Well, I’m not a specialist on banking and precisely Islami or Sharia-based banking. But a recent comment by the country’s finance minister has stunned me. I demand that the issue is clarified by the government and the state recognises and adopts the true path in line with the constitution.
I know we’ve a lot of crucial issues still pending or unresolved for decades. Now this one is added to that long list of disturbing facts of Bangladesh.
Finance Minister AMA Muhith told parliament on February 1, 2015: “Islamic Banking system is absolutely fraud to me.” It was build up based on a “misconception,” he said.
Observing that the Islamic banking system has become popular around the world, Muhith said it was unfortunate that many organisations like the IMF speak about it.
Soon after Muhith’s comment, radical group Hefazat-e-Islam Bangladesh demanded his removal from cabinet for his anti-Islamic stance.
In Bangladesh, pro-Jamaat Islami Bank is the first of its kind that was established in 1983. During the Shahbagh movement of 2013, Islamic Foundation of Bangladesh chief in a TV talk-show also gave similar views on Islami Banking, in response to call to shut down operations of the bank among other Jamaat institutions, adding that the Bangladesh Bank had no mechanism to monitor such banking activity.
Nowadays, there are a dozen of banks offering Islami Banking schemes.
Muhith said to explain that “Riba” (an Arabic word which means exploitative gains made in trade or business and also condemned in the Qur’an) and interest are not the same. “Riba has been made forbidden in Islam. It is compound interest and there is no humanity in this system. But interest that is fixed in the regular banking system has humanity. It is fixed by considering the cost of fund and cost of administration.”
He, however, said he had nothing to do to stop Islamic banking system in the country. “The Muslim Ummah and those who think about Islam and its system can do anything regarding this.”
Replying to another query, the finance minister said so far no specific allegation has been received against any bank of exploiting the religion.
Interestingly, Muhith has always been liberal while asking for CSR or sponsor from banks including the Islami Bank. This institute has given the government a lot of money as donation in the PM’s Relief Fund and sponsored the big events like ICC World Cup, Bangladesh Games, and audaciously Lakho Konthe Sonar Bangla. However, in the face of massive protests and criticisms, the government later announced that they won’t use Islami Bank’s money for the National Anthem event.
On January 20, 2015, Muhith handed over the “ICMAB Best Corporate AWARD-2014” to Islami Bank Managing Director Muhammad Abdul Mannan at Sonargaon Hotel in Dhaka.
Islami Bank aims is to establish Islamic Banking through the introduction of a welfare oriented banking system and also ensure equity and justice in the field of all economic activities, achieve balanced growth and equitable development in through diversified investment operations particularly in the priority sectors and less developed areas of the country, says its website.
Islami Bank was fined Tk20 lakh in December 2014 for not keeping client affidavits and also for not informing authorities of suspicious transactions in time. It was fined earlier in 2006, 2004 and 2002 for violation of the country’s anti-money laundering law!
Prime Minister Sheikh Hasina on February 5, 2015 asked the banks and financial institutions to identify the financiers of militant and destructive activities and strictly monitor the bank transactions to check terror financing. She said the patrons of terrorists and militants are still using the banks to transfer money at home and abroad.
Bangladesh Bank has identified 10 accounts of private banks that were used for transacting large amounts of money suspected to have been used for financing militant activities, including purchase of weapons and organising subversive activities. Of those, two accounts are with Islami Bank, according to a recent report.
In a bid to stop militant financing, the government will investigate how Islami Bank, Islamic or Sariah-based banks and other financial institutions spent their profits, State Minister for Home Affairs Asaduzzaman Khan Kamal on August 14, 2014 said. “Islami Bank already gave a report on how its profits are spent. The law enforcement and intelligence agencies have been instructed to look into whether there are any inconsistencies in it. We are also looking into where these financial institutions spent their profits,” the minister told reporters after a meeting of the National Committee on Militancy Resistance and Prevention at the home ministry.
On February 28, 2011, former home state minister Shamsul Haque Tuku said Islami Bank spends around 8% of its profit to finance militants. “Bangladesh Bank is looking into the matter. Islami Bank will submit its accounts to the home and finance ministries to explain where it stands. “We’ve information on transfer of funds from the bank to the Islami Bank Foundation. Bangladesh Bank has stopped the fund transfer through a circular. The central bank is monitoring terrorist financing and the intelligence agencies have been asked to look into the matter.” Though regulations require the Zakaat fund to be spent in eight phases, Islami Bank spent it in 16 phases. Intelligence agencies were asked to investigate whether Zakat funds were being properly used, Tuku said.
In the morning of February 15, 2013, the day when blogger Ahmed Rajeeb Haider was hacked to death, he gave a post on Facebook condemning the activities of Islami Bank. He was allegedly killed by some members of fanatic group Ansarullah Bangla Team, being inspired by a leader of Islami Chhatra Shibir, student body of Jamaat-e-Islami.
Now that it has been an open issue of debate, I posted the news of Muhith’s comment on Facebook. Several friends of me confirmed that Islami Banking was fraud. I’ve been tangled since then as it’s a matter of serious concern to me because it involves irregularities and corruption.