BB aims to raise Tk 30b to finance rural dev project

The auction for the fifth Sukuk bonds will be held at the central bank on March 12, aiming to raise Tk 30 billion for financing smooth implementation of a rural development project.

The decision was taken at a Shariah Advisory Committee of the central bank at its headquarters in Dhaka on Thursday, with Bangladesh Bank (BB) Deputy Governor Dr. Md. Kabir Ahmed in the chair.

"All official formalities to issue the upcoming Sukuk bonds have already been completed at the meeting," a member of the committee told the FE after the meeting.

He said interested investors may apply for the Islamic bonds from any scheduled bank branches across the country.

Meanwhile, profit or rent for the Sukuk bonds has been fixed at 9.25 per cent. The profit will be paid on a half-yearly basis.

Talking to the FE, a senior executive of a leading Shariah-based Islamic bank said the profit for the Sukuk bonds is comparatively lower than the previous ones.

Earlier, such profit was fixed at 10.40 per cent for five-year tenure Sukuk bonds, according to the private banker.

He also said profit for such bonds may be determined based on the yields on Bangladesh Government Treasury Bonds (BGTBs).

"We've fixed the profit or rent of the upcoming Shariah-compliant bonds on the basis of economic return as well as social impacts on the project," the committee member said, replying to a query relating to the profit.

He said that it would be a social impact Sukuk bond for the construction of important bridges on rural roads (CIBRR-2) within the tenure of seven years.

Under the project, 82 bridges will be constructed in 58 upazilas across the country, enhancing connectivity in rural areas.

Besides, work for river training will be implemented under the project.

However, a special purpose vehicle (SPV) allocated the bond certificates as per quota, set by the central bank earlier, giving priority to the Shariah-based Islamic banks, non-banking financial institutions (NBFIs) and insurance companies, for the fifth auction of Sukuk bonds.

A separate Islamic securities unit under the Debt Management Department of the BB acts as SPV, a central banker told the FE.

As per the central bank criteria, 70 per cent of the Sukuk would be allocated to Shariah-based Islamic banks, NBFIs and insurance companies.

An additional 10 per cent will go to the Islamic branches and windows of conventional banks, while the remaining 20 per cent will be reserved for individual investors, provident funds, and deposit insurance schemes.

The government had already raised Tk 190 billion through issuing four types of Sukuk bonds for the implementation of different projects across the country.

Sukuk is an Islamic financial certificate, similar to a treasury bond and structured to generate returns in compliance with Islamic finance principles.

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