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BSEC working to introduce Islamic 'Sukuk' in capital market

DHAKA, April 13, 2018 (BSS) - Bangladesh Securities and Exchange Commission (BSEC) is working to introduce 'Sukuk', an Islamic financial certificate similar to bond, in the capital market for financing the large projects.

"The work is going on to form rules of Sukuk. Recently, we had a meeting with the finance ministry to discuss about Sukuk," BSEC Executive Director M Saifur Rahman told BSS here today.

A technical assistant project has already been approved and the consultants of the project will prepare the rules, he said.

With the support of the Asian Development Bank, the executive director said, the rules will be prepared soon. "After preparing the rules, we can introduce the Islamic financial certificate," he added.

Bangladesh Bank (BB) had earlier suggested BSEC to issue Islamic Shariah compliant investment certificate popularly known as 'Sukuk' in to expedite the country's bond market, according to the BB quarterly report, titled "Capital Market Development in Bangladesh" for October to December 2017.

Talking to BSS, BB Research Department General Manager M Abdul Awwal Sarker said they have suggested BSEC to issue the certificate for financing the large infrastructure projects like in other Muslim majority counties such as Malaysia, Indonesia, KSA, UAE as well as non-Muslim majority countries such as the UK and Singapore.

In the quarterly report, the central bank said though the capital market plays a significant role in economic development by channeling long-term funds from savers to investors, the capital market in Bangladesh is still lagging behind as compared to those of South Asian and Southeast Asian countries.

"Banks play dominant roles in financing economic activities in Bangladesh. However, banks are not in a position to finance long-term productive investment activities continuously because of higher level of non-performing loan and risk of maturity mismatch of funds," it observed.

Given this, the report said, Bangladesh needs to undertake measures to expand capital market for financing productive investments and infrastructural projects.

"To this end, capital market regulator BSEC may undertake some pragmatic steps to ensure good corporate governance and to motivate good companies for floating bonds, shares and continue legal facilitation with more attractive incentives, especially for the foreign participants," it added.