Bangladesh Bank (BB) is drafting separate rules to regulate the Islamic banking system in the country, a move that has stirred mixed reactions among bankers and analysts. An Executive Director of the central bank, who is involved in drafting the rules, said that under the proposed regulations, conventional banks would no longer be permitted to offer Sharia-based banking services directly. Instead, banks would need to establish subsidiary institutions to operate Islamic banking. “If this law comes into effect, conventional banks will not be able to provide Sharia-based banking services,” the official added. DSE trading ends with upward trend on Sunday Some bankers, however, argue that this move could contradict Bangladesh’s long-standing commitments under the Islamic Development Bank (IDB). The country became a signatory to the IDB in the 1980s, which facilitated the introduction of Sharia-based banking within conventional banks. Mohammad Abdul Mannan, former Managing Director of Islami Bank Bangladesh, expressed concerns about the implications of the proposed regulations. “New law (regulations) regarding establishment of subsidiaries instead of Islamic banking windows for conventional banking will be contradictory with the declaration of IDB,” he told UNB. Instead of conflicting with the IDB’s declaration, he said, the central bank could set up a dedicated department to monitor Sharia compliance and fund management in Islamic banks. Syed Mahbubur Rahman, Managing Director of Mutual Trust Bank, highlighted the current success of Islamic banking windows and branches operated by conventional banks. DSE index gains 30.88 points as 211 stocks rise in early trading “All the banks that are doing Islamic banking through windows or branches are in good condition. I don't think that making one Islamic and the other traditional will yield good results. If we prepare separate balance sheets and income statements and follow the instructions of the central bank properly, [it] would be more effective and time-befitting,” he said. Mahbubur Rahman went on to say, “If they monitor properly, and if the Sharia board is in place properly, then I think there should be no problem here.” But some analysts view the situation differently. While acknowledging the financial viability of Islamic banking under conventional banks, they pointed out challenges related to Sharia compliance. Former Chairman of the Association of Bankers Bangladesh (ABB) Mohammad Nurul Amin questioned the integrity of current practices. “The balance sheet of the conventional bank is also the same as that of the Islamic branch. How much is Sharia-based and correct?” he asked. Dr Toufiq Ahmed Chowdhury, former Director General of the Bangladesh Institute of Bank Management, supported the idea of separate rules, questioning the authenticity of Islamic banking in its current form. He said, “I personally support a separate law. Here, we are not actually doing Sharia-based banking to conduct business; we are doing it to make money, taking some money from people in the name of Islam. When it is launched, is it truly Islamic banking? Not even 1.0 percent of the total portfolio is PLS. So, why is it being called Islamic banking?” 18 banks at risk due to potential loan defaults by top 3 borrowers: Bangladesh Bank According to central bank officials, the draft law is still under review, and no final decision has been made. Husneara Shikha, Executive Director and spokesperson for BB, stated that stakeholder consultations are essential before finalising the law. “When making a law, various types of stakeholder consultation and analysis [have] to be done. What are the international policies? At the international level, conventional banks never open Islamic windows,” she explained. The Islamic Bank Company Act will be finalised after incorporating opinions from all stakeholders. Islamic banking is a banking system aligned with the spirit, ethos and values of Islam, operating in accordance with the principles outlined by Islamic Shariah. Currently, Bangladesh has 10 fully-fledged Sharia-based banks, in addition to 30 conventional banks offering Islamic banking services. These conventional banks operate 33 Islamic banking branches and around 700 windows for Sharia-based services.

Bangladesh Bank has introduced a 10 percent cash incentive for the export of agricultural and agro-processed products. This incentive will apply specifically to juices and drinks made from locally produced fruit pulp, allowing exporters in this sector to benefit from the support. The Foreign Exchange and Policy Department of BB issued a notification on Thursday, outlining new guidelines for cash assistance in the export of agricultural (vegetables/fruits) and processed (agro-processing) agricultural products. According to the notification, exporters will now receive cash assistance for exporting juices and drinks made using locally sourced fruit pulp.    

