re-casting development: islamic banking and the case of the islami bank's rural development...

RE‐CASTING DEVELOPMENT: ISLAMICBANKING AND THE CASE OF THE ISLAMIBANK’S RURAL DEVELOPMENT SCHEME

IN BANGLADESH

MOHAMMED R. KROESSIN*

International Development Department, University of Birmingham, Birmingham, UK

Abstract: Islamic economics has been counter‐constructed as an alternative to the mainstreamdevelopment model perceived to be purely focused on the material world. In this context, thedevelopment narrative of a leading Islamic bank in Bangladesh is explored, utilising a discourseanalytical approach.

Despite the fact that the Islami Bank’s development programme appears to very similar tomainstream interventions, it seeks to re‐cast development as a holistic process with a visionfor society that is both spiritual and material. By virtue of this narrative that conceptualises theobjectives of development in a different fashion to the mainstream, complex power dynamicsand antagonistic frontiers with other development actors are generated. Copyright © 2011 JohnWiley & Sons, Ltd.

Keywords: Islamic economics; Islamic finance; political Islam; conceptualisations of development;Islami Bank Bangladesh; discourse analysis

In many Muslim majority countries, both in the oil‐rich Middle East and the low‐incomedeveloping world, Islamic economics and its sub‐disciplines, such as Shari’ah1‐compliantfinancing,2 are seen as an addition, if not an alternative, to the mainstream model of

*Correspondence to: Mohammed R. Kroessin, International Development Department, University of Birmingham,Birmingham, UK.Email: [email protected]

1The Shariah is the uncodified Islamic law derived from two primary sources: the Qur’an and the sayings andexample set by the Prophet Muhammad called the Sunnah as interpreted by scholars of jurisprudence.2Islamic economics refers to a field of study that identifies and promotes an economic order that conforms to Islamicscripture and traditions. Islamic banking is a sub‐discipline, which refers to a system of banking or banking activitythat is consistent with the principles of Islamic law, in particular the prohibition of interest/usury.

Copyright © 2011 John Wiley & Sons, Ltd.

Journal of International DevelopmentJ. Int. Dev. 23, 855–867 (2011)Published online in Wiley Online Library(wileyonlinelibrary.com) DOI: 10.1002/jid.1814

development promoted by the International Finance Institutions and agencies of the UnitedNations.Most Islamic economic theorists (e.g. Ahmad, 1978; Chapra, 1985; Iqbal 2002) insist

that Islamic theology espouses a distinct ethical foundation and strategy for poverty reduc-tion and development. However, a closer examination of this literature (Farooq, 2008;Kroessin 2008) reveals that the understanding of development expressed by Islamic econ-omists is primarily focused on macro‐economic stability and economic growth, facilitatedthrough an ‘Islamic’ lending process (see for example Ahmed, 1976). Although Islamiceconomists stress a religious rather than secular motivation for achieving economic devel-opment, their conceptualisations of economic growth and management are not dissimilarto those of mainstream economics, with the exception of their rejection of interest/usury(Riba) and advocated reliance on charitable giving to generate funds for poverty reduction.Against the backdrop of the proposition made by a number of utopian Islamic thinkers

who argue that Islamic economics cannot be reduced to the technicalities of financial trans-actions, rather it should encompass a broader vision for the reformation of politics and theorganisation of society, this article explores the development narrative of a leading Islamicbank in Bangladesh, the broader ‘Islamic’ discourse that underpins the organisational ratio-nale, and its power relationship with mainstream actors within the context of the eventfulhistory of ‘development’ policymaking in the country.The purpose of this article is to understand how particular Islamic discourses and social

theories construct the objectives and processes of development, despite interventions andservices offered appearing to be very similar to mainstream ‘Western’ approaches. For thispolicy analysis, the conceptual framework and methodology applied to shed light on thesequestions is discourse analysis, drawing on a Foucauldian genealogical approach to under-standing ‘development’ in the mainstream and Islamic contexts, and critical discourse ana-lysis to explore the power relationships that framing ‘development’ in Bangladesh througha particular Islamic discourse generates.3

