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.

Chief Adviser Dr Muhammad Yunus on Monday assured that Bangladesh Bank is fully prepared to ensure enhanced cash flow to banks across the country, enabling depositors to access their funds without hindrance. “No bank has been closed, and even the weakest institutions have been stabilised,” he said in his Victory Day address to the nation. Dr Yunus said that confidence and discipline are being steadily restored in the banking system, and announced that previous restrictions on cash withdrawals have been lifted, signalling a robust recovery within the banking sector. The Chief Adviser highlighted the interim government's success in rebuilding trust in the nation’s economic future, particularly with international financial institutions such as the World Bank. CA Dr Yunus promises to control prices, fix economy These institutions are now engaging with renewed enthusiasm to establish fresh financial collaborations with Bangladesh, he said. Referring to the economic challenges faced by the interim administration upon assuming office, Dr Yunus said, “When we took charge, the economy was on the verge of collapse. Over the past four months, we have introduced significant reforms to change its trajectory.” He underlined the government’s commitment to ensuring enhanced cash flow in crucial areas, which is expected to bolster public confidence and facilitate financial stability across the nation.

Ten joint teams have been constituted to investigate allegations of revenue evasion and money laundering involving prominent figures and business entities associated with the ousted Awami League government. The Bangladesh Financial Intelligence Unit (BFIU) has uncovered the evidence of money laundering by influential business figures, according to sources at the Financial Institutions Division (FID) and Bangladesh Bank (BB). The FID disclosed that the teams were established following consultations with and advice from the Ministry of Finance. Online VAT services to remain suspended for 96 hours: NBR An officer nominated by the Anti-Corruption Commission (ACC) will lead the investigation, with the BFIU acting as the coordinating body. Members of the joint teams include representatives from the Customs Intelligence and Investigation Department and the Criminal Investigation Department (CID) of the police. These joint teams will delve into allegations of money laundering involving several high-profile groups and individuals, including the S Alam, Beximco, Nabil, Summit, and Aramit Groups. Additionally, the teams are investigating former State Minister for Land Saifuzzaman Chowdhury for alleged money laundering. A letter seeking information on their financial activities have already been dispatched to various countries, including the US, the UK, Singapore, Canada and the United Arab Emirates. Senior FID officials revealed that on December 4, the BFIU sent a formal communication to the investigating agencies. The letter detailed recent findings, which indicate instances of loan funds being diverted from various scheduled banks into different sectors through corruption, fraud, and forgery, in violation of banking regulations. Pakistan keen to import medicine from Bangladesh The letter states, “Information has been found against these business groups of tax and customs evasion, money laundering under the guise of foreign trade, and various illegal methods of money laundering abroad. It is necessary to conduct further investigation into whether these groups and individuals have embezzled bank loan money, laundered money acquired through various legal or illegal means, or smuggled it abroad.” The investigation teams, comprising the ACC, CID, and Customs Intelligence and Investigation Department under the National Board of Revenue (NBR), are tasked with determining the extent of wrongdoing. Timor-Leste President seeks to boost trade ties with Bangladesh The ACC-nominated officer will lead the inquiry and, upon obtaining agency approval, will submit charge sheets to the court.

The number of Tk 1.0 crore and above account holders in the banking system has decreased following the political changeover on August 5. According to Bangladesh Bank’s (BB) financial report for the July-September quarter, over Tk 26,000 crore was withdrawn by people, all of whom are millionaires holding accounts with over Tk 1.0 crore. Due to these withdrawals, the bank account balances of more than 1,500 people also dropped below the Tk 1.0 crore threshold. While the exact number of real millionaires in the country remains uncertain, an approximate estimate can be derived from the number of crore-taka accounts in banks. These accounts have seen a significant increase since the Covid-19 pandemic, the report says. Bangladesh Bank statistics reveal that in 1975, there were only 47 accounts holding over Tk 1.0 crore. Read: IMF suggests upward policy rate in 2025 to restrain inflation: BB By 2015, this figure had risen to 57,516. At the start of the Covid-19 pandemic in March 2020, the number of such accounts stood at 82,625, increasing to 117,000 as of now. Economists attribute the recent withdrawals to panic among small depositors following the political changeover. They suggest that weaker banks struggled to disburse large sums to millionaires, forcing many to transfer their funds to stronger banks. Consequently, funds consolidated in single accounts in stronger banks may exceed the Tk 1.0 crore mark. Based on these trends, the number of Tk 1.0 crore and above accounts was expected to rise. But, contrary to expectations, the figure has decreased.

