Proximity of practical scenario is a must to make theoretical concept and learning fruitful. Practical orientation is an exciting to be well conversant with practical banking. During the practical orientation period I worked mainly at Gulshan Branch Shahjalal Islami Bank Limited. This report is mainly based on Risk Based Capital Adequacy under Basel-II of Shahjalal Islami Bank Limited. One of vital division of this report is introduction which comprises the general and specific objectives, scopes, methodology, limitations. The main part of this report is the analysis and interpretation of Risk Based Capital Adequacy under Basel-II of Shahjalal Islami Bank Limited. Here mainly analysis that how SJIBL implement this new Basel-II regulation imposed by Bangladesh Bank and also try to find out the SJIBL overall RWA, Core Capital, Supplementary Capital position. Lastly this report includes findings, recommendation and conclusion. All those based on the financial statements of Shahjalal Islami Bank Limited. Here I try to show overall RBCA position of Shahjalal Islami Bank Limited.
To cope with the international best practices and to make the bank’s capital more risk sensitive as well as more shock resilient, ‘Guidelines on Risk Based Capital Adequacy (RBCA) for Banks’ (Revised regulatory capital framework in line with Basel II) have been introduced from January 01, 2010 with its subsequent supplements/revisions in Bangladesh. Instructions regarding Minimum Capital Requirement (MCR), Adequate Capital, and Disclosure requirement as stated in these guidelines have to be followed by all scheduled banks under Bangladesh Bank for the purpose of statutory compliance.
Shahjalal Islami Bank Ltd is one of the promising bank in Bangladesh. Many commercial banks are operating in this country and playing a vital role in the economic progress through mobilization of funds from savings units to deficit units Shahjalal Islami Bank Ltd is one of them. The banks should follow the regulations & guidelines of Bangladesh Bank for ensure secure banking business. Bangladesh Bank has introduced new guidelines for Minimum Capital Requirement (MCR) for every bank operated in the country. The new MCR is 10% on the calculation of the Total Risk Weighted Assets (RWA). Capital adequacy measurement under the Bangladesh Bank guideline is needed for banks to safe their banking business for longer term growth with the shorter term survival. Capital adequacy threshold for banks has been raised from 9% to 10% of the total risk weighted assets and core capital requirement has also been raised from 4.5% to 5% in the recent year. In the recent years Shahjalal Islami Bank Ltd has maintained the sufficient CAR as guided by the Bangladesh Bank; it seems to in the upward sign for the bank. This entire paper is based on the theoretical Basel II Capital Adequacy Framework, calculation of capital, scope of the total capital and total risk based weighted assets & also covering the strengths, weaknesses, opportunities and threats of Shahjalal Islami Bank Ltd. The report covers the area of the total Risk Based Capital Adequacy for a bank through ratio analysis and also using different statistical tools.
1.2 Origin of the report
This report is originated as the partial requirement of MBA program, Department of Banking University of Dhaka. As practical orientation is integral part of MBA program requirement, I was sent to Shahjalal Islami Bank Ltd.
This internship report is generated under the supervision of Mr. Ariful Islam, Lecturer, Department of Banking, University of Dhaka. The topic of this report is Risk Based Capital Adequacy of Shahjalal Islami Bank Ltd.
1.3 Objectives of the Report
Objective of the study acts as a bridge between the starting point and the goals of the study. To illustrate the objectives properly, presented into two parts:
General objectives of the Report: The general objective of the Report is to complete the internship as for partial requirement of MBA program, a student need to work in a business organization for two months to acquire practical knowledge about real business operations of a company.
Specific objectives of the Report:
· To be myself familiar with current Basel II Capital Adequacy framework for all schedule Banks in Bangladesh.
· To measure the Risk Based Capital Adequacy of Shahjalal Islami Bank Ltd with Guidelines on Risk Based Capital Adequacy (RBCA) for have been introduced by Bangladesh Bank.
· To constitute a more comprehensive approach to addressing Bank Risk.
· To cover all essential banking risks with theoretically grounded, flexible and operable requirements which create incentives for advanced implementation.
1.4 Methodology
The research design is presented below:
Area of Study:
The proposed study has been focused on the Risk Based Capital Adequacy of Shahjalal Islami Bank Ltd with Guidelines on Risk Based Capital Adequacy (RBCA) for have been introduced by Bangladesh Bank.. In relation with the general & specific objectives, the Gulshan Branch of Shahjalal Islami Bank Limited has been selected to perform my internship program.
Source of information:
Primary Data:
· Collect data from Bank Officials
Secondary data: Secondary sources consist of several reading materials such as circulars, journals, brochures, training materials and annual reports.
The required data and information to prepare the assignment have been collected from the followings sources:
· Annual reports of Shahjalal Islami Bank Limited from year 2006 to year 2010.
Internet
· Daily News Paper, Journals and Periodicals.
· Bangladesh Bank’s guidelines.
