ISLAMIC (MICRO)FINANCE

came under scrutiny for a draft law that would impose onerous oversight on NGOS receiving
foreign funding. 103
Islam and political contestations: IBBL’s success in increasing Islamic banking among the
poor is deeply politicizing. 104 Its efforts are occurring against the backdrop of sharp—and at times
violent—contestations regarding Islam versus secularism in political parties, the public sphere, and
the Constitution. An ongoing War Crimes Tribunal has imprisoned or executed leaders of the main
Islamic political party, Jamaat-i-Islami for their support of Pakistan during Bangladesh’s 1971
Liberation War. As IBBL continues to capture a proportion of the bottom-of-the-pyramid market, it
frequently comes under scrutiny by the current, secular Awami League government for perceived
ties to Jamaat-i-Islami. 105
As a result, IBBL is the only bank in Bangladesh required to allow a Bangladesh Bank monitor to
observe its Board of Directors meetings. IBBL’s philanthropic and poverty-oriented activities attract
particular government scrutiny, as the government tends to approach development work as
political work. This helps explains why IBBL is singled out for criticism amidst its rival Islamic
institutions in Bangladesh, such as Shahjalal Islami Bank, EXIM, and Al Arafah Islami Bank:
differences exist in corporate cultures and executive profiles. IBBL is commonly known as the most
‘Islamic’ in spirit, with current and former directors and Board members known to be private
supporters of Jamaat-i-Islami. In 2011, Bangladesh Bank ordered IBBL to stop directing its
corporate zakat and “doubtful income” (profits that came in contact with non-Shari’a compliant
processes) to its Islami Bank Foundation. These monies are now directed to IBBL’s CSR programs.
Development landscape: Since Bangladesh joined IsDB in 1974, IsDB has invested 19 billion
USD, mostly in large-scale infrastructure projects. Today, Bangladesh constitutes one of IsDB’s
largest portfolios. While IsDB helped establish IBBL in 1983 and remains an investor, overall
investment in financial sector projects remains slim. The power sector has dominated IsDB’s
engagement in recent years and will continue to do so. Health is another emerging priority sector.
A new Dhaka-based Gateway Office is set to open in 2015.
This tremendous, transparent support occurs alongside flows of documented and undocumented
funds from other Saudi Arabian charities and religious entities. These funds support development
projects, mosques, and private madrassas (schools) that are free from government oversight—a
point of contestation as these schools have produced several conservative Islamic movements in
recent years, and are periodically implicated in small-scale extremist organizing activities. Critics
also point toward a growing acceptance in Bangladesh of more conservative forms of Islam
aligned with Wahhabism. 106
5.2 Indonesia
With over 253 million residents, 87% of whom are Muslim, Indonesia possesses the largest
Muslim population in the world. With about 6,000 inhabited islands and high variability in
resource allocation, poverty persists despite impressive upward growth trends since the 1997
103 Human Rights Watch 2014
104 Daily Star 22 Jul 2011
105 Daily Star 24 Jul 2011
106 The dominant form of Islam in Saudi Arabia adhering to strict readings of the Qur’an and shunning many practices
culturally acceptable in Bangladesh and South Asia more broadly.
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