Executive Summary

Al Arafah Islami Bank Ltd is a second-generation bank established in 1996 with a

vision to stand out as a pioneer banking institution in Bangladesh. Al Arafah Islami
Bank Ltd is the first Bangladesh – commercial bank incorporated on June 18, 1995
under the Companies Act 1994. With the permission of Bangladesh Bank, it
commenced its commercial banking operation on June 03, 1996. The head office of
Al Arafah Islami Bank Ltd. is at 36 Dilkusha commercial area Motijheel Dhaka-
1000.

The corporate philosophy of Al Arafah Islami Bank Ltd is to build its non-funded
face and commission income stream, thus reducing its reliance on interest income
alone. Deposit severe competition, highly volatile money market & foreign exchange
market and intensified political unrest; AIBL was successful in achieving substantial
growth in all business segments.

The sponsors of the bank are leading business personalities and eminent
industrialists of the country having stakes in various segments of the national
economy. Among the missions of the company were to provide the customers with
high quality financial services with the help of the latest technology, and to offer
innovative banking services at competitive prices.

Al-Arafah Islami Bank Limited is scheduled commercial bank registered by the

Bangladesh Bank. The functions of the bank cover a wide range of banking and
functional activities to individuals, firms, corporate bodies and other multinational
agencies. They are committed to providing the customer with integrated local
services.
Efficient transaction processing
Reliable financial information
Innovative products
World-class clearing services

1
TQM is an efficient system that aims to achieve total quality through the combined
effort of all the employees within the organization in order to produce a
product/service that will meet the needs and expectations of the customer with
minimum cost.

The goal of Al Arafah Islami Bank Ltd is “To be a pioneer in Islami Banking in
Bangladesh and contribute significantly to the growth of the national economy. 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
127 branches of which 23 is AD throughout the country.

This survey is a part of a study on the evaluation of TQM implementation in banking

sector of Bangladesh. The main objective of this survey is to determine the extent of
TQM implementation in in this sector. The information obtained will be used for
research purposes only and no attempt will be made to identify any individual or
organizations in any of our publications.

Al Arafah Islami Bank Ltd. portrays TQM vision consciousness but in many cases, it
falls victim of treating TQM as a fad rather than an essential component. The
management principles are narrowly viewed, communicated and understood here even
with well-documented procedures and instructions. Its’ concerned are well equipped
and successful to some extent in achieving customer satisfaction with regard to
product and service quality excellence, but has a lack of close working relationships,
interest groups and the promoting aspect of working environment.

Al Arafah Islami Bank Ltd. makes a visible effort in empowerment of quality control
circles but apparently follows a comparatively rigid hierarchical structure, but
nonetheless are able to assure quality. They have much to achieve in the areas of
creativity, R&D & TQM as well, and therefore, investment in those areas is
imperative.

2
 Chapter 1: Introduction
In the International business community, the pursuit of and quest for quality have
become essential concerns and trends. Managers and employees increasingly get
convinced of the necessity to adopt the Total Quality Management (TQM) principles
within their organization. Applying TQM will enhance the overall quality and success
of any businesses in the service industry, as it works with the total surroundings.
Besides, as the quality of service in Islamic banking industry is a unique one, there is a
need to apply TQM principles in this industry with an aim to achieve customer
satisfaction. Therefore, studying the unique factors in the Islamic banking industry on
the applicability of TQM will help both the academicians and researchers involved in
the Islamic banking industry to get more knowledge in improving quality services.

In Bangladesh, Islamic banks are yet to realize its full potential in supporting the
country’s overall development in the Islamic banking sector. Furthermore, the
awareness towards quality among Bangladeshi Islamic banks is not clear. In addition,
Islamic banks in Bangladesh are facing huge competition in the global marketplace
without full understanding the importance and how to implement TQM approaches.

“Islam provides us a complete lifestyle. Main objective of Islamic lifestyle is to be

successful both in our mortal and immortal life. Therefore, in every aspect of our life
we should follow the doctrine of Al-Qur'an and lifestyle of Hazrat Muhammad (Sm.)
for our supreme success.” Al-Arafah Islami Bank started its journey as a private
limited company on 18 June 1995 with the said principles in mind and to introduce a
modern banking system based on Al-Qur’an and Sunnah. This is an exploratory paper
with the aim of determining the TQM implementation in Al-Arafah Islami Bank
Limited.

A specific questionnaire is developed to get a better feedback from the organization

within a short period of time where we tried our best to conduct with them properly &
draw up a better sketch of implementing TQM philosophy within their bank.

3
 1.1 Concept and Background
Total Quality Management (TQM) is an enhancement to the traditional way of doing
business. It is a proven technique to guarantee survival in world-class competition.
Only by changing the actions of management will the culture and actions of an entire
organization be transformed. TQM is for the most part common sense. Analyzing the
three words, we have

∞ Total - Made up of the whole

∞ Quality- Degree of excellence a product or service provides.
∞ Management- Act, art, or manner of handling, controlling, directing, etc.