Determination of time horizon:
The time horizon has been selected of five years from 2006 to 2010. Over the five year time period, the related data of the Shahjalal Islami Bank has been evaluated to find out compliance with Bangladesh Bank guideline.
Data Processing & Analysis:
Technique Used in this Study:
· Using Ratio Analysis
§ Capital Adequacy Ratio (CAR)
§ Core Capital Ratio
§ Supplementary Capital Ratio
· Using Regression Analysis
· And using SWOT Analysis
Data has been computerized & processed by using MS Word, MS Excel and SPSS.
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To cope with the international best practices and to make the bank’s capital more risk sensitive as well as more shock resilient, ‘Guidelines on Risk Based Capital Adequacy (RBCA) for Banks’ (Revised regulatory capital framework in line with Basel II) have been introduced from January 01, 2010 with its subsequent supplements/revisions in Bangladesh. Instructions regarding Minimum Capital Requirement (MCR), Adequate Capital, and Disclosure requirement as stated in these guidelines have to be followed by all scheduled banks under Bangladesh Bank for the purpose of statutory compliance.
Shahjalal Islami Bank Ltd is one of the promising bank in Bangladesh. Many commercial banks are operating in this country and playing a vital role in the economic progress through mobilization of funds from savings units to deficit units Shahjalal Islami Bank Ltd is one of them. The banks should follow the regulations & guidelines of Bangladesh Bank for ensure secure banking business. Bangladesh Bank has introduced new guidelines for Minimum Capital Requirement (MCR) for every bank operated in the country. The new MCR is 10% on the calculation of the Total Risk Weighted Assets (RWA). Capital adequacy measurement under the Bangladesh Bank guideline is needed for banks to safe their banking business for longer term growth with the shorter term survival. Capital adequacy threshold for banks has been raised from 9% to 10% of the total risk weighted assets and core capital requirement has also been raised from 4.5% to 5% in the recent year. In the recent years Shahjalal Islami Bank Ltd has maintained the sufficient CAR as guided by the Bangladesh Bank; it seems to in the upward sign for the bank. This entire paper is based on the theoretical Basel II Capital Adequacy Framework, calculation of capital, scope of the total capital and total risk based weighted assets & also covering the strengths, weaknesses, opportunities and threats of Shahjalal Islami Bank Ltd. The report covers the area of the total Risk Based Capital Adequacy for a bank through ratio analysis and also using different statistical tools.
1.2 Origin of the report
This report is originated as the partial requirement of MBA program, Department of Banking University of Dhaka. As practical orientation is integral part of MBA program requirement, I was sent to Shahjalal Islami Bank Ltd.
This internship report is generated under the supervision of Mr. Ariful Islam, Lecturer, Department of Banking, University of Dhaka. The topic of this report is Risk Based Capital Adequacy of Shahjalal Islami Bank Ltd.
1.3 Objectives of the Report
Objective of the study acts as a bridge between the starting point and the goals of the study. To illustrate the objectives properly, presented into two parts:
General objectives of the Report: The general objective of the Report is to complete the internship as for partial requirement of MBA program, a student need to work in a business organization for two months to acquire practical knowledge about real business operations of a company.
Specific objectives of the Report:
· To be myself familiar with current Basel II Capital Adequacy framework for all schedule Banks in Bangladesh.
· To measure the Risk Based Capital Adequacy of Shahjalal Islami Bank Ltd with Guidelines on Risk Based Capital Adequacy (RBCA) for have been introduced by Bangladesh Bank.
· To constitute a more comprehensive approach to addressing Bank Risk.
· To cover all essential banking risks with theoretically grounded, flexible and operable requirements which create incentives for advanced implementation.
1.4 Methodology
The research design is presented below:
Area of Study:
The proposed study has been focused on the Risk Based Capital Adequacy of Shahjalal Islami Bank Ltd with Guidelines on Risk Based Capital Adequacy (RBCA) for have been introduced by Bangladesh Bank.. In relation with the general & specific objectives, the Gulshan Branch of Shahjalal Islami Bank Limited has been selected to perform my internship program.
Source of information:
Primary Data:
· Collect data from Bank Officials
Secondary data: Secondary sources consist of several reading materials such as circulars, journals, brochures, training materials and annual reports.
The required data and information to prepare the assignment have been collected from the followings sources:
· Annual reports of Shahjalal Islami Bank Limited from year 2006 to year 2010.
Internet
· Daily News Paper, Journals and Periodicals.
· Bangladesh Bank’s guidelines.
Determination of time horizon:
The time horizon has been selected of five years from 2006 to 2010. Over the five year time period, the related data of the Shahjalal Islami Bank has been evaluated to find out compliance with Bangladesh Bank guideline.
Data Processing & Analysis:
Technique Used in this Study:
· Using Ratio Analysis
§ Capital Adequacy Ratio (CAR)
§ Core Capital Ratio
§ Supplementary Capital Ratio
· Using Regression Analysis
· And using SWOT Analysis
Data has been computerized & processed by using MS Word, MS Excel and SPSS.
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