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BD needs Shariah board to regulate Islamic banking

SJIBL MD and CEO tells the FE

JUBAIR HASAN | May 10, 2023 00:00:00

Mosleh Uddin Ahmed

Bangladesh, which has posted impressive growth in unconventional banking activities over the years, needs a centrally shariah-based board to regulate Islamic banking sustainably through averting any possible confusion over selection of halal products.

Managing director and chief executive officer (CEO) of Shahjalal Islami Bank Limited (SJIBL) Mosleh Uddin Ahmed shared his insights in an exclusive interview with The Financial Express at the bank's headquarters on Tuesday.

As the SJIBL celebrates its 22nd founding anniversary today (Wednesday), he said there was no central shariah unit for unconventional banks yet.

The shariah is different for different banks. One bank calls something as shariah while other bank differs and it is creating confusion in the market, he added.

"There should be a central shariah-based board to make a guideline with setting the areas for Islamic banking activities. It can be constituted through the chairman of the shariah board of each bank."

Talking about the target of his bank that commenced its commercial operation in 2010, Mr Ahmed said they want to take the SJIBL in the list of top five local banks in every parameter focusing more on corporate governance, digital banking, services and coverage.

In terms of profitability, credit ratings, asset quality and NPL (non-performing loan), he said the bank with its skilled and dedicated workforce has reached the target.

"We made a profit to the tune of around Tk 10 billion last year… The volume of NPL is less than 4.0 per cent. We've surplus liquidity of Tk 33 billion," said the top executive of the SJIBL, which has AA+ credit ratings.

About the factors of gaining a handsome profit in 2022, he said the bank's cost of deposits is 3.20 per cent, which is the second lowest in the industry while the lowest cost of operation is 1.67 per cent.

"These are the major reasons behind it. Despite the lower rate, the flow of deposits continues growing that indicates the strength of our banks. But we've to hold this position in the coming days as well," the managing director said.

Terming supply of foreign currency and NPL the two major challenges for the country's banking sector, Mr Ahmed said the banking sector would face a severe blow if these hurdles are not addressed urgently.

"I don't understand why inward remittance of $1.68 billion came in the month of Eid and why export proceeds amounting to $1.4 billion are not repatriated. We need to find out reasons and act accordingly," said the SJIBL managing director.

He further said the major portion of remittance basically comes from some 10 overseas sources, but unfortunately, the fastest-growing economy of $400-billion plus has not opened any exchange house yet.

"If we can set up exchange houses from where remitters will get certificate, privilege card like CIP and other facilities and it will certainly encourage them to send in more foreign currencies," he suggested.

The SJIBL continues to expand its networks and operations across the country with a target of bringing unbanked people under the banking coverage.

Now, the numbers of branches, sub-branches and agents stand at 140, 03 and 113 respectively.

The SJIBL deposits rose to Tk 245 billion. Of the amount, it invested Tk 235 billion in many areas contributing to the country's socio-economic development.

The bank also bagged awards from organisations like ICAB, ICSB and SAFA for its transparency in financial disclosures, clarity, governance and accountability.

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