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For the first time in the country, the government launches the Islamic bond ‘Sukuk’. The Tk 4 billion bonds will be launched in the first phase by auction on Monday.
The government has decided to release the bonds to cover the cost of various development projects. Through this, a new field of legal and safe investment is being created in the country. Because any individual-national-foreign institution can invest in this bond.
Officials said the introduction of the bonds would reduce dependence on government debt from conventional banks. With that the interest will also go down. The pressure from conventional banks to finance the government will also be reduced. Opportunities will be created for Islamic banks to invest lazy money. On the other hand, the implementation of the monetary policy of the Bank of Bangladesh will also be easier.
It is known that the government has decided to introduce this bond worth Rs 8 billion Tk against the assets of the “Nationwide Safe Water Supply Project” of the Public Health Engineering Department. The Bank of Bangladesh will release this bond in two phases at a cost of Tk 4,000 crore. Except for this project, the link has been named ‘Ijara Sukuk’.
An investor can invest a minimum of 10 lakhs. The term of the bond will be five years. The estimated annual profit rate has been set at 4.89 percent. These benefits will be paid semi-annually.
Roop Ratan Pine, General Manager, Debt Management Department, Bangladesh Bank, told Kaler Kanth, “Today, in the first phase, an auction has been called for the issuance of ‘Ijara Sukuk’ with a face value of Tk 4,000 crore. National and foreign individuals and institutions may submit their offers in multiples of at least Tk 10,000 crore through banks and financial institutions that have checking accounts with the Bangladesh Bank. Banks and financial institutions will be able to present their offers themselves in the same way. The necessary preparations have been completed in this regard.
On October 8, the Ministry of Finance issued a policy on Sharia-based bonds. The central bank issued the policy titled ‘Bangladesh Government Investment Sukuk Guideline 2020’ in a circular on October 21. On Tuesday, a bilateral agreement was reached between the Bangladesh Bank and the Finance Department to issue ‘Sukuk’ bonds on the market.
‘Sukuk’ is an Arabic word, which means a legal document that grants rights and responsibilities to someone by affixing a seal. However, there is a difference between conventional links and ‘sukuk’ links. Conventional bonds do not comply with Sharia because they are based on interest. And ‘sukuk’ is an investment that guarantees ownership of assets. Usually sukuk holders get ownership of the property and make profit.
Bangladesh Bank says that from now on, in addition to existing treasury bills and savings bonds and certificates, these Sharia-compliant bonds will also be a new source of funding for the government, to be spent on development activities.
Advantages of the government: To cover the budget deficit, the government could only borrow from conventional banks for a specified time. But a third of the country is Islamic banking. The government could not take any loans from there because there was no Shariah-based material. For the sake of Islamic bonds, now there is also the opportunity to borrow from there. This will balance the indebtedness of the banking system and reduce the government’s dependence on conventional banks. At the same time, the cost of paying interest on the loan will also decrease.
Islami Bank Advantages: Among institutional investors, the advantages of Islamic-style banks will be greater. Because the introduction of these bonds will create opportunities for Islamic banks to invest lazy money. This will also increase your earnings. Also, it will be easier to maintain a mandatory legal deposit (SLR) with the central bank.
Advantages of the Bank of Bangladesh: The Bank of Bangladesh has been able to implement its repurchase and reverse repurchase activities with conventional banks for so long, but it was not possible to do so with Islamic banks. As a result, the central bank had to rely on conventional banks to implement monetary policy. Now Bangladesh Bank will be able to complete such activities with Islami Bank thanks to the ‘Sukuk’ bonus.
Advantages of ordinary people: There are many people who are not interested in being interested. As a result, they simply drop the money. They will be interested in investing here, as the ‘Sukuk’ bonds are issued in accordance with the Shariah. Also, those who carry out interest-based transactions, there is no obstacle to investing in this bond.
Mudaraba (profit sharing), Musharaka (profit and loss sharing), Murabaha (profit sharing), Ishtisna (product making), Karj Hasan (good credit), Salam (advance purchase) and leasing (rent) in different countries around the world, Bangladesh Bank officials said. ) ‘Sukuk’ is common. Malaysia is currently number one in the world in terms of issuing these bonds.
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