THE PERFORMANCE OF RURAL DEVELOPMENT SCHEME IN ISLAMI BANK BANGLADESH FROM AN ISLAMIC PERSPECTIVE

Islami Bank Bangladesh Limited (IBBL) is one of the leading and efficient financial institutions in the globe. The Rural Development Scheme (RDS) has become an exclusive domain to play a significant role in increasing the performance of development in nation building. As a result, IBBL is playing a vital role in the rural area in applying the RDS for poverty alleviation. The aim of this study is to analyze the performance of the RDS of IBBL in the rural area. This paper will also discuss the achievements of this scheme in the present context to evaluate its performance. Finally, the researcher will come up with some suggestions and recommendations for further improvement.


BACKGROUND OF THE STUDY
Islami Bank Bangladesh Limited (IBBL) provides an economic system based on Islamic Syariah.In Bangladesh, the majority of the population below poverty lives in rural area.The IBBL has devised a "Rural Development Scheme" (RDS) with a view to creating employment opportunity for the rural people to reduce poverty through income generation activities.Obaidullah (2008:23) argues that the performance of RDS (Rural Development Scheme) of IBBL was better in terms of growth (12.5%),dropout rate (5%), and operational efficiency as compared to three conventional leaders in microfinance; Grameen Bank, ASA (Association for Social Advancement), BRAC (Bangladesh Rural Advancement Committee).So, it is clear that RDS works to create income generating and productive self-employment opportunities through extension of investment for the development of rural area and thereby contribute in alleviation of rural poverty.The modes of Investment for the purpose of production of crops, off-farm income activities like service, trading, processing and manufacturing, shop keeping, peddling and rural transport like rickshaw, Rickshaw-van, cart etc., irrigation equipment, hand tube well, housing materials along with various types of economic activities.As Chowdhury (2007) states that 'the micro credit program of IBBL's RDS Model is the largest and remarkable one'.
The purpose of this paper is to demonstrate the potential of Islamic Microfinance namely Rural Development Scheme (RDS) of Islami Bank Bangladesh limited as an alternative tool for poverty alleviation.So it is the timely needs to critically analyze the performance of RDS to find out the way of solution in the present context as well as remark the strength point positively to make it effective tools for poverty alleviation from the findings of existing literature to justify the impact of Islami Bank microcredit on poverty alleviation & socio-economic development.According to Uddin (2008), this scheme in the name and style of 'Rural Development Scheme' has been introduced to cater to the investment needs of the agriculture and rural sector to create opportunity for generation of employment and raising income of the rural people with a view to alleviate poverty.In this study, the researcher will discuss the performance of RDS and its contribution to eradicate the poverty among the rural people in Bangladesh from the Islamic view point.
Islami Bank Bangladesh is playing an important role in the economic development of the country through micro credit programs.That is, here just try to reflect the present performance of RDS activities.The RDS has been working for the realization of that objective to create income generating activities and productive self-employment opportunities through extension of investment for the development of rural area and thereby contribute to the alleviation of poverty among rural people.So therefore, this study has focused on which is related to Islami Bank microcredit namely "Rural Development Scheme" for its poverty alleviation and socio economic development in rural area of Bangladesh.But here the specific objective of this study is to analyze the performance of Rural Development Schemes (RDS) in poverty alleviation from an Islamic perspective.

METHODOLOGY
This study was made mainly on the basis of secondary data and information.The major sources of data were the literature of management, journals and different relevant research studies.After reading through most of the articles were found that this study will be conducted based on qualitative analysis of research.

