 1,71,611 1,69,378 2,61,566 Growth (Amt) 4,025.58 9,531.40 3,037.90 2,232.8 92,187.2 Growth% 33.89% 5.99% 1.80% -1.30% 54.43% Export Business Total Export business of the bank stood at Tk. 135,786.90 million during the year 2021 as against Tk. 104,939.40 million, Tk. 108,967.10 million, Tk. 114,481.90 million in the previous year 2020, 2019 and 2018 respectively. Our export business increased by Tk. 92,187.20 million i.e. 29.40% growth in 2021 as compared to decreases of Tk. 4,027.70 million i.e. -3.70% growth in 2020, decreases Tk. 5,514.80 million i.e. -4.82% growth in 2019. Our target for Export business for the year 2022 has been fixed at Tk 170,000 million with an expected growth of 25.20%. Export Business Growth Tk in million 2017 2018 2019 2020 2021 1,07,287.50 1,14,1481.90 1,08,967.10 1,04,939.40 1,35,786.90 Growth (Amt) 1,913.52 7,194.40 (5,514.80) (4,027.70) 30,847.50 Growth% 21.71% 6.71% -4.82% -3.70% 29.40% Export Remittance Total remittance of the bank stood at Tk. 52,662.10 million during the year 2021 as against Tk. 43,807.00 million, Tk. 37,713.40 million and Tk. 36.917.20 million in the previous year 2020, 2019 and 2018 respectively. Our remittance increased by Tk. 8,855.10 million i.e. 20.21% in 2021 as compared to increases of Tk. 6093.60 million i.e. 16.16% in 2020, Tk. 796.20 million i.e. 2.16% % in 2019 respectively. Target for Remittance business for the year 2021 has been fixed at Tk. 60,000 million and thus expecting a growth of 12.23%. 2017 2018 2019 2020 2021 Remittance 20,700.00 36,917.20 37,713.40 43,807.00 52,662.10 Growth (Amt) 8,968,10 16,217.20 796.20 6,093.60 8,855.10 Growth% 76.42% 78.34% 2.16% 16.16% 20.21% Treasury Operations: Worldwide mobility restrictions due to delta and omicron variants of covid-19 is damaging economies across the world, including financial markets and institutions in all possible dimensions. For banks in particular, globally imposed restrictions generates multifaceted crises like potential increase in default rates, liquidity and profit rate imbalance, low credit/deposit growth, policy restrictions from regulators. In line with the financial dynamics across the world, AIBL Treasury has played a pivotal role in overall fund management of the bank. Treasury team monitored inflows and outflows of all balance sheet contracts and profitably managed liquidity and unusual situations within the laid down policies and regulations of Bangladesh Bank. Treasury always focus to cater the needs of different treasury solutions in changing environments. For inherent principles, the bank has many limitations and cannot deal with conventional Treasury products like Govt. Treasury Bond, Treasury bill, Call Money, SWAP & Forward Contracts. In spite of all the limitations, Treasury team was committed to offer competitive price, excellent services and time befitting advices to the clients to best fit the changing environment. AIBL Treasury has separate designated desks to provide optimum Treasury solutions. Desks are as follows: • Foreign Exchange Desk • Money Market Desk • Asset Liability Management Desk and • Corporate Service Desk Foreign Exchange Desk Foreign Exchange Desk thoroughly monitored exchange rate movements, volatility & liquidity scenario of USD and other active currencies throughout the years. Treasury set exchange rates for merchant transactions, successfully managed Net Open Position (NOP), ensured optimum liquidity, quoted market-based exchange rates to the exchange houses and managed FC liquidity for our Offshore Banking Unit (OBU). The Foreign Exchange desk has maintained close liaison with a set of local and foreign counterparts for ensuring of FC liquidity around the calendar. AIBL Treasury successfully managed FC dealing of cross currencies through its trading platforms of world renowned banks. The Desk has also provided FC dealing solutions to the counterparty banks in our local market. Whole of the year they have performed 2,856 no. of USD/BDT & cross currency deals. FX Desk has contributed operating income of BDT 1,672.70 million from cross currency deals, exchange gains & FC funding. In 2021, Treasury Back Office (TBO) team has handled 112,724 nos FX transactions Annual Report 2021 47
  50. with turnover of USD 5 .24 bio. FX transactions were being routed through 34 Nostro accounts in USD, EUR, GBP, CNY, CHF, JPY, AED & SAR currencies. TBO had relentlessly driven it’s all out effort for timely reconciliation of all of the nostro transactions aligned with Bangladesh Bank regulations. Money Market Desk Ensuring optimum liquidity of local currency to meet asset book requirement as well as earning optimum profitability from the mismatches between maturity buckets of deposits of the bank within regulatory requirements are prime responsibility of the Money Market Desk. AIBL Treasury Money Market Desk also maintained Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) of the bank efficiently. Our team has successfully managed liquidity as well as deployed surplus funds to the Islamic banks, Islamic windows & Islamic branches of conventional banks and leasing companies operated under shariah principles. In 2021, Government introduced Bangladesh Government Investment Sukuk (BGIS) first time & AIBL also participated in its first auction of BGIS for SLR maintenance. Asset Liability Management (ALM) Desk Managing the risks that arises from maturity mismatches of Asset Liability of the bank is the prime responsibility of ALM Desk. Bank faces several risks like Liquidity Risk, Profit Rate Risk, Credit Risk and Operational Risk etc. ALM Desk mainly manages Liquidity Risk and Profit Rate Risk of the bank through day-to-day monitoring of market information & future outlooks. It prepares ALCO paper & conducts ALCO meetings each month where all issues related with ALM are discussed and instructions are given. 2021 was a challenging year from Asset Liability point of view as Bangladesh Bank issued directives for deposit rate protection against inflation. Due to volatile movements of profit/interest rates of Asset and Liabilities in the market, it was a real challenge to maintain a reasonable spread. The ALM Desk was proactive to revise the profit rates of deposits aligning with market rates as well as ensuring liquidity. ALM Desk successfully recommended asset-liability slotting for maintaining a steady and reasonable spread for 2021. ALM Desk has properly maintained BASEL III ratios like Liquidity Coverage Ratio (LCR), Net Stable Funding Ratio (NSFR) leverage ratio, commitment and wholesale borrowing position within set limit of Bangladesh Bank. Corporate Service Desk We are providing customized treasury solutions to our corporate client’s matching with market practices from the Corporate Service Desk. Mainly our foreign trades clients seek market oriented timely solutions and appropriate advices for their FX portfolios. The main objective of the desk is to ensure maximum utilization of funds of corporate clients ensuring profitability of the bank as well as strengthening their trust on us. Besides all of its regular activities, Treasury has updated following guidelines which had been duly approved by our Board of Directors: • Foreign Exchange Risk Management Guidelines • Guidelines on Asset Liability Management • Wholesale Borrowing and Lending Guidelines • Management Action Trigger • Contingency Funding Plan • Profit Rate Risk Management Guidelines • Fund Transfer Pricing Policy • Market risk and counterparty limits. 48 Annual Report 2021 Treasury Outlook of 2022 In 2021 BDT moved against USD from Tk.84.80 to Tk.86.00 resulting appreciation of almost 1.42% which was still overvalued compare to peer currencies. Most of the south Asian countries devalued their currencies significantly which has posed serious threat to our export destinations and country has faced negative growth of exports last year. Due to sporadic of, US-China trade war, Iran Crisis & BREXIT issues, to retain export earnings, BDT may be under pressure for devalue. Government has provided 2% incentive for inward remittances which has contributed in 1.49% growth during the calendar. Moratorium in investment repayment, injecting money by B. Bank from buying dollar from banks dampen money market round the year. But due to post Covid scenario, increases in private sector credit growth & bullish import growth may change overall liquidity position of the market and may lead to deepen the liquidity crisis. To cope up with the changing scenario banks have to introduce tech-based banking, spread Agent and Sub-Branch outlets countrywide and rush to retail depositors/investment clients. Off-Shore Banking Unit (OBU) Al-Arafah Islami Bank Limited (AIBL) obtained the Off-shore Banking Unit (“the Unit”) License from Bangladesh Bank on 17 February, 2014 and commenced its operation from 22 May, 2014. Located at AIBL Motijheel Branch, 161, Motijheel Commercial Area Dhaka-1000, OBU is working as an independent unit. The principal activities of OBU include Mudaraba Investment under UPAS (Usance Payment At Sight), HPSMFC (Hire Purchase Sirkatul Melk in Foreign Currency) against Usance L/C opened at AD branch with the condition that payment will be made at sight by OBU of AIBL against acceptance of LC opening AD branches and Musharaka Documentary Bills in Foreign Currency (MDBFC) against Accepted Local Export Bills to the eligible Deemed Exporters of our AD and Non-AD branches. Besides, OBU may also accept F.C deposits from eligible customers. As per Bangladesh Bank guidelines the Books of Accounts of OBU is being maintained in foreign currencies of which the base currency is USD. Comparative position of Off-shore Banking Unit; PROPERTY AND ASSETS Dec.20 (Million USD) Dec.21 (Million USD) Growth Total Assets 153.82 248.88 61.80% UPAS 145.06 231.79 59.79% MDBFC 8.76 14.71 67.92% HPSM Machinery 0.00 2.38 100.00% Placement from Parent Bank 80.63 94.47 17.16% Borrowing from Overseas Banks 73.19 154.41 110.97% 0.78 1.03 32% Net Operating Income Foreign Remittance Division: Foreign Remittance Division is one of the most potential business segments of the bank which contributes overall growth of the Bank, increases the inflow of foreign currency, assists to build up low cost deposit and strengthens customer base of the Bank as well as upholds Bank’s image in home & abroad and also makes significant impact towards the sustainable development of the Bank. Foreign
  51. Remittance Division is procuring remittance from all the remittance hubs across the globe consisting more than 100 countries through 23 (twenty-three) Remittance Arrangements with different exchange houses in abroad and local banks. 1. Remittance Achievement: Total remittance of the bank stood at Tk. 5,266.21 crore during the year 2021 as against Tk. 4,380.70 crore, Tk. 3,771.34 crore, Tk. 3,691.72 crore and Tk. 2,070.28 crore in the previous year 2020, 2019, 2018 and 2017 respectively. Our remittance increased by Tk. 885.51 crore i.e. 20.21% in 2021 as compared to increases of Tk. 609.36 crore i.e. 16.16% in 2020, Tk. 79.62 core i.e. 2.16% in 2019, Tk. 1,621.44 core i.e. 78.32% in 2018 and Tk. 896.74 crore i.e. 76.41% in 2017 respectively. Target for Remittance business for the year 2022 has been fixed at Tk. 6,350.00 crore expecting growth 20.58%. Performance of Foreign Inward Remittance -From 2017 to 2021: Remittance BDT USD (In Crore) (In Million) Commission No. of Target Achievement Growth Received Tr. (In Crore) (In %) (In %) (In Lac) 2017 2,070.28 251.89 421,704 1,500 138% 131.10 76.41 2018 3,691.72 441.22 684,045 3,000 123% 176.01 78.32 2019 3,771.34 446.45 698,640 5,000 75% 217.88 2.16 2020 4,380.70 516.19 693,537 4,250 103% 211.21 16.16 2021 5,266.21 618.68 827,851 5,400 97.52% 260.72 20.21 Year The Branches & Agent Banking Outlets of AIBL have procured foreign remittance BDT 3,653.79 crore in 2021 which is more than 24.22% of the previous year 2020 and procurement of foreign remittance through BEFTN (A/c Credit with other bank) was BDT 1,612.42 crore in 2021 which is more than 12.03% of the previous year 2020. 2. Remittance Drawing Arrangement: We have executed 04 (four) new remittance drawing arrangements with different exchange houses in Qatar, UK & Spain in 2021 and another 10 (ten) more exchange houses from different hubs of the world are under process. In order to boost-up remittance business the division is deploying all-out effort to establish new drawing arrangement with exchange houses in UAE, Oman, Bahrain, Kuwait, Qatar, Malaysia & across the globe. 3. Foreign Remittance Operation at Agent Banking Outlets: Our all-Agent banking outlets have been disbursing foreign remittance under the support of Foreign Remittance Division. Remittance achieved through Agent Banking Outlets during 2021 was BDT 1,426.87 crore which was 27.09% of total remittance. 4. Marketing & Promotional Activities: With a view to increase transaction of Moneygram, Al-Arafah Islami Bank executed promotional campaigns in Eid-ul-Azha 2021, under joint promotional campaign with Moneygram. Each Moneygram customer got an umbrella during these campaigns. In order to increase remittance volume, the division has a plan to launch more promotional campaigns in 2022. Overseas Banking Division: Overseas Banking Division of International Banking Wing is working continuously to enhance the business arena of the Bank at home and abroad by establishing Correspondent Banking Relationships with different renowned foreign and domestic Banks subject to compliance with AML-CFT regulations of Bangladesh Bank and other competent authorities. Performance of 2021 in this respect is as under: New relationship management application (RMA): Established new 08 RMA (Relationship Management Application) with global banks in 2021 in following regions: New Nostro Accounts: In 2021, we have opened new 01 (One) Nostro Accounts in the following currency as below: Name of the bank Currency City Country Commerz Bank GBP London UK New Credit line in2021: Sl no. Name of the bank 1. First Abu Dhabi Bank, UAE 2. Commercial Bank of Dubai, UAE 3. Exim Finance, Hong Kong 4. Ajman Bank, UAE Vessel Tracking Service in AIBL: Since 2019, we have been implementing web-based vessel tracking services from Lloyd’s List Intelligence (LLI), United Kingdom to prevent our import & export business from involving money laundering and terrorist financing risk as well as to comply with the requirement of Maritime Sanctions screening. Basic Tracker: Basic Tracker enables us to track all our swift payment messages from end-to-end in real time (some banks in between the transaction may be hidden/undisclosed), confirms if the beneficiary has been paid or not etc. Internal Control & Compliance Wing Internal control in bank is a broad term with wide coverage. Internal Control implies the whole system of control implemented by the management in order to carry on the business of the organization in an efficient way by having an automatic check and balance of overall activities and transactions. An ideal internal control system of an organization ensures best possible utilization of the resources and helps to mitigate the risks involved in utilization of organization’s fund and other resources. Framework of Internal Control System: Committee of Sponsoring Organizations (COSO) of the Treadway Commission has developed an internal control framework that has been accepted as the standard all over the world. The key concepts of COSO framework include: a. Internal control is a process (or, more accurately, a series of processes) b. It is effected by people c. It provides reasonable assurance, not absolute assurance d. It is objectives-focused Objectives of Internal Control The main objectives of Internal Control are to achieve its goal by proper use of its resources (e.g. manpower, assets-liabilities, equipment’s Annual Report 2021 49
  52. etc .), identifying its weakness & taking appropriate measures to overcome the weakness. There are 3 (three) types of objectives: Internal Control is established and developed for safeguarding the assets from unauthorized use and mishap, preparation of financial statement from free from misstatement, whether due to fraud or error and keeping business performance in line with ultimate objectives of the organization. Components & Principles of Internal Control Internal control consists of five integrated components such as (a) Control Environment, (b) Risk Assessment, (c) Control Activities, (d) Information & Communication and (e) Monitoring. There are 17 principles under these 5 interrelated components, which are very important for control process. Those are as followsInternal Control Components Principles Control Environment 1. Demonstrate commitment to integrity and ethical values 2. Ensure that board exercises oversight responsibility 3. Establish structures, reporting lines, authorities and responsibilities 4. Demonstrate commitment to a competent workforce 5. Hold people accountable Risk Assessment 1. Specify appropriate objectives 2. Identify and analyze risks 3. Evaluate fraud risks 4. Identify and analyze changes that could significantly affect internal controls Control Activities 1. Select and develop control activities that mitigate risks 2. Select and develop technology controls 3. Deploy control activities through policies and procedures Information& Communication 1. Use relevant, quality information to support the internal control function 2. Communicate internal control information internally 3. Communicate internal control information externally Monitoring 1. Perform ongoing or periodic evaluations of internal controls (or a combination of the two) 2. Communicate internal control deficiencies Three Lines of Defense Model: Three International organizations and their publications; (1) Basel Committee on Banking Supervision in their publication “Principles for the Sound Management of Operational Risk”, (2) Institute of Internal Auditors (IIA) in their global positioning paper “The Three Lines of Defense in Effective Risk Management and Control” and (3) COSO in their publication, “Leveraging COSO in Three Lines of Defense” have propagated and supported the Three Lines of Defense Model for Risk Management which has been internationally accepted for managing risk. Mentionable here that, Bangladesh Bank in its Guidelines on Internal Control & Compliance in Banks has also address this model for effective 50 Annual Report 2021 Internal Control &risk management. The Three Lines of Defense model distinguishes among three groups (or lines) involved in effective risk management: • Functions that own and manage risks. • Functions that oversee risks. • Functions that provide independent assurance. Relationship among the objectives, components, principles and model: Successful and effective Control System is a result of a team work. Internal Auditors are no doubt an active player of the team. In fact, the SMT, the BOD-all like internal auditors play their respective roles toward achieving the desire goals of risk management. Relationship among the objectives, the framework and the model are shown below in a nutshell. Sustainable Finance Unit SFU of Al-Arafah Islami Bank Ltd. (AIBL) looks after the activities of Green banking, Sustainable Finance and Corporate Social Responsibility. Here the main driving forces are environment, society and governance. It aims at sustainable development, maintaining higher growth of the economy, decreasing the inequality of a society and mitigating the environmental degradation. From this perspective, different following activities are done through this Unit: Green Banking a. In-house Activities: Under implementation of Green Office Guide, we organized (i) All our meeting among branches, higher authority, Board of Directors and even Annual General meeting through online platform. (ii)Many of our workshop and training session under the program of awareness and capacity building were also successfully done through online platform. b. Greening the Banking operation: (iii)At present we newly introduced banking services through mobile app and Islamic Wallet Mobile Financial Services facilitating accounting opening from home, easy money transfer, payment of bill, mobile topup, merchant payment and inclusion of rural area under banking service. (iv)Recently we also introduced Internet Banking facilitating all transactions and for availing other banking services to our valued clients through internet staying at home. (v)Under Business Process Automation (BPA), we now circulate all our letters, instructions, Investment proposal and Sanction through shared digital platform, email and IP message. c. ESRM (Environment and Social Risk Management): Considering all the social and environmental aspects as per ESRM Guidelines we have done Environment and Social Risk Rating (ESRR) at the time of processing all the investment proposals properly. Scheduled monitoring and inspections have also been done time to time. d. Green and Sustainable Finance: Green finance as a part of Green Banking makes great contribution to the transition to resource-efficient and low carbon industries i.e. green industry and green economy in general. Already we are financing in 68 green products on priority basis. To facilitate refinance in green products/projects/initiatives, we have signed agreement on the following issues with Bangladesh Bank: i) Islamic Refinance scheme for Green Products: Under this scheme any client can avail refinance for any of 52 green products/projects/initiatives at single digit profit rate.
  53. ii ) Green Transformation Fund (GTF): It includes 200 million US Dollar and 200 million Euro from which manufacturer-exporters can get refinance in foreign exchange against import of capital machineries and accessories relevant to environmentfriendly/green attributes specified by BB and industrial raw materials. Ever since the inception of Green Banking, AIBL has financed in diversified Green areas like LED Bulb/Tube Assembly Plant, ETP Construction, Recycling Waste and Green Brick Manufacturing etc. In the last quarter of 2021 total Green Finance disbursement was BDT 2004.76 million. On the other hand, we have also achieved tremendous progress in sustainable finance. The most significant issue is that AIBL has been recognized as one of the top ten most sustainable banks in Bangladesh by Bangladesh Bank in 2021. In the last quarter of this year our sustainable finance is BDT 6163.71 million. To take this more ahead, recently we signed agreement with Bangladesh Bank titled as follows: iii) Refinance Fund for Technology Development / Upgradation of Export Oriented Industries: Export-oriented industries can avail refinance under this fund at the lowest profit rate for upgradation of capital machinery to enhance their production efficiency. Corporate Social responsibility (CSR) by Al-Arafah Islami Bank Ltd. (AIBL) As part of CSR, AIBL always responds to any emergency of the country/ society/institution/individual on priority. In 2021 AIBL has done Some mentionable CSR activities such as: a. Donation of BDT. 5.00 crore to Prime Minister’s Relief Fund due to COVID-19 Pandemic. b. Besides, AIBL by its own management has distributed foods and health safety items of BDT 2.55 crore to people of different areas of the country affected by the COVID-19 Pandemic. c. AIBL has donated Tk. 10.00 Lac to prize giving ceremony of National Hifzul Quran Recitation Competition in 2021 which will act as motivation to Hifz students for further improvement of quality and standard of holy Quran recitation to an international level. Our main priority sectors of CSR are education, health, food security, shelter, prevention of environmental disaster and special attention for the advancement of research/literature/culture. In 2021 our total expenditure in CSR is BDT 149.60 million which is shown sector wise in the table below: (Amount in Million BDT) Sl No. 1 2 3 4 5 6 Particulars Health 2020 16.81 2021 87.10 Education Disaster Management Cultural Activities Environmental Protection Others Total 10.07 8.51 6.68 15.26 226.81 284.14 6.50 0.00 0.00 56.00 0.00 149.60 Education Scholarship Program: Being aligned with government initiatives to achieve Sustainable Development Goal (SDG), AIBL has also taken step to promote quality education which is the 4th most prioritized goal of SDG. In 2018, we successfully begun the program titled “Al-Arafah Islami Bank Education Scholarship-2018” for underprivileged meritorious students who completed HSC. In 2021 this program scenario is as follows: Number of Students Present institute of study Total Scholarship (BDT in Million) 199 Students are covered from different educational institutions such as Public Universities, Medical Colleges, Engineering Universities, Agricultural Universities, Science and Technology Universities, Open University, National University, Private University etc. 7.17 Cottage, Micro, Small and Medium Enterprises Investment (CMSME) Cottage, Micro, Small and Medium Enterprises (CMSME), works as the platform for job creation, income generation, and development of forward and backward industrial linkages and fulfillment of local social needs. MSMEs occupied a unique position in the economy of Bangladesh. Here, the MSMEs account for about 45% of manufacturing value addition. They account for about 80% of industrial employment, about 90% of total industrial units and about 25% of total labour force. In the light of the definition given by Bangladesh Bank, Al-Arafah Islami bank Ltd. has put utmost priority over CMSME financing in three categories of enterprises viz. Industry, Trade & Services. CMSME Investment at a glance Description Total CMSME Portfolio % of CMSME Portfolio to Total Portfolio Target of CMSME Investment Total CMSME Disbursement % of Achievement 2021 110641.00 32.12% 70000.00 65984.19 94.26% (Figure in Million) 2020 100196.89 34.41% 60000.00 61005.39 101.67% Investment on Women Entrepreneurs About 50% of the populations of Bangladesh are women. Women participation in the mainstream of economic activities especially in the productive sectors is crucial for attaining sustainable economic growth, poverty reduction and women’s empowerment. But women participation in economic sector is inadequate and the number of women entrepreneurs is very low compared to that of their male counterparts. Al-Arafah Islami Bank Ltd. is working with women entrepreneurs to make them capable of earning by connecting with country’s economic activities. We give priority to women entrepreneurs to invest on various productive sectors. By the side of collateral secured investment, collateral security free investment is also considered in the question of women development. Description Figure in Million Total SME Portfolio in Women Entrepreneurs 4571.60 Amount of Disbursement to Women Entrepreneurs 3371.28 Annual Report 2021 51
  54. Agricultural Investment Agricultural Investment is dealt by Agricultural Department functioning under the control of SME Investment Division . To face the increasing food shortage of the country, bank is paying massive attention to invest on agricultural sectors. The main items of agricultural sectors arecrops, fisheries, warehouse, poverty alleviation, irrigation, livestock development etc. At the end of December 2021, total agricultural investment portfolio is Tk. 5729.00 Million for the fiscal year 20202021. With collateral and without collateral both are practiced in agricultural investment. The Achievement of 2020-2021 is as follows: (Figure In Million) Sector wise Agricultural Disbursement a) Crops b) Fisheries c) Crop Storage d) Livestock Development e) Poverty Alleviation f) Irrigation Tools g) Agricultural Tools h) Others Grand Total Current Fiscal Year Disbursement July-20 to June-21 (20192020) 511.20 1096.4 562.80 2296.40 92.70 188.20 224.10 645.60 5617.40 Accumulated Outstanding (31/12/2021) 449.40 1099.50 681.90 2252.00 41.50 278.40 281.70 644.60 5729.00 To promote agricultural sectors properly, our collateral free agricultural schemes are: Rural Agricultural Investment Scheme (RAIS) & Khamarbari Investment Scheme. Those schemes are running in all rural Branches. Skilled and experienced staffs are recruited in the concerned branches to ensure proper development of marginal farmers. Rural Agricultural Investment Scheme (RAIS) On the basis of socio-economic development of marginal and lessee farmers, this agricultural based programme named ‘Rural Agricultural Investment Scheme (RAIS)’ is running in this Bank. Development of country’s internal food production as well as socio-economic sectors of farmers is the main focus here. We have already listed 1975 farmers under this scheme and total investment is Tk. 82.50 million of which outstanding is Tk. 39.30 million. Al-Arafah Khamerbari Investment Scheme To make a priority to invest in the crop sector of Bangladesh, we have launched the product named: “Al-Arafah Khamerbari Investment Scheme (Khamerbari)”. With this product, we work for farmer’s community surrounding the Branch. Our field officials motivate farmers to grow the potential corps based on their previous farming experience. This scheme is an innovative action to develop the crop sector of Bangladesh. We have disbursed 1.87 million investments among 150 farmers under this scheme so far. Growing spices at a lowest profit rate (4%) As per instruction of Bangladesh Bank, and to increase the production of different types of spices like Pulse, Oil-seed, Spice and Maize, we started investment at a lowest rate of profit (only 4%) to the marginal farmers. We have disbursed 30.90 million investments among 557 farmers under this sector so far. 52 Annual Report 2021 Mudaraba Animal Husbandry Scheme In the concept of Islamic Finance, Mudaraba is a special kind of partnership business, where one partner gives money to another and at the end of business cycle, the profit will be distributed between both the parties as per previously signed agreement. The investment comes from the first partner who is called “Saheb-ul-maal”, while the management and work is an exclusive responsibility of the other, who is called “Mudarib”. All the losses will be contributed by the fund provider. In this scheme, Bank shall purchase cows, goats etc. on behalf of client under the limit of sanction amount. Clients shall responsible for daily maintenance of that animal as per terms and conditions. After a certain time, that animal will be sold in current market rate and then the profit shall be distributed as on previous agreement. In this scheme, we have already disbursed Tk. 27.97 million for fattening of 484 Cows and 12 Buffalos among 187 farmers so far. This was a great achievement we think. This is a special scheme in the banking sector of Bangladesh. Agent Banking Agent Banking services is one of the important dimensions of banking services in Bangladesh which is provided through engaged agents under valid agency agreement. Agent is the owner of one or more than one outlet(s) who conducts banking transactions on behalf of the bank. This type of banking is comparatively a tremendous idea that can help the formal banking sector reach out to the marginalized people of the society through agents. It is playing a pragmatic role in paving the way for financial inclusion, which is a tool for inclusive economic growth and financial development of a country. We have launched 571 Agent Banking outlets through 397 Agents as on December 2021 with a view to bringing the un-banked population under banking services. As on December 2021, total accounts of Agent Banking are 5,02,855 . We have already covered 227 Upazillas under 55 Districts. With some restrictions and limitations, most of the banking services are available in agent banking operation. In Agent Banking, most of the beneficiaries are living in rural areas and were totally un-banked at the earlier. But now, their total deposit is Tk. 31,016.72 Million and the figure is increasing rapidly. Clients are opening accounts, depositing and withdrawing their expected money, getting foreign remittance from their relatives, paying their utility bills and getting other banking services spontaneously. This is one of the appropriate examples of financial inclusion in Bangladesh. Agent Banking Performance At a Glance (As on 31-12-2021) (Taka in Million) Particular Total Number of Agent Total Number of Outlet Number of Rural Outlet Number of Urban Outlet % of Rural Outlets Among Total Outlets Number of Covered Upazilla Number of Covered District % of Area Coverage Among 64 Districts Number of Accounts Number of Male Customer Number of Female Customer Year 2020 Year 2021 Growth 264 400 353 47 397 571 502 69 50.38% 42.75% 42.21% 46.81% 88% 88% - 185 48 75% 3,25,582 1,82,090 1,35,894 227 55 86% 5,02,855 2,62,697 2,31,533 22.70% 14.58% 54.45% 44.27% 70.38%
  55. Number of Others Account % of Female Customer Deposit of Agent Banking Cost Free Deposit Low Cost Deposit High Cost Deposit % of Cost Free & Low-Cost Deposit Number of Foreign Remittance Amount of Foreign Remittance Number of Utility Bills Collection Amount of Utility Bills Collection Amount of Investment in Outlet Area Through Branch 7,150 41.74% 23,524.42 854.73 7,865.11 14,804.63 37.07% 1,64,392 8,494.70 39,50,120 2,387.80 8,625 46.04% 31,016.72 1,156.61 11,477.92 18,382.21 40.73% 2,35,580 14,268.73 60,30,907 4,079.04 20.63% 31.85% 35.32% 45.93% 24.17% 43.30% 67.97% 52.68% 70.83% 99.14 1657.62 1572 % Al-Arafah Rural Development program (ARDP) Bangladesh has made remarkable progress in reducing poverty, supported by sustained economic growth. To keep up this progress a stronger and larger rural economy is crucial for employment generation and poverty alleviation. Financial services play a critical role in reducing poverty. Permanent access to financial services can help poor people to take control of their lives. Believing this fact and also containing the idea that rural people are bankable, we initiated our Islamic Microfinance Program on the year 2001 as Grameen Small Investment Scheme (GSIS). This program is reformed and revamped as ‘Al-Arafah Rural Development Program (ARDP)’ in late 2020 with a view of ensuring the financial inclusion of rural people and to unlock the considerable economic potential of rural areas. Functioning on the basis of Group and Samity, this program helps on socio-economic development of farmers, labours, fishermen, micro-businessmen and small entrepreneurs. Another important objective of this program is to give priority to create and patronize economically self-dependent rural women entrepreneurs. Rural microfinance comes with its own set of challenges. Unlike cities, rural populations are dispersed over large areas with poor infrastructure which increases transaction, information other costs significantly higher to offer financial products. Hence, we have tailored our banking solutions through various types of Deposit & Investment products to meet specific needs of rural people which are describe below. Deposit Schemes: Under the Al-Arafah Rural development Program (ARDP), members will operate a Mudaraba Savings Deposit (MSD) account for their personal and business transaction and monthly deposit-based saving scheme (ITD) for becoming financially self-sufficient and to build his own capital. Members could avail investment against their savings anytime. Our tailored deposit products are as under: • Al Wadiah Current Deposit Account (CD) (ARDP) • Mudarabah Savings Deposit Account (MSD) (ARDP) • Mudarabah Membership Savings Account (MSD) (ARDP) • Mudarabah Monthly Profit Paid Term Deposit 3 Years (ARDP) • Mudarabah Monthly Deposite Scheme (5,10 Years) (ITD) (ARDP) • Mudarabah Term Deposite (3,6,12 months) (MTDR) (ARDP) Investment Schemes: The investment schemes are without collateral/security and can be obtained easily. Repayment system is weekly/monthly installment basis. These are supervised investment schemes and skilled ARDP employees working in different branches ensure continuous processing and supervision of the same. Some of the popular Investment Schemes are: • Bai-Muazzal (ARDP) • Group or Samity based Unsecured Investment Scheme. Installment payable in weekly/ monthly ranging from Tk.10,000/- to Tk. 100,000/. Investment Tenure: 1 year. • In the case of bank deposit lien, 100% or equal amount of money is disbursed. Branding & Public Relations Improvements in branding and media relations were priorities during the year 2021. In response to the overwhelming expansion in Bank’s business, we extended our publicity to fulfill the market demand. We brought new dimension in our branding and publicity for establishing a positive image of the Bank. We acquired encouraging national attention towards AIBL throughout the year with our all-around activities. More than 54 news items of the Bank were broadcasted in 640 news coverage through 20 different TV Channels during the year 2021. We continued news branding on 7 major satellites TV channels such as Channel-i, Bangla Vision, ATN Bangla, ATN News, Desh TV, DBC TV and ETV. Promotion in the television media got a major hike during the Ramadan in this year. In 11 major TV channels which included NTV, Bangla Vision, Bangla TV, Independent TV Jamuna TV, Channel-9, Boishakhi TV, SA TV, News 24, Gazi TV, Ekattor TV and many more. The Bank sponsored 13 different programs to encourage true Islamic values. The initiative was praised by the stakeholders and positively put an effect on business. Positive branding was one of the vital supports that led the Bank to hold a firm position in the market. The Bank proved its engagements with people by sponsoring several occasions. Banking Fair, SME Fair, School Banking Conference, Anti-Money Laundering Conference, Fair of Chittagong Metropolitan Chamber of Commerce & Industry and many more people-related gatherings were sponsored by the Bank. These activities tightened the relationship with clients and uplifted Bank’s faithful image. Our presence in the print media also was bold as we had 1350 Press Release items published in more than 60 different leading Newspapers and Media throughout the year. Besides, more than 700 advertisements took place in 115 different publications during that year. This year the Bank went into Electronic Media vastly. Besides, promotion in social media and put utmost focus on Digital Media via Online Portals, Facebook, YouTube etc. With a new rebranded outfit, AIBL started serving more smartly and dedicatedly at every point of service throughout the country. Unexpectedly, this year the Promotional planning was struck by the negative effect of global pandemic caused by COVID-19. But the Bank had to modify its plan according to the situation. Moreover, during the adverse circumstances, Bank made its’ promotion through client service more effective and efficient in 2021. We must remember that, a satisfied client is the best advertiser of the Bank. So, all our promotional steps will be focused to make our customers feel that they are banking with their own bank with all the modern facilities, when they are with Al-Arafah Islami Bank Limited. Branding Summary of AIBL in 2021 SL NO. Branding Details Frequency During 2021 1 TV News Items 2 TV Channel Coverage 54 events 640 coverage 21 channels Annual Report 2021 53
  56. 3 4 5 6 7 8 TV Branding (throughout the year) TV Branding during Ramadan PR Published Print media covered Promotional Advertising Publications used 7 channels 13 programs 11 channels 1350 times 60 media 700 advertisements 115 publications Information Technology The technology is of great use in banking sector, it has changed the banking industry from paper and branch based banks to digitized and network services. Means it has played a very big role in reducing fraud in banks which protects it’s clients. Banks are investing heavily in digital banking technology, in which customers use mobile, web or digital platforms to use banking services. Artificial intelligence solutions, such as chatbots, often assist customers in simple tasks such as making payments. As such bank can enhance business processes, make managerial decision, and workgroup collaborations which strengthen their competitive positions in rapidly changing and emerging economies. Every bank is providing their financial services, DATA analysis & classifications, making the ultimate decision with a truly automation system accomplished by the ICT division. AIBL started its Automation journey from 2006 and lived their Online Operation in the 2008 that has been going on successfully since inception. Beside Core Banking System (CBS) we are also using the below tech based services to automate, secure and faster our internal activity as well as to offer the better services to our valued customers: i.RTGS; ii.BEFTN; iii. BACH, iv. ISS Report, v. BPA, vi. CIB, vii.goAMLCTR, viii. RIT Reporting, ix. i-Banking, x. Sylvia (HRMS), xi. Agent Banking, xii. Utility Bill Collection, xiii. Sanction Screening, xiv. FATCA Compliance, xv. SWIFT, xvi. Asset Management, xvii. Centralized Anti Virus Management, xviii. Mail Server, xix.OBU, xx.Treasury, xxi. ATM Service, xxii. Mobile ATM Service, xxiii. Debit Card, xxiv. Credit Card, xxv. SMS Alert etc. Recently AIBL has launched Islamic Wallet which a Shariah based Mobile Financial Services of Al-ArafahIslami Bank Limited. Islamic Wallet comply with the most rigorous security, compliance standards and all regulatory requirements. Islamic Wallet promises to provide the most innovative services that can be provided in Mobile Financial Services industry of Bangladesh. It is fast, secure and affordable way to send & receive money from anywhere at any time. In addition to ‘send and receive money’, it provides a total eco-system where people can derive the best use of money. This wallet will be considered as new and innovative payment system to cater all kinds of banking needs for ensuring the maximum convenience of customers specially those who do not have access to banking services. Services offered by Islamic Wallet • Cash In, Cash Out, Person to Person (P2P) • Fund Transfer from Card and Bank Account. • Person-to-Business payments (P2B) such as utility bill payment, airtime top-up, insurance premiums, loan instalments, merchant payments etc. • Business-to-Person payments (B2P) such as payroll, commission disbursement, etc. 54 Annual Report 2021 • Government-to-Person (G2P) payments such as subsidies, freedom fighter allowances, social welfare payments, endowments, etc. •Person-to-Government (P2G) payments such as government duties, taxes, fees, etc. • Ticketing Service • Tuition Fees Payment There are some Technology based initiatives taken by the bank management to improve the customers’ services with a view to become the best bank in Bangladesh: 1. To become one of the best three Technologically advanced banks in the country within next 3 years 2. Ensure100% Regulatory Compliance by taking highest possible ICT security measures within a year. 3. Considering a huge unbanked population across the country, AIBL has been working very closely with different government and nongovernment entity to ensure the availability of Mobile Financial Services (MFS) all over the country. 4.Full-phased Internet Banking along with E-Commerce and Payment Gate way will be started very soon. 5.Introduce Booth Banking Services as per Bangladesh Bank guideline. Card Division Card Division of Al-Arafah Islami Bank Limited has diversified range of products and services since the beginning to fulfill the customers’ needs by strictly maintaining the Shariah Principals. More than 3.00 lac AIBL card holders including Debit Cards, Credit Cards, Instant Cards, Pre-Paid Cards and Hajj Cards are using AIBL own 200 ATMs as well as any banks’ ATMs through NPSB network & MasterCard enable ATMs. The bank issues technologically advanced EMV Chip Cards to provide vast and secured services to our valued customers throughout the time 24/7. We are providing effective and efficient card services among the customers with nominal service charges and maintenance fees which a positive marketing tool. We have travel card which does not require to maintain any bank account and it could be used for overseas travelling time with foreign currency. We have Instant Card for account holders which is being issued from branch premises instantly at the time of account opening. We are planning to introduce International Debit Card within shortest possible time to facilitate duel currency in Debit Cards as per Bangladesh Bank policy. Bank is offering discount facilities for both Debit & Credit Card holders & Equal Monthly Installment (EMI) facilities for Credit Card holders for the last few years to grab the market trends. We have a long list of EMI and discount partners including all renowned furniture manufacturers, branded electronic chain shops, lifestyle retailers, leading hospitals, popular restaurants, hotels & resorts, e-commerce shops, mobile & computer shops, tours & travels outlets, local airlines, auto care shops, motorcycle shops, super shops, etc. We are working on to launch contactless card with more security within this year. For Platinum Credit Card holders, we have complementary airport lounge facilities at Hazrat Shahjalal International Airport, Dhaka and MasterCard designated airports all over the world. We are ensuring smooth online transactions for our card holders of AIBL through various security measures such as by using “MasterCard SecureCode”. Bank is conducting promotional activities for cards through social and print media and has designed a lucrative webpage in its main website. Card Division is working round the clock to provide efficient and
  57. outstanding services to our valued customers by using advancement technologies . Asset Quality Overdue investments stood at Tk. 3993.40 million as on 31st December 2021 as against Tk. 5,959.36 million as of December, 31 last year. Total overdue decreased by Tk. 1,965.96 million during the year 2021 bringing the same to 1.16% of our total investment as against 1.92% in the previous year. Corporate Branch Managers, Zonal Heads and other Branch Managers are advised to take all precautionary measures so that the overdue investments are not inflated and income leakage remains under control. Rescheduled investments decreased by Tk. 985.60 million from Tk. 21,959.90 million to Tk. 20,974.30 million (Term investments by Tk. 11,875.90 million plus Continuous and Demand investments by Tk. 9,098.40 million) which was 6.09% of total Investment. Recovery against rescheduled investment during the year 2020 was Tk. 1,051.20 million. Classified investments increased by Tk. 6,818.41 million in 2021 from Tk. 11,769.58 million to Tk. 18,587.99 million representing 4.81% of total investment as against 3.80% in the previous year. During the year 2021, recovery& regularization against classified investment stood at Tk. 991.75 million while recovery against written off investments stood at Tk. 71.84 million recording a total recovery of Tk. 2,114.79 million which includes a recovery Tk. 1,051.20 million from the rescheduled investments. Plan and Strategies to Improve the Asset Quality• to ensure constant supervision and follow-up for timely recovery of investment and prevent it from becoming overdue afresh. • to fix individual target from very beginning of the year for recovery of non-performing investment. • to give special attention on top classified investment clients for early settlement/ adjustment/regularization. • to keep constant, follow up & monitoring to ensure timely recovery of installment against rescheduled investment. • to address chronic NPI clients by taking effective steps and applying prudence. • to initiate necessary steps to settle the court cases quickly and even the cases can be settled outside the court through persuasion and mutual understanding. • to be more vigilant to keep NPI at the lowest possible level. • to deploy level best efforts for recovery of Written off investment including legal action. • to keep a close eye on the SMA bucket so that SMAs, do not graduate to classified accounts. Risk Management Risk is generally defined by the adverse impact on the profitability of several distinct sources of uncertainty. It looks at financial exposures and its inherent risks to the business, and deeply believes profits are in part for successful risk taking in business. A bank must run its operations with two goals- to generate profits and to stay in business. Greater risk and poorly managed risk increase the danger that the bank may incur huge losses and be forced out of business. Risk Management is a tool used by banking institution in the name of good governance, risk mitigation and prudent practice. It focuses a lot on control processes, performance monitoring, collateral value, and decision making policies for credit, market and systemic risks. Risk Management’s main objectives are to identify and measuring the risks and advise mitigation there against. Banking operations are mainly exposed to: • Investment or default Risk (including concentration risk, country risk, and settlement risk) • Market risk (Including interest rate risk in the banking book, Forex risk, and equity price risk) • Liquidity risk • Operational risk • Other risks (residual risk, compliance risk, strategic risk, reputation risk etc.) It should not be understood that risk management is only limited to the individuals, who are responsible for overall risk management function. Business lines are equally responsible for the risks they are taking. Because, the line personnel can understand the risks of their activities, any lack of accountability on their part may hinder sound and effective risk management .AIBL risk governance follows three-linesof-defense-model which is represented as under: 1st line of defense: Business owners This includes the business units and operation lines of the Bank. 1. To ensure effective processes to identify, assess/measure, monitor, mitigate, and report on their risks. 2. To operate in accordance with the risk policies and delegated mandates. 2nd line of defense: Standard Setters This includes Internal Control (IC) framework including RMD and RMC. 3. To ensure effective and efficient operations; 4. To ensure adequate control of risks; 5. To ensure prudent conduct of business; 6. To ensure reliability of financial and non-financial information reported or disclosed (both Internally and externally); and, 7. To ensure compliance with laws, regulations, supervisory Requirements and the institution’s internal policies and procedures. 3rd line of defense: Assurance Providers It consists of the bank’s internal audit and regulators which 8. Performs independent periodic reviews of the first two lines of defense, 9. Provides assurance 10. Informs strengths and potential weaknesses of the first two lines. In accordance with the direction of Bangladesh Bank, AIBL has established ‘Risk Management Division’ and possesses board’s approved risk management guidelines designed to ensure that risks are identified, monitored and reported. Risk Management Division exclusively manages 6 (six) core risks in line with core risk Management guidelines of Bangladesh Bank. AIBL formed All Risk Committee at Management level in addition to six separate Core Risk Management Committees to address basic risk management activities like identification, assessment, and mitigation of risks. Besides, Board Risk Management Committee oversights the bank’s overall risk management activities, risk appetite and performs their duties with utmost care to minimize the risk level. Regular meeting of all the committees are held on monthly/quarterly basis. The major concerns of the 6 (six) Core Risks Management Committees are as under: 1. Investment Risk Management Committee : Investment risk arises from the potential that a bank’s borrower may fail to meet its obligations in accordance with agreed terms. IRMC deals with the activities of supervises and monitors Investment concentration, Internal investment risk grading, Corporate clients rating, Non Annual Report 2021 55
  58. performing investment , Residual risk against investment, Provision against classified investment, Investment mix, Asset quality etc. 2. Asset Liability Risk Management Committee (ALCO): Asset Liability Management ensures balanced fund mobilization and their deployment with respect to their maturity profile, cost, and yield as well as risk exposure. ALCO looks after the Asset-liability risk, Liquidity risk, Investment Deposit Ratio (IDR), Deposit mix, Investment mix, Gap analysis etc. under direct guidance of the Managing Director & CEO. 3. Foreign Exchange Risk Management Committee: Foreign Exchange Risk Management in Banks has become inevitable. It oversees Foreign exchange risk, Treasury, Net open position, Import& Export business, Dealing room operations, Anti-money laundering aspects in foreign exchange transactions and remittance etc. 4. Internal Control & Compliance Risk Management Committee: The primary objective of internal control system in a bank is to help the bank perform better through the use of its resources. Through internal control system, bank identifies its weaknesses and takes appropriate measures to overcome the same. ICC Risk Management Committee assesses and mitigates the risks related to compliance with regulatory requirements, set rules of the Bank, internal checking system, lapses, fraud, forgeries, misappropriation, defalcation, violations of the set rules etc. 5. Central Compliance Committee: Money laundering risk is the risk of loss of reputation of the Bank. CCC looks after the money laundering and terrorist financing activities, STR (Suspicious Transaction Report), CTR (Cash Transaction Report), KYC (Know Your Customer) and TP (Transaction Profile) related compliances. The committee also supervises and monitors the entire transactional activities of the Bank including money laundering aspects involved with foreign exchange transactions. 6. Information & Communication Technology Risk Management Committee: ICT risks include hardware and software failure, human error, spam, viruses and malicious attacks, as well as natural disasters such as fires, cyclones or floods. This committee monitors and supervises the risks related to Data security, Physical security, Network security, Disaster recovery, Fraud, Forgery, System failure and Business continuity etc. Banks always run the risk of insufficient liquidity and investment/ credit defaults. While conducting day to day operation AIBL usually faces the following major risk: 1. Credit/Investment Risk: This risk occurs whenever a borrower considers paying current debt with future cash flows. In AIBL investment risk are evaluated in 2 ways: I. Individual client wise: Investment Wing considers the risk on a case-to-case basis. Their sole purpose is to measure the weighted risk of individual clients and disburse loan/investment accordingly. IIRS is approved & verified by CRO of the Bank. II. Portfolio wise: IAD considers the risk on a sector-to-sector basis or on industry-to- industry basis and is reviewed in ARC/MC meeting. This is what is referred to as portfolio wise investment risk management. 1.1 Credit Concentration Risk: Credit concentration risk may arise from exposure to a single entity/ group and/or exposure in the same economic or geographic sector 56 Annual Report 2021 and/or credit concentration in dependent industries. AIBL is now exposed to some of specific sectors and regions that are highly inviting concentration risks. Although these regions are economically important, AIBL has the scope to come out from such concentration gradually having a structural strategic perspective investment plan and diversify its investment portfolio in more potential sectors and areas and thus distribution of the risk factors. Initiatives of Credit risk management from RMD are below: Top-20 Investment Risk Assessment and Resolution Report: To address Systematic risk as a part of BB initiative, RMD is preparing and sending report of Top-20 Investment Clients’ position including risk mitigation road map to Bangladesh Bank quarterly after having approval from the Board of Directors and BRMC. Risk Assessment of Top-20 Defaulters & Risky Investment Client: Apart from the ‘Resolution Report of Top-20 Investment Risk Assessment’ the RMD has prepared report on the risk assessment of Top-20 Defaulters and Top-20/30/50 Risky investment clients. The division assessed various risk related issues and provided various options & advises on how to mitigate the risks. Internal Investment Risk Rating System (IIRRS): As per instructions stated in IIRRS guidelines issued by BRPD of Bangladesh Bank, summary report of IIRRS is required to be approved and signed by Chief Risk Officer (CRO) of the Bank. Credit Rating related activities: Credit Rating has direct impact on Risk Weighted Asset (RWA) of the bank by maintaining minimum capital requirement and satisfactory CAR as well. The division is trying its best to get all the eligible clients rated by the external rating agency by advising branches so that the bank can allow investment safely. Side by side it helps the bank to make investment more maintaining minimum capital. 2. Market Risk: The possibility of experiencing of loss due to the factors that affect the overall performance of the financial market is called Market Risk. Market risk can be divided into 3 types- Interest rate risk, Forex risk, Capital market investment risk. Market risk also called ‘Systematic Risk’, cannot be eliminated through diversification, nevertheless it can be evaded. Systematic risk refers to the risk inherent to the entire market. The risk that a major natural disaster will cause a decline in the market as a whole is an example of market/systematic risk. This sort of risk is evaluated by the Risk Management Division. As a part to address systematic risk, RMD is analyzing Top-20 investment clients’ position and incorporating its review report with risk mitigation road map in ‘Credit Risk Assessment and Resolution Report’ for placing before the Board of Director’s meeting for onward submission to Bangladesh Bank as well quarterly. 2.1 Interest/Profit Rate Risk: The risk that any investment’s value will change due to a change in the absolute level of interest rates, in the spread between two rates or in any other interest rate relationship is called Interest/Profit Rate risk. Such changes usually affect securities inversely and can be reduced by diversifying. 3. Operational risk: Operational risk is the risk that is not inherent in financial, systematic or market wide risk. It is the risk of loss or harm resulting from inadequate or failure of internal processes, people and systems or from external events. The policy for measuring and managing operational
  59. risks including internal control and compliance risk is approved by the Board taking into account relevant guidelines of Bangladesh Bank . As a part of continue surveillance, the Management Committee (MANCOM), All Risk Committee (ARC), Board Risk Management Committee regularly review different aspects of operational risks and suggest formulating policies, tools and techniques for mitigation of operational risks. This risk is dealt by the operational desk of the RMD. Managing other specific risks: Bangladesh Bank has issued six core risk guidelines and Risk Based Capital Adequacy (RBCA) Guidelines that provides concepts, methods and processes with regards to the respective risk areas. AIBL follows those guidelines and also reviews/updates them on regular basis and gets approval from the Board. Apart from these, there are some other specific risks that are covered by SRP Guidelines and RBCA Guidelines of Bangladesh Bank. Residual Risk: Residual risk is the amount of risk that remains in the process after all the risks have been calculated, accounted and hedged. Residual risk arises mainly from error in documentation and error in valuation. As institutions mitigate risks by way of collateral, the collaterals can pose additional risks (legal and documentation risks), which may deteriorate the impact of risk mitigation. AIBL have appropriate governing and control system, valuations procedures, internal regulations and responsible individuals assigned for the prudent handling of risks. Liquidity Risk: The risk arising from the lack of marketability of an investment that cannot be bought or sold quickly enough to prevent or minimize a loss is called liquidity risk. This type of risk is maintained by FAD, TD and RMD. Strategic Risk: Strategic risk means the current and prospective risk to earnings and capital arising from imperfection and unsuccessful in business strategy/plan formulation, inefficiencies in implementing plan targets, or from the overlooking of changes in business environment. Strategic risk induces operational loss that consequently hampers the capital base. The key aim of strategic Risk Management is to strengthen the bank’s earnings resilience and protect it against undue earnings volatility to support overall risk appetite targets (especially CET-1 ratio and Leverage Ratio).This is a part of the risk governance incorporated with top level management. AIBL involves all levels of management in formulating and establishing robust strategy planning process, and regularly reviews on incorporating changes to strategic environment. Reputation Risk: A thought or danger to the good name or negative media report against the entity is called reputation risk. This risk is managed by operational risk section of RMD. Environmental Risk: Actual or potential threat of adverse effects on environment by effluent, emissions, wastes etc. arising out of organization’s activities is called environmental risk. This risk is managed by Investment Risk Management and Sustainable Financial Unit (SFU). Basel Accord Implementation: AIBL has been following various Basel pact viz. Basel-I, Basel-II, Basel-III, Stress Testing and others core risk guidelines implemented by Bangladesh Bank. To implement Basel III guidelines, AIBL formed units as under: Basel Implementation Unit (BIU) at Operational Layer and Supervisory Review Process (SRP) team at Managerial Layer. The Risk Management Division (RMD), a division headed by Chief Risk Officer (CRO) acts as the center of all risk management function of AIBL and continuously supports BIU/SRP team to be in place to establish supervisory review process under the Basel-III guidelines and to be compliant of Bangladesh Bank’s instruction under the supervision of the Chief Risk Officer (CRO). All Risk Committee (ARC) at Management level: The All Risk Committee at the Management level sits at least once in a month or more when necessary. In the meeting all the existing/ identified and foreseeable/potential risks issues are discussed. Afterwards, recommendations/decisions taken in the meeting are minute and forwarded to the concerned risk-taking departments to address, measure and taking necessary steps to mitigate the risk factors. Discussion on non-complied issues are taken place in the next meeting. All the meeting minutes along with Risk Management Papers are reported to the Department of Off-site Supervision (DOS) of Bangladesh Bank duly. Risk Management and Other regulatory reports: Risk Management Division prepares Monthly/Quarterly Risk Management Report, Half-Yearly Comprehensive Risk Management Report (CRMR), and Stress Testing reports incorporating all risk areas as per directions of the prescribed format of Bangladesh Bank. These risk reports are discussed in depth in All Risk Committee at Management level as well as Board Risk Management Committee and necessary instructions with guidance are given there against. Besides, AIBL sends Risk Appetite Statement (RAS), Effectiveness of Risk Management functions etc. to Bangladesh Bank annually duly reviewed and approved by the meeting of Board Risk Management Committee and Board of Directors’ of the Bank as well. Money Laundering and Terrorist Financing Prevention: We all know that the initial focus of anti-money laundering regime was the intersection of organized crimes and drugs. But in course of time the focus was widened to include proceeds from many criminal activities. Today, everywhere in the world, AML has many goals. With the increased globalization of financial system money laundering has evolved into an activity affecting the societies, financial system and the economy as a whole. Thus, it has become a global phenomenon. It is a danger not just to the global economy but also to national security. All the countries in the world have come to a common platform with a common goal to create an infrastructure which would make the criminals think twice before involving into money laundering activities. Bangladesh accordingly enacted to different laws for combatting money laundering and terrorist financing. Banks are being constantly alerted by the regulators about the evils of ML. As the criminals use the banks as the main vehicle of their criminal activities, responsibilities of bankers have widened over time by manifold as well. Money laundering techniques are always evolving, and as a result, AIBL authority has taken strong steps to fight the evil. Combating Money Laundering activities have been an integral part of the duties of every banker these days. We are constantly updating ourselves with the rules and regulations of AML/CFT. Nevertheless, it becomes hard to keep up with the culprits. They have always been finding out newer ways to bypass the rules and thus the vigilant eyes of the bankers and other Law Enforcing Agencies. Of late, the COVID-19 pandemic has changed the way of our lives exhaustively. Keeping in Annual Report 2021 57
  60. line with the new normal , criminals have also adopted newer ways of laundering money. Criminals are exploiting vulnerabilities opened up by the COVID-19 pandemic, increasing the risks of Cyberattacks, money laundering, and terrorist financing activities. This pandemic has forced us to leverage technology to our best. At the same time also exposed us to newer AML/CFT risks. Our Management has been principally watchful concerning our IT network, non-public data, third party risk, and Cyber security incident response plans and to focus additional efforts on staff training and awareness. Prominent activities we have done in the year 2021: • The Board has agreed to introduce an automated AML monitoring system and approved installation of monitoring software this year. • Introduced TBML guidelines and ensuring compliance thereof. • Nominated Zonal and Divisional anti-money laundering compliance officer so that every department, divisions, zones remain active in preventing money laundering. • Circulated the new methods of records keeping (22 comprehensive data files) for sound AML/CFT compliance. •Circulated the common lapses in regard to AML/CFT Risk Management for awareness on branch level compliance. • Conducted 04 Central Compliance Committee meetings and adopted multi-level resolutions for strengthening compliance campaign of the Bank • 58 STR/SAR submitted to BFIU and 358 STR settled by branches • Conducted AML/CFT related in-house and out-reach virtual training programs for the employees of the Bank and Agent Outlets •Delivered information on AML/CFT regarding correspondent Banking and vice versa •Submitted total 435465 CTR successfully in 2021 (report submitted Monthly) through the GoAML web portal • Corresponded about 164217 letters in number with BFIU and Branches • 191 Branches were inspected by the Audit and Inspection Division on AML/CFT compliance • Total 20 branches on AML/CFT compliance conducted virtual evaluations under the pandemic (COVID-19) situation through MLTFP Division Additionally, we have been and will remain vigilant and aware of AML & CFT compliance issues and perform the following functions, among others, in a more meticulous way: • Obtain correct and complete information in all Account Opening Forms, KYC, Transaction Profile (TP), etc. both for regular and walking customers • Due Diligence and Enhanced Due Diligence (EDD) for all customers, as the case may be. • Follow the rules for Customer Acceptance Policy of the Bank. •Review abnormal, meaningless and suspicious transactions/ activities and timely report the same as STR/SAR to the competent authority. • Regularly and accurately review the Online Cash Transactions. • Ensure auto screening of both UN, Local and other Sanction Lists • Do an acceptable price verification before opening LCs and monitor ship tracking closely. • Monitor inward and outward foreign remittances. 58 Annual Report 2021 • Obtain proper documents in support of the declared ‘Source of Fund’. • Ensure proper preventive measures and safeguards against Trade Based Money Laundering. • Strictly follow BFIU instruction in case of dealing with Politically Exposed Persons (PEPs), Influential Persons (IPs), High Officials, and Topmost of International Organizations. • Officials to be more cautious in maintaining secrecy regarding correspondence with BFIU. • To identify, assess and mitigate the risk of Money Laundering & Terrorist Financing, follow the Risk Register attached to ML & TF Risk Management Guidelines of the Bank. • Conduct Quarterly Meetings (at least) at Branch level as per instructions of BFIU’s Master Circular No. 26 dated 16/06/2020. • To transform the Central Compliance Committee (CCC) to a more effective and robust one. • Branch/Zonal/Divisional Anti Money Laundering Compliance Officers to ensure all AML & CFT issues at the branches, zones, division levels respectively. • Proper and timely submission of CTR through “GoAML Software” with assistance from Information Communication and Technology Wing (ICTW). • Internal Control and Compliance Wing (ICCW) to oversee proper implementation the rules and regulations issued for bank’s AML & CFT compliance program including Agent Banking, Agent outlets, and MFS. • Ensure correct and timely submission of STR/SAR report to BFIU. • Human Resources Division (HRD) to ensure Employee Screening Mechanism as per BFIU’s instruction. • Agent Banking Division to be watchful on AML & CFT compliance regarding Agent Banking and Agent outlets. • Overall compliance of AML & CFT issues of the Bank though will be supervised by Money Laundering and Terrorist Financing Prevention Division but it is a duty of every employee of the Bank. • Knowledge of AML & CFT compliance issues are essential for all employees. As such AIBL, Training & Research Institute (AIBTRI) ensure knowledge enhancement through In-house and Outreach training, BAMLCO training, TBML, and Lead Bank Training, workshops, seminars (both physical & virtually), etc. for capacity building. • Ensure that all AML/CFT awareness related poster, leaflet, festoon, etc. are distributed to branches properly • Ensure awareness regarding adverse media news on AML/CFT • Credit Card department to remain extra cautious regarding usage foreign currency over the allowable yearly limit • Do a proper KYC and due diligence while onboarding merchants for doing E-Commerce business • Remain extra vigilant regarding cyber threats • Timely and correctly submit the half yearly reports to BFIU Dividend The bank has been paying dividend every year since 1998 just after conversion of a public limited company. The Board of Directors of the Bank is pleased to recommend dividend 15% Cash in the year 2021. Table of Historical Dividend Payment Percentage are as follows:
  61. Year Dividend 2012 17 % Bonus 2013 2014 2015 2016 2017 2018 2019 2020 2021 13.50% Bonus 14% Cash 10% Cash & 5% Bonus 20% Cash 15% Cash & 5% Bonus 15% Cash &2% Bonus 13% Cash 15% Cash 15% Cash Human Resources Well educated and skilled manpower is the best capital of an organization particularly in banking institution. We put utmost importance on recruitment and development of human resources. In recruiting process, we put emphasis on attracting talented young stars. Total 437 employees in different categories/ranks joined and exit 63 during the year 2021 raising our total employees to 4,247 as on 31.12.2021. We have 4,247 staff in the Bank of whom 334 are executives 3,347 are officers and 566 other staff a as on December 31st 2021. 2012 2013 2014 2015 2016 2017 2018 2019 2020 15.00 15.00 13.00 17.00 20.00 20.00 15.00 14.00 13.50 17.00 Dividend (%) 2021 Credit Rating Credit Rating Information and Services Limited (CRISL) has adjudged the following rating for Al-Arafah Islami Bank Limited: Long Term Short Term Based on Date of Rating Validity Outlook AA (pronounced Double A Two) ST-2 Audited Financial Statement 2020 18 July 2021 17 July 2022 Stable Year-wise Comparative Rating Position: Date of Rating Long Term Short Term Outlook 30 June 2021 30 June 2020 30 June 2019 30 June 2018 30 June 2017 AA AA AA AA AA ST-2 ST-2 ST-2 ST-2 ST-2 Stable Stable Stable Stable Stable Interpretation: AA+, AA, AA-(Double A) (High Safety): Securities rated in this category are adjudged to be of high credit quality and offer higher safety. The level of rating indicates a security with sound credit profile and without significant problems. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. ST-2 (High Grade): High certainty of timely payment. Liquidity factors are strong and supported good fundamental protection factors. Risk factors are very small. Sl No Designation Category Number 1 Executives 2 Officers 3,347 3 Others 566 Total 4,247 334 We nominated 65 employees in outside training course viz. BIBM, BBTA, BAB etc. in 2021 and they have completed the course successfully. We motivate and facilitate our deserving employees to complete international standard professional degrees like CDCS, CSDG and ACAMS. Presently, we have 65 CDCS, 3 CSDG and 10 CAMS officials of which 1 officials completed CDCS and 3 officials CAMS during the year 2021. Activities of AIBTRI AIBTRI: Centre of Excellence for Human Capital Development After inception in 1996, Al-Arafah Islami Bank Training & Research Institute (AIBTRI) has come a long way to its destination of being an organization of excellence in training and education. Skilled human resources are the cutting-edge assets of any organization. Needless to say, for effective growth of an institution and enhance both soft & hard skills of its employees, there is no alternative to continuous training. AIBTRI’s prime objectives, among others, are to impart training to Bank employees to aware them about the latest development of knowledge in the functional procedures, policies, rules, directives and regulation of the financial system. As the banking sector is experiencing various reform measures with a view to coping up with the modern financial complexities like fintech, regtech, crypto currencies, Central Bank Digital Currency (CBDC) etc, need-focused training is imperative to turn the human resources of the Bank into human capital. Training programs at AIBTRI are scheduled and singled out on needbased assessments by a set of committed faculty members of the institute. AIBTRI has given utmost importance to training for human capital development with cutting-edge skills, knowledge and wisdom. Despite many limitations and shortcomings, AIBTRI is however, moving forward for attaining its desired level of competency through arranging various training courses, EDPs, seminars, workshops etc. on topical banking and financial issues. The financial sector of Bangladesh underwent a number of reform measures under new normal scenario in the country. In line with these changed circumstances, the AIBTRI has been adopting new strategies and methods for improving their manpower development services. AIBTRI is also keeping pace by putting its best efforts to respond to the need for capacity building of AIBL officials with new thoughts and innovative ideas to achieve the objectives of different reform measures. Annual Report 2021 59
  62. Overall Training Scenario in 2021 : Amidst of the Covid-19 pandemic, AIBTRI conducted a wide range of activities to attain objectives of imparting quality training to the officers of the Bank. AIBTRI conducted a total number of 113 (One Hundred and Thirteen) Training Courses, Workshops, Executive Development Programs, Lead Bank Program, Outreach Program and Foreign Training Program where 9449 participants attended during the period January – December, 2021. It may be noted that both the online and classroom based programs were arranged. Proper health safety measures were taken before arranging the classroom based programs. Training Courses (TC): To develop the professional skill and knowledge of the officials in the fields of shariah, banking, finance, CMSME and microfinance, customer service development etc. AIBTRI conducted a total of 12 (Twelve) training courses both classroom based as well as through virtual platform during the year under report. Training Workshops (TW): A total of 86 (Eighty Six) training workshops were conducted during the year for fulfilling the requirements of understanding the current issues and challenges relating to banking operations such as new imperatives on International Trade and Finance, impact of fintech applications, National Integrity Strategy, Documentation Errors & Investment Property Valuation, FATCA, Money Laundering & Terrorist financing issues etc. Moreover, with a view to enhancing skill of the employees, AIBTRI has arranged a number of in-house discussions on topical issues of Islamic shariah and banking. Executive Development Programs (EDP): To meet the requirements of awaring the bank’s executives, managers, manager operations, BAMLCOs about the money laundering preventions and other topical economic and financial issues, AIBTRI conducted 3 (three) EDP in 2021 through Microsoft Teams platform due to Covid -19 pandemic. Outreach Training Programs (OTP): AIBTRI conducted 11 (Eleven) outreach training programs (OTP) during the year 2021 in five different locations based on zonal offices of the Bank. The programs had their remarkable impact to create awareness among young, brilliant and promising officers regarding Islamic Shariah and Banking, Environmental Risk Rating, Agent Banking, Islamic Financial Literacy Program etc. Lead Bank Program (LBP): The AIBTRI with the cooperation of MLTFPD of the bank arranged a Lead Bank Program on prevention of Money Laundering and Terrorist Financing at Khulna Zone. BFIU Officials had conducted various sessions of the program. Future Programs of AIBTRI: Given the directions of the esteemed Board of Directors (BOD) of the Bank, following programs have been undertaken by AIBTRI for the year 2022 to initiate research on the practical operational areas with a view to assisting the Board for its policy making as well as to develop the bank as a knowledge-based Islamic bank in the country: a) To conduct “Certified Expert in AML & CFT program on Anti Money Laundering and Combating Financing of Terrorism” for professional development of the employees of the Bank. These certified experts would help the bank to make it free from money laundering and financing of terrorism activities. 60 Annual Report 2021 b)To plan, develop and conduct “Executive Diploma program on Islamic Banking and Finance” for professional development of the employees of the Bank. c) The Research Division of AIBTRI is being organized to accomplish the research work on new innovative financial products and services for the Bank to cater the growing demands of the customers at large. AIBTRI is undertaken various measures to study different industries to understand their position, contribution etc. These studies will not only help the bank in taking prudent decisions while approving investments and enhancement thereof, but also will be able to prepare contemporary policies for future reference. d)To prepare policy papers and important notes analyzing the mechanism and modus operandi of Islamic financial products in vogue in comparison with the present Islamic financial products of the Bank and suggest modifications thereto or develop new modalities of Islamic financial products. e)Creation and Management of AIBTRI website and Training Database. Branches Control Division: Branches Control Division (BCD) has been executing following tasks: 1. Compliance of different circulars on Customer Service & General Banking issued by Bangladesh Bank, NBR & other Regulatory Authorities time to time. 2. Agency Arrangement i.e Agreement for bill collection of DESCO, DPDC, WASA, BTCL, REB etc. 3.Compliance of NBR, DUDAK, Anti-corruption Commission etc. authorities Income Tax related bank account information. 4. Compliance against General banking related irregularities of the branch raised by Audit & Inspection Division. 5. Issuance of duplicate instruments (MTDR, MPTD, PO etc.) in lieu of original ones. Branches Control Division (BCD) issued total 33 very important Instruction Circular during the year-2019 some of them are listed below: 1. Up Keeping of Branch Premises and Maintenance of Important Affairs of the Branch. 2. Implementation Progress Report as per Guideline of Core Banking Solution (CBS)-Features & Controls 3.Duties and Responsibilities Branch Manager and Manager Operation. 4. Cash Management & Teller Operation. 5. Type of Deposit Accounts and General Instructions for Maintenance. 6. Banking Booth Policy and operational guideline. 7. Sending SMS to Account holders. Business Promotion & Marketing Division (BPMD) Business Promotion and Marketing Division (BPMD) started its journey in the year 2010 under the name and style ‘Marketing & Business Development Division (MBDD)’. A full fledged Policy Guideline was introduced on 23.06.2016 with a vision to survive in the market of stiff competition as well as to improve business relentlessly of our Bank using different marketing tools. BPMD has the motto to offer new customized Financial Products and Services to cater the growing needs of common people keeping in mind the strict compliance of Shariah regulatory norms.
