Bangladesh’s first short-term sukuk: A simple guide for investors

Looking for a safe investment that complies with Islamic finance principles? The Bangladesh government's sukuk bond could be worth considering.

After raising Tk 48,000 crore through sukuk of various tenures, the government on June 28 auctioned Bangladesh's first short-term sukuk-a 273-day Bangladesh Government Investment Sukuk (BGIS).

The short-term, shariah-compliant instrument attracted overwhelming interest from institutional and individual investors. Investors submitted bids worth Tk 56,607 crore-more than 10 times the target amount of Tk 5,500 crore-underscoring strong demand for Shariah-compliant investment products.

Amid strong investor interest, the government is expected to raise more funds through sukuk in fiscal year 2026-27. A senior official of the Bangladesh Bank official said around Tk 30,000 crore would be raised through auctions of sukuk with various tenures.

Here's what you need to know before investing.

What is a sukuk?

A sukuk is a Shariah-compliant investment certificate that serves as an alternative to a conventional bond.

Unlike traditional bonds, which pay interest, sukuk generate returns from income earned by underlying assets or projects. The government's latest issue is structured as an Ijara sukuk, meaning investors will receive returns from lease income rather than interest.

Who can invest?

The sukuk is open to individual investors, expatriate Bangladeshis, and institutional investors.

What is the minimum investment requirement?

The minimum investment is Tk 10,000. There is no maximum investment limit for individual investors.

How can you invest?

You can apply through any scheduled bank or financial institution where you maintain an account.

First-time investors must obtain a Sukuk Investor (SI) ID through their bank before submitting an application. Investors who already have an SI ID from previous sukuk investments do not need to register again.

Is the profit subject to tax or tax deducted at source?

Yes. A 10 percent tax deducted at source (TDS) will be applied to the profit before it is credited to the investor.

Can an investor redeem or sell the sukuk before maturity?

Yes. Investors can redeem or sell their sukuk before maturity, subject to prevailing market conditions and applicable regulations.

How does the return compare with other government savings instruments and bank deposits?

The expected return is broadly comparable to those offered by government savings instruments and bank deposits.

The key difference is that sukuk generate returns from income earned by underlying assets rather than interest, making them compliant with Islamic finance principles.

How will investors receive their profit and principal at maturity?

Both the principal and the accumulated profit will be paid together in a lump sum at maturity.

The money will be credited directly to the investor's designated bank account.