Therefore, TQM is the art of managing the whole to achieve excellence. TQM is
defined as both a philosophy and a set of guiding principles that represent the
foundation of a continuously improving organization. It is the application of
quantitative methods and human resources to improve all the processes within an
organization and exceed customer needs now and in the future. TQM integrates
fundamental management techniques, existing improvement efforts, and technical
tools under a disciplined approach.

Total quality management has now become an important aspect of management due to
increased competition among companies and quality issues associated with company
operations; the survival of a business mainly depends upon the quality associated with
the product. However, competition has become more challenging today than ever
before, while customer expectations of service quality are higher than ever.

TQM is an ideology which is focused on the satisfaction of customer’s need. TQM

require organizations to develop a customer focused operational processes and at the
same time committing the resources that position customers and meeting their
expectation profitably. This implies an approach of changing the corporate culture of
an organization to be customer centric.
TQM requires effective knowledge management so as to ensure that employees obtain
timely reliable, consistent, accurate, and necessary data and information as they need
to do their job effectively and efficiently in the firm. TQM is concerned with the
continuous improvement in all the process of design and operation, from the levels of
planning and decision making to the execution of work by the front-line staff.

The focus on continuous improvement leads to the formation of formidable team

whose membership is determined by their work on the detailed knowledge of the
process, and their ability to take improvement action. TQM also implies reducing and
streamlining the supplier base to facilitate managing supplier relationships, developing
strategic alliances with suppliers, working with suppliers to ensure that customer
expectations are met.

4
 1.2 Origin of the Report
This report is a comprehensive study prepared as a requirement for the completion of
the BBA Program. The primary goal of report is to provide an opportunity for
translation of theoretical conceptions in real life situation. We are placed in
enterprises, organizations, research institutions as well as development projects.
The comprehensive study about the TQM practices in Al Arafah Islamic Bank as an
commercial Banks in Bangladesh prepared under the guidance of Nafiza Islam mam.
As a requirement for the completion of the program we need to submit this report,
which would include an overview of the Products of the Banks was attached with and
elaboration of the project we were supposed to conduct during the study period.
1.3 Communicating Objectives
The objectives of the study are:
To make everyone understand, what the TQM is and its activities.
How TQM product can help us.
Make recommendations to improve some service areas where the
organization is lacking on customer perception and to meet customer
satisfaction.
a. General Objectives:
 The general objective of this report is to fulfill the requirement of report.
 To earn practical experience and knowledge about the banking operations,
corporate functions & the TQM philosophy performed by Al- Arafah Islami
Bank Limited.
b. Specific Objectives:
 To determine the extent of TQM implementation.
 To submit a brief description about the performance of Al-Arafah Islami Bank
Ltd.
 To understand the various services the bank offers and to understand the
mechanism of the services.
 To suggest remedial measurement for the improvement of the whole process of
the Al- Arafah Islami Bank Ltd.
 To formulate recommendations that could add value to the service of Al-
Arafah Islami Bank Ltd.

5
 1.4 Significance of the Study
As a modern management approach, TQM can be used successfully in Islamic
banking sectors that are mainly focused on increasing the customer satisfaction.
Recent researches on TQM have brought a widely updated plan for the Islamic
banking sector’s reforms and modernization of Islamic banking. The TQM principles
have broad applications in Islamic banking sectors and have produced desirable
outcomes.

Deploying these applications, service improvement has become a continual process for
any organizations in their way to achieve customers’ loyalty (Terry, 1996). On the
other hand, there is a considerable proximity between the principles of TQM and the
principles of an effective banking system (Balcı, 2001; Lezotte, 1992). Many people
involved in the banking industry consider them as the part of the financial sector rather
than the service industry. As such, they concentrate more on to compete in terms of
financial prowess rather than service quality (Al-Shobaki et al., 2010).

However, to be successful in applying TQM in the Islamic banking sector, identifying

on how to evaluate the quality of service are very important. Service can be evaluated
on the basis of cost, flexibility, equitability, totality, and response time. Ramadan
(1995) considered the nature of services that the banks provide. Banking sector is a
part of the overall service industry; therefore, meeting customers’ need will help them
to retain their customers with satisfaction & that is the main concern of Total Quality
Management philosophy.

1.5 Scope of the study

The scope of the report has based on our surveying experience, annual reports & web
site of this sector, and also communicating with the Human Resource Manager of this
bank. We have highlighted on the TQM implementation in AIBL. To focus on the
TQM philosophy, we have also conducted with the company objectives, market
strategies, market situations & so on. SWOT analysis of the company has been done.
Some recommendations also have been worked out to improve the current situations
for the company.

This report helps us to understand the clear real-time experience about the total
management of AIBL. It helps us to understand, how the bank manages its total
processes. It also helps us to understand how they deal with the customers as well as
the top-level management to ensure the continuous process improvement.

