Afaq Khan

Bangladesh can improve its weak infrastructures by utilising Islamic funds available globally, said a senior official of a foreign bank.

The country's stable economy can help attract more Islamic funds from international financiers, said Afaq Khan, chief executive officer (Islamic banking) of Standard Chartered Bank.

Khan was sharing his views on the prospects of Islamic banking in an interview with The Daily Star at Sonargaon Hotel recently.

“The total size of the world's Islamic funds is estimated at $1- $1.3 trillion, which is growing at 15-20 percent on average annually,” said Khan, who came to Dhaka to launch the bank's Shariah-based product Saadiq for its corporate clients in the country.

Most shariah-based financiers in the world are eager to invest in large infrastructure projects, he said. Bangladesh can attract these investors, thanks to a positive economic outlook of the country.

“All the ingredients are here to attract the Islamic financiers as you have a stable economy, stable regulations and fast economic growth,” said Khan.

The country needs to tell its success stories and future plans to the Islamic investment community globally, he added.

Standard Chartered Saadiq is ready to cooperate with the government in the processes of bringing in the Islamic investors to the country by utilising its global network, said Khan.

Islamic banking is now an issue of great interest for many, including the western non-Muslims, as the system remained almost unhurt during the global financial crisis, said the official.

Shariah-based banking is growing much faster than conventional banking, he said. Currently, the banking giant has Islamic banking operation in six countries -- Indonesia, Malaysia, UAE, Bahrain, Pakistan and Bangladesh.

Of the countries, Indonesia has the highest annual growth rate at 45 percent, followed by Bangladesh at 25-30 percent, said the 50-year-old official.

“Conventional banking is riskier than Islamic banking because it deals with debt trading and keeps itself involved in market speculations, which the European and American banks experienced,” he said.

“At present 19 percent of the industry assets and 16 percent of the industry deposits are Islamic. So, there is an accelerated demand for Islamic banking products in the market,” said Khan.

The London-based bank started its Islamic banking operation in Bangladesh in 2004 with consumer banking products under the bank's group branding Saadiq.

“Islamic banking operates in real economy. This banking has no room for gambling, speculation, excess leverage, or the greed for windfall profit,” said Khan.

He joined StanChart in 2003 with a mandate to launch the Islamic business division for the bank. Since then, he has been responsible for the strategic build-up of a global Islamic banking business covering retail, corporate and investment banking with a wider product capabilities and award winning solutions.

Khan, who has 22 years of banking experience, believes Bangladesh could be a big market for the Islamic banks. “Around 90 percent people here are Muslims. So, the country has an immense potential for the growth of Islamic banking.”

But he feels the business prospect would depend on diversification of products, services and adequate training of the officials.

"Saadiq" is the brand of this bank's Islamic banking, which has rolled out more than 250 products and solutions relating to consumer and wholesale banking.

An Islamic bank traditionally generates its profits from Sharia-compliant investment activities. This profit is shared back with the bank's customers at a pre-agreed ratio. An account holder is entitled to a share of these profits according to the funds he holds in his account.

Khan said Islamic banking differs from conventional banking, primarily because it does not look to charge or deliver interest.

In Islamic banking, profit is generated through investment and trading, said Khan, who did an MBA from the University of Western Illinois in the US.

The official said this return rate has to match the level of return provided by interest levels of conventional banking.

Islamic banking in Bangladesh continues to show strong growth since its launch in 1983.

At present, out of 47 banks, seven private commercial banks are operating as full-fledged Islamic banks. Besides, 16 conventional banks are engaged in Islamic banking, according to Bangladesh Bank's annual report for 2010-11.

The total deposits with Islamic banks and Islamic banking branches of the conventional banks stood at Tk 67,580 crore by the end of December 2010. This deposit accounts for 17.5 percent of the deposits with the total banking system, according to BB Data.

Total credit of the Islamic banks and the Islamic banking branches of the conventional banks stood at Tk 62,870 crore by the end of December 2010. This was 19.1 percent of the credit of the total banking system.

The global banking giant targets Bangladesh as one of the potential markets for its Islamic financial products and services.

As part of the move, the bank launched its Shariah-based wholesale banking product Saadiq for its corporate clients on August 2. Earlier the product was for retail customers only.

The Saadiq brand will offer a core comprehensive suite of products related to cash management, trade, term and working capital financing for corporate clients to fulfil their banking requirements in a Shariah compliant way.

News: Daily Star/Bangladesh/26-Aug-12

Citibank NA has recently won the “Best Corporate/Institutional Internet Bank in Bangladesh” for the fifth consecutive year at the Global Finance magazine's annual World's Best Internet Banks competition.

"Internet banking has transformed the way most businesses operate, and five consecutive Best Internet Bank awards signifies Citi's stronghold in this crucial segment," said Rashed Maqsood, managing director and Citi country officer for Bangladesh.

The consistent performance indicates Citi's contribution to the IT sector of Bangladesh, especially in promoting electronic fund transfers, the bank said in a statement yesterday.