  63. BPMD consists of four (4) Departments as: i) Business Development & Marketing Department ii) Branch Expansion Department iii) Product Development & Evaluation Department iv) Financial Literacy & Financial Inclusion Department Each department has its own targeted goal to achieve. will definitely play a pivotal role in the development of ever changing Islamic Banking arena. Function of BPMD: The main marketing strategy of BPMD is to build and maintain a long-term relationship with its investment clients, assists Branches regarding prospective investment clients, assist Branches for deposit mobilization growth of the Bank. Appointment of Statutory Auditor In the 26th Annual General Meeting of the Bank M/S Hossain Farhad & Co. Chartered Accountants and M/S Shafiq BASAK & Co. Chartered Accountants was appointed External Auditors of the Bank for a term till conclusion of the 27th Annual General Meeting. However, Business Promotion & Marketing Division focuses the following marketing strategies: 1. Close follow-up, Monitoring, Supervision with the marketing desk of branches and zones regarding business development issues 2. To fix-up a reasonable annual business target considering market situation or all the branches and follow-up, monitor; supervise to achieve the target by the branches 3. To design and develop all marketing communication materials/gift items and to provide promotional gift items, leaflet, brochure to the branches for maintaining marketing relationship with the existing and prospective investment clients 4. To identify customer need, designing and developing of new products and improvement of existing products 5. To provide assistance/advice/guideline to the branches regarding new investment client for business development of the Bank according to the collected potential client list by the Branch 6. To conduct Financial Literacy program among unbanked people through Branches for increasing “No Frills Accounts” and balance 7. To collect potential client list quarterly in each year from the Branches for maintaining sustainable business growth 8. To evaluate the Branch performance on monthly basis whether the branches are maintaining the point-to-point deposit, investment and operating profit growth 9. Provide assistance/advice/guideline to the Branch regarding deposit mobilization for business development of the Bank. List of corporate depositors to be kept at Branch level as well as Head Office 10.Generating several promotional items for specific events and business development/brand development as well such as Ramadan Gift Box, Pohela Boishakh Gift items, Happy New Year Gift items etc. 11.To arrange special service month, awareness program, customer gathering and other program on different development and promotional issues 12.To arrange and execution of agreement with govt, sami-govt, autonomous bodies, corporation and also private sector to collect utilities and others Services. 13.To arrange School Banking Campaign and Conference 14.To arrange or formulate program for customer awareness and monitor properly 15.Other functions related with Business Promotion. Some other responsibility of BPMD is worth mentioning here such as it will maintain probable schedule of different National & International Trade Fair, National Book Fair, National Banking Fair, Hajj Fair, other important fair, BishwaIjtema. The above expresses a whole gamut of functions of BPMD part of which is in practice. If total support and logistics are in place, BPMD The Board has approved M/S Shafiq BASAK & Co. Chartered Accountants and M/S Hoda Vasi Chowdhury & Co. Chartered Accountants for appointment as External Auditors by the shareholders till the 28th Annual General Meeting. Branch Network At present we have 201 branches all over the country. In a bid to expand our network of Branches we got approval to open 17 (Seventeen) new branches in 2021. Board Meeting During the year 2021, 13 regular Board Meeting had been held. Besides, 20 meetings of Executive Committee, 8 meetings of Audit Committee and 4 Risk management Committee of the Board had also been held during the year. Appreciation The Board of Directors expresses its gratitude to the Almighty Allah for enabling us to achieve remarkable progress in all respect during the year 2021. Board of Directors takes this opportunity to thank the Shariah and Board Members of the Bank for their relentless wholehearted support. Their collective wisdom contributed extensively to acquiring of strength. The Board of Directors also thanks the management and the staff for their loyalty, support and untiring efforts which has resulted in improved performance. The Board of Directors expresses its thanks to respected shareholders, valued customers, patrons well-wishers, Government, of Bangladesh, Bangladesh Bank, Registrar of Joint Stock Companies & Firms, Securities and Exchange Commission, Auditors, Legal advisers and all others concerned for giving us the benefit of their support and co-operation. We quietly weigh their continued support and co-operation which are constant source of inspiration. We re-assurance Our vow to remain most disciplined, Shariah compliant and result oriented. While we look forward to their continuous support and co-operation with trust and confidence, we reassure that our respected shareholders can expect further satisfactory results in 2022. May the Almighty, Allah give us dedication, patience and fortitude to serve the cause of Islam and to go ahead with our mission to run the Bank as per the principles of Islamic Shariah. May Allah the Almighty bestow his bountiful blessing upon us all. Allah Hafiz Ma- Assalam Sincerely, Alhajj Salim Rahman Chairman Date: 11 August 2022 Annual Report 2021 61
  64. Opening ceremony of AIBL Shantirhat Branch , the 196th branch of the Bank situated at Patiya, Chattogram Snap of “The Annual Business Development Conference 2022” where Chairman of the Board of Directors of the Bank was present virtually as the Chief Guest As a tribute to Father of the Nation Bangabandhu Sheikh Mujibur Rahman, the Bank organized a webinar titled 'Bangabandhu and Bangladesh' An Investment Agreement of Tk 500 crore was signed with Unique Hotel & Resorts Ltd, the leading five-star quality hotel service provider of the country Chairman, Executive Committee Chairman along with Managing Director & CEO of AIBL traveled Maldives while giving courtesy-visit to Finance Minister and Monetary Authority Governor of the island nation 62 Annual Report 2021
  65. Governor of Bangladesh Bank handing over a Tax Certificate to AIBL Managing Director and CEO . The Bank was awarded as highest taxpayer for the 2020-2021 tax year by National Board of Revenue Chairman of the Bank handing over a sponsorship cheque as Al-Arafah Islami Bank Limited become the Title Sponsor of 7th Bangladesh Junior Science Olympiad AIBL introduced the first contactless Islamic Mastercard debit and prepaid cards that will allow cardholders to simply tap the card in front of a card reader or POS terminal to complete transactions Managing Director & CEO along with the top Management of the Bank in a photo-session with 116 newly recruited Management Trainee Officers (MTO) at their Orientation Program The Bank signed an agreement on Automated Challan System with Bangladesh Bank for collecting passport fees, VAT, tax and other government fees with A-Challan In the middle of the year, the Bank opened its 500th Agent Outlet at Nafartila Bazar, Lohagara Upazila of Chattogram Annual Report 2021 63
  66. Directors ’ Report to the Shareholders as per condition No. 1.5 of BSEC Notification No. BSEC/ CMRRCD/2006-158/207/Admin/80 Dated 3rd June 2018 The Directors also report that: i. Industry outlook and possible future developments in the industry; Page No. 39-40 ii. The segment-wise or product-wise performance; Page No. 44-46 & 50-53 iii. Risks and concerns including internal and external risk factors, threat to sustainability and negative impact on environment, if any; Page No. 119-121 iv. A discussion on Cost of Goods sold, Gross Profit Margin and Net Profit Margin, where applicable; Page No. 64 v. A discussion on continuity of any extraordinary activities and their implications (gain or loss); Not applicable. vi. A detailed discussion on related party transactions along with a statement showing amount, nature of related party, nature of transactions and basis of transactions of all related party transactions; Page No. 179-182 vii. A statement of utilization of proceeds raised through public issues, rights issues and /or any other instruments (AIBL Mudaraba Subordinate Bond) Page: 45; viii. An explanation if the financial results deteriorate after the company goes for Initial Public Offering (IPO), Repeat Public Offering (RPO), Rights Share Offer, Direct Listing, etc. Not Applicable; ix. An explanation on any significant variance that occurs between Quarterly Financial performances and Annual Financial Statements; Highlights along with reasons thereof are given below: Particulars 2020 Amount in million Growth (%) Investment income 23,261.04 26,169.24 -11.11% Profit paid to depositors 12,833.77 16,385.55 -21.68% Net Investment Income 10,427.27 9,783.69 6.58% Commission, Exchange and other Income 3,878.28 3,491.91 11.06% Total Operating Income 14,305.55 13,275.60 7.76% Total Operating Expense 6,959.66 6,614.51 5.22% Profit before tax and provision 7,345.89 6,661.09 10.28% Provision on Investment and others 2,655.58 1,887.90 40.66% Profit Before tax 4,690.31 4,773.19 -1.74% Provision for taxation 2,666.95 2,222.40 20.00% Net Profit after tax 2,023.36 2,550.79 -20.68% 1.90 2.40 -20.83% EPS 64 2021 Amount in million Annual Report 2021 The growth rate in 2021 has decreased as a result of combined effect of decrease in net Investment Income compared to previous corresponding year due to implementation of single digit rate (as directed by Bangladesh Bank) as well as impact of prevailing COVID-19. x. A statement of remuneration paid to the directors including independent directors; Page no. 145 xi. The financial statements prepared by the management of the Bank present fairly its state of affairs, the result of its operations, cash flows and changes in equity; xii. Proper books of account of the Bank have been maintained; xiii. Appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment; xiv.International Accounting Standards(IAS) or International Financial Reporting Standards(IFRS),as applicable in Bangladesh, have been followed in preparation of the financial statements and any departure there from has been adequately disclosed; xv. The system of internal control is sound in design and has been effectively implemented and monitored; xvi. The Minority share holders have been protected from abusive actions by, or in the interest of, controlling shareholders acting either directly or indirectly and have effective means of redress; xvii. There is no significant doubt upon the Bank’s ability to continue as a going concern; xviii. The significant deviations from the last year’s operating results of the Bank has been highlighted and the reasons thereof is explained serial no. ix of page no 64; xix. A statement where key operating and financial data of at least preceding5 (five) years shall be summarized; Page No. 17 xx. The Bank has declared dividend (cash or stock) for the year 2021; xxi. Board’s statement to the effect that no bonus share or stock dividend has been or shall be declared as interim dividend; Page No 59 xxii. The total number of Board meetings held during the year and attendance by each director; Page No 78 xxiii. A report on the pattern of share holding disclosing the aggregate number of shares (along with name-wise details where stated below) held by: a.Parent or Subsidiary or Associated Companies and other related parties(name-wise details); Page No. 128-130 b.Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit and Compliance and their spouses and minor children(name-wise details); page no 179-182 c.Executives; and); page no 9-11 d.Shareholders holding ten percent(10%) or more voting interest in the company (name-wise details); Not applicable
  67. Explanation : For the purpose of this clause, the expression “executive” means top5 (five) salaried employees of the company, other than the Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer and Head of Internal Audit and Compliance. xxiv.Appointment or reappointment of a director, a disclosure on the following information to the shareholders: a. Brief resume of the director; Page No. 179-182 b. nature of his or her expertise in specific functional areas; and Page No.179-182 c.names of companies in which the person also holds the directorship and the membership of committees of the Board; Page No.179-182 xxv. A Management’s Discussion and Analysis signed by CEO or MD presenting detailed analysis of the company’s position and operations along with a brief discussion of changes in the financial statements, among others, focusing on: a. Bank has an accounting policies and there in after have been consistently applied in estimation for preparation of financial statements; b. Changes in accounting policies and estimation, if any, clearly describing the effect on financial performance or results and financial position as well as cash flows in absolute figure for such changes; Not applicable c. Comparative analysis (including effects of inflation) of financial performance or results and financial position as well as cash flows for current financial year with immediate preceding five years explaining reasons thereof; Not applicable. d. Compare such financial performance or results and financial position as well as cash flows with the peer industry scenario; Not applicable e. Briefly explain the financial and economic scenario of the country and the globe; Page no 39-40 f. Risks and concerns issues related to the financial statements, explaining such risk and concerns mitigation plan of the company; and page no 55-57 g. Future plan or projection or forecast for Bank’s operation, performance and financial position, with justification thereof, Budgeted Deposit, Investment, Classified Investment, Foreign Exchange and Operating Profit for the year 2022 (BDT in million) SLNo Particulars Achievement December 2020 Budget Achievement December 2021 1 2 3 4 5 Achievement Of Budget 2021 6=(5/4)% % Growth on 2020 7=(5-3)/3 Budget 2022 Budgeted Growth on 2021 (In Taka) (%) Growth on 2021 8 9=(8-5) 10=(8-5)/5 1 Deposit & Borrowings 348,814 410,000 380,885 92.90% 9.19% 435000 54,115 14.21% 2 Investment 309,762 369,000 344,431 93.34% 11.19% 398000 53,569 15.55% 3 No. of Accounts 2,259,902 2,600,000 2541170 97.74% 12.45% 2850000 308,830 12.15% 4 Classified Investment 11,770 15,000 16,566.84 110.45% 40.75% 19000 2,433 14.69% 5 Percentage (%) of Classified Investments 3.80% 4.07% 4.81% - 4.77% - - 6 7 318,125 419,000 450,015.10 107.40% 41.46% 530000 79,985 17.77% a) Import Foreign Exchange Business 169,379 220,000 261,566.10 118.89% 54.43% 300000 38,434 14.69% b) Export 104,939 145,000 135,786.90 93.65% 29.40% 170000 34,213 25.20% c) Remittance 43,807 54,000 52,662.10 97.52% 20.21% 60000 7,338 13.93% Operating Profit 6,661 8,500 7,345.89 86.42% 10.28% 8300 954 12.99% Annual Report 2021 65
  68. Annexure-B Certificate as per condition no . 1(5)(xxvii) CORPORATE GOVERNANCE COMPLIANCE CERTIFICATION Report to the Shareholders of Al Arafa Islami Bank Limited On Compliance on the Corporate Governance Codes For the year ended on 31st December 2021 We have examined the compliance status to the corporate governance Code by Al Arafa Islami Bank Limited for the year ended on 31st December 2021. This code relates to the Notification No. BSEC/CMRRCD/2006/ 158/207/Admin/80, Dhaka, Dated: 03 June 2018 of the Bangladesh Securities and Exchange Commission. Such compliance with the Corporate Governance Code is the responsibility of the company. Our examination was limited to the procedures and implementation thereof as adopted by the Management in ensuring compliance to the condition of the Corporate Governance Code. This is scrutiny and verification and an independent audit on compliance of the condition of the corporate Governance Code as well as the provisions of relevant Bangladesh Secretarial Standards (BSS) as adopted by Institute of Chartered Secretaries of Bangladesh (ICSB) in so far those standards are not inconsistent with any condition of this Corporate Governance Code. We state that we have obtained all the information explanation, which we have required, and after due scrutiny and verification thereof, we report that, in our opinion. (a) The Bank has complied with the condition of the Corporate Governance Code as stipulated in the above-mentioned Corporate Governance Code issued by the Commission except condition no. 1.2(a). (b) The Bank has complied with the provisions of the relevant Bangladesh Secretarial Standards (BSS) as adopted by the Institute of Chartered Secretaries of Bangladesh (ICSB) as required by this Code. (c) Proper books and records have been kept by the Bank as required under the Companies Acts, 1994, the securities laws and other relevant laws, and (d) The Governance of the company is satisfactory Place: Dhaka For Saifur Enayet & Associates Dated: 26 April, 2022 th Md. Saifur Rahman FCMA Principal & CEO Cost & Management Accountants 66 Annual Report 2021
  69. COMPLIANCE STATUS OF BSEC GUIDELINES FOR CORPORATE GOVERNANCE Annexure – C As per condition No. 1(5) (xxvii) Status of Compliance with the Corporate Governance Code (CGC) of Al Arafa Islami Bank Limited For the year ended 31st December 2021 [As per condition No. 1(5) (xxvii)] Status of compliance with the conditions imposed by the Commission’s Notification No. BSEC/CMRRCD/2006-158/207/Admin/80, dated 3 June 2018. (Report under Condition No. 9.00) Condition No. Title 1.00 1.(1) 1.(2) 1.2.(a) Board of Directors (BoD) Board Size shall not be less than 5(five) and more than 20(twenty) Independent Director: At least one-fifth (1/5) of the total number of board of directors shall be Independent Directors (ID) Complied 1.2 (b) (i) IDs do not hold any share or holds less than 1% shares of the total paid-up shares of the Company ID is not a sponsor and not connected with any sponsor or director or nominated director or shareholder or any of its associates, sister concerns, subsidiaries and parents or holding entities who holds one percent (1%) or more shares of the total paid-up shares and his or her family members shall not hold above mentioned shares; ID has not been an executive of the company in immediately preceding two financial years; ID does not have any relationship whether pecuniary or otherwise relationship with the company or its subsidiary/ associated companies; ID is not a member or TREC holder, director or officer of any stock exchange; ID is not a shareholder, director excepting independent director or officer of any member or TREC holder of stock exchange or an intermediary of the capital market; ID is/was not a partner or an executive of company’s audit firms engaged in Statutory Audit or Internal Audit or Special Audit or Compliance Certification of the Codes during preceding three years; ID shall not be independent director in more than five listed companies; ID has not been convicted by a court of competent jurisdiction as a defaulter in payment of any loan or any advance to a bank or NBFI; ID has not been convicted for a criminal offence involving moral turpitude; 1.2(b) (ii) 1.2 (b)(iii) 1.2 (b)(iv) 1.2 (b)(v) 1.2 (b)(vi) 1.2 (b)(vii) 1.2 (b)(viii) 1.2 (b)(ix) 1.2 (b)(x) Compliance Status Complied Not Complied Remarks √ - √ √ - √ - √ - The Board of Directors consists of 20 (Twenty) members including 3 (Three) Independent Directors which is in compliance with the Section- 15(9) of Bank Company Act, 1991 (Amended up to 2018) - √ - √ - √ - √ - √ - √ - √ - Annual Report 2021 67
  70. Condition No . 1.2 ( c ) 1.2 (d) 1.2 (e) 1.3 1.3(a) 1.3(b) 1.3(b)(i) 1.(3)(b)(ii) 1(3)(b)(iii) 1(3)(b)(iv) 1(3)(b)(v) 1 (3) ( c) 1 (3) (d) 1(4) 1(4)(a) 1(4)(b) 1(4)(c) 1(4)(d) 1(4)(e) 1(5) 68 Title Appointment of ID shall be done by Board and approved by the shareholders in AGM. The Post of ID cannot remain vacant more than 90 days. The tenure of office of an ID shall be for three(3) years, which may be extended for one(1) tenure only; Qualification of Independent Director(ID): Independent Director shall be a knowledgeable individual with integrity who is able to ensure compliance with financial, corporate laws, regulatory requirements and can make meaningful contribution to the business; Independent director shall have the following qualifications: ID is a Business Leader who is/was a promoter or director of an unlisted company having minimum paid-up capital of One Hundred million or any listed company or a member of any national or international chamber of commerce or business association; ID is/was a Corporate Leader as top level executive as adopted by the code and a candidate with equivalent position of an unlisted company having minimum paid up capital of Tk. 100.00 million or of a listed company; ID was Former official of government in the position not below 5th Grade of the national pay scale and educational background of bachelor degree in economics or commerce or business or law; Compliance Status Complied Not Complied √ Annual Report 2021 - √ √ - √ √ - √ √ ID is/was University Teacher who has educational background in Economics or Commerce or Business Studies or Law; ID is/was a professional or an advocate practicing in the HCD of Bangladesh Supreme Court or a CA, CMA, CFA, CCA, CPA and CS or equivalent qualification; The ID shall have at least Ten (10) years of experiences in any √ field mentioned in clause (b); Special cases for relaxing qualifications or experiences with prior approval of the Commission; Duality of Chairperson of the Board of Directors and Managing Director or CEO: The Position of the Chairman of the Board and the Managing √ Director (MD) and/or the Chief Executive Officer (CEO) of the Company shall be filled by different Individuals; MD and/or CEO of a listed Company shall not hold the same √ position in another listed Company; The Chairperson of the Board shall be elected from among the √ non-executive directors; The Board shall clearly define respective roles and √ responsibilities of the Chairperson and the Managing Director and/or CEO; In absence of Chairman, the remaining members may elect one from non-executive directors as Chairperson for that particular Board’s meeting; the reason of absence shall be duly recorded in the minutes. Directors’ Report to Shareholders: Remarks √ - N/A N/A N/A Roles and responsibilities are as per BRPD circular no - 11 dated on 27 October,2013 of Bangladesh Bank guidelines and service rules of the bank
  71. Condition No . 1(5)(i) 1(5)(ii) 1(5)(iii) 1(5)(iv) 1(5)(v) 1(5)(vi) 1(5)(vii) 1(5)(viii) 1(5)(ix) 1(5)(x) 1(5)(xi) 1(5)(xii) 1(5)(xiii) 1(5)(xiv) 1(5)(xv) 1(5)(xvi) 1(5)(xvii) 1(5)(xviii) 1(5)(xix) 1(5)(xx) Title Industry outlook and possible future developments in the industry; Segment-wise or product-wise performance; Risks and concerns including internal and external risk factors, threat to sustainability and negative impact on environment, if any; A discussion on Cost of Goods Sold, Gross Profit Margin and Net Profit Margin, where applicable; A discussion on continuity of any extraordinary activities and their implications (gain or loss); A detailed discussion and statement on related party transactions; A statement of utilization of proceeds raised through public issues, rights issues and/or any other instruments; Explanation if the financial results deteriorate after the company goes for IPO, RPO, Rights Offer, Direct Listing, etc.; Explanation by the Management if significant variance occurs between Quarterly Financial Performance and Annual Financial Statements; Disclosure for remuneration paid to Directors including Independent Directors A statement that financial statements prepared by the management of the issuer present fairly its state of affairs, the result of its operations, cash flows, and changes in equity; Proper books of account of the issuer company have been maintained; Appropriate accounting policies have been consistently applied in preparation to the financial statements and that the accounting estimates are based on reasonable and prudent judgment. Followed IAS or IFRS as applicable in preparation of the financial statement and departure therefrom has been adequately disclosed. The system of internal control is sound in design and has been effectively implemented and monitored. A statement that minority shareholders have been protected from abusive actions by, or in the interest of, controlling shareholders acting either directly or indirectly and have effective means of redress; There are no significant doubts upon the issuer company’s ability to continue as a going concern. If the issuer company is not considered to be a going concern, the fact along with reasons thereof should be disclosed; Significant deviations from the last year’s operation results of the issuer company shall be highlighted and the reasons thereof should be explained; Key operating and financial data of at least preceding 5 (Five) years shall be summarized; Reason for non-declaration of dividend (cash or stock) for the year. Compliance Status Complied Not Complied √ √ √ - √ - √ - √ - - - - - - - Remarks N/A N/A N/A √ - √ - √ - √ - √ - √ - √ - √ - √ - √ - - - N/A Annual Report 2021 69
  72. Condition No . 1(5)(xxi) 1(5)(xxii) 1(5)(xxiii) 1(5)(xxiii)(a) 1(5)(xxiii)(b) 1(5)(xxiii)(c) 1(5)(xxiii)(d) 1(5)(xxiv) 1(5)(xxiv)(a) 1(5)(xxiv)(b) 1(5)(xxiv)(c) 1(5)(xxv) 1(5)(xxv)(a) 1(5)(xxv)(b) 1(5)(xxv)(c) 1(5)(xxv)(d) 1(5)(xxv)(e) 1(5)(xxv)(f) 1(5)(xxv)(g) 1(5)(xxvi) 1(5)(xxvii) 70 Title Compliance Status Complied Not Complied - Remarks Board’s statement to the effect that no bonus share or stock N/A dividend has been or shall be declared as interim dividend; The number of Board meetings held during the year and √ attendance by each Director; A report on the pattern of shareholding disclosing the aggregate (name wise details); Parent/Subsidiary/Associated Companies and other related √ parties (name wise details); Directors, CEO, Company Secretary, CFO, HIAC and their √ spouses and minor children (name wise details). √ Executives (top 5 (five)) salaried employees of the company, other than the Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer and Head of Internal Audit and Compliance Shareholders holding ten percent (10%) or more voting interest √ in the company (name wise details); In case of the appointment/re-appointment of a director the company shall disclose the following information to the shareholders: A brief resume of the director. √ - Nature of his/her expertise in specific functional areas; √ Names of the companies in which the person also holds the √ directorship and the memberships of committees of the Board; Management discussion and analysis signed by CEO/MD presenting detail analysis of the company’s position and operations along with a brief discussion of changes in the financial statements, among others, focusing on: Accounting policies and estimation for preparation of financial √ statements; Presenting detailed Changes in accounting policies and √ estimation as well as cash flows on absolute figure for such changes; Comparative analysis (including effects of inflation) of financial √ performance and position as well as cash flows for current financial year with immediately preceding five years explaining reasons thereof; Compare such financial performance or results and financial √ position as well as cash flows with the peer industry scenario; Briefly explain the financial and economic scenario of the √ country and globe; Risks and concerns issues related to the financial statements, √ explaining such risk and concerns mitigation plan of the company; Future plan or projection or forecast for company’s operation, √ performance and financial position, with justification thereof, i.e., actual position shall be explained to the shareholders in the next AGM; Declaration or certification by the CEO and the CFO to the Board √ as required under condition No. 3(3) shall be disclosed as per Annexure-A; The report as well as certificate regarding compliance of √ conditions of this Code as required under condition No. 9 shall be disclosed as per Annexure -B and as per Annexure-C. Annual Report 2021
  73. Condition No . 1(6) 1(7) 1(7)(a) 1(7)(b) 2 2(a) 2(b) 2(c) 2(d) 2(e) 3.0 3.1 3(1)(a) 3(1)(b) 3(1)(c) 3(1)(d) 3(1)(e) 3 (2) 3.3 3(3)(a) Title Compliance Status Complied Not Complied √ - Meeting of the Board of Directors: Conducting Board meetings and recording the minutes of the meetings and keeping required books and records in line BSS as adopted by the ICSB; Code of Conduct for the Chairperson, other Board members and Chief Executive Officer: The Board shall lay down a code of conduct, based on the N/A recommendation of the Nomination and Remuneration Committee (NRC); The code of conduct as determined by the NRC shall be posted N/A on the website of the company including, among others, prudent conduct and behavior; Remarks As per the Banlgladesh Bank Circular BRPD(R-1) 717/2021-5064 dated 16 June 2021 no such committee is possible to form without the instructions from Bangladesh Bank. As per the circular formation of such committee clearly contradcits with the rules of Bank Company Act 1991 and instructions of Bangladesh Bank. So no NRC is formed by the Board. Governance of Board of Directors of Subsidiary Company: Provisions relating to the composition of the Board of the √ holding company shall be made applicable to the composition of the Board of the subsidiary Company; At least 1 (One) Independent Director of holding company shall √ be a director on the Board of subsidiary company; Minutes of subsidiary to be placed in the meeting of holding √ company; The minutes of the respective Board meeting of the holding √ company shall state that they have reviewed the affairs of the subsidiary company also; The Audit Committee of the holding company shall also review √ the financial statements in particular the investments made by the subsidiary company. Managing Director (MD) or Chief Executive Officer (CEO), Chief Financial Officer (CFO), Head of Internal Audit and Compliance (HIAC) and Company Secretary (CS): Appointment: The Board shall appoint a MD or CEO, CS, CFO and HIAC; √ The positions of the MD or CEO, CS, CFO and HIAC shall be √ filled by different individuals; The MD or CEO, CS, CFO, and HIAC of a listed company shall √ not hold any executive position in any other company at the same time; The Board shall clearly define respective roles, responsibilities √ and duties of the CFO, the HIAC and the CS; MD or CEO, CS, CFO, and HIAC shall not be removed from their √ position without approval of the Board and be disseminated to the commission and stock exchange(s). Requirement to attend Board of Directors’ Meetings: MD or √ CEO, CS, CFO and HIAC shall attend the meetings of the Board; Duties of Managing Director (MD) or Chief Executive Officer (CEO) and CFO: The MD or CEO and CFO shall certify to the Board that they have reviewed financial statements for the year and that to the best of their knowledge and belief: Annual Report 2021 71
  74. Condition No . 3(3)(a)(i) 3(3)(a)(ii) 3(3)(b) 3(3)( c) 4. 4 (i) 4 (ii) 5. 5(1) 5(1) (a) 5(1) (b) 5(1) (c) 5.2 5(2) (a) 5(2) (b) 5(2) (c ) 5(2) (d) 5(2) (e) 5(2)(f) 5.3 5(3)(a) 5(3)(b) 72 Title These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; These statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards and applicable laws; The MD or CEO and CFO shall also certify that there are, to the best of knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or in violation of the code of conduct for the company’s Board or its members The certification of the MD/CEO and CFO shall be disclosed in the Annual Report. Board of Directors’ Committee: Audit Committee Nomination and Remuneration Committee Audit Committee: Responsibility to the Board of Directors Company shall have an Audit Committee as a sub-committee of the Board. Audit Committee shall assist the Board in ensuring that the financial statements reflect true and fair view of the state of affairs of the Company and in ensuring a good monitoring system within the business; Audit Committee shall be responsible to the Board. The duties of Audit Committee shall be clearly set forth in writing. Constitution of the Audit committee: The Audit Committee shall be composed of at least 3 (three) members. Board shall appoint members of the Audit Committee who shall be non-executive directors of the company excepting Chairperson of the Board and shall include at least one independent director (ID); All members of the Audit Committee should be “financially literate” and at least 1 (one) member shall have accounting or related financial management background and 10 years of such experience; Casual vacancy shall be filled by the board not later than 1(one) month from the date of the vacancy. The Company Secretary shall act as the Secretary of the Audit Committee; The quorum of the Audit Committee meeting shall not constitute without at least 1 (one) independent director; Chairperson of the Audit Committee: The Board of Directors shall select 1 (one) member of the Audit Committee to be Chairman of the Audit Committee, who shall be an independent director; Election of Chairman of the particular meeting in absence of regular Chairperson of Audit Committee recording the reasons of such absence in the minutes. Annual Report 2021 Compliance Status Complied Not Complied √ Remarks √ √ √ √ - N/A √ √ √ √ √ √ √ - √ √ √ √ -
  75. Condition No . 5(3)( c) 5.4 5(4)(a) 5(4)(b) 5.5 5(5)(a) 5(5)(b) 5(5)(c ) 5(5)(d ) 5(5)(e) 5(5)(f ) 5(5)(g ) 5(5)(h ) 5(5)(i) 5(5)(j ) 5(5)(k ) 5(5)(l ) 5(5)(m ) Title Chairperson of the Audit Committee shall remain present in the AGM. Meeting of the Audit Committee: The Audit Committee shall conduct at least 4 meetings in a financial year. Quorum of Audit Committee, presence of 2 or 2/3 members whichever is higher, where the presence of an ID is a must. Role of Audit Committee: Oversee the financial reporting process; Monitor choice of accounting policies and principles; Internal Audit and Compliance process to ensure that it is adequately resourced; Oversee hiring and performance of external auditors; Hold meeting with the auditors, review the annual financial statements before submission to the Board for approval or adoption; Review along with the management, the annual financial statements before submission to the board for approval; Review along with the management, the quarterly and halfyearly financial statements before submission to the board for approval; Review adequacy of internal audit function; Review the management’s discussion and analysis before disclosing in the Annual Report; Review statement of all related party transactions submitted by the management; Review management letters or letter of Internal Control weakness issued by statutory auditors; Oversee the determination of audit fees based on scope and magnitude, level of expertise deployed and time required for effective audit and evaluate the performance of external auditors; Oversee whether the proceeds raised IPO or RPO or Rights Share Offer have been utilized per the purposes stated in relevant offer document or prospectus approved by the Commission; Compliance Status Complied Not Complied √ Remarks √ √ √ √ √ √ √ √ √ √ √ √ √ √ - Provided that the management shall disclose to the Audit Committee about the uses or applications of the proceeds by major category (capital expenditure, sales and marketing expenses, working capital, etc.), on a quarterly basis, as a part of their quarterly declaration of financial results: 5.6 5.6 (a) 5(6)(a)(i) Provided further that on an annual basis, the company shall prepare a statement of the proceeds utilized for the purposes other than those stated in the offer document or prospectus for publication in the Annual Report along with the comments of the Audit Committee. Reporting of the Audit Committee: Reporting to the Board of Directors The Audit Committee shall report on its activities to the Board. √ √ Annual Report 2021 73
  76. Condition No . 5(6)(a)(ii) 5(6)(a)(ii)(a) 5(6)(a)(ii)(b) 5(6)(a)(ii)(c) 5(6)(a)(ii)(d) 5.6 (b) 5.7 6 6.1 6(1)(a) 6(1)(b) 6(1)(c) 6.2 6(2)(a) 6(2)(b) 6(2)(c) 6(2)(d) 74 Compliance Status Remarks Complied Not Complied The audit committee shall immediately report to the board on the following findings, if any:Report on conflicts of interests; √ Suspected or presumed fraud or irregularity or material defect √ identified in the internal audit and compliance process or in the financial statements Suspected infringement of laws, regulatory compliance √ including securities-related laws, relies on and regulation; Any other matter which the Audit Committee deems necessary √ shall be disclosed to the Board immediately; √ Reporting to the Authorities: If the Audit Committee has reported to the Board about anything which has material impact on the financial condition and results of operation and has discussed with the Board and the management that any rectification is necessary and if the Audit Committee finds that such rectification has been unreasonably ignored, the Audit Committee shall report such finding to the Commission, upon reporting of such matters to the Board for three times or completion of a period of 6 (six) months from the date of first reporting to the Board, whichever is earlier Reporting to the Shareholders and General Investors: Report on √ the activities carried out by the Audit Committee, including any report made to the Board of Directors under condition 5(6)(a) (ii) above during the year, shall be signed by the Chairperson of the Audit Committee and disclosed in the annual report of the issuer company. Nomination and Remuneration Committee (NRC): As per the Bangladesh Bank Circular BRPD(R-1) 717/20215064 dated 16 June 2021 no such committee is possible to form without the instructions from Bangladesh Bank. As per the circular formation of such committee clearly contradicts with the rules of Bank Company Act 1991 and instructions of Bangladesh Bank. So no NRC is formed by the Board. Responsibility to the Board of Directors The company shall have a NRC as a sub-committee of the Board. The NRC shall assist the Board in the formulation of the nomination criteria or policy for determining qualifications, positive attributes experiences and independence of directors and top level executive as well as a policy for formal process N/A of considering remuneration of directors, top level executive; The Terms of Reference (ToR) of the NRC shall be clearly set forth in writing covering the areas stated at the condition No. 6(5)(b); Constitution of the NRC The Committee shall comprise of at least three members N/A including an independent director (ID); All members of the Committee shall be non-executive directors; N/A Members of the Committee shall be nominated and appointed N/A by the Board; Board shall have authority to remove and appoint any member N/A of the committee; Annual Report 2021 Title
  77. Condition No . 6(2)(e) 6(2)(f) 6(2)(g) 6(2)(h) 6(2)(i) 6.3 6(3)(a) 6(3)(b) 6(3)(c) 6.4 6(4)(a) 6(4)(b) 6(4)(c) 6(4)(d) 6.5 6(5)(a) 6(5)(b)(i)(a) 6(5)(b)(i)(b) Title In case of death, resignation, disqualification, or removal of any member of the Committee or in any other cases of vacancies, the board shall fill the vacancy within 180 (one hundred eighty) days of occurring such vacancy in the Committee; The Chairperson of the Committee may appoint or co-opt any external expert and/or member(s) of staff to the Committee as an advisor who shall be a non-voting member if the Chairperson feels that advice or suggestion from such external expert and/ or member(s) of staff shall be required or valuable for the Committee; The company secretary shall act as the secretary of the committee; The quorum of the NRC meeting shall not constitute without the attendance of at least an independent director; No member of the NRC shall receive, either directly or indirectly, any remuneration for any advisory or consultancy role or otherwise, other than Director’s fees or honorarium from the company; Chairperson of the NRC The Board shall select 1 (one) member of the NRC to be Chairperson of the Committee, who shall be an independent director; In the absence of the Chairperson of the NRC, the remaining members may elect one of themselves as Chairperson for that particular meeting, the reason of absence of the regular Chairperson shall be duly recorded in the minutes; The Chairperson of the NRC shall attend the annual general meeting (AGM) to answer the queries of the shareholders. Meeting of the NRC The NRC shall conduct at least one meeting in a financial year. The Chairperson of the NRC may convene any emergency meeting upon request by any member of the NRC. The quorum of the meeting of the NRC shall be constituted in presence of either two members or two-third of the members of the Committee, whichever is higher, where the presence of an independent director is must as required under condition No. 6(2)(h). The proceedings of each meeting of the NRC shall duly be recorded in the minutes and such minutes shall be confirmed in the next meeting of the NRC. Role of NRC NRC shall be independent and responsible/accountable to the Board and to the shareholders; NRC shall oversee, formulate & recommend to the Board regarding the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate suitable directors to run the company successfully; Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; Compliance Status Complied Not Complied - Remarks N/A N/A - N/A N/A N/A N/A N/A - - N/A N/A N/A N/A N/A - N/A N/A - N/A Annual Report 2021 75
  78. Condition No . 6(5)(b)(i)(c) 6(5)(b)(ii) 6(5)(b)(iii) 6(5)(b)(iv) 6(5)(b)(v) 6(5)(b)(vi) 6(5)(c ) 7 7(1) 7(1)(i) 7(1)(ii) 7(1)(iii) 7(1)(iv) 7(1)(v) 7(1)(vi) 7(1)(vii) 7(1)(viii) 7(1)(ix) 7(2) 7(3) 8 8(1) 8(2) 8(3) 76 Title Compliance Status Complied Not Complied - Remarks Remuneration to directors, top level executive involves a balance between fixed and incentive pay reflecting short and N/A long term performance objectives appropriate to the working of the company and its goals; Devising a policy on Board’s diversity taking into consideration age, gender, experience, ethnicity, educational background and N/A nationality; Identifying persons who are qualified to become directors and who may be appointed in top-level executive position in N/A accordance with the criteria laid down, and recommend their appointment and removal to the Board; Formulating criteria for evaluation of performance of N/A independent directors and the Board; Identifying the company’s needs for employees at different levels and determine their selection, transfer or replacement N/A and promotion criteria; Developing recommending and reviewing annually the N/A company’s human resources and training policies. The company shall disclose the nomination and remuneration policy and the evaluation criteria and activities of NRC at a N/A glance in its annual report. External or Statutory Auditors The issuer company shall not engage its external or statutory auditors to perform the following services of the company, namely:Appraisal or valuation services or fairness opinions. √ Financial information systems design and implementation. √ Book-keeping or other services related to the accounting √ records or financial statements. √ Broker-dealer services. Actuarial services. √ Internal audit services or special services; √ Any other service that the Audit Committee determines; √ Audit or certification services on compliance of corporate √ governance as required under condition No. 9(1); Any other service that may create conflict of interest. √ No partner or employees of the external audit firms shall √ possess any share of the company they audit at least during the tenure of their audit assignment of that company; his or her family shall not hold any shares in the said company. Representative of external or statutory auditors shall remain √ present in the Shareholders’ Meeting (Annual General Meeting or Extraordinary General Meeting) to answer the queries of the shareholders; Maintaining a website by the company The company shall have an official website linked with the √ website of the stock exchange. √ The company shall keep the website functional from the date of listing. The company shall make available the detailed disclosures √ on its website as required under the listing regulations of the concerned stock exchange(s). Annual Report 2021
  79. Condition No . 9 9(1) 9(2) 9(3) Title Compliance Status Complied Not Complied Reporting and Compliance of Corporate Governance The company shall obtain a certificate from a practicing √ Professional Accountant/Secretary (Chartered Accountant/ Cost and Management Accountant / Chartered Secretary) other than its statutory auditor or audit firm on yearly basis regarding the compliance of conditions of the Corporate Governance Code of the Commission and shall such certificate shall be disclosed in the Annual Report. The professional who will provide the certificate on compliance √ of Corporate Governance shall be appointed by the Shareholders in the AGM. The directors of the company shall state, in accordance with √ the Annexure-C attached, in the directors’ report whether the Company has complied with these conditions or not. Remarks - - - Annual Report 2021 77
  80. COMPLIANCE REPORT ON BSEC ’S NOTIFICATION 1.Compliance of section 1.5 (xxii) a) Board of Directors meeting held during the year 2021 and attendance by each Director: Composition of Board Name of Directors Sl 1 Alhajj Salim Rahman 2 Alhajj Abu Naser Md. Yeahea 3 Alhajj Abdus Samad 4 Alhajj Mohammad Abdus Salam 5 Jb. Badiur Rahman 6 Alhajj Mahbubul Alam 7 Alhajj Nazmul Ahsan Khaled 8 Position No. of Meeting Held Entitlement to attend Attended Chairman 13 13 13 Vice-Chairman 13 11 10 Director 13 13 13 Director 13 13 13 Sponsor Director 13 13 13 Independent Director 13 13 13 Sponsor Director 13 13 13 Alhajj Abdul Malek Mollah Sponsor Director 13 13 13 9 Hafez Alhajj Md. Enayet Ullah Sponsor Director 13 13 13 10 Alhajj Ahamedul Hoque Director 13 13 13 11 Alhajj Niaz Ahmed Director 13 11 11 12 Alhajj Mohammed Eamadur Rahman Director 13 13 13 13 Alhajj Engr. Kh. Mesbahuddin Ahmed Director 13 13 13 14 Alhajj Mohammed Haroon Sponsor Director 13 13 13 15 Alhajj Liakat Ali Chowdhury Director 13 13 13 16 Alhajj Md. Anowar Hossain Sponsor Director 13 13 13 17 Alhajj Md. Harun-Ar-Rashid Khan (Nominated by China Builders & Machineries Ltd.) Nominee Director 13 13 13 18 Alhajj Md. Rafiqul Islam Director 13 12 12 19 Alhajj Md. Amir Uddin PPM Independent Director 13 13 13 20 Alhajj M. Kamaluddin Chowdhury Independent Director 13 13 13 b) Board of Executive Committee meeting held during the year 2021 and attendance by each Director: 01 January, 2021 to 08 August, 2021 Composition of Board Sl Name of Directors 78 No. of Meeting Held Attended Chairman 12 9 Position 1 Alhajj Salim Rahman 2 Hafez Alhajj Md. Enayet Ullah Vice Chairman 12 12 3 Alhajj Abu Naser Md. Yeahea Member 12 11 4 Alhajj Mohammad Abdus Salam Member 12 12 5 Alhajj Liakat Ali Chowdhury Member 12 12 6 Alhajj Md. Anowar Hossain Member 12 12 7 Alhajj Md. Harun-Ar-Rashid Khan (Nominee Director of China Builders & Machineries Ltd.) Member 12 12 Annual Report 2021
  81. 09 August , 2021 to 31st December, 2021 Composition of Board Name of Directors Sl Position No. of Meeting Held Attended Chairman 8 8 1 Alhajj Abdus Samad 2 Alhajj Mohammad Abdus Salam Vice Chairman 8 7 3 Hafez Alhajj Md. Enayet Ullah Member 8 8 4 Alhajj Ahamedul Hoque Member 8 8 5 Alhajj Engr. Kh. Mesbah Uddin Ahmed Member 8 8 6 Alhajj Liakat Ali Chowdhury Member 8 8 7 Alhajj Md. Anowar Hossain Member 8 8 Position No. of Meeting Held Attended c) Board of Audit Committee meeting held during the year 2021 and attendance by each Director: 01 January, 2021 to 08 September, 2021 Composition of Board Sl Name of Directors 1 Alhajj Mahbubul Alam Chairman 5 5 2 Alhajj Nazmul Ahsan Khaled Member 5 5 3 Alhajj Abdul Malek Mollah Member 5 5 4 Alhajj Niaz Ahmed Member 5 5 5 Alhajj Md. Amir Uddin PPM Member 5 5 Position No. of Meeting Held Attended 09 September, 2021 to 31 December, 2021 Composition of Board Sl Name of Directors 1 Alhajj Mahbubul Alam Chairman 3 3 2 Alhajj Nazmul Ahsan Khaled Member 3 3 3 Alhajj Mohammed Emadur Rahman Member 3 2 4 Alhajj Md. Harun-Ar-Rashid Khan (Nominated by China Builders & Machineries Ltd.) Member 3 3 5 Alhajj M. Kamaluddin Chowdhury Member 3 2 d) Board of Risk Management Committee meeting held during the year 2021 and attendance by each Directors: 01 January, 2021 to 08 September, 2021 Composition of Board Sl Name of Directors Position No. of Meeting Held Attended 1 Jb. Badiur Rahman Chairman 2 2 2 Alhajj Md. Rafiqul Islam Member 2 2 3 Alhajj Engr. Kh. Mesbahuddin Ahmed Member 2 2 4 Alhajj Ahamedul Hoque Member 2 2 5 Alhajj M.Kamaluddin Chowdhury Member 2 2 Annual Report 2021 79
  82. 09 September , 2021 to 31 December, 2021 Composition of Board Sl Name of Directors Position No. of Meeting Held Attended 1 Jb. Badiur Rahman Chairman 2 2 2 Alhajj Abdul Malek Mollah Member 2 2 3 Alhajj Mohammed Haroon Member 2 2 4 Alhajj Md. Rafiqul Islam Member 2 2 5 Alhajj Md. Amir Uddin PPM Member 2 2 2. Compliance of section 1.5 (xxiii) The Pattern of Shareholding a) Parent/Subsidiary/Associated Companies and Other Related Parties: Sl No Name of the Directors Relation Shares Held 1 AIBL CAPITAL MANAGEMENT LTD Related Party 98% 2 AIBL CAPITAL MARKET SERVICES LTD Related Party 60.50% b) Directors, Chief Executive Officer/Managing Director, Company Secretary, CFO, Head of Internal Control and Compliance wings and their spouse and minor Children (as on 31st December, 2021) Sl No 01 Name Alhajj Salim Rahman Tahsina Rahman Shares Held Chairman 21,298,982 Spouse 23,315,376 Vice-Chairman 26,300,798 02 Alhajj Abu Naser Md. Yeahea 03 Alhajj Abdus Samad Director 23,965,115 Mrs. Shahana Ferdous Spouse 769,540 04 Alhajj Mohammad Abdus Salam Director 21,598,392 05 Jb. Badiur Rahman Sponsor Director 29,704,244 Spouse 2,620,906 Mrs. Syeda Rashida Yasmin 06 Alhajj Mahbubul Alam 07 Alhajj Nazmul Ahsan Khaled Sponsor Director 22,812,996 08 Alhajj Abdul Malek Mollah Sponsor Director 21,357,454 Mrs. Laila Begum 09 Hafez Alhajj Md. Enayet Ullah 10 11 Independent Director Spouse - 333 Sponsor Director 21,303,874 Alhajj Ahamedul Hoque Director 21,298,448 Alhajj Niaz Ahmed Director 21,407,921 Mrs. Shabana Niaz Spouse 8,780,841 12 Alhajj Mohammed Eamadur Rahman Director 21,324,314 13 Alhajj Engr. Kh. Mesbahuddin Ahmed Director 21,299,266 Mrs. Ajmeri Ahmed Spouse 9,423,819 Sponsor Director 21,422,224 14 15 80 Designation Alhajj Mohammed Haroon Mrs. Shamsun Nahar Begum Spouse 190,500 Alhajj Liakat Ali Chowdhury Director 21,304,850 Annual Report 2021
  83. 16 Alhajj Md . Anowar Hossain Sponsor Director Mrs. Shahida Anowar 23,578,732 Spouse 236,850 17 Alhajj Md. Harun-Ar-Rashid Khan (Nominated by China Builders & Machineries Ltd.) Nominee Director 21,376,917 18 Alhajj Md. Rafiqul Islam Director 21,350,369 19 Alhajj Md. Amir Uddin PPM Independent Director - 20 Alhajj M. Kamaluddin Chowdhury Independent Director - 21 Jb. Farman R. Chowdhury Managing Director - 22 Jb. Md. Mahmudur Rahman DMD & Company Secretary - 23 Jb. Muhammed Nadim FCA DMD & CFO 24 Jb. Akter Kamal SEVP & Head of ICCW - c) Statement of Shares held by top 5(Five) salaries employees other than the Director, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Control and Compliance Wings (as on 31st December, 2021) Sl No Name Designation No. of Shares 1 Jb. S. M. Jaffar Deputy Managing Director Nil 2 Jb. Shabbir Ahmed Deputy Managing Director Nil 3 Jb. Md. Shafiqur Rahman Deputy Managing Director Nil 4 Jb. Syed Masodul Bari Deputy Managing Director Nil 5 (i) Jb. Abed Ahmed Khan Deputy Managing Director Nil (ii) Jb. Abdullah Al-Mamun Deputy Managing Director Nil d) Shareholding ten percent (10%) or more voting interest in the Company: None Annual Report 2021 81
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  85. Report of the Shariah Supervisory Committee For the year ended on 31 December 2021 Honourable Shareholders of Al-Arafah Islami Bank Limited (AIBL) Al-hamdulillah! As a Shariah Supervisory Committee we examine all the Banking activities to see whether all Shariah Laws, Guidelines, Directions and Fatwas given by the Shariah Supervisory Committee from time to time have been complied with by the Bank or not. On the other hand it is the responsibility of the Management of the Bank to ensure compliance thereof. After completing examinations, the Shariah Committee places an Independent Report based on Islami Shariah for the Shareholders. As a result we have meticulously scrutinized and examined all the activities including relevant documents, transactions and deals performed by 201 Branches of AIBL during the year ended on 31.12.2021 (Esayee) (Hijri 1442-1443). Our Opinions and Suggestions are enumerated below: Opinions: a. Whatever we have audited, on completion we have found that more or less all the activities, transactions and deals have been in accordance with the Shariah Principles and Regulations. b. Distribution of profits among various Mudaraba Depositors has been done in line with the Mudaraba Principles as per Sahibul Mal, i.e. as per the contractual agreement between the Bank and the Depositors. c. Since the Bank does not pay any Zakath on the money of the Depositors and Shareholders, the responsibility of paying Zakath is thus vested in our respective Depositors and Shareholders. d. Although all the activities have been in terms with Shariah Principles nevertheless due to ignorance of the obligation of abiding by some internal and international regulatory bindings and lack of proper due diligence there has been few cases where the means of the income earned have not been approved by the Shariah. This has been termed as Doubtful Income and the Bank has been advised to separate the same from its basic income and spend it on the basis of Shariah prescribed ways. This money is not to be distributed among the Depositors or Shareholder as Profit or Dividend. Suggestions: 1.To ensure buy and sell through Bi-muajjal and Bi-murbaha investment modes and to comply with the Shariah rules clients can even be appointed as “Buying-Agents” if needed. 2. Bank should introduce the Mudaraba and Musharaka investment schemes even in a small scale. 3. To assist in improving the socio-economic condition of the less privileged group of the population Bank should emphasize on the existing small investment schemes and introduce new development schemes based on Islamic Shariah. 4. In order to involve more and more people into Islamic Banking and to make them understand the benefit of it in this life and hereafter Bank should arrange various seminars, workshops and client-gathering at the Head Office, Zones and Branch level on a regular basis. 5. To strengthen the welfare and CSR activities of Al-Arafah Islami Bank Foundation by ensuring the implementation of the Shariah Rules and Regulations. 6. Everyone from the Banking Sector should keep in mind about the responsibilities of Shariah Compliance in Islamic Banking. So, all of us have to perform our duties with utmost vigilance. May Allah (SWT) forgive all of our sins and accept all of our good deeds for His sake. In future, May Allah (SWT) give us Tawfiq to do more financially welfare activities by remembering and maintaining Taqwa for developing the Country and the Nation, Ameen. (Md. Abdur Rahim Khan) (Mufti Sayeed Ahmad Muzaddedi) Secretary Chairman Shariah Supervisory Committee Shariah Supervisory Committee Annual Report 2021 83
  86. IMPLEMENTATION STATUS OF INTEGRITY UNDER NATIONAL INTEGRITY STRATEGY Integrity & National Integrity Strategy: Integrity generally means behavioral excellence influenced by ethics, morality and honesty. It also implies adherence to time-tested norms, values, customs and principles of a society. At the individual level, it means being duty-bound and honest. Organizations are created by people for achievement of its common goal. For promotion of integrity, strict adherence to remaining morally and ethically correct at individual level is of critical importance. “Homes” can play a vital role in promoting integrity since moral education originates from homes. It is equally true about institutions, as they are the manifestation of the overall goal of the individuals. Laws, regulations, processes, policies, systems and the philosophy may be followed in such a manner that they promote righteousness in life. So, beyond the laws/policies, a movement has to be initiated so that the citizens become ethical in public and private lives and integrity prevails in all organizations, business and civil society. Therefore keeping all these factors in mind, in order to establishing a good governance in all institutions and in the society at large The Government of the People’s Republic of Bangladesh formulated a NATIONAL INTEGRITY STRATEGY to prevent corruption and promote a happy and prosperous Bangladesh. Purpose of National Integrity Strategy: The Government of Bangladesh has introduced National Integrity Strategy in the year 2012 to establish rule of law, fundamental human rights, equality, justice and organizational good governance through ensuring political, economical and social rights as well as to develop prosperous Bangladesh. Bangladesh Bank itself and all the scheduled banks are implementing the Strategy through Action Plans since 2013. National Integrity Strategy Action Plan and Implementation Progress Monitoring Structures, 2021-22 at field level, has also been in place. For implementation of National Integrity Strategy, Al-Arafah Islami Bank Limited has taken the following steps according to the instructions given by Bangladesh Bank to improve ethics in all levels and to establish good governance in the bank:01. 7 (seven) member Central Integrity Committee (having a Managing Director as a president) has been formed. Progress on Integrity Strategy implementation is discussed in regular meetings of the Central Integrity Committee. 02. Action Plan regarding integrity has been devised as per format provided by Bangladesh Bank and quarterly implementation progress reports are being sent to Bangladesh Bank. 03. An Instruction Circular has been issued to all the branches/zones/offices to strictly comply with instructions so that the identified existing and potential challenges and problems of the bank can be faced and mitigated. 04. Previous Code of Conducts for the officials and stakeholders of the bank has been updated as per Central Bank instructions and informed all the employees of the bank through instruction circular for meticulous compliance thereof. 05. According to the instructions of the Integrity Committee of Head Office, discussion meetings are being organized in every zones/branches at least quarterly basis to improve the ethics/morality of the officials and minutes of the meetings are being sent to the Member-Secretary, Integrity Committee of Head Office of the bank on a quarterly basis for monitoring and follow up. 06. As per directions of the bank’s Central Integrity Committee, classroom sessions are being conducted in each training program of the training institute for development of the morality of all the executive/officials of the bank. The Training Institute of the bank is being organized Executive Development Program (EDP) from time to time with executives of different levels for development of their moral and ethical values. 07. According to the instructions of Bangladesh Bank, a 5-Member Innovation Team has been formed to take new strategies/Innovative Ideas on the deposit/investment & services products from time to time. 08. According to the instructions of Bangladesh Bank, recently, the Obijog Nishpotti Kormokarta (ONIK), Complain Management & Resolving Officer (CMRO) and an Appellate Authority have been appointed for the management of dispute/complaints of the customers and stakeholders under the Right to Information Act, 2009. 09. The particulars (name & designation etc) of the officials who are dismissed / removed / terminated from time to time by the bank are being uploaded to the web portal of Bangladesh Bank and compliance reports is being sent to Bangladesh Bank on quarterly basis as per their instruction. 84 Annual Report 2021
  87. 10 .Advertisements are being published in each quarter in the national daily newspaper by AIBL on the Integrity Rhymes introduced by Bangladesh Bank on ethics/morality. 11. In 2016, for the practice of integrity, AIBL awarded crests and certificates to the 38 employees as incentive after fulfilling 13 different criteria. In 2017, 63 officials / executives have been awarded crests and certificates in order to encourage good practice / excellence in the bank. This time the number of determining criteria was 25. In the meantime, to encourage even further BRPD Circular No. 08 of 08/08/2018 was issued by Bangladesh Bank with a direction to give one month’s basic salary each to 5 employees/officials of the bank each year as Integrity Award. In order to encourage the integrity practice / excellence in this bank in the light of the instructions of the Bangladesh Bank, the policy of awarding of one month’s basic in each year to 5 employees/officials as Integrity Award was approved by the Board of Directors on 24/11/2018 in its 330th Meeting and the award. Accordingly Integrity Award are being given to the employees of the bank. Lastly for the year 2019-2020, the award has been given to 05 Executives and officials of the bank. The Award for the year 2020-2021 have to be given soon as per Bangladesh Bank Policy and guidelines of this bank. There is no denying the fact that introduction of financial award for integrity will not only motivate the officials to be behaviorally correct but also will increase the competitiveness and efficiency of the employees and officials. This will inevitably decrease the irregularities of banking activities and will improve the quality of asset as well. Thus the aims and objectives/goals of the bank as well as overall integrity of the officials will be achieved. Annual Report 2021 85