So, the scope of the report covers the comprehensive knowledge on the organization
of AIBL. We have tried to analyze and evaluate of TQM performance based on
adequate information contained in documents and interviews of banking officers.

6
 1.6 Acknowledging Exceptions & Limitations of the Study
We, all have tried our level best to complete this report properly & for facilitating
others to make decision through it’s’ information. But there is some cause behind this
report suffered from several limitations:
 Time has not been adequate to complete the study more effectively.
 Large-scale research is not possible due to constraints and restrictions posed by
the organization.
 Respondents were busy as well as reluctant to go through the process of
questionnaire.
 The respondents sometimes did not agreeable in providing accurate statistics
and information.
 In many section of the organization, we have confronted difficulties in getting
appointment from the desired respondents due to confidential facts.
 Sufficient records, publications, facts and figures are not available. These
constraints narrowed the scope of the real analysis.
 Confidentiality of data was another important barrier that was faced during the
conduct of this study.
 The website of AIBL is not that much rich with data.

Chapter 2: Methodology
2.1 Questionnaire Development
▪ What is your perception about your organization in general?
▪ What is your opinion of Total Quality Management?
▪ How is the level of TQM implementation of your bank?
▪ Tell some of the barriers or difficulties faced in trying to adopt TQM in your
organization?
▪ Which term do you like most to practice in your bank?
▪ Do every one of your bank have knowledge of TQM?
▪ What is perception about TQM?
▪ Predict the future of your bank after implementing TQM.
▪ Which tools do you use to ensure TQM culture?

7
 2.2 Data collection procedures
While working on this study, we are suggested to explore on a specific questionnaire.
In this regard, we have collected two types of data; Primary Data and Secondary Data.
A sample survey was conducted to collect primary data using two pre-designed survey
instruments from concerned groups following an appropriate sample design. We have
collected both primary and secondary data where Secondary data from prior records of
AIBL & primary information through observing various organizational procedures,
structures, direct communication.
Primary Source of Information: We have collected data from primary
sources using the following method:
a. Observation method
b. Interview method
Now mention some primary points: -
 Questionnaire development
 Personal experience gained by visiting different desks
 Personal investigation with bankers.
Collection of Primary data: For collecting primary data personal interview
technique have been used through a set of organized and structured questionnaire
with mostly close-ended and open-ended questions as the instruments.
Secondary Sources of Data: We have collected data from secondary sources
where internal & external environment sources are available.
Internal Sources:
1. Bank's Annual Report
2. Group Instruction Manual & Business Instruction Manual
3. Prior research report
4. Any information regarding the Banking sector.
External Sources:
1. Different books and periodicals related to the banking sector
2. Newspapers.
3. Previous reports and journals relevant to the banking industry
4. Relevant AIBL paper and published documents
5. Annual reports of 2016.
Collection of Secondary data: In order to collect the secondary data
different related printed materials like corporate profile, annual report 2007-2008
and the official web site has been followed. Moreover, various library sources like
textbooks (Total Quality Management) also have been used.

2.3 Data Processing & Analysis

The quantitative analysis tools are used to analyze the gathered data and different
types of computer software’s are used for reporting the gathered information from the
analysis, such as- Microsoft Word, Microsoft Power Point & so on.

8
 2.4 Gantt Chart

Activities Time Line

Week 1 Week 2 Week 3 Week 4
Preliminary
Phase
Construct
Research
Question,
Identify
variables
Analysis Phase

Development of
questionnaire,
Collection of
data, Analysis
of data,
Interpretation of
findings

Paper
Preparation
Phase
Review paper

Paper
Submission
Phase
Prepare final
paper, Submit
paper

9
 Chapter 3: Theoretical Framework
3.1 Literature Review
TQM in the Public Sector: As indicated before, TQM has gradually spread from the
manufacturing sector to the service sector, and most recently into the public sector. In
this environment, TQM is commonly used to implement QM strategies related to
state-funded education, and human resources, although it has other applications within
government in terms of the maintenance of public infrastructure (roads, sewage
treatment, and water provision), the military, and law enforcement. Swiss (1992)
suggested that one of the main reasons why TQM has gained currency throughout the
public sector is that many areas within this sector have increasingly followed popular
business models in terms of their administrative functions and hierarchy, thus making
public sector organizations more similar to businesses than they have been in the past.

Moreover, a central argument for adopting TQM within the public sector is that it is
the responsibility of good government to operate in an efficient and effective manner
(Ho and Shih 2001). This entails reducing costs without denying taxpayers the
services they require, for example, crime prevention, well-maintained roads, and
access to schools and hospitals. Koehler and Pankowski (1996) argued that one of the
main barriers to the effective use of TQM practices by governments, lies in the fact
that most government employees are not trained in business-related fields or human
resource management and, therefore, do not understand the TQM process.

