Bangladesh Bank has barred Islamic scholars from serving on Shariah supervisory committees of more than three banks at a time, in an effort to improve governance and strengthen oversight in Islamic banking.
BB issued a circular in this regard on Sunday.
In the circular, the central bank said that appointees to the committees must hold at least a bachelor鈥檚 degree in Islamic studies.
Each member will receive a monthly honorarium of Tk聽25,000 and an attendance fee of up to Tk 8,000 for every meeting.
The committees will consist of either three or five members, one of whom must serve as chairman.
Members will be appointed for a maximum term of three years, subject to Bangladesh Bank鈥檚 prior approval based on their credentials and board nominations.
They may be reappointed after performance reviews, but no one can serve more than six consecutive years at the same bank without taking a two-year break.
Bangladesh currently has 10 fully-fledged Islamic banks and 17 conventional banks with Islamic banking windows or branches.
All of them are required to operate Shariah supervisory committees to ensure compliance with Islamic principles in their banking activities.
Officials said the new rules were prompted by serious concerns over scholars鈥� over-commitments and weak oversight.
In some cases, a single scholar was serving on as many as 17 committees.
Regulators said such practices diluted the quality of supervision, with many scholars attending meetings mainly to collect fees rather than offering well-considered guidance.
The Shariah supervisory committees play a vital role in drafting and monitoring Islamic banking policies.
Bangladesh Bank expected that the restrictions will help ensure independence, improve accountability, and restore confidence in Islamic banking, which now accounts for more than a quarter of total deposits in the country鈥檚 financial system.