BB governor pledges 'full protection' for Shariah boards to ensure banking integrity
Reforms proposed to tackle laundering, governance gaps in banks.
Shariah board members will be given full protection and allowed to work independently to restore discipline in the country's Islamic banking sector, Bangladesh Bank Governor Md Mostaqur Rahman has said.
"You, the members of the Shariah boards, will work independently; full protection will be provided to you by the central bank," he said while presiding over a high-level meeting at the central bank headquarters recently.
The meeting, titled "Current Status, Challenges, and Future Way Forward of Islamic Banking," brought together members of the newly formed Bangladesh Bank Shariah Advisory Board, chairmen of Shariah boards from Islamic banks, and leading Islamic scholars and academics.
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This was the first time a Bangladesh Bank governor sat with top Shariah experts.
In his opening remarks, the governor said money laundering had occurred in several Islamic banks in the past due to weak supervision.
He said Islamic banking is designed to be asset-backed, and such losses should not occur if the system is implemented properly.
"The fact that losses occurred is a matter of deep concern for us," he said, adding that empowering Shariah boards is key to ensuring effective oversight.
During the meeting, scholars and experts presented several recommendations to strengthen governance.
They called for a dedicated Islamic Banking Act and the appointment of a separate deputy governor and executive director at Bangladesh Bank to oversee the sector.
They also proposed granting Shariah supervisory committees legal independence from bank boards and requiring the consent of at least three Shariah board members for approving large investments.
Participants recommended ensuring Shariah supervisors can work free from management pressure and strengthening audit systems.
They also suggested developing a Shariah governance framework, establishing a research centre, and improving capacity through training and certification in Islamic finance.
The meeting discussed five troubled Islamic banks under the United Islamic Bank umbrella.
Scholars urged the central bank to recognise the share value of existing shareholders and provide liquidity support on easier terms.
The governor said banks and hospitals should operate as service-oriented institutions without political interference.
He also expressed interest in hosting international Islamic finance conferences in Bangladesh.
