IFIC Bank, a first generation conventional private commercial bank, has decided to become a full-fledged Islamic or Shariah-based bank.
“Our board recently approved the proposal. The government, being the bank’s majority shareholder, has also given clearance,” said Shah A Sarwar, managing director of the bank.
“We are now approaching the regulators for necessary permissions. We will then start the conversion process by appointing world-class consultants. But it is subject to approval from different regulators,” he said in an interview with The Daily Star.
“There is a strong demand from customers and shareholders,” said Sarwar.
In addition, non-Muslims can also take the service and that “is the beauty of the Shariah-based banking.”
Sarwar who joined the bank in December last year could not give a definite time on how long the conversion process would take.
“The conversion is not a day’s job. We have to change the computer systems and business processes and we have to run parallel for the time being.”
The globally-booming Islamic finance is making strides and gaining popularity in Bangladesh, with experts predicting that the Shariah-compliant industry will continue in steady steps to become the mainstream banking system in the Muslim-majority nation.
Bangladesh entered the Islamic banking system in 1983, with the establishment of Islami Bank Bangladesh Ltd.
Since then, eight more full-fledged private Islamic banks and 23 Islamic banking branches of conventional banks have been established. Currently, Islamic banks hold 24 percent of total banking deposit and have around 10 percent of the total bank branches.
The combined share of Islamic banks (excluding Islamic banking branches/windows of conventional banks) is 16.85 percent in assets, 19.85 percent in investments (loans), 14.3 percent in equity and 17.1 percent in liabilities as of December 2012, according to the Financial Stability Report-2012.
International Finance Investment and Commerce Bank Ltd (IFIC Bank) was set up in 1976 as a joint venture between the government and sponsors in the private sector with the objective of working as a finance company within the country and setting up joint venture banks/financial institutions aboard.
In 1983, when the government allowed banks in the private sector, IFIC was converted into a full fledged commercial bank.
The government holds 32.75 percent of the bank, directors and sponsors 11.31 percent, institutions 33.91 percent, foreign investors 0.28 percent and the rest 21.75 percent is held by the general public, according to the DSE website.
(The Daily News / 21 Nov 2013)---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com