The tenure of Shariah-based short-term bills generally lasts less than one year. Therefore, plans have been made to introduce Shariah-based short-term bills with maturities of three months, six months, and one year.
Key Points:
The government will introduce Shariah-based short-term bills in early 2026.
The bills will fund social development projects through Bangladesh Bank’s issuance.
The move provides a new investment opportunity amidst mistrust in Islamic banks.
Shariah-based banks gain an alternative to traditional treasury bills and bonds.
Strong market demand is expected from both individuals and financial institutions.
Profits of traditional banks have been boosted recently by treasury bill investments.
The government will issue Shariah-based short-term bills at the start of 2026, marking the first time this initiative will be introduced in the country. For this purpose, Bangladesh Bank is working on ways for the government to raise funds from investors.
On the 11th of this month, a policy decision regarding this matter was made at a meeting of the Cash and Debt Management Committee (CDMC) under the Finance Division of the Ministry of Finance. A senior official from the ministry who attended the meeting confirmed this information to The Business Standard.
The tenure of Shariah-based short-term bills is typically less than one year. Therefore, plans are in place to launch Shariah-based short-term bills with maturities of three months, six months, and one year.
These bills will be issued to fund social development projects. When the government decides to issue bills or bonds, the central bank is responsible for officially releasing them to the market. By issuing bills and bonds, Bangladesh Bank raises funds from the general public, banks, insurance companies, financial institutions, and other entities.
Economists and bankers believe that these Shariah-based bills are beneficial for the economy because they will create an investment avenue for people who follow Islamic Shariah principles. Additionally, because these are short-term bills, investment in this sector is expected to increase.
There has been some mistrust surrounding Shariah-based banks in the country, especially since customers of five Islamic banks, which were due to be merged, were unable to withdraw their deposits on time. Subsequently, many customers withdrew their deposits from Shariah-based banks, and some still have outstanding dues.
For this reason, as an alternative investment sector, these Shariah-based short-term bills will provide a new avenue for investment.
Zahid Hussain, former lead economist at the World Bank Dhaka office, commented, “A large portion of the population in the country believes in Islamic Shariah-based philosophy. This sector will greatly benefit them. There has been a crisis of confidence in Islamic-oriented banks, which has had a significant impact on the economy. Customers had deposited money in these five banks because they trusted them, but due to irregularities, they could not withdraw their funds on time. Once Islamic bills are introduced, a new investment sector will be created.”
He added, “Traditional banks can invest in various sectors, but Shariah-based banks cannot. Therefore, a new sector will open up for Islamic banks. Along with them, Shariah-based financial institutions and insurance companies will also be able to invest in this new sector.”
Merged Banks to Get Opportunity to Invest in These Bills:
Once these bills are introduced, a new investment sector will open up for Shariah-based banks. The newly merged bank formed from the five banks will also benefit from this. A former managing director of an Islamic Shariah-based bank believes this will offer an opportunity for these banks to earn profits by investing in a new sector.
He explained that if Islamic banks cannot provide loans, they have limited options for investing their funds elsewhere. While traditional banks can invest in treasury bills and bonds, Islamic banks currently cannot. Once these Shariah-based bills are introduced, Islamic banks will gain another option, as they will be able to invest depositors’ funds in these bills.
Currently, a large portion of traditional banks’ income comes from investments in treasury bills and bonds.
He added that most banks now generate income from non-operating sources, such as investments in bills and bonds.
A senior official at the central bank mentioned that this initiative is being taken because there is strong market demand for Shariah-based Islamic bills. As such, the bills are expected to be introduced before or during the next Ramadan in 2026.
The official further stated that individuals, banks, financial institutions, insurance companies, and other entities will be able to purchase these bills. The decision to introduce such financial instruments has been made specifically because of the existing market demand for this type of investment.
To raise funds, the government first introduced Islamic bonds in late 2020. After that, Bangladesh Bank issued two additional sukuk—one in December 2021 and another in the first half of 2022. Through these instruments, Shariah-based banks and the Islamic banking windows of commercial banks were able to invest in government securities.
A senior official at Bangladesh Bank noted that while traditional banks can invest in repo, treasury bills, bonds, and other government securities issued by the central bank, Islamic banks cannot do so. Therefore, these new bills will serve as a fresh investment sector for Islamic banks.
Investment in Treasury Bills and Bonds Boosted Profits for Traditional Banks:
A significant portion of traditional banks’ income currently comes from investments in treasury bills and bonds. At the start of 2025, the outlook for Bangladesh’s banking sector appeared bleak—deposit interest rates were rising, inflation remained persistent, loan demand was weak, margins were tightening, and political uncertainty raised concerns of an earnings slump.
However, the opposite occurred. Private banks’ profits not only held steady but grew—particularly those banks considered “good players”. The reason for this growth was not through loan expansion or new business ventures, but rather through substantial income earned from government bonds and treasury bills. Government securities have effectively become a lifeline for banks, transforming the financial health of the entire banking sector.
This change was particularly noticeable in the case of BRAC Bank. Between 2020 and 2022, the bank’s investment income ranged between Tk700 crore and Tk800 crore, but by 2024, this figure surged to a record Tk2,880 crore—a nearly fourfold increase in just two years.
Investment income grew by 67% in 2023 and by a further 127% in 2024, far surpassing the bank’s income from loan interest or other fees.
In the first nine months of 2025, the bank’s net profit increased by 50% year-on-year to Tk1,553 crore. However, during the same period, net interest income (the difference between loan and deposit interest) fell by about 7%, or Tk100 crore.
In other words, income from treasury bill investments helped to keep the bank’s overall earnings stable.
Like BRAC Bank, other banks such as City Bank, Dutch-Bangla Bank, Prime Bank, MTB, and Eastern Bank are also benefiting from income derived from investments in treasury bills and bonds.