What a tenfold oversubscription says about Islamic banking

Bangladesh sold its first short-term sovereign sukuk on 28 June — 273 days, 9.36% — seeking Tk5,500 crore and receiving offers worth Tk56,607 crore, more than ten times the ask. One bank alone bid Tk4,400 crore and was allocated a tenth of that. The oversubscription is not a success story so much as a diagnosis: Islamic banks in Bangladesh hold enormous surpluses and have almost nowhere Shariah-compliant to put them, because the treasury-bill and bond markets that conventional banks use for liquidity management have no Islamic equivalents at scale. Money that cannot be parked productively is money that cannot finance industry, housing or trade. The lesson generalizes across Muslim-majority markets: retail religiosity has built large Islamic deposit bases faster than states have built the instruments to employ them. The gap between the two is measured in idle crores — and it is an institutional gap, not a spiritual one.

This is a QeRN summary by Ahmed Qerni. Read the original at The Business Standard: https://www.tbsnews.net/economy/banking/debut-short-term-sukuk-oversubscribed-tenfold-exposing-islamic-banks-liquidity-glut.