Bangladesh has three types of banks that provide Islamic banking services. Usually, by Islamic banks we mean full-fledged Islamic banks. The journey of Islamic banking began with the inauguration of Islami Bank Bangladesh PLC in 1983 and the number of full-fledged Islamic banks currently stood at 10. According to the 'Quarterly Report on Islamic Banking in Bangladesh' published by Research Department of Bangladesh Bank, until December 2022, there were 1659 branches of 10 these banks across the country with a total of 48,588 employees. It means, an average of 29 employees were working per branch in full-fledged Islamic banks.
The second and third types of banks are conventional banks that are offering Islamic services. Among them, some banks provide this service by establishing separate Islamic banking branches and other banks by setting up Islamic banking windows within their conventional branches. These two types of conventional banks are commonly known as dual banking operators as they offer interest-based banking services as well as Islamic banking services. However, there is another type of Islamic banking services, which provides services nation-wide through agent banking outlets of the banks.
Prime Bank is the first dual banking service provider in Bangladesh. The bank opened its first Islamic banking branch on 18 December 1995. Now a total of 11 dual banks are offering this service through a total of 23 Islamic banking branches with an average of 21 employees per branch. The country's first Islamic banking window was inaugurated by Standard Chartered Bank on November 4, 2004 under the brand name Saadiq. Although it was a window, it launched using completely separate premises like a branch.
At that time, the process of drafting an Islamic banking guideline was ongoing, allowing more new banks to open Islamic banking branches and windows were put on hold for a long time. Finally, on November 9, 2009, the first guidelines for Islamic Banking of Bangladesh were released. However, in 2008, Trust Bank, Bank Asia and Standard Bank obtained licenses to operate Islamic banking windows and opened the windows even before the guidelines were issued. Interestingly, the guidelines did not include any clauses for operating Islamic banking windows. Despite that, by 2010, Pubali Bank, Sonali Bank and Agrani Bank also introduced Islamic banking services by setting up several windows. After a decade-long break, issuance of window licenses for dual banking operators was resumed in 2019. Thus, the total number of Islamic windows in the country has increased twenty-two times and reached 550 now from 25.
It should also be noted that the concept of Islamic window is completely different in international and local contexts. In a recent joint guidance of AAOIFI-IFSB, Islamic window refers to the entire Islamic operation of a conventional bank. Whereas in the context of Bangladesh, Islamic window is a customer service outlet that is a tiny unit inside the existing conventional branch of the bank.
As mentioned earlier, guidance on the operation of Islamic banking window was absent in the guidelines of 2009. As a result, there are no unique rules as to what will be the physical shape of windows within a conventional branch. For this reason, soon after this, some banks applied for conversion of their windows into separate Islamic branches. However, Bangladesh Bank has advised some banks to set up 'separate entry and distinct counter with sufficient manpower' for Islamic windows inside conventional branches complying with the 'Terms & conditions for the conventional Banks to obtain license for opening Islamic banking branch(es)' mentioned in the existing Guidelines.
The statistics of Bangladesh Bank's quarterly reports on Islamic banking shows that in December 2013, the number of Islamic windows of 8 dual banks was 25 country-wide. Until December 2018, this number remained at 25. As the Islamic window became very popular, this number has seen an incredible boost since 2019. By the end of 2019, 2020, 2021 and 2022 these numbers reach 88, 198, 368 and 535 respectively. According to the report, at the quarter-end of March 2023, there were 550 Islamic windows of 13 dual banks across the country. Those quarterly reports also include, among other information, the numbers of human resources against Islamic windows. A review of the relevant window data indicates that the Islamic banking windows of Bangladesh are suffering from severe manpower shortage.
According to the displayed data, a total of 193 people were employed in 25 Islamic windows in 2018, with an average of about 8 employees per window. At the end of 2022, against 535 windows, this number is 778, which is less than 2 per window on average!
The data shows that in 2022, 152 new employees were added against 167 new Islamic windows in different banks of the country, less than one per window. The big surprise is that in 2021 the number of Islamic windows increased by 170 against only one workforce! Is it not surprising that banks have not deployed sufficient manpower despite a notable increase in the number of outlets?
More importantly, the guidelines of 2009 make establishment of an 'Islamic Banking Division' at the head office of each dual bank mandatory. Besides, the division has been assigned a lot of duties, all of which require some skilled manpower. Then if we exclude the number of manpower working at the head office level of those 13 banks, for argument's sake, the average number per window can be close to 1 or below. It is baffling that this situation has been continuing for several years. On the other hand, we still find ourselves in a situation where some frustrated youth are burning their certificates for their inability to find a job.
Whether this instance is due to ignorance or lack of guidance or supervision, needs to be studied. If there is any weakness, measures can be taken to rectify it and adequate manpower for customer service at Islamic banking windows to be engaged. Besides, the disposition to carry out Islamic operations without employing manpower must be avoided.
In such a situation, the new banks which have introduced Islamic banking services and are going to do so, have to train their own manpower in addition to recruiting new employees and allocate sufficient manpower for their Islamic banking operations. This requires, at all appropriate levels, clear direction and visionary strategy and the will to implement the plan effectively.
Muhammad Munirul Huq is an Islamic banker and Certified Shari'ah Advisor and Auditor (CSAA) by AAOIFI, Bahrain.
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