Citi Asia Pacific won a total 26 awards at this year's edition in corporate/ institutional and consumer banks categories.

In the category of best corporate/institutional internet bank, Citi won in 15 out of 16 Asian markets.

News: Daily Star/Bangladesh/26-Aug-12

Bharti Airtel has shortlisted banks including Standard Chartered and JPMorgan to manage a share flotation for its telecoms masts unit to raise more than $750 million, two sources with direct knowledge of the matter said.

The biggest Indian mobile phone carrier has also shortlisted Bank of America Merrill Lynch, HSBC, UBS and Kotak Mahindra for the initial public share offer (IPO), the sources said on Friday.

Bharti may file a prospectus for the IPO with the market regulator next month, said the sources, declining to be named as they are not authorised to speak to the media.

The unit, Bharti Infratel, is eyeing a listing in the first half of 2013, the sources said. Bharti declined to comment.

Bharti Infratel, which has more than 33,000 mobile phone masts, also holds a 42 percent stake in joint venture Indus Towers, which is the world's biggest telecoms mast company, with about 110,000 masts.

Mast companies get their revenue from leasing infrastructure to network operators but they are going through a tough time in India currently as a Supreme Court order to revoke the regional operating licences of eight mobile phone companies in the 15-player market has weighed on demand for masts.

Bharti Airtel owns 86 percent of the Infratel unit, with the remainder held by investors including Tema-sek Holdings, Kohlberg Kravis Roberts & Co, Goldman Sachs, Macquarie Group, Citigroup, Investment Corporation of Dubai and AIF Capital.

News: Daily Star/Bangladesh/26-Aug-12

Bangladesh Bank Governor Atiur Rahman, ICT Secretary NI Khan, BTRC Chairman Zia Ahmed and Airtel Bangladesh CEO Chris Tobit attend the launch of mobile banking service of Airtel in partnership with Dutch-Bangla Bank, at Uttarkhan in Dhaka yesterday.

Airtel Bangladesh yesterday launched mobile banking services for its subscribers.

The mobile operator is going to offer multiple services such as cash deposit and withdrawal, sending money, mobile top-up, remittance collection and salary disbursement, said a statement.

The new service was launched in partnership with Dutch-Bangla Bank Ltd and was inaugurated by Bangladesh Bank Governor Atiur Rahman on the premises of Union Information Service Centre (UISC) at Uttarkhan in Dhaka.

UISC is an ICT-enabled one-stop service outlet located at all Union Parishads across the country, where young entrepreneurs are supported by the government to offer various public and private services.

According to the statement, 9002 young entrepreneurs are working at 4,501 UISCs across the country. Airtel and DBBL will work together to make mobile banking available on most of the UISC premises.

Rahman said the service would go a long way in making financial transactions accessible even for the unbanked population across the remotest corners of Bangladesh.

ICT Secretary NI Khan and Chairman of Bangladesh Telecommunication Regulatory Commission Zia Ahmed were also present.

Chris Tobit, chief executive officer of Airtel, said the operator foresees a range of additional services in conjunction to mobile banking in near future.

Sayem Ahmed, chairman of the executive committee of DBBL, K Shamshi Tabrez, managing director of the bank, and AKM Shirin, its deputy managing director, were also present.

Mobile banking is a one-stop solution, which transforms the mobile phone into a secure and convenient wallet.

It enables subscribers to obtain services such as cash deposit, cash withdrawal, foreign remittance collection, salary disbursement, scholarship and government's allowance disbursement, person-to-person transfer and so on.

In addition, Airtel also offers mobile top-up facility through mobile banking account. With the commercial launch, the service will now be available in all major districts for all Airtel subscribers.

News: Daily Star/Bangladesh/26-Aug-12

A large water and sanitation project supported by the World Bank (WB) in Chittagong is now getting momentum despite some delay at the initial stage.

Chittagong Water Supply and Sewerage Authority (CWASA) have recently accelerated its efforts to initiate the Chittagong Water Supply Improvement and Sanitation Project (CWSISP) soon.

The $185.4 million project aims to increase the supply of potable water by constructing selected water production, transmission, distribution and storage facilities in the port city.

Of the total project cost, WB is providing around $170 million, while the rest will be borne by the public exchequer.

The project is also supporting the expansion of piped water supply services to under-served areas through the rehabilitation, replacement and extension of distribution pipes.

Having 3.5 million households, Chittagong suffers from inadequate water production capacity and sewerage systems.

The city’s water production capacity is only able to cater to 40 percent of the total estimated demand. Additionally, there are no water borne sewerage systems and storm water drainage services in Chittagong.

After initial delays, the project management is now in full operation, says a WB release.

CWASA is actively engaged in procuring the preparatory works for hydraulic modeling and detailed engineering design of the transmission and distribution systems, as well as the detailed engineering design for the Modunaghat Water Treatment Plant (WTP).

This will allow the project’s large infrastructure investments to be initiated and finalised, the release said.

Once completed, these are expected to increase water production as well as address the widening gaps between water demand and production in the port city.

News: Daily Sun/Bangladesh/25-Aug-12