A Study into the “Non-Formal & Voluntary Banking Services” of SIBL
CHAPTER-NINE: Voluntary Banking Services of SIBL
9.0 Cash Waqf Certificate
SIBL is a three sector Banking Model beyond conventional Banking and co-
operative aiming at alleviation of poverty and empowering family through social
investment on participatory economy. Various activities of the Bank are
conducted through Formal, Non-Formal and Voluntary sectors. In the process of
organizing Social Capital Market operations in the voluntary sector of the Bank, it
has for the first time in the history, introduced “Cash Waqf Certificate” scheme. It
also aims at empowering the family of the rich for the sake of social investment
and welfare.
A research study entitled, Structural Adjustment and Islamic Voluntary Sector
with special Reference to Awaqf in Bangladesh written by the author and
published by Islamic Development Bank, Jeddah, in 1995 showed that “Cash
Waqf” is also recognized in Islam. Its use can be traced to the Ottoman era as
well as in Egypt. But the use of Cash Waqf as a financial instrument is indeed an
innovation in Islamic social finance.
Cash waqf provides an unique opportunity for making investment in different
religious, educational and social services. Savings made from earning by the
well-off and the rich people of the society can be utilized by purchasing cash
waqf certificate. Income earned there from will be spent for different purposes
like the purposes of the waqf properties itself.
Historically speaking, the immovable assets mainly in the form of landed
properties are the predominant feature of Awaqf. It follows then that one of the
main characteristics of Awaqf is their low degree of liquidity. Liquidity as defined
by economists refers to the transferring of funds into cash money within a short
period of time and at a reasonable cost. We know that landed property even in
the case where it is legally permissible to be sold or replaced by another, such
as giving up a landed property it takes a considerable amount of time and
expenses to be transferred from landed property into liquid cash. Therefore, we
can safely consider low liquidity as a distinctive feature of the Awaqf properties,
even when we want to invest in Awaqf properties e.g. constructring a building on
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a piece of Waqf land with a view to leasing it, this will entail the availability of
liquid cash money that would enable us to transfer waqf from one shape to
another. In this context, raising fund through sale of cash waqf certificate for
development of awaqf properties assumed a special significance in the 21 st
century.
Another significance of the cash waqf certificate lies in the fact that it has broken
the age old barrier that the privilege of making waqf belongs to only to the rich.
Since cash waqf certificate as introduced by SIBL is expressed in term of a small
denomination of TK. 1000 (US$21 only), it has become affordable to a large
section of the Muslim population; it can also be expressed in even smaller
denomination also. Send in this light, cash waqf certificate scheme can be seen
as a movement of social reconstruction and development in which vast majority
of the population can participate.
Attempts should then be made to popularize the role of waqf in the country
including cash waqfs which can be instrumental in transferring savings of the rich
to those entrepreneurs and members of the public in financing various religious,
educational and social services in Muslim countries. Cash waqf can work as
supplement to the financing of various social investment projects undertaken by
Islami Banks which can eventually emerge as waqf bank. Even today, for
example, cash waqf in Bangladesh, is extremely important in terms of
mobilization of fund for the development of waqf properties. According to 1986
census of waqf estate, there are 150,593 waqf estates in Bangladesh having
multipurpose uses. According to 1983 mosque census, there are 131,641
mosques in Bangladesh out of which 123,006 mosques are waqf properties. Out
of the total waqf estates 97,046 are registered, 45607 are verbal and the rest
7940 are waqf by tradition. Out of this large Awaqf estates, only 13200 waqf
estates are under the administrative control of Waqf administrator out of which
10683 waqf estates are of mixed nature.
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9.0.1Cash Waqf Certificate: Empowering Multi-Generational Family
Heritage
An individual can easily link himself for at least two hundred years in the family
chain in the following say:
Consider: yourself, your parents, and your grandparents- that’s at least one
hundred years of your family history.
Consider: yourself, your children, and your grandchildren-that’s next hundred
years of your family’s future history. In this way, an individual can easily link
himself for two hundred years. Within a framework of family heritage and
develop a vision for his family contribution to society and people.
……………………………………………200 year…………………………………………….
