TABLE OF CONTENTS

CHAPTER 1
A. Introduction
B. Genesis of Islamic Finance in Bangladesh

CHAPTER 2
A. Islamic Finance and Banking Development Globally
B. Status of Islamic Finance in Bangladesh

CHAPTER 3
A. Issues and Challenges of Islamic Finance Globally
B. Islamic Finance Challenges in Bangladesh
C. Misconceptions on Islamic Banking in Bangladesh

CHAPTER 4
A. Developments of Islamic Finance in Western Countries
B. Development Areas for Islamic Finance in Bangladesh
C. Policy Options
D. Conclusion
CHAPTER 1

Introduction
The Islamic finance industry across the world has expanded exponentially in various degrees across
different markets and jurisdictions, particularly Bangladesh for the purpose of this study. Islamic
finance is governed by universal and divine legal and moral principles and standards related to
economic transactions. Bangladesh is an eminent centre of Islamic Finance in South Asia. Besides
other Muslim countries the Islamic banking of Bangladesh is growing fast. Islamic Banking as a new
mode of financing started in Bangladesh in 1983, with the establishment of the first Islamic Bank
“Islami Bank Bangladesh Limited (IBBL)”. Since then, Islamic finance has shown continuous strong
growth, not only in terms of deposits and assets, but also in market share. The innovation of interest
free banking systems proved its worth in the country’s money market as such many new banks have
been established to operate in compliance with Shari’ah and many traditional banks have opened their
Islamic Banking branches. Bangladesh Bank (herein after BB) is the central bank of Bangladesh that
controls and guides the activities of the Islamic Banking Industry. BB had laid down clear guidelines
for performing Islamic Banking in Bangladesh that have attracted the attention of researchers and
Islamic Banking community worldwide because, according to the guidelines, it is not compulsory for
an Islamic Bank to have a Shari'ah supervisory committee. The guidelines fail to address every issue
and as a result ambiguity remains in some cases. Like any other system, Islamic finance and banking
system may be seen as an emerging reality, in its relatively steady journey to mesh into the global
financial service industry, it faces many issues and challenges.

In the context of Bangladesh, Islamic banking information, practices and findings on various Islamic
banking issues have only been made available in recent years through limited research activities. The
prime objective of this research is to provide an overall view of the developments in Islamic finance
across the globe and also to identify the issues and hurdles that Islamic finance faces in Bangladesh in
order to remain viable to meet the growing competition and prosper in the years to come . The issues
in particular to be addressed are: (i) evaluating the progress / development of the Islamic Financial
services industry in the context of both Bangladesh and globally; and (ii) Identifying issues and
challenges for the prospering Islamic finance and banking sector in Bangladesh and suggesting
specific recommendations to address those challenges.

Genesis of Islamic Banking in Bangladesh

In 1971, Bangladesh appeared on the world map as a new nation. After the Organization of Islamic
Cooperation (OIC) recommendation at its Foreign Ministers meeting in Senegal in 1978 to develop a
separate banking system of their own, the people's hope and aspiration to run the banking system on
the basis of Islamic principle came into reality. Bangladesh established its first Islamic bank in 1983
after five years of that declaration. At present, Bangladesh is the 3 rd largest Muslim country in the
world with around 190-200 million population (2018 estimate) of which 90% are Muslims. Reports of
April-June 2018 (Bangladesh Bank) suggests that currently, there are 8 full-fledged Islamic Banks
that are operating with 1134 branches out of total 10114 branches of the banking industry. The
popularity of Islamic Banks in Bangladesh have gained momentum since their inception despite some
operational problems.
BIBLIOGRAPHY

Akbar, C. (2018). Islamic banking: Creating an enabling regulatory environment. The

Financial Express.

Aimevents.net. (2008). Islamic banking and finance: on its way to globalization. [online]

Available at: http://www.emeraldinsight.com/0307-4358.htm

Alam, M.N., (2000). Islamic Banking in Bangladesh: A Case Study Of IBBL. International
Journal of Islamic Financial Services, 1 (4)

Alo, J. (2017). BB not giving new Islamic banking licences. [online] The Daily Star. Available
at: https://www.thedailystar.net/business/banking/bb-not-giving-new-islamic-banking-
licences-1463608 [Accessed 18 Sep. 2017].

An Analysis of Islamic Banking Activities in Bangladesh: Issues and Challenges.

(n.d.). Thoughts on Economics, 25(03 & 04), pp.29-56.

Bangladesh Bank. Guidelines for Islamic Banking. Dhaka, 2009. Available at:
https://www.bb.org.bd/aboutus/regulationguideline/islamicbanking/guideislamicbnk.pdf

Bank, B. (2018, March 8). Developments of Islamic Banking in Bangladesh.

Retrieved from https://www.bb.org.bd/pub/publictn.php

Growth and Prospect of Islamic Finance in Bangladesh. (2018). IOSR Journal of Business and
Management (IOSR-JBM), [online] 20(3), pp.10-20. Available at:
[http://www.iosrjournals.org [Accessed 24 Mar. 2018]

Islamic Banking and Finance in Bangladesh: Potential, Challenges and future Development.
(2018). American Journal of Business, Economics and Management, [online] 6(4), pp.119-
126. Available at: http://www.openscienceonline.com/journal/ajbem [Accessed 10 Dec.
2018].

Islamic Financial Services Board (2014). Prospects and Challenges in the Development of

Islamic Finance for Bangladesh. Kuala Lumpur, Malaysia: Islamic Financial Services Board,
pp.1-114.

Maierbrugger, A. (2017). Bangladesh’s Islamic finance market in need for proper regulation.

[online] Gulf-Times. Available at: https://www.gulf-times.com/story/568627/Bangladesh-s-
Islamic-finance-market-in-need-for-pr [Accessed 24 Oct. 2017].

Murtaza Ali, M. (2013). Takaful in Bangladesh Seeking a framework for growth. [online]

Primeislamilifebd.com. Available at:
(https://www.primeislamilifebd.com/aritcle/takaful/Takafulinbangladesh.pdf [Accessed 10
Dec. 2013).
Paresh Kumar Narayan, D. H. (2017). A survey of Islamic banking andfinance literature:
Issues,challenges and future directions. Pacific-Basin Finance Journal, 13.

Sarkar, A. A. (2005). Islamic Banking in Bangladesh: Achievements & Challenges. Internal

and Islamic Economics Division, Research Department, Bangladesh Bank.

Star, T. D. (2017, September 18). BB not giving new Islamic banking licences. Retrieved from
The Daily Star: http://www.thedailystar.net/business/banking/bb-not-giving-new-
Islamicbanking-licences-1463608

Zaker, S. (n.d.). Islamic Banking in Bangladesh: an Alluring Prospect Ahead. [ebook]

Chittagong, Bangladesh: Exim Bank. Available at: http://www.bea-
bd.org/site/images/pdf/new17/115.pdf [Accessed 10 Feb. 2013].