Atiur calls for promotion of Islamic microfinance

Bangladesh Bank Governor Dr Atiur Rahman speaking at the 5th Roundtable of the World Islamic Economic Forum (WIEF) at a city hotel Tuesday. — Focus Bangla

FE Report

The Bangladesh Bank Governor called upon the Islamic banks and the Islamic windows of conventional banks in the country to pursue vigorous promotion of Islamic micro and SME finance to attain faster poverty eradication with deeper, wider financial inclusion.

While entering into partnering engagements with Islamic MFIs (Microfinance institutions) and area agents in off-branch locations, they need to exercise utmost care in steering clear of the money laundering, hundi, terrorist financing -- influences that may be active in different regions of the country, Governor of Bangladesh Bank (BB) Dr Atiur Rahman said.

"There is ample room for Islamic microfinance to flourish, given the growing popularity of Islamic finance among both Muslims and non- Muslims," Dr Atiur said.

He was speaking as chief guest while addressing the World Islamic Economic Forum (WIFE) roundtable's second session titled 'Islamic Microfinance: An Instrument for Poverty Alleviation' held in the city Tuesday.

The two-day WIEF roundtable has jointly been organised by WIEF Foundation, the SEACO Foundation with support from the Federation of Women Entrepreneurs, Bangladesh-Malaysia Chamber of Commerce and Industry and the High Commission of Malaysia in Dhaka.

The roundtable began on March 19 with the major objective of strengthening regional cooperation in the South Asian region to address climate change, poverty alleviation and quality higher education.

Managing Director of Islami Bank Bangladesh Ltd Mohammad Abdul Mannan presented a keynote paper, while Vice Chancellor of Asian University, Dhaka, Dr Abul Hasan M Sadeq moderated the programme at the second session.

Dr Dadang Muljawan, Senior Economic Researcher, Islamic Research and Training Institute (IRTI) of Islamic Development Bank (IDB), Saudi Arabia, Datuk Hajah Zabidah Ismail, Managing Director of Amanah Ikhtiar Malaysia, Nadeem Hussain, Chief Executive Officer of Tameer Micro Finance Bank Ltd, Pakistan and Nurul Fazal Bulbul of Association of Banks, Bangladesh, were present at the session as panelists.

"Islamic banking has been thriving in the vibrantly growing Bangladesh economy now comprising one-fifth of the total banking sector assets and liabilities," the central bank chief said.

According to available data, Islamic microfinance amounting to Taka 46.2 billion up to the end of December 2011 constituted 8.38 per cent of total Islamic financing, increasing sharply from a mere Taka 2.8 billion or 0.93 per cent of the total Islamic financing as of the end December 2009.

The number of microfinance clients has risen to 448734 as of the end of December 2011, from 211197 as of the end December 2009, he added.

Bangladesh Bank is also supporting and encouraging the development of a local Islamic money market, he said adding some recent proposals for modification in the Bangladesh Government Islamic Bond Rules to this end were awaiting formal approval of the government.

Atiur Rahman said, IDB (Islamic Development Bank) has embarked upon its Microfinance Development Programme (IDB-MDB) which has three objectives: poverty reduction, providing access to Islamic finance for the poor in IDB member-countries and development of the Islamic Financial Services Industry (IFSI).

In this context, IDB wants to establish an Islamic Microfinance Institution (IMFI) in Bangladesh partnered with renowned local and international financial institutions having considerable technical expertise in Islamic microfinance, which will be the first such institution of its kind, the BB Governor said.

"Bangladesh Bank has given no objection to the idea," he added.

Mr Mannan while presenting his keynote paper suggested introducing integrated models such as microfinance, zakah and awqaf, targeting the extreme poor and portfolio diversification and ensuring financial inclusion for poverty alleviation.

Explaining Islamic microfinance, he said, "It is a tool of satisfying the financial needs of the poor following Shariah principle with a form of socially responsible investment and a target group approach under Islamic financing modes."

Two other sessions titled 'Regional Cooperation to Combat Climate Change: The Way Forward' and 'Private Higher Education: Creating World Class Institutions through Regional Cooperation' were also held.