Bangladesh is preparing to introduce Shariah-based short-term government bills at the beginning of 2026, marking a significant milestone in the country’s financial landscape. Bangladesh Bank is now working through the technical frameworks required to issue these instruments, which are expected to create a new, confidence-boosting investment channel for a wide variety of market participants.
A policy-level green signal was given during a meeting of the Cash and Debt Management Committee (CDMC) on 11 November, according to senior officials at the Finance Division. This is the first time the government has moved to develop a structured short-term Shariah-compliant bill to raise funds for public expenditure.
These upcoming instruments will have tenures of three months, six months, and one year, aligning with global models of Islamic money-market tools. The proceeds will be used strictly for social development projects, ensuring that both the use of funds and the profit-sharing mechanisms remain compliant with Islamic financial principles.
Market experts believe these bills will fill a long-standing gap. Although Bangladesh previously introduced Islamic bonds (sukuk) from late 2020 to 2022, short-term Shariah-compliant assets have been absent from the market. This left Shariah-based banks with limited investment avenues, especially as they are unable to participate in traditional treasury bills and bonds.
Recent turbulence in the Islamic banking sector has hastened the need for an alternative. Confidence dipped when the five Islamic banks that were later merged struggled to meet depositors’ withdrawal demands. Many customers shifted deposits elsewhere, and some complaints remain unresolved. As a result, public trust—crucial for Islamic banking—was strained.
Economists emphasise that the new bills could play a repairing role. Former World Bank economist Dr Zahid Hussain noted that a substantial portion of the population prefers Islamic financial products, but until now, suitable instruments were scarce. The introduction of Shariah-based bills, he said, not only diversifies investment opportunities but also strengthens the credibility of the entire Islamic finance ecosystem.
Traditional banks have long benefitted from investing in treasury bills and bonds, and this has significantly bolstered their profitability. For example, BRAC Bank’s investment income surged to Tk 2,880 crore in 2024, nearly four times the figure recorded just two years earlier. In the first nine months of 2025, the bank posted a 50% year-on-year rise in net profit, even as its core interest income fell.
The government expects similar enthusiasm for the new Islamic bills. According to central bank officials, the demand already exists among individual investors, Islamic banks, financial institutions, insurance companies and even conventional banks with Islamic windows. The authorities hope to roll out the first batch before or during Ramadan next year.
With this initiative, Bangladesh is poised to diversify its financial products while promoting stability and inclusivity within the banking sector.