  88. REPORT OF THE BOARD AUDIT COMMITTEE (BAC) In compliance with the guidelines of Banking Companies Act (amended in July 2013), Bangladesh Bank guidelines, notifications of Bangladesh Securities & Exchange Commission (BSEC) and international best practices of Corporate Governance, the Audit Committee of the Board of AlArafah Islami Bank Limited was formed by the Board of Directors of the bank with a view to ensuring the achievement of objectives of the bank, enhancing the efficiency of operations and compliance with applicable laws, rules, regulations and internal policies to make the bank a strong and dependable organization for all stakeholders, specially shareholders, depositors and the society as a whole. Objectives of the Board Audit Committee 1. Review the financial reporting process, the system of internal control and compliance approach to manage risks, the audit process, findings of the Central Bank’s comprehensive audit and the Bank’s mechanism for monitoring compliance of laws and regulations and its own code of business conduct. 2. Assist the Board in fulfilling its oversight responsibilities including implementation of the objectives, strategies, policies and overall business plans set by the Board for effective functioning of the bank. Role and Responsibilities of the Committee The roles and responsibilities of Board Audit Committee of AIBL have been formulated on the basis of BRPD Circular No. 11 dated 27 October 2013, corporate governance notification issued by BSEC, dated 03 June, 2018 and other best practice of corporate governance guidelines and standards. The important roles and responsibilities of the Board Audit Committee are described below: 1. Review the Internal Control system of the bank to ensure that sufficient Risk Management System is in place to manage core risk of the bank. 2. Review the Internal Audit Procedure. 3. Review the efficiency and effectiveness of Internal Control System. 4. Consider the recommendations made by the internal and external auditors. 5. Ensure fair presentation of financial statements in compliance with Bangladesh Accounting Standards and Bangladesh Financial Reporting Standards. 6. Review compliance with the applicable rules and regulations of Bangladesh Bank, BSEC, Bank Company Act- 1991 (amended in July, 2013) and Companies Act, 1994. 7. Review the statement of all related party transactions submitted by the management. 8. Oversee the determination of audit fees based on scope and magnitude, level of expertise deployed and time required for effective audit and evaluate the performance of external auditors. 9. Hold meeting with the external or statutory auditors for review of the annual financial statements before submission to the Board for approval or adoption. Report to the Board of Director 1. Report immediately to the Board of Directors on conflict of interest. 2. Report to the Board of Directors on frauds or irregularities or material defects in the Internal Control System. 3. Suspected infringement of laws, regulatory compliances including securities related laws, rules and regulations. Composition of the Board Audit Committee (BAC) The Board Audit Committee was reconstituted by the Board of Directors of the bank in its 363rd Meeting held on 09 September, 2021. The Board Audit Committee (BAC) consists of the following 05 (five) members: SL. No Name Educational Qualification Status with the Bank Status with the Committee B.Com Independent Director Chairman B.Sc Engineer Director Member 1 Jb. Mahbubul Alam 2 Jb. Nazmul Ahsan Khaled 3 Jb. Mohammed Emadur Rahman M.B.A. (Marketing-London) Director Member 4 Jb. Md. Harun-Ar-Rashid Khan M.A. (Social Welfare) Nominee Director Member 5 Jb. M. Kamal Uddin Chowdhury B.Com Independent Director Member Meetings of Board Audit Committee: During the Year 2021, 08 (eight) meetings of the Committee were held. 86 Annual Report 2021
  89. Activities during the year : The Board Audit Committee carried out the following activities during the year 2021:1. Reviewed the comprehensive inspection report of Bangladesh Bank, evaluated compliance status thereof and advised the bank management to take necessary action as required. 2. Reviewed performance of internal audit, 2021. 3. Reviewed audited accounts and report of 2021 and recommended those audited report to place to the Board. 4. Reviewed inspection report of different branches of the bank conducted by Internal Control and Compliance Wing of the bank and advised the bank management to enhance deposit, Investment including reduction of classified Investment. 5. Reviewed the compliance status of audit objections and advised the management to ensure full compliance of regulatory, legal and significant issues meticulously. 6. Reviewed annual financial statements of the bank with appointment of external auditors prior to submission to the Board for their approval. 7. Reviewed and approved Annual Plan of Risk Based Internal Audit, 2021. 8. Reviewed and approved action plan for turning loss-incurring branches into profitable branches. 9. Reviewed comparative position of half yearly income - expenditure statement as on 30 June, 2021 and 30 June, 2020. 10. Recommended various measures for improvement of performance of the bank. 11. Reviewed cost of fund as on June 30, 2021 of the bank. 12. Reviewed half yearly report of Self-Assessment of Anti-Fraud Internal Control. 13. Reviewed Annual Health Report on ICCW and Integrated Health report of the Bank. Acknowledgement In conclusion, we would like to extend our sincere thanks and profound gratitude to the members of Board of Directors for allowing the committee to discharge its due role independently. We also express our gratitude and thanks to the management, auditors, regulatory authorities particularly, Bangladesh Bank and Bangladesh Securities & Exchange Commission for their cordial co-operation in performing the duties with due diligence. For and on behalf of Board Audit Committee. Alhajj Mahbubul Alam Chairman Board Audit Committee (BAC) Annual Report 2021 87
  90. ACTIVITIES OF THE BOARD RISK MANAGEMENT COMMITTEE IN THE YEAR 2021 The major activities of the Board Risk Management Committee (BRMC) in the year 2021 were as follows: a) Reviewed the Bank’s Risk Management Guidelines and recommended thereon. b) Reviewed all Core Risk Management Guidelines of the Bank. c) Reviewed the Capital Management, Bank Resiliency Capacity, and Internal Capital Adequacy Assessment Process (ICAAP) through Comprehensive Risk Management Report (CRMR) of the Bank. d) Reviewed the Capital to Risk Weighted Assets Ratio (CRAR) of the Bank from time to time against Minimum Capital Requirement (MCR) through Risk Management Paper/Report of the Bank. e) Reviewed the Risk Appetite Statement of the Bank. f) Evaluated the Stress Testing Result periodically while reviewing CRMR of the Bank g) Evaluated the Risk Based Capital Adequacy (Basel-III) periodically while reviewing CRMR of the Bank. h) Evaluated the Monthly Risk Management Report (MRMR) and Comprehensive Risk Management Report (CRMR) of the Bank periodically. i) Evaluated the implementation status of the decisions taken in the management level Risk Management Committee (RMC) meetings time to time. j) Reviewed the status of Bank’s Recovery, Classification, Legal position and Written off accounts periodically. k) Reviewed the Bank’s overall collateral securities and advised the management to obtain additional securities from the large borrowers on best effort basis to reduce additional capital charge of the Bank. l) Evaluated the concentration of Investment portfolio of Bank and advised the management to diversify investment portfolio as far as possible and practicable. m) Reviewed the Bank’s overall rated investment clients and advised the management to improve the number of rated investment clients by pursuing the existing Corporate and SME investment clients to reduce the Risk Weighted Assets (RWA) as well as to reduce additional capital charge on the Bank. n) Reviewed the Bank’s Top-20 Defaulter Clients and the status thereof. o) Reviewed the status of the Top-20/30/50 investments of the Bank and advised the management to closely monitor such investments for further improvement. p) Reviewed the CAMELS rating and Comprehensive Risk Management Ratings of the Bank and advised the management for further improvement. q) Reviewed the report of Risk Management Policies and Effectiveness of Risk Management functions of the Bank. The Minutes of the RMC meetings with suggestions were placed for implementation and to the Board of Directors for subsequent approval. Reporting to the Board The decisions and recommendations of the Board Risk Management Committee were submitted before the Board of Directors for reviewing and the Board closely reviewed and approved the same as placed. Acknowledgement The members of the Board Risk Management Committee (BRMC) express their gratitude and thanks to the Board of Directors, Management and Risk Management Team of the Bank for their cooperation while performing its duties and responsibilities. Badiur Rahman Chairman Board Risk Management Committee 88 Annual Report 2021
  91. CEO AND CFO ’S DECLARATION TO THE BOARD April 26, 2022 The Board of Directors Al-Arafah Islami Bank Limited Al-Arafah Tower, 63,PuranaPaltan, Dhaka 1000. Subject: Declaration on Financial Statements for the year ended on December 31, 2021 Muhtaram, Assalamu Alaikum. Pursuant to the condition No. 1(5)(xxvi) imposed vide the Commission’s Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 Dated June 3, 2018 under section 2CC of the Securities and Exchange Ordinance, 1969, we do hereby declare that: 1. The Financial Statements of Al-Arafah Bank Limited for the year ended on December 31, 2021 have been prepared in compliance with International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as applicable in the Bangladesh and any departure there from has been adequately disclosed; 2. The estimates and judgments related to the financial statements were made on a prudent and reasonable basis, in order for the financial statements to reveal a true and fair view; 3. The form and substance of transactions and the Company’s state of affairs have been reasonably and fairly presented in its financial statements; 4. To ensure above, the Company has taken proper and adequate care in installing a system of internal control and maintenance of accounting records; 5. Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures of the Company were consistently followed; and 6. The management’s use of the going concerns basis of accounting in preparing the financial statements is appropriate and there exists no material uncertainty related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. In this regard, we also certify that: i. We have reviewed the financial statements for the year ended on December 31, 2021 and that to the best of our knowledge and belief: a) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; b) these statements collectively present true and fair view of the Company’s affairs and are in compliance with existing accounting standards and applicable laws. ii. There are, to the best of knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or in violation of the code of conduct for the company’s Board of Directors or its members. Ma-assalam Sincerely yours, Farman R. Chowdhury Muhammed Nadim FCA Managing Director and CEO Chief Financial Officer Annual Report 2021 89
  92. DIVIDEND DISTRUBUTION POLICY 2021 Introduction : This policy is formulated in compliance with the Directive No. BSEC/CMRRCD/2021-386/03 of Bangladesh Securities & Exchange Commission (BSEC) dated January 14, 2021. Purpose: The purpose of the policy is to comply with the Directives of Bangladesh Securities & Exchange Commission (BSEC). So this Dividend distribution policy 2021 is formulated and shall be disclosed in the Annual Report & official website of Al-Arafah Islami Bank Limited. Manner and Procedure of Dividend Distribution: In case of Cash dividend: i) Within 10 (ten) days of declaration of cash dividend by the Board of directors, the declared cash dividend payable for the concerned year shall be kept in the separate bank account of Al-Arafah Islami Bank Ltd. dedicated for this purpose only; ii) Cash Dividend shall be paid directly to the bank account of shareholder or unit holder as available in the BO Account maintained with the depository participant (DP) or the bank account as provided by the shareholder through Bangladesh Electronic Fund Transfer Network (BEFTN). The bank may pay off such cash dividend through bank transfer or any other electronic payment system as recognized by Bangladesh Bank if not possible to pay off through BEFTN; iii) Upon receiving the claim on cash dividend from a stock broker or a merchant banker or a portfolio manager for the margin client, the bank shall pay off such cash dividend to the Consolidated Customer’s Bank Account (CCBA) of the stock broker or to the separate bank account of the merchant banker or portfolio manager through BEFTN; iv) In case of non-availability of a valid bank account or non-possibility to distribute dividends through BEFTN/other electronic system, it will have to be distributed in the form of dividend warrants and send by post to the respective shareholders address; v) The bank shall pay off cash dividend to non-resident sponsor, director, shareholder, unit holder or foreign portfolio investment (FPI) through the security custodian in compliance with rules or regulations in this regard; vi) A separate bank account will be maintained from which all the dividend payment can be made. In case of stock dividend:i) Stock dividend shall be directly credited to the BO accounts respective shareholders within 30 days of AGM (final approval) or record date as the case may be; ii) Undistributed stock dividend shall be kept in Suspense BO Account under the Block Module of CDBL system; iii) The sale proceeds of fractional bonus dividend shall be paid off as per circular of BSEC or Bangladesh Bank or other regulatory authority from time to time. Unpaid or unclaimed of unsettled cash/stock dividend: The summary of unpaid or unclaimed and unsettled cash or stock dividends shall be disclosed in the Annual Report and settled as per instructions of Bangladesh Securities & Exchange Commission (BSEC) from time to time. Any voting rights on undistributed or unclaimed stock dividend or bonus shares shall remain suspended till the rightful ownership claim of the shareholder is established. Deduction of Tax: Tax will be deducted at source as per applicable tax laws. Amendments/Modifications: To the extent of any change/amendment is required in terms of any applicable law or change in regulations, the regulations would prevail over the policy and the provisions in the policy would be modified in due course to make it consistent with the law of the land. Such amended policy shall be placed before the board for approval. Discloser Policy: The Dividend Distribution policy shall be available on the Bank’s website and shall also be disclosed in the Bank’s Annual Report. 90 Annual Report 2021
  93. SUMMARY OF UNCLAIMED Stock /Right/Cash & Fraction Dividend as on 31-12-2021 In compliance with the Bangladesh Securities & Exchange Commission (BSEC) Directive No. BSEC/CMRRCD/2021-386/03 dated January 14, 2021, Summary of Unclaimed Stock/Right/Cash & Fraction Dividend are as follows: Balance of Unpaid/ Undistributed/ Unclaimed & Unsettled Stock/Right/Cash & Fraction Dividend on 31-12-2021 Unpaid/Undistributed/ Unclaimed/Unsettled Stock/Right/ Cash & Fraction Dividend on 31-12-2021 SL No. Dividend Year % Of Dividend & Right Stock/Right (Share) Stock/Right Transferred to CMSF (Share) Cash & Fractional Transferred to CMSF (Tk.) Cash & Fractional Dividend (TK) Stock/Right (Share) Cash & Fraction Dividend (Tk.) 1 1998 & 1999 15% & 12% - - 5,53,332.50 5,53,332.50 - 5,53,332.50 2 2000 12% - - 3,78,907.50 3,78,907.50 - 3,78,907.50 3 2001 7.5% - - 2,68,405.44 2,68,405.44 - 2,68,405.44 4 2002 20% - - 4,58,000.00 4,58,000.00 - 4,58,000.00 5 2003 16% - - 9,57,150.53 9,57,150.53 - 9,57,150.53 6 2004 15.5% - - 10,01,935.11 10,01,935.11 - 10,01,935.11 7 2005 26% 1,26,500 - 6,86,943.75 6,86,943.75 1,26,500 6,86,943.75 8 2006 35% 1,98,300 - 9,86,536.81 9,86,536.81 1,98,300 9,86,536.81 9 2007 20% 1,52,120 - - - 1,52,120 - 10 2008 30% 2,59,810 - 3,68,594.06 3,68,594.06 2,59,810 3,68,594.06 3,35,181 - - - 3,35,181 - 87,459 - - - 87,459 - 11 2009 30% 12 2010 100% (R) 13 2010 26% 4,16,932 - 57,632.55 57,632.55 4,16,932 57,632.55 14 2011 21% 4,33,137 - 64,195.18 64,195.18 4,33,137 64,195.18 15 2012 17% 4,14,990 - 56,254.28 56,254.28 4,14,990 56,254.28 16 2013 14% 3,84,352 - 72,115.50 72,115.50 3,84,352 72,115.50 17 2014 14% - - 1,13,93,632.73 1,13,93,632.73 - 1,13,93,632.73 18 2015 10% (C) & 5% (S) 1,73,136 - 1,00,36,241.44 1,00,36,241.44 1,73,136 1,00,36,241.44 19 2016 15% - - 1,24,89,642.70 1,24,89,642.70 - 1,24,89,642.70 20 2017 15% (C) & 5% (S) 2,47,003 - 86,19,759.73 - 2,47,003 86,19,759.73 21 2018 15% (C) & 2% (S) 99,441 - 1,44,66,276.20 - 99,441 1,44,66,276.20 22 2019 13% - - 1,42,13,910.91 - - 1,42,13,910.91 23 2020 15% - - 1,56,61,919.07 - - 1,56,61,919.07 33,28,361 - 9,27,91,385.99 3,98,29,520.08 33,28,361 9,27,91,385.99 Total Annual Report 2021 91
  94. Auditor ’s Report and Financial Statements of Al-Arafah Islami Bank Limited for the year ended 31 December 2021 92 Annual Report 2021
  95. INDEPENDENT AUDITOR ’S REPORT To the Shareholders of Al-Arafah Islami Bank limited Report on the Audit of the Consolidated and Separate Financial Statements Opinion We have audited the consolidated financial statements of Al-Arafah Islami Bank Limited and its subsidiaries (the “Group”) as well as the separate financial statements of Al-Arafah Islami Bank Limited (the “Bank”), which comprise the consolidated and separate balance sheets as at 31 December 2021 and the consolidated and separate profit or loss accounts, consolidated and separate statements of changes in equity and consolidated and separate cash flow statements for the year then ended, and notes to the consolidated and separate financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements of the Group and separate financial statements of the Bank give a true and fair view of the consolidated financial position of the Group and the separate financial position of the Bank as at 31 December 2021, and of its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as explained in note 02 and comply with the Bank Companies Act, 1991 (as amended up to date), the Companies Act, 1994, the Rules and Regulations issued by the Bangladesh Bank, the Rules and Regulations issued by the Bangladesh Securities & Exchange Commission (BSEC) and other applicable Laws and Regulations. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report. We are independent of the Group and the Bank in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Bank, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Institute of Chartered Accountants of Bangladesh (ICAB) Bye-Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Risk Our response to the risk Measurement of provision for Investments The process for estimating the provision for customer investments We tested the design and operating effectiveness of key controls focusing on the following: associated with credit risk is significant and complex. • Investment appraisal, disbursement and monitoring procedures, and provisioning process; For the individual analysis for large exposure, provisions calculation considers the estimates of future business performance and the • Identification of loss events, including early warning and default market value of collateral provided for availing investment facilities. warning indicators; and • Reviewed quarterly Classification of Investments (Investment -CL) For the collective analysis of exposure on portfolio basis, provision submitted to Bangladesh Bank; calculation and reporting are manually processed that deals with Our substantive procedures in relation to the provision for investment voluminous databases, assumptions and estimates. portfolio comprised the following: At year end the group and the Bank reported total gross investment of • Reviewed the adequacy of the general and specific provisions in BDT 336,890 million (2020: BDT 308,620 million) and BDT 336,091 line with related Bangladesh Bank guidelines; million (2020: BDT 303,210 million) respectively and the Bank • Assessed the methodologies on which the provision amounts are reported provision for investments of BDT 13,285 million (2020: BDT based, recalculated the provisions and tested the completeness 10,771 million). and accuracy of the underlying information; • Evaluated the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines; •Finally, compared the amount of provision requirement as determined by Bangladesh Bank Department of Banking Inspection (DBI) team to the actual amount of provision maintained. Annual Report 2021 93
  96. Risk Our response to the risk Measurement of provision for Investments Considering continuing adverse impact of COVID 19 , Bangladesh Bank has given certain flexibility from classification requirement for Investments vide issuing various circulars such as BRPD 3 dated 31 January 2021, BRPD 5 dated 24 March 2021, BRPD 13 dated 27 June 2021, BRPD 19 dated 26 August 2021 and BRPD 53 dated 30 December 2021 whereby Banks were not allowed to adversely classify any investment upon fulfilment of applicable conditions for the year ended 31 December 2021. See note no 9 and 15.2 and 15.4 to the financial statements Risk Our response to the risk Valuation of treasury bill and treasury bond (including Islami Bond) The classification and measurement of T-Bill and T-Bond require We assessed the processes and controls put in place by the Group to judgment and complex estimates. identify and confirm the existence of financial instruments. In the absence of a quoted price in an active market, the fair value of T-Bills and T-Bonds including Islami Bond issued by Bangladesh Bank is determined using complex valuation techniques which may take into consideration direct or indirect unobservable market data and complex pricing models which require an elevated level of judgment. We obtained an understanding, evaluated the design and tested the operating effectiveness of the key controls over the financial instrument valuation processes, including controls over market data inputs into valuation models, model governance, and valuation adjustments. We tested a sample of the valuation models and the inputs used in those models, using a variety of techniques, including comparing inputs to available market data. Finally assessed the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines. See note no 8 to the financial statements Risk Our response to the risk Valuation of deferred tax liabilities The Bank reports net deferred tax liabilities (DTL) to totaling BDT 93.59 million as at 31 December 2021. Significant judgment is required in relation to deferred tax liabilities as their recoverability is dependent on forecasts of future profitability over a number of years. We obtained an understanding, evaluated the design and tested the operational effectiveness of the Group’s key controls over the recognition and measurement of DTLs and the assumptions used in estimating the Group’s future taxable income. We also assessed the completeness and accuracy of the data used for the estimations of future taxable income. We involved tax specialists to assess key assumptions, controls, recognition and measurement of DTLs. Finally assessed the appropriateness and presentation of disclosures against IAS 12 Income Tax. See note no 16 to the financial statements 94 Annual Report 2021
  97. Risk Our Response to the risk IT systems and controls Our audit procedures have a focus on IT systems and controls due to We tested the design and operating effectiveness of the Bank ’s IT the pervasive nature and complexity of the IT environment, the large access controls over the information systems that are critical to volume of transactions processed in numerous locations daily and the financial reporting. reliance on automated and IT dependent manual controls. We tested IT general controls (logical access, changes management Our areas of audit focus included user access management, and aspects of IT operational controls). This included testing that developer access to the production environment and changes to the IT requests for access to systems were appropriately reviewed and environment. These are key to ensuring IT dependent and application- authorized. based controls are operating effectively We tested the Bank’s periodic review of access rights and reviewed requests of changes to systems for appropriate approval and authorization. We considered the control environment relating to various interfaces, configuration and other application layer controls identified as key to our audit. Risk Our Response to the risk Legal and regulatory matters We focused on this area because the Bank and its subsidiaries (the “Group”) operates in a legal and regulatory environment that is exposed to significant litigation and similar risks arising from disputes and regulatory proceedings. Such matters are subject to many uncertainties and the outcome may be difficult to predict. We obtained an understanding, evaluated the design and tested the operational effectiveness of the Bank’s key controls over the legal provision and contingencies process. We enquired to those charged with governance to obtain their view on the status of all significant litigation and regulatory matters. These uncertainties inherently affect the amount and timing of potential outflows with respect to the provisions which have been established We enquired of the Bank’s internal legal counsel for all significant and other contingent liabilities. litigation and regulatory matters and inspected internal notes and reports. Overall, the legal provision represents the Group’s and the Bank’s best estimate for existing legal matters that have a probable and estimable We assessed the methodologies on which the provision amounts are impact on the Group’s financial position. based, recalculated the provisions, and tested the completeness and accuracy of the underlying information. We also assessed the Bank’s provisions and contingent liabilities disclosure. Risk Our Response to Risk Carrying value of investments in subsidiaries by the Bank The Bank has invested in equity shares of its two subsidiaries, AIBL We have reviewed Management’s analysis of impairment assessment Capital Market Services Ltd. & AIBL Capital Management Ltd. as at and recoverable value calculation of subsidiaries in accordance with 31 December 2021. The carrying value of this investment is BDT IAS 36. 2,910 million. In particular, our discussions with the Management were focused At the time of conducting our audit of the separate financial statements on the continued appropriateness of the value in use model, the key of the Bank we have considered the recoverable value of the Bank’s assumptions used in the model, the reasonably possible alternative investments in all the above subsidiaries stated at cost. assumptions, particularly where they had the most impact on the value in use calculation. Management has conducted impairment assessment and calculated recoverable value of its individual subsidiaries in accordance with IAS We also checked mathematical accuracy of the model, recalculated 36. discount rate used within the model, inputs used in the determination of assumptions within the model were challenged. See note no 11 to the financial statements Annual Report 2021 95
  98. Risk Our Response to Risk Implementation of IFRS 16 Leases IFRS 16 modifies the accounting treatment of operating leases at inception , with the recognition of a right of use (ROU) on the leased asset and of a liability for the lease payments over the lease contract term. With respect to operating leases of premises used by the Bank, at inception of the lease, the lessor receives a right of using the premises, in exchange of a lease debt, using an implicit discount rate. In responding to the identified key audit matter, we completed the following audit procedures: Assessed the design and implementation of key controls pertaining to the determination of the IFRS 16 Leases impact on the financial statements of the Bank; Our key audit matter was focused on all leasing arrangements within Assessed the appropriateness of the discount rates applied in the scope of IFRS 16 are identified and appropriately included in the determining lease liabilities; calculation of the transitional impact and specific assumptions applied to determine the discount rates for lease are appropriate. Verified the accuracy of the underlying lease data by agreeing to original contract and checked the accuracy of the IFRS 16 calculations through recalculation of the expected IFRS 16 adjustment and; Assessed whether the disclosures within the financial statements are appropriate in light of the requirements of IFRS. See note no 11 to the financial statements Other Matter The consolidated and separate financial statements of AL Arafah Islami Bank Ltd for the year ended December 31, 2020, were audited by Hussain Farhad & Co. and Shafiq Basak & Co., Chartered Accountants, who expressed an unmodified opinion on those statements on May 09, 2021. Reporting on other information Management is responsible for the other information. The other information comprises all of the information in the annual report other than the consolidated and separate financial statements and our auditors’ report thereon. The annual report is expected to be made available to us after the date of this auditor’s report. Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. Responsibilities of Management and Those Charged with Governance for the Consolidated and Separate Financial Statements and Internal Controls Management is responsible for the preparation and fair presentation of the consolidated financial statements of the Group and also separate financial statements of the Bank in accordance with IFRSs as explained in note 2, and for such internal control as management determines is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error. The Bank Company Act, 1991 and the Bangladesh Bank Regulations require the Management to ensure effective internal audit, internal control and risk management functions of the Bank. The Management is also required to make a self-assessment on the effectiveness of anti-fraud internal controls and report to Bangladesh Bank on instances of fraud and forgeries. In preparing the consolidated and separate financial statements, management is responsible for assessing the Group’s and the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group and the Bank or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s and the Bank’s financial reporting process. 96 Annual Report 2021
  99. Auditor ’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and the Bank to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on other Legal and Regulatory Requirements In accordance with the Companies Act, 1994, the Securities and Exchange Rules 2020, the Bank Company Act, 1991 and the rules and regulations issued by Bangladesh Bank, we also report that: (i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof; (ii) to the extent noted during the course of our audit work performed on the basis stated under the Auditor’s Responsibility section in forming the above opinion on the consolidated financial statements and considering the reports of the Management to Bangladesh Bank on antifraud internal controls and instances of fraud and forgeries as stated under the Management’s Responsibility for the financial statements and internal control: (a) internal audit, internal control and risk management arrangements of the Group as disclosed in the financial statements appeared to be materially adequate; (b) nothing has come to our attention regarding material instances of forgery or irregularity or administrative error and exception or anything detrimental committed by employees of the Group and its related entities {other than matters disclosed in these financial statements}; Annual Report 2021 97
  100. (iii) Consolidated financial statements of the Bank include two subsidiaries, namely AIBL Capital Market Services Limited and AIBL Capital Management Ltd., which has been audited by another auditor who has expressed an unqualified audit opinion. The results of these subsidiaries have been properly reflected in the Group’s consolidated financial statements; (iv) in our opinion, proper books of account as required by law have been kept by the Group and the Bank so far as it appeared from our examination of those books; (v) the records and statements submitted by the branches have been properly maintained and consolidated in the financial statements; (vi) the consolidated balance sheet and consolidated profit or loss account together with the annexed notes dealt with by the report are in agreement with the books of account and returns; (vii) the expenditures incurred were for the purpose of the Bank’s business for the year; (viii)the consolidated financial statements have been drawn up in conformity with prevailing rules, regulations and accounting standards as well as related guidance issued by Bangladesh Bank; (ix) adequate provisions have been made for investments and other assets in accordance with the quick summary report issued by Bangladesh Bank vide Circular Letter #DBI-7/4(1)/2022-223 dated April 21, 2022 which are, in our opinion, doubtful of recovery. (x) the information and explanations required by us have been received and found satisfactory; (xi) we have reviewed over 80% of the risk weighted assets of the Bank and spent over 6,640-person hours; and (xii) Capital to Risk-weighted Asset Ratio (CRAR) as required by Bangladesh Bank has been maintained adequately during the year. A.K.M Fazlul Haque FCA Partner Enrolment number: 1090 Hussain Farhad& Co. Chartered Accountants Md. Shafiqul Islam FCA Partner Enrolment number: 595 Shafiq Basak & Co. Chartered Accountants DVC:2204261090AS597496 DVC: 2204260595AS896100 Place: Dhaka Date: 26th April 2022 98 Annual Report 2021
  101. CONSOLIDATED BALANCE SHEET As at December 31 , 2021 PROPERTY AND ASSETS Cash in hand Cash in hand (including foreign currencies) Balance with Bangladesh Bank and its Agents Banks (including foreign currencies) Balance with other Banks and Financial Institutions In Bangladesh Outside Bangladesh Placement with Banks & Other Financial Institutions Investment in Share & Securities Government Others Investments General Investments etc. Bills purchased and discounted Fixed assets less Accumulated Depreciation Other Assets Non-Banking Assets Total Assets LIABILITIES AND CAPITAL Liabilities Placement from Banks & Other Financial Institutions Deposits and other Accounts Mudaraba Savings Deposits Mudaraba Term Deposits Other Mudaraba Deposits Al-wadeeah Current Accounts and Other Accounts etc. Bills Payable Other Liabilities Deferred tax Liabilities/ (Assets) AIBL Mudaraba Bond Total Liabilities Capital/Share holders Equity Paid -up Capital Statutory Reserve Revaluation Reserve Retained Earnings Total Equity attributable to equity holders of the bank Non-Controlling Interest Total Equity Total Liability and Share holders equity Net assets value per share (NAV) Notes 5.A 2021 2020 Taka Taka 3,232,053,536 20,456,548,331 23,688,601,867 2,898,207,542 28,660,902,877 31,559,110,419 3,133,653,387 8,907,482,685 12,041,136,072 23,985,000,000 30,156,139,866 23,504,940,000 6,651,199,866 8,288,025,632 8,273,812,895 16,561,838,527 14,270,010,000 21,563,673,525 19,583,830,000 1,979,843,525 323,342,833,833 13,547,882,130 336,890,715,963 5,470,272,635 30,404,308,443 50,875,037 462,687,049,884 296,717,853,936 11,902,810,514 308,620,664,450 5,833,880,252 19,838,600,217 50,875,037 418,298,652,427 32,506,761,109 24,000,477,831 62,011,042,726 175,485,115,456 68,093,138,221 43,639,188,504 4,059,481,203 353,287,966,110 36,298,385,294 93,595,145 14,600,000,000 436,786,707,658 54,879,126,373 164,009,495,781 66,743,970,036 37,331,437,580 3,059,381,492 326,023,411,262 31,485,714,465 133,204,157 11,200,000,000 392,842,807,715 10,649,021,850 10,649,021,850 1,084,331,861 1,823,372,676 24,205,748,237 1,694,593,989 25,900,342,226 462,687,049,884 10,649,021,850 10,334,627,824 1,084,326,967 1,732,137,218 23,800,113,859 1,655,730,853 25,455,844,712 418,298,652,427 22.73 22.35 6.A 7.A 8A 8.A.i 9.A 10.A 11.A 12 13.A 14.A 14.A.ii. 15.A 16.A 17 18 19 20 21.A 18.A 42 Annual Report 2021 99
  102. CONSOLIDATED BALANCE SHEET As at December 31 , 2021 Notes 2021 2020 Taka Taka Contingent Liabilities Acceptance and endorsement 51,57,55,95,132 54,17,66,70,210 13,673,407,658 10,511,211,685 44,089,212,630 28,867,356,800 7,495,927,198 4,386,736,198 - - 116,834,142,618 97,941,974,893 Documentary Credits and other short term trade related transactions - - Forward Assets Purchased and forward Deposit placed - - Undraw note issuance and Revolving underwriting Facilities - - Undraw Formal standing Facilities, Credit lines and others commitments - - 116,834,142,618 97,941,974,893 Letters of Guarantee 22 Letters of Credit Bills for Collection Other Contingent Liabilities Total Other Commitments : Total Off Balance sheet items including Contingent liabilities Accompanying notes form an integral part of these financial statements. Chief Financial Officer Managing Director Director Director Chairman Signed in terms of our report of even date. A.K.M Fazlul Haque FCA Partner Enrolment number: 1090 Hussain Farhad& Co. Chartered Accountants Md. Shafiqul Islam FCA Partner Enrolment number: 595 Shafiq Basak & Co. Chartered Accountants DVC:2204261090AS597496 DVC: 2204260595AS896100 Place: Dhaka Date : 26th April 2022 100 Annual Report 2021
  103. CONSOLIDATED PROFIT OR LOSS ACCOUNTS For the year ended December 31 , 2021 Notes Investment Income Profit paid on deposits & Borrowing Net Investment Income Income from Investment in Shares /Securities Commission, Exchange and Brokerage Other Operating Income 23.A 24.A 2021 Taka 2020 Taka 23,446,012,634 (13,072,790,998) 10,373,221,636 359,554,772 3,299,109,368 591,501,509 4,250,165,649 14,623,387,285 4,756,913,912 6,962,107 246,770 539,464,890 67,231,400 13,427,966 1,640,750 20,418,000 891,400,236 149,075,124 682,465,783 7,129,246,938 7,494,140,347 2,647,118,347 8,459,961 2,655,578,307 4,838,562,040 2,751,343,416 (39,225,005) 2,712,118,411 2,126,443,629 26,331,277,005 (16,556,644,305) 9,774,632,700 681,937,628 2,627,550,022 345,976,039 3,655,463,689 13,430,096,389 4,546,405,905 6,142,217 298,376 499,303,449 68,348,432 16,046,838 1,667,500 19,344,000 836,300,557 186,323,511 562,152,855 6,742,333,640 6,687,762,748 1,878,171,305 9,725,095 1,887,896,400 4,799,866,349 2,258,441,408 (30,381,805) 2,228,059,603 2,571,806,745 2,087,580,493 38,863,136 2,126,443,629 2,565,236,578 6,570,167 2,571,806,745 314,394,026 20,233,578 64,364,153 38,863,136 437,854,894 Transfer to Retained Earnings 1,688,588,736 Earning per Ordinary Share (EPS) 41.A 1.96 Accompanying notes form an integral part of these financial statements. 954,638,686 25,507,894 6,570,167 986,716,747 1,585,089,999 2.41 25.A 26.A 27.A Total operating income Salaries and allowances & contribution to P.F Directors fees & expenses Shariah Supervisory Committee’s fees & expenses Rent, taxes, insurance and lighting etc. Postage, telegram, telephone and stamp etc. Legal charges Auditors’ fee Salary & Allowances to the Managing Director Depreciation and repairs to the bank’s properties Stationery, printing & advertisement etc. Other expenses Total operating expenses Profit/(Loss) before Tax & provision Provision against Investments & Contingent Liabilities Provision for diminution in value of investment Other Provision Total provision Profit/(Loss) before Tax Current tax Deferred tax Provision for Taxation Net Profit/(Loss) after tax Net Profit attributable to: Equity holders of the bank Non-controlling Interest Profit for the year Appropriation Statutory Reserve General Reserve ( 1 % strat-Up fund ) Profit paid on aibl mudaraba perpetual bond Non-Controlling Interest Chief Financial Officer Managing Director 28.A 29.A 30 31.A 32.A 33.A 34.A 35.A 36.A 15.1.A Director Director Chairman Signed in terms of our report of even date. A.K.M Fazlul Haque FCA Partner Enrolment number: 1090 Hussain Farhad& Co. Chartered Accountants Md. Shafiqul Islam FCA Partner Enrolment number: 595 Shafiq Basak & Co. Chartered Accountants DVC:2204261090AS597496 DVC: 2204260595AS896100 Place: Dhaka Date : 26th April 2022 Annual Report 2021 101
  104. CONSOLIDATED CASH FLOW STATEMENT For the year ended December 31 ,2021 Notes Cash flows from operating activities Investment income receipt in Cash Profit paid on deposits and borrowing Dividend received Fees & Commission received in cash Recoveries from written off investments Cash payments to employees Cash payments to suppliers Received from other operating activities (item-wise) Paid for other operating activities (item-wise) Advance income tax paid Operating profit before changes in operating assets and liabilities Changing in Operating assets & liabilities Increase/(Decrease) of trading securities Increase/(Decrease) of placement to other banks Increase/(Decrease) of Investment and advances to customers (other than Banks) Increase/Decrease of other assets (item-wise) Increase/ (Decrease of placement from other banks and financial institution Increase/(Decrease) of Deposits from customers (other than Banks) Increase/(Decrease) of Other liabilities account of customers Increase/(Decrease) of Trading liabilities (item-wise) Cash receipt from operating activities A. Net Cash from operating activities Cash flows from investing activities: Proceeds from sale of securities Payments for purchases of securities Purchase of property, plant and equipment Sales proceeds of Fixed assets Purchase-sale of subsidiary B. Net cash flows from investing activities Cash flows from financing activities Increase in Exchange Equalization Account Issue of AIBL Subordinate Bond / Perpetual Bond Dividend paid C. Net cash flows from financing activities D. Net increase in cash and cash equivalent (A+B+C) E. Effects of exchange rate changes on cash and cash-equivalents F. Net increase in cash and cash equivalent D+E G. Cash & Cash Equivalents at the beginning of the year H. Cash & Cash Equivalents period ended Net Operating Cash Flow per Share (NOCFPS) Chief Financial Officer 102 Annual Report 2021 Managing Director Director 37.A 38.A 39.A 40.A 43 2021 2020 Taka Taka 24,041,035,285 (13,545,742,269) 43,099,747 3,299,109,368 57,842,746 (4,777,331,912) (149,075,124) 591,501,509 (1,432,385,136) (2,108,226,440) 6,019,827,775 27,246,795,860 (17,792,460,102) 9,408,411 2,627,550,022 56,952,186 (4,565,749,905) (186,323,511) 345,976,039 (1,246,894,494) (2,449,571,990) 4,045,682,515 (4,671,356,341) (9,714,990,000) (28,354,421,330) (8,773,892,156) 8,506,283,278 27,737,506,118 (560,976,753) (15,831,847,184) (9,812,019,409) (460,733,215) (460,733,215) (309,323,863) (2,270,010,000) (18,920,509,901) (38,804,398) (3,545,897,730) 30,017,418,004 1,073,635,198 6,006,507,310 10,052,189,825 (2,225,318,994) (2,225,318,994) 4,894 3,400,000,000 (1,597,353,277) 1,802,651,616 (8,470,101,008) (8,470,101,008) 67,704,778,946 59,234,677,938 -9.21 (19,953) 4,400,000,000 (1,384,372,840) 3,015,607,206 10,842,478,038 10,842,478,038 56,862,300,908 67,704,778,946 9.44 Director Chairman
  105. Annual Report 2021 103 - offload share - Asset revalution Reserve Gain on pre acquisition of subsidiary Revaluation of subsidiary Managing Director 10 ,649,021,850 Balance as at December 31, 2020 Chief Financial Officer 10,649,021,850 Balance as at December 31, 2021 10,334,627,824 10,649,021,850 314,394,026 - - - - - - - - - (1,597,353,277) Director 1,732,137,218 1,823,372,676 (314,394,026) - - Bonus Share - 2,087,580,493 Appropriations during the year - Cash Dividend - - (20,233,578) - Net profit for the year - - - Share premium - - Transfer to 1 % strat-Up fund - Currency translation differences recognized in the income - - 1,732,137,218 - (64,364,153) - Surplus/deficit on account of revaluation of investments - 10,334,627,824 - - - 1,732,137,218 Retained Earnings Profit paid on aibl mudaraba perpetual bond - Deferred tax Adjustment Restated balance 10,649,021,850 - Changes in accounting policy Restated Adjustment 10,334,627,824 10,649,021,850 Balance at 1st January, 2021 - Statutory Reserve Particular Paid up Capital For the year ended December 31, 2021 1,084,326,967 1,084,331,861 - - - - - - - - - 4,894 - - 1,084,326,967 - - - 1,084,326,967 Revaluation Reserve Director 23,800,113,859 24,205,748,237 - (20,233,578) (64,364,153) - - - - (1,597,353,277) 2,087,580,493 - 4,894 - - 23,800,113,859 - - - 23,800,113,859 Total CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 1,655,730,853 1,694,593,989 - - - - - - - 38,863,136 - - - - 1,655,730,853 - 1,655,730,853 Non-Controlling Interest Chairman 25,455,844,712 25,900,342,226 - (20,233,578) (64,364,153) - - - - (1,597,353,277) 2,126,443,629 - 4,894 - - 25,455,844,712 - - - 25,455,844,712 Total Equity
  106. 104 Annual Report 2021 Total Assets 55 ,421,966,000 18,772,473,287 Total Liabilities Net Liquidity Gap - AIBL Mudaraba Subordinated Bond - (23,579,988,817) 137,001,750,237 - - 3,600,000 - Provision and Other Liabilities Deferred tax Liabilities/ (Assets) - 117,192,600,000 19,809,150,237 113,421,761,420 - 105,200,000 - 93,530,661,420 - 19,640,000,000 - 54,213,966,000 Deposits Other Accounts 1,204,400,000 74,194,439,287 Placement from Banks & Other Financial institutions Liabilities : - 183,200,000 - 60,054,761,420 145,900,000 1 to 3 Months 4 - (12,769,061,673) 122,590,131,957 - - - - 111,096,921,085 11,493,210,872 109,821,070,284 - - - 105,548,970,284 972,100,000 2,200,000,000 1,100,000,000 3 to 12 Months 5 - - - - 7,707,461,420 45,257,900,000 - - - - 45,257,900,000 - 52,965,361,420 - 1,433,100,000 - 51,532,261,420 1 to 5 Years 6 35,769,458,008 76,514,959,464 14,600,000,000 93,595,145 36,294,785,294 - 25,526,579,025 - 112,284,417,472 50,875,037 28,682,808,443 5,470,272,635 26,224,061,419 29,184,039,866 (20,576,000) 7,267,136,072 15,425,800,000 More than 5 Years 7 Chief Financial Officer Managing Director Director Director The Liquidity statement is prepared on contractual basis and which usually renewable. As a result it may not be actually alarming situation due to mismatch of assets & liability. 2 Non Banking Assets Other Assets Fixed Assets including premises (Land & Bulding) Investments - 2,165,576,000 Placement with Banks & Other Financial Institutions Investments (in Shares & Securities) 3,528,100,000 Balance with other Bank and Financial Institution Less than 1 Month 3 8,262,801,867 2 Particulars Cash in hand SL No 1 1 Assets : For the year ended December 31, 2021 (Maturity Analysis of Assets and Liabilities) CONSOLIDATED STATEMENT OF LIQUIDITY Chairman 25,900,342,226 436,786,707,658 14,600,000,000 93,595,145 36,298,385,294 - 353,287,966,110 32,506,761,109 462,687,049,884 50,875,037 30,404,308,443 5,470,272,635 336,890,715,963 30,156,139,866 23,985,000,000 12,041,136,072 23,688,601,867 8 Total
  107. BALANCE SHEET As at December 31 , 2021 PROPERTY AND ASSETS Cash in hand Cash in hand (including foreign currencies) Balance with Bangladesh Bank and its Agents Banks (including foreign currencies) Notes 2020 Taka Taka 5 Balance with other Banks and Financial Institutions In Bangladesh Outside Bangladesh 6 Placement with Banks & Other Financial Institutions Investment in Share & Securities Government Others 7 8 8.a 8.b Investments General Investments etc. Bills purchased and discounted 9 Fixed assets less Accumulated Depreciation Other Assets Non-Banking Assets Total Assets LIABILITIES AND CAPITAL Liabilities Placement from Banks & Other Financial institutions Deposits and other Accounts Mudaraba Savings Deposits Mudaraba Term Deposits Other Mudaraba Deposits Al-wadeeah Current Accounts and Other Accounts etc. Bills Payable 10 11 12 Other Liabilities Deferred tax Liabilities/ (Assets) AIBL Mudaraba Bond Total Liabilities Capital/Share Holders Equity Paid up Capital Statutory Reserve Revaluation Reserve Retained Earnings Total Share holders equity Total Liability and Share holders equity Net assets value per share (NAV) 2021 13 14 14.i 14.ii 15 16 17 18 19 20 21 42 3,217,933,106 20,456,548,331 23,674,481,437 2,879,721,830 28,660,902,877 31,540,624,707 3,133,653,387 8,907,482,685 12,041,136,072 23,985,000,000 8,288,025,632 8,273,812,895 16,561,838,527 14,270,010,000 23,504,940,000 5,472,068,391 28,977,008,391 19,583,830,000 1,143,979,346 20,727,809,346 322,543,724,969 13,547,882,130 336,091,607,099 5,463,069,708 23,190,127,923 50,875,037 453,473,305,667 291,307,599,462 11,902,810,514 303,210,409,976 5,826,875,749 20,870,178,204 50,875,037 413,058,621,546 27,343,210,872 22,504,318,785 62,011,042,726 175,739,194,371 68,093,138,221 43,639,188,504 4,059,481,203 353,542,045,025 33,868,952,635 93,595,145 14,600,000,000 429,447,803,677 54,879,126,373 164,296,138,402 66,743,970,036 37,331,437,580 3,059,381,492 326,310,053,883 29,226,954,457 133,204,157 11,200,000,000 389,374,531,282 10,649,021,850 10,649,021,850 1,084,331,861 1,643,126,429 24,025,501,990 453,473,305,667 22.56 10,649,021,850 10,334,627,824 1,084,326,967 1,616,113,623 23,684,090,264 413,058,621,546 22.24 Annual Report 2021 105
  108. OFF BALANCE SHEET As at December 31 , 2021 Notes OFF BALANCE SHEET ITEMS Contingent Liabilities Acceptance and endorsement Letters of Guarantee Letters of Credit Bills for Collection Other Contingent Liabilities Total Other Commitments : Documentary Credits and other short term trade related transactions Forward Assets Purchased and forward Deposit placed Undraw note issuance and Revolving underwriting Facilities Undraw Formal standing Facilities, Credit lines and others commitments Total Off Balance sheet items including Contingent liabilities 2021 2020 Taka Taka 51,575,595,132 13,673,407,658 44,089,212,630 7,495,927,198 116,834,142,618 54,176,670,210 10,511,211,685 28,867,356,800 4,386,736,198 97,941,974,893 116,834,142,618 97,941,974,893 Accompanying notes form an integral part of these financial statements. Chief Financial Officer Managing Director Director Director Chairman Signed in terms of our report of even date. A.K.M Fazlul Haque FCA Partner Enrolment number: 1090 Hussain Farhad& Co. Chartered Accountants Md. Shafiqul Islam FCA Partner Enrolment number: 595 Shafiq Basak & Co. Chartered Accountants DVC:2204261090AS597496 DVC: 2204260595AS896100 Place: Dhaka Date : 26th April 2022 106 Annual Report 2021
  109. PROFIT OR LOSS ACCOUNTS For the year ended December 31 , 2021 Notes Investment Income Profit paid on deposits & Borrowing Net Investment Income Income from Investment in Shares /Securities Commission, Exchange and Brokerage Other Operating Income 23 24 2021 2020 Taka Taka 23,261,043,228 (12,833,773,890) 10,427,269,338 339,091,445 3,003,819,477 535,368,779 3,878,279,701 14,305,549,039 4,678,276,709 6,962,107 246,770 518,790,708 67,054,263 13,422,248 1,583,250 20,418,000 886,756,883 147,513,137 618,636,986 6,959,661,061 7,345,887,978 2,647,118,347 8,459,961 2,655,578,307 4,690,309,671 2,706,560,843 (39,609,013) 2,666,951,830 2,023,357,841 26,169,242,291 (16,385,553,054) 9,783,689,237 679,338,829 2,500,613,283 311,960,495 3,491,912,607 13,275,601,844 4,476,381,093 6,142,217 298,376 479,560,573 67,993,484 15,988,510 1,667,500 19,344,000 832,224,004 185,548,278 529,363,979 6,614,512,014 6,661,089,829 1,878,171,305 9,725,095 1,887,896,400 4,773,193,430 2,253,104,866 (30,700,807) 2,222,404,059 2,550,789,370 314,394,026 64,364,153 20,233,578 398,991,758 Retained Earnings 1,624,366,083 Earning per Ordinary share (EPS) 41 1.90 Accompanying notes form an integral part of these financial statements. 954,638,686 25,507,894 980,146,580 1,570,642,791 2.40 25 26 27 Total operating income Salaries and allowances & contribution to P.F Directors fees & expenses Shariah Supervisory Committee’s fees & expenses Rent, taxes, insurance and lighting etc. Postage, telegram, telephone and stamp etc. Legal charges Auditors’ fee Salary & Allowances to the Managing Director Depreciation and repairs to the bank’s properties Stationery, printing and advertisement etc. Other expenses Total operating expenses Profit/(Loss) before Tax & provision Provision against Investments & Contingent Liabilities Provision for diminution in value of investment Other Provision Total provision Profit/(Loss) before Tax Current tax Deferred tax Provision for Taxation Net Profit/(Loss) after tax Appropriation Statutory Reserve Profit paid on aibl mudaraba perpetual bond General Reserve ( 1 % Start-Up Fund ) Chief Financial Officer Managing Director 28 29 30 31 32 33 34 35 36 16 Director Director Chairman Signed in terms of our report of even date. A.K.M Fazlul Haque FCA Partner Enrolment number: 1090 Hussain Farhad& Co. Chartered Accountants Md. Shafiqul Islam FCA Partner Enrolment number: 595 Shafiq Basak & Co. Chartered Accountants DVC:2204261090AS597496 DVC: 2204260595AS896100 Place: Dhaka Date : 26th April 2022 Annual Report 2021 107
  110. CASH FLOW STATEMENT For the year ended December 31 , 2021 Notes Cash flows from operating activities Investment income receipt in Cash Profit paid on deposits and borrowings Dividend recieved Fees & Commission received in cash Recoveries from write off investments Cash payments to employees Cash payments to suppliers Received from other operating activities (item-wise) Paid for other operating activities (item-wise) Advance income tax paid Operating profit before changes in operating assets and liabilities Changing in Operating assets & liabilities Increase/(Decrease) of trading securities Increase/(Decrease) of placement to other banks Increase/(Decrease) of Investment and advances to customers (other than Banks) Increase/(Decrease) of other assets (item-wise) Increase/(Decrease) of placement from other banks and financial institution Increase/(Decrease) of Deposits from customers (other than Banks) Increase/(Decrease) of Other liabilities account of customers Increase/(Decrease) of Trading liabilities (item-wise) Cash receipt from operating activities A. Net Cash from operating activities Cash flows from investing activities: Proceeds from sale of securites Payments for purchases of securities Purchase of property, plant and equipment Sales proceeds of Fixed assets Purchase-sale of subsidiary B. Net cash flows from investing activities Cash flows from financing activities Increase in Exchange Equalization Account Issue of AIBL Subordinate Bond / Perpetual Bond Increase in Share Capital Dividend paid C. Net cash flows from financing activities D. Net increase in cash and cash equivalent (A+B+C) E. Effects of exchange rate changes on cash and cash-equivalents F. Net increase in cash and cash equivalent (D+E) G. Cash & Cash Equivalents at the beginning of the year H. Cash & Cash Equivalents at the end of the year Net Operating Cash Flow per Share (NOCFPS) Accompanying notes form an integral part of these financial statements. Chief Financial Officer 108 Annual Report 2021 Managing Director Director 37 38 39 40 43 2021 2020 Taka Taka 23,658,148,613 (12,906,725,161) 33,566,797 3,003,819,477 57,842,746 (4,698,694,709) (147,513,137) 535,368,779 (1,347,641,802) (2,061,982,892) 6,126,188,711 26,746,398,647 (17,221,368,851) 8,761,739 2,500,613,283 56,952,186 (4,495,725,093) (185,548,278) 311,960,495 (1,192,933,381) (2,438,271,566) 4,090,839,180 (4,328,089,045) (9,714,990,000) (33,947,860,704) (407,390,310) 4,838,892,087 27,704,942,412 (138,075,121) (15,992,570,680) (9,866,381,969) (277,727,877) (2,270,010,000) (18,855,090,010) 246,484,556 (3,520,255,065) 30,020,097,525 608,890,594 5,952,389,723 10,043,228,903 (402,005,372) (402,005,372) (2,224,248,856) (2,224,248,856) 4,894 3,400,000,000 (1,597,353,277) 1,802,651,616 (8,465,735,725) (8,465,735,725) 67,686,293,234 59,220,557,509 (9.27) (19,953) 4,400,000,000 (1,384,372,840) 3,015,607,206 10,834,587,253 10,834,587,253 56,851,705,980 67,686,293,234 9.43 Director Chairman
  111. Annual Report 2021 109 - Issue of the share capital - Net profit for the year Cash Bonus Share Reserve Managing Director 10 ,649,021,850 Total shareholders’ equity as on December 31,2020 Chief Financial Officer 10,649,021,850 Total shareholders’ equity as on December 31,2021 Director 10,334,627,824 10,649,021,850 Director 1,616,113,623 1,643,126,429 (314,394,026) - Appropriations during the year 314,394,026 (20,233,578) - - Transfer to 1 % strat-Up fund 1,084,326,967 1,084,331,861 - - - (64,364,153) - - - - 4,894 - - 1,084,326,967 - - 1,084,326,967 Revaluation Reserve - (1,597,353,277) 2,023,357,841 - - - - 1,616,113,623 - 1,616,113,623 Retained Earnings - - - - - - - 10,334,627,824 - - 10,334,627,824 Statutory Profit paid on aibl mudaraba perpetual bond Asset revalution Reserve - Currency translation differences recognized in the income - Surplus/deficit on account of revaluaton of investments Net gain and losses not recognised in Income Statement - Deferred tax Adjustment 10,649,021,850 - Changes in accounting policy Restated balance 10,649,021,850 Paid up Capital Balance at 1st January, 2021 Particular For the year ended December 31 , 2021 STATEMENT OF CHANGES EQUITY Chairman 23,684,090,264 24,025,501,990 - (20,233,578) (64,364,153) - - (1,597,353,277) 2,023,357,841 - 4,894 - - 23,684,090,264 - - 23,684,090,264 Total Taka
  112. 110 Annual Report 2021 145 ,900,000 19,640,000,000 93,530,661,420 105,200,000 113,421,761,420 14,645,600,000 117,192,600,000 - 1,204,400,000 54,213,966,000 3,600,000 1 to 3 Months 4 8,248,681,437 3,528,100,000 2,165,576,000 60,054,761,420 183,200,000 74,180,318,857 Less then 1 Month 3 11,493,210,872 111,351,000,000 - 1,100,000,000 2,200,000,000 972,100,000 104,749,861,420 109,021,961,420 3 to 12 Months 5 45,257,900,000 - 51,532,261,420 1,433,100,000 52,965,361,420 1 to 5 Years 6 25,526,579,025 - 15,425,800,000 7,267,136,072 (20,576,000) 28,004,908,391 26,224,061,419 5,463,069,708 21,468,627,922.52 50,875,037 103,883,902,550 More then 5 Years 7 Chief Financial Officer Managing Director Director Director 33,865,352,634.88 Deferred tax Liabilities/ (Assets) 93,595,145 AIBL Mudaraba Subordinated Bond 14,600,000,000 Total Liabilities 55,421,966,000 131,838,200,000 122,844,210,872 45,257,900,000 74,085,526,805 Net Liquidity Gap 18,758,352,857 (18,416,438,580) (13,822,249,452) 7,707,461,420 29,798,375,744 The Liquidity statement is prepared on contractual basis and which usually renewable. As a result it may not be actually alarming situation due to mismatch of assets & liability. SL Particulars No 1 2 1 Assets : Cash in hand Balance with other Bank and Financial Institution Placement with Banks & Other Financial Institutions Investments (in Shares & Securities) Investments Fixed Assets including premises (Land & Bulding) Other Assets Non Banking Assets Total Assets 2 Liabilities : Placement from Banks & Other Financial Institutions Deposits Other Accounts Provision and Other Liabilities For the year ended December 31, 2021 (Maturity Analysis of Assets and Liabilities) STATEMENT OF LIQUIDITY Chairman 93,595,145 14,600,000,000 429,447,803,677 24,025,501,990 27,343,210,872 353,542,045,025 33,868,952,635 23,674,481,437 12,041,136,072 23,985,000,000 28,977,008,391 336,091,607,099 5,463,069,708 23,190,127,923 50,875,037 453,473,305,667 8 Total
  113. Al-Arafah Islami Bank Limited NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 1. The Bank and its activities 1.1 Al-Arafah Islami Bank Limited was established in 1995 under the Companies Act, 1994 as a Banking Company with Limited Liability by shares. It is an interest free Shariah Bank of Bangladesh rendering all types of commercial banking services under the regulation of Bank Companies Act, 1991 (as amended 2013) . The Bank conducts its business on the principles of Musharaka, Bai-Murabaha, Bai-Muazzal and Hire Purchase transactions approved by Bangladesh Bank. Naturally, its modes and operations are substantially different from those of other conventional commercial banks. There is a Shariah Supervisory Committee in the bank who maintains constant vigilance to ensure that the activities of the bank are being conducted on the percepts of Islam. The Shariah Supervisory Committee consists of prominent Ulema, reputed Bankers. The Bank went for public issue of share in the year 1998 and its share are listed with Dhaka Stock Exchance (DSE) and Chaittagong Stock Exchange (CSE). Presently the bank has 201 Branches and 2 (two) Subsidiary Companies. The principal activities of the Bank are to provide a comprehensive range of financial services including commercial banking, consumer banking, trade finance and other related custody and clearing services to the customers following the provisions of Bank Companies Act, 1991 (as amended), Bangladesh Bank’s directives and the principles of Islamic Shariah. 1.2 Subsidiaries of the Bank Al-Arafah Islami Bank Ltd has two subsidiary companies. The financial statements of these subsidiary companies are included in the cosolidated financial statements according to IFRS-10. 1.2.1 AIBL Capital Market Services Limited Al-Arafah Islami Bank Ltd. owned 60.50% shares of AIBL Capital Market Services Ltd. a subsidiary company of Al-Arafah Islami Bank Limited. AIBL Capital Market Services Ltd. incorporated in Bangladesh on 20 September, 2010 as a Public Limited Company. The principal activities of subsidiary company is to provide quality services to the prospective institutional and individual investors in the capital market. The main activities and functions of the company include; i.  Share trading in Dhaka Stock Market and Chittagong Stock Market. ii.   Provide Margin facilities to the client. iii. Full service depository participant of Central Depository of Bangladesh Ltd. Copy of the audited financial statement is attached Appendix A 1.2.2 AIBL Capital Management Limited Al-Arafah Islami Bank Ltd. owned 98% shares of AIBL Capital Management Limited a subsidiary company of Al-Arafah Islami Bank Limited. AIBL Capital Management Limited has been incorporated under the Companies Act (Act XVIII) of 1994 as a Private Limited Company by share on 25th October, 2011. The company was entitled to commence the business also from 25th October, 2011 with a view to run and manage the operations of Merchant Banking Services with an authorized Capital of BDT 2 billion and paid up capital of BDT 500 million . It aims to be one of the leading Merchant Banks of the country by rendering quality Merchant Banking Services with a high level of professional expertise and integrity. Copy of the audited financial statement is attached in Appendix B 2. Basis of preparation and significant accounting policies 2.1 Preparation of financial statements The consolidated financial statements of the group and the financial statements of the bank have been prepared on a going concern basis under the historical cost convention and on Generally Accepted Accounting Principles consistently with those of previous years. Although the operations of the Bank are in strict compliance with the rules of Islamic Shariah, the financial statements have been prepared in accordance with the Bank Companies Act 1991 (as amended 2013), in particular Banking Regulation and Policy Department (BRPD) Circular No.15 (09 November, 2009) other Bangladesh Bank circulars, the Companies Act 1994, the Securities and Exchange Rules 2020, Dhaka and Chittagong Stock Exchange Listing Regulations, other laws and rules applicable in International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). where relevant to the Bank to the extent that these do not contradict with the applicable statutory provisions and standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions. Annual Report 2021 111
