The Bangladesh Bank has revised the Sukuk allotment quota to pave way for conventional banks to participate in the auctions.
Conventional banks will now be permitted to take part in the auctions without any quota allocation.
The debt management department of the Bangladesh Bank (BB) issued a circular on this matter on Sunday.
It is believed that this move comes as a result of the liquidity stress experienced by Islamic banks, creating a new avenue of opportunity for their conventional counterparts.
However, branches or windows of conventional banks will still maintain a quota for Sukuk, which is set at 10%.
Currently, these banks hold around 11% stake in Islamic bonds.
According to the BB circular, priority for investing in Shariah-compliant bonds or Sukuk will be given to Shariah-based Islamic banks, non-banking financial institutions (FIs) and insurance companies.
This group will now have an 85% quota, marking a 15% increase from the previous allocation.
On the other hand, individual investors, provident funds and the deposit insurance sector will have a 5% quota for the government's Islamic fixed-income instruments.
Those interested in investing in Shariah-compliant bonds, as well as all provident funds and the central bank's insurance department, will be eligible to invest in the Sukuk.
The circular said the auction will be conducted on a pro-rata basis, ensuring that Sukuk securities are distributed proportionately among participants.
Similar to a treasury bond, Sukuk is an Islamic financial certificate structured to generate returns in compliance with Islamic finance principles.
The government has raised a total of Tk18,000 crore from Bangladesh government investment Sukuk.
Profits are paid on a half-yearly basis.
