Governor of Bangladesh Bank Ahsan H Mansur on Saturday said that Islamic banking is not just a matter of religious sentiment, but rather a complete economic system.
He also hoped that this sector will expand further in the future.
The governor said these as the chief guest on the second day of the “International Islamic Finance and Banking Conference” at the Nawab Nawab Ali Chowdhury Senate Building at Dhaka University.
The two-day conference was organized by the Central Shariah Board for Islamic Banks of Bangladesh and the Finance Department of Dhaka University.
He said that although a large part of the country's banking sector is Shariah-based, investment opportunities for Islamic banks are still limited. Due to this, pressure is being created on the liquidity management of these banks. In such a situation, there is a need to develop a Shariah-based bond or sukuk market for Islamic banks.
The governor said that currently, about one-fourth of the country's total banking assets are under the Shariah-based system. But the investment field for Islamic banks has not been created in that proportion.
As a result, liquidity management has become a major problem and the field of competition has also been limited.
He mentioned that banks are operating in a risky situation due to the absence of a Shariah-based money market and sukuk market.
He said that if the government's initiative is to develop a Sukuk market, on the one hand, the government's financing costs will decrease, and on the other hand, Islamic banks will get relief in liquidity management. This will make the entire sector more stable.
The governor said that in principle, Islamic banking is supposed to be the safest credit system, as it is directly linked to wealth and income. But in reality, this principle has not been implemented properly in Bangladesh.
Due to the occupation of some groups, irregularities have occurred in Islamic banks. Due to this, customers and depositors have faced major losses.
He also said that the responsibility for these irregularities does not lie with just one party. This situation has arisen because the regulatory agency, bank management, Shariah Board and depositors have all not fulfilled their respective responsibilities properly. Depositors have also not raised questions about where their money is being spent.
The Governor mentioned that five banks have recently been merged to restore confidence in the Islamic banking sector. He said that at the same time, the board of directors of the country's largest Islamic bank has been restructured.
He hoped that in the future, at least two large and strong Islamic banks will be established in the country, which will give good returns to depositors through healthy competition.
Stating that Bangladesh Bank has taken strict control measures to ensure transparency in loan distribution, the Governor said that work is underway to formulate a new Islamic banking law for this purpose.
Regarding the role of the Shariah Board, Dr. Ahsan H. Mansur said: "The Shariah Board must play a strong and courageous role. It is not okay for board members to be afraid of their jobs."
Regarding Sukuk bonds, the governor said that the country's bond market has been damaged and people's confidence has been lost due to the forced sale of Beximco Sukuk bonds.
However, the government has been requested to bring new Islamic Sukuk bonds to the market and work has started in this regard.
"No more financial looting will be allowed to return to Bangladesh. For this, the cooperation of everyone, including academics, is needed.”