LITERATURE REVIEW
A significant level of development had been observed in Islamic banking research since the last decade.The Rural Development Scheme (RDS) of Islamic Bank Bangladesh Limited (IBBL) has been discussed and analyzed widely among the practitioners, researchers and policy makers as an important development indicator of clients.This study reveals that RDS of IBBL has been treated as a sustainable tool in the rural development and poverty alleviation of Bangladesh with a short span of time of its establishment.Therefore, Islami Bank Bangladesh Limited was founded with the major objective of establishing Islamic economy for balanced economic growth by ensuring reduction of rural-urban disparity and equitable distribution of income on the basis of Islamic rules and regulations.It is one of the largest private banks in the country most influential financial institutions in the globe.Moreover, Ahmed (2002) has mentioned that Islamic banking is most effective banking system because of its theoretical basis, operational framework, and empirical support for the establishment of Islamic MFIs.After critically evaluating the conventional MFIs, an Islamic alternative is presented.Besides that Habib et.al (2003) has been done good study to examine the effectiveness of RDS credit provided by the Islami Bank Bangladesh Limited through interviewing a few randomly selected program beneficiaries.In this regard, Mannan (2006) has been done an analytical review of an innovation in Islamic Micro-finance in terms of Family Empowerment Micro-Credit as operation by Social Investment Bank, Dhaka, Bangladesh in contrast to 20,000 or so non-Governmental organization (NGOs) operating mainly in the rural area.Moreover, Dusuki (2006) has been examined the potential of group-based lending scheme of microfinance.It is argued that group-based lending approach is not a subject alien to Islam, as it is deeply inscribed in Ibn Khaldun's concept of 'Asabiyyah' or social solidarity.By adopting groupbased lending approach, Islamic bank may offer various Islamic financial products and services without compromising on the issue of institutional viability and sustainability.So, the main goals of RDS to provide the financial access for creating opportunity of income generation of the rural people with a view to alleviate poverty (Cited at IBBL, 2006;Mizanur Rahman, 2008).Based on the above study it argued that there is need to further study to see the current performance of Rural Development Scheme of Islami Bank Bangladesh.

Present Scenario of Islami Bank Bangladesh and Development
Bangladesh is the third largest Muslim country in the world with around 160 million populations of which 90 percent are Muslim.The hope and aspiration of the people to run banking system on the basis of Islamic principle came into reality after the OIC recommendation at its Foreign Ministers meeting in 1978 at Senegal to develop separate banking system of their own.After 5 years of that declaration in 1983, Bangladesh established first Islamic bank namely Islami Bank Bangladesh limited.At present, in Bangladesh, out of 48 banks, 8 full-fledged Islamic Banks and 21 Islamic Banking branches of 10 conventional banks, have been working in the private sector on the basis of Islamic Syariah.There is no doubt, Islamic banks and banking institutions that offer Islamic banking products and services are required to establish Syariah advisory committees, consultants to advise them and to ensure that the operations and activities of the bank comply with Syariah principles.As Hanif (2011) mentioned that the conventional banking systems follow the philosophy of capitalism and interest which is forbidden according to Islamic Syariah.Therefore, Ahmad and Hassan (2007) concluded that Islamic banks in Bangladesh should recognize the fact that their success in abolishing interest has been only partial and they have a long way to go in their search for a satisfactory alternative to interest.

A Genealogy of Development Discourse
The term 'development' has not featured in the traditional Islamic discourses that primarily deal with jurisprudential issues Fiqh or matters of belief Aqeedah.In the contemporary context the Arabic term Taimiyah is used by modern-day Middle Eastern development finance institutions such as the Islamic Development Bank.This Arabic term, however, does not appear in the English language literature that deals with related issues such as Islamic economics which uses the term 'development'.This calls for a deeper and wider approach to understanding the genealogy of the term, which is in use today but doesn't appear to be rooted in the historical Islamic discourses on societal or economic organization.Yusuf al- Qaradawi (1972, p.132) andShahadah al-Natur et al. (1996, p.157) state in their books, Muslims are called to pursue and persevere in entrepreneurial activities.This form of encouragement refers to the highest recognition by Shara" upon the sincere and honest entrepreneurs.Abu Saad narrates that Prophet (p.b.u.h) said: "An honest and sincere businessman will be placed with the prophets, siddiqin and al-syuhada"" (Hadit Hasan) (al-Tirmidhi, 1987(al-Tirmidhi, , no. 1209, p. 515, p. 515)".

