Bangladesh Bank is set to issue its seventh investment Sukuk, worth Tk 2,500 crore, in December to finance the Important Rural Infrastructure Development Project in Noakhali, Feni, and Lakshmipur districts. This move is part of a wider effort to support public infrastructure development while adhering to Shariah-compliant financial practices.
Sukuk, often referred to as an Islamic alternative to conventional bonds, is structured in a way that investors earn profits from real assets or economic activities, rather than interest. The returns come through mechanisms such as profit-sharing or rent, aligning with the principles of Islamic finance.
Unlike traditional bonds, where the issuer borrows money and pays interest, Sukuk involves the financing of tangible assets or projects. In this case, the funds raised by Bangladesh Bank will be used to improve physical infrastructure, including roads, markets, and water systems. Investors will receive profits generated from these assets, typically through lease payments under the Ijarah method.
Sukuk structures can vary depending on the nature of the project. Under the Ijarah model, the asset is leased, and the resulting rent is distributed to investors. Meanwhile, the Istisna model involves constructing an asset, with returns generated once the asset is delivered and put into use.
The introduction of Sukuk addresses the challenges faced by Shariah-compliant banks, which previously had limited investment options due to the interest-based nature of conventional government bonds and Treasury bills. The launch of the “Bangladesh Government Investment Sukuk” in 2020 was a significant step in allowing Islamic financial institutions to participate in government infrastructure projects.
Since then, the government has issued a total of six Sukuk, amounting to Tk 24,000 crore. The new issuance will further bridge the gap between Islamic financial principles and the financing of essential public infrastructure, contributing to the country’s socio-economic development.
This upcoming Sukuk issuance marks a critical milestone in Bangladesh’s efforts to enhance investment in infrastructure while fostering the growth of Shariah-compliant financial instruments.