The amount of bad loans in the banking sector has been increasing rapidly in recent years, as reflected in data from Bangladesh Bank (BB), according to the recently released White Paper. In June 2021, BB data showed the defaulted loan rate was 7.9 percent. By the end of June this year, it had exceeded 12 percent. Around 88 percent of these defaulted loans are categorised as bad quality loans, according to the report. The severity of the issue has been described as the 'black hole' of the banking sector, with a depth three times greater than what is visibly apparent. The central bank’s statement at the end of last June revealed defaulted loans amounting to Tk211,391 crore. This figure surged to over Tk288,000 crore by September. Domestic economists and international organisations have consistently questioned the accuracy of the defaulted loan data presented by the central bank. Following an independent assessment of banks’ assets by a committee comprising domestic and international chartered accountants, the defaulted loan ratio could rise to 25 percent, according to experts. Bangladesh Bank Governor Dr Ahsan H Mansur told UNB that the current defaulted loans ratio of 12.50 percent may double after the assets evaluation. “We have to accept the reality, which was hidden earlier. But there is no solution to the problems by hiding the information of banks’ bad loans,” he said. The White Paper formally released on December 2, shows that in the country’s bad debt data, Tk272,856 crore were re-disbursed, Tk75,389 crore were written off, Tk39,209 crore were in special mention accounts, and Tk76,185 crore were tied up in High Court cases. These loans have also become defaulted. Altogether, the actual default amount totals Tk675,000 crore. This staggering figure is equivalent to the construction cost of 13 metro rail projects or 22 Padma bridges. Crony capitalism created an undemocratic attitude: Rehman Sobhan Banks are required to maintain a 100 percent provision against bad loans. However, at the end of June, banks had kept only Tk89,355 crore in provisions, falling significantly short of the required Tk176,889 crore. Approximately 55 percent of the defaulted loans originate from the manufacturing sector. The dire situation in the banking sector has been attributed to the actions of senior central bank officials and influential external actors. Their combined influence has been particularly evident from 2015 to 2024. The white paper highlights that during this period, amendments to the Bank Company Act, influenced by economic and political factors, contributed to the sector’s decline. In 2023, the term for entrepreneur directors was increased to 12 years, up from 9 years in a 2018 amendment. The number of directors from a single family was reduced to three in 2023, after being increased to four earlier. Workshop on financial inclusion, rural transformation towards achieving SDGs begins Besides, a critical provision was removed: previously, if one company in a group defaulted, loans from others in the group would also be considered defaulted. This removal, the report notes, has further weakened the banking sector.  

Bangladesh's capital market orchestrated an upward movement last week, with the main index of the Dhaka Stock Exchange gaining 11.78 points to reach 5197. The percentage change for the broad index was 0.23 percent. Market participation was 18.53 percent. The average daily turnover for the week was Tk 444.3 crore. The capital market is making notable strides on various economic fronts, demonstrating resilience and adaptability in the face of challenges. Fresh designs, new era: Bangladesh Bank to launch new notes This progress is timely, as an IMF mission is visiting to validate compliance and discuss the next steps. A new inflation calculation methodology, focusing on 20 key products, aims to provide a more accurate picture, excluding volatile items like fuel and vegetables. Furthermore, efforts to enhance the business environment through regulatory reforms and incentives are attracting more foreign direct investment, supporting economic growth. DSE benchmark index up 5.36 points; Tk 113.8 crore traded in 1:30 hrs Bangladesh continues to implement structural adjustments and strategic policies, well-positioned to overcome challenges and sustain its growth trajectory in the coming years.