Islamic View on Socio-Economic Development
Traditionally, the Islamic sciences were not accustomed to dealing with a broad range of social science issues, since it was held that the only legitimate sources of knowledge about the structure of society, economy and governance were the Qur'an and the Prophet Muhammad's Sunnah (Rahman, 1997).Hence, the schools of jurisprudence were seen as having the sole responsibility, through their established methodologies, for deriving guidance from revelation (usul al-fiqh) to shape societal norms and conventions.But Islam's basic concern is human welfare.The Quran and Sunnah reveal an overriding interest in the overall welfare of mankind (Al-Quran 2:201), while a unanimous view of Fuqaha (Muslim jurists) is that the welfare of the people and their relief from hardships is the basic objective of the Syariah (Chapra, 1985).The life of mankind consists of two sequential stages: the worldly life (from birth until death) which is temporary and the life of the hereafter (that begins after death) which is eternal and permanent (al-Qur'an 87:16).Islam desires welfare of this composite life (al-Qur'an 28:77).A fundamental principle of Islam is to prohibit monasticism and encourage economic activities not for the sake of accumulating wealth, but for the welfare of mankind (al-Quran 57:27).The Qur'an states that all the natural resources are meant for the benefit of mankind (al-Quran 2:22).Man should explore them, use them for production, enjoy the fruits of producing goods and services, and use them for meeting moral and social obligation (al-Quran 28:77).
Thus, optimum and efficient use of human resources is important for accelerating production and as well as attaining other aspirations of life.This needs development of human resources.As a matter of fact, Imam Ibn Taymiyyah stresses that Islamic law scholars from the Shafi'ite school of thought, Imam Ahmad bin Hanbal, Abu Hamid al-Ghazali and Abu al-Farj Ibn al-Jawzi in chorus stated that entrepreneurial activities is a responsibility that must be performed social wise.This is due to the fact that life will not prosper without committing this responsibility (Abd al-Halim, 1992).While Ibn Abidin (2000, 1, p. 32), a scholar of Hanafi school, further support the statement claiming that entrepreneurship is important for it is a responsibility that must be carried out socially.

THE PERFORMANCE OF THE RDS OF IBBL Rural Development Scheme (RDS) at a Glance
Islami Bank Bangladesh Limited (IBBL) has been introduced an Islamic Syariah based microcredit model "Rural Development Scheme (RDS)" in 1995 with committed promise to eliminate rural poverty.The RDS microcredit model is the largest one among the various Islamic MFIs in Bangladesh (Chowdhury, 2001).Currently, 244 Branches of the Bank have been operating the activities of the Scheme in their respective areas.These Branches are working among the poor in 18,086 villages of 64 districts of the country.Present number of members is 911,470 since beginning the scheme.The members are provided investment facilities an amount of BDT 100,521.08 million against which the outstanding was 17,379.97 million.Rate of recovery of the Scheme is more than 99.50% (IBBL, 2014).
Islamic Bank has taken up a scheme to reactive the rural economy and develops model villages through integrated approach.The objective of the scheme is to create income generating and productive self-employment opportunities for Muslim youths through of investment for the development of rural areas and thereby contribute in alleviating rural poverty.It covered different types of income generating activities like goat rearing, beef fattening, dairy farming etc.Bank provides credit facilities without collateral plus support services such as skill training, environment awareness and entrepreneurship development etc.The performance of the bank appears to be excellent as management of the program is very satisfactory.But the youth entrepreneurship development approach of the bank seems to suffer from several problems like lack of scientific approach in selection of target group, absence of need based training course contents, inadequate motivation of the trainees and the likes.The analyses evidence that the Islamic Bank Bangladesh Limited through its innovative programs is contributing towards the poverty alleviation process as well as Muslim Youth entrepreneurship development program of Bangladesh.But, it appeared that the success of failure of these programs depends upon a number of factors such as need based strategic supports, absence of realistic decisions and lack of comprehensive training programs etc.However, the bank has made some progress in financing projects as well as youth entrepreneurship development under this scheme.Overall, more than 90% of the investment made in these youth entrepreneurship development schemes have been recovered, some of which have welfare orientation.Further, the very objective of the sharia is to promote the welfare of the people, which lies in safeguarding their faith, their life, their intellect and their wealth (Chapra 1985).

