Islamic banks are licensed and supervised by Bangladesh Bank under the same Bank Company Act 1991 as conventional banks, so capital, governance, lending limits and reporting rules largely apply to both. Bangladesh Bank adds Islamic-specific guidelines and circulars on Shariah supervisory committees, profit distribution to depositors, investment modes and liquidity instruments. In practice, Islamic finance is regulated as banking with an additional Shariah governance layer rather than as a separate system. That means a product can be compliant with Shariah but still breach a prudential rule, and the reverse can also happen.

Hire purchase under shirkatul melk, often called HPSM, is a widely used mode in Bangladesh for financing vehicles, machinery and real estate. The bank and customer jointly own the asset, the customer rents the bank's share and gradually buys it, and ownership passes fully to the customer once payments are complete. HPSM suits Bangladesh because it fits familiar hire purchase practice and allows the bank to retain an ownership interest during the term. It requires careful drafting on title, registration, insurance, maintenance and what happens to the bank's share on default or early settlement.

Islamic banks cannot charge interest on overdue amounts, but they commonly use compensation or penalty mechanisms that Shariah advisers have approved, often with amounts directed to charity rather than retained as income. Bangladesh Bank policies and the bank's own Shariah committee decisions shape what is permitted and how it is accounted for. Disputes arise when charges are not clearly documented or are applied inconsistently. We review late payment provisions in Islamic finance documents to make sure they are clear, consistent with approved policy and capable of being explained to a court if challenged by a customer.

Islamic banks and finance companies generally recover defaulted investments through the Artha Rin Adalat under the Artha Rin Adalat Ain 2003, in the same way as conventional lenders. The court focuses on the documented claim, security and statutory procedure rather than on Shariah theory. Mortgaged property may be sold under the statute's procedure, and guarantors can be pursued. Problems arise when documents show inconsistent profit figures or when the purchase and sale sequence was not properly evidenced. We prepare recovery files carefully and, for borrowers, review whether the claim can be challenged on those grounds.

Yes. Several conventional banks in Bangladesh operate Islamic banking windows or branches with Bangladesh Bank permission. Windows must keep Islamic funds and investments separate from conventional operations, maintain a Shariah supervisory committee and follow Bangladesh Bank guidance on segregation, accounting and profit distribution. The practical challenge is operational: systems, staff and documents must prevent commingling. We advise banks on setting up and running windows, preparing standard documentation and responding to inspection findings, and on converting conventional facilities into Islamic finance structures where a customer requests it. We also review window-level policies.

Several financially distressed Islamic banks were placed under the bank resolution framework introduced in 2025 and consolidated. For depositors, borrowers and counterparties, this raises practical questions about which entity now holds their accounts and facilities, whether existing documents and security remain valid, how pending litigation continues and whom to deal with on restructuring. Answers depend on the resolution orders and transfer arrangements in each case. We review those instruments for clients and advise on protecting claims, preserving security and continuing proceedings against or involving the successor institution. Customers should keep statements, facility letters and any transfer notices received.

Foreign Islamic banks and development institutions can provide Shariah-compliant financing to Bangladeshi companies, subject to the approvals and reporting requirements for foreign borrowing. Depending on the borrower, the amount and the tenor, Bangladesh Bank approval or registration is needed, and Invest Bangladesh may be involved for certain investment-related borrowings. Security over Bangladeshi assets must be created and perfected under local law, often through a local security agent. We advise on the approval route, payment mechanics and enforcement in Bangladesh, working with the lender's offshore counsel on the main facility documents.

Many do. Mortgages of immovable property must be registered under the Registration Act 1908, and transaction documents generally attract stamp duty under the Stamp Act 1899 as amended. Charges created by companies should be registered with the Registrar of Joint Stock Companies within the statutory period to bind a liquidator and other creditors. Vehicles financed under HPSM or ijarah should reflect the bank's interest in the motor vehicle registration. Failure to stamp or register can weaken enforcement significantly, so we include these steps in every closing checklist for Islamic finance transactions.