Sukuk, often referred to as Islamic bonds, are Shariah-compliant financial instruments used to raise capital while adhering to Islamic law, which prohibits interest (riba). Instead of debt obligations, Sukuk represent partial ownership in tangible assets, projects, or investment activities.
In Bangladesh, the development of the Sukuk market is relatively recent but growing steadily. The country issued its first government-backed Sukuk, called the Bangladesh Government Investment Sukuk (BGIS), in 2020. This landmark issuance — valued at BDT 80 billion (approximately USD 948 million) — aimed to finance a specific infrastructure project, namely the "Safe Water Supply Project Across the Country." The Sukuk was structured based on the Ijara (leasing) model, a widely accepted form of Sukuk globally.
Key Features
- Shariah complaint attractive profit
- Profits and maturity proceeds (after tax deductions) can be repatriated abroad in foreign currency for non-resident investors
- Profits are paid semi-annually as per the prospectus.
- Sukuk is tradable based on prospectus terms.
- Supervised by the central bank’s Shariah advisory committee to ensure adherence to Islamic principles.
- Strong support from Bangladesh Bank and the Ministry of Finance to develop the Islamic finance sector.
- Sukuk offers an alternative investment avenue for both institutional and retail investors, encouraging broader participation in the financial market.