Key Objectives of RDS
The followings are the important objectives of IBBL's Rural Development Scheme objectives: a.To extend bank investment to agricultural and non-agricultural sectors in the rural areas; b.To bring the poorer population within an organizational framework by setting up certain rules and regulations with a view to free them from the curse of poverty and make them self-reliant thereby converting RDS into a self-reliant sustainable program; c.To invest on employment and income generation activities of the rural population; d.To provide self-employment for the distressed people; 1. Socio-economic development of the poor and distressed by group/center formation; e.To continue to support the self-reliance drive of the poor in their endeavor to capital formation from savings they make out of their increased income; f.To bring both male and female to provide employment under income generation activities and help them to attain self-reliance step by step; g.To help reduce and eventually stop, through enhancement of their income, the lending on high and exorbitant rate of interest by the village moneylenders, the advance sale of crops, land and mortgage of land by the poor during their acute needs.

Formation and Management of the Scheme
In order to formalize group formation and formation of the center and that of the election of the group leader, deputy group leader, center leader and deputy center leader all members of the center are required to promise themselves, through adopting resolutions that they will abide by the rules and regulations of the group/center.They sit for a weekly center meeting the date, time and place of which are determined by themselves according to their convenience.Group formation and subsequently emergence of a center are the result of constant effort and intensive supervision of a field supervisor.Generally a field supervisor is responsible to supervise 40 groups or 200 members.Field supervisor is recruited few months ahead of the group formation and initiation of investment activities.Soon after the appointment a supervisor is required to motivate people, mobilize supports, conduct base-line surveys, form groups and conscience the group members.Preferably a field supervisor should be a local person with a minimum graduation degree.The entire activity of RDS is coordinated and managed from a branch office of IBBL by a project officer who is responsible to a committee headed by the bank's branch manager.The project officer supervises the activities of the field supervisors in the entire command area of its operation.He provides instructions and suggestion to the field supervisors in implementing the project.While forming groups the project officer attends the meetings.He organizes training for the group members and ensures, through the field supervisors, the attendance of the group members in weekly meetings.He keeps a constant eye on the investment disbursement, timely repayment of weekly installments and savings deposits and adherence of other rules and regulations by the group members.Investment vouchers preparation, filing of documents and production of monthly investment balance sheets are among the few other regular activities of a project officer.

Investment Avenues, Higher Limits and Duration
RDS started as a pilot operation in the rural areas of several districts under the direct supervision of the nearby Branches of the Bank.At present, it is extended to all the 61 districts out of 64 districts of the country through 139 Branches of the Bank.The metropolitan areas and three Chittagong Hill Districts are kept outside of RDS.Each designated Branch selects villages within a radius of 16 km of the Branch.Following criteria are followed to select a village: 1) Ease communication so that staff members can easily attend weekly meetings; 2) Availability of agriculture and other off-farm activities; and 3) Abundance of low-income people.

Categories and the Number of Activities under RDS
IBBL is one of the fastest growing and best performing banks in Bangladesh.
Because of its excellent teamwork among the top management, staff and clients as well as outstanding banking performance, this bank achieved a secured position in Bangladesh banking sector.IBBL has invested in a wide range of areas that not only reduced the risk of investment, but also providing services to a large number of citizens in the country as well as its citizens working abroad.The above study has portrayed a picture of IBBL's role in the socio-economic development of Bangladesh.

