Islamic Banking in Bangladesh : Its History & Socio-Economic Programmes

Abstract

Islam is not a religion in western sense of the term; rather it is a Din or complete code of life encompassing the whole span of man's life from the cradle to the grave • and the life hereafter. The concept of human creation and regulation of life are centered round the Holy Qur'an (the revealed book) and the Sunnah (teaching and tradition of the Holy Prophet), which are the primary sources of Islamic Law. This mundane life is just like a corridor to enter the abode of eternity where every species of rational being will be rewarded according to the a'mal or deeds done in the world. Hence the motto of every work and deed of man should be to achieve the pleasure of Allah, the creator. To weigh the good and bad side of man's activities there is a scale set up by Allah, and this is but Shariah of Islam (Islamic Law). Islam lays much stress on the corporate life of man, as it is evident from the concept of congregational prayers and other socio-religious festivals sanctioned by the Shariah of Islam. Moreover, to lead a harmonious social life as per the Shariah rules, a Muslim specially needs to earn lawful bread and to follow a sound economic program delineated in the Holy Qur'an and the Sunnah of the Prophet (SM). Extravagance in any form is condemned in Islam; in the same way stinginess is also discouraged. Tile leading of a modest life is praised in Islam. A Muslim is warned against spending all he has •and leaving his children and dependents in economic misery at the time of his death. Islam, therefore, urges the Muslim to increase his wealth within the framework of the Shariah and to spend it in a lawful way. Thus the monetary transactions are performed in various ways through the centuries or Muslim rule in the world. With the passage of time the concept of modem banking come into being to facilitate tile moneta,y transaction. Islamic Banking is a Shariah based concept and part of the modern economic system. The introduction of interest free equity based financing is an outcome of Islamic Economic System. Islamic economy is as old as Islamic civilization, while Islamic banking concept is a new phenomenon. The Islamic Banking concept has come into force in the late 20th century. Islamic Banks are financial institutions that operate with the objective of implementing and materializing the economic and financial principles of Islam in the Banking arena. Islamic Banks provide finance and financial services in any Hallal (lawful) activities, which leads to mutual benefit of both the parties involved in any transaction. Islam insists that the participants in the trading process must share risk and return both. The Bank should neither pay interest to the depositors nor charge any interest on loans and advances. Instead they should enter into partnership with the businessmen as a possible alternative, sharing profit and losses if any. Interest is opposed in Islam perhaps on the ground of social divisions it creates and the hardship to borrowers. Islamic Banks in our country have started working with the concept of interest-free banking and it is proved that the new banking with interestð€€µfree concept could be successful and expanded in the country. The main objective of Islamic banking is social welfare and helps the downtrodden people of the society and also to initiate different investment projects that conform to social responsibility for the disadvantaged and neglected segment of the society. Most of the Islamic Banks in our country have soine special programs for-social welfare, such as, rural development scheme, employment generation scheme, poverty alleviation scheme, cultural and religious scheme, healthcare & Medicare scheme, sanitation and pure drinking water scheme, Quard-e-Hasan scheme, development of libraries, Forquania Madrassa, Waqf properties, graveyards, Eidga etc. This study mainly concentrated on the historical origin and development of Islamic Banks in Bangladesh and their socio-economic programmes as mentioned above…………….