Bangladesh Bank set to form Shariah advisory board
Bangladesh Bank is set to establish a Shariah Advisory Board (SAB) to ensure adherence to Islamic legal principles in the services of Shariah based banks.
The central bank’s board of directors has recently approved a policy titled “Policy on the Formation, Appointment, Removal, Duties and Responsibilities of the Shariah Advisory Board (SAB) of Bangladesh Bank–2025” to this end.
Whereas such boards exist in the central banks of many countries, Bangladesh has not had one, even though Islamic banking operations began in the country in 1983.
According to sources at Bangladesh Bank, public participation in the Islamic banking sector is expanding rapidly.
Consequently, it has become essential for the central bank to play a greater role in setting centralised standards for Shariah compliance, auditing, governance, and liquidity management.
A strong SAB will be established in accordance with the international standards of the Islamic Financial Services Board (IFSB) and the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) to this end.
Bangladesh Bank has stated that the board will play a crucial role in resolving ‘matters of concern’ related to Islamic banks, financial institutions and Shariah-based financial and industrial activities.
It will also be responsible for setting standards, verifying the Shariah compliance of new products and issuing necessary resolutions.
Furthermore, under the Bank Resolution Ordinance 2025, the central bank has been empowered to establish its own Shariah board to advise on the resolution of Islamic banks.
According to the policy, the governor will form an independent and impartial seven-member SAB comprising eminent Shariah scholars and Islamic academics of the country. At least five of the members must be recognised Shariah scholars.
Members will be appointed for a maximum term of three years and may be reappointed based on performance upon completion of their term.
However, any member who has served consecutively for six years will not be eligible for reappointment without a two-year break.
At present, there are 10 full-fledged Islamic banks in Bangladesh, in addition to 31 commercial banks offering Islamic banking services through dedicated branches or windows.
As of June this year, among 11,372 branches of 61 scheduled banks, 1,699 belonged to full-fledged Islamic banks, while 41 operated as Islamic banking branches and 905 as Islamic windows.
To qualify for SAB membership, candidates must hold an advanced degree in Dawra-e-Hadith, Kamil, Islamic Economics, Fiqh, Islamic Banking or a related discipline.
In addition, they must have at least two years of experience in teaching at a university or serving on a Fatwa Board, along with experience in publishing research papers or books on Islamic finance.