Counter Party Limits

ISLAMI BANK BANGLADESH LTD INTERNATIONAL BANKING WING FOREX TREASURY DIVISION (DEALING ROOM) HEAD OFFICE, DHAKA E.C Memo: Date: April 08, 2009 Re: Proposal for approval of Inter-Bank Money Market Placement limit(s) to other Islamic Banks/Branches & Islamic Financial Institutions for efficient management of Bank’s Funds. Islami Bank Bangladesh Limited started its integrated Treasury operation from June 1,2009 for efficient management of portfolio & surplus funds of the BankDue to integration,Treasury activities has extended to foreign exchange ,Money Market & Money market securities markets.Iner-Bank Market are the forefront of Financial markets and are the first to signal of any changes in the money supply and the resultant liquidity in the system.n order to smooth operation of Money Market operation, we need to allow limit to the Other Islamic banks/Financial institutions and the Conventional Banks having Islamic Banking Branch. Interbank Money market is used for deployment of surplus funds and also to raise short-term funds to bridge the gaps in the Cash flow of the bank maturity of funds generally not exceeding one year. Present Islamic Money Market Scenario: IBBL MM Position To have a money market discipline for sound management of liquidity,the following guidelines may be established: MM products :In order to deployment or raising funds,The market have the following available products. Short-term : Mudarabaha Short Notice Mudarabaha Saving Term Ssructure Mudarabaha Term not exceeding One Year Inter-Bank Money Market management:

Liquidity Management: For maintaining sound liquidity position, and effective use of surplus liquidity, the placement support as 2nd tier of reserve asets.Treasury invests its surplus cash in IterBank

Money

market

after

meeting

CRR

,SLR

and

present

and

expected

internal

requirements.Banks can invest its surplus funds considering its expected outflows.At present bank runs liquidity surplus of TK……… and enjoying a limit of Tk.

As approved by Board.The Treasury

can invest maximum amunt of Investable surplus funds to the Inter-Bank market in different tenor so that it can call back as and when necessary to support CRR depending on Banks Projected requirements of Funds, Non core deposit, Market condition and market opertunity.

1. Limits for Local Counter-Parties: In Inter-Bank Market, Banks only do carry Counterparty risk..for effective use of surplus liquidity, e may allow limits to the following Banks…….. b. Full fledged Islamic Banks

Rating

01.

Al Arafa Islami Bank Ltd

CAMELS C

02.

Social Inv. Bank Ltd

C

03. 04. 05. 06.

EXIM Bank Limited Shajahal Islami Bank Limited The First Security Bank ICB Islamic Bank

C A C E

06 .

02 . 03 . 04 . 06 . 08 .

Islamic Banking Branches OF Conventional BankS

No of IB Branc hes

Paid up Capital

Proposed Limits

CRISL STSTA-

Banks’ Rating

HSBC Standard Chartered Bank The City Bank Ltd

01 01

CAMEL S A B

01

C

AB Bank Ltd

01

B

Dhaka Bank Ltd

01

B

Prime Bank Ltd

01

B

Jamuna Bank Ltd

02

B

CRISL

Bank’s Paid up Capital

Assets of IB Branche s

Proposed Limit

09 . 10 . 12 . 15 .

Premier Bank Ltd

01

B

Bank Aisa Ltd

02

B

05

B

Standard Bank Limited Southeast Bank Ltd Trust Bank

B

Form of Limits:We may extend credit lines in the following for to utilize the banks surplus liquidity: Short Term Notice MSA MTDR b. Discretionary Power /Approval Authority: A budget of Taka 5000.00 million approved by board to place funds inter-Bank Market.We may however consider our non core deposit( Al-wadiah and 9% of MSA) to place the Market which may act as 2nd tier of Reserve/liquid assets to be supported in case of liquidity stressed. In order to instant utilization of market opertunity,we may propose the following : Treasury DMD MD

Discretionary Power 10% of Approved Limit 25% of approved Limit 100 % of approved limit

C. Shariah Approval: Once in a Year: We may propose the followings: 1. In case of Full fledged Islamic Bank, Our Shariah Council may give their considered once in a Year. 2. In case of Conventional Banks having Islamic Banking Branch, the approval will be on case to case basis.

Securities Market: Treasury invests primarily in BGIIB to comply with the BBK requirements of the Bank that is SLR under mudaraba principle.HTM Bonds can be taken money by lien it.

a.

Bangladesh Bank

As per requirements

Reporting Inetr-Bank Money Market Position:

Local MM Positions…..Daily CRR & SLR ……Daily ALCO-------Monthly EC….Monthly

.ii Limits for Overseas Counterparties Sl 01 02. 03. 04. 05.

