Rural development Sukuk sees massive demand, 8.5 times oversubscribed

The government’s Shariah-based investment Sukuk worth Tk 5,600 crore for rural road infrastructure has received overwhelming investor response, with total bids reaching Tk 47,490.88 crore-about 8.5 times higher than the offered amount, according to the Bangladesh Bank.

The strong demand forced the central bank to allocate the Sukuk proportionately among investors through an automated auction system held on Monday (June 22). 

Officials said the auction was conducted using Bangladesh Bank’s own in-house software platform.

The instrument, issued under the government’s “9th Bangladesh Government Investment Sukuk,” is linked to the project titled “Cyclone Amphan and Flood Damaged Rural Road Infrastructure Rehabilitation Project (1st Revised)”. 

The funding target was Tk 5,600 crore, but total bids came from a wide range of investors including Islamic banks, Islamic windows of conventional banks, financial institutions, provident funds and individual investors.

A total of Tk 47,490 crore 88 lakh in bids was submitted, reflecting not only strong liquidity in the financial system but also growing confidence in Shariah-compliant instruments.

Retail demand modest, institutional appetite strong

Out of the total issue size, 15 per cent-or Tk 840 crore�"was reserved for individual investors.

However, retail participation remained limited compared to institutions, with individuals applying for only Tk 269.63 crore worth of Sukuk.

The remaining allocation was distributed among banks, financial institutions, and other institutional investors on a proportional basis, based on their bids.

Officials confirmed that due to heavy oversubscription, no investor received full allocation. Instead, all participants were awarded Sukuk on a pro-rata basis, ensuring fair distribution across categories.

Return and structure of the Sukuk

The five-year Sukuk offers an annual profit rate (lease return) of 9.75 per cent. It is structured as an Ijara-based Islamic financial instrument, backed by government infrastructure assets linked to rural road rehabilitation projects.

The Sukuk is designed to mobilize long-term funding for rebuilding and improving rural road networks damaged by natural disasters such as Cyclone Amphan and major floods, strengthening connectivity and local economic activity.

Bangladesh Bank said the Sukuk will be eligible for use as Statutory Liquidity Ratio (SLR) instruments for banks and financial institutions. This means banks can treat their Sukuk holdings as part of their mandatory liquidity buffer maintained with the central bank.

In addition, Islamic banking branches of conventional banks will be able to use this Sukuk as collateral to access liquidity support from the central bank when needed.

This feature is expected to increase the instrument’s attractiveness among financial institutions, as it improves both liquidity management and balance sheet flexibility.

Secondary market trading allowed

The Sukuk will also be tradable in the secondary market. Islamic banks, conventional banks, insurance companies, Islamic windows, and individual investors will be able to buy and sell the instrument in the capital market.

Market participants say this tradability adds depth to Bangladesh’s Islamic finance ecosystem and provides investors with exit options before maturity.


They added that strong demand reflects growing investor confidence in government-backed Islamic instruments, especially at a time when liquidity remains ample in the banking system.

In a related development, the government is preparing to issue a short-term 273-day (around 9-month) Shariah-based Sukuk for the first time. The auction for this new instrument is scheduled for June 28.

This upcoming issue, under the Rural

Infrastructure Development Project-2, aims to raise Tk 5,500 crore at an expected return rate of 9.36 per cent.

Officials say the introduction of shorter-tenor Sukuk will give investors more flexibility while helping the government diversify its funding tools for infrastructure development.

For now, the latest oversubscription signals a clear message from the market: demand for Shariah-compliant government securities is rising fast, and investors are willing to commit large funds to stable, sovereign-backed instruments.