Islamic banks are running their operations under the Bangladesh Bank’s circulars and guidelines in absence of any act, which is working as a hindrance to the growth of Islamic banking in the country, according to a Bangladesh Institute of Bank Management study.
The study was presented at a workshop on ‘Islamic Banking Operations of Banks’ organised by the BIBM at its secretariat in Dhaka on Monday.
The study report was prepared by BIBM assistant professors Md Alamgir, Md Mahabbat Hossain and Tofayel Ahmed, and EXIM Bank vice-president and Shariah secretariat head Abul Quasem Md Safiullah.
According to the report, only 33.92 per cent members of the Shariah supervisory committees in the Islamic banks have banking experience.
Banks’ managing directors and chief executive officers are members of the SSCs in 71.43 per cent of the banks, it said.
Not having any specific act for Shariah banking is working as a hindrance to the growth of the sector as the banking activities are running under the Bangladesh Bank’s guidelines and circulars, the study report said.
Md Alamgir, while presenting the study report, said, ‘Although the
extent of the Islamic banking has been expanding, lack of experienced manpower becomes a hindrance to the smooth operation.’
He suggested introducing special certification programme emphasising Islamic banking.
The certificate would be considered additional advantage for bankers in getting promotion and other facilities, he said.
The study report stated that the share of deposit possessed by Islamic banks in the banking industry was 19.91 per cent in comparison with the share of deposit possessed by private commercial banks — 65.25 per cent as of September, 2017.
The growth of deposit and investment in Islamic banks, however, was higher.
The growth of deposit in all banks was 10.76 per cent but in Islamic banks 12.79 in 2017.
The year-on-year lending growth in the private commercial banks was 21.72 per cent in 2017, whereas the growth rate was 22.31 per cent in Islamic banks.
Bangladesh Bank deputy governor Abu Hena Muhammad Razi Hasan said that the central bank had been working to strengthen Islamic banking activities in the country.
The BB has already instructed all the banks which operate Islamic banking to open separate cell for the banking, he said.
Banking compliance has to be maintained along with obeying Shariah principles for running Islamic banking, he said.
Islamic banking adviser M Azizul Haque said that the banks were giving the service without clarifying the idea of Islamic banking.
Malaysia along with some other countries has managed to make some advancement in running the service, he said.
Special training for the bankers is a must for the improvement of such banking in Bangladesh, he said.
According to BIBM chair professor Barkat-e-Khuda, statement of Riba must be analysed further as many people raise objection to Riba or interest.
Former Pubali Bank managing director Helal Ahmed Choudhury said there are circulars for Islamic banking but no act for such banking in the country.
Enactment of act would help flourish such banking, he said.
EXIM Bank managing director and chief executive officer Mohammed Haider Ali Miah said, ‘Solving liquidity crisis is comparatively easy in Islamic banks rather than in the traditional banks.’
He emphasised building trained human resources for the Islamic banking.
BIBM supernumerary professor Yeasin Ali said that Islamic banking was not limited to the religious sentiment only.
In Malaysia, 60 per cent of bank clients are subscribers of Islamic banking, he said.
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