Clearly, the public sector does present a different scenario from the traditional
business environment with which TQM was initially associated, and in recognition of
this, Fernandez and Ratney (2006) argue that several critical factors must be addressed
if TQM practices are to succeed in public organizations. Firstly, the organization must
have a genuine need for implementing TQM practices. Secondly, it must create a plan
for implementing TQM. Thirdly, it must have support from internal customers.
Fourthly, management must support and understand TQM changes. Fifthly, the
organization must have the support of external customers and stakeholders. Sixthly,
the organization must have both the financial and technological resources to
implement TQM. A seventh requirement is that it must actually implement the change;
and an eighth requirement is that the organization must complete more extensive
changes in terms of quality. The main argument for this sequence of steps being
appropriate and indeed, necessary for the implementation of TQM in the public sector,
is that it outlines a plan that will help public sector officials and internal customers to
understand what TQM is and how it works, thereby making it a more effective method
of QM for the organization involved.

10
Koehler and Pankowski (1996) suggest that the US government has had reasonable
successes in its attempts to introduce the TQM philosophy and its practices within
several of its departments.

In this respect, it is noted that where success is not achieved, one of main barriers
appears to be that few government administrators understand TQM processes and
what they mean, and consequently, the application of TQM principles is not consistent
across departments. This confirms the need for the eight-point plan proposed by
Fernandez and Ratney (2006) since that clearly aims at raising awareness among all
stakeholders.

It is obvious from the research into the success of TQM in the public sector that the
key factor in achieving effectiveness in this context is the quality of the leadership and
the ability of those leading the initiative to focus on the more flexible aspects of TQM
philosophy and promote these to lower level employees. Hence, leaders should be
properly trained and apprised of the TQM concept in its entirety.

Additionally, the research indicates that TQM must be adapted to fit the organizational
cultures and practices of public sector organizations as they frequently have different
aims and goals from those of TQM, and they may not be as focused on customer or
client services as managements are in profit-making organizations. As a result, more
concentration on other areas of the TQM process is required (Berman and West,
1995).

Such adaptation is not difficult to achieve. Indeed, there are several public-sector areas
beyond the government itself in which TQM has been successfully adapted to fit the
needs of the public sector. These include education (Aksu, 2003), the military, and the
police force.

Militaries throughout the world have adapted TQM in order to create their own QM
programs, specific examples being the US Army and the US Air Force, both of which
have their own TQM-based initiatives. Likewise, the police sector has also
demonstrated some modicum of success in implementing TQM in police organizations
to improve tasks ranging from homicide investigations to case clearance rates.

Research gap: The importance of TQM is spread out the whole world where
everyone is getting acquainted with this term & interested to adopt this philosophy for
better performance. Genuine need, plan, support from external & internal sources,
financial and technological resources, the change in quality are main concern to
implement TQM & our limitations are in here. We have those barriers in
implementing TQM in our organization, but our positive aspects towards TQM helps
& inspires us to practice this philosophy.

11
 Chapter 4: Organizational Synopsis
4.1 Overview of Al-Arafah Islami Bank Limited
With the objective of achieving success in the life here and hereafter 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 Bank was formally inaugurated on 27th September, 2005 with Dilkusha Branch

(Principal Branch). The Management of the Bank is vested in a Board of Directors

consisting of 24 members including the Managing Director of the Bank. Among 24

Directors 2 (two) Directors came from the public shareholders. Managing Director is

the chief executive of the Bank.

There is a Shariah council of 7 (seven) members in Al-Arafah Islami Bank Ltd. to

monitor the investments whether it invests in Shariah allowed sectors or not .Since

its establishment, AIBL opened 5 branches in 1995, 5 in 1996,10 in 1997, 10 in

1998, 5 in 1999, 2 in 2000, 3 in 2001, 1 in 2005, & 5 in 2006 i.e. at the end of

2006.i,e at the end of 2010 the Bank branch reaches to78.Total number of employees

of the Bank was 771 in 1995 and reached to 1711 in 2010 and during the short

period of its activities the Bank has made remarkable progress in various activities.

It started business on 27 September of that year with an authorized capital of Tk 1,000

million. At inception, its paid-up capital was Tk 101.20 million divided into 101,200

ordinary shares of Tk 1,000 each. 23 sponsors of the bank subscribed the total issued

capital. In 2000, the paid-up capital of the bank increased to Tk 253 million, of which

Tk 126.50 million were paid by the promoters/sponsors and Tk 126.50 million by the

general public.

