BB seeks Shariah committee details from Islamic banks

The Bangladesh Bank has asked Islamic banks and conventional banks having Islamic banking branches or windows to submit detailed information about their Shariah supervisory committees.

It recently wrote to the banks, asking them to submit the information shortly.

The banking regulator wants to know educational backgrounds, experiences and exposures, track records, solvency and financial integrity, honesty, and reputation of the Shariah supervisory committee members.

Serajul Islam, spokesperson for the Bangladesh Bank, declined to comment on why the banking regulator had sought this information.

Md Anwar Hosain Molla, chairman of City Bank’s Shariah supervisory committee, told The Business Post the Bangladesh Bank already has a guideline on how the Shariah board will operate.

“It is the responsibility of the central bank to supervise whether the board members have been appointed as per the guideline or not. This is a good initiative.”

Section 3 of the central bank’s Guidelines for Conducting Islamic Banking says the board may form an independent Shariah supervisory committee with persons experienced in and knowledgeable about Islamic jurisprudence.

But it has been found that some banks’ Shariah committees are not following the central bank guideline properly. The committees are supposed to be independent, but the chairmen of some banks are acting as that of the Shariah committees.

Besides, many Shariah committee members are serving as members or chairmen of such committees of multiple banks.

The central bank thinks a clear picture of how the committees are operating can be found by obtaining detailed information from the banks.

Also, the central bank may update its guideline this year to ensure that banks form independent Shariah committees and clarify how many members of the committee can be members of another bank’s committee at the same time.

The central bank data shows 10 fully-fledged Islamic banks are currently operating with 1,671 branches out of 10,937 in the whole banking sector.

In addition, 41 Islamic banking branches of nine conventional commercial banks and 368 Islamic banking windows of 13 conventional commercial banks are providing Islamic financial services.

The Islamic banking sector’s total deposits reached Tk 3.93 lakh crore at the end of last year, accounting for 27.89 per cent of the entire banking sector’s deposits.

Moreover, total investment, including loans and advances, in this sector stood at Tk 3.53 lakh crore at the end of 2021, making up 27.88 per cent of loans and advances in the whole banking sector.

At the end of December 2021, 45,260 people were working in the Islamic banking sector.