Bangladesh's Islamic finance market keeps booming with no slowdown in sight

Recent current information that Bangladesh's central bank accepted the conversion of two more native banks to fully-fledged Islamic banks warrants taking a closer consider the Shariah-compliant banking and finance industry on the world's fourth-many populous Muslim country.

According to reports in Dhaka Tribune, The Daily Star and The Economical Express last week, the central bank of Bangladesh permitted applications from two domestic banks, Standard Lender and NRB Global Lender, to be fully Islamic banks. The two privately-held commercial banks so far only operated Islamic windows but sought to convert to fully-fledged Shariah-compliant banks to enlarge their scope of merchandise offerings amid growing popularity of Islamic banking in the country and tougher competition on the traditional banking marketplace. NRB Global Bank said it strategies to change its brand to Global Islami Bank to underscore its latest role.

The approach brings the number of fully-fledged Islamic banks in Bangladesh to ten, with others being Al-Arafah Islami Bank, Islami Bank Bangladesh, Exim Bank, Social Islami Bank, Shahjalal Islami Bank, Union Bank, First Security Islami Bank and ICB Islamic Bank. Furthermore, 19 Islamic banking branches of nine conventional industrial banks and 41 Islamic banking windows of seven conventional commercial banks are currently providing Islamic financial products and services in the country.

Bangladesh is among the Muslim nations whose impressive growth in Islamic finance features somehow been overlooked during the past. The united states with a people of 165mn, of which 91% are Muslim which results in 8% of the global Muslim population , has experienced strong public demand from the general public and from businesses for Islamic banking and financing services basically because the industry's inception in 1983. According to latest obtainable central bank data, at the end of the July-September 2019 quarter, total Shariah-compliant deposits at Bangladesh's banking institutions reached $30.8bn, a good 15% increase above the same quarter of the prior year. This is based on the 15 to 20% twelve-monthly expansion of the industry in the last years and brings the show of Islamic banking deposits near to 24% of the whole deposit level of the country's banking marketplace, while the talk about of loans and funding is even higher at near 25%. The quantity of branches of the Islamic banking sector incorporating Islamic branches and house windows of conventional commercial banks reached 1,301 by the end of the quarter, up from 1,200 in the same quarter of the previous year. Islamic banking today employs a lot more than 36,000 persons in Bangladesh, the central lender said.

'Bangladesh's Islamic banking sector offers experienced robust growth because of policy supports and good community demand, the central lender noted in its sydney. 'Recent issuance of sukuk guidelines by the Bangladesh Securities and Exchange Commission will promote Islamic capital market segments badly needed for financing infrastructure and professional projects towards obtaining higher inclusive GDP growth and other sustainable expansion goals, it added.

Analysts note that the industry features still high potential for further expansion seeing that Bangladesh enjoys a vibrant market with GDP per capita having a lot more than tripled in the last decade to near $1,800 with the average (nominal) GDP progress of 6% annually to $288.4bn in 2018. Last year, Bangladesh's economy posted record high growth of 8.1% and is currently close to obtaining double-digit GDP progress. Since 2009, the country's economy has grown by 188% in proportions, and the per-capita profit as per purchasing electricity parity has surpassed $4,000, up from $2,400 ten years ago.

These are very great preconditions for the Islamic banking and finance market since foreign shareholders beyond Indian firms, namely Muslim buyers, are beginning to look at the 'Bangladesh boom and look for to recognize business opportunities. It is also predicted that the Islamic capital industry and the Islamic insurance and microfinance sector will extend in tandem as supportive plans are adopted and applied. Bangladesh's Islamic finance industry with the help of its many IT business owners is currently also adopting Shariah-compliant fintech to handle financial transactions and processes more effectively through technological innovations.