RDS AND POVERTY ALLEVIATION FROM ISLAMIC VIEW POINT
IBBL, a leading private Islamic commercial bank, was founded with the major objective of establishing Islamic economy for balanced economic growth by ensuring reduction of rural-urban disparity and equitable distribution of income.Branches of the Bank have been encouraged to invest their deposits in their respective areas and in particular for the economic uplift of the rural people.In addition to its commercial banking operations, IBBL introduced its own version of microfinance called 'Rural Development Scheme' (RDS) in 1995 by practicing Islamic modes of finance to cater to the investment needs of agriculture sector and rural poor to generate employment opportunities, enhance income to alleviate poverty.As we will explain in details in this paper that RDS, a division of IBBL, is offering an Islamic alternative to microfinance services offered by traditional MFIs in rural Bangladesh.Now a day's poverty alleviation is a very important issue in all over the world.It was come in the front when the failure of the past macro-economic development strategies in eradicating poverty in a sustainable manner pave the way for changes in the development strategy to specifically for the targeted poverty.

Defining poverty in an Islamic Perspective
There is no unanimously agreed definition of poverty in Islam and various schools of jurisprudence have offered diverging bases for poverty conceptualizations and indicators.Interestingly, the Qur'an mentions two categories of poverty: the 'poor' (fakir) and the 'needy' (miskin) and there is considerable debate amongst Islamic jurists about the nature of the difference, whilst for example the orientalist Schacht held the opinion that the difference is arbitrary (c.f.Qardawi, 1999).Whether and how much of the Zakat should be allocated to these first two group mentioned in the Qur'an is also debated: "That there were significant consequences resulting from favoring one of the definitions over the other becomes obvious when we see how jurists decided the amount of charity that the poor were to be given.In general, those who defined poverty as need did not place a monetary limit on this amount, since needs vary among individuals.On the other hand, jurists who defined poverty in absolute financial terms generally allowed no more than a specified amount of Zakat to be given to one individual.The majority of Sunni schoolsthe Malikis, the Shafi'is, and Hanbalistook the former position while the Hanafis took the later position" (Mattson, 2003: 33).
But, the Maqasid al-Shariah approach (The Objective of Shariah), conceptualized and defines poverty in broader socio-economic sense.Needs are defined as religion (deen), life (nafs), the mind (aql), progeny (nasl), and property (maal) (Al-Habshi, n.d.).The Maqasid al-Shariah concept has been derived from the Qur'an and the Sunnah or inferred from these by a number of scholars (Chapra, 2008).

THE PERFORMANCE OF RDS IN POVERTY ALLEVIATION: AT IBBL
The contribution of the banking sector is playing significant role in the development of this country.However, the emergence of Islamic banking in Bangladesh has added a new height in the banking sector.The role of IBBL seems to be magnificently surpassed among all the Banks in Bangladesh during last three decades.So, the RDS is considered as a new paradigm in poverty alleviation and bring about development (H.Ahmed, 2003).RDS has large positive impact, which is observed in the case of food intake, housing, education, clothing, taking medical treatment, use of toilet, use of clear pure water, income, expenditure and as such economic, socio-economic, health and physiochemical environment (Uddin, 2008).Parveen (2009) argues that RDS of IBBL has been treated as a sustainable MFI in the rural development and poverty alleviation of Bangladesh with a short span of time of its establishment.Another study has found that MFIs are based on the implicit assumptions of social class conflict, so they tend to empower women, whereas Islamic MFIs' intend to empower family by ensuring joint liability of husband and wife in case of lending to family or groups of families, which ensures a mutual liability sharing and cooperation in the family (Mannan, 2006).In the era of high-growth Islamic banking, the best-fit alternative to conventional Microcredit is Islamic Microcredit, which promises the same benefits based on Syariah.As Islam provides the complete code of life, the religion covers poverty reduction as one of the premier agendas.Islam considers that poverty induces other indecent acts; therefore, poverty should be treated with much care.Among more than three thousand MFIs' at present working in Bangladesh, Rural Development Scheme (hereafter referred to as RDS) is the largest Islamic Microcredit program (M.Ahmed, 2006).Despite of the increasing religious sympathy and higher interest rate with the counterparts, RDS could not able to achieve significant progress in terms of outreach and socio-economic development.Therefore, it is imperative to critically analyze the performance of RDS to examine the way forward for better success in future.Applying performance analysis techniques, this study analyzes the current status of Rural Development Schemes (RDS) offered by Islamic Bank Bangladesh Limited.
The above study is shown that, it is a general belief in Bangladesh community that the contribution of Islami Bank Bangladeshi Limited in development is very significant among the financial institutions (Rahman, Jahan & McDonald 2010).To make the rural poor people self-reliant, IBBL has initiated Rural Development Scheme.During FY 2010, RDS performance got better than ever, which is operating in around 12,000 villages among more than 5, 00,000 members of around 21,000 centers of the country and will expand this business to all over the Bangladesh in the coming years (IBBL 2010).A study on RDS system by a group of scholars analyzed many facets of the RDS and they conclude that IBBL's RDS is a successful project (Rahman, Jafrullah & Islam 2008).It is highly encourageable to other banking system to adopt and implement IBBL rural development scheme in the rural area.IBBL has significantly contributed it the employment generation in Bangladesh.This bank has employed over 10,000 people directly and a few million indirectly through financing in businesses including import-export, industrialization, SME financing and Rural development projects.So, it can be apprehended that a few million families are directly and indirectly benefited from IBBL and they are also contributing in the economy Bangladesh.According to Rashid, Hasan and Ahmad (2009), Islami Banks along with IBBL is providing satisfactory community service through job creation and ensuring consistency in service provisions.