1900 (past)…………………………………2000 (Present)…………………………2100
(Future)
SIBL offers: Family stability and
Beneficiaries
sustainable
of the 1. Output
opportunities
Continued 2. Employment
Charity/Waqf 3. Income Future beneficiaries of
4. Management of contined charity/waqf
continued
charity/waqf Better Generation
Zakah/Sadaqah/
Endowment
9.0.2Implication of Cash Waqf Certificate
As part of extending three sector models banking services towards the
achievement of corporate objectives of SIBL, SIBL introduced cash waqf
certificate, a new product for the first time in the history of Banking in its
Voluntary sector Banking as mentioned earlief. Cash-Waqf can be seen as a
social assignment raplacing income tax in many Muslim countries which are
reported to be one of the most corrupt departments in most of the Muslim
countries like Bangladesh. Its introduction is highly suggestive in the context of
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fiscal system of Bangladesh which is heavily dependent on indirect tax (85% of
the total revenue of the government). A great part of direct tax can be converted
to social assignment and cash waqf certificate can partially substitute a
substantial part of the income tax for financing strategic social projects in
education, health, social welfare activities proposed to be undertaken by the rich.
What is needed is a political will. Together, a new beginning can be made for a
participatory economy and a caring society.
Besides cash waqf can be used as a strategic investment in alleviating poverty
and economic deprivation as well as education, health and research to be
discussed late on. By taking part in scheme one can contribute not only towards
development of a social capital market operation, but also sharing in permanent
social investment. As deposit of cash waqf is made once for all, Bank can safely
invest it on short term, medium term and long term basis as indicated below:
Short term investment: Micro Credit and Micro Enterprise investment for poverty
alleviation and family empowerment, Tokai rehabilitation etc.
Medium term investment: Cottage Industry, weaving industry, small garments
industry and dairy farm etc.
Long term investment: Various heavy industries/factories etc.
These investment activities shall result in creation of new avenues of
employment opportunities. A large number of unemployed shall have the
opportunity for earning their livelihood and thus making contribution to social
progress.
As noted earlier, there are 150,593 Waqf estates in Bangladesh. All of them are
in immovable properties. There is an immense scope for development of such
properties commercially through raising fund by selling cash-waqf certificate.
There are many rich people who have the desire to create cash waqf at the altar
of public good as well as for the benefit of their descendants. But they can not
proceed for lack of necessary institutional arrangement for management of cash
waqf. SIBL provides the necessary institutional support and an unique
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opportunity for opening cash waqf deposit account with a view to achieving the
following objectives:
9.0.3 Objectives of Cash Waqf:
To provide Banking services as facilitator to create cash waqf and to
assist in the overall management of waqf;
To assist in mobilization of social savings by creating cash waqf with a
view to commemorate alive or deceased parents, children and to
strengthen the integration of the family relationship of the well-off people
and the rich;
To increase social investment and to transform the social savings into
capital;
To benefit the general public specially the poor sections of the people out
of the resources of the rich;
To create awareness among the rich regarding their social responsibilities
to the society;
To assist in developing social capital market;
To assist in overall development efforts of the country and to make a
unique integration between social security and social peace.
9.0.4 Cash-Waqf services as Social and Private Good and Criteria of
Allocative efficiency
The Waqf fund supported activities can be divided into social and private good,
thereby introducing an interesting area of economic analysis of resource
allocation in public finance. Generally, speaking, social good is non-rival in
consumption as it is difficult to put price tag on social good as its consumption
does not reduce the benefits available to others. This is not true in the case of
private good where we can put the price tag and exclude others from consuming
it. Its consumption is, therefore, rival, “ putting it differently, the benefits derived
by anyone consuming a social good are” externalized” in that they become
available to all others. This is the situation with social goods. In the case of
private goods, the benefit of consumption is internalized with a particular
consumer and consumption by him excludes consumption by others”.
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When cash waqf fund supports construction of a “bridge” it assumes the
character of social good and when it does support construction of a hospital or a
school, it does provide public provision of private good for which tag can be put.
Thus when total resource generated by waqf properties is divided between
private and social good or when a mix of social good is chosen, the existence of
non-rival consumption changes the condition of efficient resources use from
those applicable where consumption is rival. This institution of waqf is performing
an allocation function, however rudimentary way it might be. This allocation
function involves not only adjustment of income and wealth, but also adjustment
of price of goods and services with which waqf is associated. Thus it should be
possible to make in depth case studies to show how waqf does supported goods
and services perform allocation, distribution and stabilization function in a
modern Muslim state.
