New Delhi, July 1 (IANS) Bangladesh’s sovereign sukuk programme has raised Tk 53,000 crore raised so far but failed to build a genuine Islamic capital market, a new report has said, after the central bank this week auctioned the country’s first short‑term sukuk- an Islamic financial instrument.

On June 28, Bangladesh Bank sold a nine‑month sukuk to raise Tk 5,500 crore for rural infrastructure, the report from Bangladesh-based The Daily Star said.

The report argued that these securities are largely conventional government debt repackaged in Shariah terminology.

Apart from the Islamic terminology, it is a sale-and-leaseback and investors rely on the government’s promise to pay, which is why “activity has not produced a real Islamic capital market,” the report said.

“The state sells something it already owns, rents it back, and promises to buy it again. Financiers call this asset-based sukuk, not asset-backed sukuk. In an asset-backed structure, investors genuinely own the asset and share in its risks and returns. In an asset-based one, the asset is mostly a legal formality,” the media house noted.

It argued that Bangladesh should shift from one‑off sale‑and‑leaseback deals to sukuk that finance new, income‑generating projects.

“The harder path is to use sukuk to finance genuinely new assets—roads, ports, power plants, schools—and let the instrument work as it’s meant to work. Governments often take the easy path. Bangladesh did too,” the report said.

While asset-based sukuk can be issued only if there are public assets to repackage, they raise questions about valuation and repurchase, require heavy legal paperwork, and can only be issued in small volumes insufficient to build a market.

Such “new‑asset” sukuk, could be issued across a range of maturities without buy‑back clauses, scale with development needs and help establish a reliable benchmark yield curve even as Bangladesh has no shortage of future development projects.

The government issued its first sovereign sukuk in December 2020 to fund a national safe‑water project and roughly Tk 30,000 crore more is planned to be raised through this route for the next fiscal year.

—IANS

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