The much-hyped launch of new Bangladeshi currency notes is on the horizon, with denominations of Tk 20, Tk 100, Tk 500, and Tk 1,000 expected to grace the market within the next six months. Bangladesh Bank made the disclosure, sparking widespread curiosity about the design elements of the forthcoming notes. The introduction of new notes is certain. But, it is too early to confirm the exact design specifications, said Husne Ara Shikha, spokesperson and executive director of the central bank. With Mujib or No Mujib? Sources close to the central bank hinted at a potential shift in design philosophy, suggesting that the iconic portrait of Sheikh Mujibur Rahman might no longer feature on the new notes. Speculations abound that the new currency could instead highlight Bangladesh’s national emblem or the graffiti from the July Revolution, reflecting a distinct cultural and historical ethos. They said the government has approved the printing of new currency notes, and they are expected to be introduced within six months after completing the necessary processes. Design Overhaul Additional insights from the Security Printing Corporation and the Ministry of Finance suggest that the proposed changes are poised to reshape the visual identity of Bangladesh’s banknotes. If implemented, the designs would shift from portraying Sheikh Mujibur Rahman to showcasing religious sites, traditional Bengali motifs, and, intriguingly, the evocative imagery of the July Revolution’s graffiti. Read: BB raises limit for private travel foreign currency exchange

Bangladesh Bank (BB) from now on will maintain a database of Ultimate Beneficial Ownership (UBO) information of banks to enhance transparency in ownership structures. This initiative has taken cautious measures from past abuses of the banking system that aim to foster accountability and protect the financial system from similar risks in the future. The Banking Regulation and Policy Department (BRPD) of the central bank issued a guideline in this regard on Monday, instructing all banks to identify and verify their ultimate beneficial owners. For the first time, the central bank has issued guidelines on "Ultimate Beneficial Owners and Disclosure of Ownership Structure of Banks", detailing the reporting format and procedures for identifying ultimate beneficial owners. The first dataset must be submitted to the Bangladesh Bank by 31 March 2025. Additionally, any changes in beneficial ownership must be reported to the central bank as soon as the entity, and thereby the bank, becomes aware of the change, according to the circular. IMF suggests upward policy rate in 2025 to restrain inflation: BB Banks will have to ensure utmost accuracy and reliability in the identification of ownership structure through an appropriate review process, where applicable. Banks have to maintain a database of UBO information as well as preserve detailed records of all identification procedures and decisions. The BB may conduct regular and special or surprise inspections when warranted. The managing director/chief executive officer, head of the Share Department, and company secretary of the banks will be held responsible for compliance with this circular and reporting all the required UBO information to the central bank.  

With Bangladesh facing higher inflation for a long time, the International Monetary Fund (IMF) has advised keeping the policy interest rate on the rise until inflation decreases. Bangladesh Bank Spokesperson and Executive Director Huseara Shikha hinted this while talking to reporters at her office on Tuesday. She said this ahead of a delegation led by IMF mission Chief Chris Papadakis, scheduled to visit Bangladesh from December 3 to 17 to review the IMF conditions. The IMF says that inflation in Bangladesh is currently above 11 percent. It will remain around 10 percent throughout 2025, and after that, the international donor agency believes it may come down to 6 to 7 percent. The fourth tranche of the US $4.7 billion loan program depends on fulfilling the conditions given by the global lender. Read: BB Governor projects inflation reduction in 8 months The IMF imposed conditions on Bangladesh for providing this loan. Although almost all the conditions given by the lender are on track to be met, it is well behind the revenue collection target. However, the installment has already been released after showing progress in fulfilling most of the conditions. Earlier, in January 2023, the IMF approved a $4.7 billion loan for Bangladesh. It was supposed to provide this loan to Bangladesh subject to conditions. The IMF delegation is reviewing each installment of this loan, which was given in seven installments, before releasing it.

The Investment Corporation of Bangladesh (ICB) has received approval from Bangladesh Bank for a Tk 3,000 crore loan at a reduced interest rate of 4%, down from the initial 10%. Two-thirds of the loan will be utilised for repaying the corporation's existing debts, while the remaining amount will be invested in the capital market, said ICB Chairman Abu Ahmed confirming the information on Tuesday. Earlier, on November 13, the government provided a sovereign guarantee to facilitate the loan. Based on this guarantee, Bangladesh Bank issued a formal letter to ICB on November 27, sanctioning the Tk 3,000-crore loan at a 10% interest rate with a tenure of 18 months. Read: ICB Asset Management AGM approves 110% dividend ICB later informed Bangladesh Bank that the 10% interest rate was unsustainable for the institution and requested a reduction to 4%. Following the proposal, the central bank approved the loan at the revised interest rate. The financial support aims to strengthen ICB’s capacity to meet its obligations while bolstering investments in the capital market, aligning with broader economic stability goals, Abu Ahmed said.