BB raises Sukuk allocation for Islamic banking units to 80%

Bangladesh Bank has increased the share of Sukuk set aside for Islamic branches and windows of banks and financial institutions to 80 percent from 70 percent.

In a circular issued today, the central bank said the Sukuk being issued will be allocated in favour of Islamic branches and windows of Shariah-based banks, finance companies, and insurance companies, along with conventional banks running Islamic units.

Of the remainder, 5 percent has been earmarked for conventional banks, financial institutions, and insurers, down from 10 percent.

The remaining 15 percent will be offered to individual investors, provident funds, deposit insurance schemes, investment companies, corporate institutions, gratuity funds, mutual funds, and other similar entities, compared to 20 percent previously.

Sukuks are Shariah-compliant financial certificates, often described as the Islamic equivalent of bonds.

The banking regulator also outlined the procedure for the allocation process.

If bids exceed the prescribed ceiling in all three categories, allotments will be made to bidders in each group in proportion to their submitted bids.

However, if bids fall short of the quota in any category, the unsold Sukuk will be distributed among bidders in the remaining categories—prioritising higher bidders—in proportion to the size of their submitted offers.