Role of Bangladesh Central Bank

There is no doubt that the Central Bank has also played an important role in the development of Islamic Banking in Bangladesh. After granting license to the Islami Bank Bangladesh Limited to carry out banking business as per Islamic Shari'ah, several clauses were incorporated in the Banking Company Act. Necessary amendments were also made possible in the country’s Income Tax Law allowing the amount of profit shared by the investment clients and the profit paid on Mudaraba deposits by the Islamic banks as expenditure. Special provision has been made for Statutory Liquidity Reserve requirement of Islamic banks. In case of need, Bangladesh Bank as the lender of last resort, may place fund in Mudaraba accounts with Islamic Banks and share profit as per principles of distribution of profit to Mudaraba depositors.

`Bangladesh Bank also organized many seminars and symposia on Islamic banking. Issues related to Islamic banking are included in the training courses in its academy. The Bangladesh Bank at Dhaka also organized an International Seminar on development of Islamic financial instruments.

It has also set up an Islamic Economics Division under its Department of Research. Formation of a Shari'ah Supervisory Board is presently under active consideration, while introduction of Mudaraba Bond in the money market is almost at a mature stage.

Source: Experiences in Islamic Banking: A Case Study of Islami Bank Bangladesh, Institute of Policy Studies. Republished with permission.
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