Amid the rapid and sustained expansion of Islamic banking in Bangladesh, leading academics, regulators, and financial sector specialists have emphasised the urgent need to strengthen Shariah governance frameworks. They argue that enhanced oversight is essential to improve transparency, reinforce institutional credibility, and sustain long-term public confidence in the sector.
The call was made at a seminar titled “Shariah Governance in Islamic Banks of Bangladesh: An Evaluation”, held on Monday at the auditorium of the Bangladesh Institute of Bank Management in Mirpur. The event brought together policymakers, central bank officials, researchers, and industry practitioners to evaluate the current state of Shariah compliance and governance practices within Bangladesh’s Islamic banking system.
Growing importance of governance standards
Professor Dr Md Shihab Uddin Khan, Director of BIBM, highlighted that the continued expansion of Islamic banking has made strong Shariah governance more important than ever. He noted that compliance with Islamic financial principles is not merely a regulatory requirement, but a fundamental pillar for maintaining depositor trust and investor confidence.
Delivering the inaugural address, Nurun Nahar, Deputy Governor of the Bangladesh Bank and Chairperson of BIBM’s Executive Committee, stressed that governance mechanisms must be strengthened further. She added that Shariah compliance frameworks should move beyond procedural adherence and reflect a deeper institutional commitment to Islamic ethical and financial values.
In his presidential remarks, Dr Md Ejazul Islam, Director General of BIBM, broadened the discussion by explaining that Shariah governance is not limited to technical compliance alone. According to him, it also includes institutional culture, professional expertise, depositor protection, transparency, and ethical accountability. He further observed that the credibility of Islamic banking institutions depends on how effectively these principles are embedded into day-to-day operations.
Rising demand and increasing responsibility
Islamic banking in Bangladesh has expanded significantly in recent years, supported by financial inclusion initiatives and strong religious preferences among depositors. As a result, customers increasingly expect both competitive financial services and strict adherence to Shariah principles.
This dual expectation has placed additional responsibility on banks to maintain robust, consistent, and transparent governance systems. Experts at the seminar warned that even minor weaknesses in compliance or oversight could undermine public confidence in the sector, which now plays a vital role in the country’s financial ecosystem.
Key themes discussed
| Area of Focus | Key Observations |
|---|---|
| Shariah Governance | Essential for trust, compliance, and institutional credibility |
| Institutional Culture | Must align with Islamic ethical and financial principles |
| Depositor Protection | Crucial for sustaining confidence in the banking system |
| Regulatory Oversight | Requires stronger consistency and enforcement |
| Professional Competence | Skilled expertise needed for effective compliance |
| Transparency & Accountability | Core requirement for long-term sector stability |
Research findings highlight structural gaps
The keynote paper was presented by a research team led by Dr Md Mahabbat Hossain, Associate Professor at BIBM. The study provided a detailed assessment of Shariah governance practices across Islamic banks in Bangladesh, identifying both areas of progress and persistent structural weaknesses.
While acknowledging improvements in formal compliance mechanisms, the research highlighted significant gaps in standardisation, monitoring systems, and institutional capacity. It recommended targeted reforms to improve consistency across banks and strengthen supervisory frameworks to ensure uniform implementation of Shariah principles throughout the sector.
Panel calls for coordinated reform
The discussion panel included prominent financial sector figures such as Abdul Awal Sarker, former Executive Director of Bangladesh Bank; Mosleh Uddin Ahmed, Managing Director of Shahjalal Islami Bank Limited; and Nabil Ahmed, Executive Director of the Standards Setting Division at the Financial Reporting Council.
Panellists collectively emphasised the importance of aligning Bangladesh’s Shariah governance framework with international best practices while adapting them to local realities. They cautioned that inconsistencies in interpretation and implementation across Islamic banks could weaken the sector’s credibility if not addressed in a coordinated manner.
A key issue raised was the need for stronger collaboration between regulatory authorities and individual banks. Participants argued that a unified, transparent governance approach would enhance accountability, reduce systemic vulnerabilities, and contribute to overall financial stability.
Outlook for Islamic banking in Bangladesh
The seminar concluded with a broad consensus that the future expansion of Islamic banking in Bangladesh will depend not only on market growth but also on the strengthening of governance structures. Experts stressed that in an increasingly competitive financial environment, maintaining depositor trust will be central to long-term sustainability.
They further agreed that reinforcing Shariah governance is no longer optional but a strategic necessity. Without clear standards, effective oversight, and consistent enforcement, the sector risks undermining the very confidence that has driven its expansion. Conversely, with meaningful reforms and stronger institutional discipline, Islamic banking in Bangladesh has the potential to emerge as a regional benchmark for ethical and sustainable finance.