Bangladesh Bank governor Atiur Rahman on Monday said the country’s Islamic finance market participants like banks and insurance companies must not get involved with influences that aid or abet ‘terrorism’. Atiur, at a seminar in the city, said that Islamic banks and financial institutions in Bangladesh are performing better than conventional ones. But, he said, ‘I am voicing one caveat for our Islamic finance market participants that they must exercise utmost caution in steering clear of any involvement with extremist dogma driven influences aiding or abetting terrorism.’
The Islamic finance market players have to follow the anti-money laundering routines prescribed by the central bank’s financial intelligence unit, he said at the 4-day seminar and workshop on Islamic financing jointly organised by the BB and International Financial Services Board at Purbani Hotel in the capital.
The BB governor presented a keynote paper at the inaugural session, presided over by BB deputy governor SK Sur Chowdhury.
Praising Islamic banks, Atiur said, ‘Barring one exception of a small sick Islamic bank in
process of restructuring, the Islamic banks in Bangladesh generally have higher capital adequacy ratios and lower non performing loan ratios than their conventional banking counterparts.’
He said that aggregate assets and deposits of Islamic banks in Bangladesh had nearly doubled in the last four years crossing trillion taka thresholds, comprising around a fifth of total banking sector assets and liabilities, by the end of 2012.
‘This share of Islamic banking looks set to grow further with time, given its faster growth than conventional banking,’ he observed.
Apart from Islamic banking, Islamic insurance is also now gaining ground, he said.
He, however, cautioned that challenges are also coming hand in hand with the ongoing growth trends and the emerging new growth prospects.
He said designing and introducing new Shariah compliant versions of conventional deposit and loan products tailored to needs of our financial market require ingenuity as well as thorough understanding of relevant Shariah principles and practices.
‘As of now we are still to have a well functioning interbank Islamic money market for efficient day to day liquidity management by Islamic banks; a proposal for a new Shariah compliant short dated Treasury bill for this purpose is awaiting government approval.’
Sukuk, the Shariah compliant long term fund raising instrument, is likely to be very useful for financing of Bangladesh’s much needed infrastructure projects, the BB governor said.
IFSB secretary general Jaseem Ahmed also addressed the inaugural session.
A total of 40 participants from Bahrain, Japan, Malaysia, Pakistan, Sri Lanka, Turkey and United Kingdom have attended the seminar along with the high officials and bankers from Bangladesh.
-With New Age input
