http://www.thefinancialexpress-bd.com/search_index.php?page=detail_news&news_id=57486
Sonali, Janata to introduce Islami banking in March
Mushir Ahmed
State-owned banking giants Sonali and Janata would introduce Islamic banking in March this year, switching to dual financial system to keep pace with the fast-growing Sharia-based banks in the country, officials said Friday.
Deputy managing director of Sonali Bank Prodeep Kumar Dutta told the FE the central bank has approved introduction of Islamic banking operations in five branches each for Sonali and Janata Bank Limited.
Janata Bank chief executive officer SM Aminur Rahman also told an internal meeting Thursday that his bank — the second biggest with 848 branches and 13234 employees — would also launch Islami banking system in the country.
“We have sought to launch Islamic banking system in our 30 branches. But the Bangladesh Bank has initially approved five branches — one in Dhaka and the rest in district cities,” Dutta said.
Sonali, has already trained a group of officers on Sharia-based banking system and would constitute Sharia board in February before launching a full-fledged Islamic banking operation early March, Dutta said.
Made private limited company in late 2007 as part of IMF-prescribed reforms, Sonali is still the largest bank in the country, employing 22,181 people and operating 1,183 branches in almost every nook and corner of the country.
But the bank is fast losing its share to private banks led by the Islami Bank Bangladesh Limited (IBBL). Last year its operating profit stood at Tk6.42 billion, which is 23 per cent less than that of IBBL.
Dutta said Islamic banks’ fast growth coupled with rising shares in remittance forced the Sonali management to make foray into the new financial system.
“Bangladeshi people are very religious. As a result, Islamic banks in the country are growing fast, forcing other private banks to rethink their business strategy,” Dutta said.
Launched in 1984, Islamic banking system has enjoyed a rapid growth in Bangladesh where 90 percent people are Muslim, with the private IBBL emerging as the biggest bank after Sonali and Janata.
Deposits of the Sharia-compliant banks have grown 21 per cent to 24.4 per cent of the total banking deposits, or Tk347.30 billion, in the 2007-8 financial year.
During the same period deposits in the conventional banks grew only 15 per cent, according to the figures released by Bangladesh Bank.
As of June 2008, six private banks out of the country’s 48 commercial banks operate as full-fledged Islami banks. Ten other conventional banks also have Islamic banking facilities they provide through 21 branches
The Sonali deputy chief said Islamic banks’ rising share in remittance also prompted some banks to launch Sharia-based banking.
“Islamic banks are eating into the markets that have traditionally been controlled by state-owned banks. In remittance IBBL’s share has risen tremendously in the past few years,” Dutta said.
IBBL with its 196 branches handled 23 per cent of US$8.9 billion remittance sent by Bangladeshis living and working abroad in 2008 calendar year.
Sonali with nearly six times more branches handled only 14 percent of the amount, some four per cent less than the amount it handled in 2007.
