Kamruzzaman Bablu :
Due to the keen interest expressed by banks and financial institutions, the government is set to issue a Tk 2,000 crore Mudaraba Sukuk bond in the market for a duration of five years, pending approval from the securities regulator and other relevant authorities. Insiders have indicated that the bond may be issued in two phases by March of the following year.
The decision regarding this issuance was made during a meeting of the ‘Cash and Debt Management Committee’ (CDMC) within the Finance Department of the Ministry of Finance, according to sources familiar with the matter.
A senior official from the Finance Department revealed that activities have commenced following the 52nd CDMC meeting, with higher-ups in the department opting to proceed with the bond release after a thorough assessment of market conditions.
A review conducted in November 2023 of Islamic windows and branches within Sharia-based conventional banks revealed an existing liquidity of approximately Tk 750 million. Additionally, conventional banks have generated a liquidity amounting to Tk 3918 crore, currently circulating in the market.
Despite a slight decrease in customer purchasing tendencies for Sukuk bonds during FY 2022-2023, authorized banks and financial institutions have shown renewed interest, according to ministry reports.
The ministry has reported a total collection of approximately Tk 18,000 crore from Sukuk thus far. Consequently, plans are underway to issue a Tk 1,000 crore Sukuk bond over a five-year period from January to March. Should the initial phase garner positive feedback, a second phase involving an additional Tk 1,000 crore in Sukuk bonds will be launched.
In December 2020, the Government’s Public Health Engineering Department issued the first Sukuk bond (lease Sukuk) to fund the ‘Safe Water Supply Project nationwide,’ with the Bangladesh Government as the primary initiator and the Bangladesh Bank serving as mediator.
An agreement was signed between the Finance Department of the Finance Ministry and the Bangladesh Bank (BB) on December 22, 2020, initiating the first phase of bonds worth Tk 8,000 crore-the government’s inaugural Islamic bond issuance.
Bangladesh Bank, representing the government, distributed Sukuk certificates to investors in two rounds, totaling Tk 4,000 crore.
Typically, three parties are involved in Islamic Sukuk transactions: the originator, the Special Purpose Vehicle (SPV), and the investors, with the government acting as the originator in this case.
Bangladesh Bank (BB), serving as the country’s central bank, is functioning as the Special Purpose Vehicle (SPV) tasked with administering the risk-free securities.
It will also act as a trustee to resolve any potential disputes between investors and the government.
As of now, the required statutory liquidity ratio (SLR) stands at 13 percent for conventional banks and 5.5 percent for Shariah-based Islamic banks.
Sukuk, akin to a treasury bond, is an Islamic financial certificate structured to adhere to Islamic finance principles and generate returns accordingly.
