Zero interest, zero fees: Krishi Bank launches shariah-styled FDR
The initiative was taken to attract interest-free and low-interest deposits and to strengthen the bank’s deposit base
Bangladesh Krishi Bank (BKB) has launched a Shariah-styled interest-free fixed deposit scheme aimed at citizens who do not wish to earn interest on their savings.
In a circular issued on 29 January, the state-owned specialised bank instructed all branch managers to start offering account opening for the scheme from 1 February, allowing any Bangladeshi citizen aged 18 or above to open such an account.
Speaking to The Business Standard, BKB Deputy Managing Director Md Khaleduzzaman said the bank's board approved the scheme after considering demand from pious citizens across the country.
Under the scheme, depositors will not receive any interest. As a result, all government and bank charges, including excise duty, will not be borne by the account holders. Instead, the bank will pay those charges on their behalf.
Keep updated, follow The Business Standard's Google news channel
Depositors maintaining a specified balance will also be eligible for a debit card.
According to the circular, Bangladesh is a country with a large number of religious citizens who are interested in saving their hard-earned money for future security but do not wish to accept bank interest.
The bank believes there is strong potential to mobilise interest-free deposits from such customers.
The circular said the initiative was taken to attract interest-free and low-interest deposits and to strengthen the bank's deposit base. Approval for the account was given at the bank's 887th board meeting held on 15 October last year.
Account conditions
However, the "Krishi Bank Interest-Free Fixed Deposit Scheme" has several conditions. A minimum deposit of Tk25,000 is required, while there is no upper limit. The tenure ranges from one month to three years or longer.
According to the bank, government excise duty will be deducted every December as per rules, but the deducted amount will be automatically reimbursed by the branch within two days.
As the account is interest-free, no tax at source will be deducted.
The bank will not charge any account maintenance fees. Charges for account closure, statements and SMS services will also be waived.
In addition to individuals, mosques, temples, pagodas, churches, graveyards, madrasas, religious institutions, clubs, associations and similar organisations will be able to open the account.
But, the account will be cheque-free, meaning no cheque books will be issued. Customers will receive a deposit receipt at the time of opening the account.
The account cannot be transferred from one branch to another, and no loans will be provided against it.
How it compares with other banks
Such interest-free deposit accounts are usually offered by Islamic Shariah-based banks under the Al-Wadiah system. Conventional banks with Islamic windows also offer similar products.
However, no other state-owned commercial or specialised bank currently offers a dedicated interest-free fixed deposit account. Customers at Sonali, Janata, Rupali and Agrani banks can open savings accounts by declaring in writing that they will not accept interest.
Current accounts at these banks do not offer interest either, and the same applies to most private banks. But, customers usually have to pay various service charges and maintenance fees, depending on the bank.
Currently, Rajshahi Krishi Unnayan Bank offers an interest-free savings account.
Among private banks, City Bank, AB Bank, Trust Bank, Standard Chartered Bank, Eastern Bank, United Commercial Bank and Dutch-Bangla Bank provide interest-free services through their Islamic windows or wings.
