Trust deficit dents deposit collection of Islamic banks in Q1
Staff Reporter :
Deposits in the Shariah-based banks of the country decreased by Tk 4,300 crore in the first quarter of the current year, standing at Tk 3,99,549 crore in the March quarter, driven by a trust deficit.
At the end of December last year, the amount was Tk 4,03,850 crore, according to data from Bangladesh Bank’s Quarterly Report on Islamic Banking in Bangladesh.
Similarly, excess liquidity in the country’s 10 Shariah banks nosedived by 77 percent in March 2024 compared with December 2023.
Excess liquidity in Islamic banks dropped by Tk 5,125 crore to Tk 1,518 crore at the end of March 2024 compared with Tk 6,643 crore in December 2023 and Tk 7,767 crore at the end of September 2023.
By contrast, loan disbursements from the 10 Shariah-based banks have significantly increased in Q1 of 2024.
The loan or investment amount of fully Islamic banks in the country was Tk 4,44,974 crore at the end of last December, reaching Tk 4,56,994 crore in the March quarter of the current year.
There are currently 10 full-fledged Shariah-based banks in the country: Islami Bank Bangladesh, Al-Arafah Islami Bank, Exim Bank, Shahjalal Islami Bank, First Security Islami Bank, Social Islami Bank Limited (SIBL), Global Bank, Union Bank, ICB Islamic Bank, and Standard Bank.
Alarmingly, only two banks—Shahjalal Islami Bank and Al-Arafah Islami Bank—managed to increase their excess liquidity substantially, while others saw a severe erosion of their liquidity during the reporting period.
Excess liquidity refers to the amount of liquid assets that banks hold above and beyond what is required for their day-to-day operations and regulatory obligations.
Bankers said negative excess liquidity poses challenges for banks, making it difficult to meet immediate payment obligations, address customer withdrawals, and settle transactions promptly.
Moreover, the excess liquidity of five Shariah-based banks, including Islami Bank Bangladesh, Social Islami Bank, First Security Islami Bank, Global Islami Bank, and Union Bank, remained negative in March 2024.
Alarmingly, ICB Islamic Bank also faced a negative excess liquidity crisis.
Meanwhile, among the Islamic banks, Islami Bank Bangladesh received the highest amount of deposits (34.74 percent), followed by Al-Arafah Islami Bank (10.42 percent), First Security Islami Bank (10.20 percent), EXIM Bank (9.62 percent), Social Islami Bank (7.38 percent), ICB Islamic Bank (0.28 percent), Shahjalal Islami Bank (5.88 percent), Union Bank (5.05 percent), and Global Islami Bank (2.91 percent).