A bank account holder can withdraw cash up to two lakh taka a day for this week given the current security situation, according to a Bangladesh Bank circular. The central bank issued the instruction to the MDs of all commercial banks through SMS on Saturday. It will be effective from Sunday, the first working day of the week. Earlier on Thursday the maximum cash withdrawal limit was set at one lakh taka.    Read more: Bangladesh Bank Governor Abdur Rouf resigns However, businesspeople can draw larger amount of cash for payment of salaries of employees ensuring security on their own, said the circular. The same is applicable for the expatriates. The central bank also asked banks to supervise that a person cannot withdraw money from multiple branches of banks in a day. This directive should be followed especially in the case of key political leaders. On Thursday, the Bangladesh Financial Intelligence Unit (BFIU) under the BB was ordered to report any amount of money withdrawn by a politically important person. The names of political leaders, bank chairmen, businessmen, secretaries, and senior police officers are on this list. Such instruction is given mainly to prevent any person from withdrawing money for criminal activity or escaping from the country. Read more: Bangladesh Bank operates without governor and deputy governors

Bangladesh Bank (BB) Governor Abdur Rouf Talukder on Monday (March 11, 2024) said that around 200 mobile financial services (MFS) accounts are closing each day due to their Hundi connection. The central bank is checking rigorously trade transactions through LC and mobile financial services to prevent money laundering activities by any means, he said. The governor said this in the opening ceremony of the money laundering prevention workshop held at the head office of the Criminal Investigation (CID), Bangladesh Police in the capital on Monday. Rauf highlighted the steps taken to prevent money laundering since his joining the Central Bank as Governor. He said, “When I joined Bangladesh Bank in 2022, there was a severe crisis of foreign exchange in the country. At that time took the first step to stop over-invoicing.” Read more: Inflation, currency prime focus of BB’s next monetary policy Again, money laundering occurs despite keeping the profit of export products abroad. Initiatives are also taken to prevent that, he mentioned. The governor expressed the strong stand of the central bank on banning hundi. He said that expatriates may send Tk500 to their family in the country, then he gives it to someone he knows abroad and asks him to give it to his family in the country. That money remains abroad. In contrast, a representative in Bangladesh paid the amount. As earlier payment was made through home delivery, now it is done through MFS. Read more: Entry-level women's recruitment doubles in banking sector, but board representation still lagging Around 200 such accounts are being closed every day. Later some accounts were opened again with guarantees, permanent action was taken against some of them, he said. Highlighting the context of the campaign against money changers, the governor said that USD $45 to $50 million transactions are done through money changers in the country every year. About $270 billion in transitions are made in the banking channel. But despite a small fraction of transactions, when money changers hiked the dollar rate, many expatriates tried to hold on to remittances. This is how the dollar crisis was created, Rouf pointed out. “That is why the campaign against money changers is ongoing. Also, avoid dealing in cryptocurrencies. It is completely illegal in our country,” said the BB Governor. CID Chief and Additional IGP Muhammad Ali Mia in the chair, head of Bangladesh Financial Intelligence Unit (BFIU) Md. Masud Biswas also spoke at the function. Read more: Bangladesh received $2.16 billion remittances in February, highest in fiscal

