BSEC embarks on forming Shariah board

Bangladesh Securities and Exchange Commission (BSEC) has started the process of forming a Shariah board to oversee Sukuk bonds and ensure compliance with the Shariah law.

To make the process faster, it will take recommendations from the local and foreign shariah experts before drafting the law.

On Tuesday, the stock market regulator held a meeting with the experts at its headquarters in Dhaka. The meeting presided over by BSEC Commissioner Md Abdul Halim was also attended by around 20 local and foreign Islamic finance specialists, including Mezbah Uddin Ahmed from Malaysia and Prof M Kabir Hassan from the USA.

In June of last year, a four-member committee headed by Halim was formed. The BSEC asked the committee to submit a guideline on the law.

About the outcome of the meeting, Halim told The Business Post, “We’d draft the law to form a Shariah board. For this, we sit down with the local and foreign Islamic finance specialists. They made some valuable recommendations.”

The board will have at least a nine-member, he said.

The Shariah board was formed to monitor Sukuk-like Islamic products and securities in modeling with the similar boards that existed in Malaysia and the United Arab Emirates, according to him.

“The committee will make recommendations on the law keeping the local and foreign investors in mind,” said the BSEC commissioner.

In January 2014, the Dhaka Stock Exchange (DSE) launched a Shariah-based DSES index to increase investment from the Shariah-based banks in the stock market. On Tuesday, it rose 15.18 points or 1.02 per cent to close at 1,495 on Tuesday.

The index comprises more than 115 companies, including banks, non-bank financial institutions, insurance companies, and mutual funds.

Meanwhile, Beximco Sukuk, an Islamic bond, is set to debut on the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) on Thursday. The bond was listed on the bourses for the first time in history. 

A Sukuk is an Islamic financial certificate, similar to a bond in Western finance, that complies with Sharia - Islamic religious law.

On June 30 last year, the BSEC approved the issuance of a Tk 3,000 crore green Sukuk bond in favour of Beximco Limited to finance construction works and equipment procurement.