Islamic banking practice in Bangladesh

Abstract

In tandem with the global rapid expansion of Islamic banking, Bangladesh has experienced phenomenal growth in Islamic banking following strong public demand for the system. Since its inception in 1983, Islamic banking industry has recorded robust performance and the industry now accounted for more than twenty percent market share of the entire banking industry in Bangladesh. Though Islamic banking industry in Bangladesh has achieved more than 20 percent annual growth, the industry has immense potentials for further expansion as Bangladesh is a Muslim majority country with a vibrant economy of 6 percent real economic growth over the last decade. To reap the full potentials of Islamic banking, it is imperative to assess the present status of Islamic banking industry in Bangladesh. Given this, the present paper investigated the present status of Islamic banking industry and it also assessed its comparative performance with overall banking industry. To attain the objectives of the paper, required information/data have been collected from the secondary sources and financial ratio analysis approach has been applied. Finally, the paper shed light on challenges faced by the Islamic banking industry and prescribed policy options to meet the challenges.