Islamic Bank’s Success Story — in Bangladesh




 In 1983 Islami Bank Bangladesh Limited (IBBL) became the first interest-free Shariah-based bank to have been established in South and Southeast Asia.

According to a report posted on the bank’s website, IBBL started operations with an authorized and paid-up capital of 500 million taka and 67.50 million taka respectively. The capital is divided into ordinary shares of 1,000 taka each. The paid-up capital of the bank was enhanced to 640 million taka in 2001.

Of the 79,500 ordinary shares of the bank in 1985, foreign sponsors, including the Jeddah-based Islamic Development Bank, owned 56,000, while local sponsors and the general public owned 23,500 shares. The Investment Corporation of Bangladesh was allocated 20 percent of the bank’s issued capital, but the corporation subscribed shares of 0.5 million taka only. The bank is listed on both Dhaka and Chittagong stock exchanges.

The brain behind the bank was the late Fouad Abdul Hameed Al-Khateeb, Saudi Arabia’s first ambassador to Bangladesh (1977-1982). He mobilized a group of entrepreneurial Saudis and other industrialists from the Gulf to launch the financial institution. Another founder was Dr. Ali S. Al-Ghamdi, who was posted at the Saudi Embassy in Dhaka in the 1980s.

With more than 150 branches spread throughout the country, the bank has become a phenomenal success story and a role model for other Islamic banks.

At a Bangladeshi community gathering in Jeddah on Saturday night, Al-Ghamdi recalled how people would laugh at the idea of an Islamic bank in the 1980s.

“Islamic banking was unheard of in those days. I would meet so many Bangladeshi professionals — doctors, engineers, teachers, etc. — and they would all laugh when the idea of Islamic banking was discussed,” he said.

That was then. Al-Ghamdi said he recently met one of those Bangladeshi professionals.

“He talked enthusiastically about his investments in Islami Bank Bangladesh Limited. He told me he was making good money on his investments in the bank,” Al-Ghamdi said with a chuckle. “This is a source of pride for all of us, especially those of us who were associated with it in its embryonic stage.”

Mominul Islam Patwary, the executive committee chairman of the bank in whose honor the event was organized, said what was once an unheard of idea has become a welcome option for Muslims.

“Islamic banking,” Patwary said, “is no longer an alien concept. The idea has proved to be very successful and now that Islamic banks are available there is no reason for us to deal with regular banks. Earlier, there were no options. Now we have a choice. All the major banks are now coming up with Shariah-compliant instruments. This indicates that Islamic banking is here to stay.”

Al-Ghamdi reminded the gathering that the idea behind the bank was not to make money.

“It was certainly not a commercial venture. All those businessmen who came forward at the urging of Fouad Al-Khateeb did so out of their love and responsibility toward their religion and their brethren in Bangladesh. Material benefit was not on anybody’s mind. That it would be such a huge commercial success was something that nobody really imagined. We are glad we took that crucial and all-important first step and the rest, as they say, is for you to judge,” Al-Ghamdi said.

Al-Ghamdi pointed out that Islami Bank Bangladesh Limited should not be merely seen as a bank.

“It is an institution in itself. It is a charity institution, a medical institution, and a cultural institution. The bank is playing an important role in almost every aspect of the lives of Bangladeshis,” he said while exhorting everyone to join the institution and support it by either opening accounts at the bank or purchasing its shares.

Patwary listed the bank’s many achievements and answered many questions from the Bangladeshi expatriates at the gathering. He recalled one particular episode with pride.

“One of the government ministers told us to take charge of the government-run Krishi Bank. Why? Because he said it had become a burden on the government? And why us? Because he said we demonstrated how to run a bank successfully. This is a matter of great pride,” Patwary said.

He said the bank is committed to conducting all banking and investment activities on the basis of an interest-free profit-loss sharing system.

“In doing so, it has unveiled a new horizon and ushered in a new silver lining of hope toward materializing a long-cherished dream of the people of Bangladesh for doing their banking transactions in line with what is prescribed by Islam,” Patwary said.

He said when people talk of Bangladesh they inevitably talk about the high level of corruption.

“Here we are, running the bank with no stain of corruption. Transparency has been and is the key to our success. We have become the role model for others. And for no small reason, we are the No. 2 bank in the private sector. You can check out our results on our website anytime (”

Ashraf Uddin, the Bangladeshi consul general in Jeddah, acknowledged the bank’s contribution in the development of the country. “It is beyond the pale of doubt,” he said.

Responding to some mild criticism from the community members that he was not proactive in promoting the bank here in Jeddah, Ashraf Uddin said as a diplomat he has certain bindings. “Since I am diplomat, I cannot support any specific bank. However, I have always openly supported the concept of Islamic banking,” he said.

Ashraf Uddin also praised the bank’s representative in Jeddah. “Mosharraf Hossain is the right man for the right job. He created a lot of visibility for the bank in Saudi Arabia,” the consul general said.

The two sons of Fouad Al-Khateeb — Muhammad Al-Khateeb and Abu Bakr Al-Khateeb — spoke about their late father’s vision and recalled how he would always talk about it in the 1980s.

“He was very confident of the bank’s success but he had a tough task in explaining his idea to others,” recalled Muhammad Al-Khateeb who is the member of the bank’s board of directors. “The bank helped us win the trust of the good people of Bangladesh.”

Abu Bakr Al-Khateeb, who is the senior general manager (engineering) at United Sugar Company, spoke in Bengali amid loud cheers from those present. He too recalled his father’s passion for doing something good for Bangladesh.

“He would always be busy thinking about giving the project a practical shape. It is a moment of pride for us as the bank marches ahead,” he said.

Abdullahil Mamoon Al-Azami, community development specialist at the IDB, recalled the contribution of the Al-Khateebs in the development of Bangladesh.

“Ustaz Fuad Al-Khateeb was a great man, a visionary. He thought about an Islamic bank at a time when nobody would give it a second thought,” he said.

Al-Azami is highly respected by the Bangladeshi community and is the son of professor Ghulam Azam, the former chief of Jamaat-e-Islami, Bangladesh. “We all should support the bank not only by opening accounts in the bank but also by generating ideas. That can also be a wonderful contribution,” Al-Azami said.

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