Shariah-based institutions will get 50% of any sukuk: BB

From now on, the Bangladesh Bank (BB) will allocate half of any sukuk issue to shariah-based banks, financial institutions and insurance companies.

A separate 30 percent will be allocated to Islamic branches and windows of conventional banks, the central bank said in a circular overhauling the subscription allocation for shariah-compliant sukuk bonds.

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Individual investors will get a dedicated 10 percent quota, up from a combined 15 percent they previously shared with provident funds, investment companies and corporate entities, it added.

Conventional banks, financial institutions and insurance companies, which held a 5 percent share, have now been grouped with provident funds, gratuity funds and mutual funds into a single 10 percent category.

Istequemal Hussain, director of the Debt Management Department at the BB, said the allocation for sukuk subscriptions was 80 percent for shariah-based banks and Islamic banking branches and windows of conventional banks.

“We have separated this through a quota for shariah-based banks. This is because shariah-based banks cannot subscribe to conventional bonds and treasury bills, whereas conventional banks can,” he said.

The BB has reallocated the subscription quota ahead of the auction of a new sukuk.

The government is expected to raise Tk 30,000 crore in the current fiscal year by issuing various sukuk bonds.

Interest in sukuk has been rising since its launch in December 2020. With the auction of the first short-term, or nine-month, sukuk, the total amount raised by the government has exceeded Tk 53,000 crore.