The government has taken an initiative to amend the existing Islamic Investment Bond Rules-2004 in a bid to borrow from the country’s Islamic banks on
mandatory basis, said officials of Bangladesh Bank.
The government now takes loan from the traditional commercial banks through the Treasury bills and Treasury bonds but cannot take any loan from the Islamic banks under the existing Islamic investment bond rule.
The central bank has already formulated a policy on the Islamic investment bond rule after a government direction, a senior BB official told New Age on Tuesday.
‘The BB sent the policy to the finance ministry in April after which the government suggested the central bank change the proposed policy more on the basis of Malaysian Sukuk Islamic bond’, he said.
As a part of the move, a team comprised by officials of the finance ministry and the BB will go to Malaysia in the last week of this month, he said.
The team will gather experiences from the Sukuk Islamic bond to revise the Islamic investment bond rule, he said.
The BB may complete the policy in the middle period of the next month after which the government will make final decision in this regard, he said.
The traditional commercial banks have to now take part government securities auction in every week to facilitate borrowing.
But, the country’s seven Islamic banks do not participate in the auction due to their shariah-based banking.
The traditional commercial banks provide the government with loan through the interest-based Treasury bill and Treasury bonds.
According to the shariah-based banking, the Islamic banks pay profit to their products instead of interest.
The traditional banks will get a respite from the pressure of the government borrowing if the Islamic banks take part in this regard, the official said.
The Islamic banks have to maintain 11.5 per cent
of statuary liquidity ratio with the BB while the
traditional banks have to maintain 19 per cent SLR, he said.
The proportion is not equal between traditional banks and Islamic
banks due to the complexity of government securities, he said.
After revising rules of the Islamic Investment Bond, the existing SLR ratio of the Islamic banks may be changed, he said.
‘The Islamic banks are now maintaining the majority portion of the SLR in form of cash with the central bank. For this reason, a significant amount of the money of the SLR
virtually becomes idle fund’, he said.
But, the Islamic banks will have to maintain a portion of the SLR in form of securities after revising the Islamic investment bond rule, he said.
Under the circumstances, the government will be able to use the fund of the Islamic banks when the Islamic investment bond is modified, he said.
-With New Age input