A.

Regulatory requirements for license as an Islamic Banking Branch/Window: (IBB/W):

1. Eligibility of a bank to open Islamic Banking(IB) branch(es) having CAMEL rating of 1/2
in the last On-Site inspection of Bangladesh Bank & with no major adverse inspection
findings against the bank is considered by Bangladesh Bank(BB).
[Bangladesh Bank (BB) consider the application based on Financial strength of the bank as
evident from its capital base, Adequacy of its capital structure, Earning capabilities, Liquidity
position, Track record of bank's adherence to prudential regulations, Credit discipline,
Quality of customer services, Convenience and the needs of the population of the area]
2. The Bank shall apply to BRPD of BB with the following working papers & details: -
a) Number of branches with area(towns/districts) to operate under Islamic Shariah
b) Services and products to be offered (deposits, investments, financing etc.) by IBB/W.
c) Commitment to keep funds & accounts of IBB/W separate from conventional ones.
d) Methods of segregating the funds of IBB/W from the funds of conventional branches.
e) Description of infrastructural and logistic facilities including manpower and training.
f) Accounting aspects such as policies, principles, profit/loss sharing / distribution etc.
g) Undertaking for preparing separate financial statement for IBB/W.
3. The Bank shall:
a) Set-up an Islamic Banking Division(IBD) in the Head Office of the local Bank(s) and
in the Country Office (in Bangladesh) in case of foreign Bank(s).
b) Submit organizational structure of the Islamic Banking division indicating
qualifications and Islamic Banking experiences of the Top Executives to BB.
4. Islamic Banking Division(IBD) of the Bank shall:
a) Outline Islamic Banking rules and regulations and ensure their implementations.
b) Maintain co-ordination with the Shariah Supervisory Committee, if any, and the other
divisions/offices of the Bank.
c) Ensure investment of Funds received for IB business approved by Islamic Shariah.
d) Ensure Train up the manpower deployed in the Islamic banking branch.
e) Ensure Submission of required statements to the Central Bank.
f) Ensure implementation of the guide-lines/rules and regulations concerning Islamic
banking framed/issued/instructed by the Central Bank.
g) Ensure maintenance of SLR/CRR according to the instructions of the Central Bank.
h) Comply any other responsibility(ies), the Central Bank may assign from time to time.
i) Appoint sufficient manpower and a Senior Executive as the chief of Islamic Banking
Division who shall remain accountable to the CEO of the Bank.
5. Following steps to be taken for Segregation of Islamic Banking Fund and control for
pursuance of appropriate procedures to ensure safeguarding the interest of the depositors:
a) Prepare an operational Manual for running IB business which is to be approved by the
Board of Directors of the bank Or by the Head office in case of foreign bank(s).
 b) Prepare a full set of documents pertaining to deposits, investments & financing products
of IB business.
c) Design required documents, Forms, Books, and Deposit Receipts, cheque Books etc. of
Islamic branch (es) distinctly from conventional banking branches.
6. The Bank shall:
a) Maintain separate accounting system (ledger books, software etc.) for it’s IB branches
for keeping records of deposits, investments, profit & loss A/Cs, etc.
b) Maintain separate trial Balance for daily transactions of IB branch (es).
c) Prepare & submit quarterly, half yearly and yearly F/s to BB relating to IB branch(es).

7. All other terms and conditions as set by BB for opening of a bank branch shall be followed.

B. Regulatory requirements for license as a Full-Fledged Islamic Commercial Bank (ICB)

1. ICB to be a public limited company incorporated in Bangladesh with minimum 50% share
to be offered to the public.
2. Financial transactions of ICB shall be conducted based on the principles of Islamic Shariah.
3. The ways and means of resource mobilization, expansion and nature of business transactions
have to be stated in the application form.
4. The applicant(s) shall indicate expertise and other facilities available with them for ensuring
operation of their IB business as per Islamic Shariah.
5. Minimum paid-up capital of ICB to be Tk.400.00 crore in the form of ordinary shares owned
by the sponsors/subscribers, shall be in a liquid, unencumbered form and will maintain the
required capital adequacy ratio, as prescribed by the Bangladesh Bank.
6. ICB to issue public shares at least equal to sponsors' share amount within three (3) years
from the date of commencement of the banking business.
7. Minimum shareholding stake of each sponsor to be Tk.1.00 crore and maximum to be 10%
of the proposed ICB’s total share capital. This 10% applies to an individual, company or
family member, either severally and jointly or both. Family includes spouse, father, mother,
son, daughter, brother and sister of the individual or anyone dependent on that individual.
8. The Sponsors' share shall not be transferred before expiry of 3(three) years from
commencement of the business without permission from Bangladesh Bank.
9. The ceiling of 10% may be relaxed in case of a bank set up as a joint venture with a foreign
financial institution or banking company.
10. Sponsors and/or Directors, their spouse(s) or firm(s):-
a. shall be free from any conviction by a court of Law for committing any criminal offence
inside or outside Bangladesh;
b. has not involved in any illegal activities, particularly illegal banking business, receipt of
deposits, financial dealings and other business;
c. has not failed to settle liability/meet obligation to banks and other FIs.

Assignment-I : IB Guidelines of Bangladesh Bank: License

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 d. has not failed to pay tax/duties.
e. has no adverse reputation regarding integrity & performance by the sanctioning authority.
11. Management of the proposed ICB :
a. Director or Advisor to any banking company shall not be a Director of the proposed ICB.
b. The Member of Board of Directors shall be restricted to 13 (Thirteen).
c. Maximum number of directors from a family shall be restricted to 02 incase of the total
shareholding of that family exceeds 5% and 01 director if total shareholding is up to 5%.
d. Sponsors holding 5% or more shares shall have to sign a capital maintenance agreement
(CMA) stating that they would, jointly and severally inject additional capital if the bank
ever fell below any minimum capital requirement.
e. The Chief Executive (CE) of the ICB shall have at least 15 years of experience with
minimum 03 years at IB having no adverse information regarding his integrity and
performance and complied with “Fit and Proper Test” issued by BB and obtained prior
approval from BB.
[The “Fit and proper” criteria include: (i) skills and experience in relevant financial
operations commensurate with the intended activities of the bank; and (ii) no record of
criminal activities or adverse regulatory judgments that make person unfit to uphold
important position in a bank.]
12. The applicant for license shall submit the following documents along with the application:
a. Feasibility report with organizational structure and proposed name of the CEO
b. Short term & long term business plan.
c. Plans for Internal control management, Risks management guidelines and details of the
approval authority.
d. Working system and procedure for business activities/ operations.
e. List of other Companies/Firms and their bankers in which sponsor director(s) and their
family as defined in The Bank Company Act, 1991 are interested as director(s), Chief
Executive, Partner, proprietor or major share holders holding 5% or more shares.
13. Operation of the proposed bank:
a. The ratio of urban and rural bank branch to be 1:1 or as per instruction issued by BB.
b. Proposed ICB has to ensure finance at least 5% of its total lending into agricultural sector
or as per instruction issued by BB.
c. Proposed ICB should take part in CSR activity and should spent 10% or more of its
previous year's net income to CSR.
14. The Proposed ICB shall be subject to the prevalent banking and other laws, rules, regulations
and directives issued by the Bangladesh Bank from time to time.
15. Undertaking from the sponsors of the ICB to comply with all instructions issued by BB and
the Govt. of People's Republic of Bangladesh from time to time.
16. All other terms and conditions as set by Bangladesh Bank for establishing a bank company
shall be applicable.

Assignment-I : IB Guidelines of Bangladesh Bank: License

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