Regulation and Performance of Islamic Banking in Bangladesh

Thunderbird International Business Review, Vol. 49(2) 251–277 • March–April 2007

Posted: 7 Nov 2018

See all articles by Abu Umar Faruq Ahmad

Abu Umar Faruq Ahmad

Islamic Economics Institute; Universiti Brunei Darussalam; International Centre for Education in Islamic Finance (INCEIF); Hamdan Bin Mohammed Smart University; Islamic Cooperative Finance Australia Ltd

M. Kabir Hassan

University of New Orleans - College of Business Administration - Department of Economics and Finance

Date Written: 2007

Abstract

This article examines current legal and regulatory issues of Islamic banking in Bangladesh. The most important issue in this context is the lack of a well-defined regulatory and supervisory framework for Islamic banks for their effective functioning in line with the tenets of Shariah. Other major issues come from the absence of an interbank Islamic money market, following the same policy and guidelines for Islamic and conventional banking by the Bangladesh Bank, presence of a discriminatory legal reserve requirement for Islamic and conventional banking, prevalence of a restrictive environment in the capital market, and the lack of legal support and protection of Bangladesh Bank to avoid the associated risks of Islamic banks. For this purpose, it is suggested that Islamic banks in Bangladesh should have an independent banking act that controls, guides, and supervises their functions and provide legal support to the parties concerned.

Keywords: Legal and Regulatory Issues, Islamic Banking, Bangladesh

Suggested Citation

Ahmad, Abu Umar Faruq and Hassan, M. Kabir, Regulation and Performance of Islamic Banking in Bangladesh (2007). Thunderbird International Business Review, Vol. 49(2) 251–277 • March–April 2007, Available at SSRN: https://ssrn.com/abstract=3263384

Abu Umar Faruq Ahmad

Islamic Economics Institute ( email )

P. O. Box 80214
Jeddah, 21589
Saudi Arabia

Universiti Brunei Darussalam ( email )

School of Business and Economics
Jalan Tungku Link
Muara Brunei, AK Muara Brunei BE1410 B
Brunei

HOME PAGE: http://https://expert.ubd.edu.bn/umar.ahmad

International Centre for Education in Islamic Finance (INCEIF) ( email )

Lorong Universiti A
Kuala Lumpur
Kuala Lumpur, WY WP 59100
Malaysia

Hamdan Bin Mohammed Smart University ( email )

Dubai Academic City
P.O.Box 71400
Dubai
United Arab Emirates

Islamic Cooperative Finance Australia Ltd ( email )

Suite 12, Upper Ground Floor
55 Phillip Street
Parramatta, NSW, New South Wales 2150
Australia
+612 8065 5030 (Fax)

HOME PAGE: http://https://icfal.com.au

M. Kabir Hassan (Contact Author)

University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

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