Dhaka, Bangladesh (BBN) - Bangladesh is going to introduce the Islamic money market by December 31 this year to facilitate liquidity management of the Shariah-based Islamic banks, officials have said.
The decision was taken at a meeting with chief executive officers and managing directors of seven Islamic banks held at the central bank on Wednesday with Bangladesh Bank (BB) Executive Director SK Sur Chowdhury in the chair.
“The central bank has decided to introduce the Islamic Inter-bank Fund Market for the first time in Bangladesh by the end of this month,” Mr. Sur said after the meeting, adding that it would be a milestone in the Islamic banking’s history of the country.
Under the arrangement, Islami Bond Fund (IBF) will act as a custodian of the excess fund of the Islamic banks and financial institutions.
The IBF will facilitate the fund transfer from banks having excess liquidity to the ones having deficit under Islamic Shariah.
“The IBF will not charge any amount from the participating banks and non-banking financial institutions (NBFIs) for providing the services,” another BB official said, adding that the deal would be based on Mudaraba principle of Islamic banking law.
Market operators have welcomed the BB’s latest move saying that it’s a historic decision concerning Islamic banking in Bangladesh.
“The Islamic banks will be able to manage their liquidity, particularly excess funds properly after introduction of the money market,” Managing Director of the Islami Bank Bangladesh Ltd. (IBBL) Md. Abdul Mannan said, adding that the country’s Islamic banks are grateful to the BB for taking the decision to introduce such a market.
Currently, seven private commercial banks out of 30 are operating under the Shariah. The banks have their own Shariah Councils to dictate terms of banking under Islamic rules and regulations.
The banks are Islami Bank Bangladesh Limited (IBBL), Al-Arafah Islami Bank Ltd., Export Import Bank of Bangladesh Ltd., Social Islami Bank Ltd., Shahjalal Islami Bank Ltd., First Security Islami Bank Ltd. and ICB Islamic Bank Ltd.
Besides, a good number of local and foreign banks have introduced Islamic banking branches and windows, the BB official noted.
BBN/SSR/AD-22Dec11-9:31 am (BST)