BB boosts Sukuk allocation for Islamic banking windows to 80%
Bangladesh Bank has raised the Sukuk allocation for Islamic banking branches and windows to 80%, up from the previous 70%, aiming to strengthen the role of Shariah-compliant financial institutions.
According to a circular issued today, the central bank stated that the revised share of Sukuk – Shariah-based financial instruments akin to conventional bonds – will now primarily be allotted to Islamic branches and windows of banks, non-bank financial institutions, and insurers. This includes both fully Shariah-based entities and conventional institutions operating Islamic units.
The remaining allocation has been adjusted accordingly. Only 5% of the Sukuk will be offered to traditional banks, financial institutions, and insurance companies, reduced from the earlier 10%.
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The final 15% will be reserved for individual investors, mutual funds, corporate entities, provident and gratuity funds, deposit insurance schemes, investment firms, and similar organisations – down from the previous 20%.
The central bank also detailed the new allocation method. In cases where total bids in any category exceed the allocated quota, distribution will be made proportionately based on each bidder's submitted amount.
Conversely, if any category underperforms and fails to reach its allocated ceiling, the unsold Sukuk portion will be redistributed among the other categories, with priority given to higher-value bids, again on a proportional basis.
This move is seen as part of the regulator's ongoing efforts to deepen the Islamic finance market and ensure broader participation in government-backed Sukuk instruments.
The government has raised Tk24,000 crore through issuing six Sukuk so far to finance for developing social safety net program, according to the Bangladesh Bank data. These Sukuks' half yearly profit rate is 4.69% to 10.50%.
