What is a sukuk?
A sukuk is a Shariah-compliant way of putting money with the government without interest. With an ordinary bond you lend to the government and earn interest. With a sukuk, your money buys a slice of the assets of a government project, and that slice is yours.
The government uses those assets and pays rent for them, which is shared among the owners. At the end, your money comes back. Your income is rent, not interest, and that is the key difference from an ordinary bond.
Say Arif avoids interest but does not want his savings sitting idle. He buys Tk 1 lakh of sukuk linked to a rural roads project. Say the rent is 9% a year: he receives Tk 9,000 a year, in two halves six months apart. At maturity his Tk 1 lakh comes back.
How it works
Interest is prohibited in Islamic law, so instead of borrowing at interest through an ordinary bond, the government issues sukuk. In Bangladesh they are called Bangladesh Government Investment Sukuk. The first was issued in December 2020, and each one is tied to a specific government project, such as water supply, rural roads or bridges.
Most government sukuk use an ijarah (lease) contract. Roughly: Bangladesh Bank acts as a special purpose vehicle (SPV) and sells the sukuk; investors become proportional owners of the project’s assets; the government leases those assets; and the rent it pays passes to investors. At maturity the government undertakes to buy the assets back, which returns your principal.
Rent paid before the project is built counts as advance rent, so some sukuk combine ijarah with istisna’a (a construction contract). The rental rate is announced before the auction and is usually paid every six months. Terms are usually 5 to 7 years; in 2026 the first sukuk with a term of under a year was also issued.
With Tk 100,000 in a sukuk paying a 10% annual rental rate, you receive Tk 5,000 in rent every six months, with tax deducted at source. At maturity the government buys back the assets and you get Tk 100,000. The rate is only an example; each sukuk has its own rate.
How individuals can buy
Only banks and finance companies with accounts at Bangladesh Bank can bid in the auction directly. Individuals, resident or non-resident, bid through such a bank or institution. First-time buyers need to open a Sukuk Investor ID with their bank before the auction.
Recent sukuk have had a minimum of Tk 10,000, in multiples of that amount, so you can start with far less than a treasury bond. However, part of each issue is reserved for Islamic banks and institutions, and the share set aside for individuals, provident funds and similar investors has varied by issue (2% in some, 20% in others). When demand is high, allotments are scaled down, so you may get less than you asked for.
Can you sell before maturity?
Government sukuk can generally be traded at a negotiated price only after at least half of the project’s assets have been built and handed over; before that they can only be transferred at face value. Bangladesh Bank announces when trading opens. In practice the market for individuals is very small, so it makes sense to buy expecting to hold to maturity.
Terms can also be extended. In 2025 the first sukuk was extended by five years at a new rental rate; holders who did not want to stay in could cash in on the original maturity date.
What return to expect
The early sukuk (2020–2022) paid rent or profit of close to 5% a year, in line with the low interest rates of the time. After market rates rose, new sukuk issued in 2024–2026 have paid roughly 9–10.5% a year.
Unlike treasury bonds, where the rate comes out of bidding, a sukuk’s rental rate is announced before the auction. The first sukuk’s rate was set by adding a fixed margin to an Islamic bond rate. In 2025 some sukuk paid somewhat less than treasury bonds of the time, so it is not safe to assume sukuk always pay more.
To see your real gain, take out tax and inflation.
Why people choose it
- Shariah-compliant: rent instead of interest.
- Paying the rent and buying back the assets is the government’s obligation.
- A low minimum, Tk 10,000 in recent issues.
- Regular rent every six months.
Points to weigh
- Issues are irregular; you cannot always buy when you want to.
- The quota for individuals can be small, and allotments are scaled down when demand is high.
- Hard to sell before maturity.
- The term may be extended on new terms.
Tax
Tax is deducted at source from the rent at the rate the government sets, under the Income Tax Act 2023 and related law. Check the notice for each sukuk and that year’s Finance Act for the rate; it can change.
The rent is part of your total income. When you file a return, the tax already deducted is set against your total tax.
Tax rules can change with each year’s Finance Act. Before a big decision, check the latest rules or speak to a tax adviser.
How to get started
- Watch the Bangladesh Bank website or the newspapers for announcements of new sukuk.
- Ask whether your bank bids in sukuk auctions on behalf of customers.
- Open a Sukuk Investor ID through your bank before the auction; you will need your national ID, a bank account and your TIN if you have one.
- Decide how much to apply for and keep the money in your account.
- Get your allotment, rent dates and maturity in writing.
Check before you start
- Can I leave the money in until maturity, or longer if the term is extended?
- Have I read the notice for this sukuk’s project, term and rental rate?
- If I get a smaller allotment, have I thought about where the rest of the money goes?
- Do I know whether my bank charges any fees?
- Have I compared the after-tax return with other options?