Bangladesh has started the process of issuing a new Islamic bond called Sukuk . The Bangladesh government is planning to raise USD 3.57 Billion equivalent to 30000 crore taka through this Islamic financial certificate, similar to a bond in Western finance. In the 2020-21 financial year, the government is planning to raise 5000 crore taka or 595 Million USD. Malaysia is currently number one in the world in terms of issuing Sukuk. The World Bank Group's International Finance Corporation (IFC) and the Islamic Development Bank (IDB) have also issued Sukuk
What is a Sukuk', Islamic Bond?
Islamic law prohibits "riba," or interest Sukuk, were created in order to link the returns of a specific asset being purchased, distributing the benefits of that asset or project. The Sukuk bond was first introduced in Malaysia in 2000.
Sukuk Bond in Bangladesh
According to the Finance Department of the Ministry of Finance, the government has taken initiative to release Sukuk to meet the funding deficit. The Finance Department and Bangladesh Bank have been working together for 9 months. Two separate meetings on Sukuk were held on February 3 under the chairmanship of Ahmed Jamal, Deputy Governor of Bangladesh Bank and on January 26 under the chairmanship of Sheikh Mohammad Saleem Ullah, Additional Secretary, Finance Department. Representatives of private Islamic Bank, Exim Bank, Union Bank, SIBL, Shahjalal Islami Bank and Shariah Council of Bangladesh Bank were present at both the meetings. Finance Secretary Abdur Rauf Talukder was also present at the meeting. The last meeting was held at the central bank on February 28 .
There is no Shariah-compliant material or bond in Bangladesh to finance the government's deficit. As a result, on the one hand, Shariah financial institutions are deprived of the opportunity to invest in a more secure sector, on the other hand, the government is unable to use the funds of institutions to finance its deficit. The finance department says the government's interest expenditure will also be reduced if deficit financing is done through Sukuk .
finance ministry further said that the long-term impact of the government's investment projects in the infrastructure sector is enormous, which cannot be expected through the private sector. To do this, the government has so far had to finance the deficit from the conventional banking and financial system. However, Islamic banks and financial institutions can also participate in this process. Through this they can easily take the opportunity to involve themselves in the greater welfare of the society
Initially, the finance department estimated that it would be possible to raise at least Rs 30,000 crore through Sukuk, which could be used for government development activities. To this end, bonds worth Tk 5,000 crore may be released in the current 2020-21 financial year.