In compliance with the new provision, Al Arafah bank has raised its capital and
reserve from Tk. 2245 million in the year 2007 to Tk 3049.34 million in 2008 by

12
declaring 30% stock dividend out of the profit of the 2008. The paid-up capital of the
bank has stood at Tk. 1383.81 million at 31st December 2008. 100% of paid up capital
is being owned by local shareholders. In 2008 the bank earned a net profit before tax
& provision of Tk. 1,528.10 million which is 102.08% higher than the previous year.
The bank is listed in the two STOCK EXCHANGEs of the country and has offered
126,000 shares for subscription and trading by the public. Al-Arafah Islami Bank Ltd.
is an interest-free shariah bank and its modus operandi is substantially different from
those of regular commercial banks.
The bank however, renders all types of commercial banking services under the
regulation of the Bank Companies Act 1991. It conducts its business on the principles
of musharaka, bai-murabaha, bai-muajjal and hire purchase transactions. A Shariah
Council of the bank maintains constant vigilance to ensure that the activities of the
bank are being conducted according to the precepts of Islam.
Al-Arafah Islami Bank Ltd. was established not only to earn profit and to develop
economy of the country but also it had an ultimate goal to get reward in the Heaven
by banning interest in business. Since its commencement the Bank has been trying to
achieve this goal. The Islam loving people specially who are not interested with
interest, should help this Bank giving deposit and taking investment from this Bank.
Corporate Information (Figure-2.1)
Date of Registration 18th June
1st Branch Motijheel Branch, Dhaka
Opening Ceremony 27thSeptember, 1995
Authorized Capital 5,000.00 Million
Paid-up Capital 4,677.28 Million
Local partnership of Capital 100%
Equity 9,647.28 Million
Number of Branches 88
Deposit 52,973.97 Million
Investment 53,582.96 Million
Number of Employees 1,711
Number of Shareholders 49,386

13
 Business information:
(In million taka)

Particulars 2005 2006 2007 2008

Authorized Capital 1000.00 2500.00 2500.00 2500.00

Paid up Capital 677.94 854.20 1153.18 1383.81

Reserve Fund 542.22 835.98 1091.95 905.33

Shareholders’ Equity 1220.16 1690.18 2037.50 2705.74

Deposit 11643.66 16775.34 23009.13 29690.12

Investment 11474.41 17423.19 22906.37 29723.79

Import 12631.60 1882.14 27042.72 32685.13

Export 4932.90 914.27 12714.91 20176.64

Total Income 1452.68 2172.48 2955.61 4387.26

Total Expenditure 904.48 1202.71 2199.43 2859.16

Profit before Tax 548.20 855.47 756.18 1528.09

Profit after Tax 262.90 470.02 347.31 668.24

Income Tax 215.10 385.45 235.53 590.66

Total Assets 15336.89 21368.17 30182.32 39158.44

Fixed Assets 208.00 215.11 334.48 396.76

Earnings per share (Taka) 387.80 550.24 30.12 48.29

Profit Earning Ratio 4.89

Dividend per share 26.00% 35% 20% 30%

No. of Shareholders 5402 4487 12013 10664

Number of Employees 771 912 1033 1080

Number of Branches 41 46 46 50

Manpower per Branch 19 20 23 22

14
Chairman Badiur Rahman

Vice Chairman S M Shameem Iqbal

Members Alhajj Md. Harun-ar-Rashid Khan

Alhajj Nazmul Ahsan Khaled
Alhajj Abdul Malek Mollah
Hafez Alhajj Md. Enayet Ullah
Alhajj Ahamedul Haque
Alhajj Abdus Samad
Alhajj A.N.M. Yeahea
Alhajj Engr. Kh. Mesbah Uddin
Ahmed
Alhajj Abdus Salam
Alhajj Niaz Ahmed
Md. Ashik Hossain
Mohd. Emadur Rahman
Anwar Hossain (Alternative Director
of Alhajj Mohammed Haroon)
Dr. Md. Shafiul Haider Chowdhury
(Alternative Director of Alhajj
Badsha Meah)
Md. Liakat Ali Chowdhury
Brig. Gen. M.A. Malek (Retd)
Khalid Rahim FCA

15
 Ex Officio Director
Managing Director Md Habibur Rahman

Company Secretary Md.Mofazzal Hossain

Executive Committee (EC) Chairman Alhajj Abdus Samad

Vice-Chairman Alhajj Abdul Malek Mollah

Member Alhajj Md. Nazmul Ahsan Khaled

Hafez Alhajj Md. Enayet Ullah
Alhajj Ahamedul Haque
Alhajj Abu Naser Mohammad Yeahea
Alhajj Engr. Kh. Mesbahuddin Ahmed

Board Audit Committee (BAC)

Chairman Khalid Rahim FCA

Vice-Chairman Alhajj Abdus Salam

Member Alhajj Md. Harun-ar-Rashid Khan

S M Shameem Iqbal Alhajj Niaz
Ahmed

Shariah Supervisory Committee

Chairman Mawlana Abdul Basit Barkatpuri
(Acting)
Secretary Md. Abdur Rahim Khan

Member Mufti Ruhul Ameen

Mufti Muinul Islam
Mufti Shahed Rahmani
Alhajj A. Z. M. Shamsul Alam
Badiur Rahman