Problems of RDS
There are a few problems are faced by IBBL.First of all, IBBL cannot settle RDS in Syariah prohibited sector, so its RDS scope is narrow in Bangladesh.Secondly, Entrepreneurs have no clear concept about Syariah and RDS mode.As a result they not want to take investment easily.Thirdly, IBBL lead their RDS operation within limited number of investment mode.Fourthly, Lack of Islamic Banking Rule in our country, the authority of IBBL faces various problems in their RDS operation as a result it cannot run smoothly.

Recommendations of RDS
Based on the study, we may recommend some aspect which can be implemented for further development of RDS system in IBBL.These are follows: 1. IBBL should encourage potential customer, so that they be engaged in

CONCLUDING REMARKS
In the end of the study, it is clear to us that Islamic microfinance is a potential field of study.We have seen there is overall literature scarcity in this field Islamic principles & theories in the microcredit field.On the other hand, in the area of impact Assessment of RDS microcredit in Bangladesh we found lack of study has been done for analyzing the real impact of RDS to know poverty alleviation, socio-economic development, women empowerment and sustainable livelihood.Finally, we suggest to reduce the literature by doing future study in the above the field of Islamic Microfinance in Bangladesh.The study results have proved that the overall performance of the sample RDS under study is quite satisfactory.As stated earlier, rural development initiatives under the interest -free framework in Bangladesh, is of recent origin (1995).
The growth performance measured in this research shows remarkable success of RDS (see Table 2) program.However, the findings of the study reveal that though RDS has very strong avenues in case of micro investment assistance, it is yet to develop in many aspects of its program and beneficiaries in this regard, some just policy implications have been suggested below so that this type of program can spread its mission and vision not only in Bangladesh but also in any region of the world.
bring forth Halal Products by dint of Halal device, thus they can inspire their RDS investment scope.2. By arranging various seminar & symposium, it can possible to understand the people about Halal, Haram & Syariah and influence them to increase RDS investment.-3.IBBL can create new investment mode to increase their RDS investment mode by huge research & study.4. As welfare oriented bank, IBBL should increase their operation to remove poverty alleviation specially Rural Area in establishing their Branches.5.By increasing RDS investment scope, IBBL can proper utilize their idle money through Syariah.6. IBBL can develop the stillness of the manpower by increasing their varieties kinds of training facility such as computer courses, English & Arabic language courses, and business ethics, morality, organizational behavior, etc.

Table 1 .
Purpose, Period and Ceiling Investment

Table 3 .
Financial Statement of RDS

Table 4 .
Position of Manpower at IBBL