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Letter To the Editor

Launching Islamic bond in Bangladesh

Published : Sunday, 27 December, 2020 at 12:00 AM  Count : 356

Dear Sir
It is great to know that Sukuk, a Sharia-compliant bond-like device used in Islamic finance, would be issued in Bangladesh by December 30 this year. Bangladesh Bank authorities deserve thanks for this initiative. Though it was long due for a Muslim-majority country like us, it is expected to be a groundbreaking event in our capital market.

A Sukuk is an Islamic financial instrument, similar to a bond as like in Western finance that complies with Islamic religious law commonly known as Shariah principle. The issuer must make a contractual promise to buy back the bond at a future date at par value.
Sukuk investors receive profit generated by the underlying asset on a periodic basis while bond investors receive periodic interest payments. Bonds and Sukuk are initially issued to investors. Both are considered to be safer investments than equities.

There is no tool for managing short-term liquidity of the Islamic banks and NBFIs in Bangladesh. The clients of conventional bank frequently raised the question that where the Islamic Bank maintained central bank reserve and how they settle the day to day financial transactions.

The authorities concerned should develop proper mechanism and make popular to ensure providing short-term liquidity support to the Islamic banks and NBFIs through potential Islamic bond like the conventional ones.

Md. Zillur Rahaman
Gandaria, Dhaka.






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