Prospects of Sukuk Bonds in Bangladesh

Abstract

Sukuk has gained importance as a global financial instrument that offers financing to both the private and public sectors. Our analysis intends to determine the prospects of Sukuk bonds in Bangladesh using a descriptive analysis. The Muslim population, the size of the economy, the size of Islamic banking and excess liquidity of Islamic banks, per capita income, institutional infrastructure, the formation of a national Shariah board, and the increasing trend of Shariah-based indexes both in Dhaka and Chittagong stock exchange all these enhanced the necessity of Sukuk issuance in Bangladesh according to our studies. The Maiden Sukuk, announced in Bangladesh in 2020, was approximately four times oversubscribed, while the second auction was nearly eight times oversubscribed. Our study suggests that institutional capacity and market infrastructure for Sukuk be developed. In this scenario, an Islamic capital market as well as a Shariah-based regulatory and supervisory structure for Sukuk should be implemented.