Bangladesh’s Islamic Banks Cite Decrease in Investments for Current Surplus of Idle Funds

Islamic banking sources in Bangladesh say that the decrease in investments in the aftermath of the COVID-19 pandemic is directly linked to the excess liquidity in Shariah-based banks in the country.

Why it Matters?

Loose monetary policy, introduction of stimulus packages by the government and higher inward remittances are reasons cited by bankers and experts for the increase in liquidity in the overall banking sector in Bangladesh. The excess liquidity of Islamic banks grew 20% in the second quarter of 2021 to BDT 363.65 billion from BDT 304.09 billion in the previous quarter as per the latest statistics issued by the Central Bank. Senior bankers say that surplus funds in Islamic banks are leading to a downward trend in profitability of Shariah-based...