It should then be possible to discuss further the implications of the spending of
Awaqf revenue under the following three effects:
“Good deed” effect
“Free rider” effect
“Income re-distribution “effect
9.0.5Guidelines/ Rules Governing the Operations of Cash Waqf Certificate
Account
The guidelines/rules governing the operation of the cash waqf certificate as
introduced by Social Islami Bank Limited are as follows:
Cash Waqf shall be accepted as endowment in conformity with the
shariah. Bank will manage the waqf on behalf of the Waqfi
Waqfs are done in perpetuity and the accunt shall be opened in the title
given by the Waqif
Waqif will have the liberty to choose the purposes to be served either from
the list of 32 purposes mentioned below indentified by SIBL as given
below or any other purposes permitted by the shariah
The amount deposited in the cash waqf A/Cs will be invested as per
Bank’s own decision in conformity with the shariah and the cash waqf
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amount will earn profit at the highest rate offered by the bank from time to
time
The waqf amount will remain intact and only the profit amount will be
spent for the purposes specified bey the waqfi. Unspent profit amount will
automatically be added to waqf amount and earn profit to be grown over
the time. No cheque book will be issued in this account
Waqfi may also instruct the Bank to spend the entire amount for the
purpose specified by him/her
Waqfi has the opportunity to create cash waqf at a time. Otherwise he/she
may declare the amount he/she intends to build up and may start with a
minimum deposit of TK. 1000/= only. Specific cash waqf A/Cs (where
name of beneficiary whether individual or institutions are mentioned) by
depositing a minimum sum of TK. 5000/= and above. The subsequent
deposits shall also be made in thousand or in multiple of thousand.
Waqfi shall also have the right to give standing instruction to the bank for
regular realization of cash waqf at a rate specified by him/her from any
other a/c maintained with SIBL
Cash waqf shall be accepted in specified endowment receipt voucher
and a certificate for the entire amount shall be issued as and when the
declared amount is buit
Account of cash waqf are maintained in a separate ledger and necessary
bank charges are deducted therefrom
In case of any change of address of the waqfi must inform the Bank
immediately
Bank reserves the right to regret to open any cash waqf account or to
close any account opened earlier without showing any cause
The rules of cash waqf account are subject to amendment in conformity
with shariah at any time by the Bank
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Table-9.1: Growth Trends of Cash Waqf A/Cs Number & Deposited Amount
A COMPARATIVE POSITION OF THE CASH WAQF PROGRAM FROM THE YEAR
2006 TO 2010
Particulars 2006 2007 2008 2009 2010
No. of Cash Waqf Account (Opened) 2623 3547 5084 7082 8000
Principal Amount (Fig. in Crore) 1.43 1.59 2.03 2.77 4.41
The above table indicates that the number of cash waqf account opening was
increased in a good trends and the amount deposited amount was also
increased significantly.
Figure -9.1: Number of Cash Waqf Certificate Account from the year 2006
to 2010
Figure-9.2: Deposited Amount Trends in Cash Waqf A/Cs over the year
(2006-2010)
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Table-9.2: Cash Waqf A/Cs at Principal Branch of SIBL:
Cash Waqf Statement From June 2010 to June 2011 at principal Br.
Sl No. Name of Waqf No.of A/Cs Amount (TK)
General Cash Waqf:
1 Family Rehabilitation 150 371200
2 Education 320 578550
3 Health & Sanitation 112 145965
4 Social Utility 45 50700
5 Others 38 350756
665 1497171
Specific Waqf:
1 Family Rehabilition 5 532762.67
2 Education 100 6591813.19
3 Health & Sanitation 8 401241.58
4 Social Utility 7 98783.99
5 Others 12 980750
132 8605351.43
Total A/Cs 797 10,102,522.43
Large amount is deposited at the principal branch of SIBL because this branch is
located at the heart of country and the larger contribution is coming from the
bank’s higher level personnel.
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VOLUNTARY BANKING SERVICES SECTOR: CORPORATE SOCIAL
RESPONSIBILITY
In a natural calamity-prone area like Bangladesh, there remains an existing and
distinctive CSR agenda focused on the business contribution to tackling social
crises in the erected area. Disaster relief and rehabilitation became the segment
where the highest number of banks participated to help ease the sufferings of
the affected people. In the current context, a desired move from the traditionally
popular fields of education or health.
9.1.1: Priority Areas of Corporate Social Responsibility (CSR)
It would be of strategic, longer run competitive advantage for banks and financial
institutions in Bangladesh to embrace CSR in their management approaches
and operations, with initiatives chosen in broad-based, extensive stakeholder
engagement. Besides adoption of socially and environmentally responsible
practices in own internal operations, banks and financial institutions can make
major CSR contribution by speeding up financial inclusion of the large socially
disadvantaged rural and urban population segments; drawing them in with
appropriate financial service packages and with financing programs innovatively
designed to generate new employment, output and income. The following could
be some priority areas, among the broad range of possible useful initiatives:
o Self-employment credit and small and Medium Enterprise (SME) lending
programs, taken up solo or in association with locally active Micro Finance
Institutions (MFIs), designed to create productive new on-farm
employment, such initiatives are of particular urgency for regions with
endemic high seasonal unemployment (e.g., the manga afflicted Northern
districts);
o Financing programs for installation of biomass processing plants (e.g.
