Source: http://islamicbanking.blogsome.com
1. Islami Bank Bangladesh Limited
2. Al-Arafah Bank
3. Social Investment Bank Ltd
4. Exim Bank Ltd
5. Oriental Bank Ltd
6. Shahjalal Islami Bank Ltd
Showing posts with label Bangladesh. Show all posts
Showing posts with label Bangladesh. Show all posts
04 February 2007
BANGLADESH: Background of Islamic banking industry
Source: Bangladesh Bank
Alongside the conventional interest bearing banking system, Bangladesh entered into an Islamic banking system (profit-loss sharing) in 1983. At present, out of 48 banks in Bangladesh, 6 private commercial banks are operating as full-fledged Islamic banks and 10 conventional banks are partially involved in Islamic banking in a total of 20 branches.
Bangladesh is the third largest Muslim country in the world with around 139 million populations of which 90 percent are Muslim. Islamic banking system started operation in Bangladesh in 1983 with the establishment of first Islamic bank "Islami Bank Bangladesh Limited". After that, five more full-fledged Islamic banks and 20 Islamic banking branches of 10 conventional banks have started their operations in the private sector on the basis of Islamic Shariah. They have passed about two decades of successful Islamic banking operations in Bangladesh in spite of some problems in their operations.
The growth of Islamic banking in Bangladesh is progressing day by day. The remarkable shifting or conversion of the conventional banks and their branches into the Islamic lines, signals high acceptance of the interest-free banking by the public in general. The Islamic banking industry continued to show strong growth since its inception in 1983 to June 2006 in tandem with the growth in the economy, as reflected by the increased market share of the Islamic banking industry in terms of assets, financing and deposits of the total banking system. The products being offered by these banks range from consumer credit to long term finance for big investment projects using Islamic modes of financing such as Marahaba, Bia-Muazzal and Ijarah.
The Islamic banks in Bangladesh started from a very limited resource base right from the beginning. But with the passage of time, they have excelled strong performance in respect of mobilization of deposits as well as in investments. Total deposits of the Islamic banks and Islamic banking branches of the conventional banks stood at Taka 232981.00 million at end June 2006. This was 28.46 percent of the deposits of all private commercial banks and 9.67 percent of the deposits of the total banking system at the end of June, 2006. Total investment of the Islamic banks and the Islamic banking branches of the conventional banks stood at Taka 210493.80 million at end June 2006. This was 29.35 percent of all private banks and 14.88 percent of the total banking system of the country. The Statutory Liquidity Requirement (SLR) for the Islamic banks is fixed at 10 percent since inception of first Islamic Bank in 1983. This has remained unchanged till date while SLR for the traditional commercial banks has been changed several times which presently is fixed at 18 percent. The low requirement of SLR for Islamic banks is due to the non-holding of interest bearing types of eligible securities. In order to overcome the situation, the Bangladesh Bank has issued an Islamic Bond on behalf of the government namely “Government Islamic Investment Bond (GIIB)” in October 2004, which is governed by the Islamic Shariah. Excess liquidity of the Islamic banks and Islamic banking branches as well stood at Taka 8956.80 million as at end June 2006 (19.08 percent of private banks and 8.19 percent of all banks) which originated due mainly to the non-responsiveness of the good borrowers for investment demand and absence of adequate interest free financial instruments and an organized Islamic money arket in the country as well. However, efforts are underway to develop Islamic inter-bank market instruments to help banks in managing their liquidities.
The role of Bangladesh Bank in regulating, guiding and supervising the Islamic Banks in Bangladesh in accordance with Islamic Shariah is at the preparatory stage. The inspectors and supervisors of Bangladesh Bank have been undergoing massive training programme on Islamic banking both at home and abroad to be equally familiar with the technicalities of the different operational methodologies of the Islamic banking system.
Alongside the conventional interest bearing banking system, Bangladesh entered into an Islamic banking system (profit-loss sharing) in 1983. At present, out of 48 banks in Bangladesh, 6 private commercial banks are operating as full-fledged Islamic banks and 10 conventional banks are partially involved in Islamic banking in a total of 20 branches.
Bangladesh is the third largest Muslim country in the world with around 139 million populations of which 90 percent are Muslim. Islamic banking system started operation in Bangladesh in 1983 with the establishment of first Islamic bank "Islami Bank Bangladesh Limited". After that, five more full-fledged Islamic banks and 20 Islamic banking branches of 10 conventional banks have started their operations in the private sector on the basis of Islamic Shariah. They have passed about two decades of successful Islamic banking operations in Bangladesh in spite of some problems in their operations.
The growth of Islamic banking in Bangladesh is progressing day by day. The remarkable shifting or conversion of the conventional banks and their branches into the Islamic lines, signals high acceptance of the interest-free banking by the public in general. The Islamic banking industry continued to show strong growth since its inception in 1983 to June 2006 in tandem with the growth in the economy, as reflected by the increased market share of the Islamic banking industry in terms of assets, financing and deposits of the total banking system. The products being offered by these banks range from consumer credit to long term finance for big investment projects using Islamic modes of financing such as Marahaba, Bia-Muazzal and Ijarah.
The Islamic banks in Bangladesh started from a very limited resource base right from the beginning. But with the passage of time, they have excelled strong performance in respect of mobilization of deposits as well as in investments. Total deposits of the Islamic banks and Islamic banking branches of the conventional banks stood at Taka 232981.00 million at end June 2006. This was 28.46 percent of the deposits of all private commercial banks and 9.67 percent of the deposits of the total banking system at the end of June, 2006. Total investment of the Islamic banks and the Islamic banking branches of the conventional banks stood at Taka 210493.80 million at end June 2006. This was 29.35 percent of all private banks and 14.88 percent of the total banking system of the country. The Statutory Liquidity Requirement (SLR) for the Islamic banks is fixed at 10 percent since inception of first Islamic Bank in 1983. This has remained unchanged till date while SLR for the traditional commercial banks has been changed several times which presently is fixed at 18 percent. The low requirement of SLR for Islamic banks is due to the non-holding of interest bearing types of eligible securities. In order to overcome the situation, the Bangladesh Bank has issued an Islamic Bond on behalf of the government namely “Government Islamic Investment Bond (GIIB)” in October 2004, which is governed by the Islamic Shariah. Excess liquidity of the Islamic banks and Islamic banking branches as well stood at Taka 8956.80 million as at end June 2006 (19.08 percent of private banks and 8.19 percent of all banks) which originated due mainly to the non-responsiveness of the good borrowers for investment demand and absence of adequate interest free financial instruments and an organized Islamic money arket in the country as well. However, efforts are underway to develop Islamic inter-bank market instruments to help banks in managing their liquidities.
The role of Bangladesh Bank in regulating, guiding and supervising the Islamic Banks in Bangladesh in accordance with Islamic Shariah is at the preparatory stage. The inspectors and supervisors of Bangladesh Bank have been undergoing massive training programme on Islamic banking both at home and abroad to be equally familiar with the technicalities of the different operational methodologies of the Islamic banking system.
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