Islamic Banking and Bangladesh

 

Pair with the worldwide fast extension of Islamic saving money, Bangladesh has encountered extraordinary development in Islamic managing an account following solid open interest for the framework. Since its commencement in 1983, Islamic saving money industry has recorded powerful execution and the business now represented in excess of 20% piece of the pie of the whole managing an account industry in Bangladesh. In spite of the fact that Islamic keeping money industry in Bangladesh has accomplished in excess of 20 percent yearly development, the industry has monstrous possibilities for encourage extension as Bangladesh is a Muslim larger part nation with a lively economy of 6 percent genuine monetary development in the course of the most recent decade. To procure the true abilities of Islamic keeping money, it is basic to evaluate the present status of Islamic managing an account industry in Bangladesh. Given this, the present paper explored the present status of Islamic managing an account industry and it likewise surveyed its near execution with general keeping money industry. To accomplish the destinations of the paper, required data/information have been gathered from the auxiliary sources and money related proportion examination approach has been connected. At long last, the paper shed light on challenges looked by the Islamic saving money industry and recommended strategy choices to address the difficulties. JEL Classification: G10, G21, G28

• With a tentative start in 1960s, the Islamic monetary industry has now picked up ubiquity in both Muslim and non-Muslim nations pulling in clients of all confidence because of its flexibility and less dangerous character. Pair with the worldwide fast extension of Islamic keeping money

Islamic saving money in Bangladesh is coming to fruition quickly with fractional routine with regards to Shariah in the midst of the nonappearance of a legitimate administrative structure, posturing risk to religious conviction and net revenue of the banks' customers and speculators.

Islamic saving money, an ideological managing an account and fund framework, in light of a casing inside the Shariah standards, has been started meaning to give monetarily suitable monetary intermediation contrasting options to ordinary keeping money.

The intermediation between 'those who are well off' and 'the poor's among clients over all portions is reliable with Shariah planning to wipe out enthusiasm by building up a genuine segment, producing allowable (halal) exercises, advancing benefit and misfortune sharing, setting up social value, maintaining values and keeping up immaculateness of agreement.

Islamic managing an account was first presented in Bangladesh path in 1983 by outside financial specialists from Saudi Arabia and Kuwait.

Right now, eight undeniable Islamic banks are working with 1,068 branches in the nation, says the most recent information of Bangladesh Bank (BB).

The banks are Islami Bank Bangladesh Limited (IBBL), Al-Arafah Islami Bank Limited, Social Islami Bank Limited, Export Import Bank of Bangladesh Limited (EXIM Bank), Shahjalal Islami Bank Limited, First Security Islami Bank Limited, ICB Islamic Bank Limited and Union Bank Limited.

Besides, 19 Islamic managing an account branches of nine business banks and 25 Islamic keeping money windows of eight business banks are likewise giving Islamic monetary administrations.

With a workforce of 30336 individuals, Islamic keeping money covers 22.72% piece of the pie of the nation's whole managing an account area as far as stores and speculations.

As of June 30, the aggregate number of stores and interests in Islamic managing an account was Tk1,99,424.90 crore and Tk1,85,244.93 crore individually.

Md Yasin Ali, supernumerary educator of Bangladesh Institute of Bank Management (BIBM) stated: "The majority of the Islamic Banks in Bangladesh are not Shariah consistent. They can't keep up Shariah in saving money activity like benefit sharing, loaning and different issues. Shariah-consistent keeping money covers under 2% of the Islamic banks' loaning portfolio."

"Actually, the banks are tricking their customers exploiting their religious assessment. They are really misusing the religious conviction of the customers, which isn't useful for Islamic managing an account," he opined.

He additionally underscored the need of building up great administration in customary managing an account, which in stages would in the long run dispose of the other 'awful' practices.

BIBM Associate Professor Md Alamgir, who led a few investigations on Islamic keeping money in Bangladesh, approving Yasin's supposition, said the Islamic banks are working in view of the 'adaptable' Shariah.

Alamgir said:"If a bank entirely takes after the Shariah standards, the bank needs to give budgetary administrations in the midst of the hazard, and its Islamic expression is "Mudaraba and Musharaka." The standards for the most part manage value based exchanges and should be free from Riba (premium)."

"Amid its commencement, IBBL took after the Shariah standard, bringing about misfortunes. From that point onward, the Islamic banks began their task by making the Shariah rules adaptable. Rather than chance sharing of the benefit, the banks began cost-in addition to benefit loaning," he said.

In the cost-in addition to benefit loaning framework, a bank buys a ware in the interest of the client, and afterward offers it adding benefit to the purchasing cost. Under this game plan, the bank unveils its cost and net revenue to the client.

"The adaptable routine with regards to Shariah is a total infringement of Shariah standards," he watched, saying: "Islamic keeping money challenging Shariah is totally equal to deluding customers and financial specialists of the banks that are saving money upon a religious conviction of admissible (halal) saving money."

Most banks, the analyst stated, are not following the BB rules while opening new branches and windows of Islamic keeping money as they really run in light of the regular strategy.

He recommended framing an autonomous and focal Shariah supervisory board under the BB for appropriate review and observing of the Islamic banks' activity as per Shariah standards.

He stated, "However the Islamic banks have their own Shariah sheets, they need ability."

A BB official namelessly said banks in the Islamic saving money framework don't need to settle the loan fee to the customers since they gather stores in the benefit misfortune framework.

Utilizing the technique, the banks can without much of a stretch betray the store holders by demonstrating a thin overall revenue, he expressed.