16
 4.2 Mission, Vision, Strategy statement
This bank is one of the most disciplined Banks with a distinctive corporate culture.
Here they believe in shared meaning, shared understanding and shared sense making.
Their people can see and understand events, activities, objects and situation in a
distinctive way. They mould their manners and etiquette, character individually to suit
the purpose of the Bank and the needs of the customers who are of paramount
importance to us. The people in the Bank see themselves as a tight knit team/family
that believes in working together for growth. The corporate culture they belong has
not been imposed; it has rather been achieved through their corporate conduct
Mission
• Achieving the satisfaction of Almighty Allah both here & hereafter.
• Proliferation of Shariah Based Banking Practices.
• Quality financial services adopting the latest technology.
• Fast and efficient customer service.
• Maintaining high standard of business ethics.
• Balanced growth.
• Steady & 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.
Vision

To be a pioneer in Islami Banking in Bangladesh and contribute significantly to the

growth of the national economy.

17
 Objectives

Al-Arafah Islami Bank Limited is Islamic Banking institutions that operates with the
objectives to implement and materialize the economic and financial principles of
Islamic in the banking arena. The objectives of AIBL are not only to earn profit, but
also to do good and welfare to the people. The main objectives of AIBL are listed
below-
 To conduct interest free banking
 To establish participatory banking instead of banking on debtor creditor
relationship
 To invest through different modes permitted under Islamic Shariah
 To accepts deposits on profit loss sharing basis
 To establish as welfare–oriented banking system
 To extend co-operation to the poor, the helpless and the low income group for
their economic up liftmen
 To play a vital role in human development and employment generation
 To contribute towards balances growth and development of the country
through investment operations particularly in the less developed areas
 To contribute in achieving the ultimate goal of Islamic economic System.

Commitments
Ours is a customer focused modern Islamic Banking making sound and steady
growth in both mobilizing deposit and making quality Investment to keep our
position 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.
Our business initiatives are designed to match the changing trade industrial needs
of the clients.
Goals
Al-Arafah Islami Bank Ltd. will be the absolute market leader in the number of loans
given to small and medium sized enterprises throughout Bangladesh. It will be a
world-class organization in terms of service quality and establishing relationships that
help its customers to develop and grow successfully. It will be the Bank of choice both
for its employees and its customers, the model bank in this part of the world.

18
 Core Values
∞ Trust in Almighty ALLAH
∞ Strict observation of Islamic Shariah
∞ Highest standard of honesty, integrity and morale
∞ Equity and Justice
∞ Adoption of charged Technology

Implementing TQM philosophy in AIBL

To implement the TQM philosophy within the organization, AIBL concentrated on the

quality control program to assure the continuous improvement & the respect to others

as well. To focus on the quality, AIBL has highlighted on some specific factors, like

leadership, customer satisfaction, employee involvement and so on.

Leadership: Quality of the output has a positive relationship with the perception

of the employee towards the leadership. If the positive perception about the

leadership increase, the quality of the performance will be increased. In this step,

AIBL has established the specific leadership structure as well as the responsibility

of the leaders toward the goal achievement activities of the bank.

 Arise the importance of leadership within the organization.

 Responsibility of the leaders should be fixed & prestated.

Customers Satisfaction: To satisfied the customers with their performance,

AIBL concentrate on the assurance of the quality & the activities of the customer

relationship to make it longterm, profitable & so on.

 Customer satisfaction activities.

 Customer relation activities.

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Employee invovement: The first & foremost equipment of involving emploee

as the employee participation & then the employee engagement.

 Utilizing the lower level employee

 HR development

 Recognition & reward

 Open & frequent communication

Continuous process improvement: AIBL has developed some crieterion to

ensure the continuous process improvement, where it has completed the process

improvement phase & then they ensure the gradual & continuous improvement of

the working condition. To ensure it, they follow

KAIZEN theory: KAIZEN is a culture of sustained continuous

improvement focusing on eliminating waste in all systems and

processes of an organisation.

KAIZEN strategy begins and ends with people. Involved leadership

guides people to continuously improve their ability to meet

expectations of high quality, low cost, and on-time delivery.

Lead time theory: A lead time is the latency between the

initiation and execution of a process. AIBL has worked with this

theory to reduce the length of the queue in the service station.

In summary, we can see that Al Arafah Islami Bank Ltd. Follows the leadership

theory, employee involvement, continuous improvement, KAIZEN theory,

leadtime theory & so on to make better performance & to get the better output.

Undoubtedly, AIBL follows the TQM philosophy within its surroundings.

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 At a glance, the activities of AIBL towards the continuous
improvements of its existence.

