IN MOTIJHEEL, the main business district in Bangladesh’s capital, Dhaka, an iron fence and terrible traffic divide two branches of the country’s oldest private bank—a “conventional” one and an Islamic one. Abdus Sattar, manager of the Islamic one, says that when he joined AB Bank, in 2005, his was “a loser branch”. Today, like most Islamic banks in the country, it is more profitable and better run than its conventional peers. Islamic banking’s future in the country, however, remains murky.
Bangladesh has eight full-fledged Islamic banks; a handful of orthodox banks, like AB, also offer Islamic-banking services alongside others. Islami Bank Bangladesh, founded in 1983 by Saudi and Kuwaiti investors, commands 90% of Islamic-banking assets and deposits. It is also the biggest private lender overall, with 14,000 staff, 12m depositors and a balance-sheet of $10bn. Its success was built on the “two Rs”: remittances…Continue reading