biogas plants), solar panels in rural households, for waste recycling plants
in locations populated by urban poor, and for Effluent Treatment Plants
(ETPs) in manufacturing establishments;
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o Credit programs for diversified production of crops, oilseeds, spices,
vegetables, fruits etc. by rural households, financing the growers directly
or through suitable intermediaries in the value chain.
o Credit support for combinations of farming activities (like co-production of
a minor crop with a major one, fish/duck farming with aman rice of
deepwater variety in low lying fields), may also be well worthwhile;
o Mobile phone based/ local MFI outlet supported programs promptly
delivering remittances from migrant workers to recipients in remote rural
households; programs for card based/ mobile phone based delivery of
financial services to such households;
o Financing programs supporting folk crafts, folk musical and performing
arts, aimed at promoting domestic tourism and markets in cultural
products/events besides income and employment for the population
groups involved.
With the employment and new income generated by successfully executed
programs, the targeted population segments can eventually constitute big new
client bases for financial products and services.
9.1.2 Initiating CSR programs in banks/financial institutions
Embracing CSR has to begin with decision at the highest corporate level (board
of directors), and adoption of action programs and performance targets chosen
in consultative processes involving the internal and external stakeholders
concerned. A first time CSR program of a bank or financial institution would be
likely to include action plans for:
i) Ingraining environmentally responsible practices within the organization;
ii) Engaging with borrowers in scrutiny of the environmental and social impacts of
their proposed undertakings (along the PKSF 2004 or Equator Principles 2006
guidelines, as relevant);
iii) Reaching out with financial services to the less well o. population segments of
the community (With own initiatives along lines indicated at paragraph 1.2
above); and
iv) Community investments by way of donations to initiatives of Civil Society
Organizations (CSOs), NGOs and institutions involved in health, education and
culture; for social and environmental improvement including nutrition, health and
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education in the disadvantaged population segments (most banks and financial
institutions in Bangladesh already have significant outlays of such charitable
expenditures, these can _it in appropriately as elements in the new structured
CSR programs).
Foreign banks in Bangladesh having structured CSR programs (in line with their
home country practices) can come forward to usefully mentor the new, incipient
CSR initiatives of local banks.
Networking and joint initiatives in CSR programs among banks and financial
institutions may be useful in some cases in devising more inclusive,
comprehensive programs of necessary critical size.
Reporting of the CSR initiatives can begin in a modest way as supplements to
usual annual financial reports, eventually to develop into full blown
comprehensive reports in the GRI format. Like the statutory financial reports, the
CSR reports are expected to be available in the public domain for perusal by
stakeholders.
9.1.3 What is CSR-Clearing the Confusion
In recent years many technical terms have been introduced to the Bangladesh
business community these include:- Corporate Governance, Corporate
Philanthropy, Social Responsibility, Social Compliance and Corporate Culture.
This fact sheet aims to summaries these concepts and to compare and contrast
them with “full-blown” corporate social responsibility (CSR).
9.1.4 So what is Corporate Social Responsibility (CSR)?
CSR is the heart of a business. It should be integrated into the companies
Human Resource Policy, its ethical business practice and define how it complies
with environmental regulations and respects the local community. Most CSR
choices involve balancing competing values, interests and costs. CSR also
involves decisions about sustainability-involving the “triple bottom line” of
economic, social and environmental performance.
CSR is a source of opportunity, innovation and competitive advantage
particularly in relation to international sales. Advocates of CSR often offer four
arguments as to why it should be given attention:- (1) Moral Obligation-
companies have a duty to be good citizens and to “ do the right things” (2)
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sustainability- emphasizing environmental and community stewardship (3)
License to operate – because every company needs permission from
government, communities and other stakeholders to do business and (4)
Reputation – to improve the image of a business and to strengthen its brand.
We have come to a time in Bangladesh when a new approach is needed in order
to integrate social and environmental considerations more effectively into core
business operations and strategy. This will be ‘strategic CSR’ integrating
company CSR inside out and outside in – where the company’s employment
practice and factory conditions will receive as much attention as its donations to
good causes and its environmental enhancement projects. Typically the more
closely tied a social issue is to a business, the greater the opportunity to
leverage the firm’s resource- and to benefit society.
CSR is interdependence between society and business and each successful
business needs a healthy society. Education, health care and equal opportunity
are essential to the development of a productive workforce. Safe products and
safe working conditions not only attract customers but lower the internal costs of
activities. Efficient use of land, water, energy and other natural resources makes
business more productive. Ultimately, a healthy society creates expanding
demand for business, as more human needs are met and aspirations grow. At
the same time a healthy society needs successful companies. No social program
ca rivals the business sector when it comes to creating the jobs, wealth and
innovation that improve standards of living and social conditions over time.
