The government will raise Tk 20 billion by issuing the sixth Sukuk bond in the second-week of next month (May) to implement a development project in the Rajshahi division.
The decision was made at the first meeting of the Shariah Advisory Committee of the central bank at its headquarters in Dhaka on Wednesday, with Bangladesh Bank (BB) Deputy Governor Dr. Md. Kabir Ahmed in the chair.
"Interested individuals as well as institutions will be eligible for investing in the Shariah-compliant bonds," a member of the committee told The Financial Express (FE) after the meeting.
He also said the committee also decided to issue the Islamic bonds using both Istisna'a and Ijarah financing modes with seven-year tenure.
The Local Government Engineering Department (LGED) will implement the Rajshahi Division Important Upazila & Union Road Widening & Strengthening Project (RDIRWSP) using the funds, aiming to create job opportunities by improving road connectivity in the rural areas of the northwestern region of Bangladesh.
The project is expected to help establish civic amenities across 65 upazilas in eight districts under the Rajshahi division by enhancing rural road connectivity, according to the BB officials.
They also said the government had already raised Tk 220 billion through issuing five types of Sukuk bonds for the implementation of different projects across the country.
Sukuk is an Islamic financial certificate, which is similar to a treasury bond and structured to generate returns in compliance with Islamic finance principles.
A senior executive of a leading Shariah-based Islamic bank urged the authorities concerned to fix the profit for the upcoming Sukuk bonds considering the yields on Bangladesh Government Treasury Bonds (BGTBs).
"The profit rate for the upcoming Sukuk bonds should be aligned with the prevailing yields on BGTBs to enhance their popularity," the private banker told The Financial Express (FE) while replying to a query.
Mentioning the profit for the fifth Sukuk Bonds, he also said that the profit for the Sukuk bonds was comparatively lower than the previous ones.
Earlier, such profit was fixed at 10.40 per cent for five-year tenure fourth Sukuk bonds, according to the banker. However, the profit or rent for the fifth Sukuk bonds was 9.25 per cent.
On the other hand, the yields on BGTBs have maintained an upward trend in recent weeks as most banks expressed unwillingness to invest their funds in the government approved risk-free securities.
The cut off yield, generally known as interest rate, on the two-year BGTBs rose to 12.18 per cent on Tuesday from 11.20 per cent earlier, according to auction results.
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