Trust Bank expands Islamic banking footprint with strong growth

Islamic banking has been gaining strong momentum both globally and in Bangladesh, and its future prospects remain highly promising. Countries with large Muslim populations, such as Bangladesh, offer natural scope for the expansion of Shariah-compliant financial services. Over the years, the sector has built a solid foundation, driven by a majority Muslim population and growing awareness of ethical, interest-free financial solutions.

As of September 2025, the Islamic banking system in Bangladesh recorded total deposits of Tk4,703.16 billion, accounting for 24.56% of total banking sector deposits. At the same time, total investments stood at Tk5,175.82 billion, representing 29.22% of total loans and advances in the banking sector. These figures highlight the sector's increasing importance within the country's financial landscape.

Islamic finance promotes the circulation of wealth and discourages its concentration, making it well-suited for SME financing, agriculture, and rural development. The sector is also evolving with advancements in agent banking, digital banking, fintech integration, and Sukuk-based investments, opening new opportunities for both domestic and foreign investors.

Despite this growth, challenges remain. Compared to conventional banks, deposit growth is relatively slower, and issues related to governance, product diversification, and stronger Shariah compliance need to be addressed. Overcoming these challenges will be essential for ensuring long-term, sustainable growth.

Islamic banking is becoming increasingly popular because it combines religious compliance with financial prudence. By avoiding interest (riba) and promoting profit-and-loss sharing, it appeals to a large segment of the population seeking Shariah-compliant financial solutions. Its focus on ethical, socially responsible, and asset-backed financing reduces risk and encourages real economic activity, making it attractive to investors.

Growing public awareness, supportive regulatory initiatives, and the perception of stability during financial uncertainties have further strengthened confidence in Islamic banking. In addition, the introduction of innovative products and the expansion of digital services have made Islamic banking more accessible and appealing to customers.

At Trust Bank, we have been operating our Islamic banking services under the brand name "Trust Islamic Banking (TIB)" since 2008, offering a wide range of Shariah-compliant deposit and investment products. Currently, we operate through 30 Islamic banking windows across different branches, and our Board of Directors has a long-term plan to gradually transform the bank into a fully-fledged Islamic bank.

As part of this strategy, we are planning to open 15 new Islamic banking windows and convert 3 branches into full-fledged Islamic branches. We are also focusing on launching innovative deposit and investment products to meet evolving customer needs. Our Islamic banking operations are managed by a dedicated division at Head Office, while Shariah compliance is ensured by a Shariah Supervisory Committee and a dedicated Shariah Secretariat. This ensures strict adherence to both Shariah principles and Bangladesh Bank guidelines.

The Islamic deposit portfolio of Trust Bank exceeds Tk9,000 crore, reflecting strong customer confidence in our services. Funds are managed separately, and profits are distributed to Mudarabah depositors using the weightage method, maintaining a 70:30 profit-sharing ratio between depositors and the bank. With increasing awareness of Shariah-compliant finance, Trust Islamic Banking continues to experience steady growth in deposits, investments, and its customer base, contributing positively to the bank's overall performance.

Rebuilding and maintaining depositor confidence remains a top priority. Trust Bank, with majority ownership held by the highly disciplined Bangladesh Army, has consistently maintained strong client trust. In response to evolving market dynamics, we have placed strong emphasis on strict Shariah compliance through supervisory committees and regular audits, ensuring transparent reporting of investments and profits. We have also strengthened internal controls and risk management systems to further enhance depositor confidence.

In addition, we regularly conduct customer awareness programmes, offer and review competitive Shariah-compliant products, enhance digital banking services, and maintain consistent profit-sharing mechanisms to foster long-term trust and reliability.

The development of the Sukuk market presents a major opportunity for raising capital in a Shariah-compliant manner. Sukuk can provide long-term financing, attract both local and international Islamic investors, and support large infrastructure projects such as bridges and railways. It can also help diversify capital market instruments and reduce reliance on traditional bank financing. With proper regulatory support from Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC), Sukuk can play a vital role in strengthening the Islamic finance ecosystem and supporting sustainable economic growth.

To further diversify Islamic banking products, strong regulatory support is essential. The Islamic Banking Guidelines introduced in 2009 need to be reviewed and updated. Regulators should provide clear and comprehensive guidelines for Islamic financial products and instruments such as Sukuk, Mudarabah, Musharakah, Salam, and Istisna. A standardized Shariah governance framework, supportive policies, and a flexible approval system for new products are also necessary.

Furthermore, support from Bangladesh Bank and BSEC in developing Islamic capital market instruments and liquidity facilities will help expand product offerings. Most importantly, the enactment of a dedicated Islamic Banking Law or Act would significantly strengthen the sector. It is noteworthy that Bangladesh Bank has already taken initiatives in this direction, including the establishment of the Islamic Banking Regulations and Policy Department (IBRPD) to oversee and regulate Islamic banking activities.

Islamic banking also offers significant opportunities to attract Non-Resident Bangladeshis (NRBs). Through Shariah-compliant products such as Mudarabah deposits and Sukuk, NRBs can invest their earnings while adhering to Islamic principles. NRBs play a crucial role in Bangladesh's economy, and Trust Bank, as one of the leading remittance-receiving banks, offers fast, reliable, and transparent services for sending and receiving money.

With dedicated NRB deposit schemes, opportunities to invest in national development projects, and modern fintech-based remittance services, NRBs can invest with confidence while contributing to the country's growth.

Finally, Islamic banking plays a vital role in promoting sustainable and inclusive growth. By financing real economic activities through profit-and-loss sharing and asset-backed products, it ensures ethical and socially responsible investments. It also enhances financial inclusion by providing Shariah-compliant services to unbanked populations, supporting SMEs and agriculture, and contributing to long-term national development through instruments like Sukuk and other Islamic financing tools.

Author: Ahsan Zaman Chowdhury, Managing Director and CEO, Trust bank PLC