How to expand Islamic Banking in Bangladesh

How to expand Islamic Banking in Bangladesh

Islamic Banking has experienced a phenomenal growth and expansion in Bangladesh
in the backdrop of strong public demand and support for the system along with its gradually
increasing popularity across the world. As a result, a number of full-fledged Islamic Banks
has been established, while a good number of conventional banks have come forward to offer
services compliant with Islamic Shariah through opening of Islamic branches along with
conventional ones. There is also a trend of conversion of conventional banks into Islamic
bank.

It has, therefore, become necessary to ensure that activities of the fast growing
Islamic Banks are carried out properly and uniformly according to the principles of Islamic
Shariah. With this end in view, Bangladesh Bank constituted a Focus group comprising
representatives of the central Bank, a number of Islamic Banks and the Central Shariah Board
for Islamic Banks of Bangladesh to formulate an integrated guideline for conducting banking
business of the Islamic Bank/Islamic bank branches of conventional banks. Based on the
recommendations of the Focus group this guideline embodying different terminologies used
in Islamic Banking operations, definitions of the terminologies, the principles and modes of
deposits and investments has been prepared. It also dwelt upon the issues of liquidity,
maintenance of books of accounts and preparation of financial statements and other related
issues. This guideline has been prepared mainly on the basis of Banking Companies Act
1991, Companies Act 1994 and Prudential Regulations of Bangladesh Bank. However, this
guideline should be treated as supplementary, not a substitute, to the existing banking laws,
rules and regulations. Incase of any point not covered under this Guideline as also in case of
any contradiction, the instructions issued under the Banking Companies Act and Companies
Act will prevail.