Staff Reporter :
Shariah-based banks in Bangladesh have experienced a significant decline in deposits, falling by 2.9 per cent or Tk 11,781 crore during the July-September (Q3) period compared to the previous quarter (Q2) this year. This drop is attributed to decreased confidence among savers following a series of scams in the sector.
A recent Bangladesh Bank report, titled ‘Quarterly Report on Islamic Banking in Bangladesh’, revealed that deposits at full-fledged Islamic banks fell to Tk 3,90,760 crore by the end of September, down from Tk 4,02,541 crore in June, resulting in a negative liquidity position of approximately Tk 2,000 crore at the end of Q3 2024.
Correspondingly, the market share of Shariah-based banks in the overall deposits of the country’s banking system dropped to 25.08 percent in September from 25.56 percent in June.
There are 10 full-fledged Shariah-based banks operating in Bangladesh, including Islami Bank Bangladesh, Al Arafah Islami Bank, Social Islami Bank, Standard Bank, Exim Bank, First Security Islami Bank, Shahjalal Islami Bank, Union Bank, Global Islami Bank, and ICB Islamic Bank.
According to the central bank report, “Liquidity position of full-fledged Islamic banks decreased significantly during the quarter under review, primarily due to a shortfall in deposits and excessive withdrawals by depositors.”
A Bangladesh Bank official, speaking anonymously, noted that media reports about large-scale loan-related irregularities in these unconventional banks could have undermined public confidence.
The situation worsened after the Bangladesh Bank restructured the boards of all S Alam-controlled banks in a bid to address their financial difficulties. “These factors may have contributed to the fall in market share,” the official added.
Additionally, excess liquidity at full-fledged Islamic banks plunged to Tk 1,990 crore by the end of September, down from Tk 7,866 crore in June.
The central bank data also showed a decline in total deposits within the Islamic banking system, which dropped by 1.94 percent to Tk 436,667 crore at the end of September, compared to Tk 445,309 crore in June.
