B Mirror Report: Bangladesh Bank Governor Ahsan H. Mansur has said that Islamic banking is not merely a matter of religious sentiment; rather, it is a comprehensive economic system. He made the remarks on Saturday while speaking as the chief guest on the second day of the “International Islamic Finance and Banking Conference,” jointly organised by the Central Shariah Board for Islamic Banks of Bangladesh and the Department of Finance of the University of Dhaka at the Nawab Nawab Ali Chowdhury Senate Building.
Expressing optimism, the governor said that with proper management, the sector could witness a more revolutionary expansion in the future.
He noted that although nearly one-fourth of the country’s total banking assets currently fall under the Shariah-based system, corresponding investment avenues or opportunities have not been created in proportion to that share. Due to the lack of adequate investment opportunities, Islamic banks are facing severe pressure in managing liquidity. To address this challenge and provide relief to Islamic banks, he stressed the urgent need to develop a strong Shariah-compliant bond, or “sukuk,” market. Once established, a sukuk market would reduce the government’s cost of financing while easing liquidity stress in Islamic banks, thereby making the entire sector more stable.
Describing Islamic banking in theory as the safest lending system, Mansur said that since it is directly linked to assets and income, it is supposed to involve lower risk. However, in the context of Bangladesh, unprecedented irregularities have occurred in the sector due to the dominance of vested interest groups, causing heavy losses for ordinary depositors. He held all stakeholders—regulators, bank management, Shariah boards, and depositors—responsible for the situation. In particular, he remarked that depositors had never questioned where their money was being invested.
Highlighting recent measures taken to restore confidence in the Islamic banking sector, the governor said that five banks have already been merged and the board of directors of the country’s largest Islamic bank has been reconstituted. He set a goal of establishing at least two very strong and large Islamic banks in the country in the future, which would ensure maximum returns for depositors through healthy competition. To this end, he confirmed that work is progressing rapidly on drafting a new “Islamic Banking Act” to ensure transparency in loan disbursement.
Addressing members of Shariah boards, Dr Mansur said they must play a stronger and more courageous role, stressing that irregularities should not be compromised out of fear for one’s job. Recalling bitter experiences such as the Beximco sukuk bond, he said public confidence in the market was damaged due to forced bond sales. However, the government has begun efforts to introduce a clean and credible sukuk bond market anew. Concluding with a stern warning, he said no form of financial plunder would be allowed in Bangladesh in the future and sought cooperation from all segments of society to achieve this goal.
