The growth in credit, known as investments in Islamic banking, from the country’s Islamic banks and Islamic banking wings of traditional banks dropped to 9.02 per cent in the last fiscal year (2019-2020).
The growth in credit or investments from the Islamic banks and Islamic banking wings of traditional banks has been on the decline since the fiscal year of 2015-2016 when the growth rate was 19.47 per cent, according to a Bangladesh Bank report released on Tuesday.
The BB quarterly report, Development of Islamic Banking in Bangladesh, for the period of April-June quarter of FY20 showed that the outstanding investments from the Islamic banks and Islamic banking wings of traditional banks increased to Tk 2,75,465.96 crore at the end of June this year from Tk 2,45,188.42 crore a year ago.
Social Islami Bank managing director and chief executive officer Quazi Osman Ali told New Age that the imposition of countrywide shutdown to tackle the spread of coronavirus might be the main reason for the slowdown in investment growth.
During the shutdown, business activities in the country remained almost halted, hampering the regular activities of the banks, he said.
Bankers said that not only the Islamic banks but also the traditional banks saw dismal loan disbursement in FY20 due to the outbreak of coronavirus.
The BB data showed that the investment growth in Islamic banks and Islamic wings of traditional banks was 13.08 per cent in FY19. The rate was 17.05 per cent in FY18 and 18.28 per cent in FY17.
Of the Tk 8,157 crore investments made by the Islamic banks and Islamic banking wings of traditional banks in the April-June quarter of FY20, 95.12 per cent was made by eight full-fledged Islamic banks, 2.84 per cent by the conventional banks’ Islamic banking branches and the rest 2.04 per cent by the conventional banks’ Islamic banking windows.
Islami Bank Bangladesh’s market share was the highest, 33.2 per cent, among the banks which were providing Shariah-based banking services in the country.
First Security Islami Bank made the second highest, 14.38 per cent, investments followed by EXIM Bank 13.37 per cent, Al-Arafah Islami Bank 10.99 per cent, Social Islami Bank 9.95 per cent, Shahjalal Islami Bank 7.26 per cent, Union Bank 5.76 per cent and ICB Islamic Bank 0.31 per cent.
However, the Islamic banks’ market share in terms of investments increased to 25.03 per cent at the end of June this year from 24.93 per cent at the end of March this year.
The Islamic banks’ performance in terms of deposit mobilisation fell as the market share of Islamic banks among all banks dropped to 24.67 per cent at the end of June from 25.04 per cent three months ago.
The total deposits in the country’s Islamic banks and Islamic banking wings of traditional banks stood at Tk 2,91,303.9 crore. The total bank deposits in the country was Tk 11,80,999.5 crore.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Banking