A comparative study on Dhaka Bank Ltd and Shahjalal Islami Bank Ltd.
The banking system plays a crucial role in underpinning economic development. Against the background of Financial Sector Reform Policy in Bangladesh, Dhaka Bank Limited (DBL) and Shahjalal Islami Bank Limited have resulted in great success in all areas of operation with a view to improve the socio-economic development of the country.
Since the beginning of its journey DBL has never looked back. It has established itself as one of the strong local bank of this country. Its capital base is as strong as its profit is high, not only this it has a capital adequacy ratio of 11.31 % and classified loan ratio of 5.57 %. Literally this bank is growing day by day. During last nine years SJIBL has diversified its service coverage by opening new branches at different strategically important locations across the country offering various service products both investment & deposit.Its capital adequacy ratio 13.98% in 2009 and classified investment to total investment was 0.98%. In credit or investment management banks have to conscious about customers,their repayment capacity and the most important fact is interest rate though SJIBL is interest- free bank.
After the introduction of Financial Sector Reform Policy and Banking Company Act 1991, changes in banking sector of the country are very remarkable. Activities of different dimensions, modern systems and methods of workings and better policies have been taking place in the banks. Successful application and operations of these methods and policies in different banks for providing efficient services enhance performance of them. Credit evaluation is a result of this trend. Credit portfolio of the bank is increasing over the period of time with interest income from investment. In this paper we basically focus on credit performance in islami banking in relation to conventional banking which is based on interest on a high scale.
Bangladesh economy has been experiencing a rapid growth since the '90s. Industrial and agricultural development, international trade, inflow of expatriate Bangladeshi workers' remittance, local and foreign investments in construction, communication, power, food processing and service enterprises ushered in an era of economic activities. Urbanization and lifestyle changes concurrent with the economic development created a demand for banking products and services to support the new initiatives as well as to channelize consumer investments in a profitable manner. A group of highly acclaimed businessmen of the country grouped together to responded to this need and established Dhaka Bank Limited in the year 1995.
The Bank was incorporated as a public limited company under the Companies Act. 1994. The Bank started its commercial operation on July 05, 1995 with an authorized capital of Tk. 1,000 million and paid up capital of Tk. 100 million. The paid up capital of the Bank stood at Tk 2,659,597,763 as on March 31, 2010. The total equity (capital and reserves) of the Bank as on March31,2010stoodat Tk 6,036,368,754.
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