Standard Bank and its 26-year-long journey

Standard Bank PLC, a conventional bank now transformed into an Islamic one, has completed a eventful 26 years. It has been a long journey in the arena of country's banking. Mr. Md. Habibur Rahman, Managing Director and Chief Executive Officer of the bank, while talking to the FE recently, explained the current state of the bank and the gains it has made through transformation. Text of the interview follows:

Financial Express (FE): Standard Bank PLC. has completed 26 years. What would you say about the bank's overall achievements and current position during this long journey?

Md Habibur Rahman (MHR): Alhamdulillah, Standard Bank PLC has successfully completed 26 years. Over this long journey, we have embarked on a new chapter by transitioning from conventional banking to Islamic banking. I extend my heartfelt gratitude, best wishes and congratulations to our valued shareholders, customers, regulatory authorities, officials, employees and well-wishers for their support.

Based on a bold and timely decision, the bank with 138 branches transformed from conventional banking to a fully Shar'iah-based Islamic banking model in January 2021. This transformation marked a milestone in the bank's history and elevated our identity, acceptance and operational capacity to new heights.

As of March 2025, the bank's deposits have increased to approximately BDT 21,000 crore, which is about BDT 4,000 crore more than before the transformation. Similarly, investment has grown by around BDT 3,000 crore, currently totaling nearly BDT 20,000 crore.

As a modern and progressive bank, Standard Bank PLC. is playing a significant role in the country's socio-economic development by promoting productivity through easy-term investments in industrial and agricultural sectors and supporting SME entrepreneurs, thereby contributing to employment generation and entrepreneurship development.

Through digital banking, agent and mobile banking, the bank has made remarkable contributions toward financial inclusion of rural and marginalized populations.

As a fully Islamic bank, we are also facilitating simple and safe Haj management for our customers through Haj savings and services. Additionally, we are actively promoting social responsibility through Waqf and Mahr accounts and contributing to sustainable development through CSR activities in education, health and disaster relief.

Despite challenging economic and social circumstances, we have maintained consistent growth and progress. We express our gratitude to the Almighty Allah for this success.

FE: What challenges did you face after transitioning to Islamic banking, and how did you address them?

MHR: The transition from conventional to fully Shari'ah-based Islamic banking was highly challenging. Initially the main challenge was to convey the benefits and importance of Shari'ah compliance to customers and gain their trust. Simultaneously, it was essential to provide extensive training for our staff, rebuild the IT infrastructure and restructure internal policies and product mapping in line with Shari'ah guidelines.

We progressed through each step with sincere planning and dedication. We conducted widespread demand-based training & workshops and implemented awareness programs to enhance staff capacity. Technologically, the entire IT system was restructured to provide Shari'ah-compliant banking services.

Our key strengths during this journey were the interest and full cooperation of the board of directors, timely guidance and supervision from the Shari'ah Supervisory Committee, unwavering support from customers and the senior management's capable leadership and relentless efforts from all levels. These factors made it easier to successfully overcome the challenges. Today this transformation has become a source of sustainable competitive advantage for the bank.

FE: Is there any plan to change the name 'Standard Bank' after the transition to Islamic banking?

MHR: This is an important and timely question. The name 'Standard Bank' has been part of our reputation, heritage and brand value since inception. Among customers and stakeholders, it is well-known and trusted. However, after transitioning to Islamic banking, we are actively considering renaming the bank to better reflect Shari'ah-compliant branding.

Our goal is to ensure that the bank's name aligns with Islamic values, ethics and banking principles while maintaining the recognition and trust we've built over the years. The matter is currently under review by the board of directors for final decision and approval.

FE: What advice would you give to banks considering a transition to Islamic banking?

MHR: Islamic banking has gained widespread popularity and trust worldwide and it continues to advance with both theoretical and practical success. It is not just a conventional banking model; it is a sustainable, fair and welfare-oriented financial system that offers proper direction for the future.

In the context of Bangladesh, Islamic banking has great prospects. People are spontaneously interested in interest-free banking. Government policy support, effective role of Bangladesh Bank, technology adoption and an increasing number of skilled professionals have made this sector even more popular.

