Shariah-compliant financial services are now being offered through Mobile Financial Services (MFS). 'Nagad' is the first MFS provider in the industry to offer a Shariah-compliant interest-free mobile payment solution via its 'Islamic Account. The platform has been in operation since 2019.
Customers are increasingly becoming more interested in preserving an Islamic lifestyle, thus Sharia-based banking is getting more popular. While the country's mobile payment industry is expanding, 'Nagad Islamic,' is becoming more and more popular among observant Muslims who want to conduct shariah-based, interest-free financing from the comfort of their own home. In recent months, the platform has attracted a lot of interest among the customers.
In Bangladesh, despite the presence of several Islamic services in the country and significant growth within the market, the market continues to have a sizable Muslim population, accustomed to living a Shariah-based life, who are still excluded from the financial inclusion.
According to experts, Shariah-compliant mobile payment service is crucial in bringing this segment into financial inclusion. Because, through mobile wallet customers can easily withdraw deposits and conduct shariah-based transactions from anywhere, without having to physically visit a bank location. For these types of facilities, the industry is witnessing an increasing number of Muslim customers opting Nagad Islamic Account.
Professor Dr Md Salim Uddin, chairman of executive committee of Islami Bank Bangladesh Limited, told the FE that Nagad, one of the leading MFSs in the country, was able to attract a large number of customers to its Shariah-compliant mobile payment service due to its consistent efforts and compliances.
Dr Md Salim ,who is also the chairman, Bangladesh House Building Finance Corporation, put emphasis on being more Shariah-compliant and quality services to this end as a large portion of the country’s pious people are still seeking such services to conduct their daily banking transactions.
Even countries like the US and UK are adopting Financial Technology (FinTech) based on Islamic shariah-compliant as a good number of people are searching for the service eagerly there, he stated.
Professor Dr Salim also hoped that more customers would like and add to this service in the coming days.
Since 2019, Nagad has been the only digital wallet in the country that is providing Shariah Complaint ‘Nagad
Islamic Account’, ensuring digital Islamic finance for its customers under the supervision of the Sharia Monitoring Board.
“Our Islamic accounts have been operating in a transparent, dependable and compliant manner, since 2019. We believe this capability would eventually lead to the formation of a cashless society, ensuring financial inclusion in the country." Mohammad Aminul Haque, Member of Shariah Board and the Executive Director of Nagad Ltd. told the Financial Express.
Over the last 3 years, Nagad Islamic account has gained popularity among Muslim consumers as a convenient, secure and trustworthy medium. Users are now saving their hard-earned money, donating and conducting other transactions such as payment of Hajj and Umrah travel through this Islamic account.
The process of opening an account on this platform is also much easier. There is no need to go anywhere physically or fill out any additional form to open an account. Customers are easily converting their running Nagad app into Islamic account by simply clicking on the 'My Nagad' option in their regular 'Nagad' app from anywhere. This simple process is also reducing the harassment of customers, making the transaction process much easier.
The Shariah-based Islamic banking system was first introduced in the country in 1983. Since then, the country’s Shariah-based financial sector has achieved substantial progress in the past three and a half decades and seeing robust expansion in recent times due to policy backing and increasing demand for shariah-based services in the market.
Besides Nagad Islamic account, there are 10 full-fledged Islamic banks in Bangladesh that have been operating with 1569 branches across the country as of June 2021. 39 Islamic banking branches of eight conventional commercial banks and 194 Islamic banking windows of 13 conventional commercial banks are currently providing Islamic financial services in Bangladesh.
As competition continues to grow, the Islamic banking system is acquiring traction through deposit collecting, investment/ loan disbursement, remittance collection etc.
Total deposits in the Islamic banking sector reached BDT 393,111crore/3931.11 billion at the end of December 2021 which increased by 20.24 per cent compared to the same quarter of 2020.10 full-fledged Islami banks have disbursed 27.88 per cent of the Total Investment/loans disbursement at the end of 2021.
Islamic banks have accounted for a 40 per cent share of remittances mobilized by the entire banking sector.
As the only mobile banking solution that enables Islamic life management, Nagad Islamic Account has also amassed a large user base who are is now performing shariah-compliant transactions, including depositing, Insurance Payments, Donations and etc. from the comfort of their own homes.
The industry sees Nagad's initiative as a significant step toward promoting cashless transaction and accelerating financial inclusion in the country.
