BB opens refinance scheme for Islamic lenders
Sharia-based lenders can make renewable investment in the fund
Bangladesh Bank has decided to form a refinancing scheme for Sharia-based banks and other financial institutions to provide agro-processors, small enterprises, renewable energy and environment-friendly initiatives with funds.
The refinance scheme aims to encourage the Sharia-based lenders to be involved more in the sectors such as agro-processing, small enterprises, renewable energy and environment-friendly efforts, the central bank said in a circular yesterday.
Islamic banks and other lenders hold more liquidity than they require as per the central bank regulations.
Bangladesh Bank has opened Islamic Refinance Fund Account to direct the excess liquidity to economic activities, according to the notice.
Under the scheme, the Sharia lenders can make a three-month renewable investment in the fund.
The lending rate will be the Mudaraba savings account rate of the lenders or 5 percent or which one is lower.
The profits from the fund will be distributed among participating lenders based on their investment ratio. The central bank will not take any profit even if it manages the fund, the banking regulator said.
Sharia-based lenders will have to repay the central bank the principal amount of the loan and the profits on it every three months. The lenders, however, will be able to borrow until their investment period lasts.
The circular came on the back of a huge growth in Islamic banking in the country. There are seven full-fledged shariah-compliant banks. Most other banks have also launched their Islamic banking wing in recent years.
News:The Daily Star/19-Sep-2014
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