DBH gets go-ahead to open Islamic financing wing

DBH Finance PLC, the country's largest and specialised housing finance institution, has received the final approval from the Bangladesh Bank to open its Islamic financing wing.

DBH got the approval from the central bank on April 11 to launch the Islamic finance window to offer Shariah-compliant products and services from all of its 14 branches located in all major cities of the country.

In a press release, Nasimul Baten, managing director of DBH, said, "This is a milestone achievement for us. There is a huge demand for Shariah-based products in Bangladesh."

He said DBH Finance has completed its preparation under the guidance of a Shariah supervisory committee.

"Now we are ready to offer Shariah-compliant deposits and housing financing products to cater to the growing need of our clients."

"This will open a new avenue for us and we are committed to delivering the services to our customers in the most compliant manner."

Recently, IDLC Finance Ltd, the largest non-bank financial institution in Bangladesh, received the go-ahead from the central bank to introduce the Shariah-based financing operation.

There are 35 NBFIs in the country. Of them, Islamic Finance and Investment, Hajj Finance and Aviva Finance have full-fledged Shariah-based operations.

The NBFIs are making a foray into a banking segment that is growing at a steady pace in the Muslim-majority country.

Islamic finance bans interest payments, monetary speculation, gambling, short sales, and financing activities that it considers harmful to society. It can only be used to invest in Sharia-compliant assets or portfolios.

In Bangladesh, the market share of Islamic banks has increased in the total banking industry in the past one decade.

At the end of December of 2022, Islamic banks represented 25.81 per cent share in terms of deposits and 29.20 per cent when it comes to investments, data from the Bangladesh Bank said.

It was 23.13 per cent and 23.81 per cent, respectively, in 2017.

At present, nine banks have full-fledged Shariah-based operations and eleven banks have opened Shariah-based branches.

Besides, 14 conventional banks have Islamic banking windows, according to the central bank's latest quarterly report on Islamic banking.

In 2017, seven banks were full-fledged Islamic banks and nine banks had Shariah-based branches. Only eight banks had Islamic banking windows.