National and Global Islamic Financial Architecture:

Prolems and Possible Solutions for the OIC Member Countries

There are limited Islamic financial instruments and relatively inactive secondary market for

trading Islamic short-term Islamic financial securities. BB issued a Guideline on Islami

Interbank Fund Market (IIFM) on 27 December 2011 (BB 2011). As indicated, Islamic banks

have taken the initiative to establish an interbank Islamic money market with the

encouragement of BB.

BB has taken three initiatives to provide a liquidity management infrastructure for the Islamic

banks. The requirement of maintaining the SLR (including CRR) still remains well below at

12.5%, compared to the requirement of the conventional banks (19%). The introduction of the

Bangladesh Government Islamic Investment Bond (BGIIB) was the beginning of providing a

cushion for the Islamic banks to park their excess liquidity by using it as a vehicle to maintain

the required amount of SLR. There are however no Shariah complaint lenders of the last resort

facilities for Islamic banks (IFSB 2014).

4.1.5. Information Infrastructure and Transparency

Accounting and Auditing Framework/Transparency and Disclosure

The Institute of Chartered Accountants of Bangladesh (ICAB) is the national professional

accounting body responsible for regulating the accounting profession in the country. Among

others, ICAB issues the Bangladesh Accounting Standards (BFRS) in line with International

Accounting Standards (IAS).

Bangladesh Bank Guidelines for Conducting Islamic Banking requires that licensed Islamic

financial institutions should maintain proper accounting standards and prepare financial

statements that can be conveniently audited. It provides the framework that Islamic banks can

use to comply with the different laws of the country (BCA 1991 and Companies Act 1994), the

IFRS and also the AAOIFI. While Islamic banks are required to comply with the disclosure

requirements of the Securities and Exchange Rules of 1987 and the Listing regulations of the

Dhaka and Chittagong Stock Exchanges, they are also required to adjust their financial

statements according to the IFRS.

The Guidelines, however, do not address the necessary

adjustment of financial transactions that is required to comply with the requirements of the

International Financial Reporting Standards (IFRS). So, reporting institutions are required to

adjust their Financial Statements as per their own requirements.

Rule 12(2) of the cited Securities and Exchange Rules prescribing compliance with the

International Accounting Standards (IAS) states that 'The financial statements of an issuer of a

listed security shall be prepared in accordance with the requirements laid down in the

Schedule and in the International Accounting Standards as adopted by the Institute of

Chartered Accountants of Bangladesh (ICAB)". It is also to be noted that in case the

requirements of the guidelines and circulars issued by the Bangladesh Bank differ with those

of other regulatory authorities and financial reporting standards, the guidelines and circulars

issued by the Bangladesh Bank prevail. The Guidelines for Islamic Banking 2009 give details on

the modalities of specimen reporting formats and Financial Statements for Banks operating

under Islamic Shariah. It also stipulates that the BB may specify standards related to

transparency and disclosure requirements that entail information that is accurate, clear, timely

and not misleading.

BB (2009), Appendix II.