Islamic finance, which adheres to Shariah principles, is one of the thriving segments of the global financial system. A recent report published by Refinitiv, one of the world’s largest providers of financial market data and infrastructure, postulates that the size of the Islamic finance industry is expected to grow from USD 3.37 trillion in 2020 to USD 4.94 trillion in 2025, representing an annual growth rate of 8% on average over the course of the next five years.
Bangladesh is one of the fastest-growing economies in the world. In line with other economic activities, Islamic finance in Bangladesh has also been witnessing robust growth. The country is among the top ten economies holding the highest Islamic financial assets and is growing above the global average growth rate.
Out of the USD 50 billion Islamic finance market, Islamic banking alone possesses a market cap of USD 48 billion, which indicates that the Islamic capital market, the Islamic insurance (Takaful) market and other areas of Islamic finance have not flourished to the extent of Islamic banking expansion in Bangladesh. Nonetheless, the recent issuance of Sukuk (Islamic bond) by both the public and private sectors, the gradual development of the Takaful market (Islamic Insurance), the penetration of Islamic microfinance to the doorsteps of marginalised people, and the advent of Islamic FinTechs indicate that other areas of Islamic finance have a bright future.
Considering the high market demand and growth potential of Islamic finance in Bangladesh, different financial institutions are trying to offer innovative Islamic financial products and services to their clients. Undoubtedly, this growth momentum of Islamic finance indicates that our financial ecosystem is en route to new horizons.
Md. Shah Jalal
Assistant Manager
IDLC Finance Ltd.
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