During the last global economic crisis, the Islamic banks and financiers emerged successful compared to the conventional ones, which probably had encouraged expansion of such banking even in non-Muslim countries, said Bangladesh Bank governor.
Dr Atiur Rahman was addressing a seminar in Dhaka Monday on the “Prospects and challenges in development of Islamic finance in Bangladesh.”
Islamic Financial Service Board (IFSB) and Bangladesh Bank jointly organised the seminar.
IFSB secretary general Jaseem Ahmed and Bangladesh Bank’s deputy governor SK Sur Chowdhury, among others, were also present.
“Islamic banks and financial institutions fared better than conventional ones during the last global financial crisis, which might be a reason why we see niche presence of Islamic financing widening steadily in non-Muslim countries including the advanced Western economies,” observed the central bank boss.
Referring to Islamic banking in Bangladesh, he traced back the establishment of first such bank in the 1980s.
“Now, there are eight Islamic banks run wholly on Sharia principles.”
Further, as many as 17 conventional banks including one foreign bank are running Islamic branches, Dr Atiur added.
He said more conventional banks have requested for approval to become the wholly Sharia-based, which indicates robust customer demand in Bangladesh for Islamic financial services.
“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.”
“Aggregate assets and deposits of Islamic banks in Bangladesh have nearly doubled in the last four years; by end 2012 aggregate assets and deposits both crossed trillion taka threshold, comprising around a fifth of total banking sector assets and liabilities,” continued Dr Atiur.
He also praised the inclusive nature of Islamic banking which is “evidenced in their growing and already significant engagement in agricultural, SME and microfinance, so far without any refinance support like those available for conventional banks.”
BB chief, however, put stress on the challenges which are coming hand in hand with the ongoing growth trends and the emerging new growth prospects.