1. Grameen & Small Medium Enterprise (SME) Scheme: The objective

of this project is to introduce Shariah based banking system in rural and village
area, creating employment through financing to low income group, build up
savings attitude, improvement of living standard of rural low-income mass people,
creating opportunity to carry out Islamic lifestyle by way of alleviating poverty
and at the same time to make other financially established by investing in small
investment project. This is an approach of the bank to connect with the rural & the
ordinary people of the society as a tool of TQM to meet the customer satisfaction.
2. Computerized Banking system: The head office and the other branches
have been provided with the state if the art computer hardware as well as software
to carry on day-to-day accounting and routine work efficiently and quickly. The
AIBL is already moved to the next stage of automation through introduction of o
line banking in all branches.
3. ATM Banking: AIBL has implemented successfully Automated Teller
Machine (ATM). Through ATM/Debit card, customer can avail the facilities like
withdrawal money, balance inquiry.
4. Shariah Auditing: The supervisory function forms a part of the Shariah
Supervision procedures, its main task being to check Shariah compliance under the
guidance of the Shariah Supervisor. The auditors continuously review the Bank’s
transactional procedures to ensure adherence to the framework created by the
Fatwa & Shariah Supervision Board.

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5. Training and Development: Training refers to instruction provided for a
current job and has a rather narrow focus and should provide skills that will benefit
the organization rather quickly. Development, on the other hand, has a broader
scope and may not be focused on either the present or future job but more on the
organization’s general long-term needs (Anthony et al, 2003).

6. Green Survivor Program: AIBL has arranged a regular program of tree

plantation to keep the world green & also to help the poor society freely. Every
year this program is run within the whole country. This enables the AIBL in the
sector of corporate governance.

7. Distribution of winter material: In every winter, AIBL operates a societal

philanthropy to help the poor people of the society who are in need of winter
materials.

8. Scholarship on the public examination: On the basis of public exam

result of PEC, JSC, SSC, HSC, Varsity admission, AIBL offers scholarship to the
poor & talent students for their far-reaching studies.

9. Observing service month: AIBL announces a specific target month to

provide their service to the customer without any cost. On this month, the bankers
go to the customer to make long-term, profitable relationship with them.

Others
∞ Online Banking
∞ SMS Banking
∞ ATM
∞ Utility Bills
∞ Money gram

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 Obstacles in implementing TQM
To implement the TQM culture within the organization, AIBL has faced some
obstacles. There are various cause & effect of the main problem. To show those cause,
effects & the main problem, here we use the Cause-Effect Diagram, which is
developed by Dr. Kaoru Ishikawa.

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 Strengths & Weaknesses
This SWOT Analysis of Al Arafah Islami Bank Ltd provides a strategic report of
businesses and operations of the company. The SWOT analysis shows strengths,
weaknesses, opportunities and threats. This SWOT analysis of Al Arafah Islami Bank
Ltd can provide a competitive advantage.

Strengths
-Access to comparable industries is
possible
-The industry provides future trends
-The industry is more robust than the
economy in general.
The industry has unique products.
The industry shows a strong
diversification.
Weakness
-Cost and income structure could
be critical.
-There might be a lack of strategic
relationships
-There is a competitive market

Threats
Opportunities -The bargaining power of suppliers
-New trade agreements between is high
countries are possible. -New products and technologies
-Global markets are available change demand
-The market changes fast -The industry sees new market
entrants

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 Industry specific SWOT analysis (Relevance/Importance)
Factors and trends affecting the overall industry and their implications for this
business:

Strengths Relevance Importance

Access to comparable industries is possible 12% 43%
The industry provides future trends 59% 39%
The industry is more robust than the economy in 20% 33%
general.
The industry has unique products. 55% 19%
The industry shows a strong diversification. 29% 41%

Weaknesses Relevance Importance

Cost and income structure could be critical. 46% 58%
There might be a lack of strategic relationships 24% 51%
There is a competitive market 28% 32%

Opportunities Relevance Importance

New trade agreements between countries are 57% 58%
possible.
Global markets are available 48% 19%
The market changes fast 11% 44%

Threats Relevance Importance

The bargaining power of suppliers is high 16% 16%
New products and technologies change demand 56% 56%
The industry sees new market entrants 21% 49%

 A SWOT Analysis provides a comprehensive insight into the history of the

company, corporate strategy, business and financial structure, management and
operations. The report contains a detailed SWOT analysis on products and
services, key competitors, as well as detailed financial information.

25
 Strategies
To strive for customers best satisfaction & earn their confidence.
To manage & operate the bank in the most effective manner.
To identify customer’s needs & monitor their participation towards meeting
those requirements.
To review & update policies, procedures & practices to enhance the ability to
extend better services to the customers.
To train & develop all employees & provide them adequate resources so that
the customer’s needs are reasonably addressed.
To promote organizational efficiency by communicating company plans,
polices & procedures openly to the employees in a timely fashion.