  114. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 2.2 Basis of Consolidation A separate set of records for consolidating the Statements of Affairs and Income & Expenditure Statements of the branches are maintained at the Head Office of the Bank in Dhaka from which the financial statements are drawn up. Subsidiries are entities controlled by the group. Control exists when the group has the power to govern the financial and operating policies of an entity, so as to obtain economic benefits from its activities. The consolidated financial statements incorporate the financial statements of Al-Arafah Islami Bank Limited and the fianancial statements of subsidiary companies from the date that control commences until the date that control ceases. The financial statements of such subsidiary companies are incorporated on a line by line basis and the investments held by the bank is eliminated against the corresponding share capital of subsidiaries in the consolidated financial statements. Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there are no evidence of impairment. 2.3 Cash flow statement IFRS: The Cash flow statement can be prepared using either the direct method or the indirect method. The presentation is selected to present these cash flows in a manner that is most appropriate for the business or industry. The method selected is applied consistently. 2.4 Liquidity Statement The liquidity statement of assets and liabilities as on the reporting date has been prepared on residual maturity term as per the following basis: i) Balance with other banks and financial institutions, money at call and short notice, etc. are on the basis of their maturity term; ii) Investments are on the basis of their respective maturity; iii) Fixed assets are on the basis of their useful lives; iv) Other assets are on the basis of their realization / amortization; v) Borrowing from other Banks, financial institutions and agents, etc are as per their maturity / repayment terms; vi) Provisions and other liabilities are on the basis of their repayment / adjustments schedule. 2.5 Use of estimation and judgment The preparation of financial statements requires the bank to make certain estimates and to form judgments about the application of accounting policies which may affect the reported amount of assets, liabilities, income and expenses. The most significant areas of estimates and judgments have been made on provision for Investments. 2.6 Reporting period The financial statements cover particular calendar period from January 01, 2021 to December 31, 2021. 2.7 Offsetting Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. 2.8 Assets and basis of their valuation 2.8.1 Cash and cash equivalent IFRS: Cash and cash equivalent items should be reported as cash item as per IAS 7. Bangladesh Bank: Some cash and cash equivalent items such as ‘money at call and on short notice’, treasury bills, Bangladesh Bank bills and prize bond are not shown as cash and cash equivalents. Money at call and on short notice presented on the face of the balance sheet, and treasury bills, prize bonds are shown in investments. 2.8.2 Investments Investments are stated in the Balance Sheet net of profit receivable/mark-up profit. 112 Annual Report 2021
  115. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 Investment write-off Investment are normally written off, when there is no realistic prospect of recovery of these amounts in accordance with BRPD Circular No.2 (13 January, 2003). A separate Investment Administration and Recovery Department (IARD) has been set up at the Head Office, which monitors investment written off and legal action through the Money Court. These write-offs do not undermine or affect the amount claimed against the borrower by the bank. The Investment Administration and Recovery Department (IARD) maintains a separate ledger for all individual cases written off by each branch. The IARD follows up on the recovery efforts of these written off investment and reports to management on a periodic basis. Written off investment are reported to the Credit Information Bureau (CIB) of Bangladesh Bank. 2.8.2.1 Investment in shares and securities IFRS: As per requirements of IFRS 9 investment in shares and securities generally falls either under “at fair value through profit and loss account” or under “available for sale” where any change in the fair value (as measured in accordance with IFRS 13) at the year-end is taken to profit and loss account or revaluation reserve respectively. Bangladesh Bank: As per BRPD Circular No. 14 dated 25 June, 2003 investments in quoted shares and unquoted shares are revalued at the year end at market price and as per book value of last audited balance sheet respectively. Provision should be made for any loss arising from diminution in value of investment; otherwise investments are recognised at cost. 2.8.2.2 Revaluation gains/losses on Government securities IFRS: As per requirement of IFRS 9 where securities will fall under the category of Held for Trading (HFT), any change in the fair value of held for trading assets is recognised through profit and loss account. Securities designated as Held to Maturity (HTM) are measured at amortised cost method and interest income is recognised through the profit and loss account. Bangladesh Bank: HFT securities are revalued on the basis of mark to market and at year end any gains on revaluation of securities which have not matured as at the balance sheet date are recognised in other reserves as a part of equity and any losses on revaluation of securities which have not matured as at the balance sheet date are charged in the profit and loss account. Interest on HFT securities including amortisation of discount are recognised in the profit and loss account. HTM securities which have not matured as at the balance sheet date are amortised at the year end and gains or losses on amortisation are recognised in other reserve as a part of equity. 2.8.2.3 Provision on loans and advances/investments IFRS: As per IFRS 9 an entity should start the impairment assessment by considering whether objective evidence of impairment exists for financial assets that are individually significant. For financial assets that are not individually significant, the assessment can be performed on an individual or collective (portfolio) basis. Bangladesh Bank: As per BRPD Circular No.14 (23 September, 2012), BRPD Circular No. 19 (27 December, 2012) and BRPD Circular No. 05 (29 May, 2013) a general provision at 0.25% to 5% under different categories of unclassified loans (good/standard loans) has to be maintained regardless of objective evidence of impairment. Also provision for sub-standard loans, doubtful loans and bad losses has to be provided at 20%, 50% and 100% respectively for loans and advances depending on the duration of overdue. Again as per BRPD Circular No. 10 dated 18 September, 2007 and BRPD Circular No. 14 dated 23 September, 2012, a general provision at 1% is required to be provided for all off-balance sheet exposures. Such provision policies are not specifically in line with those prescribed by IFRS 9. 2.8.2.4 Investment in subsidiaries The bank has made investment in subsidiary company named AIBL Capital Market Service Ltd Tk. 242.00 crore holding 60.50% shares. The rest of 39.50% shares are hold by others and another subsidiary Company named AIBL Capital Management Limited Tk 49.00 crore holding 98% shares. 2.8.3 Fixed assets Accounting & Depreciation and Intangible Assets Accounting & Amortization Policy. Board of Directors of Al- Arafah Islami Bank Limited in its 226th meeting held on 11 July, 2012 has approved “Fixed Assets accounting & depreciation and Intangible Assets accounting & amortization Policy” which has been effected from January 2012. i) All fixed assets except land are stated at cost less accumulated depreciation and accumulated impairment loss as per IAS-16 “Property, Plant and Equipment”. Acquisition cost of an asset comprises the purchase price and any directly attributable cost of bringing the asset to working condition for its intended use. Annual Report 2021 113
  116. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 ii) Land is recognised at cost at the time of acquisition and subsequently measured at revalued amounts which is the market value at the time of revaluation done on 31st January 2020 by a independent professional valuer on 31st December 2020, any surplus on revaluation is shown as equity component until the disposal/de-recognition of asset. The property is located within: a) Holding No 63, Purana Paltan Dist : Dhaka, P. S Motijheel, Sub - registry office : Sutrapur, Dhaka collectorate Touzi # 141B-1, Mouza : Sabek Shahar Dhaka, Sheet # 22, Ward # 03, Sabek Khatian # 6947, 6947 [KA], 6947[Jha], Sabek Dag # 97, 100,101,102 and 110, SA Mouza : Ramna, Sheet # 10, SA Khatian # 362, SA Dag # 1979,1980,1981,2025,1997,1998 and 1979/2039, RS Mouza : Motijheel, RS Khatian # 420, RS Dag # 1314 and 1322, D.P Khatian # 619, D.P Dag # 812 and 804. Mutation Khatian 362/3 and Dag # 1979 and 1980. The area of land measuring about 27.10 Decimal, b) Holding No 63/1/A, Purana Palton, Dist: Dhaka, P.S Motijheel,Subregistry office: Sutrapur ,Dhaka Collectorate Touzi # 141-B-1, under Mouza: Sabek-Sahar Dhaka then Ramna, Hal-Motijheel, J-L#S.A-04, R.S & City Jarip - 06, Sheet # 22,Ward # 03, KhatianC.S-6947 (Jha), SA-362, R.S-428, Dhaka City Jarip-103,449, Namjari-542, 362/3/1, Jote-543,687& 437,Dag # C.S-100,101, S.A 1979, 1980, 1981,1997,2025,1979/2039,R.S-1315,1322,1316/1360,1323/1359, Dhaka City Jarip-808,809,811. Deed # 3825 &300, dated: 22.08.2010 & 01.02.2012. The area of land measuring about (11.40+11.60) 23.00 Decimal. c) Total land measuring 30.36 katha, cost price was Tk. 453,255,000. The land was revalued at tk. 5.00 crore per katha and total land valuation amount Tk. 1,518,000,000. Total asset revaluation gains amounting Tk. 1,129,348,248. Depreciation of an item of fixed assets and amortization on intangible assets is charged on the basis of estimated useful lives as mentioned in revised fixed asset policy of the bank on monthly basis following straight-line method. The depreciation/amortization method used should reflect the pattern in which the asset’s economic benefits are consumed by the enterprise. The depreciation charge for each period should be recognized as an expense unless it is included in the carrying amount of another asset. iv) Depreciation/amortization rates used for each type of fixed assets are as follows (per annum): Name of Assets "Rate of Depreciation/amortization" Estimated useful Lives Furniture and Fixture (Wood) 10% 10 years Furniture and Fixture (Steel ) 10% 10 years Computer 20% 5 years Computer Accessories 20% 5 years Motor Car 20% 5 years Mechanical Appliances 20% 5 years Books 10% 10 years Online Hardware 20% 5 years Nil Nil Land Building 2.50% 40 years Interior Decoration 10% 10 years Online Software 20% 5 years v) Depreciation is charged on the addition of fixed assets and intangible assets are amortized from the date of use. vi) Maintenance and repair costs are charged to profit and loss account as and when incurred. vii) Presentation of intangible asset IFRS: An intangible asset must be identified and recognised, and the disclosure must be given as per IAS 38. Bangladesh Bank: There is no regulation for intangible assets in BRPD Circular No. 15. 2.8.4 IFRS 16: Leases AL-Arafah Islami Bank Limited applied I FRS 16: Leases for the first time with the date of initial application of 1 January 2020, using modified retrospective approach where the Bank measured the lease liability at the present value of the remaining lease payments and recognised a right-of-use asset at the date of the initial application on a lease by lease basis. According to IFRS 16, a contract is, or contains, a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. 114 Annual Report 2021
  117. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 Control is conveyed where the customer has both the right to direct the identified asset’s use and to obtain substantially all the economic benefits from that use. An asset is typically identified by being explicitly specified in a contract, but an asset can also be identified by being implicitly specified at the time it is made available for use by the customer Upon lease commencement, the Bank recognizes a right-of-use asset and a lease liability. The right-of use asset is initially measured at the amount of the lease liability plus any initial direct costs incurred by the Bank. Adjustments may also be required for lease incentives, payments at or prior to commencement and restoration obligations or similar. After lease commencement, the Bank measures the right-of-use asset using a cost model. Under the cost model, a right-of-use asset is measured at cost less accumulated depreciation and accumulated impairment. The lease liability is initially measured at present value of the future lease payments discounted using the discount rate @ 6% implicit in the lease. Subsequently, the lease liability is adjusted for interest and lease payments as well as the impact of lease modifications, amongst others. The Bank has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these arc recognised as an expense in profit and loss account on a straight-line basis over the lease term. On the balance sheet. right-of-use assets have been included in fixed assets including premises. furniture and fixtures and lease liabilities have been included in other liabilities. 2.8.5 Other assets Other assets include all balance sheet accounts not covered specifically in other areas of the supervisory activity and such accounts may be quite insignificant in the overall financial condition of the Bank. 2.8.6 Non-banking asset IFRS: No indication of Non-banking asset is found in any IFRS. Bangladesh Bank: As per BRPD Circular No. 15, there must exist a face item named Non-banking asset. 2.8.7 Reconciliation of inter bank/branch books of accounts Books of accounts in regard to Inter-branches are reconciled and there are no material differences, which may affect the financial statements significantly. Unrecognized entries in case of inter-branch transactions as on the reporting date are not mentionable due to the time gap before finalizing the same. 2.9 Share Capital Ordinary shares are classified as equity, when there is no contractual obligation to transfer cash or other financial assets. 2.10 Statutory reserve Bank Companies Act, 1991 requires the Bank to transfer 20% of its current year’s profit before tax to reserve until such reserve along with share premium equals to its paid up capital. 2.11 Revaluation reserve When an asset’s carrying amount is increased as a result of revaluation, the surplus amount should be credited directly to equity under the heading of revaluation surplus/reserve as per IAS-16: “Property, Plant and Equipment”. The bank first revalued its land in December 2004 ,December 2012 and again in December 2020 which is absolutely owned by the bank and the surplus amount transferred to revaluation reserve. (Annexure-A) 2.12 Non-controlling interest Non-controlling interest is that portion of the profit or loss and net assets of the subsidiaries (AIBL Capital Market Services Limited and AIBL Capital Management Limited and ) attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent (Al-Arafah Islami Bank Limited). 2.13 Basis for valuation of liabilities and provisions 2.13.1 Provisions on Investment a) Provision for Investment are made on the basis of year end review by the management and instructions contained in Bangladesh Bank BRPD Circular No. 05 dated 05 June, 2006 & BRPD Circular No. 10, dated 18 September, 2007 & Subsequent changes as per BRPD Circular No.14 dated 23 Spetemebr, 2012 and BRPD Circular No.05 dated 29 May, 2013 and BRPD Circular No.52 dated 29 December 2021. The provision rates are given below: Annual Report 2021 115
  118. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 Particulars General provision on unclassified general loans and advances / investments General provision on unclassified small enterprise financing 1% 0.25% General provision on unclassified loans / investments for housing finance and on loans for professionals 2% General provision on unclassified BHS/MHS/SDS 2% General provision on unclassified consumer financing other than housing finance and loans for professionals 0.25% to 5% General provision on special mention account 0.25% to 5% Specific provision on substandard loans and advances / investments 20% Specific provision on doubtful loans and advances / investments 50% Specific provision on bad / loss loans and advances / investments 100% General provision for COVID 19 Start-up Fund on Net Profit 2.13.2 Rate 1.5% & 2% 1% Loans and advances/Investments net of provision IFRS: Loans and advances/Investments are presented should be net of provision. Bangladesh Bank: As per BRPD Circular No. 14 dated September 23, 2012, provision on loans and advances/investments are presented separately as liability and can not be netted off against loans and advances. 2.13.3 Provision for off balance sheet exposures BRPD circular no.10 (18 September, 2007) requires a general provision for off balance sheet exposure is to be calculated at 1% (2007:0.50%) on all off balance sheet exposures as defined in BRPD Circular No.10 (24 Novemberm, 2002). Accordingly we have recognized a provision of 1% on the following off balance sheet items: 1. Letter of Guarantee 2. Letter of Credit 3. Acceptance and endorsements 4. Other Contingent Liabilities iv) Off-balance sheet items IFRS: There is no concept of off-balance sheet items in any IFRS; hence there is no requirement for disclosure of off-balance sheet items on the face of the balance sheet. Bangladesh Bank: As per BRPD Circular No. 14 dated September 23, 2012, off balance sheet items (e.g. Letter of credit, Letter of guarantee etc.) must be disclosed separately on the face of the balance sheet. v) Provision for other assets BRPD Circular No. 14 (25 June, 2001) requires a provision of 100% on other assets which are outstanding for one year and above. vi) Provision on balance with other banks and financial institutions (Nostro Accounts) Provision for unsettled transaction on nostro accounts made are reviewed at each balance sheet date by management and certified by our external auditor in accordance with Bangladesh Bank Foreign Exchange Policy Department (FEPD) Circular Letter No. 677 (13 September, 2005) vii) Provision for taxation Current tax Provision for current income tax has been made @ 37.50% for income from business, @ 20% fot cash dividend & @ 10% for capital gain as prescribed in the Finance Act 2020 and Income Tax Ordinance, 1984 of the profit made by the bank considering taxable add-back of income and disallowance of expenditure in compliance with IAS-12 “Income Taxes”. Tax return for the income year 2021 (Assessment year 2022-2023) has been filed but assessment is to be done by the tax authority. 116 Annual Report 2021
  119. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 Deferred tax The bank recognized deferred tax in accordance with the provision of IAS-12. Deferred tax arises due to temporary difference deductible or taxable for the events or transaction recognized in the income statement. A temporary difference is the difference between the tax base of an assets or liability and its carrying amount/reported amount in the financial statement. Deferred tax assets or liability is the amount of income tax payable or recoverable in future period(s) recognized in the current period. The deferred tax assets/expenses does not create a legal liability/recoverability to and from the income tax authority. The bank recognizes deferred tax on 100% specific provision investment which will be write off as per Bangladesh Bank Circulars. The detail calcuation of deffered tax for the period ended 31st December 2021, has given below: Particular As per Books of Account Items giving rise temporary Difference Carrying Amount Assets not Deprecible Net Carring Amount As Per Tax Tax Base Temporary Difference Deferred Tax Tax Rate Liability/(Assets) Taxable/ (Deductible) 1. Fixed Assets 5,46,30,69,708 1,51,91,50,691 3,94,39,19,017 3,81,47,90,448 12,91,28,569 37.50% Net deferred tax liability (asset) 4,84,23,214 Deferred tax Assets (Income )/Liability Expenses Balance as on 1st January 2021 Provision required as on 31 December ,2021 Balance as on 31 December ,2021 4,84,23,213 8,80,30,227 Equity Component 4,51,73,930 (3,96,09,013) 4,84,23,214 13,32,04,157 (3,96,09,013) 4,51,73,930 9,35,95,144 viii) Provision for gratuity Gratuity Fund benefits are given to the staff of the bank in accordance with the approved Gratuity Fund rules. National Board of Revenue has approved the gratuity fund as a recognized gratuity fund on October 10, 2010. The fund is operated by a Board of Trustees consisting of 06 (six) members of the bank. The employees who serve at least 07 (seven) years in AIBL are normally entitled to get gratuity equivalent to one month’s basic salary of the employees for their completed year of services in the Bank. So that actuarial valuation is not considered essential. ix) Retirement benefit and staff welfare schemes The Bank operates a Contributory Provident Fund, Social Security Fund and Benevolent Fund. These funds are managed by separate Board of Trustees. x) Other provision and accrued expenses In compliance with IAS-37, provision and accrued expenses are recognised in the fianancial statements when the bank has legal or constructive obligation as a result of past event, it is probable that an outflow of economic resources will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. 2.14 Revenue recognition 2.14.1 Profit on Investment a) Income from investments has been accounted for on accrual basis except investment under Musharaka. Income in case of Musharaka is accounted for on realization basis. b) Profit/rent/compensation accrued on classified investment are suspended and accounted for as per Circulars issued by the Bangladesh Bank. Moreover, incomes which are irregular (doubtful) as per Shariah are also not included in the distributable income of the Bank. Bank charges compensation on unclassified overdue Bai-Murabaha and Bai-Muazzal investment. Such compensation is not permissible by Shariah to take into regular income of the bank. Therefore, the amount of compensation treated as a component of provision against bad & doubtful investment. Interest received due to legal obligation is also not taken into regular income of the bank. c) Profit on investment is calculated on daily product basis and charged on yearly basis. d) Recognition of interest in suspense Annual Report 2021 117
  120. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 2.14.2 2.14.3 2.14.4 2.15 2.16 2.17 2.18 2.19 2.20 2.20.1 2.20.2 118 IFRS: Loans and advances to customers are generally classified as ‘loans and receivables’ as per IAS 39 and interest income is recognised through effective interest rate method over the term of the loan. Once a loan is impaired, interest income is recognised in profit and loss account on the same basis based on revised carrying amount. Bangladesh Bank: As per BRPD Circular No. 14 dated 23 September, 2012, once a loan is classified, interest on such loans are not allowed to be recognised as income, rather the corresponding amount needs to be credited to an interest in suspense account, which is presented as liability in the balance sheet. Fees and commission income Fees and commission income are recognized when earned. Commission charged on customer on letters of credit and letters of guarantee are credited to income at the time of effecting the transactions. Other comprehensive income IFRS: As per IAS 1 Other Comprehensive Income (OCI) is a component of financial statements or the elements of OCI are to be included in a single Other Comprehensive Income statement. Bangladesh Bank: Bangladesh Bank has issued templates for financial statements which will strictly be followed by all banks. The templates of financial statements issued by Bangladesh Bank neither Other Comprehensive Income nor the elements of Other Comprehensive Income are allowed to be included in a single Other Comprehensive Income (OCI) Statement. As such the Bank does not prepare the other comprehensive income statement. However, elements of OCI, if any, are shown in the statements of changes in equity. Dividend Income Dividend Income from investment is recognised at the time when it is declared, ascertained, and right to receive the payment is established. Management and other expenses Expenses incurred by the bank are recognised on actual and accrual basis. Sharing of investment income The investment income (except exchange and commission income) is shared between depositors and the bank at the ratio of 70 : 30. Foreign currency transactions i) The transactions in foreign currencies are converted into equivalent Taka currency using the ruling exchange rates prevailed on the dates of such transactions. ii) The assets and liabilities denominated in foreign currencies as at 31 December, 2021 are translated into Taka currencies at the prevailing selling and buying rates of the concerned foreign currencies. iii) Gains and losses of translation are dealt with through exchange account. Basic Earning per share This has been calculated by dividing the basic earning attributable to ordinary shareholders of the bank by the weighted average number of ordinary shares outstanding during the year as per IAS-33. Diluted earning per share is required to be calculated for the period, when there is scope for dilution during the period under review. Related Party transactions Related party transaction is a transfer of resources, services, or obligation between related parties, regardless of whether price is charged as per IAS 24. (Annexure-C) Events after reporting period All the material events after the reporting period have been considered; appropriate adjustments and disclosures have been made in the financial statements. Financial instruments – presentation and disclosure In several cases Bangladesh Bank guidelines categorise, recognise, measure and present financial instruments differently from those prescribed in IFRS 9. As such full disclosure and presentation requirements of IFRS 7 and IAS 32 cannot be made in the financial statements. Financial guarantees IFRS: As per IFRS 9, financial guarantees are contracts that require an entity to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantee liabilities are recognised initially at their fair value, and the initial fair value is amortised over the life of the financial guarantee. The financial guarantee liability is subsequently carried at the higher of this amortised amount and the present value of any expected payment when a payment under the guarantee has become probable. Financial guarantees are included within other liabilities. Bangladesh Bank: As per BRPD Circular No. 14 dated September 23, 2012, financial guarantees such as letter of credit, letter of guarantee will be treated as off-balance sheet items. No liability is recognised for the guarantee except the cash margin. Annual Report 2021
  121. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 2.20.6 Balance with Bangladesh Bank: (Cash Reserve Requirement) IFRS: Balance with Bangladesh Bank should be treated as other asset as it is not available for use in day to day operations as per IAS 7. Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents. 2.21 Approval of the financial statements 2.22 General i) The financial statements have been prepared in accordance with the formats prescribed under the Banking Companies Act, 1991 (as amended 2013) and in compliance with the rules of Islamic Law (Shariah) related to the banking business activities. ii) The figures appearing in these accounts have been rounded off to the nearest taka. iii) Wherever necessary previous years’ figures have been rearranged to conform to the current years’ presentation. 3.A Risk Management The risk of Al-Arafah Islami Bank Limited is defined as the possibility of losses, financial or otherwise. The risk management of the Bank covers 6 (six) Core Risk Areas of banking i.e Credit risk management, foreign exchange risk management, Assets Liability Management, prevention of money laundering and establishment of internal control and compliance and information & communication technology. The prime objective of the risk management is that the bank takes well calculative business risks while safeguarding the bank’s capital, its financial resources and profitability from various risks. In this context, the bank took steps to implement the guidelines of Bangladesh Bank as under : i) Credit Risk Management Credit risk is one of the major risks faced by the bank. This can be described as potential loss arising from the failure of a counter party to perform as per contractual agreement with the bank. The failure may result from unwillingness of the counter party or decline in his/her financial condition. Therefore, bank’s credit risk management activities have been designed to address all these issues. The bank has an investment (Credit) risk management committee at head office. The committee reviews the investment risk issues on monthly basis. The bank has segregated the investment approval, investment administration, investment recovery and legal authority. The bank has segregated duties of the officers/executives involved in credit related activities. A separate business development (marketing) department has been established at head office, which is entrusted with the duties of maintaining effective relationship with the customer, marketing of credit products, exploring new business opportunities etc. In the branches of the bank separate officials are engaged as relationship manager, documentation officer, verification officer, disbursement officer and recovery officer. Their jobs have been allocated and responsibilities have been defined. Investment (Credit) Risk Grading Manual The bank has implemented the Investment (Credit) Risk Grading Manual (IRGM) since April 1, 2006 which is made mandatory by Bangladesh Bank vide BRPD Circular No. 18 of December 11, 2005. Investment Officials of the bank have been trained on IRGM. Investment Risk Grading is incorporated in the investment presentation form for all the cases. ii) Foreign Exchange Risk Management Foreign exchange risk is defined as the potential change in earnings arising due to change in market prices. As per foreign exchange risk management guideline, bank has established a separate treasury department at head office. Under the treasury department, foreign exchange front office, foreign exchange back office and local money market have been physically demarketed. Duties and responsibilities of them have also been defined. All foreign exchange transactions are revalued at mark to market rate as determined by Bangladesh Bank at the month end. All Nostro accounts are reconciled on monthly basis and outstanding entry beyond 30 (thirty) days is reviewed by the management for its settlement. Regulatory reports are submitted on time to Bangladesh Bank. iii) Assets Liability Management The Asset Liability Committee (ALCO) monitors balance sheet risk and liquidity risks of the bank. The balance sheet risk is defined as potential change in earnings due to change in rate of profit, foreign exchange rates which are not of trading nature. ALCO reviews liquidity requirement of the bank, the maturity of assets and liabilities, deposit and lending pricing strategy and the liquidity contingency plan. The primary objective of ALCO is to monitor and avert significant volatility in net profit income, investment value and exchange earnings. iv) Internal control and compliance Effective internal controls are the foundation of safe and sound banking. A properly designed and consistently enforced system of operational and financial internal control helps the bank management to safeguard the bank’s resources, produce reliable financial and managerial report, and comply with laws and regulations. Annual Report 2021 119
  122. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 AIBL has taken all-out efforts to mitigate all sorts of risk in line with the guidelines issued by Bangladesh Bank. To this effect, the bank has formed an Internal Control & Compliance (ICC) division headed by Senior Executive Vice President. The ICC division has been segregated to three departments which are audit & inspection department, audit monitoring department and regulatory compliance department. AIBL internal control contains self-monitoring mechanisms and to ensure effective control DCFCL, Investment documentation checklist and quarterly operation report have been developed and implemented. Internal audit and internal control teams carries out regular audit and surprise/special inspection of the branches to mitigate operational risk and restrain the possibility of circumvention or overriding the control procedure. ICC division submits parallel comprehensive internal audit report to the managing director and to the audit committee. Within 02 (two) months after receiving the audit report, audit monitoring department completes the compliance report and submits the report to the audit committee for their review. The committee reviews the system of internal control and the audit process for compliance with rules, regulation and code of conduct, financial reporting process, and also suggests actions to remedy the lapses/irregularities. By this time the ICC dvision has introduced concurrent audit, surprise inspection, auto information system, Quarterly Audited System, and mandatory leave policy to boost-up the functions of internal control and compliance. v) Prevention of money laundering Money laundering risk is defined as the loss of reputation and expenses incurred as penalty for being negligent in prevention of money laundering. For mitigating the risk the bank has a Central Compliance Unit (CCU) at head office. The unit reviews the anti money laundering activities of the bank on regular basis. The bank has a designated Chief Anti Money Laundering Compliance Officers (CAMLCO) at head office and Branch Anti Money Laundering Compliance Officers (BAMLCO) at branches. The compliance officers review the Suspicious Transaction (STR) and records them properly. Manuals have been established for the prevention of money laundering and transaction profile has been introduced. Training has been continuously given to all category of officers and executives for developing awareness and skill for identifying suspicious activities. The bank submits the STR, CTR and other periodical reports to Bangladesh Bank on time. vi) Guideline on information & Communication Technology: Technology is the process by which humans modify nature to meet their needs and wants. The term Information Technology (IT) means computers, auxiliary equipment, software, hardware and similar procedures, services and related resources. Information Technology (IT) developed in a rapidly changing global environment, and challenges us to courageous initiatives to address a host of vital skilled human resources. To overcome the challenges the bank has a IT policy. The IT policy of the bank includes the purchase policy, hardware policy, software development policy, banking application usage policy, security policy, disaster recovery policy etc. The bank is now implementing its on line banking project complying the IT policy. vii) Internal Audit As per Internal Control & Compliance (ICC) Risk Management Guideline of Bangladesh Bank, a ’Risk Based Audit Plan‘’ is to prepared for each calendar year for smooth conducting of Audit & Inspection of all the branches and departments & divisions of Head Office of the bank. Besides the Yearly Auditing, Internal Audit Department Conducts Special Audit, Quarterly Foreign Exchange & Investment Audit, Surprise Audit etc. To prevent incidence of errors and their recurrences, more emphasis are given on spot rectification of irregularities/lapses while auditing/inspecting of the branches. For Audit purpose, branches have been segregated into 05 risk categories ( Extremely High, Very High, High, Medium & low risk). The regular Audit & Inspection Teams also conduct Core Risks System Audit during their regular Audit & Inspections. viii) Fraud and Forgeries: During the year 1st January to 31st December, 2021 Audit and Inspection department of ICCD, have detected some incidents/ irregularities as fraud-forgeries relating to cash misappropriation and investment disbursement in 02 branches of the Bank, which are not material in terms of Bank’s overall financial transactions. In order to not jeopardize the bank’s interest, all such irregularities were regularized/mitigated by recovery of the defalcated money through strong monitoring and close supervision by the ICC Division. Furthermore, administrative actions were also taken against the delinquent officers/persons involved. Compliances of these issues were duly reported to the Board Audit Committee and Bangladesh Bank in time as per regulatory guidelines. 120 Annual Report 2021
  123. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 3.B Risk Based Capital (Basel III) To comply with the international best practices and to make the bank’s capital more risk sensitive as well as to build the banking industry more shock absorbent and stable, Bangladesh Bank is aimed to implement Basel-II reporting from 2010 and Basel-III reporting from 2015. As per the directive of Bangladesh Bank, all scheduled banks in Bangladesh are now required to report risk based capital adequacy for banks under Basel-III along with the existing capital adequacy rules and reporting under Basel-I and Basel-II during the parallel run i.e. 2009 and 2010 respectively. All scheduled banks are also required to disclose capital adequacy in both quantitative and qualitative terms. The first disclosure as per guidelines shall be made as on the effective date viz. January 01, 2015. 3.C Compliance status on Bangladesh Accounting Standards (IAS) and Bangladesh Financial Reporting Standards (IFRS) The Institute of Chartered Accountants of Bangladesh (ICAB) is the sole authority for adoption of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). While preparing the financial statements, the bank applied most of IAS and IFRS as adopted by ICAB. Details are given below: Name of the IAS Presentation of Financial Statements IAS No. 1 Status Applied Inventories 2 Applied Statement of Cash Flow 7 Applied Accounting Policies, Changes in Accounting Estimates and Errors 8 Applied Events after the Reporting Period 10 Applied Income Taxes 12 Applied Property, Plant and Equipment 16 Applied Employee Benefits 19 Applied Accounting for Government Grants and Disclosure of Government Assistance 20 N/A The Effects of Changes in Foreign Exchange Rates 21 Applied Borrowing Costs 23 Applied Related Party Disclosures 24 Applied Accounting and Reporting by Retirement Benefit Plans 26 N/A Separate Financial Statements 27 Applied Investments in Associates & Joint Ventures 28 N/A Applied Financial Instruments: Presentation 32 Earnings per share 33 Applied Interim Financial Reporting 34 Applied Impairment of Assets 36 Applied Provisions, Contingent Liabilities and Contingent Assets 37 Applied Intangible Assets 38 Applied Investment Property 40 N/A Agriculture Name of the IFRS Financial Instruments: Disclosures 41 N/A IFRS No. Status 7 Applied Financial Instruments: Recognition and Measurement 9 Applied Consolidated Financial Statements 10 Applied Disclosure of interest in other entities 12 Applied Fair value Measurement 13 Applied Revenue from contracts with customers 15 Applied Leases 16 Applied Annual Report 2021 121
  124. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 4 Audit Committee: An Audit Committee was constituted by the Board of Directors of the bank in its 95th meeting held on 24th March, 2003 as per BRPD Circular No. 12 dated 23th December, 2002 and subsequently reconstituted by the Board of Directors in its 363rd Meeting held on 09 September, 2021 as per BRPD Circular No. 11 Dated 27.10.2013 as under: SL Name Status with Committee Educational Qualification 1 Mahbubul Alam Chairman B.Com 2 Nazmul Ahsan Khaled Member B.Sc Engineer 3 Mohammed Emadur Rahman Member M.B.A. (Marketing-London) 4 Md. Harun-Ar-Rashid Khan Member M.A. (Social Welfare) 5 M. Kamal Uddin Chowdhury Member B.Com During the period 2021 the audit committee of the bank conducted 08 (eight) meetings in which among others, the following issues were discussed:i) Reviewing the inspection report of different branches of AIBL conducted by the bank internal inspection team from time to time and status of compliance thereof. ii) Reviewing the comprehensive inspection report of different branches of AIBL conducted by Bangladesh Bank and status of compliance thereof. iii) Reviewing the financial statements of the bank for the period 31 December, 2021. 5 COVID-19 on disclosure The business operation and profitability of the Bank had been impacted severely by COVID-19 along with implication of single digit profit rate declared by Bangladesh Bank during the year 2020, but due to the relatively stable market condition and quicker economic recovery, the operating income of the Bank increased significantly during the year 2021 compared to 2020. 122 Annual Report 2021
  125. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 5. Cash in hand a) Cash in hand In local currency In Foreign currency ( Note 5.a.ii ) b) Balance with Bangladesh Bank In local currency In Foreign currency c) Balance with Sonali Bank Ltd. In local currency In Foreign currency 5.a.i 5.a.ii Balance With Bangladesh Bank and its Agents Banks (including foreign currencies) In Foreign currency Currency Name US Dollar 5.d 5.e 5.A 6. Amount in FC Ex. Rate 80 86.62 2021 2020 Taka Taka 3,209,848,106 8,085,000 3,217,933,106 2,856,093,511 23,628,319 2,879,721,830 19,000,036,966 269,017,371 19,269,054,337 26,395,995,220 740,941,976 27,136,937,196 1,187,493,994 1,187,493,994 20,456,548,331 1,523,965,681 1,523,965,681 28,660,902,877 Amount in BDT Amount in BDT 762,256 7,442,519 Great Britain Pound - - - EURO - - - REYAL 350000 7,322,744 16,185,800 8,085,000 23,628,319 20.92 Cash Reserve Requirments (CRR) and Statutory Liquidity Requirments (SLR) Cash Reserve Requirments(CRR) and Statutory Liquidity Requirments (SLR) have been calculated and maintained in accordance with Section 33 of Bank Companies Act.1991 & as per Bangladesh Bank Curcular No: MPD/03 Dated:09.04.2020 Cash Reserve Requirments (CRR) Required Reserve(DBO 4.00 % & OBO 2% of Average Demand and Time Liabilities) 15,257,506,000 13,637,960,000 Actual reserve held with Bangladesh Bank 18,947,749,000 26,864,746,000 Surplus/(Deficit) 3,690,243,000 13,226,786,000 Statutory Liqudity Requirments (SLR) Required Reserve( 5.50 % of Average Demand and Time Liabilities) 21,309,191,000 19,106,483,000 Actual reseve held 27,910,362,000 23,548,000,000 Surplus/(Deficit) 6,601,171,000 4,441,517,000 Cash in hand Al-Arafah Islami Bank Ltd. 3,217,933,106 2,879,721,830 AIBL Capital Market Services Ltd. 5,602 6,982 AIBL Capital Management Ltd. 14,114,828 18,478,730 Millennium information solution Ltd. 3,232,053,536 2,898,207,542 Balance with other Banks and Financial Institutions a) In Bangladesh: Al-Wadia Current Accounts Dutch Bangla Bank Ltd. 235,458 1,276,148 National Bank Ltd. 2,176,505 3,442,195 Agrani Bank 20,576,000 18,649,430 22,987,962 23,367,772 Short Term Deposits Dhaka Bank Ltd. 52,198,332 271,243,614 Prime Bank Ltd. 5,067,421 4,936,282 Annual Report 2021 123
  126. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 2021 2020 Taka Taka EXIM Bank Ltd. ICB Islamic Bank Ltd. Jamuna Bank Ltd. The City Bank Ltd. Southeast Bank Ltd. AB Bank Ltd. Bank Alfalh Ltd. 74,906,530 111,881,874 162,068,844 162,134,189 44,611,746 58,702,131 15,496,381 12,224,062 37,673,703 1,619,083,538 6,849 4,386,784 425,246,611 919,604,341 3,110,665,425 8,264,657,859 3,133,653,387 8,288,025,632 * (AIBL is maintaining constant communication with ICB Islamic Bank and Bangladesh Bank for Recovering their money from ICB Islamic bank) b. Outside Bangladesh (NOSTRO A/C) Name of Bank CITIBANK N.A.,NEW YORK, USA COMMERZBANK AG, FRANKFURT, USD HABIB AMERICAN BANK, NEW YORK, USA ICICI BANK LIMITED,HONGKONG MASHREQ BANK PSC,NEW YORK STANDARD CHARTERD BANK LTD,NEW YORK AB BANK LTD., MUMBAI AXIS BANK LTD. MUMBAI BANK OF BHUTAN, BHUTAN HABIB METROPOLITAN BANK LTD, KARACHI ICICI BANK LIMITED, MUMBAI KUMARI BANK LTD, NEPAL MASHREQ BANK PSC,MUMBAI PUNJAB NATIONAL BANK, KOLKATA SONALI BANK LTD. KOLKATA STANDARD CHARTERD BANK LTD,KARACHI STANDARD CHARTERD BANK LTD,MUMBAI STANDARD CHARTERD BANK, KOLKATA (AMEX) COMMERZBANK AG, FRANKFURT, EURO INTESA SANPAOLO SPA, ITALY STANDARD CHARTERD BANK LTD,FRANKFURT PUNJAB NATIONAL BANK, KOLKATA, ACUE COMMERZBANK AG, FRANKFURT, GBP STANDARD CHARTERD BANK LTD,LONDON AL RAJI BANK, RIYADH, KSA EMIRATES NBD, RIYADH, KSA RIYAD BANK, K.S.A. STANDARD CHARTERD BANK LTD,JAPAN ABU DHABI COMMERCIAL BANK, UAE SHANGHAI PUDONG DEVELOPMENT BANK HABIB BANK AG, ZURICH Total Placement to OBU-USD Grand total 124 Annual Report 2021 Currency USD USD USD USD USD USD ACUD ACUD ACUD ACUD ACUD ACUD ACUD ACUD ACUD ACUD ACUD ACUD EUR EUR EUR ACUE GBP GBP SAR SAR SAR JPY AED CNY CHF Amount in FC (17,03,903) 2,56,484 5,16,791 3,99,041 8,95,933 37,80,025 4,47,742 3,78,644 1,38,887 4,19,311 12,95,451 97,725 3,43,100 1,54,819 1,42,087 2,80,454 (6,74,996) 1,55,899 20,911 2,88,135 9,87,230 7,812 49,550 (9,298) 5,57,086 5,47,242 2,11,620 3,04,871 36,479 2,93,433 64,344 Rate 81.80 81.80 81.80 81.80 81.80 81.80 81.80 81.80 81.80 81.80 81.80 81.80 81.80 81.80 81.80 81.80 81.80 81.80 93.56 93.56 93.56 93.56 113.89 113.89 22.84 22.84 22.84 0.75 23.36 13.46 22.84 Amount in BDT (14,68,36,571) 2,20,06,301 4,41,24,251 3,26,41,103 7,29,00,023 32,11,13,043 3,84,16,251 3,24,75,419 1,19,16,532 3,59,76,868 10,97,26,793 83,84,805 2,94,38,122 1,32,82,501 1,21,91,028 2,40,62,953 (5,77,83,990) 1,33,76,118 19,56,456 2,79,48,192 9,59,44,205 7,57,764 57,10,469 10,58,939 1,27,24,401 1,24,99,550 48,33,612 2,27,769 8,52,152 39,49,930 59,97,565 79,18,72,554 8,11,56,10,131 8,90,74,82,685 12,04,11,36,072 Amount in BDT 14,72,09,072 10,51,15,091 9,47,71,267 4,85,04,690 14,84,17,846 68,69,553 5,24,23,873 5,07,01,575 1,44,16,835 1,44,80,822 5,56,80,851 1,16,60,055 3,82,88,046 1,86,04,759 7,54,34,605 2,53,89,421 9,16,40,935 1,32,20,281 2,06,46,771 90,56,872 31,55,14,199 8,13,926 5,18,60,773 1,65,02,478 55,87,121 13,10,835 4,50,350 12,87,106 5,98,842 1,43,64,58,850 6,83,73,54,045 8,27,38,12,895 16,56,18,38,527
  127. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 6.A. Consolidated Balance with other Banks and financial institutions a) In Bangladesh: Al-Arafah Islami Bank Ltd. [ Note-6.a ] AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. Less: Inter-Company Adjustment b. Outside Bangladesh 6.A.i 7. Maturity - wise Groupings ( Inside & Outside Bangladesh ) Payable on Demand Up to 1 ( one ) month Over 1 ( one ) Month but not more than 3 ( three ) Months Over 3 ( three ) Months but not more than 1 ( one ) year Over 1 year but not more than 5 years Over 5 years Placement with Banks & Other Financial institutions The City Bank Exim bank ltd. Premier bank ltd. Southeast Bank Limited Islamic Finance and Investment Ltd Union bank ltd Mercantile Bank Ltd Social Islami Bank Ltd. Dhaka Bank NRB Commercial Bank Ltd Standard Bank Limited Midland bank ltd. Agrani Bank F.c. placement local (usd) 7.A Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. 8. Investment in Shares & Securities Bangladesh Govt. Islami Bond Fund ( 8.a ) Bangladesh government investment sukuk (BGIS) (8.a) Investment In Islamic Refinance Fund (8.a) Investment in Share ( 8.b ) 2021 2020 Taka Taka 3,133,653,387 254,078,915 3,387,732,302 (254,078,915) 3,133,653,387 8,907,482,685 12,041,136,072 8,288,025,632 186,642,621 100,000,000 8,574,668,253 (286,642,621) 8,288,025,632 8,273,812,895 16,561,838,527 3,528,100,000 145,900,000 1,100,000,000 7,267,136,072 12,041,136,072 16,561,838,527 16,561,838,527 6,300,000,000 2,000,000,000 300,000,000 1,200,000,000 1,000,000,000 300,000,000 2,840,000,000 1,000,000,000 250,000,000 2,500,000,000 600,000,000 3,550,000,000 21,840,000,000 2,145,000,000 23,985,000,000 23,985,000,000 23,985,000,000 450,000,000 6,700,000,000 2,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000 12,150,000,000 2,120,010,000 14,270,010,000 14,270,010,000 14,270,010,000 13,500,000,000 9,504,940,000 500,000,000 5,472,068,391 28,977,008,391 17,500,000,000 1,583,830,000 500,000,000 1,143,979,346 20,727,809,346 Annual Report 2021 125
  128. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 8.a 2020 Taka Taka Investments in Share & Securities Government Securities 23,504,940,000 19,583,830,000 Bangladesh Govt. Islami Bond Fund 13,500,000,000 17,500,000,000 9,504,940,000 1,583,830,000 500,000,000 500,000,000 931,991,763 503,902,718 Bangladesh government investment sukuk (BGIS) (8.a) Investment In Islamic Refinance Fund 8.b 2021 In shares (quoted and unquoted) Quoted Private (8.b.i) Unquoted Private (8.b.ii) 8.b.i 4,540,076,628 640,076,628 5,472,068,391 1,143,979,346 Dafodilco 337,651,147 186,423,800 padmaoil 17,742,023 22,496,986 Primetex 25,658,888 20,878,645 - 5,416,784 Book value of share as on 31 December 2021 as follows Quoted shares in (Schedule of Shares and Securities are given Annexure B) Doreenpw Jamunaoil primelife 8.b.ii 8,071,989 Bbscables 5,063,220 - Sinobangla 31,756,505 31,756,505 Premierce 27,720,667 13,105,238 ITC - 26,505,188 YPL - 4,567,429 renata - 5,767,991 acmelab - 6,165,247 ibnsina 9,042,717 2,746,916 Lindbd 1,192,739 - BEXGSUKUK 100,000,000 - AIBl 1st Islamic Mutual Fund 170,000,000 170,000,000 931,991,763 503,902,718 Swift Share 7,453,233 7,453,233 Central Depository Bangladesh Limited 3,138,890 3,138,890 - 100,000,000 Unquoted shares in Inv in SIBL bank mudaraba sub-or Inv in union bank mudaraba sub-or 500,000,000 500,000,000 Investment in sibl perpetual bond 1,000,000,000 - Investment in ibbl second mudara 2,000,000,000 - Investment in sbl perpetual bond 1,000,000,000 - Investment in Millennium Information Solution Limited 126 8,855,453 197,308,404 Annual Report 2021 29,484,505 29,484,505 4,540,076,628 640,076,628 5,472,068,391 1,143,979,346
  129. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 8.A 8.A.i 8.A 9. Investment in Shares & Securities Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. 8.A.ii AIBL Capital Management Ltd. 8.A.ii Millennium information solution Ltd. 8.A.ii Investment in Shares & Securities Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. Maturity grouping of investments Payable on Demand Not more than 3 months Over 3 ( three ) months but not more than 1 ( one ) year Over 1 year but not more than 5 years More than 5 years Investments a) General Investment i. in Bangladesh Murabaha Investment Bai-Muazzal Investment Hire Purchase Investment Quard Other Investment ii. Out side Bangladesh Less: Unearned profit on Investment b) Bill Purchased & Discounted Payable in Bangladesh Payable out side Bangladesh c) Maturity grouping of Investment Including bills purchased and discounted Payable on Demand Up to 1 ( one ) month Over 1 ( one ) month but not more than 3 ( three ) months Over 3 ( three ) months but not more than 1 ( one ) year Over 1 year but not more than 5 years Over 5 years 2021 2020 Taka Taka 28,977,008,391 662,120,683 517,010,792 30,156,139,866 20,727,809,346 662,120,683 173,743,496 21,563,673,525 5,472,068,391 662,120,683 517,010,792 6,651,199,866 1,143,979,346 662,120,683 173,743,496 1,979,843,525 972,100,000 29,184,039,866 30,156,139,866 165,100,000 835,864,179 20,562,709,346 21,563,673,525 86,322,076,719 129,337,794,964 107,165,266,820 2,200,822,788 5,857,967,923 330,883,929,214 330,883,929,214 8,340,204,245 322,543,724,969 84,060,687,619 109,678,699,174 96,221,472,646 2,203,972,836 5,694,465,907 297,859,298,182 297,859,298,182 6,551,698,720 291,307,599,462 11,622,369,941 1,925,512,189 13,547,882,130 336,091,607,099 10,685,972,770 1,216,837,744 11,902,810,514 303,210,409,976 60,054,761,420 93,530,661,420 104,749,861,420 51,532,261,420 26,224,061,419 336,091,607,099 42,483,870,000 8,521,000,000 96,457,600,000 38,378,000,000 117,369,939,976 303,210,409,976 Annual Report 2021 127
  130. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 d) An analysis to disclose following Significant concentration : i. Investment to Directors and others ii. Investment to Managing Director and Cheif Executive iii. Investment to customer (No. of clients with amount of outstanding and classified loan to whom loans and Investment sanctioned more than 10% of total capital of the Bank) iv. Investments to customers for more than 10% of Bank’s Total Capital Number of clients Amount of outstanding Investment Amount of Classified Investment Name of Clients 128 01 Meghna Group 02 Funded Non-Funded 2021 2020 Taka Taka 44,115,238 149,637,600,000 44,115,238 132,086,200,000 43 149,637,600,000 - 38 132,086,200,000 - Figure in crore Figure in crore 0.52 522.20 522.72 109.03 City Group 159.59 430.82 590.41 621.10 03 Thermax Group 423.24 68.81 492.05 500.98 04 Majumder Traders 309.39 72.97 382.36 233.40 05 T K Group 110.27 57.07 167.34 149.61 06 Abul Khair Steel Industries Ltd. 99.38 392.10 491.48 451.23 07 AIBL Capital Market Services Ltd. 428.01 100.00 528.01 405.37 08 Noapara Traders 09 Techno Electricals ltd - 273.00 273.00 331.54 61.91 124.96 186.87 203.47 10 Badsha Group 229.77 260.89 490.66 457.99 11 Aman Tex Limited 259.59 153.51 413.10 556.73 12 Masihata Sweaters Ltd. 367.37 193.56 560.93 450.62 13 Tafrid Cotton Mills Ltd. 460.90 77.82 538.72 486.89 14 The Rani Concast, Rani Re-Rolling & RRM Electron 240.66 86.03 326.69 310.28 15 Sheikh Brother & its Sister Concern 263.89 650.55 914.44 252.18 16 Runner Motors Ltd. & Promita 207.78 10.03 217.81 390.25 17 Bangladesh Steel Re-rolling Mills - 311.85 311.85 211.34 18 NICE Denim Mills Ltd. 458.62 197.14 655.76 622.87 19 Younus Paper Mills Ltd & its sister concern 228.80 33.66 262.46 252.44 20 Momtex 375.48 45.03 420.51 376.53 21 Kader Compact Spinning Mills 320.59 - 320.59 308.95 22 Kabir Steel Re-rolling Mills 367.68 203.82 571.50 416.91 23 IBN Sina 257.85 87.61 345.46 329.50 24 Ayman Textile & Hosiery Ltd. 413.27 0.77 414.04 403.71 25 Aman Group - - - - 26 Nitol Motors Ltd. 355.29 1.28 356.57 297.69 27 Robiul Islam, M/S. Rahman Traders & M/S. Zobari Traders 342.10 - 342.10 271.85 28 Creative paper Mills 226.54 128.19 354.73 321.95 Annual Report 2021
  131. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 29 Biswas Poultry & Fish Feeds Ltd. 30 PRAN-RFL Group 31 Delta Group 32 Bandar Steel Industries Ltd 33 34 35 Smile Food Products Ltd 36 H.R. Re-Rolling Mills 37 Healthcare pharmaceuticals Ltd. 2021 2020 Taka Taka 278.09 141.89 419.98 716.39 62.33 224.17 286.50 290.28 383.51 0.72 384.23 356.89 - - - 328.12 Mahmud Fabrics And Finishing Ltd. 654.93 124.84 779.77 495.14 S Suhi industrial Park Ltd 647.53 198.83 846.36 609.33 - 149.96 149.96 420.04 55.67 137.55 193.22 36.90 97.13 27.34 124.47 81.46 Max Infrastructure Ltd. 191.16 135.95 327.11 - Nassa Taipei Denim & Textile Ltd 433.95 53.61 487.56 - Bashundhara Group 396.08 510.93 907.01 - - 386.27 386.27 - Formula One MIR Akter Buildstone Construction Co. Ltd v) Industry/Sector wise Investments Agriculture Industry Constraction Power,Gas,Water & Sanatary Services Transport & communication Trade Service Storage Professional & Miscellaneous Service Less: Unearned profit on Investment vi) Geographical Location -wise Investment Urban: Dhaka Region Chittagong Region Sylhet Region Rajshahi Region Mymensing Khulna Region Rangpur Region Barisal Region Rural: Dhaka Region Chittagong Region Sylhet Region Mymensing 207.54 79.11 286.65 - - 251.53 251.53 - 10,376.41 6,906.37 17,282.78 13,058.96 5,663,500,000 178,629,900,000 24,653,900,000 2,807,700,000 11,341,300,000 115,621,408,696 1,753,800,000 3,960,302,648 344,431,811,344 8,340,204,245 336,091,607,099 5,295,100,000 135,956,500,000 33,552,500,000 509,000,000 25,252,500,000 106,382,508,696 2,575,100,000 238,900,000 309,762,108,696 6,551,698,720 303,210,409,976 325,933,829,009 260,538,764,572 38,886,917,343 1,062,490,925 6,711,620,886 3,906,143,427 7,853,894,878 3,594,003,561 3,379,993,417 18,497,982,335 1,155,605,025 6,955,001,100 662,255,000 2,755,021,200 279,733,284,696 229,158,499,696 30,868,768,000 701,366,000 6,756,778,000 1,709,600,000 1,604,789,000 6,790,241,000 2,143,243,000 30,028,824,000 12,655,339,000 6,962,517,000 612,328,000 2,675,891,000 Annual Report 2021 129
  132. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 Rajshahi Region Khulna Region Rangpur Region Barisal Region Less: Unearned profit on Investment e) Classification of Investment including bills purchased and discounted Unclassified Standard including (Staff investment ) Special Mention Accounts (SMA) Classified Sub Standard Doubtful Bad / Loss Less: Unearned profit on Investment f) Required Provision on Investment & Off -balance sheet exposures Unclassified General provision on unclassified Investment General provision on small enterprise Investment General provision on Housing financing Investment General provision on consumer financing Investment General provision on Micro Investment General provision on special mention Investment General provision on BHS/MHS/SDS Classified Specific provision on substandard Investment Specific provision on doubtful Investment Specific provision on bad/loss Investment Unclassified General provision on Off-balance sheet g) Provision made on Investment & Off-balance sheet exposures Unclassified General provision on unclassified Investment General provision on small enterprise Investment General provision on Housing financing Investment General provision on consumer financing Investment General provision on Micro Investment General provision on special mention Investment General provision on BHS/MHS/SDS 130 Annual Report 2021 2021 2020 Taka Taka 319,450,000 3,560,050,000 2,245,000,000 845,600,010 344,431,811,344 8,340,204,245 336,091,607,099 309,873,000 3,698,801,000 2,177,094,000 936,981,000 309,762,108,696 6,551,698,720 303,210,409,976 327,864,971,344 322,876,507,344 4,988,464,000 16,566,840,000 4,694,050,000 424,893,000 11,447,897,000 344,431,811,344 8,340,204,245 336,091,607,099 297,992,531,696 292,884,970,696 5,107,561,000 11,769,577,000 1,699,551,000 1,051,252,000 9,018,774,000 309,762,108,696 6,551,698,720 303,210,409,976 2,597,152,001 243,546,000 31,668,000 17,215,000 35,533,000 24,395,000 134,591,000 3,084,100,001 2,391,238,001 220,660,000 27,071,000 6,378,000 26,456,000 25,475,000 89,822,000 2,787,100,001 560,609,000 36,471,000 7,969,703,099 8,566,783,099 1,093,400,000 12,744,283,100 294,903,000 85,100,000 6,264,354,000 6,644,357,000 935,500,001 10,366,957,001 2,597,152,001 243,546,000 31,668,000 17,215,000 35,533,000 24,395,000 134,591,000 3,084,100,001 2,391,238,001 220,660,000 27,071,000 6,378,000 26,456,000 25,475,000 89,822,000 2,787,100,001
  133. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 2021 2020 Taka Taka Classified Specific provision on substandard Investment 560,609,000 294,903,000 Specific provision on doubtful Investment 36,471,000 85,100,000 Specific provision on bad/loss Investment 7,969,703,099 6,264,354,000 Unclassified 8,566,783,099 6,644,357,000 General provision on Off-balance sheet 1,093,400,000 935,500,001 12,744,283,100 10,366,957,001 - - 248,117,618,428 213,929,647,146 96,314,192,910 95,832,461,579 or more perties in addition to the personal guarantee of the debtors; - - iv) Investment adversely classified; provision not maintained thereagainst; - - 65,053,016 39,033,331 - - - - 11,447,897,000 9,018,774,000 i) Decrease/Increase in provision ( Specific ) 1,922,426,099 622,334,000 ii) Amount of Investment written off; 7,463,593,749 7,328,753,936 57,842,746 56,952,186 - - 7,969,703,099 6,264,354,000 - - Provision Excess/(Shortfall) h) Particulars of Investments i) Investment considered good in respect of which of the bank company is fully secured; ii) Investment considered good against which the banking company holds no security other then the debtors personal guarantee. iii) Investment considered good secured by the personal undertaking of one v) Investment due by directors or officers of the Banking company or any of these either separately or Jointly with any other persons; vi) Investment due from companies or firms in which the directors of the banking company have interests as directors, partners or managing or in the case of private companies as members; vii) Maximum total amount of Investments including temporary Investments made at any time during the year to directors or managers or officers of the banking companies or any of them either agents severally or jointly with any other persons; viii) Maximum total amount of Investment including temporary Investment granted during the year to the companies or firms in which the directors of the banking company have interests as directors, partners or managing agents or in the case of private companies as members; ix) Due from banking companies; x) Amount of Clssified Investment on which profit has not been charge, are mentioned as follows; a) An amount of Bad Investment on which profit has not been charged iii) Amount realised against Investment previously written off; b) Amount of provision kept against Investment classified as “bad/loss” on the date of preparing the balance sheet ; c) Profit creditable to the profit suspense/Compensation A/c; Annual Report 2021 131
