BB fixes quotas for sukuk bond allocation

Bangladesh Bank yesterday fixed quotas for allocating sukuk bonds among Shariah-based banks, financial institutions, insurance companies and individual investors. 

A sukuk is a Shariah-compliant bond-like instrument used in Islamic finance. Bangladesh issued its first sovereign investment sukuk in December 2020.

A central bank notice said 85 percent of the allocation would be for Shariah-based banks, financial institutions and insurance companies.

About 10 percent will be allocated for Islamic branches and windows of conventional banks.

The remaining 5 percent will be for individual investors, provident fund and deposit insurance.

All conventional banks, financial institutions and insurance companies will be able to attend sukuk auctions.

In cases where the bids exceed the quotas or when there is a lack of bids, the sukuk bonds will be allocated proportionately, meaning on a pro rata basis, among all the bidders.

Till June last year, the government issued sukuk bonds worth Tk 18,000 crore, as per the BB data.

To avail the sukuk bonds, Shariah-based Islamic banks invested Tk 12,895 crore, Islamic branches and windows of conventional banks Tk 1,998 crore, conventional banks Tk 2,899 crore, life insurance companies Tk 4.36 crore and individuals Tk 206 crore.