Chapter 5: Analysis & Interpretation

We, as the researcher of TQM implementation in banking sector, choose the Al Arafah
Islami Bank Ltd. to complete our survey. This is a local bank where more than three
hundred employees are working for implementing quality initiatives through
developing strategies for total quality, employee involvement & customer satisfaction
initiatives as well.
Through this surveying, we notice that in most of the cases the employees of the bank
are agree and they are being neutral & strongly agreed in some cases. Training,
education, management leadership, team work, commitment & support are the key
points where majority are strongly agreed & have positive aspects about TQM.
In case of finding out the important key features relating with this survey, stuff
involvement & empowerment are very important & also those have the highest degree
of practice in their organization. Besides, the human resource, management support,
customer satisfaction measurement, reward & recognition, team improvement,
educational training, positive values, customer relationship are the important factor in
case of determining the level of TQM implementation where those have also very high
degree of practice in the organization.
To identify the barriers in adopting TQM in their bank they face the problem of
lacking’s of essential training & the higher cost of training.

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 Chapter 6: Summary of the Findings

Al-Arafah Islami Bank Limited believes that consistently strong performance of the

Bank is result of the team of committed, knowledgeable and dedicated employees who

are focused on achieving the excellence. The Bank is committed to recruiting high

caliber employees and providing them with the motivation, training, working

environment and compensation package they need to perform at the highest level.

The major pattern of the AIBL in the observation is that employee involvement,

customer satisfaction, long term commitment has the greatest degree of importance

but there is a variation between those and the availability of training. The maintenance

of the proper training courses among the employees is the way of improving TQM

practices. Besides, arising awareness, reducing the cost of training program can make

a better output in future.

The study established that bank leadership practices affect the operational

performance of banks. That the implementation of total quality management has

facilitated bank leadership to provide the necessary resources to meet the new

requirements resulting from quality management systems, provided conductive

working environment to employee involvement in quality management process,

influenced the decision of selecting qualified suppliers and certifying suppliers for

quality material, creates strategies, plans and systems for achieving superior quality in

the institution and that has inspired staff and management in effective and efficient use

of the resources and efforts of the institution towards quality excellence.

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 Conclusion

The concept of Islami Banking is several decades old. The third attempt to establish an
Islamic Financial Institution took place in Pakistan in the late 1950s with the
establishment of a local Islami Bank in a rural area (Wilson 1995. After 45 years,
Islamic Banking system is established in Bangladesh as a financial institution that is
named “Al-Arafah Islami Bank Limited”.

Al-Arafah Islamic Bank Limited is a Bank which operates its activities according to
Quaran and Sunnah. It’s banking activities based on profit \ loss sharing. It does not
create any illegal pressure on client.

On the other hand, every client is not 100% honest. So they are taking investment
from AIBL and after maturity, they are showing loss on that project intentionally. So
AIBL is losing some profits from their investment. For this reason, Al-Arafah Islami
Bank Limited has closed its bai - mechanism. Now it is not providing investment
under this mechanism.

Threats of Al-Arafah Islami Bank Limited are - at this time, many financial
institutions have commenced their financial activities according to Islamic shariah.
This type of organization will create more competition in the financial market. So it is
a threat for Al-Arafah Islami Bank Limited.

Although it is facing some problem, it has a bright future and day-by-day it is

enhancing its financial activities over the country. Many organizations are following
to AIBL and they are starting their business based on Islamic shariah in the economy
of Bangladesh.

After all, Al-Arafah Islami Bank is increasing its reputation day after day through
providing various sorts of innovative product and service. Moreover, AIBL,s customer
services and management are also being enhanced. Foreign Direct Investment
Department will be fully computerized soon.

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 Recommendations
The fast pace of growth in the Islamic financial sector and the emergence of
conventional finance companies offering Islamic products and services has brought
critical attention to key issues facing this sector. Some of the core issues identified
after analyzing this report that Al-Arafah Islami Bank Limited should give lots of
attention in many sectors, which are given below.

To recommend the TQM conduction in AIBL, we have developed a prioritization

matrix. This matrix may help the bank to prioritize the related factors and may reduce
the problems in different areas efficiently.
Urgent Not Urgent

-Reducing gap between -Improve the working

manpower &equipment conditions
Important -Providing available -Increasing customer
training facilities service
-Ephasis on HRM -Working on increasing
reputation
-Enrichment of the AIBL
profile

-Changing picture on
-Emphasize on the lead web site
time theory Increasing the number
Not Important -Increasing awareness of followers
about the TQM -Decorating the work
philosophy place environment
-Ensuring free time
during the working
hours

29
 References
1. Munsi Araf, “Financial Performance of Al-Arafah Islami Bank” (2010, August
25) retrieved from https://scribd.com/document/198832817/Financial-
Performance-Analysis-of-Al-Arafa-Bank-Ltd (2017, June 09).

2. John S. Oakland “Total Quality Management” (2002, July 20) retrieved from
https://books.google.com.bd/books/about/Total_Quality_Management.html (2017,
July 20).

3. Pearson “Total Quality Management” (2003) retrieved from

https://pearson.com/us/higher-education/program/Besterfield-Total-Quality-
Management-3rd-Edition/PGM200617.html (2017, June 15).

4. Deming “Theories and teaching TQM” (1993) retrieved from

https://deming.org/management-system (2017, July 20).

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