Loan From Islamic Banks
Govt to issue Islamic bonds
The government has revised its Islamic Investment Bonds Regulations, 2004 to allow itself to borrow from the Shariah-based banks and non-bank financial institutions by floating Islamic investment bonds. The government will borrow from the Shariah-based banks and NBFIs to implement its Shariah approved projects. The regulations were revised on August 18 so that the government can take loans from the Shariah-based banks and NBFIs to
implement its large projects like Padma Multipurpose Bridge, a Bangladesh Bank official told New Age on Monday.
The BB on Monday issued a circular to managing directors and chief executive officers of all scheduled banks and NBFIs saying that it would arrange auctions to complete the bids of Islamic investment bonds in line with the revised regulations of the government.
The central bank will declare the auction date of Islamic investment bonds before 10 days.
The Shariah-based banks and NBFIs earlier invested in the Islamic bonds issued by the government without any auction while the government could not take the funds as those were kept attached
with the Islamic Bond Fund in the central bank.
The Shariah-based banks and NBFIs will be able to take loans from the BB and other Islamic banks and NBFIs through the repurchase agreement by using the bonds, according to the revised regulations.
Some Islamic banks and NBFIs earlier faced severe cash crunch as they were not allowed to take loan from the BB through the REPO.
The BB will set profit sharing ratio at the auction for the Islamic investment bonds and the Shariah-based banks and NBFIs will avail the profit in accordance with the PSR.
The Islamic banks and NBFIs will keep the bond at the central bank to fulfil its statutory liquidity requirement.
Private companies and general people along with the foreign companies and non-resident Bangladeshis will be able to invest their fund in the Islamic investment bond.
But, they will have to purchase the bond from the Shariah-based banks and NBFIs.
The BB official said that the government had revised the regulations on Islamic investment bond as it would need huge amount of fund from the banking sector in the coming months to implement its mega projects like Padma Multipurpose Bridge.
Due to the revision of the regulations, the government will issue different tenure of Islamic bonds to borrow from the Shariah-based banks and NBFIs.
-With New Age input