  134. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 9.A. xi) i) Cumulative amount of the written of Investment; ii) Amount written off during the current year; iii) The amount of written off Investment for which lawsuit has been filed; Investments Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. Less : Inter company Adjustment 9.A.i 10. Maturity grouping of Investment Including bills purchased and discounted Payable on Demand Up to 1 ( one ) month Over 1 ( one ) month but not more than 3 ( three ) months Over 3 ( three ) months but not more than 1 ( one ) year Over 1 year but not more than 5 years Over 5 years Fixed Assets Tangiable Assets Land Building Furniture (Wood) Furniture (Steel) Computer Computer (Accessories) Motor Car Machine equipment & appliance Online Hardware Interior Decoration Right of use Assets as per IFRS-16* Books & Library Intangiable Assets Online Software Total Less Accumulated Depreciation & Amortization 10.A. 132 Schedule of Fixed Assets are given in Annexure - A. Fixed Assets Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. Annual Report 2021 2021 2020 Taka Taka 8,833,746,975.81 190,860,995 798,433,000 8,627,064,415 121,316,489 7,328,753,936 336,091,607,099 784,382,481 14,726,383 336,890,715,963 336,890,715,963 303,210,409,976 8,805,970,320 3,384,154 312,019,764,450 (3,399,100,000) 308,620,664,450 60,054,761,420 93,530,661,420 105,548,970,284 51,532,261,420 26,224,061,419 336,890,715,963 42,483,870,000 8,521,000,000 96,457,600,000 38,378,000,000 122,780,194,450 308,620,664,450 1,519,150,690 1,221,316,331 1,110,481,309 198,052,878 339,509,129 139,586,740 218,854,314 1,336,114,375 945,058,999 179,000,650 1,636,000,000 9,279,367 8,852,404,782 1,519,150,690 1,221,316,331 992,423,925 173,781,745 317,880,563 124,487,860 206,274,578 1,236,705,711 931,105,123 177,608,111 1,623,800,000 9,234,557 8,533,769,194 514,696,836 9,367,101,618 3,904,031,910 5,463,069,708 440,632,105 8,974,401,299 3,147,525,550 5,826,875,749 5,463,069,708 6,690,525 512,402 5,470,272,635 5,826,875,749 6,879,749 124,754 5,833,880,252
  135. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 11. 2020 Taka Taka Other Assets Master card Settlement Account Suspense Account Adjustment a/c debit balance Stock of Stationery Stamp in hand Advance Deposit Advance Rent Stock of atm card P.r (bb) against stimulus fund Investment for Subsidiary Companies Advance Income Tax & TDS [ Note 11.3 ] Protested Bills Prepaid Expenditure Balance with cmsl for portfolio account 167,495,746 126,991,506 47,190,764 60,233,028 - - 105,202,072 82,703,538 9,469,036 7,780,094 5,108,992 - 391,982,212 365,452,182 1,050,000 1,050,000 97,374,511 - 2,910,000,000 2,910,000,000 16,679,938,718 14,617,955,826 18,539,796 16,146,242 2,255,786 1,799,998 1,433,093,999 1,395,696,176 Parking for overdue claims (ibw) 135,951,643 - Accrued Income 994,244,364 1,143,667,847 8,420,248 - 1,211 - 100,000,050 - Clearing adjustment 76,829,300 140,701,767 Dividend Receivable 5,979,475 - 21,450,372,206 13,101,216,877 44,640,500,129 33,971,395,081 21,450,372,206 13,101,216,877 23,190,127,923 20,870,178,204 Investment in subsidiary 29,484,505 29,484,505 Less: Sale of Investment - - 29,484,505 29,484,505 Scb mc settlement a/c (local) Stock of ATM Card Master card Due from off-shore Banking unit Less: Balance with OBU for elimination investment with OBU *** 2021 Investment in Millennium Information Solution Ltd. Millennium Information Solution Limited was a subsidiary of Al-Arafah Islami Bank Limited. This year Al-Arafah Islami Bank sold out it’s 41% holdings shares to different parties. As a result the Millennium Information Solution Limited is not a subsidiary of Al-Arafah Islami Bank Limited this year. Hence, consolidated financial statements did not consider the financial statement of Millennium Information Solution Limited. Al-Arafah Islami Bank also reduce it’s investment of the said subsidiary accordingly. So this investment in subsidiary has been reclassified as investment is share. 11.1 Classification of other Assets under the following catagories i) Investment in shares of subsidiary companies; In Bangladesh 2,910,000,000 2,910,000,000 - - ii) Stationery, Stamps, Printing materials etc. 114,672,319 90,483,632 iii) Advance rent and advertisement; 391,982,212 365,452,182 iv) Profit accrued on Investment but not collected, commision & 994,244,364 1,143,667,847 brokerage receivable on shares and debenture and other income receivable Annual Report 2021 133
  136. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 2021 2020 Taka Taka v) Security deposit 5,108,992 - vi) Preliminary, formation and organization expenses, renovaiton 2,255,786 1,799,998 167,495,746 126,991,506 47,190,764 60,233,028 - - 18,539,796 16,146,242 - - 1,050,000 1,050,000 18,537,587,944 16,154,353,769 23,190,127,923 20,870,178,204 76,829,300 140,701,767 Remittance adjustment a/c 5,979,475 - Advance Income Tax & TDS 16,679,938,718 14,617,955,826 8,420,248 - 1,433,093,999 1,395,696,176 Parking for overdue claims (ibw) 135,951,643 - Master card 100,000,050 - 18,537,587,944 16,154,353,769 14,617,955,826 12,179,684,260 1,908,417,810 2,256,760,016 153,565,082 181,511,550 - - 16,679,938,718 14,617,955,826 Al-Arafah Islami Bank Ltd. 23,190,127,923 20,870,178,204 AIBL Capital Market Services Ltd. 10,104,219,007 1,716,724,790 19,961,514 261,697,223 33,314,308,443 22,848,600,217 (2,910,000,000) (3,010,000,000) 30,404,308,443 19,838,600,217 50,875,037 50,875,037 - - vii) Master card Settlement Account viii) Suspenses account ix) DD Paid without advice x) Protested Bills xi) Dividend Receivable xii) Stock of atm card xiii) Others xiii) Others Clearing adjustment Scb mc settlement a/c (local) Balance with cmsl for portfolio account 11.2 Advance Income Tax & TDS i) Begining of the year Advance tax paid during the year Tax deducted at Source during the year Settlement for previous year Advance income tax at the end of the year 11.A. Consolidated Other Assets AIBL Capital Management Ltd. Less: Inter-Company Adjustment 12. Non-Banking Assets 13. Placement from Banks & Other financial Institutions The Bank has taken finance from Islami Investment Bond (Islami Bond ) at banks’ own mudaraba savings rate (i,e.as on 31ST December 2021 MTDR provisional rate ) for 180 days tenure which introduced by the Government for islami banks and financial institutes in september 2004 through Bangladesh Bank. The borrowing has been secured by MTDR, Accepted bills and Demand Promissory Note. 134 Annual Report 2021
  137. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 Name of the Bank 2021 2020 Taka Taka Mature Date Nature Amount Amount 22-Feb-2022 D.P Note 1,00,00,00,000 1,00,00,00,000 Brorowing from Bangladesh Bank 21-Feb-2022 D.P Note 2,00,00,00,000 2,00,00,00,000 Brorowing from Bangladesh Bank 14-Mar-2022 D.P Note 2,00,00,00,000 2,00,00,00,000 Brorowing from Bangladesh Bank 23-Mar-2022 D.P Note 2,00,00,00,000 2,00,00,00,000 Brorowing from Bangladesh Bank 29-Mar-2022 2,00,00,00,000 - Brorowing from Bangladesh Bank 9,00,00,00,000 7,00,00,00,000 b. F.C. BORROWING FROM BANGLADESH BANK 18,343,210,872 15,504,318,785 - 11,200,658,264 Borrowing from b. Bank, stimulus Fund (qsf) 1,262,813,140 1,711,372,719 Borrowing from b. Bank, stimulus Fund (agri) 562,245,000 170,403,000 Borrowing from b. Bank refinance 775,829,783 799,661,178 15,742,322,948 1,622,223,623 - - 27,343,210,872 22,504,318,785 27,343,210,872 22,504,318,785 5,163,550,237 1,496,159,046 32,506,761,109 24,000,477,831 62,011,042,726 54,879,126,373 175,739,194,371 164,296,138,402 Other Mudaraba Deposits [ Note :14.i ] 68,093,138,221 66,743,970,036 Al-Wadia Current Accounts and Others Accounts etc.[ Note: 14.ii] 43,639,188,504 37,331,437,580 4,059,481,203 3,059,381,492 353,542,045,025 326,310,053,883 Mudaraba Short Term Deposit 27,878,761,286 26,533,627,259 Installment Term Deposit (Itd) 23,089,167,411 21,472,769,922 a. In Bangladesh Brorowing from Bangladesh Bank Mudaraba f.c. deposit a/c (edf from bb) Fc borrowing from b. Bank (ltff & edf) c. Out side Bangladesh 13.A Placement from Banks & Other financial Institutions Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. 14. Deposit and Other Accounts Mudaraba Savings Deposits Mudaraba Term Deposits Bills Payable 14.i. Other Mudaraba Deposits Savings Inv. Deposit (Sid) P/P Term Deposit (Ptd) Monthly Hajj Deposit (Mhd) Term Hajj Deposit (Thd) Marriage Savings & Invt. Scheme Special Pension Dep. Scheme Mudaraba Term Cash Waqf Deposi 7,402,166 4,139,247 7,434,782,237 8,061,971,632 238,875,966 232,468,349 3,548,315 3,086,982 670,217 610,238 3,773,268 - 72,970,341 70,862,881 Lakhapati Deposit Scheme (Lds) 111,760,029 181,909,800 Millionaire Dep. Scheme (Mmds) 3,111,638,016 3,374,519,941 Annual Report 2021 135
  138. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 Kotipoti Deposit Scheme (Mkds) Double Benefit Dep. Scheme (Dbds) Taka 2,240,940,296 2,159,841,416 1,312,742,366 3,095,763,445 179,705,862 239,656,558 68,093,138,221 66,743,970,036 Al-wadeeah Current Deposits 26,253,187,927 18,914,518,753 Sundry Deposit 12,909,524,574 11,804,905,539 2,934,255,132 3,407,206,402 Al-wadeeah Current Accounts and Other Accounts Profit Payable For All Deposit Ac F.C Held against EDF 167,243,984 185,135,669 F.C Deposit Account : 1,374,976,887 3,019,671,217 43,639,188,504 37,331,437,580 62,011,042,726 54,879,126,373 175,485,115,456 164,009,495,781 Other Mudaraba Deposits 68,093,138,221 66,743,970,036 Al-Wadia Current Accounts and Others Accounts etc. 43,639,188,504 37,331,437,580 4,059,481,203 3,059,381,492 353,287,966,110 326,023,411,262 8,063,000,000 13,303,500,000 46,150,966,000 39,757,253,883 135,934,172,086 133,550,120,000 iv. Over 6 ( six ) months within 1 ( one ) year 92,355,348,999 91,659,580,000 v. Over 1 ( one ) year within 5 ( five ) years 45,257,900,000 34,489,600,000 vi. Over 5 ( five ) years within 10 ( ten ) years 25,525,128,672 13,262,418,753 Consolidated Deposit and other Accounts Mudaraba Savings Deposits Mudaraba Term Deposits [ Note :14.A.ii ] Bills Payable 14.A.i Taka 742,170,944 Triple Benefit Dep. Scheme (Tbds) 14.A. 2020 2,976,971,867 Pension Dep. Scheme (Pds) 14.ii 2021 Maturity-wise Classification of Deposits i. Repayable on Demand With a residual maturity of ii. Repayable within 1 ( one ) month iii. Over 1 ( one ) month but within 6 ( six ) months vii. Unclaimed Deposits 10 (ten) years and above 14.A.ii Mudaraba Term Deposits Less: Inter-Company Adjustment 15. 938,626 326,023,411,262 175,739,194,371 164,296,138,402 (254,078,915) (286,642,621) 175,485,115,456 164,009,495,781 3,084,100,000 2,787,100,000 541,424,000 404,650,000 Provission for classified investment [ 15.2.a.i] 8,566,783,099 6,644,357,001 Provision for off balance sheet item [15.a.iii] 1,093,400,000 935,500,000 40,659,950 32,199,990 5,001,470 5,101,558 17,280,168,856 14,573,608,012 Other Liabilities Provission for unclassified investment [15.2.a.ii] 1.5% & 2 % general provision - covid-19 Provision for diminution in value of investment Provision for Outstanding expense Provision for taxation [15.1] 136 1,450,354 353,287,966,110 Annual Report 2021
  139. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 provision for Others Provident fund Adjustment a/c credit balance 2020 Taka Taka 18,747,964 18,747,964 16 98,209 3,587,475 - Clearing adjustment 256,522,409 299,931,381 Cib collection charge 24,141,583 23,036,634 74 10,903 Social security b. Fund F.c. held against bb l/c 94,973 94,973 Supervision fees (sme) 594,841 556,066 b.b borrowing Settlements 19,506,849 157,695,559 Electronic govt procurement 1,242,771 4,054,623 Profit rent suspense 368,939,189 605,761,304 1,242,589,933 1,212,529,229 Mastercard Settlement Account 44,270,101 74,513,157 1 % strat-Up fund 45,741,472 25,507,894 Compensation receivable Lease Liabilities as per IFRS-16 Leases * 15.1 2021 1,216,000,000 1,421,900,000 33,868,952,635 29,226,954,457 14,573,608,013 12,320,503,147 2,706,560,843 2,253,104,866 - - 17,280,168,856 14,573,608,013 Provision for income Tax Current tax Provision held at the begining of the year Provision made during the year Settlement for previous year Provision held at the end of the year 15.1.a Provision for Current Tax made during the year Income Tax on Business income 2,487,522,473 2,040,894,923 Capital gain 2,693,406 825,991 Cash Dividend 6,713,359 1,752,348 - - Excess Profit Tax (+) Estimated Provision Required as at December 31,2021 (i) 2,496,929,239 2,043,473,263 Balance as at January 1,2020 14,573,608,013 12,320,503,147 Tax for previous year ( - ) 14,573,608,013 12,320,503,147 Actual provision for tax held (II) 17,280,168,856 14,573,608,013 Estimated provision needs to be made (I-II) 2,706,560,843 2,253,104,866 Provision actually made during the year 2,496,929,239 2,043,473,262 Profit before tax 4,690,309,671 4,773,193,430 Add:Inadmissible expenditure 3,213,489,721 2,016,627,451 60,500,859 17,021,649 A. Computation of Taxable Profit Less: Item of income for sparate Considaration Less: Further allowable Expenditure Estimated Business income other than 82(C) - 650,887,660 771,395,159 7,192,410,872 6,001,404,073 Add: Capital Gain 2,693,406 825,991 Add:Cash dividend 6,713,359 1,752,348 7,201,817,638 6,003,982,412 Total Taxable Income Annual Report 2021 137
  140. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 15.2 2021 2020 Taka Taka Provision on Investment & Others Provision against Classified Investments (Specific) [ 15.2.a.i ] 8,566,783,099 6,644,357,001 Provision against Unclassified Investments (general) [15.2.a.ii ] 3,084,100,001 2,787,100,000 Provision against Off-balance Sheet exposures [15.2.a.iii ] 1,093,400,000 935,500,000 Provision for diminution in value of investments [15.3] 40,659,950 32,199,990 12,784,943,050 10,399,156,991 i) Provision held at the begining of the year 6,644,357,001 6,022,023,000 Fully provision debt written off (190,860,995) (121,316,489) 57,842,746 56,952,186 2,055,444,347 686,698,303 - - Provision held at the end of the year 8,566,783,099 6,644,357,001 Provision held at the beginning of the year 2,787,100,001 2,157,277,000 297,000,000 629,823,001 Total Provision Held (a) a) The movement in Specific provision on classified Investment : Recoveries of amount previously written off Specific provision for the year Provision transfered from diminution in value of investment Provision during the year Provision transfered from classified investment - - 3,084,100,001 2,787,100,001 3,084,100,001 2,787,100,001 Provision held at the beginning of the year 935,500,001 778,500,000 Provision during the year 157,900,000 157,000,001 Provision held at the end of the year iii) The movement in provision against Off-balance sheet exposures Provision held at the end of the year Total general provision on Investment 1,093,400,000 935,500,001 12,744,283,100 10,366,957,001 18,747,964 18,747,964 b) Provision for Others Provision held at the beginning of the year Provision during the year Less, Adjustment durring the year Provision held at the end of the year 15.3 Provision transfered to classified Investment - - 18,747,964 18,747,964 32,199,990 22,474,895 8,459,960 9,725,095 40,659,950 32,199,990 404,650,000 404,650,000 Transferred to 1.5 % General provision -COVID-19 (215,400,000) - Transferred to 2 % General provision -COVID-19 (189,250,000) - Provision held at the end of the year 138 18,747,964 Provision for diminution in value of invevtment in Share Provision held at the beginning of the year 15.4 18,747,964 General provision -COVID-19 : - - Transferred From 1.5 % General provision -COVID-19 215,400,000 - Transferred From 2 % General provision -COVID-19 189,250,000 - Provision during the year 2 % General provision -COVID-19 136,774,000 - 326,024,000 - Provision held at the end of the year 541,424,000 404,650,000 Annual Report 2021
  141. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 15.5 15.A. 2021 2020 Taka Taka General Reserve ( 1 % Start-Up Fund ) 25,507,894 25,507,894 Provision during the year 20,233,578 - Provision held at the end of the year 45,741,472 25,507,894 33,868,952,635 29,226,954,457 2,384,221,150 2,317,497,394 45,211,508 41,262,614 - - 36,298,385,294 31,585,714,465 Consolidated Other Liabilities Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. Millennium information solution Ltd. Less: Inter-Company Adjustment 15.I.A - (100,000,000) 36,298,385,294 31,485,714,465 2,706,560,843 2,253,104,866 42,223,340 3,927,898 2,559,233 1,408,644 2,751,343,416 2,258,441,408 40,659,950 32,199,990 AIBL Capital Market Services Ltd. - - AIBL Capital Management Ltd. - - 40,659,950 32,199,990 Opening balance 133,204,157 157,832,964 Add: Addition for the year (39,609,013) (30,700,807) Consolidated Current tax Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. 15.3.A Provision for diminution in value of investment Al-Arafah Islami Bank Ltd. 16. Deferred tax Liabilities/ (Assets) Deferred tax Liabilities on revaluation Reserve - 6,072,000 93,595,145 133,204,157 Presented after appropriate offsetting as follows: 133,204,157 157,832,964 Deferred tax Liabilities(+) (39,609,013) (30,700,807) Provision held at the end of the year Deferred tax Liabilities on revaluation Reserve - 6,072,000 93,595,143 133,204,157 93,595,145 133,204,157 - - 93,595,145 133,204,157 AIBL Mudaraba Bond 9,600,000,000 11,200,000,000 Perpetual bond 5,000,000,000 - 14,600,000,000 11,200,000,000 Deferred tax Liabilities Deferred Tax Liabilities(net) 16.A Deferred tax Liabilities/ (Assets) Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. Provision held at the end of the year 17. AIBL Mudaraba Bond Annual Report 2021 139
  142. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 18. 2021 2020 Taka Taka a) Authorised Capital The Authorized Capital of the Bank is 1,500,000,000 Ordinary Share of Tk. 10 each. 15,000,000,000 15,000,000,000 Issued for Cash 2,819,339,680 2,819,339,680 Issued for other than Cash ( Bonus Share ) 7,829,682,170 7,829,682,170 10,649,021,850 10,649,021,850 b) Issued, Subscribed and Fully Paid - up Capital c) Issued and paid up Capital of the Bank is 106,49,02,185 nos. of shares of Tk. 10 each as follows Description 2021 2020 2021 2020 No. of Shares No. of Shares Total Taka Total Taka Sponsors / Promoters 445,921,227 445,921,227 4,459,212,270 4,459,212,270 Institution 318,138,088 233,005,304 3,181,380,880 2,330,053,040 General Public Total 300,842,870 385,975,654 3,008,428,700 3,859,756,540 1,064,902,185 1,064,902,185 10,649,021,850 10,649,021,850 d) Break-up of Shares Classification of shareholders by holding as on 31-12-2021 Range of Holding Less Number of Shareholders No. of Shares % of Shares than 50,000 18,620 52,384,493 4.92 50,001 to 100,000 169 11,890,568 1.12 100,001 to 200,000 125 17,588,588 1.65 200,001 to 300,000 34 8,577,625 0.81 300,001 to 400,000 34 11,471,171 1.08 400,001 to 500,000 24 10,676,827 1.00 500,001 to 1,000,000 33 22,181,357 2.08 1,000,001 to 10,000,000 78 210,392,974 19.76 10,000,001 to Above Total 29 19,146 719,738,582 67.59 1,06,49,02,185 100.00 e) Minimum Capital Requirement Capital Adequacy Ratio 1.Tier-I ( Core Capital ) Paid-up Capital 10,649,021,850 10,649,021,850 Statutory Reserve 10,649,021,850 10,334,627,824 Retained Earnings 1,643,126,429 1,616,113,623 Less : Regulatory Adjustment ( Goodwill and al other Intangible Assets ) (514,696,836) (440,632,105) 22,426,473,293 22,159,131,192 2.Additional Tier-I Capital Total Tier-1 Capital 5,000,000,000 - 27,426,473,293 22,159,131,192 3.Tier- II ( Supplimentary Capital ) General Provision 4,759,583,951 4,127,250,001 AIBL Mudaraba Bond 9,600,000,000 11,200,000,000 As per basel iii excess amount over maximum limit of T-2 Maximum Limit ofierr-2 Capital (considerin para 3.2 (v) including foot note no. Of Guidelines) 140 Annual Report 2021 (427,367,314) 13,932,216,636 15,327,250,001 13,932,232,685 -
  143. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 2021 2020 Taka Taka 3.Tier- III A. Total Eligible Capital ( 1+2) 41,358,689,930 37,486,381,193 B. Total Risk weighted Assets ( a+b+c) 270,110,220,245 248,708,705,958 a. Credit Risk 244,926,742,164 224,672,718,460 i. Balance sheet Exposure 236,977,560,164 212,203,213,710 ii. Off-balance sheet Exposure 7,949,182,000 12,469,504,750 b. Market Risk ( From WS-3 ) 4,370,700,000 4,278,305,436 c. Operrational Risk ( From WS-4) 20,812,778,081 19,757,682,062 C. Capital Adequqcy Ratio (CAR) ( A / B) 15.31% 15.07% D. Core Capital to RWA 10.15% 8.91% 5.16% 6.16% F. Minimum Capital Requirement (MCR) 10.00% of RWA 27,011,022,025 24,870,870,596 G. Capital surplus on risk weighted assets based ( A-F) 14,347,667,905 12,615,510,597 H. Required Capital with Conservation Buffer @ 12.50% on RWA 33,763,777,531 31,088,588,245 7,594,912,399 6,397,792,948 1,655,730,853 1,649,160,686 38,863,136 6,570,167 1,694,593,989 1,655,730,853 Opening balance beginning of the year 10,334,627,824 9,379,989,138 Add. Reserve @ 20% (on pre-tax profit) 314,394,026 954,638,686 10,649,021,850 10,334,627,824 1,084,174,318 938,446,318 - (6,072,000) E. Supplementary Capital to RWA I. Excess Over Capital with Conservation Buffer ( A-H) 18.A. Non-Controlling Interest Opening balance Add: Non-Controling Interest in Profit for the year 19. Statutory Reserve Balance at the end of the year. 20. Revaluation Reserve Asset revaluation Reserve Less. Deferred tax liabality on revalution Reserve Add. Asset revaluation Reserve 2020 0 151,800,000 1,084,174,318 1,084,174,318 157,543 152,649 1,084,331,861 1,084,326,967 1,616,113,623 1,429,843,673 (1,597,353,277) (1,384,372,840) 2,023,357,841 2,550,789,370 2,042,118,187 2,596,260,203 Less : Transfer to Statutory Reserve 314,394,026 954,638,686 Less : transfer to 1 % strat-Up fund 20,233,578 25,507,894 Total Asset revaluation Reserve FC Revaluation Reserve 21. Retained Earnings Opening balance beginning of the year Less : Cash Dividend Add: Net Profit / (loss) after tax during the year Less : Profit paid on aibl mudaraba perpetual bond 64,364,153 - 1,643,126,429 1,616,113,624 Annual Report 2021 141
  144. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 21.A. 2020 Taka Taka Consolidated Retained Earnings Al-Arafah Islami Bank Ltd. 1,732,137,218 1,531,420,060 Add: Net profit after tax during the year 2,087,580,493 2,565,236,578 Less: Cash dividend to equity holders of the bank 22. 2021 (1,597,353,277) (1,384,372,840) Less: Transfer to statutory reserve (314,394,026) (954,638,686) Less : transfer to 1 % strat-Up fund (20,233,578) (25,507,894) Less : Profit paid on aibl mudaraba perpetual bond (64,364,153) - 1,823,372,676 1,732,137,218 i. Directors - - ii. Government - - iii. Bank and other financial institution - - 13,673,407,658 10,511,211,685 13,673,407,658 10,511,211,685 Letter of Guarantee a) Claim against the bank which is not acknowledged as debt b) Money for which is the bank is contingently liable in respect of guarantees given favoring iv. Others 23. Investment Income i. Income from General Investments Murabaha 659,946,127 956,400,707 Bai-Muazzal 7,829,192,174 8,609,387,246 Hire-Purchase 7,331,125,505 7,140,486,725 Others mode income 6,509,268,620 8,190,599,917 22,329,532,426 24,896,874,595 ii. Profit received from other Islamic Bank Total ( i + ii ) 23.A. AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. Millennium information solution Ltd. Less : Inter company Adjustment 23,261,043,228 26,169,242,291 148,918,120 201,661,411 618,117 6,945,439 - - 23,410,579,465 26,377,849,141 35,433,169 (46,572,136) 23,446,012,634 26,331,277,005 1,011,254,295 941,831,308 440,700,008 625,070,485 Mudaraba Term Deposit 7,566,899,289 10,151,872,162 Mudaraba Special Deposit 2,938,461,887 2,824,683,287 Profit paid on Deposits & Borrowing Mudaraba Savings Deposit Mudaraba Short Term Deposit AIBL Mudaraba subordinate debt. Mudaraba BD. Govt. Islamic Bond fund Profit Expenses of Lease Liabilities ( as Per IFRS 16 Leases ) 142 1,272,367,696 26,169,242,291 Cosolidated Investment Income Al-Arafah Islami Bank Ltd. 24. 931,510,802 23,261,043,228 Annual Report 2021 738,784,104 539,888,191 51,674,307 1,238,807,621 86,000,000 63,400,000 12,833,773,890 16,385,553,054
  145. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 24.A. AIBL Capital Market Services Ltd. 16,385,553,054 217,663,387 - Millennium Information - - 13,037,357,829 16,603,216,441 35,433,169 (46,572,136) 13,072,790,998 16,556,644,305 Dividend income ( cash) 33,566,797 8,761,739 Gain on sale of Shares/Securities 26,934,062 8,259,910 278,590,586 662,317,180 339,091,445 679,338,829 339,091,445 679,338,829 - - Income from Investment in Share /Securities Income from Investment in Share /Securities AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. Less : Inter company Adjustment 20,463,327 2,598,799 359,554,772 681,937,628 - - 359,554,772 681,937,628 Commission 1,730,909,474 1,259,857,835 Exchange 1,272,910,003 1,240,755,448 - - 3,003,819,477 2,500,613,283 3,003,819,477 2,500,613,283 294,535,529 124,563,647 754,362 2,373,092 3,299,109,368 2,627,550,022 - - 3,299,109,368 2,627,550,022 Commission, Exchange & Brokerage Income Brokerage commision Commission, Exchange & Brokerage Income Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. Less : Inter company Adjustment 27. 12,833,773,890 - Al-Arafah Islami Bank Ltd. 26.A Taka 203,583,939 Profit received from other Islamic Bond 26. Taka AIBL Capital Management Ltd. Less : Inter company Adjustment 25.A. 2020 Profit paid on Deposits & Borrowing Al-Arafah Islami Bank Ltd. 25. 2021 Other Operating Income Procesing fee on investment Supevision fee Service charge Capital gain or loss from fixed asset Passbook sales(gsis) Application form sales(seis) Telephone/ fax charge legal expenses recovered 18,060,588 - 84,025 74,850 7,747 8,169 3,479,798 305,162 133,429 40,865 218,573,859 138,100,106 52,250 150 21,436,649 16,379,916 Annual Report 2021 143
  146. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 Printing & stationary 73,900 1,260 3,151,338 Card income 124,264,624 95,905,368 Misc.earning 98,332,549 21,182,405 535,368,779 311,960,495 535,368,779 311,960,495 Other Operating Income AIBL Capital Market Services Ltd. 56,132,730 34,015,544 AIBL Capital Management Ltd. - - Millennium information solution Ltd. - - 591,501,509 345,976,039 - - 591,501,509 345,976,039 1,663,242,302 1,694,088,275 House Rent Expenses 800,951,906 731,982,953 House Maintanence 317,926,866 292,000,108 Medical Expenses 281,866,696 258,298,752 Bonus 541,349,863 426,220,502 Bank’s contribution to P.F 161,546,104 148,161,310 78,706 214,448 Conveyance Expenses 100,064,622 95,497,579 LFA Allowance (Salary) 246,766,683 275,976,247 Lunch and entertainment allowance 105,944,972 96,284,980 2,003,898 106,294,540 Car Expenses 205,111,892 195,407,818 Gratuity Expenses 251,422,199 155,953,581 4,678,276,709 4,476,381,093 4,678,276,709 4,476,381,093 68,679,573 65,349,066 9,957,630 4,675,746 - - 4,756,913,912 4,546,405,905 i. Directors fees for attending Board/executive Committee/other committee meeting 3,921,800 2,723,499 ii. TA/DA/ Hotel fare & Foreign Directors 3,040,307 3,418,718 Less : Inter company Adjustment Salaries, Allowances & Contribution to P.F Basic Pay Utility Leave encashment expenses Salaries, Allowances & Contribution to P.F Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. Millennium information solution Ltd. 29. Director & Sharia Council Fees & Expenses iii. Others 144 Taka 36,738,266 Al-Arafah Islami Bank Ltd. 28.A. Taka 476,520 Account maintenance fee 28. 2020 45,496,826 P & t charge recovered 27.A. 2021 Annual Report 2021 - - 6,962,107 6,142,217
  147. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 29.A. Taka Taka 6,962,107 6,142,217 AIBL Capital Market Services Ltd. - - AIBL Capital Management Ltd. - - Millennium information solution Ltd. - - 6,962,107 6,142,217 246,770 298,376 ii. TA/DA/ Hotel fare & Foreign Directors - - iii. Others - - 246,770 298,376 Transfer to depreciation and profit expenses under IFRS-16* 144,248,868 155,320,787 Electricity Bill 110,020,581 102,938,980 Insurance 264,521,259 221,300,806 518,790,708 479,560,573 518,790,708 479,560,573 20,674,182 19,742,876 AIBL Capital Management Ltd. - - Millennium information solution Ltd. - - 539,464,890 499,303,449 - - 15,413,217 13,455,317 - 75 3,101,615 3,444,999 - - Telephone (Mobile) 1,363,239 6,295,445 SWIFT Charge 5,775,809 3,979,418 452,182 297,670 40,948,201 40,520,560 67,054,263 67,993,484 Sharia Supervisory Committee’s Fees & Expenses i. Sharia fees for attending meeting 31. 2020 Director & Sharia Council Fees & Expenses Al-Arafah Islami Bank Ltd. 30. 2021 Rent,Taxes,Insurance & Electricity Bill Rent Office 31.A. Rent,Taxes,Insurance & Electricity Bill Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. 32. Postage,Telegram,Telephone & Stamp Stamp and Catridge paper Postage Fax Charges Telephone (Office) Telephone (Residence) Internet Charges Online Charge 32.A. - Postage,Telegram,Telephone & Stamp Al-Arafah Islami Bank Ltd. 67,054,263 67,993,484 AIBL Capital Market Services Ltd. 89,706 317,218 AIBL Capital Management Ltd. 87,431 37,730 67,231,400 68,348,432 Annual Report 2021 145
  148. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 33. 2021 2020 Taka Taka Depreciation Repairs to the Bank’s property Repairs to the Bank’s property R.R. Furniture & Fixture (Wooden) 1,758,545 1,668,371 R.R. Furniture & Fixture (Steel) 1,829,961 1,415,162 R.R. Computer 1,517,523 1,306,037 Maint. of Motor Car and other Vahicle 809,384 842,577 R.R. Machine equipment & appliances 32,845,059 35,954,599 183,868 64,220 Maintenance of Land & Building Maintenance of Rented Premises - - 737,533 795,944 1,964,421 983,812 Software Maintenance Fee 78,229,272 47,053,580 Hardware Maintenance Fee 1,069,904 1,834,440 120,945,470 91,918,742 Depr. Furniture (Wood) 96,730,246 89,493,472 Depr. Furniture (Steel) 12,449,534 11,297,083 Depr. Computer 26,861,104 26,211,176 Depr. Motor Car 20,038,911 23,533,557 143,752,896 147,499,163 R.R. Computer Accessories R.R. Others Depreciation to the Bank’s property Depr. Machine equip & Appliance Depr. Books & Library 84,699 62,791 Depr. Land & Building 30,665,928 30,665,652 Depr. Online Hardware 132,773,014 123,308,414 Depr. Online Software 69,107,402 58,082,225 Depr. Computer Accessories 15,208,404 15,702,666 Right of use (ROU) Asssets* 206,412,506 201,900,000 Depr. Interior Decoration 33.A 11,726,769 12,549,063 765,811,413 740,305,262 886,756,883 832,224,004 886,756,883 832,224,004 4,414,224 3,951,074 229,129 125,479 - - 891,400,236 836,300,557 Printing & Stationerty 36,810,220 41,198,965 Paper & Table Stationery 38,035,768 38,193,139 72,667,148 106,156,174 147,513,136 185,548,278 Depreciation Repairs to the Bank’s property Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. Millennium information solution Ltd. 34. Stationary,Printing & Advertisement Advertisement & Publicity Expenses 146 Annual Report 2021
  149. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 34.A. 35. Stationary,Printing & Advertisement Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. Other expenses Local conveyance expenses Petrolium oil lubricant motors Cng motor car Entertainment expenses Travelling expenses Bank charge Wages (salary-casual staff) Security guard service Subscription Leveries & uniforms Petrolium oil & lubricants Donations Wasa charge Gas charge Excise duty News paper journal & periodical Evining banking expenses Upkeep branches premises Washing charge Direct expenses on investment Computer Accessories Photo Copy Machine Accessories Business development Closing expenses Holding tax of own premises Capital loss from sale of fixed ass Office expenses (Various Purchase) Registration expenses Remittence expense through agent Agm/egm Crocarige Creditrating charge Tax token expenditure Misc. Expenses Training expenses Card expense It allowance Saturday working allowance (Overtime) Charge expenses Risk expenses Account opening commision throu Data info service charge Electronics & fittings item Honorarium 2021 2020 Taka Taka 147,513,137 1,401,253 160,734 149,075,124 185,548,278 737,312 37,921 186,323,511 11,702,975 15,051,989 2,789,043 26,656,869 17,875,884 14,910,956 57,639,381 143,101,713 16,613,973 9,608,893 249,500 568,432 7,459,488 1,684,448 48,857,727 1,429,439 862,392 2,787,527 2,519,125 761,233 13,097,023 21,931,850 1,790,880 7,776,512 282,466 15,066,095 144,282 633,302 680,765 967,500 633,857 2,118,347 3,572,674 129,933,462 6,008,645 4,504,134 3,499,133 2,254,500 11,548,500 2,924,436 3,009,126 3,128,510 618,636,986 10,501,672 12,065,249 2,122,200 21,576,260 16,156,750 12,945,186 54,948,195 133,168,957 14,266,550 312,200 8,413,110 404,035 6,259,411 1,389,486 82,000 2,728,127 824,425 3,861,063 2,942,511 9,928,681 1,476,921 22,028,761 926,280 1,185,200 140,618 27,041,979 20,369,472 632,792 394,774 806,250 980,503 2,356,619 5,008,905 101,621,778 5,299,377 4,974,789 4,203,500 2,089,100 6,904,900 1,690,240 3,087,555 1,247,600 529,363,979 Annual Report 2021 147
  150. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 35.A. AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. Millennium information solution Ltd. 59,993,316 31,832,421 3,835,481 956,455 2,055,444,347 686,698,303 On Un-classified Investment as per Bangladesh Bank Circular 297,000,000 1,034,473,001 1% General provision -COVID-19 136,774,000 - On Off-balance sheet as per Bangladesh Bank Circular 157,900,000 157,000,001 2,647,118,347 1,878,171,305 2,647,118,347 1,878,171,305 - - Provision against Investments & Off-Balance sheet exposures Provision against Investments & Off-Balance sheet exposures - - 2,647,118,347 1,878,171,305 6,962,107 6,142,217 246,770 298,376 Paid for other operating activities Directors fees & expenses Shariah Supervisory Committee’s fees & expenses Rent, taxes, insurance and lighting etc. 518,790,708 479,560,573 Postage, telegram, telephone and stamp etc. 67,054,263 67,993,484 Legal charges 13,422,248 15,988,510 Auditors’ fee 1,583,250 1,667,500 Repairs to the bank’s properties 120,945,470 91,918,742 Other expenses 618,636,986 529,363,979 (1,347,641,803) (1,192,933,381) (1,347,641,802) (1,192,933,381) Paid for other operating Activities Al-Arafah Islami Bank Ltd. Inter company Adjustment (84,743,334) (53,961,113) (1,432,385,136) (1,246,894,494) 40,504,240 (20,027,608) Increase/Decrease of other assets (item-wise) Master card Settlement Account Suspense Account Adjustment a/c debit balance Stock of Stationery Stamp in hand Advance Deposit Advance Rent Stock of atm card P.r (bb) against stimulus fund 148 529,363,979 - AIBL Capital Management Ltd. 38. 618,636,986 562,152,855 AIBL Capital Market Services Ltd. 37.A. Taka - Al-Arafah Islami Bank Ltd. 37. Taka 682,465,783 On Classified Investment as per Bangladesh Bank Circular 36.A. 2020 Consolidated Other expenses Al-Arafah Islami Bank Ltd. 36. 2021 Annual Report 2021 (13,042,264) (11,934,296) - (17,092,695,939) 22,498,534 30,100,671 1,688,942 (195,313) 5,108,992 (4,411,842) 26,530,030 (70,989,465) - (128,867,841) 97,374,511 2,910,000,000
  151. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 Investment for Subsidiary Companies Advance Income Tax & TDS [ Note 11.3 ] Protested Bills Prepaid Expenditure Balance with cmsl for portfolio account Parking for overdue claims (ibw) Accrued Income Scb mc settlement a/c (local) Stock of ATM Card Master card Clearing adjustment Dividend Receivable Revaluation adjustment a/c 38.A 39. 39.A 40. 40.A Increase/Decrease of other assets (item-wise) Al-Arafah Islami Bank Ltd. Inter company Adjustment Increase/Decrease of Trading liabilities (item-wise) Clearing adjustment Interest income Cib collection charge Social security b. Fund Parking account F.c. held against bb l/c Credit card payment (local) Supervision fees (sme) b.b borrowing Settlements Electronic govt procurement Settlement npsb (issuing) Profit rent suspense Compensation receivable Mastercard Settlement Account Increase/Decrease of Trading liabilities (item-wise) Al-Arafah Islami Bank Ltd. Inter company Adjustment Cash and Cash Equivalent at the end of the year Cash in hand Balance with Bangladesh Bank & Sonali Bank Ltd. Balance with Other Banks Bangladesh Government Islamic Investment Bond Cash and Cash Equivalent at the end of the year Al-Arafah Islami Bank Ltd. AIBL Capital Market Services Ltd. AIBL Capital Management Ltd. Millennium information solution Ltd. 2021 2020 Taka Taka 2,393,554 455,788 37,397,823 135,951,643 8,420,248 1,211 100,000,050 (63,872,467) 5,979,475 (407,390,310) 11,707,955,826 2,438,271,566 10,439,542 (233,928) 20,509,132 36,468,548 (70,873,608) 246,484,555 (407,390,310) (8,366,501,847) (8,773,892,156) 246,484,556 (285,288,953) (38,804,398) (43,408,972) 1,104,949 (10,829) 15,435,609 38,775 (138,188,710) (2,811,852) 56,519,683 (30,243,056) (138,075,121) 20,655,010 6,612,931 10,903 24,050 (94,239,274) (1,832,465) 417,556,616 199,364,900 60,639,754 608,890,594 (138,075,121) (422,901,632) (560,976,753) 608,890,594 464,744,603 1,073,635,198 3,217,933,106 20,456,548,331 12,041,136,072 23,504,940,000 59,220,557,508 2,879,721,830 28,660,902,877 16,561,838,527 19,583,830,000 67,686,293,234 59,220,557,508 5,602 14,114,828 59,234,677,938 67,686,293,234 6,982 18,478,730 67,704,778,946 Annual Report 2021 149
  152. NOTES TO THE FINANCIAL STATEMENTS As at and for the year ended December 31 , 2021 41. 2021 2020 Taka Taka Calculation of Earning Per Share (EPS) The earning per share of the bank has been calculated in accordance with BAS-33 under basic Earning per share method as follows: Earnings Per Share (EPS) Basic earning ( net profit after tax ) for the year 2,023,357,841 2,550,789,370 Number of ordiner shares outstanding as of the reportng date 1,064,902,185 1,064,902,185 1.90 2.40 Net profit after tax 2,087,580,493 2,565,236,578 Number of ordiner shares outstanding as of the reportng date 1,064,902,185 1,064,902,185 1.96 2.41 Net Assets Value (Consolidated) 24,205,748,237 23,800,113,859 Net Assets Value (Bank’s) 24,025,501,990 23,684,090,264 No. of Outstanding Share Earning per Share 41.A Consolidated Earnings Per Share (CEPS) Consolidated earnings per share as per share 42. 43. Net Asset Value 1,064,902,185 1,064,902,185 Net Asset Value (NAV) per Share (Consolidated) (Previous year’s figure restated) 22.73 22.35 Net Asset Value (NAV) per Share (Bank’s) (Previous year’s figure restated) 22.56 22.24 Net cash flows from operating activities (Consolidated) (9,812,019,409) 10,052,189,825 Net cash flows from operating activities (Banks) (9,866,381,969) 10,043,228,903 Net Opertating Cash Flows per share (NOCFPS); No. of outstanding share 44 1,064,902,185 1,064,902,185 Net Operating Cash Flow per share (NOCFPS) (Consolidated) (previous year’s figure restated) (9.21) 9.44 Net Operating Cash Flow per share (NOCFPS) (Bank’s ) (Previous year’s figure restated) (9.27) 9.43 7,345,887,978 6,661,089,829 765,811,413 740,305,262 (3,479,798) (305,162) Reconcilation of Operating Cash flow: Profit before provision & tax (A) Adjustment of Non-Cash Items (B): Depreciation Net loss/(gain) on sale of fixed assets Foreign Exchange gain/ loss (24,185,838) (25,963,976) Total Non-Cash Items (B) 738,145,777 714,036,124 Adjustment of accrued income /expenses (C) : (increase)/decrease of profit income receivable on investment 2,885,264,371 1,425,454,075 Increase/(decrease) of profit payable on deposits (2,781,026,435) (2,272,020,303) Increase/(decrease) of accrued expenses payable (100,088) 551,021 Total adjustment of accrued income/expenses (C) Income tax payment (D) Cash flows before changes in operating assets and liabilities (A+B+C+D) 45. 104,137,848 (846,015,207) (2,061,982,892) (2,438,271,566) 6,126,188,711 4,090,839,180 Events after the balance sheet date The Board of Directors in its 371th meeting held on 26 April, 2022 has approved the audited financial statements for the year ended 31 December 2021.The Board has also recommended 15% cash dividend for the year ended 31 December 2021 subject to approval of the shareholders at the 27th Annual General Meeting (AGM). 150 Annual Report 2021
  153. Annual Report 2021 151 Particulars Interior Decoration Right of use Aseets (ROU) 11 12 Online Software - - - 25,059,739 12,200,000 1,703,831 13,974,699 44,810 99,771,627 21,626,594 15,490,985 23,273,181 6,819,095,281 151,800,000 Decmber 31. 2020 - - 74,286,531 74,286,531 2,075,144,710 - 405,577,921 9,036,210,706 - - - - - 331,291,390 - - - - - - - Decmber 31. 2021 1,129,348,248 Addtion during the year - 118,145,924 - - Revaluation 1,129,348,248 Land 443,047,973 443,047,973 7,463,814,485 1,623,800,000 194,298,047 934,052,007 9,234,557 1,248,466,534 224,337,517 123,789,160 324,777,060 174,255,887 995,684,943 1,221,316,331 389,802,442 Balance at 1st January 2021 Sub-Total 14 C. Revaluation of Property, Plant & Equipment Sub-Total 13 B. Intangible Assets Sub-Total Books & Library Machine Equipment & Appliance 8 Online Hardware Motor Car 7 9 Computer Acessories 6 10 Furniture & Fixture (Steel) Computer Furniture & Fixture (Wood) 3 4 Building 2 5 Land 1 A. Fixed Assests SL No Cost / Revaluation - - - Balance at 1st January 2021 87,948,510 9,279,367 8,959,695 84,699 1,348,238,161 890,144,377 144,185,603 20,038,911 15,208,404 27,143,198 12,494,674 97,056,348 30,665,928 - Charge for the year 7,785,496,735 9,829,285 9,609,140 - - 9,036,210,706 9,432,179,487 1,129,348,248 1,129,348,248 - - 69,422,403 2,467,168,292 743,519,935 3,202,330,453 768,881,451 - - - 517,334,504 275,878,677 69,422,403 2,926,451,776 699,459,048 - 517,334,504 275,878,677 9,609,140 13,381,455 1,636,000,000 201,900,000 206,426,814 - 196,001,878 155,299,245 Balace at 31st December 2021 Written down value as on 31-12-21 Annexure - A.I 9,044,394 234,973 1,034,329,980 313,908,181 48,594,515 36,123,231 67,253,023 3,616,615,431 4,168,881,304 1,227,673,186 27,321,178 8,357,774 9,305,053 - - 3,202,330,453 3,961,906,851 - - 5,833,880,252 5,470,272,635 1,129,348,248 1,129,348,248 9,660 345,291,420 172,043,084 9,660 345,291,420 172,043,084 9,295,393 - 408,326,814 - 168,680,700 20,823 666,444,757 281,561,126 - - 9,046,858 188,322,738 - 103,156,914 - 280,797,218 97,591,428 101,182,739 - 473,264,099 640,566,768 1,034,659,941 - 389,802,442 - 186,656,390 - 227,712 Tranfer/ Disposal during the year Depreciation/Amortization 20,823 948,005,883 533,692,566 132,773,014 - - 9,046,858 236,917,253 177,330,685 - 139,280,145 - 348,050,241 253,654,020 85,324,466 1,113,830,867 376,207,751 1,221,316,331 155,990,462 - 389,802,442 Balance at 31 st December 2021 541,459 198,774,167 Transfer/ Disposal during the year As at a December 31, 2021 CONSOLIDATED SCHEDULE OF FIXED ASSETS
  154. 152 Annual Report 2021 Particulars 1 ,623,800,000 7,404,420,947 12 Right of use Aseets (ROU) Sub-Total 440,632,105 440,632,105 13 Online Software Sub-Total - - 24,812,592 12,200,000 1,392,539 13,974,699 44,810 99,408,664 21,626,594 15,098,880 21,628,566 1,129,348,248 8,974,401,300 6,758,510,216 151,800,000 Sub-Total Decmber 31. 2021 Decmber 31. 2020 - - 74,064,731 74,064,731 2,073,920,367 - 402,309,459 - 1,129,348,248 - - - - 328,244,728 - - 14 Land C. Revaluation of Property, Plant & Equipment - - - 177,608,111 B. Intangible Assets - - 11 Interior Decoration 9 Addtion during the year - 118,057,384 - - Revaluation 1,236,705,711 9,234,557 Machine Equipment & Appliance 8 206,274,578 931,105,123 Motor Car 7 124,487,860 Books & Library Computer Acessories 6 317,880,563 173,781,745 992,423,925 1,221,316,331 389,802,443 Balance at 1st January 2021 10 Online Hardware Furniture & Fixture (Steel) Computer Furniture & Fixture (Wood) 3 4 Building 2 5 Land 1 A. Fixed Assests SL No Cost / Revaluation - - Balance at 1st January 2021 87,837,806 9,279,367 8,946,171 84,699 1,336,114,375 878,636,782 143,752,896 20,038,911 15,208,404 26,861,104 12,449,534 96,730,246 30,665,928 - Charge for the year 7,723,056,535 9,829,285 9,609,140 - - 8,974,401,300 9,367,101,619 1,129,348,248 1,129,348,248 - - 69,107,402 2,415,578,062 740,305,262 3,147,525,551 765,811,413 - - - 514,696,836 273,539,252 69,107,402 2,873,986,299 696,704,011 - 514,696,836 273,539,252 9,609,140 11,712,461 1,636,000,000 201,900,002 206,426,814 - 179,000,650 144,316,272 Written down value as on 31-12-2021 Annexure - A 103,046,210 274,584,550 248,497 3,561,394,917 4,161,661,618 1,227,673,184 22,971,917 8,357,774 9,305,053 - - 3,147,525,550 3,904,031,911 - - 5,826,875,750 5,463,069,708 1,129,348,248 1,129,348,248 9,660 342,636,994 172,059,842 9,660 342,636,994 172,059,842 9,295,393 - 408,326,816 156,028,733 20,823 663,253,095 281,805,904 9,030,870 1,022,389,678 313,724,697 48,603,172 36,540,530 64,924,579 97,538,949 100,513,929 470,288,484 640,192,825 1,034,659,941 - 389,802,443 186,656,390 Balace at 31st December 2021 9,046,858 170,251,142 227,712 Tranfer/ Disposal during the year Depreciation/Amortization 20,823 945,058,999 530,500,904 132,773,014 - - 9,046,858 218,854,314 159,259,089 - 139,586,740 - 339,509,129 247,723,446 85,317,127 1,110,481,309 373,558,238 1,221,316,331 155,990,462 389,802,443 Balance at 31st December 2021 541,459 198,052,878 Transfer/ Disposal during the year As at a December 31, 2021 SCHEDULE OF FIXED ASSETS
  155. Annexture - B INVESTMENT IN SHARES & SECURITIES Stock at hand as on 31-12-2021 SL No. Name of Company No. of Share Amount (at cost) Market rate Market Amount 1 PRIMELIFE 2413032 197,308,404 57.50 138,749,340 2 AIBL1STIMF 17000000 170,000,000 8.50 144,500,000 3 PREMIERCEM 337734 27,720,667 65.10 21,986,483 4 SINOBANGLA 376000 31,756,505 50.00 18,800,000 5 DAFODILCOM 4988678 337,651,147 70.90 353,697,270 6 PRIMETEX 846623 25,658,888 22.00 18,625,706 7 PADMAOIL 78864 17,742,023 212.50 16,758,600 8 BBSCABLES 66162 5,063,220 55.90 3,698,456 9 LINDEBD 751 1,192,739 1579.80 1,186,430 10 JAMUNAOIL 47473 8,855,453 171.10 8,122,630 11 IBNSINA 31274 9,042,717 271.30 8,484,636 12 BEXGSUKUK 1000000 100,000,000 0.00 - 27,186,591 931,991,763 Total 734,609,552 Annual Report 2021 153
  156. DISCLOSURE / INFORMATION AS PER BANGLADESH SECURITIES AND EXCHANGE COMMISSION REQUIREMENT Ref. No.: SEC/CFD/Miscellaneous/233/2004/Part-3/475, dated 25th April 2022 (a) Fully secured Loans, advances and leases considered good in respect of Bank is in amount of 248,117,618,428/- in year ending 2021. These information is presented in note 9.h.i. (b) Loans, advances and leases considered good and secured by the personal undertaking of one or more parties in addition to the personal guarantee of the borrowers in amount 96,314,192,910/- in year ending 2021.These information is presented in note 9.h.ii. (c) Loans, advances and leases considered good against which the bank holds no security other than the debtor’s personal guarantee 96,314,192,910/- in year ending 2021. (d) Provision maintained all kind of classified investments as either sub-standard or bad as per Bangladesh Bank Circular is presented in note 9.f of Audited financial statement. Classified 16,566,840,000 11,769,577,000 Sub Standard 4,694,050,000 1,699,551,000 424,893,000 1,051,252,000 11,447,897,000 9,018,774,000 Doubtful Bad / Loss (e) List of borrowers and amount of loans, advances and leases which remained outstanding for more than one year and exceeding 5% of total equity of the bank. Provide borrower’s specifics Including managing director, directors and chairman of the board of directors of the borrowing entity’s is: SL 1 2 3 4 5 5 6 7 154 Name of the branch Name of the Brrower Name ot the Proprietor/ Pratner/ Director Group Name 1 2 3 4 Motijheel Noapara Traders Noapara Trading Noapara Trade International Shufala Trading Corporation Difa Enterprise Saifullah Gulf South Bengal Fertilizer Mills Ltd City Sugar Industries Ltd Noapara             Jatrabari City Group Chitta Majumder (Proprietor) Majumder Motijheel Majumder Traders Khatungonj ABUL KHAIR LTD. SHAFIQUL ISLAM, ABUL Abul HASHEM, ABUL KASHEM,ABU Khair SYED CHOWDHURY PRETTY Uttara Model S SUHI INDUSTRIAL PARK LTD. Rezin Ahmmad Talukder, MD Town Pretty Weashing Ltd     Pretty Composite Textaile Ltd     OXFORD Colours Ltd     Motijheel Nice Denim Mills Ltd. Md. Nurul Islam   Corporate Motijheel MAX INFRASTRUCTURE LTD. GHULAM MOHAMMED   Motijheel Shaikh Brothers Hafizur Rahman Babu   Islam Fertilizer     Fertilizer House     Nipa Enterprise     Jessor Traders     Jannat Enterprise     Annual Report 2021 Faizur Rahman Saidur Rahman Faizur Rahman Asrafunnahar Mosammat Morzina Rahman Saidur Rahman Faizur Rahman Fazlur Rahman Limit NonFunded Funded 5 6 Outstanding Amount Total Funded Non Funded Total 7=(5+6) 8 9 10=( 8+9) 0.00 1000.00 1000.00                                     325.00 602.00 927.00 47.87               273.76             430.82 321.63             590.41 314.00 340.00 500.00 470.00 814.00 810.00     72.97 392.10 382.36 491.48 279.47       437.81 482.18       226.00 761.65       663.81           198.83       197.01 846.36       633.52 159.86 0.00           451.20 600.00           611.06 600.00               135.95 650.55           327.11 794.39                    
  157. DISCLOSURE / INFORMATION AS PER BANGLADESH SECURITIES AND EXCHANGE COMMISSION REQUIREMENT Ref. No.: SEC/CFD/Miscellaneous/233/2004/Part-3/475, dated 25th April 2022 SL 8 9 Limit Outstanding Amount Name of the branch Name of the Brrower Name ot the Proprietor/ Pratner/ Director Group Name Funded NonFunded Total Funded Non Funded Total 1 2 3 4 5 6 7=(5+6) 8 9 10=( 8+9) Khatungonj CHIN HUNG FIBRES LTD. ABU TAYAB, ABUL KALAM, LAILA BILKIS BEGUM,KHALEDA BEGUM TK 307.50 258.00 565.50   57.07 167.34 CHIN HUNG COTTON MILLS LTD.                 SAMUDA CONTAINER LTD.                 T.K.GAS & GAS CYLINDER                 T.K FOOTWEAR LIMITED                 Mohammad Mahafuzul Hoque (MD),Golam Mostafa Majumdar (Diractor)   250.00 300.00 550.00   149.96 149.96 Station Road Smile Food Products Ltd 10 Head Office Corporate Tafrid Cotton Mills Ltd. Shaikh Md. Shamiul Islam, Managing Director Tafrid 460.90 87.76 548.66   77.82 538.72 11 Motijheel Techno Electricals Ltd. Abu Zafar Mohammad Shofiuddin (Chairman) Shohel Ahmed (Managing Director) Nurul Kader (Director) Afroza Sultana (Director) Shirin Akter (Director) Jb. Monzurul Quader (Director) SQ 216.15 326.67 542.82   124.96 186.87 S.Q lights Ltd.                 S.Q Trading & Engineering                 S.Q Wire & Cable Co. Ltd                 S.Q Woods Preservatives                 SRN Electronics                 Power Add                 Global Marketing Service                 372.56 135.60 508.16     0.00 12 VIP Road M/S Thermax Group’ 7 concern Jb. Abdul Kadir Molla (MD),Mrs. Nasima Begum Thermax (Director),Mrs. Nahida Group Sultana Kona (Director),Mrs. Nasrin Sultana Dina (Director) THERMAX TEXTILE MILLS LTD.             7.43 78.09 THERMAX KNIT YARN LTD.             0.00 24.21 THERMAX SPINNING LTD             7.76 93.81 THERMAX MELANGE SPINNING   MILLS LTD.           1.91 22.88 THERMAX WOVEN DYEING LTD.             6.13 17.02 THERMAX YARN DYED FABRICS   LTD.           42.63 251.10 THERMAX YARN DYEING LTD           0.56 18.28   Annual Report 2021 155
  158. DISCLOSURE / INFORMATION AS PER BANGLADESH SECURITIES AND EXCHANGE COMMISSION REQUIREMENT Ref. No.: SEC/CFD/Miscellaneous/233/2004/Part-3/475, dated 25th April 2022 SL Outstanding Amount Name of the Brrower Name ot the Proprietor/ Pratner/ Director Group Name Funded NonFunded Total Funded Non Funded Total 1 2 3 4 5 6 7=(5+6) 8 9 10=( 8+9) Jb. Badiur Rahman (Nominated Director), Jb. Muhammed Nadim (Nominated Director), Jb. Rezaur Rahman (Nominated Director)   380.00 13 Motijheel AIBL Capital Market Services Ltd 100.00 480.00   100.00 528.01 14 Motijheel Formula one Spinning Md. Rezaul Karim   290.63 150.00 440.63   386.27 386.27 15 VIP Road KBC Agro Products (Pvt.) Ltd. Jb. Md. Mahabubur Rahman (MD)   50.00 382.04 432.04   1.49 51.90 16   M/S Meghna Group’s 17 concern Jb. Mostafa Kamal (MD),Mrs. Beauty Akhter (Director), Mrs. Tahmina Binthe Mostafa Meghna (Director),Mrs. Tanjima Binthe Group Mostafa (Director),Jb. Tanveer Ahmmed Mostafa (Director) 100.00 320.00 420.00     0.00 Janata Flour And Dal Mills Ltd.             0.00 0.00 Tanveer Food Ltd.             73.68 73.68 United Sugar Mills Ltd.             0.00 0.00 Unique Cement Ind. Ltd.             48.56 48.56 UNIQUE CEMENT FIBRE INDUSTRIES LTD             0.44 0.44 Tasnim Condensed Milk Ltd.             12.52 12.52 Meghna Seeds Crushing Mills Ltd.             0.00 0.00 Tanveer Oils Ltd.             0.00 0.00 Meghna Edible Oils Refinery Ltd.             51.58 52.10 Meghna Noodles & Biscuits Factory Ltd.             1.03 1.03 SONARGAON PRINTING AND PACKAGING INDUSTRIES LIMITED             0.00 0.00 Sonargaon Seeds Crushing Mills Ltd.             49.20 49.20 Meghna Fresh LPG Ltd.             9.19 9.19 MEGHNA BEVERAGE LIMITED             0.00 0.00 Sonargoan Flour & Dal Mills ltd             54.34 54.34 Meghna Sugar Refinery Ltd.             221.65 221.65 Surma Mustard Oil Mills Ltd.             0.00 0.00 17 New Elephant Younus Paper Mills Ltd. Road 156 Limit Name of the branch 18 Gulshan MAHMUD FABRICS AND FINISHING LTD 19 Motijheel Corporate Creative Paper Mills Ltd. 20 Banani Masihata Sweater Ltd. Annual Report 2021 MOHAMMED YOUNUS ,MAHFUZA YOUNUS Younus 292.86 127.00 419.86   33.66 262.46 A. K. M. Aminul Islam Mahmud Group 357.65 60.00 417.65   59.04 536.01   229.00 166.62 395.62   128.18 344.91 Masihata Group 157.77 235.22 392.99   99.12 379.89 Feroz Ahmed Khaled Hossain Mahboob(MD), Sayeda Mahfuza Akter(Chairman)
  159. DISCLOSURE / INFORMATION AS PER BANGLADESH SECURITIES AND EXCHANGE COMMISSION REQUIREMENT Ref. No.: SEC/CFD/Miscellaneous/233/2004/Part-3/475, dated 25th April 2022 SL Limit Outstanding Amount Name of the branch Name of the Brrower Name ot the Proprietor/ Pratner/ Director Group Name Funded NonFunded Total Funded Non Funded Total 1 2 3 4 5 6 7=(5+6) 8 9 10=( 8+9) 21 Motijheel Partex Jute Mills Ltd. 22 Dilkusha Bandar Steel Industries Ltd 23 New Elephant MIR AKHTER HOSSAIN LTD. Road 24 Dilkusha Kamal Yarn Ltd. partex Group 156.00 236.16 392.16   0.00 51.57 Sirajul Islam, Harun Ur Rashid, Sharif Ahmed, Kauser Ahmed, Mohammad Akhter Hossain Khan, Sabina Yeasmen,Abul Kalam, Kamrul Islam   155.33 236.00 391.33   76.99 76.99 MIR NASIR HOSSAIN,SHAMA E JAHEER, MAHBUBA NASIR,SOHELA HOSSAIN   280.00 110.00 390.00   79.11 286.65 Badsha Group 170.00 215.00 385.00   102.13 158.15 224.06 157.00 381.06   153.51 235.47 327.64 52.00 379.64   0.72 341.77 363.00 300.00     15.00 75.00     378.00 375.00             1.28 0.00     356.57 342.10     218.46 150.00 368.46   203.82 571.50 336.67 20.00 356.67   27.34 124.47 244.41 110.00 354.41   86.03 326.69 223.16 124.88 348.04   137.35 193.02 71.22 274.54 345.76   138.35 210.06       281.52       60.00       341.52               0.00       212.58 257.78 76.05 333.83   76.05 209.77 Rubel Aziz Md. Badsha Mia 25 UttaraModel Aman Tex Limited RAFIQUL ISLAM (MD) Aman Town 26 kawran bazar The Delta Blended Yarn Mills Ltd. Eng. A.K.M Faruque Ahmed, Delta Chairman & Managing Director Group 27 Motijheel Nitol Motors Ltd Abdul Matlub Ahmad Nitol Niloy 28 Motijheel Md. Robiul Islam Md. Robiul Islam (Proprietor)   Rahman Traders     Jubayer Trading     29 Agrabad Kabir Steel Re-Rolling Mills Md Shajahan , Rokeya Begum, Nawab Sirazudowla, Jamal Uddin, Selim KSRM Uddin,Karim Uddin, Sarwar Jahan, Shariar Jahan 30 Dilkusha Healthcare Pharmaceuticals Alauddin Ahammad, Suraya Limited Bilkis ,Md. Halimuzzaman ,   Mokarram Hossain (Liton) 31 Motijheel The Rani Concast Steel Mills Jb. Abul Bashar (Chairman) Ltd. Jb. Sumon Chowdhury RRM (Managing Director), MS Yeasmin Bashar Chowdhury (Director) 32 Motijheel H. R. Re-Rolling Mills Ltd Syfur Rahman Khokon (MD) , Md. Saydur Rahman Sumon (Director), Md. Arifur Rahman   (Director), Md. Mizanur Rahman (Director) 33 Motijheel Birds Garments Ltd unit-2 Mustafa Anwar (Chairman), Najmus Shahrir Saadat Birds Anwar (MD) , Aktaruzzaman Bablu (Director) Birds R.N.R Fashions Ltd     Khalifa Apparels Ltd.     Birds A & Z Ltd.     34 Dhamondi THE IBN SINA TRUST A.K.M. Sodrul Islam   35 Head Office Bonafide Knitting Mills Ltd Md. Wahiduzzaman, Bonafide Corporate Managing Director Group Annual Report 2021 157
  160. DISCLOSURE / INFORMATION AS PER BANGLADESH SECURITIES AND EXCHANGE COMMISSION REQUIREMENT Ref. No.: SEC/CFD/Miscellaneous/233/2004/Part-3/475, dated 25th April 2022 SL Outstanding Amount Name of the Brrower Name ot the Proprietor/ Pratner/ Director Group Name Funded NonFunded Total Funded Non Funded Total 1 2 3 4 5 6 7=(5+6) 8 9 10=( 8+9) 36 Banani 38 Mohakhali 39   40 Head Office Corporate 41 Bandartila Ayman Textile & Hosiery Ltd. Sarker Steel Ltd M S Dyeing, Printing & Finishing Ltd. Islam Brothers & Com. Taher And Co. Ltd. T. R. Ship Breakers Ltd. Golden Steel Alloy Works Ltd. Taher Ship Breaking And Recycling Industries 42 Agrabad 43 Motijheel Corporate 44 UttaraModel Town 15 Motijheel 46 Dhamondi BSRM MSA Spinning SHISHIR KNITTING & DYEING LTD M.M. FASHIONS AND COMPOSITE LTD. DELTA PRINTING AND PACKAGING BANGLADESH LTD. EAST WEST PROPERTY DEV. (pvt) Ltd. MOMTEX EXPO LTD 47 Motijheel Kader Compact Spinning Ltd. Corporate 48 Head Office Z & Z Intimates Ltd. Corporate 49 New Elephant Runner Motors Ltd. Road 50 Jubilee Raod HOSSAF POWER LTD 51 Dilkusha 158 Limit Name of the branch Al-Amin Poultry Feed Annual Report 2021 Bahauddin Mohammad Yousuf(MD),Ziauddin Muhammad Yeahyea, Md. Irtejaur Rahman, Ahmad, Maleka Akter Md. Zakir Hossain Sarker Md. Mamunur Rashid, Managing Director Ayman Group 322.31 0.77 323.08   0.77 414.04   226.93 94.50 321.43   54.51 311.86   126.60 191.60 318.20   191.60 274.25 Aman Group 297.42 20.00 317.42   0.00 123.77 10.00 306.17 316.17   191.98 222.71                                     BSRM 100.00 205.00 305.00   311.85 311.85 Shahabuddin Ahmed   200.00 100.00 300.00   97.92 317.74 Badrul Hasan Taslim,MD   188.75 106.57 295.32   66.14 275.39                                 280.00 0.00 280.00   0.00 328.70 214.00 60.00 274.00   45.03 267.63 272.65 0.00 272.65   0.00 320.59 Md. Rafiqul Islam Jb. Alhaj Abu Taher(Chairman) Mostafa Jb. Alhaj Mohammad Monjur hakim Alam(MD)           Ali Hossain Akbarali,Amir Ali Hossain,Zohaer Taher Ali, Tehseen Zohaer Taher Ali , Sabeen Amir   AHMED AKBAR SOBHAN Bashundhara Md. Reajul Islam,Managing Director Pakiza Group Kader Compact Shahabuddin Ahmed Sharif Zahir, Managing Director HAFIZUR RAHMAN KHAN ,MOHAMMAD ALI DEEN, SHAMSUL ALAM,MD MOZAMMEL HOSSAIN Moazzam Hossen (Managing Director)   135.61 133.00 268.61   55.09 139.98 Runner 257.97 10.03 268.00   10.03 211.16 Hossaf 120.00 141.70 261.70   13.93 113.93 Md. Abul Kalam Azad Dhaka Group 150.00 110.00 260.00   0.00 64.85
  161. DISCLOSURE / INFORMATION AS PER BANGLADESH SECURITIES AND EXCHANGE COMMISSION REQUIREMENT Ref. No.: SEC/CFD/Miscellaneous/233/2004/Part-3/475, dated 25th April 2022 SL Limit Outstanding Amount Name of the branch Name of the Brrower Name ot the Proprietor/ Pratner/ Director Group Name Funded NonFunded Total Funded Non Funded Total 1 2 3 4 5 6 7=(5+6) 8 9 10=( 8+9) M/S Biswas Poultry & Fish Feed Ltd. Jb. Md. Mahabubur Rahman (MD) ,Jb. Md. Shafiqur Rahman (Director),Mrs. Dil Afroz Rahman (Director)   80.00 180.00 260.00   131.11 235.26 Muazuddin Textile Ltd. Jb. Morzina Begum (Chairman) ,Jb. Lutfar Muazuddin Rahman (Managing Director) 87.74 166.00 253.74   53.14 89.56   251.00 0.00 251.00   0.00 242.93 Ifad 210.00 40.00 250.00   5.20 186.69   50.00 200.00 250.00   133.48 142.68 Jb. KUTUB UDDIN AHAMMED (Managing Director)   85.00 162.48 247.48   159.54 227.03 Khan Md. Aftab Uddin   85.00 158.00 243.00   107.14 195.45 52 VIP Road 53 Motijheel 54 New Elephant Anwer Khan Modern Hospital Road Ltd. 55 Mouchak IFAD AUTOS LTD 56 Laldighirpar 57 Gulshan 58 Head Office Corporate M/s. Fakhor Uddin Ali Ahmed Karooni Knit Composite Ltd. and Karooni Knit Composite Ltd. Unit-2 Spectra Engineers Limited ANWER HOSSAIN KHAN Iftakher Ahmed Tipu (Chairman) , Jb. Taskeen Ahmed ( MD) ,Janaba Nilufar Ahmed (Director), Jb. Tanveer Ahmed (Director), Jb. Tasfeen Ahmed (Directr) Fakhor Uddin Ali Ahmed,(Managing partner),Salah Uddin Ali Ahmed, (partner),Falah Uddin Ali Ahmed, (partner),Foyez Hasan Ferdous, (partner) 59 O.R.Nizam Road N. Mohammad Plastic Industries Ltd Md. Nazrul Hoque N. Mohammad Group 182.67 58.72 241.39   92.86 187.67 60 Northsouth Road Premier Steel Re-Rolling Mills (Pvt.) Ltd Md Abul Hossain PSRM 176.60 55.00 231.60   2.00 226.48 61 VIP Road Navana Pharmaceuticals Ltd   127.00 102.00 229.00   124.16 289.43 HAMKO GROUP 193.30 35.00 228.30   17.73 189.75 62 Khulna JB. DR. MD. JONAID SHAFIQ(MD),MRS. IMRANA ZAMAN CHOWDHURY(CHAIRMAN),JB. JAVED KAISER ALLY(DIRECTOR), JB. SAYEED AHMED(DIRECTOR), MRS. TARANA AHMED(DIRECTOR) M/S Khorshed Metal Industries AHMED TALUKDER,ABDUL MALIKE,KABIR HOSSAIN,A.T.M MOSTAFA, ABDULLAH AL MAHMUD,MRS HAZERA BEGUM 63 Banani Promita Oil & Gas Ltd HAFIZUR RAHMAN KHAN   215.39 10.00 225.39   0.00 6.65 64 Gulshan MAHMUD INDIGO LIMITED     122.56 100.00 222.56   31.34 121.51 Annual Report 2021 159
