Experts Urge Stronger Shariah Governance In Islamic Banking

Amid the rapid expansion of Islamic banking in Bangladesh, leading experts and regulators have called for stronger Shariah governance frameworks to ensure transparency, credibility, and sustained public confidence in the sector.

The call was made during a seminar titled “Shariah Governance in Islamic Banks of Bangladesh: An Evaluation”, held at the auditorium of the Bangladesh Institute of Bank Management in Mirpur on Monday. The event brought together policymakers, academics, regulators, and industry practitioners to examine the current state of Shariah compliance and governance practices within the country’s Islamic banking system.

Professor Dr Md Shihab Uddin Khan, Director of BIBM, emphasised that as Islamic banking continues to grow in scale and significance, it is imperative to reinforce Shariah governance mechanisms. He noted that ensuring strict adherence to Islamic principles is not only a regulatory requirement but also fundamental to maintaining trust among depositors and investors.

Delivering the inaugural address, Nurun Nahar, Deputy Governor of Bangladesh Bank and Chairperson of BIBM’s Executive Committee, highlighted the critical importance of robust Shariah governance. She stressed that compliance frameworks must go beyond formal regulatory obligations and reflect a genuine commitment to Islamic ethical and financial principles.

In his presidential remarks, Dr Md Ejazul Islam, Director General of BIBM, provided a broader perspective on the issue. He explained that Shariah governance is not confined to technical compliance alone; rather, it encompasses institutional culture, professional competence, depositor protection, transparency, and ethical accountability. According to him, the credibility of Islamic banking depends heavily on how effectively these elements are integrated into everyday operations.

Bangladesh has witnessed significant growth in Islamic banking over recent years, with a substantial portion of depositors choosing Shariah-compliant financial services not only for economic reasons but also for religious considerations. This dual expectation—financial security alongside adherence to Islamic principles—places added responsibility on banks to maintain rigorous governance standards.

Key Themes Discussed at the Seminar

The keynote paper was presented by a research team led by Dr Md Mahabbat Hossain, Associate Professor at BIBM. The study provided an in-depth evaluation of existing Shariah governance practices across Islamic banks in Bangladesh, identifying both strengths and areas requiring improvement. It highlighted gaps in uniformity, monitoring mechanisms, and institutional capacity, suggesting that reforms are needed to standardise practices across the industry.

The discussion panel featured prominent figures from the financial sector, including Abdul Awal Sarker, former Executive Director of Bangladesh Bank; Mosleh Uddin Ahmed, Managing Director of Shahjalal Islami Bank Limited; and Nabil Ahmed, Executive Director of the Standards Setting Division at the Financial Reporting Council.

Panellists collectively underscored the importance of aligning governance frameworks with international best practices while also addressing local challenges. They pointed out that inconsistencies in Shariah interpretation and implementation across institutions could undermine the credibility of the sector if left unaddressed.

Another key concern raised was the need for greater coordination between regulatory authorities and individual banks. Participants emphasised that a unified and transparent approach to Shariah governance would help mitigate risks, enhance accountability, and strengthen the overall financial system.

The seminar concluded with a strong consensus that the future growth of Islamic banking in Bangladesh will depend not only on expanding market share but also on reinforcing governance structures that uphold both financial integrity and Shariah compliance. As competition intensifies and customer expectations evolve, maintaining trust will be paramount.

Experts agreed that strengthening Shariah governance is no longer optional but a strategic necessity. Without robust oversight, clear standards, and effective implementation, the sector risks eroding the very confidence upon which it is built. Conversely, with the right reforms, Islamic banking in Bangladesh has the potential to emerge as a model of ethical and sustainable finance in the global arena.