Islamic Finance is a way of doing financial transactions and banking while respecting Islamic law or sharia. Islamic finance hardly existed 30 years ago yet today is a $2.2 trillion industry with hundreds of specialised institutions located in more than 60 countries including Bangladesh. Islamic finance only represents about 1% of global financial assets but with a 10%-12% annual growth rate. The concentration of Interest-Free Lending, Avoiding Interest Pays Off are working behind the success of Islamic finance.
How Does It Make Money Without Interest?
Many of the products offered by Islamic financial institutions are comparable to Western or conventional finance. Aside from the absence of interest rates, the key concept of Islamic finance is Risk Sharing between parties in all operations.
Bangladesh Bank sells Three and Six month Bangladesh Government Islami Investment Bond (BGIIB).
Islamic finance and banking might ensure inclusive growth along with financial stability and address the other development challenges effectively. Introducing Sukuk or Islamic bond could be an alternative for better liquidity management in upcoming years. Bangladesh Securities and Exchange Commission (BSEC) has already issued the Bangladesh Securities and Exchange Commission (Investment Sukuk) Rules, 2019 which may promote Islamic capital market in the country.