1 ISLAMIC ECONOMICS AND DEVELOPMENT

Islamic economics is a new discipline. This is primarily because although Muslim scholarsof the past did differentiate between religious (Ibadat) and worldly (Mu’amalat) affairs,the realm of social sciences was dominated by Islamic jurists. They adjudicated on the per-missibility of human actions through interpretation of scripture or by analogy to practicesascribed to the example of the Prophet Muhammad, rather than exploring new avenues forsocial or economic change.4 This continues to form the epistemological basis for the bodyof literature in the field of Islamic economics, although policy prescriptions made by Isla-mic economists vary drastically from pragmatic to utopian approaches (Nienhaus, 1982).Within a broader historical perspective, Islamic economics also may be interpreted as an

expression to re‐create the historical construct of the ‘Golden Age of Islam’ where rapidterritorial expansion coupled with a rudimentary welfare system (see Benthall, 2003) hadbrought unprecedented levels of prosperity to Arabia. However, with the onset of

3This article draws on the author’s doctoral study at the International Development Department, University ofBirmingham, which concerns itself with the discursive relationship between mainstream and Islamic developmentpolicymaking.4Interestingly, the medieval Islamic scholar, Ibn Khaldun (1332–1406), is considered by some to be the father ofeconomics and of social sciences in general.

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Copyright © 2011 John Wiley & Sons, Ltd. J. Int. Dev. 23, 855–867 (2011)DOI: 10.1002/jid

colonisation and the Industrial Revolution, Muslim scholars began to talk the about ‘retar-dation’ compared with the rapid progress observed in Europe (Choueiri, 1997).Since the mid‐twentieth century, there has been a rapid growth of literature in Islamic

economics and finance, culminating in a boom in Islamic banking in the 1990s. Underly-ing factors are seen as a desire for an Islamisation of deeply secular disciplines like eco-nomics, which had become a priority in the post‐colonial struggle in the Muslim world(Chapra, 2000). In a more critical manner, Kuran (1995) views the birth of Islamic Eco-nomics as a means to create a distinct identity for Muslims in absence of any tangiblepolitical entities. This Islamic revivalism was inspired by thinkers in the Indian sub‐continent like Abul Ala Mawdudi (1903–1979) and in the Arab world by Hassan Al‐Banna(1906–1949) and Sayyid Qutub (1906–1966), the founding fathers of the MuslimBrotherhood (Al Ikhwan al Muslimeen) in Egypt who contrasted Islam with the dominantpolitico‐economic systems of capitalism and communism. As Nienhaus (2000) states, theutopia constructed by early Islamic economic thinking clearly was fuelled by counter‐constructing it against the backdrop of a bi‐polar system of political economy:

‘In the early years of Islamic economics, from its origins in the 1950s until the 1970s,much study was devoted to the construction of ‘ideal worlds’. That these models were[regarded as, the author] superior to the imperfect reality of Western socialist and capi-talist systems, not to mention the real existing systems of the Islamic world, is neithersurprising nor methodologically relevant.’ (Nienhaus, 2000: 96).

The idea of Islamic economics was popularised byMawdudi, the founder of the Jamaat‐e‐Islami movement,5 who regarded himself as a staunch defender of Islamic culture againstthe corrupting influence of the West. Islamic development thinking was, hence, a counter‐construction to the way ‘Western’ economics was perceived to be focusing purely on mate-rial growth and individual wealth accumulation and hence eroding the moral values ofIslam. For Mawdudi, the rationale for the Islamisation of all human affairs was based onhis theological reasoning that Islam’s key message was one of justice with a caliphate asthe ideal form of governance. As the Islamic economist and Jamaat politician KhurshidAhmed underlines, the ‘primary norm in an Islamic society is the elimination of crime,establishment of morality and protection of private property, not economic progressor public participation in decision‐making’ (c.f. Qureshi, 1980). Hence, this particularIslamic conceptualisation of the processes relating to development focuses mainly onsocial reformation and the creation of a state‐led social and economic system.

2 ANALYSING ‘ISLAMIC’ AND ‘WESTERN’ DISCOURSES

To highlight and examine the tensions between the foundational values of development inIslam compared with the ‘Western’ discourse, a strand of the Islamic development dis-course, which promotes a strategic convergence of religious, political and broader socio‐economic objectives, will be explored in more detail. Such a comparison is fraught with

5Founded during British rule in India in 1941, the Jamaat’s objectives are the ‘Iqamat‐e‐Deen’ or ‘Nizam‐e‐Mustafa’—the establishment of a pure Islamic state, governed by Shari’ah law. The Jamaat moved its organi-sation after the partition of India to the newly created Muslim state of Pakistan, although Mawdudi hadopposed the creation of a separate state for the Muslims of India. The Pakistani Jamaat was divided into Westand East wings, and after the independence of Bangladesh, which was resisted by the Jamaat vis‐à‐vis theargument that an Islamic Republic should not be split, the two wings became separate entities.