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9.1.5 Corporate Social Responsibility (CSR) Social Islami Bank Ltd.
The Social Islami Bank Limited started its journey with the concept of 21st
century Islamic participatory three sector banking model: (i) Formal Sector
commercial banking with latest technology, (ii) Non-Formal Sector Family
Empowerment Micro-Credit, Family Empowerment Micro-Enterprise & Small
and Medium Enterprise (SMEs) program and (iii) Voluntary Sector-Social
Capital Mobilization through CASH WAQF and others. ‘Reduction of poverty
level’ is the vision of the bank together with a commitment to “working
together for a caring society”.
The welfare activities of the Social Islami Bank Limited (SIBL) as part of
corporate social responsibility are maintained from profit made in the Cash
Waqf and Social Welfare Fund.
Financial support has been extended to different Mosques, Madrashas,
Orphangages, Schools & Voluntary Organizations. Benefiaciaries that have
received ‘out of profit from the Cash Waqf Fund’ include center for
rehabilitation of the Paralyzed (CRP), Sight Savers International, kidney
Foundation, Bangladesh Cancer Foundation Hospital, Jatiya Ando Kalayan
Samity, Comilla and Misabbir Cancer Care Centre.
SIBL has assisted poor patients suffering from Cataract & Low Vision. In 2006
eight mobile camps were held in different parts of Bangladesh including
Faullah, Mirpur, Manikgonj, Bancharampur, Fatichari, Sylhet and Noakhali.
These camps provided 185 cleft lip and palate operations and medical care
for 2622 patients including medicine/ medicine, spectacles and cataract
surgery free of costs. After successful cataract operation, the patients can see
the light of the beautiful world and can read the holy Quran or scriptures.
SIBL recognizes the importance of skilled Human Resources and promotes a
congenial working environment, people related policies generating team spirit
and promoting a high level of integrity, loyalty, commitment and devotion
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among the employees. In order to maintain transparency, SIBL follows clear
recruitment policies to show fairness to deserving candidates. The Bank has
its own full-fledged training institute and stresses the need for training to
employees for their professional improvement.
Through its Family Empowerment Micro-Credit program SIBL lends to the
segment of the Bangladesh society who are not able to provide collateral
security. The Micro-Enterprise Program is tailored to meet the needs of small
traders and shop-keepers. Small and Medium Enterprises (SMEs) investment
is addressed to unlock the potentials of the ‘missing middle’ who are not being
properly addressed by the Corporate Banking Sector.
SIBL has successfully implemented Micro-Credit program with the support
from International Labour Organization (ILO) to eliminate child labor form
Garment sector in Bangladesh. SIBL and UNICEF have also jointly
implemented Micro-credit program to extend investment facilities among the
parents-guardians of the former garment child workers. SIBL with support
from International Labor Organization (ILO) successfully disbursed stipend
worth of TK. 45.00 Million among 5000 students (child labor) during 1996-
1998 who had lost their child labor jobs from Garment sector.
SIBL Executives & officers have been distributing spectacles among poor
patients suffering from cataract & low vision since 2005. SIBL also organized
Voluntary Blood Donation Program every year and motivates others to donate
blood for the noble cause of humanity.
During 2007 SIBL staff donated one day’s salary to flood affected people of
the northern part of the country along with other help in the form of both cash
and kinds reaching their door-steps. SIBL also donated one day’s salary for
the devastating SIDR affected people and distributed both cash and kinds in
the remotest areas of the southern part of the country. In addition during the
winter time staff gives warm clothes for distribution to the poor people. SIBL
intends to continue with its welfare activities as part of its Corporate Social
Responsibility (CSR).
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9.1.7Corporate Social Responsibility (CSR) Expenditure (Amount in Lac
Tk)
Table-9.1.1: Sector wise Corporate Social Responsibility expenditure
Year
CSR Sector 2006 2007 2008 2009 2010
Education 38.45 40.21 18.52 22.74 90.7
Health & Beneficiary 39.365 10.23 12.68 19.61 30.85
Disaster Management 18.28 15.25 29.35 34.57 21.6
(Family
Rehabilitation)
Environment (Social 2.5 1.21 1.25 2.81 3.47
Utility)
Others 10.13 20.31 58.6 60.01 57.76
Total 108.725 87.21 120.4 139.74 204.38
Figure-9.1.1: Total Corporate Social Responsibility expenditure
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