Islamic banking : a case analysis from Bangladesh

Abstract

This study is concerned primarily with the theory of Islamic banking and its practice in Bangladesh. Our paper examines: (a) the Shariah principles for operation ofIslamic banking in angladesh, (b) the genesis of Islamic banking in Bangladesh, (c) the factors which led to the emergence of this type of banking as well as its growth, development and future of Islamic banking, and (d) the deposit and investment mechanisms of Islamic and conventional banking in Bangladesh. Preliminary results indicate that, although Islamic banks are competing successfully with their conventional counterparts in an environment where no independent guidelines or acts exist for them, the products and services they use often resemble those used by conventional banking. We suggest that regulatory authorities of the country should set up a well defined and explicit legal and regulatory framework that, while consistent with Islamic Shari 'ah, would at the same time, be realistic and flexible enough to meet internationally recognized prudential and supervisory requirements.