Bangladesh Bank to disallow conventional banks from operating Islamic windows (By IFN)

Bangladesh Bank to disallow conventional banks from operating Islamic windows

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BANGLADESH: The Bangladeshi parliament is expected to pass amendments to the Banking Companies Act 1991 which will see the cessation of Islamic banking services offered through conventional banks. According to an official at the Ministry of Finance, the bill has been amended to ensure full compliance within the Shariah banking sector and to create a more secure banking environment as a whole, by minimizing the misuse and misappropriation of funds by dishonest parties. The new amendments will also allow the central bank to set a cap on the number of directors sitting on the board of any bank at 13; and has allocated a two year window for this process to take effect. Bangladesh Bank will also, under the proposed amendment, have the absolute power to remove any CEO of state-owned banks whenever seen fit. There are currently seven “Shariah-based private commercial banks” in the country, according to the central bank’s website; with major international players such as HSBC Amanah already pulling out of the country following the bank’s decision to restructure its Islamic banking business last year. However, other international banks such as Standard Chartered Saadiq have affirmed their commitment to exploring the opportunities within the country’s Islamic banking and finance sector; especially in the area of project finance and infrastructure development. Early last month, during the Islamic Finance news Bangladesh Roadshow, a high-profile panel comprising of central bank officials, government officials and representatives from multilateral organizations suggested the issuance of cross-border Sukuk to raise funds for national development projects. With the proper regulations in place, and increased transparency within the Bangladeshi banking sector, this country of 130 million Muslims could realize its potential in the Islamic finance sector.