Islamic Finance in Bangladesh
Islamic Finance in BangladeshBangladesh is the first country in the Southeast Asia to have an Islamic bank. The idea to have an Islamic banking system is recommended by Organisation of the Islamic Conference (OIC) in 1978. The founder of this successful establishment is late Fouad Abdul Hameed Al-Khateeb. He is the Saudi Arabia’s first ambassador stationed at Bangladesh from 1977- 1982. He also organized a team with other scholars to start a project to establish Islamic bank and financial institutions based on shariah. In 1983, Islami Bank Bangladesh Limited (IBBL) was established and followed by the others such as Al-Arafah Islami Bank and Shahjalal Islami Bank Ltd.
However, to trigger the effort that can make this idea come true is not easy. Bangladesh is also facing the challenges regarding the problem that comes through this phenomenon in this Islamic world. First of all, the modes of investments like Mudarabah and Musharakah are not really practices in Islamic banking services. It is because there are insufficient factors such as committed entrepreneur and committed professional who can create new instruments. Furthermore, the absence of Islamic money market have made banks cannot invest their surplus fund so their profit will be affected. The ability of Islamic bank in Bangladesh to use tradable financial instrument is also not clear because the absence of suitable long term assets.
The progression of Islamic finance in Bangladesh has growth in positive value in last few decades. It is because the demand for this kind of financial services is always there. Today, from 48 banks that run in Bangladesh, six are fully based on shariah principle. Besides that, about 10 of conventional banks were already launched the Islamic windows which also provide the Islamic banking products and services.