StanChart betting big on Shariah-based banking
Standard Chartered is bullish about the fortunes of its Islamic banking business, Saadiq, in the united states, seeing the religious bent of the Bangladeshis and the economy's tremendous growth momentum, said the global head of the lender's Shariah-based arm.
"For the country, we've plenty of expectations," Rehan M Shaikh, chief executive officer of Standard Chartered Saadiq, told The Daily Star within an interview on his last trip to Dhaka.
Shaikh is based in Dubai, where Standard Chartered Saadiq's headquarters can be found.
There aren't many countries in the world where the most the populace is Muslim. But Bangladesh gets the third most significant number of Muslim population in the world.
The global lender introduced Islamic banking in Bangladesh 15 years back and is a trendsetter since.
It was the first ever to introduce Islamic credit card in Bangladesh in 2007 and arrange Sukuk transaction in 2019.
In 2017, the lender arranged a $32 million Diminishing Musharakah Facility for Noman Terry Towel Mills and Ismail Spinning Mills, two concerns of Noman Group, in what was the first Islamic syndication.
Its achievements have caught the attention of different global entities recently. For example, in 2019 Global Finance, a fresh York-based monthly financial magazine, recognised it as the very best Islamic financial institute in Bangladesh for 2019.
"We will open up this market more next 4-5 years both for retail and corporate clients," said Shaikh, the global head of standard chartered Saadiq.
Standard Chartered is investing in huge time, effort and resources to take its Shariah-based financial services forward and the brand to another stage in Bangladesh, where it's been since 1905.
It has introduced something, Saadiq Hajj Savers, to provide its customers a one-stop solution for Hajj and Umrah. This account will enable customers to deposit a set amount on a monthly basis and earn profit on their monthly average balance at an attractive rate.
It has another one-of-its-kind savings product in the works: the Saadiq Graduate account targeting fresh university leavers.
The entire market size of Islamic banking in Bangladesh is about 23-24 per cent and it is likely to grow further as clients are slowly but surely becoming aware of the Shariah-based financial services, said Shaikh, who has a business administration degree from an American university.
Given the religious bent of Bangladeshis, the lender is finding the Bangladesh market more receptive towards Islamic products.
A whole lot of conventional banks are submiting to Islamic ones plus some of them are opening Islamic banking windows, he said. "This means the area of Islamic banking keeps growing at a faster pace."
In Bangladesh, two conventional banks -- Standard and NRB Global -- have recently managed approval from the central bank to be full-fledged Shariah-based lenders.
This will take the total number of Islamic banks operating in the country to 10.
The Islamic banking window of the lending company can be intent on helping Bangladesh achieve its growth ambitions.
"We are increasing our investment in line with the expectation of the united states. We want to participate the journey that Bangladesh is certainly going through."
Ensuring the Shariah-based products are before the clients if they need them is now a challenge for Standard Chartered given its exceptional growth, Shaikh said.
Besides Bangladesh, Islamic banking has seen tremendous progress around the world in the last two decades because of regulatory support.
Financial regulators of Malaysia, Pakistan, the UAE and some other countries, where Islamic banking has managed popularity, are incredibly active in promote Shariah-based finance.
Similarly, the Bangladesh Bank can be coming up with time-befitting regulations, that have helped the lender to promote Shariah-based banking here.
"The initiatives have helped banks like Standard Chartered. And Islamic finance is becoming a fundamental element of our business," he said, adding that the British lender is expanding its services to new markets like African countries given the tremendous growth opportunity.
Shaikh, who has a lot more than 30 years of banking and management experience, said that Islamic banking has yet to have the form that conventional bank has.
Shariah-based banking started its journey 35-40 years back in a structured manner and Standard Chartered embraced it in 2003.
"We are very hopeful our Islamic banking window are certain to get boost in a tremendous way as 70 per cent of the Muslim population on earth are living in 70 countries where Standard Chartered has active presence."
Besides, the lending company is operating the Shariah-based financing services in some countries from its hq.
The bank is trying to make certain that the client demand for Islamic banking products are fulfilled if they are retail or corporate banking customers and government agencies.
"As part of our commitment, the bank is bringing in a plenty of events globally to push up the Islamic finance base."
One such event is the "Living Islam" series, which allures Islamic scholars and professionals to talk about subject areas that are part of Muslims' everyday life. The lending company has taken a decision to organise the event in its different core markets, including Bangladesh.
Standard Chartered held the function in Bangladesh on February 3 in Dhaka.
"Bangladesh may be the second country where we've organised the event. We discuss specific issues about business ethics in light of the gains. It really is my desire to spread it globally."
The lending company will arrange the function in Bahrain and Malaysia next.
"So you want to institutionalise the function as our job is merely not limited to offering products."
He also touched after some issues - such as uniformity among Islamic scholars' thinking -- which may have held back Islamic banking in the global market.
"The challenges of Islamic banking is not different between Bangladesh and the global market."
Human capital is a huge challenge for Islamic banking.
"I have also result from conventional banking, but I have already been doing my job in Islamic banking going back 15 years. But there is hope as many universities are running Islamic programmes."
Pakistan, Malaysia, Indonesia plus some other countries are running different courses on Islamic banking.
All stakeholders, ranging from regulators to Shariah scholars, have to work in tandem to make certain that products are in the line with the expectations of clients and growth.
Some markets have successfully create the appropriate infrastructure given their liquidity framework and corporate governance, he said, adding that Shariah-based banking has already reached a uniform platform in the last 5-7 years among some countries.
"In Bangladesh, we will work closely with the central bank and it has given all-out support to promoting our business," he said, adding that the mandatory regulation for Islamic financing services for Bangladesh are being well met from the global Shariah board.
The lender is totally prepared to create Shariah board in Bangladesh if the central bank provides any such condition.
"We will be the only bank with four Shariah boards. One may be the global Shariah board and the three others are for the UAE, Pakistan and Malaysia."
Shaikh said Islamic banking can be embraced by non-Muslims too.
"This is a wrong concept that Islamic banking is only applicable for Muslims. It is an alternative solution banking form paralleling the traditional ones."
It really is true that Muslims prefer Shariah-based banking. However, many of Standard Chartered's key markets have a whole lot of non-Muslims who are taking Shariah products.
"For the reason that, they are getting advantages from the Shariah products that the bank has offered."