  162. DISCLOSURE / INFORMATION AS PER BANGLADESH SECURITIES AND EXCHANGE COMMISSION REQUIREMENT Ref. No.: SEC/CFD/Miscellaneous/233/2004/Part-3/475, dated 25th April 2022 SL Outstanding Amount Name of the Brrower Name ot the Proprietor/ Pratner/ Director Group Name Funded NonFunded Total Funded Non Funded Total 1 2 3 4 5 6 7=(5+6) 8 9 10=( 8+9) 65 Sonargaon Janapath ADVANCED CHEMICAL IND 66 Motijheel Corporate Bangldesh Hardland Ceramics Co. Ltd. Md. Shahedul Islam 67 Panthapath Wahid construction Ltd. MD WAHID MIAH (Managing Director)  68 Khatungonj Ruby Food Industries Ltd. Abul Bashar chowdhury,Abul Masud Chowdhury M/s. Masud & Brothers   M/s. BSM Syndicate   R.B Steel Mills (pvt) Ltd 69 Pagla 70 Motijheel ANIS UD DOWLA,ARIF DOWLA , NAJMA DOWLA ,GOLAM MAINUDDIN , WALIUR RAHMAN BHUIYAN 120.00 220.00     106.71 123.00 90.00 213.00   6.20 129.16 Karim Group 133.00 80.00 213.00   18.77 61.70 BSM Group 115.00 97.81 212.81   75.16 166.24                             Md. Hasan Miah(Managing Director) Fatema Hasan Ruma Alias(Director), Md. Hasan Miah-(Director)   81.50 125.00 206.50   51.49 129.90 RUPALI IRON ENTERPRISE                 NB IRON ENTERPRISE                 New Rupali Iron Building Structure Manufacture Ltd                 Ms. Zulfia Yasmin (Chairman),Jb. Nasir Uddin Ahmed (Managir Director)   63.07 137.50 200.57   86.27 142.10 Ziri Subeder 100.00 100.00 200.00   0 0.00 5.00 195.00 200.00   0.17 14.44   200.00 0.00 200.00   0.00 209.21   200.00 0.00 200.00   0.00 204.74 Sarker Group 20.00 180.00 200.00   152.85 252.87 NAZ Bangladesh Limited Ziri Subeder Steel Re rolling Mills 72 Agrabad jb. Master Abul Kashem , M/S Mak Corporation and its sister concern Mother Steel Ltd A.K.M Saifullah Sayed, Nigar & A.P.S Corporation Sultana Deizi , Mofizul Alam, Md. Parvez Kamal Chy 75 Gallamari ACI GROUP 100.00 71 Agrabad 73 Motijheel 74 VIP Road 160 Limit Name of the branch Md Lokman Hakim ANW Homes Ltd.   INTERNATIONAL LEASING AND MIZANUR RAHMAN FINANCIAL SERVICES LIMITED (Director),M. NURUL ALAM (Director) , NOWSHERUL ISLAM (Director) ,ANWARUL KABIR (Director), BASHUDEB BANERJEE (Director) , ABUL HASHEM (Director),NASIM ANWAR (Director) , RASHEDUL HAQUE (Director), ZAHIRUL ALAM (Director) M/S. Sarker Traders Md. Alamgir Sarker,(Managing partner),Md. Abu Sayeed Sarker (Partner) , Md. Abul Kalam Azad (Partner), Md. Abu Yusuf Sarkar (Partner) Annual Report 2021   MAK
  163. DISCLOSURE / INFORMATION AS PER BANGLADESH SECURITIES AND EXCHANGE COMMISSION REQUIREMENT Ref. No.: SEC/CFD/Miscellaneous/233/2004/Part-3/475, dated 25th April 2022 SL Outstanding Amount Name of the Brrower Name ot the Proprietor/ Pratner/ Director Group Name Funded NonFunded Total Funded Non Funded Total 1 2 3 4 5 6 7=(5+6) 8 9 10=( 8+9) 76 Motijheel Corporate 77 Panthapath 78 Banani 79 Gulshan 80 Agrabad 81 Motijheel 82 O.R.Nizam Road 83 Motijheel Corporate 84 Saidpur 85 Banani 86 Motijheel 87 VIP Road 88 Moulvibazar 89 Dilkusha 90 Kushtia 91   Limit Name of the branch The Ibn Sina Ph. Ind. Ltd. ANM Abduz Zaher   108.92 90.00 198.92   87.60 132.87 MAHABUB BROTHERS PVT. LTD. SHEIKH MOZNU (Chairman) Akhankha Mega Yearn Dying Mills Ltd. Khaled Hossain Mahboob(MD), Sayeda   Mahfuza Akter(Chairman) Incepta Pharmaceuticals Janab Abdul Muktadir Limited. (Managing Director &   Chairman ) Maf Footwear Ltd Mr. Hasnat Md. Abu Obida ,   Mr. Talha Bin Tayab Rahmat Spinning & sister Md. Aman Ullah Sarkar   concern Al- Razi Chemical Complex Ltd Md. Mujibur Smart Rahaman,Managing Director Group Orion Pharma Ltd. Mohammad Obaidul Karim Orion 137.48 60.00 197.48   3.53 143.19 92.36 104.36 196.72   76.84 125.95 50.00 140.00 190.00   9.30 9.30 108.30 79.00 187.30   29.54 112.67 103.42 80.72 184.14   16.15 148.03 128.65 50.50 179.15   49.57 91.41 174.00 0.00 174.00   0.00 196.58 Ahmed Wood Crafts Pvt. Ltd M/s. S.I Overseas and M/s. Joanaki Traders Aman Knitting’s Ltd. 156.81     15.00     171.81           2.19     113.79     61.80 109.00 170.80   34.23 102.90 100.00 70.00 170.00   0.00 0.00 89.00 81.00 170.00   29.39 130.25 108.53 60.00 168.53   18.05 106.20 150.00 15.00 165.00   158.76 332.51 136.81 20.00 156.81   21.49 103.40 75.00 80.00 155.00   0.00 5.54 Aftab Ahmed (Chairman)           Md. Mahabub Hossain(MD) Abul Hossain(Chairman) Aman Mohammad Sakhawat Group Hossain(Director) Amanat Shah Spinning Mills Ltd. Jb. Fazlur Rahman (Chairman) Jb. Helal Miah (Managing Director) Amanat Ms. Lutfa Begum (Director) Shah Jb. Rezaul Karim (Director) Jb. Kamrul Hasan (Director) Vitalac Dairy & Food Industry Ltd. Md. Mahabub-Ul-Alam (MD), Mostaq Hossain Chowdhury (Director), Md. Selim (Director), Md. Nuruddin   (Director), Shah Humayun Kabir(Director), Syed Jamal Uddin(Director) ,Md. Aftab Uddin Mintu (Director), Star UPVC Pipes & Fittings ltd. Fardin Md. Baker, Managing Dircetor Group Pioneer Denim Ltd Md. Badsha Mia,Asma Begum,Kamal Uddin Ahmed,   Mohiuddin Ahmed Woodland Plywood & Particle Woodland MD HAFIJUR RAHMAN Board Mills Ltd Group Zuma Enterprise Issa Badsha   Annual Report 2021 161
  164. DISCLOSURE / INFORMATION AS PER BANGLADESH SECURITIES AND EXCHANGE COMMISSION REQUIREMENT Ref. No.: SEC/CFD/Miscellaneous/233/2004/Part-3/475, dated 25th April 2022 SL Outstanding Amount Name of the Brrower Name ot the Proprietor/ Pratner/ Director Group Name Funded NonFunded Total Funded Non Funded Total 1 2 3 4 5 6 7=(5+6) 8 9 10=( 8+9)   45.00 110.00 155.00   9.87 64.37   147.63 7.00 154.63   0.00 36.21   148.68 1.50 150.18   12.10 117.60 Nassa   100.00 100.00 40.00 40.00 140.00 140.00     53.61 0.00 171.41 106.86   137.40 1.00 138.40   1.33 144.88   Jaj Bhuiyan 60.64 76.60 137.24   45.58 132.23 136.12 0.40 136.52   14.44 145.43   122.58 12.78 135.36   3.04 111.65   60.50 72.11 132.61   73.33 100.95 Imran Hossain Chowdhury Noman Group 60.00 72.00 132.00   56.88 118.08 Turag 29.63 100.00 129.63   99.13 135.28   66.24 61.50 127.74   4.60 99.58   52.38 75.00 127.38   9.32 62.40   Pran RFL Group 83.08 40.00 123.08   34.46 116.26 0.00 122.00 122.00   88.81 89.17 Rahimafrooz 119.65 0.98 120.63   4.53 124.63 0.00 120.00 120.00   40.13 59.76 92 Agrabad 93 Dilkusha 94 Mirpue 95 Motijheel 96 Saidpur 97 Banani 98 VIP Road Khulna Printing & Packaging Ltd S.M. Amzad Hossain(Chairman) Amzad Hossain (Director) Mrinal Kanti Debnath (Director) Habibur Rahman (Director) Sujit Kumar Saha (Director) National Auto Rice Mill (Unit 1&2) Mohammad Ali DELTA HOSPITAL LIMITED Dr. Syed Mukarram Ali, Managing Director Nassa Taipei Denims Ltd. NAZRUL ISLAM MAZUMDER Nassa Taipei Textile Mills Ltd. NAZRUL ISLAM MAZUMDER Ranu Agro Industries Ltd. Shaymoly Rani Das (Chairman), Sushil Kumar Das (MD) , Sushanto Kumar Das(Director) Khantex Fashion ltd HUMAYUN KABIR SALIM(MD) Jaj Bhuiyan Textile Mills Jb. Md. Fayazur Rahman Bhuiyan Libra Infusion Ltd. Rowshan Alam 99 Motijheel Corporate 100 Jubilee Raod GPH ISPAT LTD MD. ALAMGIR KABIR (Chairman),Mohammad Jahangir Alam (MD) 101 Motijheel Corporate 102 UttaraModel Town Zaber Spinning Mills Ltd. Turag Garment & Hosiery Mills Ltd SAMIA RAHMAN, HOSSAIN BIN M.A. KHALEQUE 103 Motijheel Haseen Knit Composite Ltd Jb. Faiz Ahamed Khan (MD) ,Ms. Fatema Humaira Haseen (Director) 104 Motijheel 105 Gulshan 106 Progati Sarani 107 Dhamondi 108 UttaraModel Town 162 Limit Name of the branch Hasan Tanvir Fashion wears Ltd Mrs. Farjana Begum (Chairman),Jb. A M Zakir Hossain (MD) MAHMUD DENIMS LIMITED   RFL Electronics Ltd. Mr. Rathindra Nath Paul RAHIMAFROOZ BATTERIES LTD. Feroz Rahim Elegant Coal & Mining Company Annual Report 2021 Tanveer Ahmed Elegant
  165. (f) Loan, advances and leases due from entities in which managing director, directors or chairman of the board of directors of the bank has ownership interest or exercises control over operating and financial policies by their representation in the board or management of the entities is : Date 31-12-2021 Figure in million Name of the borrower/ company of which debentures SL of share subscribed/ bencficiary on whose behalf guarantee issued Name of the interested director his immediagte relations (together with the name of concerned director) or employed of the Bank 1 Purbachal Gas Filling Abu Naser Mohammad yeahea 2 Engr. Khandakar Younger Brother Mejbha Uddin ahmed FARIHA APPARELS LTD Nature of interest (shareholder director, employee, guarantor etc) & value of interst in the concern indicated in col-1 Proprietor Nature of facilit (Loan, Guarantee, debentures, shares etc) Amount outstanding 23.01.2027 15.02.2027 19.03.2023 05.03.2024 23.01.2023 24.08.2023 20.04.2025   Guarantee 2.75 24.03.2023 Back to Back LC Bai Istisna Baim Wes Bill 0.17 Bank Guarantee 1.01 Date of over due Khandakar Mofassel Uddin Ahmed 3 M/s Golden Jb. Alhaj Niaz Trading & sister Ahmed concern       Shareholder director UnLimit Date Total 3.93 Particulars & value of securities Remarks STD 1) 700000 nos. shares of mutual Trust Bank Ltd of JB. ABU NASER MOHAMMAD YEAHEA, book value 7700.00 market value 17290.00 BDT 2) 325000 nos. shares of Progati Insurance Company Ltd of Mrs. NAHREER SIDDIQUE, W/O JB. ABU NASER MOHAMMAD YEAHEA, book value 3200.00, marker value 10465.00 BDT Total Book value 10250.00, Market value 27755.00 BDT 5.50 Dec land H.O approval with 7 storied for Reschedule building with dated-11.02.2019 1 storied basement. Value 33880.00 BDT MTDR/Cash uc Security of TK. 50,64,786 and Lien of 187266 nos share of AIBL (as per latest sanction).     Annual Report 2021 163
  166. (g) Loan, advances and leases due from directors or officers of the bank or any of them their separately or jointly with any other person list enclosed with f no ans. (h) Opening balance of provision for bad and doubtful loans/debt, actual provision required for the year, provisions released for the year because of their recovery of the loan or writing-off of the loans. Actual provision made for the year and shortfall in provision for bad and doubtful loans/debts are: Opening balance of provision for bad and doubtful loans/debt 6,644,357,001 Fully Provision debt Written off (190,860,995) Recoveries of amount previously written off 57,842,746 Provision required for the year 2,055,444,347 Ending balance of provision for bad and doubtful loans/debt 8,566,783,099 (i) Amount of reclassified/rescheduled loans, advances and leases which are outstanding for more than one year and considered to be classified on the balance sheet date is 2097.43 crore. (j) Amount of loans, advances and leases to the related parties. Related party disclosure shall be in accordance with IAS-24 and shall cover the following in particulars: Sl Name and Address 1 Alhajj Salim Rahman 255, Nasirabad I/A, Chittagong. Status with the bank Chairman Name of the firms/companies in which interested as Proprietor, Partner, Director, Managing Director, Guarantor, Employees etc. Chairman a. KYCR Coil Ind. Ltd. b. KDS Textile Mills Ltd. c. SKYS Securities Ltd.   13.47% 0.67% 1.21% Managing Director d. KDS Accessories Ltd. e. KDS Garments Ind. Ltd. f. KDS Apparels Ltd. g. KDS Fashions Ltd. h. KDS IDR Ltd. i. KDS Cotton Poly Thread Ind. Ltd. j. KDS Poly Ind. Ltd. k. Steel Accessories Ltd. l. KDS Logistics Ltd. 14.09% 49.85% 50.12% 1.71% 45.00% 10.00% 21.00% 50.00% 0.07% Director m. Millennium Information Solution Limited Representative Director n. AIBL Capital Market Services Ltd. Shareholders o. Eastern Bank Ltd. p. Pragati Insurance Ltd. q. Pragati Life Insurance Ltd. 164 Annual Report 2021 Percentage (%) of holding/ interest in the concerned 5.00% -0.33% 1.12% 2.13% Remarks
  167. Sl Name and Address 02 Alhajj Abu Naser Md . yeahea 232-234, Tejgoan Industrial Area, Dhaka-1208. Status with the bank Vice Chairman Name of the firms/companies in which interested as Proprietor, Partner, Director, Managing Director, Guarantor, Employees etc. Managing Director a. Purbachal Steel Mills Ltd. b. Purbachal Exclusive Ltd. c. Purbachal Drillers Ltd. d. Beco Feed Ltd. Director e. AIBL Capital Market Services Ltd. Proprietor f. Purbachal Gas Filling g. Beco Electronics 03 04 05 Alhajj Abdus Samad S.Alam Bhaban,57-C, Sugandha R/A, Chattogram. Alhajj Mohammad Abdus Salam Mir Ahmed Building 234, Khatungong, Chittagong. Jb. Badiur Rahman PriyaPrangon, Building No. -A, Flat No: 0506, 2 Paribagh, Dhaka. Director Director Director Director a. AIBL Capital Market Services Ltd. b. AIBL Capital Management Ltd. c. Millennium Information Solution Limited Percentage (%) of holding/ interest in the concerned 99.82% 99.50% 50.00% 42.50% 4.50% 100.00% 100.00% 0.50% -2.00% Proprietor d. Samad Trading Agency 100.00% Managing Director a. Mir CNG & Filling Station b. Mir Pulp & Paper Industries Ltd. c. Mir Filling Station Ltd. 40.00% 25.00% 100.00% Director d. Karnafully Filling Station Ltd. e. AIBL Capital Market Services Ltd. 15.00% 1.50% CEO f. M/S. Hajee Mir Ahmed Sowdagar 30.00% Proprietor g. M/S M.A. Salam & Co. h. Mir Bonaspati Products i. Mir Food & Beverage Industries 100.00% 100.00% 100.00% Proprietor a. M/S Oceanlink Services 100.00% Director b. Central Hospital Ltd. c. Human Resources Dev Co. Ltd. d. AIBL Capital Market services ltd. e. Sea Force Alliance Limited 2.45% 2.00% 0.625% 20.00% Chairman/Director :  f. Baidene Pvt. Ltd. g. Ocean Trade Ltd. 16.16% 15.00% Director h. Millennium Information Solution Limited i. Sea Force Alliance Limited 5.00% 20.00% CEO/Director  j. Ariel Maritime PTE Ltd. Remarks 100.00% Annual Report 2021 165
  168. Status with the bank Sl Name and Address 06 Alhajj Mahbubul Alam Niraloy Prova , Apartment # C2W, House # 75, Road # 8/A, Dhanmondi, Dhaka. Independent Director 07 Alhajj Nazmul Ahsan Khaled 760, Satmasjid Road, Dhanmondi R/A, Dhaka Director 08 09 10 Alhajj Abdul Malek Mollah House-12-14, Road-6, Block-E, Niketon, Gulshan-1, Dhaka Director Hafez Alhajj Md. Enayet Ullah 2, MukimKatra, Moulvi Bazar, Dhaka. Director Alhajj Ahamedul Hoque M/s. A.H. Syndicate 16/1, Amir Market, Khatungonj, Chittagong. Director Name of the firms/companies in which interested as Proprietor, Partner, Director, Managing Director, Guarantor, Employees etc. Nil Annual Report 2021 Nil Managing Director :  a. Moonlight Garments Ltd. b. Ehsan Garments Ltd. c. Khaled Shipping Lines Ltd. d. Engineers Enterprise Ltd. e. Nourish Poultry & Hatchery Ltd. f. Nourish Agro Ltd. g. Telnet Communication Ltd. h. Nourish Grand Parents Ltd. i. Nourish Feeds Ltd. j. Nourish Fisheries Ltd. k. Nourish Foods Ltd. l. Agrow Breeders Ltd. m. Agrow Layers Ltd. n. Artisun Enterprise Ltd. o. Ehsan Packaging & Printing Ind. Ltd. p. Aquafarm Shrimp Ltd. q. Executive Travel Solutions Ltd r. GROW Fruits & Vegetables Ltd. 20.00% 10.00% 30.00% 20.00% 25.00% 20.00% 40.00% 20.00% 25.00% 30.00% 20.00% 20.00% 20.00% 25.00% 16.67% 20.00% 20.00% 20.00% Director :  s. Mohammadi Navigation Ltd. t. AIBL Capital Market Services Ltd. 46.15% 0.50% Managing Director a. The Mollah Trading Ltd. 15.00% Shareholder:  b. AIBL Capital Market Services Ltd. 0.50% Active Owner: a. M/S Hadyet & Brothers 100% Chairman a. AIBL Capital Management Services Ltd. Proprietor: b. M/S. A.H. Syndicate Shareholder: c. AIBL Capital Market Services Ltd. 166 Percentage (%) of holding/ interest in the concerned -51.00% 0.25% Remarks
  169. Sl 11 12 Name and Address Alhajj Niaz Ahmed House # 24, Road # 1, Block # i, Chairman Bari, Banani, Dhaka. Alhajj Mohammed Emadur Rahman Kazi Castle, Islampur, Shaporan Sylhet. Status with the bank Director Director Name of the firms/companies in which interested as Proprietor, Partner, Director, Managing Director, Guarantor, Employees etc. Chairman a. Millennium Information Solution Limited Managing Director: b. Golden Oil Mills Ltd. c. Savoy Ice Cream Factory Ltd. d. Golden Mart Agro Indus. Ltd. Director: e. AIBL Capital Market Services Ltd. f. Bangla Tel Limited g. BD Link Communication Limited h.Jibondhara Solution Limited i. Reedisha Golden Economic Zone Ltd. j. KLF Agro Extracts BD Ltd. Proprietor: k. Broadway Marketing Co. l. Golden Trading Co. m. Khaja Corporation n. Trade Plus Partner: o. Golden Gulf Bitumen p. Golden Trading Co. 14 Alhajj Mohammed Haroon 1025/B, Housing Society, Nasirabad, Chittagong. Director 50.00% 95.00%   49.00% 24.00% 34.00%  CEO: g. 4 Corners Distribution UK Limited 50.00% Managing Director a. M/S Aqua Consultant and Association Ltd. Director : b. Takaful Islami Insurance Ltd. c. Human Resources Development Co. Ltd (HURDCO) d. Central Hospital Ltd. e. AIBL Capital Market services ltd. f. Millennium Information Solution Limite Director  95.00% 100.00%  100.00% 100.00% Managing Director: d. Rich & Ruitz Perfumes Trading L.L.C. e. Al Halal Perfumes Industry f. Hamidia Tea Company Limited Shareholder: j. AIBL Capital Market Services Ltd. Alhajj Engr. Kh. Mesbahuddin Ahmed House # 2-E, Road # 8, Sector # 7, Uttara Model Town, Dhaka. 0.75%  10.00% 5.00% 10.00% 33.00% 30.00% 40.00% 5.00% 40.00% Partner: i. Al Haramain Trading LLC Owner: a. Rising Star Trading Est (U.A.E.) Shareholder: b. AIBL Capital Market Services Ltd. Remarks 70.00% 55.00% 60.00% Director a. Al Haramain Perfumes (Pvt) Co. Ltd. b. Millennium Information Solution Limited c. Al Haramain Hospital Deputy Managing Director: h. Al Haramain Perfumes Mgf.& Oudh Processing Ind.L.L.C. 13 Percentage (%) of holding/ interest in the concerned -  10.00%   0.75% 34.25% 3.20% 5.00% 4.88% 1.75% 2.00% 100.00%   1.00% Annual Report 2021 167
  170. Sl Name and Address 15 Alhajj Liakat Ali Chowdhury As-Salam Tower (9th Floor), 57, Agrabad C/A, Chittagong Status with the bank Director Name of the firms/companies in which interested as Proprietor, Partner, Director, Managing Director, Guarantor, Employees etc. Managing Partner: a. Asadi steel Enterprise b. Jamuna Ship Breakers 90.00% 83.34% Managing Director: c. Bangladesh Ship Breaking Ltd. d. L & M Builders (Pvt) Ltd. 90.00% 25.00% Proprietor e. Regal Oxygen Alhajj Md. Anowar Hossain House # 6, Road # 1, Dhanmondi, Dhaka-1205. Director 0.25% Managing Director a. A.G. Textile Mills Ltd. b. Dubai Bangla L P Gas Ltd c. Ashik Shipping Lines Ltd. d. Dubai Bangladesh Cement Mills Ltd. e. Dubai Bangladesh Bag Factory Ltd. 54.00% 40.00% 60.00% 18.00% 80.00% Director f. Islami Commercial Insurance Co. Ltd. g. Southeast University h. Anowar Hossain Secondary School i. Sultan Hossain Memorial Hospital 5.00% ---- 17 Alhajj Md. Harun-Ar-Rashid Khan (Nominee Director of China Builders & Machineries Ltd.) House-19/A, Road-18, Banani, Dhaka Nominee Director Nil 18 Alhajj Md. Rafiqul Islam 1025/C, Housing Society, Nasirabad, Chittagong. Director Nil 19 Alhajj Md. Amir Uddin PPM A 11 Nasreen Villa, 08 Baily Road, Dhaka Independent Director Independent Director: a. AIBL Capital Market Services Ltd. b. AIBL Capital Management Ltd. 20 Alhajj M. Kamaluddin Chowdhury Flat no. 0015/C2, 14th Floor, Baily Heights, 2 Nawratan Colony, New Baily Road, Dhaka-1217 Independent Director Trustee a. South-East University, Dhaka 21 Jb. Farman R. Chowdhury ACME Concord, Flat # 3B, House # 10, Road # 121, Gulshan-1, Dhaka-1214. Ex-Officio Director Remarks 100.00% Vice Chairman f. AIBL Capital Market Services Ltd. 16 Percentage (%) of holding/ interest in the concerned --- Nil (k) Amount of Classified loans, Advances and leases on which interest income has not been recognized is in amount of Tl. 11,447,897,000/-. (Note-9.x.a) (l) Written-off investments during the year -2021 =20.67 Crore Cumulative balance of written-off investments =746.36 crore (m) Interest credited to interest suspense account and year-end balance of interest suspense account is 368,939,189/-, which is presented in Note 15. 168 Annual Report 2021
  171. Off-shore Banking Unit (OBU) BALANCE SHEET As at December 31, 2021 PROPERTY AND ASSETS Notes Cash in hand Cash in hand (including foreign currencies) Balance With Bangladesh Bank and its Agents Banks (including foreign currencies) Balance with other Banks and Financial Institutions In Bangladesh Outside Bangladesh Placement with Banks & Other Financial institutions Investment in Share & Securities Government Others Investments General Investments etc. Bills purchased and discounted Fixed assets including Premises Other Assets Non-Banking Assets Total Assets LIABILITIES AND CAPITAL Liabilities Placement from Banks & Other Financial institutions Deposits and other Accounts Mudaraba Savings Deposits Mudaraba Term Deposits Other Mudaraba Deposits Al-Wadia Current Accounts and Others Accounts etc. Bills Payable Other Liabilities Deferred tax Liabilities/ (Assets) Total Liabilities Capital/Share Holders Equity Paid up Capital Statutory Reserve Foreign Currency Transaction gain/(Loss) Other Reserve Retained Earnings Total Share holders equity Total Liability and Share holders equity 4 31/12/2021 USD 31/12/2020 Taka USD Taka - - - - - - - - 998,479 998,479 85,669,504 85,669,504 - 667,236 667,236 - 56,581,852 56,581,852 - - - - - - 2,412,457 246,593,402 249,005,859 250,004,338 206,988,771 21,157,713,930 21,364,702,701 21,450,372,206 153,819,518 153,819,518 154,486,753 13,043,956,622 13,043,956,622 13,100,538,474 249,006,077 21,364,721,437 153,819,662 13,043,968,884 249,006,077 21,364,721,437 153,819,662 13,043,968,884 - - - - 998,261 998,261 250,004,338 85,650,768 85,650,768 21,450,372,206 667,091 667,091 154,486,753 56,569,590 56,569,590 13,100,538,474 Annual Report 2021 169
  172. Off-shore Banking Unit (OBU) OFF-BALANCE SHEET As at December 31, 2021 PROPERTY AND ASSETS Notes 31/12/2021 USD 31/12/2020 Taka USD Taka OFF BALANCE SHEET ITEMS Contingent Liabilities Acceptance and endorsement - - - - Letters of Guarantee - - - - Letters of Credit - - - - Bills for Collection - - - - Other Contingent Liabilities - - - - Total - - - - Documentary Credits and other short term trade related transactions - - - - Forward Assets Purchased and forward Deposit placed - - - - Undraw note issuance and Revolving underwriting Facilities - - - - Undraw Formal standing Facilities, Credit lines and others commitments - - - - Total off Balance sheet items including Contingent liabilities - - - - Other Commitments : 170 Annual Report 2021
  173. Off-shore Banking Unit (OBU) PROFIT & LOSS ACCOUNTS As at December 31, 2021 Notes Investment Income 31/12/2021 USD 31/12/2020 Taka USD Taka 10,019,100 859,638,807 6,708,563 568,888,800 (9,016,840) (773,644,839) (6,037,472) (511,980,009) 1,002,261 85,993,968 671,091 56,908,791 Income from Investment in Shares /Securities - - - - Commission, Exchange and Brokerage - - - - Other Operating Income - - - - - - - - 1,002,261 85,993,968 671,091 56,908,791 Profit paid on deposits & Borrowing Net Investment Income Total operating income 6 Salaries and allowances & contribution to P.F - - - - Directors fees & expenses - - - - Shariah Supervisory Committee’s fees & expenses - - - - Rent, taxes, insurance, lighting etc. - - - - 4,000 343,200 4,000 339,202 Postage, telegram, telephone and stamp etc. Legal charges - - - - Auditors’ fee - - - - Salary & Allowances to the Managing Director - - - - Depreciation and repairs to the bank’s properties - - - - Stationery, printing, advertisement etc. - - - - Other expenses - - - - 4,000 343,200 4,000 339,202 998,261 85,650,768 667,091 56,569,590 Provision against Investments & Contingent Liabilities - - - - Provision for diminution in value of invevtment - - - - Total operating expenses Profit/(Loss) before Tax & provision Other Provision - - - - Total provision - - - - 998,261 85,650,768 667,091 56,569,590 - - - - Profit/(Loss) before Tax Current tax Deferred tax - - - - Provision for Taxation - - - - 998,261 85,650,768 667,091 56,569,590 Statutory Reserve - - - - General Reserve - - - - - - - - 998,261 85,650,768 667,091 56,569,590 Net Profit/(Loss) after tax Appropriation Retained Earnings Earning per Ordinary share (EPS) Annual Report 2021 171
  174. Off-shore Banking Unit (OBU) CASH FLOW STATEMENT As at December 31, 2021 31/12/2021 USD 31/12/2020 Taka USD Taka Cash flows from operating activities Investment income receipt in Cash 10,019,100 859,638,807 6,708,563 568,888,800 Profit paid on deposits (9,016,840) (773,644,839) (6,037,472) (511,980,009) Dividend recieved - - - - Fees & Commission received in cash - - - - Recoveries from write off investments - - - - Cash payments to employees - - - - Cash payments to suppliers - - - - Received from other operating activities (item-wise) Paid for other operating activities (item-wise) Advance income tax paid Operating profit before changes in operating assets and liabilities - - - - (4,000) (343,200) (4,000) (339,202) - - - - 998,261 85,650,768 667,091 56,569,590 Changing in Operating assets & liabilities Increase/Decrease of trading securities - - - - Increase/Decrease of investment and advances to other banks 249,006,077 21,364,721,437 153,819,662 13,043,968,884 Increase/Decrease of Investment and advances to customers (other than Banks) (13,043,956,622) (249,005,859) (21,364,702,701) (153,819,518) Increase/Decrease of other assets (item-wise) - - - - Increase/Decrease of Deposits from other banks - - - - Increase/Decrease of Deposits from customers (other than Banks) - - - - Increase/Decrease of Other liabilities account of customers - - - - - - - - Cash receipt from operating activities Increase/Decrease of Trading liabilities (item-wise) 218 18,736 145 12,262 A. Net Cash from operating activities 998,479 85,669,504 667,236 56,581,852 - - - - Cash flows from investing activities: Proceeds from sale of securites Payments for purchases of securities - - - - Purchase of property, plant and equipment - - - - Sales proceeds of Fixed assets - - - - Purchase-sale of subsidiary - - - - B. Net cash flows from investing activities - - - - Increase in Exchange Equalization Account - - - - Increase in Share Capital - - - - Cash flows from financing activities Dividend paid - - - - C. Net cash flows from financing activities - - - - 998,479 85,669,504 667,236 56,581,852 - - - - 998,479 85,669,504 667,236 56,581,852 D. Net increase in cash and cash equivalent (A+B+C) E.Effects of exchange rate changes on cash and cash-equivalents F.Net increase in cash and cash equivalent (D+E) G.Cash & Cash Equivalents at the beginning of the year H.Cash & Cash Equivalents at the end of the year 172 Annual Report 2021 0 0 0 0 998,479 85,669,504 667,236 56,581,852
  175. NOTES TO THE FINANCIAL STATEMENTS 31 /12/2021 USD 31/12/2020 Taka USD Taka Cash a) Cash in hand In local currency - - - - In Foreign currency - - - - - - - - - - - - - - - - - - - - - - - - 998,479 85,669,504 667,236 56,581,852 998,479 85,669,504 667,236 56,581,852 - - - - - - - - b) Balance with Bangladesh Bank In local currency In Foreign currency c) Balance with Sonali Bank Ltd. In local currency In Foreign currency Balance with other Banks and Financial Institutions In Bangladesh: Outside Bangladesh Placement with Banks & Other Financial institutions Investments in Share & Securities Government Securities Bangladesh Govt. Islami Bond Fund Investment In Islamic Refinance Fund In shares (quoted and unquoted) - - - - Quoted - - - - Private (8.b) - - - - Unquoted - - - - Murabaha Investment - - - - Bai-Muazzal Investment - - - - Investments a) General Investment i. in Bangladesh Hire Purchase Investment - - - - Quard - - - - Other Investment - - - - - - - - 246,593,402 21,157,713,930 153,819,518 13,043,956,622 ii. Out side Bangladesh b) Bill Purchased & Discounted Payable in Bangladesh Payable out side Bangladesh Annual Report 2021 173
  176. NOTES TO THE FINANCIAL STATEMENTS 31 /12/2021 31/12/2020 USD Taka USD Taka 246,593,402 21,157,713,930 153,819,518 13,043,956,622 Land - - - - Building - - - - Furniture (Wood) - - - - Fixed Assets Tangiable Assets Furniture (Steel) - - - - Computer - - - - Computer (Accossories) - - - - Motor Car - - - - Machine equipment & appliance - - - - Online Hardware - - - - Interior Decoration - - - - Books & Library - - - - - - - - - - - - Parent Bank 94,593,974 8,116,162,950 80,628,939 6,837,366,304 Other Bank OBU 31,000,000 2,659,800,000 9,000,000 763,203,600 123,412,104 10,588,758,487 64,190,723 5,443,398,980 249,006,077 21,364,721,437 153,819,662 13,043,968,884 Mudaraba Savings Deposits - - - - Mudaraba Term Deposits - - - - Other Mudaraba Deposits - - - - Al-Wadia Current Accounts and Others Accounts etc - - - - Bills Payable - - - - Intangiable Assets Online Software Total Less Accumulated Depreciation Other Assets Placement from Banks & Other financial Institutions Out Side Bangladesh Deposit and Other Accounts Other Liabilities a) Authorised Capital The Authorized Capital of the Bank is Ordinary Share of Tk. 10 each. b) Issued, Subscribed and Fully Paid - up Capital Issued for Cash Issued for other than Cash ( Bonus Share ) Statutory Reserve 174 Annual Report 2021
  177. NOTES TO THE FINANCIAL STATEMENTS 31 /12/2021 USD Opening balance beginning of the year 31/12/2020 Taka - USD - Taka - - Add. Reserve @ 20% (on pre-tax profit) Balance at the end of the year. Other Reserve Asset revaluation Reserve Retained Earnings Opening balance beginning of the year Less : transfer to Parent bank Add: Profit during the year 667,091 56,569,590 597,727 50,747,047 (667,091) (56,569,590) (597,727) (50,747,047) 998,261 85,650,768 667,091 56,569,590 998,261 85,650,768 667,091 56,569,590 Less : transfer to Parent bank Investment Income 10,019,100 859,638,807 6,708,563 568,888,800 Profit paid on Deposits & Borrowing (9,016,840) (773,644,839) (6,037,472) (511,980,009) Income from Investment in Share /Securities Commission, Exchange & Brokerage Income Commission Exchange Brokerage commision Other Operating Income Salaries, Allowances & Contribution to P.F Director & Sharia Council Fees & Expenses i. Directors fees for attending Board/executive Committee/other committee meeting ii. TA/DA/ Hotel fare & Foreign Directors iii. Others Sharia Supervisory Committee’s Fees & Expenses i. Sharia fees for attending meeting ii. TA/DA/ Hotel fare & Foreign Directors iii. Others Rent,Taxes,Insurance & Lighting Rent Office Lighting & Electricity Insurance Postage,Telegram,Telephone & Stamp Stamp and Catridge paper Postage Fax Charges Telephone (Office) Annual Report 2021 175
  178. NOTES TO THE FINANCIAL STATEMENTS 31 /12/2021 USD 31/12/2020 Taka USD Taka Telephone (Residence) Telephone (Mobile) SWIFT Charge Internet Charges Online Charge Depreciation Repairs to the Bank’s property Repairs to the Bank’s property R.R. Furniture & Fixture (Wooden) R.R. Furniture & Fixture (Steel) R.R. Computer Maint. of Motor Car and other Vahicle R.R. Machine equipment & appliances Maintenance of Land & Building Maintenance of Rented Premises R.R. Computer Accessories R.R. Others Software Maintenance Fee Hardware Maintenance Fee Depreciationto the Bank’s property Depr. Furniture (Wood) Depr. Furniture (Steel) Depr. Computer Depr. Motor Car Depr. Machine equip & Appliance Depr. Books & Library Depr. Land & Building Depr. Online Hardware Depr. Online Software Depr. Computer Accessories Depr. Interior Decoration Stationary,Printing & Advertisement Printing & Stationerty Paper & Table Stationery Advertisement & Publicity Expenses Other expenses Cash and Cash Equivalent at the end of the year Cash in hand Balance with Bangladesh Bank & Sonali Bank Ltd. Balance with Parent Banks 998,479 85,669,504 667,236 56,581,852 998,479 85,669,504 667,236 56,581,852 Bangladesh Government Islamic Investment Bond 176 Annual Report 2021
  179. Off-shore Banking Unit (OBU) NOTES TO THE FINANCIAL STATEMENTS For the Year ended 31 December 2021 1 Status of the unit The Bank obtained the Off-shore Banking Unit (“the Unit”) License on 17 February’14 vide letter # BRPD (P-3)744(121)/2014-934 from Bangladesh Bank. The Bank commenced operation of this unit from 22 may 2014. The Off-shore Banking Unit is governed under the rules and guidelines of the Bangladesh Bank. Its office is located at AIBL Motijheel Branch, 161, Motijheel Commercial Area Dhaka 1000. 1.1 Principal activities The principal activities of OBU are to provide Mudaraba Investment against payment of import bills under UPAS (Usance Payment at Sight) and Musharaka Documentary Bills in foreign currency (MDB F.C) to its customers. 2 Significant accounting policies and basis of preparation of financial statements 2.1 Basis of accounting The Off-shore Banking Unit maintains its accounting records in USD from which accounts are prepared according to the Bank Companies Act, 1991, Bangladesh Accounting Standards, Bangladesh Financial Reporting Standard (BFRS) and other applicable directives issued by the Bangladesh Bank, in particular, Banking Regulations and Policy Department (BRPD) Circular No. 15 (09 November 2009). 2.2 Use of estimates and judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. 2.3 Foreign currency transaction a) Foreign currency transactions are converted into equivalent taka using the ruling exchange rates on the dates of respective transactions as per BAS-21” The Effects of Changes in Foreign Exchange Rates”. Foreign currency balances held in US Dollar are converted into Taka at weighted average rate of inter-bank market as determined by Bangladesh Bank on the closing date of every month. Balances held in foreign currencies other than US Dollar are converted into equivalent US Dollar at buying rates of New York closing of the previous day and converted into Taka equivalent. b) Assets and liabilities & income and expenses have been converted into Taka currency @ US$1 = Taka 85.80 closing rate as at 31 December 2021. a) Commitments Commitments for outstanding forward foreign exchange contracts disclosed in these financial statements are translated at contracted rates. Contingent liabilities/commitments for letter of credit and letter of guarantee denominated in foreign currencies are expressed in Taka terms at the rates of exchange ruling on the balance date. b) Translation gains and losses The resulting exchange transaction gains and losses are included in the profit and loss account, except those arising on the translation of net investment in foreign subsidiary. 2.4 Cash and cash equivalents Cash and cash equivalents are accounted for notes and coins in hand, highly liquid financial assets, unrestricted balances held with other banks/ financial institutions and Bangladesh Bank. 3.Investments a) General investments of Off-shore Banking Units are stated in the Balance Sheet net off unearned income. Provisions for investments are made as per instructions contained in Bangladesh Bank BRPD Circular No. 14 dated 23 September 2012 and BRPD Circular No. 19 dated 27 December 2012. b) Profit is calculated on a daily product basis but charged and accounted for on accrual basis. Profit is not charged on bad and loss investments as per guidelines of the Bangladesh Bank. Records of such interest amounts are kept in separate memorandum accounts. c) A provision is recognized in the balance sheet when the unit has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefit will be required to settle the obligations, in accordance with the BAS 37 “Provisions, Contingent Liabilities and Contingent Assets”. 4. Placement from Banks & Other Financial institutions The OBU has borrowed fund from differentBanks& Other Financial institutions reside in Bangladesh and outside Placement. Bangladesh in the mode of Annual Report 2021 177
  180. Off-shore Banking Unit (OBU) NOTES TO THE FINANCIAL STATEMENTS For the Year ended 31 December 2021 Name of the Bank In Bangladesh Al-ArafahIslami Bank Ltd. Other OBU Outside Bangladesh 31.12.2021 USD 31.12.2020 TK 9,45,93,973.78 8,11,61,62,950 USD TK 8,06,28,939.30 6,83,73,66,304.21 3,10,00,000.00 2,65,98,00,000 90,00,000.00 76,32,03,600.00 12,34,12,103.58 10,58,87,58,487 6,41,90,722.92 5,44,33,98,980.00 5. Profit income In terms of the provisions of the BAS-18 “Revenue”, the profit income is recognized on accrual basis. 5.1 Fees and commission income Fees and commission income arises on services provided by the units are recognized on a cash receipt basis. Commission charged to customers on letters of credit and letters of guarantee are credited to income at the time of effecting the transactions. 5.2 Profit paid and other expenses In terms of the provisions of the BAS - 1 “Presentation of Financial Statements” interest and other expenses are recognized on accrual basis. 5.3 Allocation of common expenses Establishment expenses in the nature of rent, rates, taxes, management expenses, printing and stationery, electricity, postage, stamps, telecommunication and audit fees etc. have not been separately accounted for in the financial statements, but staff costs (salaries and allowances) are separately accounted for OBU 6 Profit paid on deposits & Borrowings 31.12.2021 31.12.2020 USD TK USD TK AIBL Treasury Division 85,15,884.60 73,06,62,898.6 57,02,043.50 48,35,35,569.4 AIBL AD Branches 5,00,955.02 4,29,81,940.35 3,35,428.14 2,84,44,440.03 90,16,839.62 77,36,44,838.95 60,37,471.64 51,19,80,009.4 7. Principles of Shariah Any gains, expenses & losses not permitted in the Shariah and not duly approved by the Shariah Supervisory Committee is not accounted for and income thus derived transferred/expensed as per approval of the Shariah Supervisory Committee. 8. Cash flow statement Cash flow statement has been prepared in accordance with the BAS-7 “Cash flow statement” under direct method as recommended in the BRPD Circular No. 14, dated June 25, 2003 issued by the Banking Regulation and Policy Department of Bangladesh Bank. 9.General These financial statements are presented in BDT, which is the Bank’s functional currency. Figures appearing in these financial statements have been rounded off to the nearest BDT. 10. Reporting period The financial statements cover from 1st January 2021 to December 31, 2021. 178 Annual Report 2021
  181. Related Party Disclosure (Annexure-C) NAME OF THE DIRECTORS & THE ENTITIES IN WHICH THEY HAVE INTEREST as on 31 December 2021 Sl Name and Address 1 Alhajj Salim Rahman 255, Nasirabad I/A, Chittagong. Status with the bank Chairman Name of the firms/companies in which interested as Proprietor, Partner, Director, Managing Director, Guarantor, Employees etc. Chairman a. KYCR Coil Ind. Ltd. b. KDS Textile Mills Ltd. c. SKYS Securities Ltd.   13.47% 0.67% 1.21% Managing Director d. KDS Accessories Ltd. e. KDS Garments Ind. Ltd. f. KDS Apparels Ltd. g. KDS Fashions Ltd. h. KDS IDR Ltd. i. KDS Cotton Poly Thread Ind. Ltd. j. KDS Poly Ind. Ltd. k. Steel Accessories Ltd. l. KDS Logistics Ltd. 14.09% 49.85% 50.12% 1.71% 45.00% 10.00% 21.00% 50.00% 0.07% Director m. Millennium Information Solution Limited Representative Director n. AIBL Capital Market Services Ltd. 02 Alhajj Abu Naser Md. Yeahea 232-234, Tejgoan Industrial Area, Dhaka-1208. Vice Chairman Alhajj Abdus Samad S.Alam Bhaban,57-C, Sugandha R/A, Chattogram. Director -0.33% 1.12% 2.13% Managing Director a. Purbachal Steel Mills Ltd. b. Purbachal Exclusive Ltd. c. Purbachal Drillers Ltd. d. Beco Feed Ltd. 99.82% 99.50% 50.00% 42.50% Proprietor f. Purbachal Gas Filling g. Beco Electronics Director a. AIBL Capital Market Services Ltd. b. AIBL Capital Management Ltd. c. Millennium Information Solution Limited Proprietor d. Samad Trading Agency Remarks 5.00% Shareholders o. Eastern Bank Ltd. p. Pragati Insurance Ltd. q. Pragati Life Insurance Ltd. Director e. AIBL Capital Market Services Ltd. 03 Percentage (%) of holding/ interest in the concerned 4.50% 100.00% 100.00% 0.50% -2.00% 100.00% Annual Report 2021 179
  182. Sl Name and Address 04 Alhajj Mohammad Abdus Salam Mir Ahmed Building 234 , Khatungong, Chittagong. 05 Jb. Badiur Rahman PriyaPrangon, Building No. -A, Flat No: 0506, 2 Paribagh, Dhaka. Status with the bank Director Director Name of the firms/companies in which interested as Proprietor, Partner, Director, Managing Director, Guarantor, Employees etc. Managing Director a. Mir CNG & Filling Station b. Mir Pulp & Paper Industries Ltd. c. Mir Filling Station Ltd. 40.00% 25.00% 100.00% Director d. Karnafully Filling Station Ltd. e. AIBL Capital Market Services Ltd. 15.00% 1.50% CEO f. M/S. Hajee Mir Ahmed Sowdagar 30.00% Proprietor g. M/S M.A. Salam & Co. h. Mir Bonaspati Products i. Mir Food & Beverage Industries 100.00% 100.00% 100.00% Proprietor a. M/S Oceanlink Services 100.00% Director b. Central Hospital Ltd. c. Human Resources Dev Co. Ltd. d. AIBL Capital Market services ltd. e. Sea Force Alliance Limited 2.45% 2.00% 0.625% 20.00% Chairman/Director :  f. Baidene Pvt. Ltd. g. Ocean Trade Ltd. 16.16% 15.00% Director h. Millennium Information Solution Limited i. Sea Force Alliance Limited 5.00% 20.00% CEO/Director  j. Ariel Maritime PTE Ltd. 180 06 Alhajj Mahbubul Alam Niraloy Prova, Apartment # C2W, House # 75, Road # 8/A, Dhanmondi, Dhaka. Independent Director 07 Alhajj Nazmul Ahsan Khaled 760, Satmasjid Road, Dhanmondi R/A, Dhaka Director Annual Report 2021 Percentage (%) of holding/ interest in the concerned Nil 100.00% Nil Managing Director :  a. Moonlight Garments Ltd. b. Ehsan Garments Ltd. c. Khaled Shipping Lines Ltd. d. Engineers Enterprise Ltd. e. Nourish Poultry & Hatchery Ltd. f. Nourish Agro Ltd. g. Telnet Communication Ltd. h. Nourish Grand Parents Ltd. i. Nourish Feeds Ltd. j. Nourish Fisheries Ltd. k. Nourish Foods Ltd. l. Agrow Breeders Ltd. m. Agrow Layers Ltd. n. Artisun Enterprise Ltd. o. Ehsan Packaging & Printing Ind. Ltd. p. Aquafarm Shrimp Ltd. q. Executive Travel Solutions Ltd r. GROW Fruits & Vegetables Ltd. 20.00% 10.00% 30.00% 20.00% 25.00% 20.00% 40.00% 20.00% 25.00% 30.00% 20.00% 20.00% 20.00% 25.00% 16.67% 20.00% 20.00% 20.00% Director :  s. Mohammadi Navigation Ltd. t. AIBL Capital Market Services Ltd. 46.15% 0.50% Remarks
  183. Status with the bank Sl Name and Address 08 Alhajj Abdul Malek Mollah House-12-14 , Road-6, Block-E, Niketon, Gulshan-1, Dhaka Director 09 Hafez Alhajj Md. Enayet Ullah 2, MukimKatra, Moulvi Bazar, Dhaka. 10 Alhajj Ahamedul Hoque M/s. A.H. Syndicate 16/1, Amir Market, Khatungonj, Chittagong. Name of the firms/companies in which interested as Proprietor, Partner, Director, Managing Director, Guarantor, Employees etc. Managing Director a. The Mollah Trading Ltd. 0.50% Director Active Owner: a. M/S Hadyet & Brothers 100% Director Chairman a. AIBL Capital Management Services Ltd. Proprietor: b. M/S. A.H. Syndicate Alhajj Niaz Ahmed House # 24, Road # 1, Block # i, Chairman Bari, Banani, Dhaka. Director Alhajj Mohammed Emadur Rahman Kazi Castle, Islampur, Shaporan Sylhet. Director -51.00% 0.25% Chairman a. Millennium Information Solution Limited Managing Director: b. Golden Oil Mills Ltd. c. Savoy Ice Cream Factory Ltd. d. Golden Mart Agro Indus. Ltd. 70.00% 55.00% 60.00% Director: e. AIBL Capital Market Services Ltd. f. Bangla Tel Limited g. BD Link Communication Limited h.Jibondhara Solution Limited i. Reedisha Golden Economic Zone Ltd. j. KLF Agro Extracts BD Ltd. 0.75%  10.00% 5.00% 10.00% 33.00% 30.00% Proprietor: k. Broadway Marketing Co. l. Golden Trading Co. m. Khaja Corporation n. Trade Plus 12 Remarks 15.00% Shareholder:  b. AIBL Capital Market Services Ltd. Shareholder: c. AIBL Capital Market Services Ltd. 11 Percentage (%) of holding/ interest in the concerned  95.00% 100.00%  100.00% 100.00% Partner: o. Golden Gulf Bitumen p. Golden Trading Co. 50.00% 95.00% Director a. Al Haramain Perfumes (Pvt) Co. Ltd. b. Millennium Information Solution Limited c. Al Haramain Hospital 40.00% 5.00% 40.00% Managing Director: d. Rich & Ruitz Perfumes Trading L.L.C. e. Al Halal Perfumes Industry f. Hamidia Tea Company Limited   49.00% 24.00% 34.00%  CEO: g. 4 Corners Distribution UK Limited 50.00% Deputy Managing Director: h. Al Haramain Perfumes Mgf.& Oudh Processing Ind.L.L.C. Partner: i. Al Haramain Trading LLC Shareholder: j. AIBL Capital Market Services Ltd. -  10.00%   0.75% Annual Report 2021 181
  184. Sl Name and Address 13 Alhajj Engr . Kh. Mesbahuddin Ahmed House # 2-E, Road # 8, Sector # 7, Uttara Model Town, Dhaka. Director Name of the firms/companies in which interested as Proprietor, Partner, Director, Managing Director, Guarantor, Employees etc. Managing Director a. M/S Aqua Consultant and Association Ltd. Director : b. Takaful Islami Insurance Ltd. c. Human Resources Development Co. Ltd (HURDCO) d. Central Hospital Ltd. e. AIBL Capital Market services ltd. f. Millennium Information Solution Limite 14 Alhajj Mohammed Haroon 1025/B, Housing Society, Nasirabad, Chittagong. Director Owner: a. Rising Star Trading Est (U.A.E.) Shareholder: b. AIBL Capital Market Services Ltd. 15 Alhajj Liakat Ali Chowdhury As-Salam Tower (9th Floor), 57, Agrabad C/A, Chittagong Director Managing Partner: a. Asadi steel Enterprise b. Jamuna Ship Breakers Managing Director: c. Bangladesh Ship Breaking Ltd. d. L & M Builders (Pvt) Ltd. Proprietor e. Regal Oxygen Vice Chairman f. AIBL Capital Market Services Ltd. 16 182 Status with the bank Alhajj Md. Anowar Hossain House # 6, Road # 1, Dhanmondi, Dhaka-1205. Director Managing Director a. A.G. Textile Mills Ltd. b. Dubai Bangla L P Gas Ltd c. Ashik Shipping Lines Ltd. d. Dubai Bangladesh Cement Mills Ltd. e. Dubai Bangladesh Bag Factory Ltd. Director f. Islami Commercial Insurance Co. Ltd. g. Southeast University h. Anowar Hossain Secondary School i. Sultan Hossain Memorial Hospital 17 Alhajj Md. Harun-Ar-Rashid Khan (Nominee Director of China Builders & Machineries Ltd.) House-19/A, Road-18, Banani, Dhaka Nominee Director Nil 18 Alhajj Md. Rafiqul Islam 1025/C, Housing Society, Nasirabad, Chittagong. Director Nil 19 Alhajj Md. Amir Uddin PPM A 11 Nasreen Villa, 08 Baily Road, Dhaka Independent Director Independent Director: a. AIBL Capital Market Services Ltd. b. AIBL Capital Management Ltd. 20 Alhajj M. Kamaluddin Chowdhury Flat no. 0015/C2, 14th Floor, Baily Heights, 2 Nawratan Colony, New Baily Road, Dhaka-1217 Independent Director Trustee a. South-East University, Dhaka 21 Jb. Farman R. Chowdhury ACME Concord, Flat # 3B, House # 10, Road # 121, Gulshan-1, Dhaka-1214. Ex-Officio Director Annual Report 2021 Nil Percentage (%) of holding/ interest in the concerned 34.25% 3.20% 5.00% 4.88% 1.75% 2.00% 100.00%   1.00% 90.00% 83.34% 90.00% 25.00% 100.00% 0.25% 54.00% 40.00% 60.00% 18.00% 80.00% 5.00% ---- --- Remarks
  185. NAME OF THE DIRECTORS AND THEIR SHAREHOLDINGS IN THE YEAR- 2021 Sl Name of Directors Status Ending position on 31 /12/2021 Opening position on 01/01/2021 Chairman 21298982 shares of Tk. 10/- each Tk. 212989820/- 21298982 shares of Tk. 10/- each Tk. 212989820/-   Vice-Chairman 26300798 shares of Tk. 10/- each Tk. 263007980/- 26300798 shares of Tk. 10/- each Tk. 263007980/-   Remarks 1 Alhajj Salim Rahman 2 Alhajj Abu Naser Md. Yeahea 3 Alhajj Abdus Samad Director 23965115 shares of Tk. 10/- each Tk. 239651150/- 23965115 shares of Tk. 10/- each Tk. 239651150/-   4 Alhajj Mohammad Abdus Salam Director 21598392 shares o Tk. 10/- each Tk. 215983920/- 21598392 shares of Tk. 10/- each Tk. 215983920/-   5 Jb. Badiur Rahman Sponsor Director 29704244 shares of Tk. 10/- each Tk. 297042440/- 29704244 shares of Tk. 10/- each Tk. 297042440/-   6 Alhajj Mahbubul Alam Independent Director Nil Nil   7 Alhajj Nazmul Ahsan Khaled Sponsor Director 22812996 shares of Tk. 10/- each Tk. 228129960/- 22812996 shares of Tk. 10/- each Tk. 228129960/-   8 Alhajj Abdul Malek Mollah Sponsor Director 21357454 shares of Tk. 10/- each Tk. 213574540/- 21357454 shares of Tk. 10/- each Tk. 213574540/-   9 Hafez Alhajj Md. Enayet Ullah Sponsor Director 21303874 shares of Tk. 10/- each Tk. 213038740/- 21303874 shares of Tk. 10/- each Tk. 213038740/-   10 Alhajj Ahamedul Hoque Director 21298448 shares of Tk. 10/- each Tk. 212984480/- 21298448 shares of Tk. 10/- each Tk. 212984480/-   11 Alhajj Niaz Ahmed Director 21407921 shares of Tk. 10/- each Tk. 214079210/- 21407921 shares of Tk. 10/- each Tk. 214079210/-   12 Alhajj Mohammed Eamadur Rahman Director 21324314 shares of Tk. 10/- each Tk. 213243140/- 21324314 shares of Tk. 10/- each Tk. 213243140/-   13 Alhajj Engr. Kh. Mesbahuddin Ahmed Director 21299266 shares of Tk. 10/- each Tk. 212992660/- 21299266 shares o Tk. 10/- each Tk. 212992660/- 14 Alhajj Mohammed Haroon Sponsor Director 21422224 shares of Tk. 10/- each Tk. 214222240/- 21422224 shares of Tk. 10/- each Tk. 214222240/- 15 Alhajj Liakat Ali Chowdhury Director 21304850 shares of Tk. 10/- each Tk. 213048500/- 21304850 shares of Tk. 10/- each Tk. 213048500/- 16 Alhajj Md. Anowar Hossain Sponsor Director 23578732 shares of Tk. 10/- each Tk. 235787320/- 23578732 shares of Tk. 10/- each Tk. 235787320/- Alhajj Md. Harun-Ar-Rashid Khan 17 (Nominated by China Builders & Machineries Ltd.) Nominee Director 21376917 shares of Tk. 10/- each Tk. 213769170/- 21376917 shares of Tk. 10/- each Tk. 213769170/- 18 Alhajj Md. Rafiqul Islam Director 21350369 shares of Tk. 10/- each Tk. 213503690/- 21350369 shares of Tk. 10/- each Tk. 213503690/- 19 Alhajj Md. Amir Uddin PPM Independent Director Nil Nil 20 Alhajj M. Kamaluddin Chowdhury Independent Director Nil Nil 21 Jb. Farman R. Chowdhury Ex. Officio Director Nil Nil Annual Report 2021 183
  186. DISCLOSURES ON Risk Based Capital (Basel-III) The public disclosure of prudential information is an important component of Basel Committee on Banking Supervision’s framework of capital measurement and capital adequacy, known as Basel III. Bangladesh Bank has specified the standard of disclosure through Guidelines on Risk Based Capital Adequacy (December 2010) which revised in Basel III Guideline on December 2014 with effect from January2015.The standard aims to enhance the transparency in Bangladeshi financial market by setting minimum requirement for the disclosure of information on the risk management practice and capital adequacy. To cope up with the international best practices and to make the bank’s capital shock absorbent ‘Guidelines on Risk Based Capital Adequacy(RBCA) for banks’(Revised Regulatory Capital Framework in line with Basel II) was introduced from January 01, 2009 as a parallel run with BRPD Circular No. 10, dated November 25,2002 (Basel I). At the end of parallel run, Basel II regime started from January 01, 2010 and the guidelines on RBCA came fully into force with its subsequent supplements/revisions. After that Bangladesh Bank issued ‘Guidelines on Risk Based Capital Adequacy (RBCA) for banks’ (Revised Regulatory Capital Framework in line with Basel III) vide its BRPD Circular 18 dated December 21, 2014 that Basel III reporting start from January 2015 and full implementation will start from January 2020. Instructions regarding Minimum Capital Requirement (MCR), Adequate Capital and Disclosure requirement as stated in the guidelines had to be followed by all scheduled banks for the purpose of statutory compliance. An Action Plan/Roadmap was issued by Bangladesh Bank for implementation of Basel-III in Bangladesh vides BRPD Circular No: 18 Dated: 21December, 2014. For effective implementation of Basel-III, the Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework in line with Basel III) has been issued by Bangladesh Bank. Action Plan/Roadmap Action Action Issuance of Guidelines on Risk Based Capital Adequacy Commencement of Basel III Implementation process Capacity Building of the Banks Initiation of Full Implementation of Basel III Phase-in Arrangements The phase-in arrangements for Basel III implementation will be as follows: 2015 2016 Minimum Common Equity Tier-1(CET-1) Capital Ratio 4.50% 4.50% Capital Conservation Buffer 0.625% Minimum CET-1 plus Capital Conservation Ratio 4.50% 5.125% Minimum T-1 Capital Ratio 5.50% 5.50% Minimum Total Capital Ratio 10.00% 10.00% Minimum Total Capital plus Capital Conservation Buffer 10.00% 10.625% Deadline December 2014 January 2015 January 2015- December 2019 January 2020 2017 4.50% 1.25% 5.75% 6.00% 10.00% 11.25% 2018 4.50% 1.875% 6.375% 6.00% 10.00% 11.875% 2019 4.50% 2.50% 7.00% 6.00% 10.00% 12.50% 2020 4.50% 2.50% 7.00% 6.00% 10.00% 12.50% 2021 4.50% 2.50% 7.00% 6.00% 10.00% 12.50% The Basel III framework consists of three-mutually reinforcing pillars: Pillar 1 : Minimum capital requirements for credit risk, market risk and operational risk Pillar 2 : Supervisory review process(SRP) Pillar 3 : Market discipline Market discipline (Pillar 3) comprises a set of disclosures on the Capital Adequacy and Risk Management framework of the Bank. Pillar 3 disclosures as per BB circular on Basel-III Capital Regulations are set out in the following sections for information. The disclosures (qualitative and quantitative) under the revised Risk Based Capital Adequacy (RBCA) framework as advised by Bangladesh Bank based on the audited financial position of the bank as of 31st December, 2021 are presented below: 1. Scope of Application 2. Capital Structure 3. Capital Adequacy 4. Credit Risk 5. Equities: Disclosures for Banking book positions 6. Interest Rate Risk in the Banking Book (IRRBB) 7. Market Risk 8. Operational Risk 9. Liquidity Ratio 10. Leverage Ratio 11. Remuneration 184 Annual Report 2021
  187. 1 . Scope of application: a.Qualitative Disclosures The name of the top corporate entity to which this framework applies An outline of differences in the basis of consolidation for accounting and regulatory purposes, with a brief description of the entities within the group Al-Arafah Islami Bank Limited Consolidated financial statements are the financial statements of a group (parent and subsidiaries) presented into one. This offers the benefit of viewing the whole group’s combined financial information together to see how all companies are doing jointly. The bank has an approved disclosure policy to observe the disclosure requirements set out by the Bangladesh Bank and International Financial Reporting Standard (IFRS) and International (ii) that are given a deduction treatment; Accounting Standards (IAS) as adopted by the Institute of Chartered Accounts of Bangladesh (ICAB) into Bangladesh Financial Reporting Standards (BFRS) and Bangladesh Accounting and Standards (BAS) where relevant to the bank (iii) that are neither consolidated nor A group consists of a parent entity and all its subsidiaries. The control exercised by the parent deducted entity is the power to govern the financial and operating policies of the subsidiaries so as to (e.g. where the investment is risk-weighted) obtain benefits from its activities. (i) that are fully consolidated; Consolidated financial statements represent combination of the financials of all subsidiaries of the parent entity. This consolidation is required when a parent owns 50 percent or more shares in the subsidiaries with controlling authority. Procedures In preparing consolidated financial statements, an entity combines the financial statements of the parent entity and its subsidiaries and the items covered are mainly assets, liabilities, equity, income and expenses. However intra group balances, transactions, income and expenses are eliminated in full. The financial statements of the parent and its subsidiaries used in the preparation of the consolidated financial statements are of the same date. Consolidated financial statements are prepared using uniform accounting policies for both the parent entity and the subsidiaries. Minority interest is presented in the consolidated statement of financial position within equity segment but separately from the equity of the owners of the parent entity. Consolidation for regulatory purposes Banks having subsidiaries have been advised to consolidate their financial statements following accounting standards as set by the regulators to assess capital adequacy. As such the bank has prepared capital adequacy report on Solo basis as well as on consolidated basis. If subsidiaries financials are not consolidated with that of the Bank, investments in subsidiaries by the bank will be deducted at 50% from Tier 1 and 50% from Tier 2 capital of the bank. The assets representing the investments in subsidiaries whose capital had been deducted from that of the parent would not be included in total assets for the purposes of computing CAR. Off-Shore Banking Unit (OBU) The Bank obtained the Off-shore Banking Unit (“the Unit”) License on 17 February’14 vide letter # BRPD (P-3)744(121)/2014-934 from Bangladesh Bank. The Bank commenced operation of this unit from 22 may 2014. The Off-shore Banking Unit is governed under the rules and guidelines of the Bangladesh Bank. Its office is located at AIBL Motijheel Branch, 161,Motijheel Commercial Area, Dhaka 1000. Al-Arafah Islami Bank Limited has 3 (Three) subsidiaries viz. a. AIBL Capital Market Services Ltd. b. AIBL Capital Management Ltd. c. AIBL Asset Management Co. Ltd. Al-Arafah Islami Bank Ltd. holds 60.50% share of AIBL Capital Market Services Ltd., 98% share of AIBL Capital Management Ltd. and 90% share of AIBL Asset Management Co. Ltd. A brief description of the Bank and its subsidiary are given below: Annual Report 2021 185
  188. a . AIBL Capital Market Services Limited AIBL Capital Market Services Limited was incorporated as subsidiary company of Al-ArafahIslami Bank Limited with an authorized capital of Tk. 10 billion and paid-up capital of Tk. 4 billion of which AIBL holding is 60.50%. The main objectives of the company are to carry out the business of Stock Broker and Dealer in the Capital Market. b. AIBL Capital Management Limited AIBL Capital Management Limited, a subsidiary company of Al-ArafahIslami Bank Limited, was incorporated with an authorized capital of Tk. 2 billion and paid-up capital of Tk. 500 million. The main objectives of the company are to carry out the business of Merchant Banking in all its aspects including Issue Management (IPO, Right Share Issue, Bond Issue etc.), Portfolio Management, Underwriting, Corporate Advisory Services, Pre-IPO Placement, Investment Analysis and Research etc. c) AIBL Asset Management Co. Ltd. Another subsidiary company in the name of AIBL Asset Management Co. Ltd. has already been incorporated with Authorized Capital of Tk. 500 million and Paid up Capital of Tk. 100 million to carry out the business of Asset Management, Portfolio Management, Capital Market Operation and other financial services. The shareholding ratio of AIBL and its another subsidiary AIBL Capital Market Services Limited is 9:1. We hope that the company will start its functioning very soon. c) Any restrictions, or other major impediments on transfer of funds or regulatory capital within the group. Not Applicable b.Quantitative Disclosures The aggregate amount of surplus capital of insurance subsidiaries (whether deducted or subjected to and alternative method) included in the capital of the consolidated group. Not Applicable 2) Capital structure: 1.Qualitative Disclosures: a) Summary information on the terms and conditions of the main features of all capital instruments, especially in the case of capital instruments eligible for inclusion in CET 1, Additional Tier 1 or Tier 2 For the purpose of calculating capital under capital adequacy framework, the capital of banks shall be classified into two tiers. The total regulatory capital will consist of sum of the following categories: 1) Tier 1 Capital (going-concern capital): a) Common Equity Tier 1 b) Additional Tier 1 2) Tier 2 Capital (gone-concern capital) Common Equity Tier 1 Capital: It is called ‘Core Capital’ comprises of highest quality of capital elements consists of – i. Fully Paid-up Capital ii. Statutory Reserve iii. Non-Repayable Share Premium Account iv. General Reserve v. Retained Earnings vi. Minority Interest in Subsidiaries vii. Dividend Equalization Account viii. Less: Regulatory adjustments applicable on CET1 Additional Tier 1: i) Non-cumulative irredeemable preference share ii) Instruments issued by the banks that meet the qualifying criteria for AT1 iii) Minority Interest i.e. AT1 issued by consolidated subsidiaries to third parties as specified in Annex-4 of Basel III Guidelines (For Consolidated Reporting) Less:Regulatory adjustments applicable on AT1 186 Annual Report 2021
  189. Tier-2 Capital : It is called ‘gone-concern capital’ represents other elements which fall short of some of the characteristics of the core capital consists ofi) General Provision ii) All other preference shares iii) Subordinated debt iv) Minority Interest i.e. Tier-2 issued by consolidated subsidiaries to third parties (For Consolidated reporting only) v) Revaluation Reserves as on 31st December, 2017 (50% of Fixed Assets and Securities and 10% of equities) vi) Other (if any item approved by Bangladesh Bank) vii) Less: Regulatory adjustments applicable on Tier-2 capital Compliance status ofAIBLas per condition for maintaining regulatory capital: 1 Common Equity Tier 1 of at least 4.5% of the Total RWA Complied 2 Tier 1 will be at least 6.00 % of the Total RWA Complied 3 Minimum CRAR will be 10.00 % of the Total RWA Complied 4 Additional Tier 1 Capital can be admitted maximum up to 1.5% of the Total RWA or 33.33% of CEFI whichever higher Complied 5 Tier 2 Capital can be admitted maximum up to 4% of the Total RWA or 88.89% of CEFI whichever higher Complied 6 Addition to Minimum CRAR, Capital Conservation Buffer (CCB) of 2.50% of the Total RWA is being introduced which will be maintain in the form of CETI. Complied 2. Quantitative Disclosures: The amount of Regulatory Capital 2021 as follows: 1.Common Equity Tier-1(Going Concern Capital): (Figure In million) Consolidated Basis Solo Basis Fully Paid-up Capital 10,649.02 10,649.02 Statutory Reserve 10,649.02 10,649.02 Retained Earnings 1,643.12 1,823.37 Non Controlling Interest -  1,694.50 Less: Deferred Tax Assets (DTA) -  - 22,941.17 24,816.01 (514.69) (514.69) 22,426.47 24,301.31 Instruments issued by the banks that meet the qualifying criteria for Additional Tier-1 5,000.00 5,000.00 Maximum limit of additional tier-1 capital 5,224.45 5,746.59 Total Admissible Additional Tier-1 Capital 5,000.00 5,000.00 Good will and other Insensible assets Total Common Equity Tier-1 Capital Additional Tier-1 Capital: 2. Tier-2 Capital : - General Provision 4,759.60 4,759.60 Subordinated debt 9,600.00 9,600.00 Revaluation Reserves for Securities up to 50% 1084.33 1084.33 Less: 100%of Revaluation Reserves for Fixed Assets, Securities & Equity 1084.33 1084.33 Total Tier-2 Capital 14,359.60 14,359.60 Maximum limit of tier-2 capital 13,932.23 15,324.71 Total Admissible Tier-2 Capital 13,932.23 14,359.60 Total eligible capital 41,358.71 43,660.91 Annual Report 2021 187
