Islamic Banking and Finance in Bangladesh: Potential, Challenges and Future Development

Bangladesh has already experienced in potential growth in Islamic banking and finances the rapid expansion of Islamic banking and finance in global banking and finance sector. The aim of this study is to assess the present status, potential and challenges of Islamic banking and finance in Bangladesh. An extensive literature review method has been done with multiple indicators for obtaining research objectives. The study uses secondary data sources like journal article, books, periodicals, newspaper article and websites of the central bank of Bangladesh and other commercial banks. This study is done from November to December 2017. The study reveals that the financial performance of Islamic banks is better than conventional banks. In Bangladesh, Islamic banking and finance has a great potential but still have some challenges like lack of Islamic banking and finance infrastructure, lack of concrete legal basis, low attention from the central bank, lack of Islamic capital market and unavailability of shariah law experts and people’s awareness. This study also explores that the research trend in Islamic banking and finance is still in a poor situation and need to improve. The study suggests that a strong legal framework under central Shariah board should be implemented. It further suggests that proper attention from the central bank, introducing Islamic capital market, sufficient Islamic finance instruments, proper training of Islamic bankers, people’s awareness through a seminar, workshop, TV program and daily newspaper are necessary for the sustainable growth of Islamic banking and finance in Bangladesh.