Name of Counterparties Scotia Bank,Hongkong Commerz bank ,Frankfurt, Germany Mashreq Bank,U.A.E ICICI , India Citi Bank N.A , Singapore

Existing Limit in million USD 5.00 10.00

Limit in million USD

10.00 3.00 -

5.00 3.00 5.00

5.00 10.00

I11. Split of Limits into different Currencies Limits as approved to be splited among different currency pair(s) by the Head of treasury in consultation with Head of International Banking Wing & Managing Director considering the dealing capabilities of the dealer(s).Besides, The Treasury Back & Mid Office should ensure that all the deals are done within the prescribed limits. If the limit is exceeded, it should be promptly reported to the Deputy Managing Director, IBW and Managing Director for their approval from him.

The issue is now placed before the Executive Committee for their kind perusal and approval. If agreed, the following resolution may be adopted: “Resolved that the proposal for fixation of foreign Exchange market risk , counter party credit risk related limit and after hour dealing allowance for the dealers as envisaged in the memo is perused and hereby approved with advice the management to ensure proper management of F.C fund “

(Md. Fariduddin Ahmed)

Managing Director

ISLAMI BANK BANGLADESH LTD INTERNATIONAL BANKING WING TREASURY & FUND MANAGEMENT DIVISION (DEALING ROOM) HEAD OFFICE, DHAKA 01. Counterparty Credit Risk Limit: To perform deals (Buying and selling of foreign currency) and minimize the counter party risk with other bank at home and abroad the following limit may be fixed up : .i. Limits for Local Counter-Parties Sl

Name of Counterparties

a. Bangladesh Bank b. Foreign Bank 01. Citibank Na,Dhaka 02. HSBC Bank 03. Standard Chartered bank 04. Commercial Bank of Cylon 05. National Bank of Pakistan 06. Bank al Falah 07. Habib Bank c. Nationalized Commercial Bank 01. Sonali Bank Ltd 02. Janata Bank Ltd 03. Agrani Bank Ltd 04. Rupali Bank Ltd d. Specialilzed Commercial Bank 01. Bangladesh Krishi Bank 02. Bangladesh Shilpa Bank 03. BASIC BANK Ltd e. Private commercial Bank 01. Uttara Bank Ltd

Existing Limit in million USD 10.00

Proposed Limit in Million USD(including Fx trading) As per requirement

10.00 10.00 20.00 3.00 1.00 1.00 1.00

10.00 10.00 20.00 3.00 1.00 2.00 1.00

10.00 8.00 8.00 2.00

10.00 10.00 10.00 5.00

3.00 2.00 3.00

3.00 2.00 3.00

8.00

5.00

02. 03. 04. 05. 06. 07. 08. 09. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 02. 12. 22. 23. 24. 25. 27 28.

NCC Bank Ltd National Bank Ltd IFIC The City Bank Ltd AB Bank Ltd Pubali Bank Ltd Eastern Bank Ltd Dhaka Bank Ltd Al Arafa Islami Bank Ltd Dutch Bangla Ltd Prime Bank Ltd Social Inv. Bank Ltd Mercantile Bank Ltd Jamuna Bank Ltd Premier Bank Ltd Bank Aisa Ltd EXIM Bank Limited The Trust Bank Limited One Bank Limited Standard Bank Limited Mutual Trust Bank Limited Shajahal Islami Bank Limited UCBL The First Security Bank BRAC Bank Ltd. Southeast Bank Ltd

3.00 2.00 2.00 2.50 2.00 3.00 3.00 3.00 3.00 3.00 4.00 3.00 3.00 3.00 3.00 4.00 4.00 3.00 2.00 2.00 2.00 2.00

3.00 3.00 2.00 3.00 5.00 3.00 5.00 4.00 3.00 2.00 5.00 2.00 3.00 2.00 2.00 4.00 4.00 2.00 1.00 2.00 2.00 2.00

3.00 2.00 2.00 4.00

2.00 1.00 2.00 4.00

Existing Limit in million USD 5.00 10.00

Limit in million USD

10.00 3.00 -

5.00 3.00 5.00

.ii Limits for Overseas Counterparties Sl 01 02. 03. 04. 05.

Name of Counterparties Scotia Bank,Hongkong Commerz bank ,Frankfurt, Germany Mashreq Bank,U.A.E ICICI , India Citi Bank N.A , Singapore

5.00 10.00

I11. Split of Limits into different Currencies Limits as approved to be splited among different currency pair(s) by the Head of treasury in consultation with Head of International Banking Wing & Managing Director considering the dealing capabilities of the dealer(s).Besides, The Treasury Back & Mid Office should ensure that all the deals are done within the prescribed limits. If the limit is exceeded, it should be promptly reported to the Deputy Managing Director, IBW and Managing Director for their approval from him.

(Mohammad Masud) Asstt. Vice President