Robust auditing, governance crucial for future of Islamic finance: BB chief

Bangladesh Bank (BB) Governor Ahsan H Mansur on Sunday said that the future growth and stability of Bangladesh’s Islamic banking sector are dependent upon the implementation of robust accounting, governance, and auditing practices.

“Adherence to high auditing standards is crucial for maintaining transparency and accountability in both conventional and Islamic banking institutions. We need good accounting, governance, and auditing for Islamic finance in Bangladesh,” he said.

The governor made the remarks while speaking as the chief guest at the inaugural session of the three-day ‘Bangladesh Islamic Finance Summit 2025’ at a hotel in the city.

He mentioned that the central bank is working on an Islamic banking law, and they want to follow the best global practices.

“Good auditing can ensure strong Islamic finance in Bangladesh,” he added.

He acknowledged that the Islamic banking sector has recently experienced a turbulent period.

However, he noted, the sector remains structurally strong and is still outperforming many others in the market.

“Globally, Islamic finance is doing well. In Bangladesh, we could have been in a much better position if not for the turbulent period. Still, we have trust in the sector, and depositors are slowly rebuilding their confidence,” he said.

Ahsan confirmed that the central bank of Bangladesh is actively working to reconstitute and restructure troubled Islamic banks, reporting that some positive results have already been achieved.

On Islami Bank Bangladesh Limited (IBBL), the nation’s largest private Islamic bank, the governor stated that while the bank is functioning well and holds the biggest client base, irregularities remain a serious concern.

He highlighted a major breach where approximately Tk 500 billion (Tk 50,000 crore) was reportedly taken from IBBL by a single family, creating a significant strain on the bank’s resources.

Despite these “disturbing findings,” he noted the sustained trust of the public in IBBL.

The BB governor pointed to positive signs of recovery, noting that IBBL has overcome severe liquidity shortages and achieved the highest deposit growth in the Islamic banking sector this year.

Ahsan confirmed that the central bank is initiating mergers for banks facing liquidity stress to protect depositors. “We want Islamic banks with strong balance sheets, high paid-up capital, and good governance,” he asserted.

“We expect board members [of the banks] to be responsible and representative.”

Expressing hope for the sector’s trajectory, the governor said, “We want to see Islamic banking in Bangladesh grow in a systematic, well-governed, and sustainable way.”