The women employment in the banking sector increased by 1407 in July-December period of 2023, and the overall perrcentage of women employees at banks stood at 16.37 percent in Bangladesh. Meanwhile just 13.51% of board members in the banks are women.  Bangladesh Bank’s (BB’s) latest report on gender equality revealed this information. There are 33346 women employees in 61 banks in the country, which is 16.37 percent of the total employees of banks, according to the report. The BB report shows that among the scheduled banks in 2023, 43 private commercial banks have the highest number of women employees 22,248, which is 16.32 percent of the total employees. Foreign commercial banks have the highest proportion of female officers, 24.18 percent as compared to other banks. In the period July-December 2023, the participation of women as board members was only 13.51 percent. Among them, foreign commercial banks have the highest female board member participation rate at 17.54 percent. Read more: Bangladesh's women empowerment showcased in Myanmar On the other hand, there is no participation of women board members of specialized commercial banks in the discussed period. According to the reports submitted by banks during the period July-December 2023 shows that the participation rate of women employees is higher at the entry-level 17.04 percent and mid-level 15.79 percent than at the higher levels 9.36 percent. Analysis of the obtained data shows that the participation of women in the banking sector is high at the initial stage. At the same time, the participation rate of female employees under thirty years of age 20.99 percent is more than double that of female officers above 9.58 percent in scheduled banks. Bangladesh’s place has improved by 12 steps in the gender gap report of the World Economic Forum (WEF) in 2023, as women's employment increased in the country. The BB report shows that Bangladesh is holding the 59th position in 2023 improving from 71st in 2022 in the gender gap of WEF, among 146 countries in the world. Read more: PM Hasina keen to create more scopes for women in every sector: Nasrul Hamid Executive Director of CDP Dr. Fahmida Khatun said that women's employment is usually increasing with the developing socio-economic scenario of the country and decreasing the ratio of women's employment does not match that calculation. She focused on the need to study why the ratio of women employment has been decreasing in the banking sector. Bangladesh Bank’s spokesperson Mezbaul Haque told UNB that women's employment has increased in the banking sector following the central bank’s policy to reduce the gender gap in banks and financial institutions. The central bank prefers women both in employment and entrepreneurship development. Loan disbursement and interest incentives have been given to women encouraging them involved in financial inclusion. The BB is still working to ensure a sound environment in the workplace of banks. Facilities including maternity leave and daycare opportunities for women’s employees have increased, he said. Read more: Proven Passive Income Ideas for Women in 2024

Bangladesh received inward remittances of USD $2.16 billion in February, which is the highest in 8 months (July-February) in the current fiscal year 2023-24. According to the provisional data of the Bangladesh Bank (BB) revealed on Sunday, the expatriates sent $2.16 billion remittance to the country through the legal channel. In the previous month January, the expatriates had sent $2.10 billion in remittances. Bangladesh has received so far $13.26 billion in inward remittances in the first eight months of the year through the legal channel. Md Mezbaul Haque, BB spokesperson, told UNB that inward remittances flow increased in the legal channel as the government and banks are providing incentives. Read more: Brac Bank introduces digital Form C, electronic document submission platform for commercial remittances He said the central bank instructed banks to provide additional incentives from their financial sources, which keeps a role in increasing the flow of inward remittances in the legal channel. With the government's 2.5 percent incentive on expatriate income, banks can buy dollars at an additional 2.5 percent higher price. A total of 5 percent is getting incentives. As a result, remittances are coming to the country through legal channels. The executive director of the private research institute South Asian Network on Economic Modeling (SANEM) Prof Dr. Selim Raihan said that a total of 5 percent incentive on remittances will help to boost remittances temporarily. But there will be no long-term solution. Dr. Raihan said,”To increase remittances, hundi should be stopped. If you want to stop hundi, you have to stop money laundering. Now a lot of money is being smuggled abroad. It has to be controlled by any means.”  Read more: How to safely send remittance to Bangladesh?

The Bangladesh Bank (BB) will announce its next monetary policy on Wednesday for the second half of the fiscal year 2023-24 to tame inflation and ease exchange rate pressure. As part of the preparation, the draft of the monetary policy was approved at the central bank board meeting on Sunday. Bangladesh Bank authorises 90-day buyers' credit to import essentials for Ramadan Officials who attended the board meeting told UNB that the exchange rates would not be real market-based in the upcoming monetary policy as the foreign exchange market is not stable yet. The government policymakers instructed to keep the market under control by following the crawling peg system. Bangladesh Bank unveils SMART-derived interest rates for January  “Crawling pegs help control currency movement, especially when there are  threats of devaluation. The purpose of crawling pegs is to provide stability,” said an official of the BB involved in the preparation of the monetary policy statement. The monetary policy will focus on controlling  the growing inflation, which has been a burning issue over the last eight months. Bangladesh Bank dissolves National Bank’s board Economist and co-founder of PRI Dr Sadiq Ahmed, Director General of the Bangladesh Institute of Development Research (BIDS) Binayak Sen, and Chairman of the Economics Department of the Dhaka University Masuda Yasmin are in the monetary policy committee.