  190. 3 ) Capital Adequacy: Qualitative Disclosures: a) A summary discussion of the bank’s approach to assessing the adequacy of its capital to support current and future activities The Bank is subject to the Capital adequacy norms as per Master Circular on Basel-III Capital regulations issued by the Bangladesh Bank. The Basel III capital regulation is being implemented from 2015. In line with the guidelines of the Bangladesh Bank, the Bank has adopted the following approaches for computing the capital charge. For Credit Risk – Standardized Approach For Market Risk – Standardized Approach Operational Risk – Basic Indicator Approach The Bank has a policy on Internal Capital Adequacy Assessment Process (ICAAP) as stipulated by Bangladesh Bank. The ICAAP also details the Risk Appetite of the Bank, assessment of material risks, the process for capital adequacy assessment to support business projections, adequacy of risk control framework, capital raising plans and Bank-wide stress testing. The periodic assessment of bank’s performance against the Risk Appetite defined under ICAAP and results of stress testing are reported to the Board of Directors for their review. CRAR has been computed based on the Basel III guidelines and it is well above the regulatory minimum level of 10%. (Figure in million) Quantitative Disclosures : Capital requirement under following Risk: a) Capital requirement for Credit Risk Solo Basis Consolidated Basis 24,492.67 25,666.35 437.07 463.13 2,081.28 2,114.81 27,011.02 28,244.29 15.31% 15.46% 8.30% 8.60% Tier 1 Capital Adequacy Ratio 10.15% 10.37% Tier-2 Capital Adequacy Ratio 5.16% 5.08% 15.31% 15.46% b) Capital requirement for Market Risk c) Capital requirement for Operational Risk d)Total Capital Requirement (a+b+c) e) Capital to Risk –weighted Asset Ratio: 1.Common Equity Tier 1 (CET 1) Ratio Capital to Risk-weighted Asset Ratio (CRAR) f) Capital Conservation Buffer 4.15% 4.37% Available Capital under Pillar 2 Requirement 14,347.68 15,416.62 Minimum Capital Requirement (MCR) 27,011.02 28,244.29 4) Credit Risk 1. Qualitative Disclosures: a) Definition of past due and impaired assets (for accounting purposes) A loan payment that has not been made as of its due date is termed as past due. Payment may be made for repayment/renewal/rescheduling or as an installment of a claim. The past due claims are discussed below: Special Mention Accounts (SMA): A claim which is overdue for 90 days or more will be classified as Special Mention Account. When a loan is classified as SMA, it needs constant monitoring and supervision as the repayment probability decreases. Sub-Standard (SS): The repayment of the loan has been put in doubt but the recovery is not unlikely. Doubtful (DF): There is less possibility of recovery of the overdue amount and probability of loss is high. Bad /Loss (B/L): These are the loans which have almost turned unrecoverable. 188 Annual Report 2021
  191. Approaches followed for specific and general allowances : i) Specific provision: a) Substandard : 20% b) Doubtful : 50% c) Bad/Loss : 100% ii) General Provision: a) 0.25% to 5% on different categories of unclassified loans. b) 1% on Off Balance sheet exposure. c) 5% on the outstanding amount of loans kept in the ‘Special Mention Account’ after netting off the amount of Interest Suspense. For classification of loan, specific and general allowances the bank follows Master Circular-Loan Classification and Provisioning vide BRPD circular no. 06 dated June 14, 2012; and as advised by Bangladesh Bank from time to time. In addition to the above mentioned objective criteria, loans can be classified on the basis of subjective judgment taking into consideration the factors such as uncertainty or doubt of repayment, continuous loss of capital, adverse situation, decrease of value of securities, legal suit etc. However, Bangladesh Bank can classify any claim on the basis of their subjective judgment as well as can ask the Bank to buildup additional provision on non-performing loans. Credit Risk Management Policy The bank has established Credit Risk Management framework as directed by Bangladesh Bank through introduction or Risk Management (CRM) policy guide along with implementation of the Credit Risk Grading (CRG). This framework defines CRM structure, role, responsibilities and the processes to identify, quantify, and manage risk within the framework under the given policy .The CRM policy is reviewed from time to time for adoption of new techniques/policies for measurement and management of risk in line with the socio-economic scenario and investment environment of the country. 2) Quantitative Disclosures: (Figure In million) a) Funded: General Investment Murabaha Investment Bai-Muazzal Investment Hire Purchase Investment Quard Other Investment Sub Total Outside Bangladesh Less: Unearned profit on Investment Bill Purchased & Discounted Payable in Bangladesh Payable outside Bangladesh Sub Total Total Funded: b) Total Non- Funded: c) Geographical distribution of exposures Region Based Dhaka Region Chittagong Region Sylhet Region Rajshahi Region Mymensingh Khulna Region 86,322.08 1,29,337.79 1,07,165.27 2,200.82 5,857.97 3,30,883.92 3,30,883.92 8,340.20 3,22,543.72   11,622.36 1,925.51 13,547.88 3,36,091.61 1,16,834.14 2,55,357.60 44,731.88 1,682.98 6,860.82 6,499.86 1,1137.56 Annual Report 2021 189
  192. Rangpur Region Barisal Region Total d ) Country based funded Domestic Overseas e) Country based Non-funded Domestic Overseas f) Major Industry wise distribution of exposures Agriculture, Fishing and Forestry Industry Construction Water works & Sanitary Service Transport & communication Storage Trade Finance Miscellaneous Total Less Unearned Profit on Investment Total g) Distribution of risk exposure by claims a) Claims on sovereigns and central banks b) Claims on PSE c) Claims on banks and securities firms d) Claims on corporate e) Claims included in the retail portfolio & small enterprises f) Claims secured by residential property g) Claims secured by commercial real estate h) Consumer Investment i) Off-balance sheet items h) Credit risk mitigation Claims secured by financial collateral Net exposure after the application of haircuts Claims secured by eligible guarantee g) Residual contractual maturity breakdown of the whole portfolio Repayable on demand Up to 1 month More than 1 month but less than 3 months More than 3 months but less than 1 year More than 1 year to less than 5 year More than 5 year Total Gross Non Performing Assets- (NPAs) Non-performing assets to outstanding Investment ( loans and advances) Movement of Non Performing Assets (NPAs) Opening balance Additions Less Cash Recovery Less RSDL from CL Less Written Off Closing balance 190 Annual Report 2021 5,697.61 4,123.27 3,36,091.58 3,36,091.58 73,047.95 1,16,834.14 5,663.50 1,78,629.90 24,653.90 2,807.70 11,341.30 1,753.80 1,15,621.40 3,960.30 3,44,431.80 8,340.20 3,36,091.60 44,461.40 57,611.60 1,96,171.40 78,558.40 3,776.60 4,741.60 27.40 24,735.78 2,288.57 1,314.69 60,054.76 93,530.66 1,04,749.86 51,532.26 26,224.06 3,36,091.61 16,566.84 11,769.58 5962.56 (805.20) (153.42) (206.68) 16,566.84
  193. (Figure In million) Movement of specific provisions for NPAs Provision held at the begining of the year 6,644.36 Fully provision debt written off (190.86) Recoveries of amount previously written off 57.84 Specific provision for the year 2,055.44 Closing balance 8,566.78 5) Equities: Disclosures for Banking Book Positions a) Qualitative Disclosures: The bank holds unquoted equities intent of which is not trading and the same are shown as banking book asset in balance sheet. As these securities are not quoted or traded in the bourses they are shown in the balance sheet at the cost price and no revaluation reserve has been created against these equities. b) Quantitative Disclosures: Values of investments (for unquoted securities) as disclosed in the Balance Sheet: (Figure In million) Name of the Scrip value Swift Share 7.4 Central Depository Bangladesh Ltd 3.13 Investment in Millenium Information Solution Ltd 29.48 AIBL Capital Market services 662.12 AIBL Capital Management LTD 517.01 Total 1219.14 c) As investment in unquoted equities does not have any maturity, we have calculated capital charge on the basis of its risk weight which is 125% of investment value. 6) Interest Rate Risk in the Banking Book (IRRBB) a) Qualitative Disclosures: Interest rate risk is the exposure of a bank’s financial condition due to adverse movements in interest rates. Changes in interest rates affect a bank’s earnings by changing its net interest income and the level of other interest sensitive income and operating income. Changes in interest rates also affect the underlying value of the bank’s assets, liabilities and off-balance-sheet instruments because the economic value of future cash flows changes when interest rates change. 1. Interest rate risk in the banking book can be measured on the basis of: 2. Economic value perspective- net interest income measured in a given point in time such as Economic Value of Capital Annual Report 2021 191
  194. b ) Quantitative Disclosures: MATURITY GAP ON BANKING BOOK ASSETS & LIABILITIES As on December 31, 2021 (Figure In million) Up to 1 month Particulars 1 to 3 month 3 to 12 month I to 5 years Above 5 years Total Asset Cash in hand 8,262.80 - - - 15,425.80 23,688.60 Balance with other banks & Financial Institute 3,528.10 145.90 1,100.00 - 7,246.56 12,020.56 Placement with other banks & Financial Institute 2,165.57 19,640.00 2,200.00 - - 24,005.57 - - 972.10 - 29,184.04 30,156.14 93,530.66 1,05,548.97 51,532.26 Investment in Share & Securities (only HTM) Investment (Loans and Advances) 60,054.76 Fixed Assets 26,224.06 3,36,890.71 - - - - 5,470.27 50.88 50.88 183.20 105.20 - 1,433.10 28,682.81 30,404.31 Non Banking Asset Other Assets Total 74,194.43 1,13,421.76 1,09,821.07 5,470.27 52,965.36 1,12,284.42 4,62,687.04 Liabilities Placement from other banks & Financial Institute Deposits and Other accounts Provision and other liabilities 1,204.40 19,809.15 11,493.21 - 54,213.97 1,17,192.60 1,11,096.92 45,257.90 - 32,506.76 25,526.58 3,53,287.97 3.60 - - - 36,294.79 36,298.39 Deferred Tax Liabilities/Assets - - - - 93.59 93.59 AIBL Subordinate Bond - - - - 14,600.00 14,600.00 Total 55,421.97 1,37,001.75 1,22,590.13 45,257.90 GAP 18,772.46 (23,579.99) (12,769.06) 7,707.46 35,769.46 25,900.33 Cumulative Gap 18,772.46 (9,869.13) 25,900.33 - (4,807.53) (17,576.59) 76,514.96 4,36,812.69 Impact of Upward Interest Rate on Banking Book for One Year in Different Time Buckets: (Figure In million) Particular/ shock Increase in interest rate Minor Moderate Major 1.00% 2.00% 3.00% Period GAP Impact on NII (Net Interest Income) Applicable tax rate Tax adjusted impact on Net Interest Income Up to 1 month 18,772.46 18,772.46 18,772.46 15.64 31.29 46.93 37.50% 37.50% 37.50% 11.73 17.60 5.87 Period GAP 1 to 3 month (23,579.99) (23,579.99) Impact on NII(Net Interest Income) (39.30) (78.60) (117.90) Applicable tax rate 37.50% 37.50% 37.50% Tax adjusted impact on Net Interest Income (14.74) (29.47) (44.21) Period GAP 192 (23,579.99) 3 to 12 month (12,769.06) (12,769.06) (12,769.06) Impact on NII(Net Interest Income) (95.77) (191.54) (287.30) Applicable tax rate 37.50% 37.50% 37.50% Tax adjusted impact on Net Interest Income (35.91) (71.83) (107.74) Annual Report 2021
  195. Impact of Downward Interest Rate on Banking Book for One Year in Different Time Buckets (Figure In million) Particular/ shock Decrease in interest rate Minor Moderate (1.00%) Period GAP (2.00%) Major (3.00%) Up to 1 month 18,772.46 18,772.46 18,772.46 Impact on NII (Net Interest Income) (15.64) (31.29) (46.93) Applicable tax rate 37.50% 37.50% 37.50% (5.87) (11.73) (17.60) Tax adjusted impact on Net Interest Income Period GAP 1 to 3 month (23,579.99) (23,579.99) (23,579.99) 39.30 78.60 117.90 37.50% 37.50% 37.50% 14.74 29.47 44.21 Impact on NII (Net Interest Income) Applicable tax rate Tax adjusted impact on NII Period GAP 3 to 12 month (12,769.06) Impact on NII(Net Interest Income) Applicable tax rate (12,769.06) (12,769.06) 95.77 191.54 287.30 37.50% 37.50% 37.50% 35.91 71.83 107.74 Tax adjusted impact on NII Impact of Upward Interest Rate on Banking Book for up to One Year (Cumulative) (Figure In million) Particular/shock Minor Increase in interest rate GAP Moderate Major 1.00% 2.00% 3.00% (17,576.59) (17,576.59) (17,576.59) Period(Year) 1 Year Impact on NII (Net Interest Income) (175.77) (351.53) (527.30) Applicable tax rate 37.50% 37.50% 37.50% Tax adjusted impact on NII (65.91) (131.82) (197.74) Impact of Downward Interest Rate on Banking Book for up to One year (Cumulative) (Figure In million) Particular/shock Decrease in interest rate GAP Minor Moderate Major (1.00%) (2.00%) (3.00%) (17,576.59) (17,576.59) (17,576.59) Period( Year) 1 Year Impact on NII (Net Interest Income) 175.77 351.53 527.30 Applicable tax rate 37.50% 37.50% 37.50% 65.91 131.82 197.74 Tax adjusted impact on NII Annual Report 2021 193
  196. 7 ) Market Risk: a) Qualitative Disclosures: Views of BOD on trading/ investment activities The Board approves all policies related to market risk, sets limits and reviews compliance on a regular basis. The objective is to provide cost effective funding to finance asset growth and trade related transactions. Trading book consists of positions in financial instruments held with trading intent or in order to hedge other elements of the Trading Book. The portfolio of investment includes Government Treasury Bills and Bonds, Prize Bonds, Shares of listed Public Limited Companies etc. Bank always desires to invest in high yield areas and also has ensured maintenance or Statutory Liquidity Requirements (SLR) as fixed by Bangladesh Bank. Methods used to measure Market Risk. Market risk is the possibility of losing assets in the balance sheet and off- balance sheet positions due to volatility in the market variables viz. interest rate, foreign exchange rate, reinvestment and price. The bank measures impact on profitability and impact on asset prices under market risk through Maturity GAP Analysis, Sensitivity Analysis, VAR, and Mark to Market and has adopted Standardized Measurement approach for measuring Market Risks under Basel-III. Standardized approach has been used to measure the market risk. The total capital requirement in respect of market risk is the aggregate capital requirement calculated for each of the risk sub-categories. The methodology to calculate capital requirement under Standardized Approach for each of these market risk categories is as follows: a) Capital charges for interest rate risk= Capital Charge for General Market Risk b) Capital charges for Equity Position Risk= Capital Charge for Specific Risk+ Capital Charge for General Market Risk c) Capital charges for Foreign Exchange Risk=Capital Charge for General Market Risk d) Capital charges for Commodity Position Risk=Capital Charge for General Market Risk Market Risk Management System: The Bank has its own Market Risk Management System which includes Asset Liability Risk Management (ALM) and Foreign Exchange Risk Management under core risk management guidelines. The Treasury Division manage market risk covering liquidity, interest rate and foreign exchange risks with oversight from Asset-Liability Management Committee (ALCO) comprising senior executives of the Bank. ALCO is chaired by the Managing Director. ALCO meets at least once in a month. Policies and processes for mitigating Risk Management and reporting is based on parameters such as Duration, PV, Exposure market risk: and Gap Limits, VaRetc, in line with the global best practices. Risk Profiles are analyzed and mitigating strategies/ processes are suggested by the Asset Liability Committee (ALCO). Their effectiveness is monitored on an on-going basis.Forex Open Position limits (Day limit / Overnight limit), Deal-wise cut-loss limits, Stop-loss limit, Profit / Loss in respect of cross currency trading are properly monitored and exception reporting is regularly carried out. Holding of equities is monitored regularly so that the investment remains within the limit as set by Bangladesh Bank. Asset liability management committee (ALCO) analyzes market and determines strategies to attain business goals. Reconciliation of foreign currency transactions. b) Quantitative Disclosures: The capital requirements for Market Risk: (Figure In million) SOLO Basis Interest rate risk Equity position risk Foreign exchange risk Commodity risk Total 194 Annual Report 2021 Consolidated Basis - - 73.10 99.16 363.97 363.97 - - 437.07 463.13
  197. 8 ) Operational risk: a) Qualitative Disclosures: i) Views of BOD on system to reduce Operational risk is the risk of loss resulting from inadequate or failed internal processes, people operational Risk and systems or from external events. The way operational risk is managed has the potential to positively or negatively impact a bank’s customers,its financial performance and reputation. The Bank has put in place Board approved governance and organizational structure with clearly defined roles and responsibilities to mitigate operational risk arising out of the Bank’s business and operations. ii) Performance gap of executives and The bank offers competitive pay package to its employees based on performance and merit. It staffs always tries to develop corporate culture where employees can exert their highest involvement and commitment to work and organization with high ethical standards in order to build a congenial atmosphere. The bank believes that training and knowledge sharing is the best way to reduce knowledge gap. Therefore, it arranges trainings on a regular basis for its employees to develop their expertise. The bank offers competitive pay package to its employees based on performance and merit. It always tries to develop a culture where all employees can apply his/her talent and knowledge to work for the organization with high ethical standards in order to add more value to the company and for the economy. iii) Potential external events No potential external events are expected to expose the Bank to significant operational risk iv) Policies and Processes for mitigating The Bank has adopted policies which deal with managing different Operational Risk. Bank operational risk: strongly follows KYC norms for its customer dealings and other banking operations. The Internal Control and Compliance Division of the Bank, the inspection teams of Bangladesh Bank and External Auditors conduct inspection of different branches and divisions at Head Office of the Bank and submit reports presenting the findings of the inspections. Necessary control measures and corrective actions have been taken on the suggestions or observations made in these reports. In 2021 ICC Division conducted following No. of audit: Nature of Audit No of Frequencies Compressive & Risk based Internal Audit Annually 184 branches i.e 100% as per Audit Plan Surprise Inspection 28 branches i.e 100% as per Audit Plan For audit purpose, we have segregated the branches into 05 (Five) risk categories as per level of Composite Risk by fixing of a reasonable Inherent Business & Control Risk Score. Risk gradation/ category of the branches is summarized below: Nature of Risk No of Branches Extremely High Risk 7 Very High Risk 27 High Risk 86 Medium Risk 60 Low Risk 4 Total 184 v) Approach for calculating capital charge The Bank follows the Basic Indicator Approach (BIA) in terms of BRPD Circular No. 18 dated 21 for operational risk December 2014 Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework for banks in line with Basel III). The BIA stipulates the capital charge for operational risk is a fixed percentage, denoted by (alpha) of average positive annual gross income of the Bank over the past three years. It also states that if the annual gross income for any year is negative or zero, that should be excluded from both the numerator and denominator when calculating the average gross income. The capital charge for operational risk is enumerated by applying the following formula: K = [(GI 1 + GI2 + GI3) ]/n Annual Report 2021 195
  198. b ) Quantitative Disclosures: (Figure In million) b) The capital requirements for operational risk (Basic Indicator Approach) Year Gross Income (GI) December-2021 14,305.55 December-2020 13,275.60 December-2019 14,044.41 Total GI 41,574.99 Average GI 13,875.19 15% of Average GI 2,081.27 9. Liquidity Ratio: a) Qualitative Disclosures: i) Views of BOD on system to reduce The Bank manages liquidity risk in accordance with its ALM Policy. This policy is framed as per liquidity Risk regulatory guidelines and is approved by the Board of Directors. The ALM Policy is reviewed periodically to incorporate changes as required by regulatory stipulation or to realign with changes in the economic landscape. The ALCO of the Bank formulates and reviews strategies and provides guidance for management of liquidity risk within the framework laid out in the ALM Policy. ii) Methods used to measure Liquidity risk 1) Liquidity risk is measured and monitored through two approaches-1) Time Bucket Analysis: Time Bucket Analysis involves comprehensive tracking of cash flow mismatches and is done through preparation of Structural liquidity statement on a regular basis. Appropriate tolerance levels/prudential limits have been stipulated for mismatches in different time buckets. 2) Ratio Analysis: Under Ratio Analysis various balance sheet ratios are prescribed with appropriate limits. The compliance of ratios to the prescribed limits ensures that the Bank has managed its liquidity through appropriate diversification and kept it within the sustainable limit. The Bank also assess its short-term liquidity mismatches and reports the same in the short term dynamic liquidity report which represents the cash flow plans of various asset and liability generating units and seasonal variation of cash flow patterns of assets and liabilities of the bank over a period of 1-90 days. 3) Liquidity Risk Management System : A liquidity risk management involves not only analyzing banks on and off balance sheet positions to forecast future cash flows but also how the funding requirement would be met. The later involves identifying the funding market the bank has access, understanding the nature of those markets, evaluating banks current and future use of the market and monitor signs of confidence erosion. Al-ArafahIslami Bank Limited has well organized liquidity risk management system as enumerated in ALM Policy which is approved by the Board. The Asset Liability Management Committee (ALCO) of the Bank monitors & manages liquidity and interest rate risk in line with the business strategy. ALM activity including liquidity analysis & management is conducted through coordination between various ALCO support groups residing in the functional areas of Balance Sheet Management, Treasury Front Office, Budget and Planning etc. iii) Liquidity Risk Management System 196 Annual Report 2021 A liquidity risk management involves not only analyzing banks on and off balance sheet positions to forecast future cash flows but also how the funding requirement would be met. The later involves identifying the funding market the bank has access, Understanding the nature of those markets, evaluating banks current and future use of the market and monitor signs of confidence erosion. Al-ArafahIslami Bank Limited has well organized liquidity risk management system as enumerated in ALM Policy which is approved by the Board. The Asset Liability Management Committee (ALCO) of the Bank monitors & manages liquidity and interest rate risk in line with the business strategy. ALM activity including liquidity analysis & management is conducted through coordination between various ALCO support groups residing in the functional areas of Balance Sheet Management, Treasury Front Office, Budget and Planning etc.
  199. iv ) Policies and Processes for mitigating An effective liquidity risk management process should include systems to identify measure, Liquidity risk monitor and control its liquidity exposures. To mitigate the liquidity risk, Management of our bank identifies and quantifies the primary sources of a bank’s following risk in a timely manner. By proper identify of the sources, management understand both existing as well as future risk that the bank can be exposed to. Our Management always alert for new sources of liquidity risk at both the transaction and portfolio levels. Key elements of an effective risk management process include an efficient MIS to measure, monitor and control existing as well as future liquidity risks and reporting them to senior management and the board of directors. b) Quantitative Disclosures: (Figure In million) Liquidity Coverage Ratio 101.86% Net Stable Funding Ratio (NSFR) 119.77% Stock of High quality liquid assets 45,991.90 Total net cash outflows over the next 30 calendar days 45,152.90 Available amount of stable funding 3,68,596.20 Required amount of stable funding 3,07,742.50 10. Leverage Ratio: a) Qualitative Disclosures: i) Views of BOD on system to reduce Excessive leverage by banks is widely believed to have contributed to the global financial crisis. excessive leverage Thus Basel III rules have introduced leverage ratio as a non-risk-based backstop measure, to supplement risk-based capital requirements. Board of Directors of our Bank continuously is monitoring the exposure limit of lending, capital strength of our Bank in order to avoid buildingup excessive on- and off-balance sheet leverage. ii) Policies and processes for managing Many regulators are considering raising the leverage ratio. This means that banks will have to excessive on and off balance sheet keep more capital reserves. To increase capital reserves in order to meet higher leverage ratios leverage requires selling assets to get cash or reducing lending. Higher leverage ratio can decrease the profitability of banks because it means banks can do less - profitable lending. However, increasing the leverage ratio means that banks have more capital reserves and can more easily survive a financial crisis. In view of the impact of leverage into the business, our bank management takes decision about future investment. Considering the financial strength, Bank also make Capital planning and business budget to go on a right way. iii) Approach for calculating exposure The leverage ratio is a volume-based measure and is calculated as Basel III Tier I capital divided by total on and off-balance sheet exposures. A minimum Tier 1 leverage ratio of 3% is being prescribed both at solo and consolidated level. Tier-1 Capital (after related deductions) Leverage Ratio = ------------------------------------------------------Total Exposure (after related deductions) b) Quantitative Disclosures: (Fig In Million) Solo Leverage Ratio On Balance Sheet Exposure Off- Balance Sheet Exposure Total Deduction Total Exposure Consolidated 5.84% 6.12% 4,44,906.52 329,507.46 4,54,120.27 25,522.86 25,522.86 (514.70) (514.70) 4,69,914.69 4,79,128.43 Annual Report 2021 197
  200. 11 . Remuneration: The following remuneration disclosures have been prepared in accordance with ‘Guidelines on Risk Based Capital Adequacy (RBCA) for banks’ provided by Bangladesh Bank. The prudential disclosures require that all banks meet the minimum requirements for public disclosure of qualitative and quantitative information of the remuneration practices. The qualitative remuneration disclosures are broader in scope and cover all the individuals included whereas the quantitative information relates to senior managers and material risk takers of the AlArafahIslami Bank Limited, for the financial year ended December 31, 2018. a) Qualitative Disclosures: a) Information relating to the bodies that oversee remuneration: Managing Director, MANCOM & Head of Human Resources division govern the remuneration related policies and practices in alignment of the banks’ short & long term objectives. They play an independent role, operating as an overseer; and if required, makes recommendation to the Board of Directors of the Bank for its consideration and final approval for any remuneration related policy. The main work includes presenting recommendations to the Board regarding remuneration, compensation packages of senior Management, incentive schemes and retirement benefits. They also assist the Board of Directors to ensure that all employees are remunerated fairly and get performance based compensation by ensuring effective remuneration policy, procedures and practices aligned with the Banks’ strategy and applied consistency for all employee levels. A description of the scope of the bank’s remuneration policy (e.g. by regions, business lines), including the extent to which it is applicable to all branches. A description of the types of employees considered as material risk takers and as senior managers, including the number of employees in each group. Risk Takers are senior employees who can take, or influence the taking of, material risk for Al-Arafah Islami Bank or for a material business unit: Managing Director Deputy Managing Director Senior Executive Vice President Executive Vice President Senior Vice President : : : : : 01 08 16 09 36 b) Information relating to the design and structure of remuneration processes: Key features of remuneration policy: We target a fair human resources management by using a performance based system. Our salary policy is the same in all branches and service points for the beginner level. In addition, to drive further development of individual skill sets and competencies, speaking foreign languages is compensated. There is no incident of discrimination has been occurred in terms of remuneration provided to male and female employees. Al-Arafah Islami Bank compensation program focuses on individual short-term goals vis-a-vis long-term success and overall profitability of the Bank. Both our short-term annual incentive and long-term compensation plans promote our pay-for-performance philosophy, as well as our goal of having a meaningful amount of pay at-risk, and we believe both plans provide us a competitive advantage in talent acquiring and retaining. Objectives of remuneration policy: The overall objective of the Bank’s remuneration policy is to establish a framework for attracting, retaining and motivating employees, and creating incentives for delivering long-term performance within established risk limits. Performance is judged, not only on what is achieved, but also on how it is achieved as well as alignment to the Bank’s values. Whether the remuneration committee reviewed the firm’s remuneration policy during the past year, and if so, an overview of any changes that were made: The remuneration committee reviewed the firm’s remuneration on 2018 and revised the remuneration by conducting a survey considering the following facts: 198 Annual Report 2021
  201. a . Oversee Banks remuneration position and revise the structure according to the Competitive market. b. Align compensation strategy with business strategy c. Determine the percentage of increment at each job grade d. Get acquaint with the economy inflation. Based on the survey, Bank changes the remuneration on COMPA-Ratio based of its existing employees. A discussion of how the bank ensures that risk and compliance employees are remunerated independently of the businesses they oversee : Control function of internal control and compliance directly respond of Audit Committee of the Board and dotted report to the President and Managing Director. Credit Risk Officer report to President and Managing Director directly. c) Description of the ways in which current and future risks are taken into account in the remuneration processes. The Bank’s remuneration practices are carefully managed takes into account the following key risks when implementing remuneration measures: • Financial Risks • Compliance Risks Risk and compliance requirements represent a gateway to whether an incentive bonus payment is made and the size of the payment. Despite, if the individual does not me et or only partially meets compliance requirements, no award or a reduced award may be made. d) Description of the ways in which the bank seeks to link performance during a performance measurement period with levels of remuneration: Employees’ performance is appraised annually in line with the achieved objectives, which have a positive and direct impact in their pay package. So, individual’s remuneration may vary according to their performance. The payment is dependent on the Board’s discretion, taking into account the recent performance of the Bank. e) Description of the ways in which the bank seek to adjust remuneration to take account of longer-term performance: The Bank’s remuneration system is designed to reward long-term as well as short-term performance, encourage retention and recognize special performance in the organization. The Bank provides reasonable remuneration for short-term performance besides for longterm performance the bank has some deferred payment options (i.e. incentive bonus, gratuity, superannuation etc.).In case of following situation remuneration can be adjusted before vesting: • Disciplinary Action (at the discretion of Enquiry committee) • Resignation of the employee prior to the payment date. At the same time previously paid or already vested variable pay can also be recovered under the case of disciplinary action. f) Description of the different forms of variable remuneration that the bank utilizes and the rationale for using these different forms: A summary of Short-term and Long-term compensation plan are as follows: Total Compensation = Fixed Pay (Salary)+Variable Pay (Bonus)+Variable Pay (Long term incentive) Form of variable remuneration offered by Al-ArafahIslami Bank: Cash Form: Short-Term Incentives / Rewards 1. Yearly Increment 2. Yearly fixed and incentive bonus 3. Car, fuel and car maintenance allowance for executives 4. Accelerated promotion/Special increment for especial assignments/ accomplishment; 5. Cash Risk allowance for cashier; 6. Charge allowance for Head of Branches 7. Leave Encashment. Annual Report 2021 199
  202. Long-Term Incentives / Rewards 1. Provident fund; 2. Gratuity; 3. Social Security&Benevolent(SSBF) fund 4. Staff House building Investment Scheme(SHBIS) reduce profit rate 5. Provident fund Quard(Investment) with zero profit rate 6. Yearly professional membership fees for professional certificates holder Non-Cash Form: Short-Term Incentives / Rewards 1. Accelerate promotion for top talents; 2. Study leave. Long-Term Incentives / Rewards 1. Foreign training award; b) Quantitative Disclosures: g) Number of meetings held by the main overseeing remuneration during the financial year and remuneration paid to its member : Meeting regarding overseeing the remuneration was held on as and when it required h) Number of employees having received a variable remuneration award during the financial year. - Nil Number and total amount of sign-on award made during the financial year. - Nil Number and total amount of severance payments made during the financial year. - Nil Total amount of outstanding deferred remuneration, split into cash, shares and share-linked instruments and other forms. - Nil Total amount of deferred remuneration paid out in the financial year: - Nil j) Breakdown of amount of remuneration awards for the financial year to show. Fixed and Variable: deferred and non-deferred different forms used (cash, shares, share linked instruments, other forms)- - Nil - All the remunerations are provided in the form of cash k) Quantitative Information about employees’ exposure to implicit(e.g. fluctuations in the value of shares or performance units) and explicit adjustments (e.g. clawbacks or similarreversals or downward revaluation of awards) of deferred remuneration and retained remuneration: All the remunerations are provided in the form of cash i) Total amount of outstanding deferred remuneration and retained remuneration exposed to ex post explicit and/or implicit adjustments. - Nil ii) Total amount of reductions during the financial year due to ex post explicit adjustments. - Nil iii) Total amount of reduction during the financial year due to ex post implicit adjustments - Nil 200 Annual Report 2021
  203. Auditor ’s Report and Financial Statements of AIBL Capital Market Services Limited for the year ended 31 December 2021 Annual Report 2021 201
  204. INDEPENDENT AUDITOR ’S REPORT  To the Shareholders of AIBL Capital Market Services Limited  Report on the Audit of the Financial Statements  Opinion  We have audited the financial statements of AIBL Capital Market Services Limited (the Company), which comprise the Statement of Financial Position as at 31 December, 2021 and Statements of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the period then ended and notes to the financial statements, including a summary of significant accounting policies.  In our opinion, the accompanying financial statements present fairly, in all material respects, (or give a true and fair view of) the financial position of the Company as at 31 December, 2021 and of its financial performance and its cash flows for the period then ended in accordance with International Financial Reporting Standards (IFRSs).  Basis for Opinion  We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), Bangladesh Securities and Exchange Commission (BSEC), the Companies Act 1994 and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Institute of Chartered Accountants of Bangladesh (ICAB) Bye Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.  Emphasis of Matter We draw attention to the following matter:  Initial application of IFRS-16 Leases came into effect in 1st January 2019. IFRS-16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to lessee accounting by removing the distinction between operating and finance lease and requiring the recognition of a right-of-use asset and a lease liability at commencement for all leases, except for short term leases and leases of low value assets. However, the management of the company opted not to adopt the new standard in the current financial year leading to the understatement of the Assets and Liabilities, understatement of expense, overstatement of profit further references in note 8. Our opinion is not modified in respect of this matter. Key Audit Matters   Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Our assessed key audit matters and how we addressed them are outlined below: Risk Investments:  The investment of AIBL Capital Market Services Limited comprises of in investment in Margin investment, Investment in ICB Fund, investment in Dealer A/C, Investment in Share (BBSF), Investment in AIBL  Capital Management Ltd & Investment in Intech Ltd. Investment in Margin, at the end of 31 December, 2021 are valued at BDT.  8,428,902,651 which has been decreased during the year by 1.59% compared to last year, and representing 71.35% of total assets.  Investment in ICB Fund, at the year-end, are valued at BDT 244,586,355 which has been increased by 1.38% in comparison with last year, and representing 2.07% of total assets.  Investments in Dealer A/C, at the end of 31 December, 2021 are valued at BDT.  113,110,338 which has been increased by 19.38% than what was in the last year, and representing 0.96% of total assets.  202 Annual Report 2021 Our response to the risk Our audit procedures included updating our understanding of the business processes employed by the Company for accounting and valuing their investment portfolio.  Additionally, we performed the following:  • Our audit approach was a combination of test of internal control and substantive procedures.  • We confirmed financial statement assertions regarding investment existence, completeness, right and obligation, valuation and allocation.  • We obtained sufficient audit evidence to conclude that the inputs and methodologies used for the valuation of the investments are within a reasonable range and that valuation the management of the company consistently applied policies.  • Reviewed the carrying balance of the total outstanding margin Investment.  • We tested the calculations of provision for negative equity, unrealized loss and checked the presentation and disclosure of investment in compliance with BSEC circular #SEC/CMRRCD/2009-193/196, dated28 December 2016, and circular# SEC/CMRRCD/2009-193/203) dated, 28 December 2017 and subsequent extension up to 2023 through press release on 16 July, 2020.
  205. Investments in Share (BBSF), at the end of 31 December, 2021 are valued at BDT.  425,185,788 which has been increased by 100% than what was in the last year, and representing 3.60% of total assets.  Our audit procedures included obtaining our understanding of the process of Margin Profit Income, Profit from MSND and ascertaining the balance. Additionally, we performed the following: Investments in Intech Ltd., at the end of 31 December, 2021 are valued at BDT.  1,500,000 which has been increased by 100% than what was in the last year, and representing .01% of total assets. • We assessed the appropriateness of revenue recognition accounting policy in line with IFRS 15 Revenue from contracts with customers. This was an area of focus for our audit and significant audit effort was directed.  Refer to the note no. 6 to the financial statements. Investment Income: Investment Income of BDT 148,918,120 is recognised in the Statement of Profit or Loss and Other Comprehensive Income of the Company for the year ended 31st December 2021. Investment Income has been decreased by 26.15% compared to last year due to the COVID-19 global pandemic situation. This was an area of focus for our audit and significant audit effort was directed. There is also a risk that income may be overstated due to errors or fraud through manipulation or this management bias. We focused-on area of significance of the Margin Profit Income, Profit from MSND in the financial statements. Refer to the note no. 16 to the financial statements. • Carried out cut-off testing to ensure the recognized in correct income was period. • Reviewed the carrying balance of the total figure. • Recalculated Profit charged during the year. • We also tested journal entries recognised to income focusing on unusual or irregular transactions. • Performed audit trial to understand the adequacy and the design of the investment income cycle. • We obtained sufficient audit evidence to conclude that the inputs and methodologies used determination of income are within a for the reasonable range and that policies were consistently applied by the management of the company. Other Matter  a) The financial statements of AIBL Capital Management Limited for the year ended December 31, 2020 were audited by Syful Shamsul Alam & Co., Chartered Accountants; who expressed an unmodified opinion on those financial statements on 8th May 2021. b) There has been an outbreak of the global pandemic COVID-19 on 11 March 2020 which is a force majeure event, unique in nature and has divested the world and mankind. The surge of COVID-19 has negatively impacted almost all types of businesses across the world. During the year AIBL Capital Market Services Limited has taken margin investment provision facilities as per BSEC circular # SEC/CMRRCD/2009-193/196, dated 28 December 2016, and circular# SEC/CMRRCD/2009-193/203 dated, 28 December 2017 and subsequent extension up to 2023 through press release on 16 July, 2020.  As the COVID-19 global pandemic situation had an unfavourable impact on the capital market trading, AIBL Capital Market Services Limited have been suffering a reduction in their investment income by 26% in the year 2021 than that of previous year. Other Information  Management is responsible for the other information. The other information comprises all of the information in the Annual Report other than the financial statements and our auditor’s reports thereon.  The Annual Report is expected to be made available to us after the date of this auditor’s report. The directors are responsible for the other information.  Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.  In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.   When we will review the director’s report in the annual report for the year ended 31 December, 2021, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.  Responsibilities of Management and Those Charged with Governance for the Financial Statements and Internal Controls  Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, Companies Act 1994, the Securities and Exchange Rules 1987, Financial Institution Act 1993 and other applicable laws and regulations as explained in note #2 and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.  In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.  Those Charged with Governance are responsible for overseeing the Company’s financial reporting process. Annual Report 2021 203
  206. Auditors ’ Responsibilities for the Audit of the Financial Statements   Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.  Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.  As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:  • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  • Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances.  • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.  • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.  • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.  • Obtain sufficient appropriate audit evidence regarding the financial information of the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.  We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.  We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.  From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We described these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.  Report on other Legal and Regulatory Requirements:  In accordance with the Companies Act 1994, we also report the following:  i. We have obtained the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof; ii. In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appeared from our examination of those books; iii. The Statement of Financial Position and the Statement of Profit or Loss and Other Comprehensive Income dealt with by the report are in agreement with the books of account. Place: Dhaka 03 April, 2022 204 Annual Report 2021 Khan Wahab Shafique Rahman & Co. Chartered Accountants Signed by: Faruk Ahmed FCA Partner Enrolment No.: 1591 Firm’s Registration No.: 11970 E.P. DVC: 2204031591AS693518
  207. STATEMENT OF FINANCIAL POSITION As at 31 December , 2021 Particulars Notes Amount (In Taka) 31.12.2021 31.12.2020 ASSETS: Non - Current Assets: Property, Plant & Equipment Deferred Tax Assets 9,602,934 10,176,166 4 6,690,525 6,879,749 9.2 2,912,409 3,296,417 11,801,894,278 11,368,168,979 Current Assets: Account Receivable 5 26,368,263 19,711,801 Investment 6 9,223,285,132 8,910,716,378 Investment in Share (DSE & CSE) 7 662,120,683 662,120,683 Advance, Deposits & Prepayment 8 12,458,265 10,579,975 Advance Income Tax 9 1,623,577,418 1,578,390,539 Cash and Cash Equivalent 10 254,084,517 186,649,603 11,811,497,212 11,378,345,145 4,263,725,825 4,165,588,705 4,000,000,000 4,000,000,000 263,725,825 165,588,705 7,547,771,387 7,212,756,440 Total Assets: EQUITY AND LIABILITIES: Capital and Reserve: Paid-up Capital 11 Retained Earning Borrowing from Bank 12 5,163,550,237 4,895,259,046 Accounts Payable 13 369,297,955 344,797,539 Provision for Investments 14 503,822,672 503,822,672 Provision for taxation 15 1,511,100,523 1,468,877,183 11,811,497,212 11,378,345,145 Total Equity and Liabilities: The annexed notes 1 to 28 form an integral part of these financial statements. Director Place: Dhaka 03 April, 2022 Director Managing Director Company Secretary Khan Wahab Shafique Rahman & Co. Chartered Accountants Signed by: Faruk Ahmed FCA Partner Enrolment No.: 1591 Firm’s Registration No.: 11970 E.P. DVC: 2204031591AS693518 Annual Report 2021 205
  208. STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the period ended December 31 , 2021 Particulars Notes Amount (In Taka) Jan-Dec’2021 Jan-Dec’2020 Investment Income 16 148,918,120 201,661,411 Profit paid on Borrowing 17 (203,583,939) (217,663,387) (54,665,819) (16,001,976) Net Investment Income Income from Commission, Exchange & Others: Brokerage Commission 18 289,411,279 119,953,683 Documentation & Maintenance Fess 19 5,124,250 4,609,964 Other Operating Income 20 Total operating Income (A) 56,132,730 34,015,544 350,668,259 158,579,191 296,002,440 142,577,215 Hawla, Laga & CDBL Charges 21 36,952,367 16,715,393 Salary allowances & Contribution to P.F 22 68,679,573 65,349,066 Rents, Taxes, Insurance, Lighting etc. 23 20,674,182 19,742,876 Honorarium & Meetting Expense 24 3,665,000 3,280,000 5,718 828 Postage, Telegram, Telephone & Stamps etc 25 89,706 317,218 Depreciation, Amortization & Repairs to Properties 26 4,414,224 3,951,074 Law Charges Stationary, Printing, Advertisement etc. 1,401,253 737,312 19,375,949 11,837,028 Total operating expenses (B) 155,257,972 121,930,795 Profit/(loss) before provision and Tax C = (A - B) 140,744,468 20,646,420 Other Expenses 27 Provision for Investment Provision for Taxation Deferred Tax (Income)/Expense 9.2 Net Profit after Tax - - 42,223,340 3,927,898 384,008 319,002 98,137,120 16,399,520 Retained Earning Brought forward 165,588,705 149,189,185 Retained earning Carried forward 263,725,825 165,588,705 0.245 0.041 Earning per Share (EPS) The annexed notes 1 to 28 form an integral part of these financial statements. Director Place: Dhaka 03 April, 2022 206 Annual Report 2021 Director Managing Director Khan Wahab Shafique Rahman & Co. Chartered Accountants Signed by: Faruk Ahmed FCA Partner Enrolment No.: 1591 Firm’s Registration No.: 11970 E.P. DVC: 2204031591AS693518 Company Secretary
  209. STATEMENT OF CHANGES IN EQUITY As at 31 December 2021 Particulars Share Capital Balance as on 1st January , 2021 Net profit for the Period Balance as at December 31, 2021 Retained Earning Total 4,000,000,000 165,588,705 4,165,588,705 - 98,137,120 98,137,120 4,000,000,000 263,725,825 4,263,725,825 STATEMENT OF CHANGES IN EQUITY As at December31, 2020 Particulars Balance as on 1st January, 2020 Net profit for the Period Balance as at December 31, 2020 Share Capital Retained Earning Total 4,000,000,000 149,189,185 4,149,189,185 - 16,399,520 16,399,520 4,000,000,000 165,588,705 4,165,588,705 The annexed notes 1 to 28 form an integral part of these financial statements. Director Place: Dhaka 03 April, 2022 Director Managing Director Company Secretary Khan Wahab Shafique Rahman & Co. Chartered Accountants Signed by: Faruk Ahmed FCA Partner Enrolment No.: 1591 Firm’s Registration No.: 11970 E.P. DVC: 2204031591AS693518 Annual Report 2021 207
  210. STATEMENT OF CASH FLOWS For the period ended 31 December , 2021 Amount (In Taka) Particulars Jan-Dec’2021 Jan-Dec’2020 Cash flows from operating activities Investment income receipt in Cash Profit paid on deposits and borrowing 148,918,120 201,661,422 (203,583,939) (217,663,387) Commission received in cash 289,411,279 119,953,683 Cash payments to employees (68,679,573) (65,349,077) Cash payments to suppliers (1,401,253) (737,312) Received from other operating activities (item-wise) 61,256,980 38,625,508 Paid for other operating activities (item-wise) (82,336,237) (52,755,224) Advance income tax paid (45,186,879) (19,053,613) 98,398,498 4,682,000 (312,568,754) (225,208,373) Operating profit before changes in operating assets and liabilities Changing in Operating assets & liabilities Increase/Decrease Investment Increase/Decrease of Accounts receivable (6,656,462) 53,593,321 268,291,191 (25,642,665) Increase/Decrease of Accounts payable 24,500,416 190,916,852 Increase/Decrease of other assets (item-wise) (1,878,290) 5,562,728 Increase/Decrease of Borrowing Increase/Decrease of other liabilities (item-wise) - - Cash receipt from operating activities (28,311,899) (778,137) A. Net Cash from operating activities 70,086,599 3,903,863 Purchase of property, plant and equipment (2,651,685) (1,224,343) B. Net cash flows from investing activities (2,651,685) (1,224,343) Increase in Share Capital - - Interim Dividend Paid - - C. Net cash flows from financing activities - - 67,434,914 2,679,520 - - Cash flows from investing activities: Cash flows from financing activities D. Net increase in cash and cash equivalent (A+B+C) E.Effects of exchange rate changes on cash and cash-equivalents F.Net increase in cash and cash equivalent D+E 67,434,914 2,679,520 G.Cash & Cash Equivalents at the beginning of the period 186,649,603 183,970,083 H.Cash & Cash Equivalents at the end of the period 254,084,517 186,649,603 The annexed notes 1 to 28 form an integral part of these financial statements. Director 208 Annual Report 2021 Director Managing Director Company Secretary
  211. NOTES TO THE FINANCIAL STATEMENT For the period ended 31 December 2021 1 .00 Reporting entity 1.01 Company Profile The Company is incorporated under the Companies Act 1994 as a public limited company by share namely AIBL Capital Market Services Limited on 21st September 2010. The company was entitled to commence the business also from 21st September 2010. The Company is a subsidiary company of Al-Arafah Islami Bank Limited. 1.02 Address of Registered Office and Principal Place of Business The principal place of business is the Registered Office at Peoples Insurance Bhaban (4th floor), 36 Dilkusha C/A, Dhaka-1000. 1.03 Nature of Business Activities The main objective of the company is to act as a member of Dhaka Stock Exchange and Chittagong Stock Exchange to carry on the business of broker, or dealers in stocks, shares and secure commercial papers, bonds, debentures stock, foreign currencies, treasury bills and/or any instruments. The company has eight branches in Bangladesh. 2.00 Basis for preparation of financial statements 2.01 Components of financial statements: According to International Accounting Standards (IAS)-1, as adopted by ICAB as IAS-1 “Presentation of Financial Statements” the complete set of financial statements includes the following components: i. Statement of Financial Position ii. Statement of Profit or Loss and Other Comprehensive Income iii. Statement of Changes in Equity iv. Statement of Cash Flows v. Notes, comprising a summary of significant accounting policies and other explanatory information. vi. Comparative Figures. 2.02 Statement of Compliance The financial statements of AIBL Capital Market Services Limited have been prepared in accordance with the DFIM circular No. 11 dated 23 December 2009 and requirement of the Financial Institution Act 1993, the Companies Act 1994, the Security and Exchange Commission (Amendment) Act 2012, the listing rules of Dhaka Stock and Chittagong Stock Exchange, guideline from BB, International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), and other applicable laws and regulations. In case of any rules and regulations issued by Bangladesh Securities and Exchange Commission differs from those of other regulatory authorities, the rules and regulations issued by Bangladesh Securities and Exchange Commission shall prevail. The following IAS’ are applicable to the financial statements under review: IAS-1 IAS-7 IAS-8 IAS-10 IAS-12 IAS-16 IAS-19 IAS-23 IAS-24 IAS-32 IAS-33 IAS-37 IAS-38 IFRS-9 IFRS-15 IFRS-16 Presentation of Financial Statements Cash Flow Statements Accounting policies, Changes in Accounting Estimates and Errors Events after the Balance Sheet Date Income Taxes Property, Plant and Equipment Employee Benefit Borrowing Costs Related Party Disclosures Financial instrument: Presentation Earnings per Share Provisions, Contingent Liabilities and Contingent Assets Intangible Assets Financial instrument Revenue from Contracts with Customers Leases Complied Complied Complied Complied Complied Complied Complied Complied Complied Complied Complied Complied Complied Complied Complied Non-Complied Annual Report 2021 209
  212. 2 .03 Measurement bases used in preparing the Financial Statements The elements of financial statements have been measured on “Historical Cost” convention, which is one of the most commonly adopted base provided in “the framework for the preparation and presentation of financial statements” issued by the International Accounting Standards Board (IASB). 2.04 Reporting Currency and Level of Precision: The figures in the financial statements represent Bangladesh Currency (Taka), which have been rounded-off to the nearest Taka. 2.05 Use of estimates and judgments The preparation of the financial statements in conformity with IFRS requires management to use judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised. 2.06 Going Concern Financial statements have been prepared on going concern basis as there was no significant doubt or uncertainty to continue the operation of the company in the foreseeable future. 2.07 Materiality and aggregation Each material item as considered significant by management, has been presented separately in financial statements. No amount has been set off unless the Company has a legal right to set off the amounts and intends to settle on net basis. Income and expenses are presented on a net basis only when permitted by the relevant accounting standards. 2.08 Consistency In accordance with the IFRS framework for the presentation of financial statements together with IAS 1 and IAS 8, AIBL Capital Market Services Limited applies the accounting disclosure principles consistently from one period to the next. In case of selecting and applying new accounting policies, changes in accounting policies applied and correction of errors, the amounts involved are accounted for and disclosed retrospectively in accordance with the requirement of IAS-8. 2.09 Contingent asset and contingent liability The Company does not recognize any Contingent Asset and Contingent Liability, but discloses the existence of contingent liability in the financial statements. A contingent liability is a probable obligation that arises from the past events and whose existence will be confirmed by the occurrence of uncertain future events beyond the control of the Company or a present obligation that is not recognized because of outflow of resources is not likely or obligation cannot be measured reliably. 2.10 Books of account The Company maintains its books of account for main business in Electronic Form through soft automation. 2.11 Reporting period The financial period of the Company has been determined to be from 1 January to 31 December each period. These financial statements cover the period from 01 January 2021 to 31 December 2021. 2.12 Events after balance sheet date (IAS-10) Events after the reporting period, dividend declared after the reporting period should not be classified as a liability at the reporting period as the proposed dividend does not represent an Obligation under IAS-37: Provision, Contingent Liabilities and Contingent Assets. Where necessary, all the material events after the reporting period is considered and appropriate adjustments /disclosures is made in the financial statements in accordance with IAS 10 - Events After Balance Sheet Date. 2.13 Comparative figures of financial statements Comparative information has been disclosed in respect of the period ended 31 December 2021 for all numerical data in the financial statements and also the narrative and descriptive information when it is relevant for better understanding of the current year’s financial statements. 3.00 Principal Accounting Policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements. 210 Annual Report 2021
  213. 3 .01 Recognition and measurement (PPE) Items of property, plant and equipment are measured initially at cost and subsequently at cost less accumulated depreciation in compliance with International Accounting Standard (IAS) 16: Property, Plant and Equipment. The cost of acquisition of an asset comprises its purchase price and any direct cost for bringing the asset to its working condition for its intended use. Expenditures incurred after the assets have been put into use, such as repairs and maintenance is normally charged off as revenue expenditure in the period in which it is incurred. Software and all upgradation/enhancement are generally capitalised. 3.02 Property, Plant and Equipment (PPE) and depreciation Property, Plant and Equipment are stated at cost less accumulated depreciation. Depreciation is charged on the cost of Property, Plant and Equipment in order to write off such amounts over the estimated useful lives, using the straight-line method in accordance with IAS-16.no depreciation is charged for disposal and addition during the year. Depreciation is recognized in Statement of Profit or Loss and Other Comprehensive Income on a straightline basis over the estimated useful lives of each component of an item of property, plant and equipment. The rates of depreciation used to write off the amount of assets are as follows: Interior Decoration 10% Computer Accessories 20% Online Hardware 20% Motor Car 20% Furniture & Fixture - Steel 10% Office Equipment 20% Furniture Fixture - Wood 10% Computer 20% Online Software 20% 3.03 Disposal of PPE Gains and losses on disposal of an item of property, plant and equipment are to be determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment disposed off and are recognized net with “Other NonOperational Income” in the statement of profit or loss and other comprehensive income 3.04 Impairment of PPE The carrying amounts of PPE are reviewed at each reporting date to determine whether there is any indication of impairment. An impairment loss is recognized in Statement of Profit or Loss and Other Comprehensive Income if the carrying amount of an asset exceeds its estimated recoverable amount. However, no such condition that might be suggestive of a heightened risk of impairment of assets existed at the reporting date. 3.05 Investment in security Investment in security are classified broadly in two categories and accounted under as follows: I) Investment in listed securities: Investment in listed security is carried at the lower of cost or market value in accordance with IAS-39; accordingly for investment, adequate provision is being made at the end of each calendar year considering each individual investment (where cost is less than market price). Unrealized gain or loss is not recognized in the Statement of other Comprehensive Income. II) Margin Investment: AIBL Capital Market Service Limited extended margin loan to the portfolio investors at an agreed ratio (between investor deposit and loan amount) of purchases securities against the respective investor account. The investors are to maintain the margin as per set rules and regulation.The margin is monitored on daily basis as it changes due to change in market price of share. If the margin falls below the minimum requirement, the investor are required to deposit additional fund to maintain the margin as per rules or otherwise the securities be sold to bring the margin to the required level but it was not possible to maintain under present capital market scenario. Annual Report 2021 211