For banks considering a transition to Islamic banking, my advice is that sincere commitment and strong preparation are essential. Key components for a successful transition include:

a) Forming a competent advisory body and effective Shari'ah Supervisory Committee to evaluate and oversee all activities in light of Shari'ah.

b) Developing a trained and Shari'ah-aware workforce proficient in Islamic banking philosophy and practice.

c) Building a technology-driven sustainable infrastructure to deliver uninterrupted Islamic banking services.

d) Maintaining transparency, good governance and ethical standards in customer service.

FE: What do you think are the main reasons for the widespread popularity of Islamic banking in Bangladesh?

MHR: There are several reasons behind the growing popularity of Islamic banking in Bangladesh; first, the majority of the population is Muslim and they desire to follow Islamic principles in both personal and financial matters. Islamic banking, being Shari'ah-compliant, interest-free and partnership-based resonates with the values of justice, ethics and mutual welfare, which have garnered public acceptance. Secondly, Islamic banking is built on a structure of transparency, accountability and risk-sharing, which has helped achieve customer trust. Each transaction is based on real assets, promoting stability and genuine growth instead of artificial speculation. Third, Islamic banking has emerged as an ethical and acceptable alternative to some of the risky, interest-based or unethical practices seen in conventional banking. Fourth, the support from the Bangladesh government, specially the central bank along with constant awareness campaigns and outreach by Islamic banks has significantly contributed to this growing popularity.

In summary, Islamic banking has become a symbol of trust for the people of Bangladesh as an ethical, effective and sustainable financial system.

FE: How would you describe Standard Bank's current status regarding Shari'ah compliance?

MHR: At Standard Bank PLC., Shari'ah compliance is given the utmost priority. We firmly believe that the true success of Islamic banking lies in perfect adherence to and implementation of Shari'ah principles. Shari'ah is a comprehensive system of life, intended for the welfare of humanity. Therefore, true prosperity and peace lie in Shari'ah compliance. Our guiding philosophy should be: 'Shari'ah first in thought, Shari'ah first in action, Shari'ah first in service.'

We have an independent Shari'ah Supervisory Committee comprising nationally recognised scholars, renowned researchers and academics. This committee thoroughly reviews and approves every banking product, service and transaction to ensure there is no deviation from Shari'ah.

Additionally, our Shari'ah Secretariat Division consists of a trained team with both Islamic and modern education who regularly conduct Shari'ah audits. We also provide regular training, workshops, research and awareness programs to instill Shari'ah consciousness and implementation at every level.

Personally, I am a member of the Fiqh Committee of the Central Shari'ah Board for Islamic Banks of Bangladesh. I give utmost importance to Shari'ah compliance and stay directly involved in monitoring this area. Our aim is not only to adopt an Islamic banking framework but to establish a model Islamic banking system based on ethics, transparency and Shari'ah-compliant operations.

FE: Which sectors does Standard Bank currently prioritise for investment and what is the current state of profitability?

MHR: To support the country's overall economic development and sustainable growth, Standard Bank PLC. prioritises investment in the industrial, agricultural and SME sectors. These investments contribute to enhancing productivity, creating employment and fostering entrepreneurship.

Additionally, we are giving special emphasis to export-oriented industries to boost foreign exchange earnings, thereby playing a vital role in increasing the country's forex reserves.

Thanks to a well-planned investment strategy, efficient fund management and initiatives to expand import-export trade, the bank has seen positive progress in income and profitability. As of December 2024, the bank's operating profit increased by about 74% compared to the same period in the previous year, reflecting our financial stability and good governance. This positive growth trend continues to this day.

FE: What is the current state of the Islamic banking sector in Bangladesh?

MHR: Islamic banking has established a strong and vital presence in Bangladesh's financial sector. Currently, about 25 per cent of total banking assets in the country fall under Shari'ah-based banking.

In deposits, investments and branch expansion, the sector shows notable growth.

Although some banks have recently experienced temporary setbacks due to operational weaknesses and governance issues; initiatives to overcome these challenges combined with strong public interest, trust in Shari'ah-based financial principles and oversight from Bangladesh Bank are gradually stabilising the sector.

The number of full-fledged Islamic banks, branches, and Islamic banking windows has increased. Technological advancement, product diversification and increased awareness of Shari'ah compliance have also improved service quality.

All things considered, Islamic banking has built a strong foundation as a sustainable, ethical, and widely accepted alternative in Bangladesh's financial sector and is poised to grow even further in the future, In Sha Allah.