The consumer loan (retail loan) receivers have to pay the higher 13 percent interest starting from the new year, while other borrowers have to pay almost 12 percent, at 11.89 percent, in interest to the banks.   Bangladesh Bank (BB) announced the interest rates for January in accordance with the 'SMART' method it introduced since july..   The method on which the loan interest rate is now determined is known as 'SMART' or 'Six Month Moving Average Rate of Treasury Bills'. Bangladesh Bank informs this rate at the beginning of every month.   The six-month average interest rate (smart rate) on 182-day treasury bills was 7.10 percent in July this year, 7.14 percent in August 7.20 percent in September, 7.43 percent in October, 7.72 percent in November, and lastly in December smart rate increased to 8.14 percent.   According to the rules of the BB, banks can give loans in January by adding margin or interest at a maximum rate of 3.75 percent with the 'smart' rate of December. On the other hand, non-banking financial institutions can add margin at the rate of 5.75 percent.

The interest rate on loans from banks in October has been set at 10.20 percent as per Bangladesh Bank’s formula. The method, based on which the interest rate is now being determined, is known as “SMART” or “Six Months Moving Average Rate of Treasury Bills.” Bangladesh Bank informs of this rate at the beginning of every month. The new interest rate determining method was introduced on July 1, 2023. Earlier, from April 2020, the maximum interest rate on bank loans was 9 percent. With D grade Bangladesh Bank governor fares poorly in global ranking Accordingly, in the current month of October, banks can take a maximum of 10.20 percent interest on large-scale industrial loans. On the other hand, non-banking financial institutions (NBFIs) can charge interest against loans by adding a margin at a maximum rate of 5 percent. Their maximum interest rate will be 12.20 percent and 9.20 percent on deposits. However, the loan interest rate set in October cannot be changed within the next six months. This will make the highest interest rate on agricultural loans in September 9.14 percent. An additional 1 percent supervision charge can be levied on CMSME, personal, and car purchase loans. Bangladesh Bank introduces dollar booking policy for max 1 year  Bangladesh Bank publishes the 6-month average interest rate of 182-day treasury bills from January this year. Last January, the smart rate was 6.96 percent. After that, it gradually increased every month and reached 7.13 percent last May. But in June and July, it decreased slightly to 7.10 percent. However, it increased to 7.14 percent in August and reached 7.20 percent in September. On the advice of the International Monetary Fund (IMF), Bangladesh Bank introduced a market-based interest rate system. Despite Bangladesh Bank Governor’s decision to not raise exchange rate before election, dollar rate hiked again The interest rate cap of 9 percent was imposed from April 2020 to facilitate traders. A research report by the central bank also recommends withdrawing or increasing the interest rate limit. But Bangladesh Bank was silent as the government did not give positive consent. One of the conditions of IMF’s USD $4.7 billion loan is to make the interest rate market-based. In light of that condition, the new interest rate system was introduced.

Bangladesh Bank decided not to bring major changes in the US dollar exchange rate before the upcoming national election. The central bank’s Governor Abdur Rouf Talukder informed of this decision at a meeting with managing directors and CEOs of banks recently. At that meeting, the governor said that Bangladesh Bank will not make any policy changes regarding the dollar market or the foreign currency market before the national election. Despite this decision, the dollar rate has been raised by Tk .50 or 50 paisa in all cases. The price of the dollar has increased to Tk 110 in case of export and expatriates’ income, and to Tk 110.50 in case of import. Read: Selling dollars at higher prices: What is Bangladesh Bank’s action against treasury heads of 10 banks?The dollar rate was hiked again yesterday, which is effective from today. The dollar crisis in the country has become evident since March 2023, following the downturn caused by the Russia-Ukraine war. To deal with this crisis, Bangladesh Bank fixed the dollar price at the beginning. This worsened the crisis. Later, last September, Bangladesh Bank withdrew from determining the price of the dollar. Read: Bangladesh Bank seeks explanations from 13 banks for selling dollars at higher prices This responsibility has been given to the Association of Bankers, Bangladesh (ABB) and Bangladesh Foreign Exchange Dealers’ Association (BAFEDA). Since then the two organizations have been jointly setting the dollar price for export, remittance earnings, and payment of import liabilities. Read more: Dollar goes off kerb market after central bank-led raids of money exchanges