Bangladesh Bank has reserved a dedicated 10 percent quota for individual investors in Sukuk issuances to increase retail participation in Shariah-compliant financial instruments.

The central bank’s Debt Management Department issued a directive to the managing directors and chief executive officers of all scheduled banks and financial institutions across the country on Monday, outlining a revised allocation framework for Sukuk.

Under the new framework, 50 percent of a Sukuk issuance will be reserved for full-fledged Shariah-based institutions, including Islamic banks, financial institutions and insurance companies.

Another 30 percent will be allocated to Islamic branches and windows of conventional banks, while 10 percent will be exclusively reserved for individual retail investors.

The remaining 10 percent will be distributed among conventional banks and financial institutions, insurance companies, provident funds, deposit insurance, investment companies, corporate bodies, gratuity funds and mutual funds.

The move marks a change from the previous allocation policy, which did not provide an exclusive quota for individual investors.

Previously, 15 percent of Sukuk was jointly allocated to individual investors and institutional categories, including provident funds, deposit insurance, investment firms, corporate bodies, gratuity funds and mutual funds.

Under that framework, 80 percent was allocated to Shariah-compliant entities, including Islamic branches and windows of conventional banks, while the remaining 5 percent was reserved for conventional institutions.

By introducing a dedicated 10 percent quota, Bangladesh Bank has ensured that individual investors will no longer have to compete directly with large institutional investors for their share of Sukuk allocations.

The revised arrangement is expected to make Sukuk more accessible to retail investors and encourage broader participation in the country's Shariah-compliant investment market.

Sukuk are Shariah-compliant investment instruments issued by the government to raise funds for infrastructure and other development projects.

Unlike conventional bonds, which generally provide interest-based returns, Sukuk are structured in accordance with Islamic finance principles, with returns linked to underlying assets, projects or profit-sharing arrangements.

The dedicated retail quota is therefore expected to give individual investors greater access to government-backed Shariah-compliant investment opportunities while helping diversify participation in Sukuk issuances.