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the danger of reducing and essentialising either ‘Islam’ or the ‘West’. Neither are singleentities, and both the ‘Islamic’ and the ‘Western’ are multi‐faceted discourses, continuingto evolve over time. To see either the Islamic or Western development discourse as amonolithic and united formation of policy and practice would be to ignore the fact thatthe view of development is constantly re‐constructed and contested from within. The dis-cipline of development studies itself has been described as ‘in flux, with a rapid turn‐overof alternatives’ (Pieterse, 2001),6 whereas Islamic social teachings also offer a diverserange of contrasting interpretations and interpreters.For this reason, the chosen discourse analytical approach offers a retroductive methodol-

ogy that allows for the narratives or discourses to be explored, focusing on the process ofmeaning making rather than the meaning itself. This paper draws on the work of MichelFoucault, whose primary concern was with understanding the operations of power throughexamining knowledge and the process of making meaning. Foucault traces the role of dis-courses in wider social processes of legitimating and power, emphasising the constructionof current truths, how they are maintained and what power relations they carry with them.Foucault (1977) argued that power and knowledge are inter‐related, and therefore, everyhuman relationship is a struggle and negotiation of power. He further stated that power isalways present and can both produce and constrain the truth. Discourse, according to Foucault(1977, 1980, 2003) is related to power as it operates by rules of exclusion. Discoursestherefore also include excluding procedures, not just of arguments and themes but alsoof groups constructed as the ‘other’ and denounced as outsiders as evident in his researchabout the discourse of madness (Foucault, 2006). Foucault (1972: 234) called discourseanalysis ‘pure description of discursive facts’, meaning a focus on the signifier rather thanthe signified. In line with Foucault’s analytical strategy, this paper identifies the discourses,contexts and knowledge that generate the power relationships in the development field inBangladesh.

3 THE BANGLADESHI DEVELOPMENT ROLLER COASTER: SOCIALISM,CAPITALISM AND POLITICAL ISLAM

Bangladesh is a case in point for the fluidity of dominant perspectives in development pol-icy. It has had an eventful history since coming into existence in 1971. After its indepen-dence from Pakistan, Bangladesh became a parliamentary democracy, with Mujibur Rahmanas the Prime Minister. Although the new state was committed to socialism and secularism askey objectives of Mujib’s political philosophy, Mujib soon began to appeal to the more Isla-mically minded grassroots and sought Bangladesh’s membership in the Organization of theIslamic Conference and the Islamic Development Bank (Jahan, 2005).After Mujib’s assassination in 1975, General Ziaur Rahman rose to power. He reinstated

limited multi‐party politics and founded the Bangladesh Nationalist Party (BNP) to legit-imise his rule. Zia initiated economic liberalisation and his move towards Islamisation

6However, post‐development scholars, such as Escobar (1995), have been fervent critics, pointing out the essen-tial Euro‐centric nature of development theory and practice. Despite the significant and substantive counter‐critiques, post‐development theory underpins the conceptual apparatus for this article. The author has taken aFoucauldian approach to understanding discourses that helps to investigate the breadth and depth of assumptionsembedded within mainstream and Islamic concepts of development. In this light, as an important conceptualreference point for this article, ‘development’ is held to be associated with a range of values and visions aboutthe ideal type of society, economy and political system.

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brought him the support of Bangladesh’s proponents of political Islam. He issued a proclama-tion order amending the constitution to insert in the preamble the salutation ‘Bismillahir‐Rahmaanir‐Rahim’ (‘In the name of Allah, the Beneficent, the Merciful’). In Article 8(1)and 8(1A), the statement, ‘absolute trust and faith in Almighty Allah’ was added, replacingthe commitment to secularism. Socialism was redefined as ‘economic and social justice’.Bangladesh’s next ruler, General Hossain Mohammad Ershad, gained power in a blood-

