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Islamic Banking

In: Business and Management

Submitted By jackson007
Words 10535
Pages 43
BRAC University Journal, Vol. III, No. 1, 2006, pp. 35-52

COMPARATIVE ANALYSIS OF LOAN RECOVERY AMONG NATIONALIZED, PRIVATE AND ISLAMIC COMMERCIAL BANKS OF BANGLADESH
Ezaz Ahmed
Department of Management and Business BRAC University, Dhaka, Bangladesh and

Ziaur Rahman
IITM, Dhaka, Bangladesh and

Rubina I. Ahmed
Department of Business Administration East West University, Dhaka, Bangladesh

ABSTRACT Bangladesh has a unique Banking system with multiple types of Banking with Nationalized Commercial Banks (NCBs), Private Commercial Banks (PCBs), Foreign Commercial Banks (FCBs), Islamic Commercial Banks (ICBs), Specialized Development Banks and the Cooperative Banks. Currently the magnitude of loan default is quite enormous in the Banking sector. However, the general perception and belief regarding the Islamic Banking is better recovery rate of loans and advances. This paper attempts to discuss the issues that govern the banking practices in Bangladesh and it also paints a picture of the lending practices followed by NCBs, PCBs and ICBs in Bangladesh. From the analysis presented in this case, it comes to light that ICBs lending practices with Islamic banking instruments mirrors the lending practices of conventional banks having synonymous counterpart products. The paper also unfolds some strategically weak links in the development of the banking sector, which has obstructed the overall economic development of the country. In this diversified Banking system, an attempt is made in the paper to analyze the issues governing the credit recovery rate and procedure with respect to the principles of Islamic Banking while comparing with the Conventional Banking principle amongst NCBs, PCBs and ICBs. In our effort to draw a comparison (between NCBs, PCBs and ICBs), we have taken the data, information between 1995 to 19998 figures. This paper also provides an analytical

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