Expansion of Sharia Banking in Bangladesh

Salah Uddin Shoaib Choudhury

In Britain, Islamic and Sharia banking has been spreading wings, especially in past
five years. A report by International Financial Services London reveals that Britain's
Islamic banking sector is now bigger than that of Pakistan. The study says that the
UK now has by far the largest number of banks for Muslims of any western country.
The UK now has five fully 'Sharia-compliant' banks - providing products which
prohibit interest payments and investment in alcohol or gambling firms in
accordance with Islamic Sharia law - while another 17 leading institutions including
Barclays, RBS and Lloyds Banking Group have set up special branches or subsidiary
firms for Muslim clients.
The $18 billion [12bn] in assets of Britain's Islamic banks are said to dwarf those of
Muslim states such as Pakistan, Bangladesh, Turkey and Egypt. There are also 55
colleges and professional institutions in Britain, offering education in Islamic finance
- more than anywhere else in the world. This development has been actively
pushed by the government. As Chancellor of the Exchequer, Gordon Brown declared
that he wanted London to become the global centre of Islamic banking.
The spread of Sharia banking in Britain and America is a significant part of the
attempt to Islamise Britain and America. Acceptance of Sharia finance furthers the
Islamist objective of gradually legitimising Islamic Sharia law more generally in the
West. The point which is being missed is that all who use it must conform to the
dictates of Sharia law. Sharia financial institutions may not be making this clear now
- they do not want to frighten people away - but at some point, that IOU of Shariacompliance will be called in, to spread Sharia-compliance to both the Muslim and
non-Muslim population.
Any Western institution that endorses Sharia-compliant products, therefore, whether
it knows it or not, effectively endorses the extremist ideology behind it, of
conquering the West for Islam.
The most important point to grasp, however, is that Islam recognises no authority
superior to Sharia law. Sharia banks will therefore not recognize the superior
authority of the law of the land. When trillions of pounds and dollars are locked into
them, who will argue with them?
Even more troubling is the potential cover provided by Sharia finance for the
financing of terrorism. Sharia law requires Muslims to donate as a tithe a percentage
of their money to charity, called 'Zakat.' There is roughly US$ 3.5 billion donated by
Muslims as 'Zakat' [Islamic Charity]; the use of these monies, as per provisions of
Islam, is in spreading the words of this religion. For this reason, a vast segment of
Zakat funding goes to toward patronizing pro-Islamist -- or even pro-Jihadist -media internationally. In a poor and least-developed country like Bangladesh, the
annual amount of Zakat paid by the rich classes exceeds US$ 400 million -- some of

which is donated to Islamic charities promoting jihad, and supporting suicide

bombing. such as Hamas, Hezbollah, the families of Palestinian suicide bombers,
and Islamist madrassas.
Islamic politics will soon be banned in Bangladesh the third largest Muslim nation,
with a population of 150 million. According to official sources, the government is in
the process of restoring secularist democracy to the country by scrapping several
provisions in the Constitution, which were incorporated mostly by former military
regimes. As a possible pre-action of this plan, the government recently banned the
publication and distribution of books by Moulana Abul Ala Moududi, the founder and
formulator of Jamaat-e-Islami's politics in the region as well as globally.
Once the government revives the Constitution of 1971, all forms of Islamist politics
-- as well as formation of any groups on the basis of religion -- will become illegal.
Moreover, the government will remove Islam from being the 'State Religion' of
Bangladesh as in the amended constitutional provisions by the military dictators. At
this juncture, many are raising the question as to whether secular Bangladesh will
also ban Islamic or Sharia banking in the country.
Sharia banking began in Bangladesh in 1983, when the politics of Jamaat-e-Islami
re-started. This party was banned from any political activities in Bangladesh, as it
had opposed Bangladesh's War of independence. Islamic, or Sharia, banking in
Bangladesh began under the banner of Islamic Bank Bangladesh Limited,
considered an economic subsidiary of Jamaat-e-Islami. The bank started its
operation on March 13, 1983 with an authorized capital of TK. 10,000 million [US$ 1
= TK. 70], and has, in past 27 years, invested more than TK. 255,178 million in
various projects and businesses in the country. It now has more than 500 branches
in Bangladesh, with a number of overseas outlets in several Middle Eastern
countries.
Following the huge success story of Islamic Bank Bangladesh Limited, a number of
private banks opted for either Sharia banking, or opened several branches with
Sharia banking provisions. According the Central Bank of Bangladesh, more than
45% of the total financial institutions in the country have already gone over to the
Sharia finance system. Prominent Sharia banks in Bangladesh include Al-Arafah
Islami Bank, First Security Islamic Bank, ICB Islamic Bank, Export-Import Bank of
Bangladesh, Shahjala Islamic Bank, Arab-Bangladesh Bank [with a Sharia branch],
Standard Chartered Bank [Saadiq Islamic Banking Branch], and Bank Asia.
Western banks, such as Standard Chartered and Citibank have also stepped into
Sharia-compliant microfinance banking for the needs of millions of Muslims, who
had been financially excluded because of Islam's prohibition on interest.
Citi Islamic Investment Bank E. C. [CIIB] was incorporated in July 1996 in Bahrain, as
a 100%-owned subsidiary of Citicorp Banking Corporation. CIIB operates as the
dedicated Islamic Banking vehicle of Citi, and continues the pioneering and
innovative role that Citi has been playing in the industry for almost 25 years
through Islamic Finance windows within Citi.

Citi Islamic Investment Bank's core Islamic banking business has been the initiating,
structuring and distribution core of Islamic banking transactions in trade finance,
structured trade finance, leasing, fund management and Islamic securities. Issuers
from many countries -- including Brazil, Korea, Turkey, Egypt, Mexico, South Africa,
Pakistan, India, and Bangladesh -- have been introduced to the Islamic banking
market. CIIB has achieved an annual turnover of several billion US Dollars in
Islamically structured assets by drawing on its knowledge of the Islamic banking
market, its strong investor relations, and the global presence of Citi. Going forward,
with a proven track record, a reputation for product innovation and an even stronger
global Franchise of Citi, CIIB remains uniquely positioned to serve the needs of
Islamic customers through diverse investment alternatives.