Amid the rapid and sustained expansion of Islamic banking in Bangladesh, leading academics, regulators and financial sector experts have stressed the urgent need to strengthen Shariah governance frameworks in order to enhance transparency, reinforce credibility and preserve long-term public confidence in the industry.
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, academics and industry practitioners to assess the current state of Shariah compliance and governance practices across the country’s Islamic banking sector.
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Growing importance of governance standards
Professor Dr Md Shihab Uddin Khan, Director of BIBM, emphasised that the continued expansion of Islamic banking makes robust Shariah governance more critical than ever. He stated that adherence to Islamic financial principles is not merely a regulatory formality, but a foundational requirement for sustaining depositor trust and investor confidence in the sector.
Delivering the inaugural address, Nurun Nahar, Deputy Governor of the Bangladesh Bank and Chairperson of BIBM’s Executive Committee, underscored the importance of strengthening governance mechanisms. She highlighted that Shariah compliance frameworks must go beyond procedural checklists and reflect a deeper institutional commitment to Islamic ethical and financial values.
In his presidential remarks, Dr Md Ejazul Islam, Director General of BIBM, provided a broader interpretation of governance, stating that Shariah oversight extends well beyond technical compliance. He noted that it encompasses institutional culture, professional expertise, depositor protection, transparency and ethical accountability. According to him, the credibility of Islamic banking institutions depends on how effectively these principles are embedded into daily banking operations.
Rising demand and increasing responsibility
Islamic banking in Bangladesh has expanded significantly in recent years, driven by both financial inclusion and strong religious considerations among depositors. As a result, customers increasingly expect not only competitive financial returns but also strict adherence to Shariah principles.
This dual expectation places additional responsibility on banks to ensure that governance frameworks are both rigorous and consistently applied. Experts at the seminar warned that any gaps in compliance could undermine confidence in the sector, which has become an increasingly important component of the national financial system.
Key themes discussed
| Area of Focus | Key Observations |
|---|---|
| Shariah Governance | Central to ensuring trust, compliance and credibility |
| Institutional Culture | Must align with Islamic ethical principles |
| Depositor Protection | Essential for sustaining public confidence |
| Regulatory Oversight | Requires greater consistency and enforcement |
| Professional Competence | Skilled expertise necessary for effective compliance |
| Transparency & Accountability | Fundamental for long-term sustainability |
Research findings highlight gaps
The keynote paper was presented by a research team led by Dr Md Mahabbat Hossain, Associate Professor at BIBM. The study offered a comprehensive evaluation of Shariah governance practices across Islamic banks in Bangladesh, identifying both strengths and systemic weaknesses.
While acknowledging progress in formal compliance structures, the research highlighted persistent gaps in standardisation, monitoring systems and institutional capacity. It recommended reforms aimed at improving consistency across banks and strengthening supervisory mechanisms to ensure uniform implementation of Shariah principles.
Panel calls for coordinated reform
The discussion panel included several prominent figures from the financial sector, including 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 stressed the importance of aligning Bangladesh’s Shariah governance framework with international best practices while addressing domestic operational challenges. They cautioned that inconsistencies in interpretation and implementation across different Islamic banks could weaken the sector’s credibility if not properly addressed.
A recurring concern raised during the discussion was the need for stronger coordination between regulatory authorities and individual banks. Participants argued that a unified and transparent governance approach would enhance accountability, reduce systemic risks and improve overall financial stability.
Outlook for Islamic banking in Bangladesh
The seminar concluded with broad consensus that the future growth of Islamic banking in Bangladesh will depend not only on market expansion but also on the strengthening of governance structures. Experts emphasised that in an increasingly competitive financial environment, maintaining depositor trust will be essential for 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 supports its expansion. Conversely, with comprehensive reforms and stronger institutional discipline, Islamic banking in Bangladesh has the potential to emerge as a regional model of ethical and sustainable finance.