Bangladesh Bank Training Academy Journal

Abstract

Islamic shariah principles are the foundations of Islamic banking. Islamic banking is responsible not only to avoid riba, but also to avoid unethical practices and participate actively in achieving the welfare goals in an Islamic economy. In the process of offering Islamic banking services, the practitioners have been facing several challenges. Addressing some of these challenges is critical for improving the efficiency of Islamic banking activities in the country. As opined in the survey, while operating in conventional environment, Islamic finance requires a different legal and supervisory framework appropriate to its nature of business. Absence of separate act and comprehensive standards covering all areas for the Islamic Banking activities in Bangladesh are creating difficulties in a number of ways on Shariah compliance issues. Apart from this, the human capital involved in Islamic banking must be trained in the relevant field in accordance with the demand of the sector. The study dentifies the dearth of standard and harmonized guidelines and tools for expansion of Islamic banking in the country. Many of these may be required to address country and society specific need. There is no doubt that in certain areas global common standards may be drawn from the globally recognized standard setters of Islamic banking. It is also important to activate interbank money market of the country. Islamic banks in Bangladesh need more Shariah compliant bonds to manage their liquidity effectively. The policy makers of the country may think of having bonds like Sukuk and potential of introducing Commodity Murabaha may also be explored.