  214. 3 .06 Advances, deposits and prepayments Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments or charges to other account heads such as property, plant and equipment or expenses. Deposits are measured at present value. Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to statement of comprehensive income. 3.07 Cash & Cash equivalent Cash and cash equivalent includes cash in hand, cash at bank and fixed deposits which are held and are available for use by the company without any restriction. There is insignificant risk of change in the value of the above items. 3.08 Corporate Tax I) Current tax: Income tax expense is recognized in Statement of Profit or Loss and Other Comprehensive Income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. The applicable corporate tax rate is 30% as per the Finance Act 2021 for the Company. II) Deferred tax: Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they are reversed, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity. A deferred tax asset/liabilities is recognized to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilized. Deferred tax assets/liabilities is reviewed at each reporting date and are reduced to the extent that it is probable that the related tax benefit will be realized. III) Tax exposures: In determining the amount of current and deferred tax, the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the Company to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made. 3.09 Provision on expenses Provision for expenses is recognized when the company has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefit will be required to settle the obligations and reliable estimate of the amount can be measured. 3.10 Revenue Recognition As per International Financial Reporting Standard (IFRS) 15: Revenue, revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of revenue and the cost incurred or to be incurred in respect of the transaction can be measured reliably. I) Income from margin Investment: Income from margin Investment is recognized on accrual basis. Such income is calculated considering daily margin Investment balance respective parties. Income is recognized on monthly rest. Interest charged to margin Investment that results to negative equity is not probable that the economic benefit associated with that portion will not flow to the company. So, “IFRS-16 : Revenue” this is not recognized in income. II) Income from gain on sale of securities: Capital gain or loss on disposal of security listed in the stock exchange is recorded on realized basis i.e. only when the securities are sold in the market. Unrealized capital gain or losses are not accounted for in the Statement of other Comprehensive Income. 3.11 Earnings Per Share (EPS) Earnings Per Share (EPS) is calculated by dividing total earnings available for ordinary shareholders by weighted average number of shares outstanding for the year. 212 Annual Report 2021
  215. 3 .12 Statement of Cash Flows Cash Flow Statement is prepared in accordance with IAS-7 “Cash Flow Statement”. The cash flow from the operating activities have been presented under Direct Method as prescribed by the Securities and Exchange Rules 1987 and considering the provisions of Paragraph 18(b) of IAS-7 which provides that “Enterprises are encouraged to report Cash Flow from Operating Activities using the Direct Method”. 3.13 Financial risk management The company has provided in separate notes the information about the company’s exposure to each of the following risks, the company’s objectives, policies and processes for measuring and managing risks and the company’s management of capital. • Credit risk • Liquidity risk • Market risk 3.14 Related Party Disclosure The company in the normal course of operation has entered into transactions with others entities that fall within the definition of related party transaction under IAS-24 “Related Party Disclosure”. The company believes that the effect and term of these related party transactions are not significantly different from those that could have been obtained from third parties. The significant related party transactions during the year are disclosed in Annexure-B. 3.15 Date of authorisation for issue of the financial statements On 25th April 2022, the Board of Directors reviewed the financial statements and authorised them for issue. 3.16  Effect of COVID-19 Pandemic during the year There has been an outbreak of the global pandemic COVID-19 on 11 March 2020 which is a force majeure event, unique in nature and has divested the world and mankind. The surge of COVID-19 has negatively impacted almost all types of businesses across the world. During the year AIBL Capital Market Services Limited has taken margin investment provision facilities as per BSEC circular # SEC/CMRRCD/2009-193/196, dated 28 December 2016, and circular # SEC/CMRRCD/2009-193/203 dated, 28 December 2017 and subsequent extension up to 2023 through a press release on 16 July 2020. As the COVID-19 global pandemic situation had an unfavourable impact on the capital market trading. AIBL Capital Market Services Limited has also suffered a lot due to the pandemic situation in the year 2021. Annual Report 2021 213
  216. Amount (In Taka) 31.12.2021 4.00 Property, Plant & Equipment: a) Tangible Asset Interior Decoration Computer accessories Online Hardware Motor Car Furniture & fixture - steel Office equipment Computer Furniture & fixture - wood Less : Accumulated Depreciation b) Intangible Assets Online Software 5.00 6.00 7.00 8.00 214 Less : Accumulated Depreciation Total (a+b) Details have been shown in Annexure-”A” Accounts Receivable: Receivable from DSE Receivable from CSE Dividend Receivable Investments: Margin Investment Investment ICB Fund Investment in Dealer A/C Investment in Share (BBSF) Investment In AIBL Capital Management Ltd. Investment In Intech Ltd. Investment in Share (DSE & CSE): Investment in Share (DSE) Investment in Share (CSE) 31.12.2020 17,001,228 1,615,279 2,946,884 18,062,939 698,547 11,367,347 5,907,045 3,349,558 54,480,102 6,468,725 16,689,936 1,223,174 2,946,884 18,062,939 451,400 11,254,696 4,628,895 3,261,018 51,954,194 6,564,748 221,800 221,800 315,001 315,001 6,690,525 6,879,749 23,346,303 3,021,960 26,368,263 1,583,612 12,065,947 6,062,242 19,711,801 8,428,902,651 244,586,355 113,110,338 425,185,788 10,000,000 1,500,000 9,223,285,132 8,564,718,212 241,252,108 94,746,058 10,000,000 8,910,716,378 487,120,683 487,120,683 175,000,000 175,000,000 662,120,683 662,120,683 Investment in Shares of Dhaka & Chittagong Stock Exchange Limited as shown above is based on acquisition cost from the parent company Al-Arafah Islami Bank Limited, face vale of which was Tk. 2,000 (Two thousand) and Tk. 300,000 (Three lac) per share respectively. After Demutualization, DSE alloted 5,411,329 number of ordinary shares (of which 2,525,288 shares blocked with DSE Demutualization Blocked Account) and CSE also alloted 4,287,330 number of ordinary shares (of which 2,572,398 shares are blocked with CSE) at face value of Tk. 10/- each. Advance, Deposit & Prepayments: Advance against Office Space at Nikunja, Dhaka. 100,000 Advance against Office Space Head Office. 3,079,380 855,420 Advance against Office Space Gulshan(old). 344,080 344,080 Advance rent Gulshan Br.(New) 557,342 807,338 Advance Rent Khulna 1,055,460 2,069,760 Advance Rent Uttara Br. 1,968,930 1,968,930 Annual Report 2021
  217. Advance Rent Barisal Br . Advance Rent Dhanmondi Br. Advance Rent Sylhet Br. Advance Rent B. Baria Advance Rent Khatungonj Advance Against Petty Cash 9.00 Advance Income Tax: Opening Balance Tax deducted at source DSE Tax deducted at source CSE TDS against Dividend Tax deducted at source Bank Tax paid for previous year 900,849 131,009 669,438 41,931 205,908 3,503,938 12,458,265 930,849 1,154,009 209,655 446,176 1,693,758 10,579,975 1,578,390,539 43,154,710 535,759 1,489,573 6,837 1,623,577,418 1,623,577,418 1,559,336,926 17,162,761 399,465 1,028,428 462,959 1,578,390,539 1,578,390,539 19,053,613 18,188,219 24,176,626 80,447,999 414,413,240 415,952,141 306,367,030 299,791,671 1,578,390,539 1,578,390,539 19,053,613 18,188,219 24,176,626 80,447,999 414,413,240 415,952,141 306,367,030 299,791,671 1,578,390,539 1,578,390,539 3,296,417 (384,008) 2,912,409 2,912,409 3,615,419 (319,002) 3,296,417 3,296,417 254,078,915 5,602 254,084,517 186,642,621 6,982 186,649,603 17,684 17,292 243,916,674 162,665,106 1,789,813 1,003,149 491,308 483,159 8,745 1,910,000 1,950,000 2,724,000 9.01 Tax paid 2020 through Chalan & Source Tax paid 2019 through Chalan & Source Tax paid 2018 through Chalan & Source Tax paid 2017 through Chalan & Source Tax paid 2016 through Chalan & Source Tax paid 2015 Through Challan & Source Tax paid 2014 through challan & Source Tax paid 2013 through challan & Source 9.02 Deferred Tax Assets Opening Balance Addition During the year Adjustment during the year 10.00 Cash and Cash equivalent: Al-Arafah Islami Bank Limited Shajalal Islami Bank Limited 10.01 Balance at Bank: Al-Arafah Islami Bank Limited, Motijheel Br. Dhaka (2693) AIBL Capital Market Services Limited Cons.customers Ac AIBL, Motijheel Br. (0021220002927) AIBL Capital Market Services Limited.Corporate Ac AIBL, Motijheel br. (0021220002936) AIBL Capital Market Services Ltd. Dividend A/C AIBL,Motijheel Br. (0021120583328) AIBL Capital Market Services Limited, Dhanmondi AIBL Capital Market Services Limited, Union Bank Gulshan br. AIBL Capital Market Services Limited, Khatunginj Note-10.01 Annual Report 2021 215
  218. AIBL Capital Market Services Ltd . Public App. A/C AIBL Motijheel Br. (0021220004506) AIBL Capital Market Services Limited, Dlear AC AIBL, Motijheel Br (0021220003278) AIBL Capital Market Services Limited, ICB Pronodona Scheme 2 AIBL, Motijheel Br (0021220009614) BBSF Investment Account, AIBL, Motijheel Br.(10222) AIBL Capital Market Services Limited, B. Baria AIBL Capital Market Services Limited, Barishal AIBL Capital Market Services Limited, Uttara AIBL Capital Market Services Limited SIBL, Principal Br.(0021330451189) AIBL Capital Market Services Limited Khulna 11.00 Share Capital: 11.01 Authorised Capital: The authorised Capital of the Company is 100,00,00,000 Ordinary Share of TK. 10 each. 11.02 Issued, Subscribed and fully Paid-up Capital: Issued, Subscribed and fully Paid-up Capital is 40,00,00,000 share of TK. 10 each. 11.03 Share Holding Position: As at 31 December, 2021 % of Share Name of the Share Holder holdings Al-Arafah Islami Bank Limited 60.50% KDS Garment industries Ltd. 5.00% Alhaj Abu Naser Mohammad Yeahea 4.50% Alhaj Kazi Md. Mofizur Rahman 2.00% Badshah Meah 1.75% Alhaj Eng. Kh. Mesbahuddin Ahmed 1.75% Alhaj Abus Salam 1.50% Mohammed Mahtabur Rahman 1.50% Islamic Commercial Insurance Co. Ltd. 1.25% Mohammed Haroon 1.00% Norrish Poultry and Hatchery ltd. 1.00% P & I International Limited 1.00% Niaz Ahmed 0.75% Mohammed Emadur Rahman 0.75% Mohammed Oliur Rahman 0.75% Badiur Rahman 0.63% China Builders and Machinaries Ltd. 0.63% KYCR Coils Industries Ltd. 0.50% Alhaj Abdul Malek Mollah 0.50% Bangladesh Ship Brake Limited 0.50% Alhaj Nazmul Ahsan Khaled 0.50% Alhaj Abdus Samad 0.50% Md. Ashik Hossain 0.50% Farid Ahmed 0.50% A S M Mainuddin Monem 0.50% Kazi Abu Kauser 0.50% Mollah Mahmood Malek 0.50% 216 Annual Report 2021 444,870 14,542,957 2,587,213 1,943,762 88,183 185,090 2,324,680 500 233,000 209,245 57,000 254,078,915 528,000 400,000 106 200,000 186,642,621 10,000,000,000 10,000,000,000 4,000,000,000 4,000,000,000 No. of Shares 242,000,000 20,000,000 18,000,000 8,000,000 7,000,000 7,000,000 6,000,000 6,000,000 5,000,000 4,000,000 4,000,000 4,000,000 3,000,000 3,000,000 3,000,000 2,500,000 2,500,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 Amount (In Taka) 2,420,000,000 200,000,000 180,000,000 80,000,000 70,000,000 70,000,000 60,000,000 60,000,000 50,000,000 40,000,000 40,000,000 40,000,000 30,000,000 30,000,000 30,000,000 25,000,000 25,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000
  219. Galco Steel Bangladesh ltd . Faisal Ahmed Kh Sakib Ahmed Md. Liakat Ali Chowdhury Ahmedul Haque Sarker Mohammad Shameem Iqbal Master Abul Kashem Naba knit Composite Limited Jainul Abedin Jamal Kamal Uddin N.Nasir Uddin Majbura Begum Asma Begum Afroza Sultana Shajjad Mustafa Azad Mustafa Farhana Irin Tanveer Nawaz Sk. Md. Samiul Islam Mohammad Jahangir Mollah Mazharul Malek Mohammed Oheidul Alam Sahana Ferdous Md.Nurul Hoque Mrs. Shamsun Nahar Begum Md. Rafiqul Islam Mohammad Fazlur Rahman Anower Hossain Akram Hussain Miss Ruksana Mumtaz Hussain Akhter Hussain Akbar Hossain TOTAL 12.00 Borrowing from Bank: Borrowing from Al-Arafah Islami Bank Limited Motijheel Borrowing from Union Bank ltd. Borrowing from SIBL BBSF Investment ICB pronodona Scheme 2 Borrowing from HaJJ Finance 13.00 Accounts Payable : Profit Payable for SIBL Profit Payable for AIBL Motijheel Br. Profit Payable for UNION Bank Profit Payable for HAJJ Finance Profit Payable for BBSF Investment Profit Payable for ICB Pronodona Scheme 2 VAT, Salary Tax & AIT Payable 0.50% 0.50% 0.50% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 100.00% 2,000,000 2,000,000 2,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 400,000,000 20,000,000 20,000,000 20,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 4,000,000,000 3,397,899,998 800,000,000 497,700,000 400,000,000 67,950,239 5,163,550,237 3,399,100,000 800,000,000 471,690,598 164,468,448 60,000,000 4,895,259,046 20,656,125 30,991,674 45,727,128 14,845,020 1,829,029 581,621 94,280,088 36,660,432 30,238,239 4,770,895 323,978 Annual Report 2021 217
  220. Payable to DSE Payable to CSE Clients Payable Accrued exp Audit Fees Dividend adjustment clients Security Money IPO Application Process Account 14 .00 Provision for Investment: Openig Balance Add : Provision for Investment Closing Balance 15.00 16.00 17.00 18.00 19.00 20.00 218 Provision for Taxation : Openig Balance Add: Income tax provision during the year Closing Balance Investment Income Margin Profit income Profit on MSND Profit paid on Borrowing : SIBL Union Bank ltd AIBL Motijheel Branch BBSF Investment HaJJ Finance ICB Pronodona Scheme 2 Brokerage commission DSE CSE Documentation & Maintenance Fess BO Documentation and Maintenance fees Margin documentation fees Other Operating Income CDBL Income Cheque dishonour Charge Dividend income IPO Process Income Realized Capital gain Others Annual Report 2021 4,050,560 130,827 206,857,023 155,310 469,836 100,367 42,903,435 369,297,955 27,063,524 2,111,111 121,975,534 105,310 50,000 458,689 117,539 26,642,200 344,797,539 503,822,672 503,822,672 503,822,672 503,822,672 1,468,877,183 42,223,340 1,511,100,523 1,464,949,285 3,927,898 1,468,877,183 148,849,355 68,765 148,918,120 197,031,463 4,629,948 201,661,411 67,922,853 74,013,889 34,931,242 14,845,020 6,844,832 5,026,103 203,583,939 62,255,188 103,078,703 35,037,486 9,400,583 7,891,427 217,663,387 285,776,504 3,634,775 289,411,279 117,257,603 2,696,080 119,953,683 5,032,250 92,000 5,124,250 4,540,964 69,000 4,609,964 1,003,549 141,000 4,837,107 274,265 49,872,429 4,380 56,132,730 445,521 70,000 5,895,364 111,040 27,488,247 5,372 34,015,544
  221. 21 .00 22.00 23.00 24.00 25.00 26.00 27.00 Hawla, Laga & CDBL Charges Laga charge DSE Laga charge CSE CDBL Charges Salary allowances & Contribution to P.F Salary allowances & Contribution to P.F Wages Security Services Rents, Taxes, Insurance, Electricity etc. Rent Insurance Electricity bill Honorarium & Meeting Expense Meeting & Honorariam Postage, Telegram, Telephone & Stamps etc. Postage, Telegram, Telephone & Mobile Stamps Photocopy Depreciation & Repairs to Properties Depreciation Repair & Maintenance Other Expenses Computer Charge Bank Charge Petroleum Oil, Lubricant & WASA/ Gas. Entertainment Bonus & Incentive Donation Registration Travelling, conveyance, Tranportation &Saturday Allowance Internet & Online Charge Employees welfare exp. Audit Fees Utilities bill Vat Miscellaneous (Note-27.01) 21,372,909 246,449 15,333,009 36,952,367 8,908,945 7,806,448 16,715,393 67,265,998 856,550 557,025 68,679,573 63,690,174 1,061,163 597,729 65,349,066 18,376,832 33,575 2,263,775 20,674,182 17,671,591 75,903 1,995,382 19,742,876 3,665,000 3,665,000 3,280,000 3,280,000 64,593 18,750 6,363 89,706 310,680 1,200 5,338 317,218 2,840,909 1,573,315 4,414,224 3,089,194 861,880 3,951,074 264,135 701,539 1,134,953 1,585,671 5,252,161 20,000 16,585 827,961 2,306,600 386,713 50,000 533,140 11,100 6,285,391 19,375,949 6,500 188,336 733,612 697,114 5,138,602 150,000 144,715 2,210,343 50,000 215,640 3,600 2,298,566 11,837,028 Annual Report 2021 219
  222. 27 .01 28.00 220 Miscellaneous Subscription Renewal Newspaper Training & AR Liecence Fee Mandetory Leave Business Development Exp. Agent commission Upkeep, wasing & cleaning Miscellanous Investors Protection Closing Allowances EID Garcia Bank Guarantee 764,916 64,709 17,200 5,127,413 28,870 64,022 51,711 51,550 115,000 6,285,391 589,346 86,629 344,625 223,000 743,530 24,320 32,816 9,000 15,300 230,000 2,298,566 We submitted monthly report to DSE namely “Input Template” for calculating “Net Capital Balance” and “Aggregate Indebtedness Ratio” for the December, 2021 based on our provisional accounts. Therefore, those figures were not matched in some cases with final financial statements for the year ended 31 December, 2021. Annual Report 2021
  223. Annual Report 2021 221 2 ,946,884 18,062,939 Online Hardware Motor Car 88,540 2,429,885 3,261,018 58,518,942 Furniture & Fixture - Wood Total 60,467,035 2,651,685 - - - 221,800 221,800 1,948,093 Online Software 1,948,093 - - - - - - - - - - 63,118,720 2,169,893 2,169,893 60,948,827 3,349,558 5,907,045 11,367,347 698,547 18,062,939 2,946,884 1,615,279 17,001,228 Balance as on Dispopsal/ December 31, Adjustment 2021 Intangible Assets 1,278,150 4,628,895 Computer 112,651 11,254,696 247,147 - - 392,105 311,292 Addition during the Year Office Equipment 451,400 1,223,174 Computer Accessories Furniture & Fixture - Steel 16,689,936 Balance as on January 1, 2021 Interior Decoration Tangible Asset Particular Cost 20% 10% 20% 20% 10% 20% 20% 20% 10% Rate % 53,587,286 1,633,092 1,633,092 51,954,194 2,854,298 4,420,094 10,977,825 271,642 18,062,938 2,946,883 1,223,173 11,197,341 Balance as on January 1, 2021 As at December 31,2021 FIXED ASSETS SCHEDULE AIBL Capital Market Services Ltd. 2,840,909 315,001.0 315,001.0 2,525,908 326,102 208,801 276,871 45,140 - - - 1,668,994 Charge during the Year - - - - - - - - - - - Adjustment Depreciation 56,428,195 1,948,093 1,948,093 54,480,102 3,180,400 4,628,895 11,254,696 316,782 18,062,938 2,946,883 1,223,173 12,866,335 Balance as on December 31, 2021 6,690,525 221,800 221,800 6,468,725 169,158 1,278,150 112,651 381,765 1 1 392,106 4,134,893 Written Down Value as on december 31, 2021
  224. Auditor ’s Report and Financial Statements of AIBL Capital Management Limited for the year ended 31 December 2021 222 Annual Report 2021
  225. INDEPENDENT AUDITOR ’S REPORT To the Shareholders of Al-Arafah Islami Bank Capital Management Limited Report on the Audit of the Financial Statements Opinion We have audited the financial statements of “Al-Arafah Islami Bank Capital Management Limited” which comprise the statement of financial position as at 31 December 2021 and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of “Al-Arafah Islami Bank Capital Management Limited” as at 31 December 2021 and of its financial performance for the year then ended in accordance with International Financial Reporting Standards (IFRSs), and other applicable laws and regulations. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), together with the ethical requirements that are relevant to our audit of the Financial Statements in jurisdictions and we have fulfilled our other ethical responsibilities in accordance these requirements and with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other matter The financial statements of AIBL Capital Management Limited for the year ended December 31, 2020 were audited by HUSSAIN FARHAD & CO., Chartered Accountants; who expressed an unmodified opinion on those financial statements on 25th April, 2021. Responsibilities of management and those charged with governance for the financial statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, the Companies Act 1994, the Securities & Exchange Rules 1987 and other applicable laws and regulations and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management but not for the purpose expressing an opinion on the effectiveness of the company’s internal control. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause found the company to cease to continue as a going concern. Annual Report 2021 223
  226. • Evaluate the overall presentation, structure and content of the Company’s financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We are also required to provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Report on other Legal and Regulatory Requirements In accordance with the Companies Act 1994, we also report the following: a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof; b) in our opinion, proper books of accounts as required by law have been kept by the company so far as it appeared from our examination of these books; and c) the statement of financial position and statement of profit or loss and other comprehensive income dealt with by the report are in agreement with the books of accounts and returns. Place: Dhaka 31 March, 2022 224 Annual Report 2021 Khan Wahab Shafique Rahman & Co. Chartered Accountants Signed by: Faruk Ahmed FCA Partner Enrolment No.: 1591 Firm’s Registration No.: 11970 E.P. DVC: 2204031591AS693518
  227. STATEMENT OF FINANCIAL POSITION as at 31 December 2021 Particulars Notes Amount in Taka 31 .12.2021 31.12.2020 ASSETS: Non - Current Assets Property, Plant & Equipment 4.00 Current Assets: 512,402 124,754 512,402 124,754 565,813,517 557,303,603 Cash and Bank Balance 5.00 14,114,828 18,478,730 Account Recivable 6.00 3,523,589 17,355,273 Investment 7.00 531,737,175 277,127,650 Advance Income Tax 8.00 16,287,719 15,231,050 150,207 229,110,900 566,325,919 557,428,357 521,114,411 516,165,743 Balance with AIBL CMSL Total Assets EQUITY AND LIABILITIES: Capital and Reserve Paid Up Capital 9.02 500,000,000 500,000,000 Retained Earning 10.00 21,114,411 16,165,743 45,211,508 41,262,614 Current Liabilities Accounts Payable 11.00 2,300,797 911,136 Provision for Taxation 18.00 27,338,379 24,779,146 Provision for Investment 19.00 15,572,332 15,572,332 566,325,919 557,428,357 10.42 10.32 Total Equity and Liabilities NAV The annexed notes from an integral part of these financial statements. Director Director CEO Sign subject to our separate report of even date annexed. Dated, Dhaka 31st March 2022 Khan Wahab Shafique Rahman & Co. Chartered Accountants Signed by: Faruk Ahmed FCA Partner Enrolment No.: 1591 Firm’s Registration No.: 11970 E.P. DVC: 2203311591AS489888 Annual Report 2021 225
  228. STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the period ended 31 December , 2021 Particulars Notes 12.00 Investment Income Net Investment Income 13.00 Operating Income Amount in Taka 2021 2020 618,117 6,945,439 618,117 6,945,439 21,217,689 4,971,891 21,835,806 11,917,330 9,957,630 4,675,746 325,600 161,195 15.00 87,431 37,730 57,500 57,500 Stationery, Printing, Advertisement etc. 16.00 160,734 37,921 Depreciation, Amortization & Repairs to Properties 4.00 229,129 125,479 Other Expenses 17.00 3,509,881 795,260 14,327,905 5,890,831 7,507,901 6,026,499 Total operating Income (A) 14.00 Salary allowances & Contribution to P.F Board Meetting Expense Postage, Telegram, Telephone & Stamps etc Audit fees Total operating expenses (B) Profit/(loss) before provision and Tax C = (A - B) Provision for Taxation 18.01 2,559,233 1,408,644 Provision for Investment 19.00 - - Net Profit after Tax & Provision 4,948,668 4,617,855 Retained earning Carried forward 4,948,668 4,617,855 0.099 0.092 Earning per Share (EPS) The annexed notes from an integral part of these financial statements Director Director CEO Sign subject to our separate report of even date annexed. Dated, Dhaka 31st March 2022 226 Annual Report 2021 Khan Wahab Shafique Rahman & Co. Chartered Accountants Signed by: Faruk Ahmed FCA Partner Enrolment No.: 1591 Firm’s Registration No.: 11970 E.P. DVC: 2203311591AS489888
  229. STATEMENT OF CHANGES IN EQUITY For the period ended 31 December , 2021 Particulars Share Capital Balance as at 01 January, 2021 Retained Earning 500,000,000 Net Profit for the period Balance as at 31 December ,2021 16,165,743 Total 516,165,743 - 4,948,668 4,948,668 500,000,000 21,114,411 521,114,411 For the period ended 31 December, 2020 Particulars Share Capital Balance as at 01 January, 2020 Director Total 500,000,000 11,547,887 511,547,887 - 4,617,855 4,617,855 500,000,000 16,165,743 516,165,743 Net Profit for the period Balance as at 31 December , 2020 Retained Earning Director CEO Sign subject to our separate report of even date annexed. Dated, Dhaka 31st March 2022 Khan Wahab Shafique Rahman & Co. Chartered Accountants Signed by: Faruk Ahmed FCA Partner Enrolment No.: 1591 Firm’s Registration No.: 11970 E.P. DVC: 2203311591AS489888 Annual Report 2021 227
  230. STATEMENT OF CASH FLOWS For the period ended 31 December , 2021 Amount in Taka Particulars Cash flows from operating activities Investment income receipt in Cash Profit paid on deposits and borrowing Dividend Received Fees & Commission received in cash Cash payments to employees Cash payments to suppliers Received from other operating activities (item-wise) Paid for other operating activities (item-wise) Paid for Preliminary Expenses Advance income tax paid Operating profit before changes in operating assets and liabilities Changing in Operating assets & liabilities Increase/Decrease Investment Increase/Decrease of Accounts receivable Increase/Decrease of Borrowing Increase/Decrease of Borrowing (MTDR Quard) Increase/Decrease of Accounts payable Increase/Decrease of other assets (item-wise) Increase/Decrease of other liabilities (item-wise) Cash receipt from operating activities A. Net Cash from operating activities Cash flows from investing activities: Purchase of property, plant and equipment B. Net cash flows from investing activities Cash flows from financing activities Increase in Share Capital C. Net cash flows from financing activities D. Net increase in cash and cash equivalent (A+B+C) E.Effects of exchange rate changes on cash and cash-equivalents F.Net increase in cash and cash equivalent (D+E) G.Cash & Cash Equivalents at the beginning of the year H.Cash & Cash Equivalents at the end of the year Net Operating Cash Flow per Share The annexed notes from an integral part of these financial statements Director Director 2021 2020 618,117 (9,957,630) 21,217,689 (4,141,146) (1,056,669) 6,680,362 6,945,439 (4,675,746) 4,971,891 (1,089,606) (1,063,391) 5,088,587 (254,609,525) 13,831,683 - (31,336,369) (6,592,460) - 1,389,661 228,960,693 (10,427,487) (3,747,126) 533,389 40,197,637 2,802,198 7,890,784 (616,777) (616,777) 0 0 (4,363,903) (4,363,903) 18,478,730 14,114,828 (0.075) 7,890,784 7,890,784 10,587,946 18,478,730 0.158 CEO Sign subject to our separate report of even date annexed. Dated, Dhaka 31st March 2022 228 Annual Report 2021 Khan Wahab Shafique Rahman & Co. Chartered Accountants Signed by: Faruk Ahmed FCA Partner Enrolment No.: 1591 Firm’s Registration No.: 11970 E.P. DVC: 2203311591AS489888
  231. AIBL Capital Management Limited NOTES TO THE FINANCIAL STATEMENTS As at and for the period ended 31 December , 2021 1.00 Significant Accounting Policies and other materials information 1.01 Legal Form of the Enterprise: The Company has been incorporated under the Companies Act (Act XVIII) of 1994 as a private limited company namely AIBL Capital Management Limited on 25th October2011. The Company was issued Certificate of Commencement of Business on 25th October, 2011. The Company is a subsidiary company of Al- Arafah Islami Bank Limited. 1.02 Address of Registered Office and Principal Place of Business: The principal place of business is the Registered Office at Level-15, ‘Al-Arafah Tower’ 63, Purana Paltan, Dhaka -1000. 1.03 Nature of Business Activities: AIBL Capital Management Ltd. is a full-fledged merchant bank licensed by Bangladesh Securities & Exchange Commission (BSEC). The main objective of the company is to carry out the activities of a full-fledged merchant banker such as Issue Management, Portfolio Management, Underwriting and Corporate Advisory services etc. as per Securities Exchange Commission (Merchant Banker and Portfolio Manager) Regulation, 1996. 2.00 Basis for preparation of financial statements: 2.01 Statement of Compliance: The financial statements of AIBL Capital Management Limited have been prepared in accordance with the DFIM Circular no 11 dated 23rd December 2009 and requirement of the Companies Act, 1994, the Security Exchange Rules 1987, Guidelines from Bangladesh Bank, International Accounting Standard (IAS), and International Financial Reporting Standards (IFRS) and other applicable laws and regulations of Bangladesh Securities & Exchange Commission. 2.02 Measurement bases used in preparing the Financial Statements: The elements of financial statements have been measured on “Historical Cost” basis, which is one of the most commonly adopted base provided in “the framework for the preparation and presentation of financial statements” issued by the International Accounting Standard Board (IASB). 2.03 Going Concern: Financial statements have been prepared on going concern basis as there was no significant doubt or uncertainty to continue the operation of the company in the foreseeable future. 2.04 Reporting Period: The financial statements cover the period from 01 January 2021 to 31 December 2021. 2.05 Financial and Presentation Currency: a) The financial statements are presented in Bangladesh Taka (BDT) currency, which is both functional currency and presentation currency of the company. b) Figures in these notes and annexed financial statements have been rounded off to the nearest Taka. c) Figures relating to previous year have been rearranged wherever considered necessary to confirm with current year’s presentation. 2.06 Property, Plant, equipment and depreciation: Property, Plant & equipment are stated at cost less accumulated depreciation. Depreciation is charged on the cost of fixed assets in order to write off such amounts over the estimated useful lives, using the straight-line method in accordance with IAS-16. Depreciation for full month is charged on additions irrespective of date when the related assets are put into use and no depreciations is charged for the month of disposal. The rates of depreciation used to write off the amount of assets are as follows: Office Equipment 20% Computer 20% Online Software 20% Annual Report 2021 229
  232. 2 .07 Related Party Disclosure: The company in the normal course of operation has entered into transactions with others entities that fall within the definition of related party transaction under IAS-24 “Related Party Disclosure”. The company believes that the effect and term of these related party transactions are not significantly different from those that could have been obtained from third parties. The significant related party transactions during the year are disclosed in Schedule-C. 2.08 Components of financial statements: According to International Accounting Standard (IAS)-1, “presentation of financial statements” the complete set of Financial Statements includes the following components: i) ii) iii) iv) v) Statement of Financial Position Statement of Profit or Loss and Other Comprehensive Income Statement of Changes in Equity Statement of Cash Flows Notes, comprising a summary of significant accounting policies and other explanatory information 3.00 Principal Accounting Policies: 3.01 Cash flow Statement: Cash Flow Statement is prepared in accordance with IAS -7 “Cash Flow Statement”. The cash flow from the operating activities have been presented under Direct Method as prescribed by the Securities and Exchange Rules 1987 and considering the provisions of Paragraph 18(b) of IAS-7 which provides that “Enterprises are encouraged to report Cash Flow from Operating Activities using the Direct Method”. 3.02 Revenue Recognition: Income is recognized on accrual basis, such income is calculated considering daily margin loan balance of the respective parties. Income is recognized as per IFRS-15. 3.03 Event after balance sheet dated: IAS-10: Events after the reporting period, dividend declared after the reporting period should not be classified as a liability at the reporting period as the proposed dividend does not represent an Obligation under IAS-37 Provision Contingent Liabilities and Contingent Assets. 3.04 Cash & Cash Equivalent: Cash and cash equivalents includes cash in hand, cash at bank and fixed deposits which are held and are available for use by the company without any restriction. There is insignificant risk of change in the value of the above items. 3.05 Provision on expenses: Provision for expenses is recognized when the company has a present obligation as a result of a Past event and it is probable that an outflow of resources embodying economic benefit will be required to settle the obligations and reliable estimate of the amount can be measured. 3.06 Provision for Taxation: Provision for current income tax is made on the tax base profit of the company with consideration of taxable add-back of income and allowances and disallowances of expenditures in compliance of IAS-12 “Income Tax” 3.07 Investment in Shares & Securities: Investment in quoted shares are initially recognized at cost plus transaction costs that are directly attributable to the acquisition of the shares. After initial recognition, investment in quoted shares has been revalued at cost at reporting date. However, adequate provision has made if market value consider as down trend of the reported cost but no unrealized gain in recognized in the profit and loss account. % of Share Holding 98.00% 2.00% 230 Annual Report 2021
  233. Particulars 4 .00 Amount in Taka 31.12.2021 31.12.2020 Property,Plant & Equipment Opening balance Add: Additions Closing balance (A) 1,342,372 1,342,372 616,777 - 1,959,149 1,342,372 1,217,618 1,092,139 Depreciation : Opening balance Add: Charge for the year 229,129 125,479 1,446,748 1,217,618 512,402 124,754 AIBL Capital Management Ltd. (Corporate A/C ) 4,256,768 13,773,268 AIBL Capital Management Ltd. (Customers Portfolio A/C) 9,858,060 4,705,463 14,114,828 18,478,730 6,091 - Closing balance (B) Written down value (A-B) Details have been shown in Schedule-A 5.00 6.00 Cash at Bank Accounts Recivable Recivable from Panel Broker Divident Recivable Profit on MTDR AIBL Asset Management Ltd. 7.00 Investment in Shares & Securities (schedule-B) Investment in Placement Share IPO FPM Bidding and Subscription Investment in Al-Arafah Islami Bank Ltd. for MTDR Investment in Car 16,054,929 373,315 - 3,523,589 17,355,273 1,989,853 3,384,154 517,010,792 163,755,496 - 9,988,000 10,683,930 - - 100,000,000 2,052,600 - 531,737,175 277,127,650 15,231,050 14,167,659 Advance Tax Opening balance Add: Additions 1,056,669 1,063,391 Closing Balance 16,287,719 15,231,050 2,000,000,000 2,000,000,000 500,000,000 500,000,000 500,000,000 500,000,000 Name of the Share Holder Amount in Tk. Amount in Tk. Al-Arafah Islami Bank Limited 490,000,000 490,000,000 9.00 Share Capital 9.01 Authorised Capital The authorised Capital of the Company is 20,00,00,000 Ordinary Share of TK. 10 each. 9.02 1,300,344 - Investment Margin Investment 8.00 3,144,183 Issued, Subscribed and fully Paid-up Capital Issued, Subscribed and fully Paid-up Capital is 5,00,00,000 share of TK. 10 each. Share Holding Position : Annual Report 2021 231
  234. Particulars AIBL Capital Market sevices Limited 10 .00 Add: Net profit for the year Add. Adjust from Provision for Investment Closing balance Audit fees Clint Deposit Agent Commission 10,000,000 10,000,000 16,165,743 11,547,887 4,948,668 4,617,855 - - 21,114,411 16,165,743 - 42,338 57,500 57,500 2,222,104 811,298 21,193 - 2,300,797 911,136 - 107,676 182,955 40,737 Investment Income Profit from Cash at Bank Margin Profit Income Service Charge Income Profit on MTDR 13.00 31.12.2020 Accounts Payable Al-Arafah Islami Bank Ltd. For Bata Shoe Dividend wrongly credited amount 12.00 31.12.2021 Retained Earnings: Opening balance 11.00 Amount in Taka 2,000 - 433,162 6,797,026 618,117 6,945,439 15,767,483 2,598,799 4,695,843 2,345,307 484,267 - Operating Income Capital Gain Dividend Income Commission Income IPO Process income Issue Manager Commission income BO Documentation 380.00 - 100,000 - 44,500 1,000 Cheque Dishonour Charge BO Closing CDBL for yearly rebates & Charge Income BO Maintanance, Renewal Fee 14.00 Leave Encashment Mandatory Leave Allowance 232 120,415 24,261 2,800 1,400 21,217,689 4,971,891 8,087,245 4,169,364 169,310 159,120 71,050 - Bangla Noboborsho Bonus 43,174 32,832 Incentive & Festval Bonus 835,855 314,430 Car Allowance 750,996 - 9,957,630 4,675,746 87,431 37,730 87,431 37,730 160,734 37,921 Postage, Telegram, Telephone, Mobile & Stamps etc. Postage, Telegram, Telephone, Mobile & Stamps etc. 16.00 1,124 Salary Allowances & Contribution to P.F. & B.F. Salary and Allowance 15.00 2,000 - Stationary, Printing, Advertisement etc. Advertisement Exp. Printing & Stationary Annual Report 2021
  235. Particulars 17 .00 Amount in Taka 31.12.2021 160,734 31.12.2020 37,921 287,500 100,000 18,540 63,789 867,629 1,004,000 54,050 263,492 4,500 55,706 800 50,835 90,000 14,400 163,388 178,252 35,000 240,000 18,000 3,509,881 100,000 19,180 26,605 12,300 1,506 2,000 18,706 1,600 157,500 180,362 27,501 240,000 8,000 795,260 24,779,146 2,559,233 27,338,379 23,370,502 1,408,644 24,779,146 7,526,025 15,767,483 4,695,843 433,162 (13,370,463) 1,576,748 939,169 43,316 2,559,233 6,026,499 2,598,799 2,345,307 6,797,026 (5,714,633) 259,880 469,061 679,703 1,408,644 15,572,332 15,572,332 15,572,332 15,572,332 . . Other Expenses BSEC Annual Fees BMBA Membership & Annual fees Fees Subscription, Renewal Fees RJSC return file & other exp Entertainment BSEC Road Show Local Conveyance Newspaper, Journal, Periodicals & Books Car Registration EID Gracia Bank Charges & Fees Saturday Allowances Repair & Maintenance Wages Crockeris Internet and CDBL wan connectivity charges CDBL Charge IPO Bidding fee. Company secretariat Honorarium Closing Allowance 18.00 Provision for Tax Opening Balance Add: Income tax povision during the year Closing Balance 18.01 Provision for Current Tax : Operating Profit Less: Gain on Sale of Securities Less: Divident Income Less: Profit on MTDR Total Business Income Income Tax of @ 37.50% on estimated Business Income Add: Gain on Sale of Securities (10%) Add: Divident Income (20%) Add: Profit on MTDR (10%) 19.00 Provision for Investment: Opening balance Addition of Provision for the year Less: Adjust from Provision for Investment Closing balance Provision for Investment : A) Provision due against un-realized loss as on 31-12-2017 B) Provision made on 31-12-2017 Annual Report 2021 233
  236. 234 Annual Report 2021 Total 1 ,342,372 616,777 - 366,465 345,728 467,775 Computer MB Operationg Software Addition during the year Taka 250,312 Opening Balance 01-01-2021 Taka 528,869 Office Equipment Fixed assets Particular Disposal during the year Taka Cost - - - - 1,959,149 467,775 712,193 779,181 Balance as at 31 December 2021 Taka 20% 20% 20% Rate 1,217,618 467,774 345,727 404,118 Opening Balance 01-01-2021 Taka as on 31 December, 2021 229,129 - 73,293 155,836 Charge for the year Taka - - - - Adjustment during the year Taka Depreciation PROPERTY, PLANT & EQUIPMENT 1,446,747 467,774 419,020 559,954 Balance as at 31 December 2021 Taka 512,402 1 293,173 219,227 Written Down Value as at 31 December 2021 Taka 124,754 1 1 124,751 Written Down Value as at 31 December, 2020 Taka Schedule-A
  237. Annual Report 2021 235 55 ,000 684,000 SAIFPOWER SQURPHARM 16 17 55,000 462 60,000 87,500 1,303,050 966,221 RSRMSTEEL GENNEXT 10 100,000 15 FUWANGCER 9 1,030,707 RINGSHINE FAREASTLIF 8 238,350 1,194,033 14 EPGL 7 POWERGRID DESCO 6 1,403,753 13 DAFODILCO 5 598,800 ICBAMCLC1U BXPHARMA 4 68,000 105,000 INDEXAGRO BEXIMCO 3 150,000 12 BBSCABLES 2 No. of Shares 11 ADNTEL Name of Company 1 SL 517,010,792 13,167,122.50 31,685,342.40 3,661,128.58 3,975.51 4,164,803.18 11,663,870.10 12,992,084.50 13,024,659.61 2,699,662.18 83,827,400.32 10,010,700.00 75,176,318.02 93,149,126.65 131,444,909.27 11,745,920.19 7,995,137.36 10,598,632.06 Amount (at cost) Stock at hand as on 31 December , 2021 Market Rate INVESTMENT IN SHARES & SECURITIES 214.30 38.30 23.10 9.60 59.60 122.20 10.00 5.80 16.20 53.70 39.60 35.50 70.90 192.70 148.40 55.90 52.40 419,693,062 11,786,500.00 26,197,200.00 1,270,500.00 4,435.20 3,576,000.00 10,692,500.00 13,030,500.00 5,604,081.80 1,620,000.00 55,348,965.90 9,438,660.00 42,388,171.50 99,526,087.70 115,388,760.00 10,091,200.00 5,869,500.00 7,860,000.00 Market Amount Schedule- B
  238. 236 Annual Report 2021 Relationship Parent Company Sister Concern Name of the Party Al-Arafah Islami Bank Limited (AIBL) AIBL Capital Market Services Limited Commission 477,964,024 Sale 132,159,510 536,727,420 163,755,496 Investment at cost 269,308,536 Buy 229,110,900 Ledger balance Own Protfolio: (15,526,676) 29,937,317 191,094,028 (5,835,611) 458,421,943 158,719 - 163,755,496 229,110,900 15,093,514 The AIBL Capital Management Limited uses it’s parent company’s building as its office for which no rent is paid to it’s parent company. 9,257,902 Office Rent 100,000,000 15,093,514 - MTDR Profit - (197,017,780) (7,778,994) 4,705,463 (100,000,000) 8,254,394 202,170,377 9,858,060 13,773,268 2020 100,000,000 100,000,000 4,230,063 4,277,960 2021 Debit / Withdraw 4,705,463 (7,346,701) 14,762,085 2020 Outstanding Balance as at 31 December Receivables (Payables) Schedule-C Investment in Al-Arafah Islami Bank Ltd. For MTDR Credit / Deposit/ A/C-0021020054796 Bank Transaction: 207,825,205 2021 (217,320,512) 6,357,883 2020 Debit / Withdraw 13,773,268 2021 Transaction Value during the year Opening Balance as at 01 January Credit / Deposit/ A/C-0021220003350 Bank Transaction: Nature of Transaction Assets/(Liabilities) Expenses/(Income) Receivables (Payables) For The year and as at 31 December, 2021 SCHEDULE OF RELATED PARTY TRANSACTIONS
  239. BRANCHES OF AIBL DHAKA DIVISION Abdullahpur SME Branch Minnat Plaza , Abdullahpur Bazar Abdullahpur, Keranigonj, Dhaka-1311 01811487862 Bhagyakul Branch A Rashid Tower, Balasur Chowrasta Sreenagar, Munshigonj 01841226671 Alenga Branch Alenga Bus Stand, Alenga Kalihati, Tangail. 01911035196 Banglamotor Branch Rupayan Trade Center; H # 114 Kazi Nazrul Islam Avenue, Ramna, Dhaka. 01793592994 Amin Bazar Branch MA Hossain Tower, Amin Bazar Savar, Dhaka - 1348 9034411-2, 01841123004 Bhairab Branch Munshi Bhaban, Kolapatty Mor Bhairab, Kishorgonj 9471178, 01817-032726 Araihazar Branch Bhai Bhai Hazi Super Market H # 337 Main Road, Araihazar, Narayangonj 01711909072. Bhelanagar Branch R. I. Shopping Complex (1st floor) Bhelanagar, Narshingdi 9452295, 01811-487868 Ati Bazar Branch Manik Plaza, Ati Bazar Keranigonj, Dhaka-1312 01833-330274 Daxminkhan Branch L.K. Plaza, Daxminkhan Bazar, Daxminkhan, Dhaka-1230 8999042, 01817032728 Azampur Branch 272 Shah Kabir Majar Road Azampur, Chalaban, Daxminkhan, Dhaka 48954592-3, 01817143928 Dhanmondi Branch (AD) H#54/1, R#4/A, Dhanmondi, Dhaka 01841131231 Baligaon Branch Bismillah Plaza, Baligaon Bazar Tongibari Munshigonj. 01819151630 Dilkusha Branch (AD) 63, Dilkusha C/A Dhaka-1000 01766677411 Banani Branch (AD) 16, Kamal Ataturk Avn Banani, Dhaka 9822250 Fax- 9822357, 01819255587 Faridpur Branch 15/75, Mujib Sarak, Niltuli Faridpur 0631-65366 01864554466 Bandar SME Branch 555/1, Wilson Road, Bandar Bazar Narayanganj 766-1317-8 01826-180327 Fulbaria Branch Haji Joynal Abedin Sarker Plaza Fulbaria,Kaliakoir, Gazipur 01847054692 Barmi Branch Shahjahan Fakir Bhaban Barmi Bazar, Sreepur, Gazipur 01847054694 Gawsia Branch Bhai Bhai Complex Rupgonj, Narayangonj 01791418011 Bashundhara Branch H # 262-263, Block - B Bashundhara R/A, Dhaka 01841226660 Gazipur Branch Holding # K-280 , BIDC Road Gazipur 4926-1102, 4926-1140 01811-448051 Annual Report 2021 237
  240. Gulshan Branch (AD) South Bridge Squire 52 Gulshan Avenue, Dhaka-1212 9863236, 01814652647 Kamrangirchar Branch Hazi Kamal Super Market Kamrangirchar, Dhaka-1211 55160200, 01825928909 Gulshan Link Road Branch H # 204/B, Tejgaon Gulshan Link Road, Dhaka 01711351761 Kapasia Branch Kapasia Bazar, Kapasia, Gazipu 029209393, 01671973077 Hazaribagh Branch 149, Hazaribagh bazar Dhaka-1209 9611758-9, 01819-255297 Head Office Corporate Branch (AD) Al-Arafah Towar (1st & 2nd Floor) 63, Purana Paltan (Daynik Bangla Mor) Dhaka-1000 02-44 85 00 01(D), 01811409593 Hemayetpur Branch Asha Plaza (1st Floor), Hemayetpur Bus Stand Hemayetpur, Savar, Dhaka 01811-448052 Islampur Branch 29-31, Islampur Road Dhaka-1100 57393800, 57393754, 01841226653 Jatrabari Branch (AD) 6 S.F. Sharak, West Jatrabari Dhaka-1204 7554510, 7554477, 01847054693 Jamgora Branch Mollah Tower, Chhaitola Bus Stand Jamgora, Ashulia, Dhaka 01889171075) Joydebpur Chowrasta Branch Chandona Chowrasta Joydebpur, Gazipur-1700 49263958, 01912000458 Kalatia SME Branch Kabir Bazar, Kalatia Bazar Keranigonj, Dhaka 7769157, 01760-938299 Kaliakoir Branch College Road, Kaliakoir Bazar Kaliakoir Gazipur; 01716342805 Kaligonj Branch Twin Tower Market Aganagar, Kaligonj, Keranigonj Dhaka 01819677740 238 Annual Report 2021 Kathgora Bazar Branch Sarkar Plaza, Kathgora Bazar Ashulia, Dhaka-1341 7792573, 01972582013 Kazirhat Branch Mosjid Market, Kazirhat Jajira Shariatpur-8010 01717527797 Kawranbazar Branch Dhaka Trade Centre 99, Kazi Nazrul Islam Avenue Kawran Bazar, Tejgaon, Dhaka-1215 9135309, 01748414849 Keranigonj Branch Haridia Shopping Complex, Kadamtoli Keranigonj, Dhaka-1310 7763100, 01956587196 Khilkhet Branch B-34/Ka, Khilkhet Super Market Khilkhet, Dhaka-1229 58950051, 01937777077 Konapara Branch 958, Konapara Bazar Demra, Dhaka 01811-409592 Louhajang Branch Dowlat Khan Complex Louhajang, Munshiganj 01711733734 Madhabdi Branch 691-694 Madhabdi Bazar, Narshingdi 9446005, 01711-613484 Manda Branch 152 South Manda, Dhaka-1214 7277772, 7277388, 01811-458743 Manikgonj Branch Shwargo Tower, H # 129, Shahid Rafiq Sarak Manikgonj Sadar, Manikgonj 01716068686
  241. Mirpur Branch 3 /A, Darus-Salam Road Mirpur-1, Dhaka-1216 9008123, 9010623, 01811-449493 Nawabpur Road Branch (AD) 85/87, Nawabpur Road Dhaka-1100 01787-697347 Mirpur-10 Golchattar Branch 9/1 Adarsha School Market Mirpur-10, Dhaka-1216 9011766, 01811487861 Nayapur Branch Nayapur Shopping Center Nayapur Bazar Narayangonj 01811-487863 Mograpara Branch Mograpar Bazar Sonargaon, Narayangonj 01833954353 New Elephant Road Branch (AD) 91, New Elephant Road Dhaka-1205 9665323-4, 01819238220 Mohakhali Branch Arzed Chember 13 Mohakhali C/A, Dhaka-1212 9852243, 9852259, 01811417659 Mohammadpur Krishi Market Branch 32/8(Ka),T.M. Road Mohammadpur, Dhaka-1207 9142732, 01814652446 Mostafapur Branch Saim Super Market Mostafapur Bus Stand Madaripur 0661-61206-7, 01714067411 Motijheel Branch (AD) 161, Motijheel C/A, Dhaka-1000 9569350 (D), 01811413963 Motijheel Corporate Branch (AD) 125, Motijheel C/A, Dhaka-1000 9563884, 01811417660 Moulvibazar Branch (AD) 130, Chawk Mogoltuly Moulvibazar, Dhaka-1211 57311989, 01819-211828 Mouchak Branch 76 D.I.T. Road Malibagh, Dhaka-1217 9339006, 01819556379 Nandipara Branch Akkel Ali Shopping Complex Nandipara Bazar, Dhaka 7811053, 01819457729 Narayangonj Branch (AD) 71, B.B. Road, Narayangonj 7645821, 01811487867 Natun Bazar Baridhara Branch 1209 Madani Avenue Natun Bazar Dhaka 01911711950 New Market Branch Kazi Mansion 2/1 Elephant Road New Market, Dhaka 01716256929 North South Road Branch (AD) 96, Nazrul Islam Sharoni Bongshal, Dhaka-1100 9580875, 01811410075 Pagla Branch Alhajj Afser Karim Bhaban Pagla, Narayangonj 47696133, 01819-253591 Pallabi Branch Plot # 81, Block # A, Section # 12 Pallabi, Mirpur Dhaka 9023611, 9023511 Panchdona SME Branch Hira Plaza, Panchdona Chowrasta Narshingdi 029446452-3, 01619556567 Panthapath Branch F R Tower, 8/C Shukrabad Panthapath, Dhaka-1207 9138682, 01833330271 Progati Sharani Branch (AD) Ga-133/3 Progati Sharani Dhaka 9863317, 01713-204935 Rampal Branch Mujibur Rahman Super Market (1st floor) Shipahipara, Rampal, Munshigonj 7611855, 01716753106 Rampura Branch 5/1, Pashchim Chowdhury Para D.I.T. Road, Rampura Dhaka-1219 9361356, 01819157536 Annual Report 2021 239
  242. Rajbari Branch F . N. Tower H # 256, Main Road Rajbari Sadar, Rajbari 01712652099 Uttara Model Town Branch (AD) H#13 R # 14/A, S-4, Uttara Dhaka-1230 58950583, 01819-261382 Ruhitpur Branch Sun Plaza Market, Ruhitpur Bazar Keranigonj Dhaka 7766882-3, 01811418222 VIP Road Branch (AD) 50/1, Inner Cercular (VIP) Road, Dhaka-1000 9345871-2, 01833330272 Shantinagar Branch Sun Tower, Chamelibagh Shantinagar Dhaka 01688192625 MYMENSINGH DIVISION Signboard Branch Signboard, Fatulla, Narayangonj 01712032254 Shokhipur Branch Shokhipur Bazar, Kachua Road Shokhipur Tangail 01758039606 Shyamoli Branch 13/1 Ring Road, Shyamoli Dhaka-1207 9136517, 01718711511 Sonargaon Janapath Road Branch Plot#30, Sector#11, Sonargaon Janapath road Uttara, Dhaka-1230 01937100100 South Jatrabari Branch 314-A/4 South Jatrabari Dhaka-1204 7545161, 01811418204 Tangail Branch 77-78, Victoria Road, Tangail 092161435, 01819-556372 Tekerhat Branch H # 975, Tekerhat Bazar Rajoir, Madaripur 01726408722 Tongi Branch Holding # 8, Charag Ali Market Tongi, Gazipur 01711642356 Tejgaon Branch Famroze Tower, 159/D Tejgaon I/A, Dhaka 01716313337 240 Annual Report 2021 Jamalpur Branch 1419-00 Medical Road Jamalpur Sadar, Jamaplur 01912000458 Mymensingh Branch 70, Choto Bazar, Mymensingh 091-66714 01819261297 Masterbari Branch Masterbari, Bhaluka, Mymensingh. 01713572333 Netrokona Branch 274, Choto Bazar, Netrokona. 0951-615 48, 0951-615 49 01777754849 CHATTOGRAM DIVISION Agrabad Branch (AD) 96, Agrabad C/A Chattogram 031-713372-3 Akhaura SME Branch S. R. Complex (1st floor) Sarak Bazar Akhaura, B.Baria 08522-56155 01740-619012 Aman Bazar Branch Amanat Sha Palza (1st Floor) Hathazari Road, Chattogram 031-2580870-1 01811418371 Andarkilla Branch Zia Bhaban, 813/1451 Nazir Ahmed Chowdhury Road Andarkilla, Chattogram 01817210879 Anwara Branch Chaturi Bazar, Anwara Chattogram 01841226659 Ashugonj Branch Jalal Khar Building Ashugonj Bazar, Brahmanbaria 01747296951
  243. Azadi Bazar Branch Jamey Masjid Market , Azadi Bazar Fatikchhari, Chattogram. 016 29 40 89 98 Chowmuhani Branch 857,858 Hazipur, Feni Road, Noakhali 0321-51000 Bandartila Branch 2638, Airport Road, Ba. Naw. Ja. Isha khan EPZ, Chattogram, 031 74 03 83 Companigonj Branch Companigonj Bazar, Muradnagor, Cumilla-3542 08026-59076, 01712235569 Barura Branch Madina Market, Hospital Road Barura, Cumilla 0802752305-6, 01847-054695 Cox’s Bazar Branch 902, Saiket Tower, East Bazarghata Cox’s Bazar 0341-51081-2 01819-320289 Bashurhat SME Branch 34, Main Road Bashurhat, Noakhali 0322-356070, 01811-448041 Cumilla Branch 257,240, Monoharpur, Kotwali Cumilla-3500 081-64546, 01711-431174 Bahaddar Hat Branch H # 4592 Shah Amanat Concreeted Road Bahaddarhat, Chattogram 01720150975 Dohazari Branch Dohazari Bazar Chandanish, Chattogram 01862888193 Bhatiary Branch Bhatiary Station, Sitakunda Chattogram 01877185532 Eidgoan Branch Eidgaon Bazar, Cox’s Bazar Sadar Cox’s Bazar 01839656396 Bizra Bazar Branch Bizra Bazar Laksham, Cumilla 01710635790 Feni Branch 33-34 S.S.K Road Feni 0331-63548-9 01811-418216 Boalkhali Branch Well Foyez Center (1st Floor) Gumdondi, Fultali Boalkhali, Chattogram 01817751748 Firingi Bazar Branch H # 211, 220, Kobi Nazrul Islam Sarak Chattogram 01841123008 Brahmanbaria Branch Mosjid Road, Bhuiyan Mansion Brahmanbaria Sadar 0851-59330, 01827-563888 Gallai Branch Abeda Noor Foundation Complex Gallai Chandina, Cumilla 01886219672 Chambol Branch Chambol, Bashkhali, Chattogram 01841226670 Gohira Branch Gohira Digri College Market Raujan, Chattogram 01847310192 Chandina Branch Ahmed Ali Complex Chandina, Cumilla 01716387752 Gouripur Branch Maa Complex (1st Floor) Gouripur Bazar, Daudkandi, Cumilla. 01811418206 Chawkbazar Branch Shajada Market (1st Floor) 178/182 College Road, Chawkbazar Chattogram 031-2853784-5, 01811458741 Hathazari Branch Salamatullah Bhaban, Kachari Road Hathazari Bazar Chattogram, 031-2601679 01811-408492 Annual Report 2021 241
  244. Hajigonj Branch Hajigonj Tower , 762 Hajigonj, Chandpur 0842-475145-6 Halishahar Branch Holding: 1655, Port Connecting Road Halishahar, Chattogram, 031-715662-3 01833-149150 Hatiya Branch Moulvi Shafiullah Super Market H # 1510, Main Road, Hatiya, Noakhali 01720630088 Jamalkhan Branch 84/A Jamalkhan, Chattogram 01712836797 Jubilee Road Branch (AD) 221, Jubilee Road, Chattogram 031-637680 01819-315480 Kadamtoli Branch 376, D. T. Road Kadamtali, Chattogram 031-2522835, 031-2522861-2, 01847114430 Karnafuly Branch Anowar City, Charpaharghata Karnafuly, Chattogram 01886330315 Khatungonj Branch (AD) Ktatungonj Trade Center 1625/1351 Ramjoy Mohajon Lane P. O. Goli, Khatungonj, Chattogram 01819-315481 Kutibazar Branch Siraj Plaza, Kutibazar Kasba B.Baria 01768722151 Lakshmipur Branch Akota Super Market, 1310-12 Bazar Main Road Lakshmipur Sadar, Lakshmipur 0381-62290, 01720561020 Laksham Branch H # 639, Bank Road, Laksham, Cumilla. 01844584333 Lichubagan Branch Toiyabia Complex, Lichubagan Rangunia, Chattogram 0184782968 242 Annual Report 2021 Matiranga Branch B. Nawab Shopping Complex 196, Matiranga Bazar, Matiranga, Khagrachhari 01819175952 Muradpur Branch Islam Tower, 59, CDA Avenue Muradpur, Panchlaish, Chattogram 031-657966, 01965-881111 Nabinagar Branch Nabin Super Market, Sadar Road Nabinagar, Brahmanbaria 0852575504, 01766-678445 Nangalkot Branch H – 50, College Road Nangalkot, Cumilla 01712796757, 0803366471-2 O.R. Nizam Road Branch Rumana Heights, 1062/A O.R. Nizam Road, Panchlaish, Chattogram. 01819-345030 Padua Bazar Branch Seven Star Shopping Complex Padua Bazar, Lohagara, Chattogram 01833-175500 Pahartali Branch S. S. Tower, H # 6103/6882 Sagorika Road, Pahartali Chattogram 01919297699 Patiya Branch H # 2329 Awami Super Market Patiya Upazilla Sadar, Chattogram 01880003045 Patherhat Branch Patherhat, Rauzan Chattogram-4346 031-671150, 01811-424739 Pekua Branch Pekua Baza, Cox’s Bazar 01855885557 Rahimanagar Branch Rahimanagar Bazar Kachua, Chandpur 01811-487870 Rangamati Branch Kalpotoru Holyday Int. Ltd. Banarupa, Rangamati Sadar, Rangamati 01792253088
  245. Shantirhat Branch Mir Super Market , Shantirhat, Chattogram. 01847114428 Shiberhat Branch Idris Complex (1st Floor) Shiberhat Sandwip, Chattogram 01847114428, 01796399377 Sitakunda Branch H # 518, Kabir Plaza, D. T. Road Sitakunda, Chattogram 01711306700 Zindabazar Branch Jalalabad House Zindabazar, Sylhet 0821-722078-9, 01711-431175 KHULNA DIVISION Benapole Branch 283, 284, Benapole Bazar Jashore 04228-75686, 01711-431176 Station Road Branch 108, Station Road, Chattogram 01814651011 Chuadanga Branch Molla Tower-2, Hotel Royal Blue (1st Floor) Shahid Alaul Islam Khokon Sarak (VJ School Road) Chuadanga 0761-81146-7 Tantarbazar SME Branch Haji Lal Mia Market, Tantar Bazar Akhaura Brahmanbaria 01743-244344 Chuknagar Branch Chuknagar Bazar Dumoria, Khulna 01750-024499 Teknaf Branch Al-Jamia Market Teknaf, Cox’s Bazar 034-2675120, 034-2675121, 01833-112924 Doulatpur Branch Upper Jeshore Road Doulatpur, Khulna 01710685025 SYLHET DIVISION Amborkhana Branch 4877, 4874 Amborkhana, Sylhet 01777-767929 Beanibazar Branch 825, South Beani Bazar, Sylhet 08223-56114-5, 01713-409987 Laldighirpar Branch (AD) Reasot Tower, 1795 Laldighirpar, Sylhet. 01819-550426 Madhabpur SME Branch H-0006-000 Kalibari Road, W-07 Madhabpur Hobigonj 0832-756352, 01926-697968 Moulvibazar Branch 73 Farhad Plaza, Dhaka-Sylhet Highway, Moulvibazar 0861-54106-7, 01714-000907 Sreemangal Branch 1450 Central Road, Sreemangal, Moulvibazar 08626-71242, 01711431173 Shahjalal Upashahar Branch H # 0706-00 R # 35 B # D Shahjalal Upashahar, Sylhet 01712487493 Gallamari Branch 219/1, Sher-E-Bangla Road Gallamari, Khulna 041-2832181, 01830886633 Jashore Branch 27, M.K. Road, Jashore 0421-68571, 01711-431060 Jhaudanga Branch Zaman Market, Jhaudanga Bazar, Satkhira. 01751751357 Jhinaidaha Branch 33, Sher-E-Bangla Sarak Jhinaidaha Sadar, Jhinaidaha. 01911929293 Khulna Branch (AD) 4, Sir Iqbal Road, Khulna 041-721249, 01765-063340 Kushtia Branch 147, N. S. Road Harun Market (Infront of Sadar Thana), Kushtia. 07172262, 01799368224 Kolaroa Branch H # 5839, Kolaroa Bazar Kolaroa, Satkhira 01718383840 Annual Report 2021 243
  246. Magura Branch S .M Plaza (1st Floor) 177, M.R Road, ( College Road), Magura 0488-510 70 Mongla Branch 19/A, Mongla Port I/A Mongla, Bagerhat 04662-75105-6, 01738-933588 Monirampur Branch G. N. Super Market, H. # 03-005-0134 Monirampur Bazar Main Road Monirampur, Jashore 04227-783 60 Nolta Branch Nolta Sharif Super Marke Nolta Kaligonj, Satkhira 01732569143 Satkhira Branch 466, Bara Bazar Sarak, Satkhira 0471-63606, 01712-514660 Sharankhola Branch Panch Rasta Mor, Rayenda Bazar Sharankhola, Bagerhat 01953359768 Bhola Branch Jahangir Plaza, Sadar Road, Bhola 0491-61244-5, 01796863911 Jhalakathi Branch 68, Monoharipatti Road, Jhalakathi 0498-62808, 01754-015565 Fax : 0498-62807 Mathbaria Branch 407 Kapuriapatty, Mathbaria, Pirojpur 04625-75374, Fax - 04625-75373 Patharghata Branch 2/1 Hospital Road Patharghata, Barguna 017 16 70 65 76 Patuakhali Branch 95/1, Sadar Road Patuakhali Sadar, Patuakhali 0441-639 55-6, 01793205621 Pirojpur Branch H # 420 Lawer’s Plaza Post Office Road, Pirojpur 01811418209 RAJSHAHI DIVISION Shyamnagar Branch J. C. Complex, Shyamnagar Main Road Shyamnagar, Satkhira 01980746172 BARISHAL DIVISION Alipur Branch Alipur Bazar, Kalapara, Patuakhali 044-2856234-5, 01755906755 Banaripara Branch Haji Sobhan Market, Falpatti Road Banaripara, Barishal 0433-25 62 90 (D), 0433-25 62 91, 017 15 63 29 60 244 Bogura Branch (AD) Talukder Mansion H # 60/70 Barogola Bogura-5800 051-69994-5, 01713-203754 Chapainawabganj Branch Teacher’s Plaza (1st Floor) 42/14, Baten Khar More Chapainawabganj Sadar, Chapainawabganj 0781-515 45 (D), 0781-515 46, 017 28 50 40 26 Mohadevpur Branch Plot No. 245, Mohadevpur, Noagaon 07426-75136, 01711-425675 Barguna Branch Holding # 075, Sadar Road, Borguna 044 85 13 39-40, 017 27 42 19 43 Natore Branch Holding #0363-01, Kanaikhali Natore Sadar, Natore 0771-61533-4, 01811417662 Barishal Branch 442 K. B. Hemayetuddin Road, Barishal 0431-64476, 01727379119 Pabna Branch Plot#355, Sonapotti, Pabna 0731-62047, 01765700080 Bhandaria Branch Salah Al-Zubayer Market (1st Floor) Kapuriapatty Bhandaria, Pirojpur 0462-356469, 01726-265060 Rajshahi Branch (AD) 239,248 Shaheb Bazar Boalia, Rajshahi 0721-775171, 01727-179771 Annual Report 2021
  247. Shahjadpur Branch Chowdhury Plaza Dariapur Bazar Shahjadpur , Sirajgonj 07527-64052, 07527-64053,01762-331990, 01557-718828 Sherpur Branch Dhunat More, Sherpur, Bogura 0502977185-6, 017283303 31 RANGPUR DIVISION Badargonj SME Branch Upazila Road, Badargonj, Rangpur 05222-56573-4, 01761-730189 Dinajpur Branch 333, Nimtola, Dinajpur 01718219226 Lalmonirhat Branch Shahan Shopping Complex Kalibari Mor, Puran Bazar, Lalmonirhat 01767423226. Palashbari Branch Rabbi Super Market (1st Floor) Bogura-Rangpur Highway Palashbari, Gaibandha 01819559413 Rangpur Branch 15, Central Road, Payrachattar, Rangpur 0521-55830 Saidpur Branch (AD) Shahed Dr. Zikrul Haque Road Saidpur, Nilphamari 05526-72804, 01716-236334 Thakurgaon Branch M. H. Tower, H # 37 Bangabandhu Road, Chowrasta Thakurgaon Sadar, Thakurgaon. 01911747435 Annual Report 2021 245
  248. Head O ffice: 63, Purana Paltan, Dhaka-1000 PROXY FORM I/We......................................................................................................................of (address)............................................................................... ...................................................................................................................................being a sharehholder(s) of Al-Arafah Islam Bank Limited do hereby appoint Mr/Mrs. .................................................................................................................................................................................... of (address) ........................................................................................................................................................................................................... as my/our proxy on my/our behalf to attend and vote for me/us at the 27th Annual General Meeting (AGM) to be held on Monday the 11th August, 2022 at 11.30 a.m. through Digital Platform (link https:\\aibl.bdvirtualagm.com) at any adjournment thereof. Signed this in my/our presence on .............................................. day of ............................. 2022 Revenue Stamp of Tk. 20/- Signature of the Shareholder Signature of the Proxy Folio No. ......................................... BO/A/C No. No. of Shares held on Record Date (i.c. June 08, 2022) ................................ Notes: 1. This Form of Proxy dully signed (as recorded with the bank), stamped and completed must be submitted to the Registered office or Share Department Al-Arafah Towar, Level- 4, 63 Purana Paltan, Dhaka -1000 of the Company at least 48 (Forty eight) hours before the AGM. Head Office: 63, Purana Paltan, Dhaka-1000 ATTENDANCE SLIP I do hereby record my attendance of the 27th Annual General Meeting (AGM) of the Company to be held on Thursday the 11th August 2022 at 11.30 a.m. respectively through Digital Platform. Name of the Shareholder/Proxy (in Block Letter) ................................................................................................................................................. No. of Shares held on Record Date (i.c. June 08, 2022) ......................................... Folio No. ................................................................... BO A/C No. Signature Verified by Signature of the Shareholder/Proxy 246 Annual Report 2021 Authorized Signature of the the Bank
  249. Al-Arafah Tower , 63 Purana Paltan, Dhaka-1000 PABX: +88-02-44850005 (Hunting); Fax: +88-02-44850063 E-mail: info@aibl.com; Web: www.aibl.com; /aibl.com Annual Report 2021 247