Islamic banking in Bangladesh is offered by full-fledged Sharia-compliant banks such as Islami Bank Bangladesh and by Islamic branches or windows of conventional banks, which provide Mudaraba accounts, HPSM or Bai-Muajjal financing and remittance services for the diaspora.
Islami Bank Bangladesh, the pioneer since 1983
Founded in 1983 with Gulf investors and the Islamic Development Bank among its shareholders, Islami Bank Bangladesh remains the country's largest Islamic institution by branch network and deposits. It also handles a large share of the money sent home by workers abroad.
A much-discussed change of control
In 2017 control of the bank passed to an industrial group based in Chattogram, in circumstances criticised by many observers. After the change of government in August 2024, the central bank dissolved its board of directors and appointed new independent directors.
Governance lessons for depositors
For a depositor, these events show that approval by a Sharia board offers no protection against poor management or against financing granted to parties close to shareholders. It is wiser to read annual reports and financial strength ratings, not only the Islamic label.
Deposits insured up to Tk 2 lakh
Accounts held at an Islamic bank fall under the national deposit protection scheme, whose ceiling is Tk 2 lakh, or 200,000 taka per depositor. Above that amount, repayment depends on the soundness of the bank or on the plans adopted by the authorities in a crisis.
Five banks combined into Sammilito Islami Bank
At the end of 2025 the authorities merged five troubled Islamic banks, First Security Islami, Social Islami, Global Islami, Union and Exim, into a new state-owned entity, Sammilito Islami Bank, which opened its counters on 1 January 2026.
Withdrawing money after the merger
Customers may freely withdraw up to Tk 2 lakh. Beyond that, the central bank schedule limits withdrawals to Tk 1 lakh per quarter for two years, with exceptions for elderly or seriously ill people, while remaining balances continue to earn profit.
Privatisation announced in stages
The Finance Division initially holds the capital on behalf of the state, with the stated aim of bringing in a strategic partner within three years and fully privatising the bank within five. A sukuk issue is part of the recapitalisation plan.
Al-Arafah, Shahjalal and other independent banks
The market also includes mid-sized Islamic banks that stayed outside the merger, such as Al-Arafah Islami Bank and Shahjalal Islami Bank, as well as institutions converted after a conventional history. Their financial strength varies widely, so comparing published accounts is worthwhile.
Islamic windows of conventional banks
Several conventional banks, both state-owned and private, run Islamic branches or windows with segregated funds. Customers open an Al-Wadiah or Mudaraba account there and obtain Sharia-based financing while using the parent bank's branch network and cash machines.
HPSM, the most widespread financing mode
Hire Purchase under Shirkatul Melk combines co-ownership and leasing: bank and customer jointly buy a vehicle, machine or home, the customer rents the bank's share and buys it back in instalments. This mode, typical of Bangladesh, dominates equipment and housing finance.
Monthly savings plans, including Hajj savings
Islamic banks sell Mudaraba savings plans with monthly instalments, some of them designed to fund the pilgrimage. The customer deposits a fixed amount for several years and receives a variable profit, with a reduced return if the plan is closed early.
Funding an Islamic account from abroad
A migrant worker can top up an Islamic account in Bangladesh by bank transfer or through a partner money transfer company. Using these official channels qualifies for the cash incentive the state pays on remittances, which the informal hundi system does not.
Specialist external source
Bangladesh Bank publishes the list of licensed banks, identifying the Islamic ones, together with its announcements on bank mergers and the rules for deposit withdrawals.