less coup in 1982. Ershad realigned Bangladesh to Western capitalist policies with the de‐nationalisation of key industries and the banking sector. Ershad also made amendments tothe constitution of Bangladesh, which declared Islam the state religion, abandoning statesecularism. In 1992, Bangladesh reverted to a parliamentary democracy with Zia’s widow,Khaleda Zia, leading the BNP to two election victories, separated by a phase of AwamiLeague domination, headed by Sheikh Hasina, one of Mujib’s surviving daughters. In2007, following widespread political unrest, a caretaker government was appointed toadminister the next general election, a mandate expanded with the support of the military.Under it, Bangladesh’s development policies were more closely aligned with the post‐Washington consensus. The caretaker government held elections in December 2008, andthe Awami League was returned to power.This political roller coaster also reflects, to some degree, development priorities for the

country, whose population has experienced colonialism, the partition of India, a civil war,military regimes flirting with different political ideologies and the fight between two vio-lently opposed political movements. Although a major shift in policy back towards a morestate‐led approach now appears perhaps inconceivable, some flagship development poli-cies, such as the Poverty Reduction Strategy Paper (PRSP), have been put into questionby the new left‐leaning government vis‐à‐vis a return to a 5‐year plan. This intentionwas indicated to the author by a senior civil servant in the Planning Commission monthsbefore the official announcement was made.7 The ruling Awami League decided to re‐castthe PRSP‐II, designed by the last caretaker government, with a view to accommodating itselection pledges and addressing the problems created by the global economic recession. Inthe leading financial newspaper of the country, AMA Muhith, the Finance Minister, wasquoted as saying: ‘We will shift to five‐year plan from FY 2011. But until then, we willimplement the revised PRSP. There will be no other PRSP from July 2011’.8 Whether thisrepresents truly a major policy shift remains to be seen. The 5‐year plan not only has ideo-logical importance but also relates the country back to the Mujib era, when Mujib put intoplace the first 5‐year plan, and it is to his appeal as the Bangabhandu (‘Friend of Bangal’) thathis daughter seeks to connect in her bid for renewed leadership.9

In the short history of Bangladesh, the country has been in a constant state of flux oreven turmoil, with colonialism, socialism, capitalism and political Islam, all having consid-erable influence on development policymaking. Even the credit for the very creation of thecountry still remains politically contested. The Awami League claim that it was Mujib wholed the country to independence, whereas the BNP states that it was Zia’s military role thatsecured the victory. Others are alleged to have violently opposed the independence, suchas Jamaat‐e‐Islami itself.10 These contested readings and interpretations of history continue

7The Financial Express, Govt may reintroduce ‘five year plan’, Dhaka, 1 April 2009.8The Financial Express,Revised PRSP to cost $49b, 3 December 2009. Available at http://www.thefinancialexpress‐bd.com/more.php?news_id=85822 (accessed 10 May 2010).9See Islam MS. 2008. Return of the Two Begums: A ‘Hobson’s Choice’ for Bangladesh? National University ofSingapore ISAS Brief 84.10See Jahan R. 2005. Bangladesh Politics: Problems and Issues. University Press, Dhaka.



to be the prism through which all direct and indirect political activity is evaluated by theelites.

4 ISLAMI BANK BANGLADESH LIMITED: FINANCIAL INSTITUTION,SOCIAL DEVELOPMENT AGENCY OR POLITICAL FORCE?

As the first Islamic Bank in South‐East Asia, Islami Bank Bangladesh Limited (IBBL) wasfounded in 1983 with start‐up capital provided by the Islamic Development Bank,11 anumber of public and private banks and institutions from the Middle East, key figures fromthe Bangladeshi Muslim business community and political and religious leaders. A basicframework for Islamic banking was established by presidential decree, and Middle Easternfunds soon followed.Although legally a Private Commercial Bank and regulated by the Bangladesh Bank, the

central bank, some senior IBBL staff would like to see it as a ‘development finance institu-tion’ a specialist financial institutions focusing on industrial or agricultural lending and lessstringently regulated (Debuath, 2003).12 In 2008, it was the largest private commercialbank in Bangladesh,13 with profits double that of the second largest bank. IBBL claimsto finance approximately 20 per cent of Bangladesh’s exports, and a quarter of all foreignremittances received by the country are channelled through the bank. Its mission is toestablish Islamic banking through the introduction of a welfare‐oriented banking system.It has previously aimed to contribute to the ‘Islamisation’ of the economic system, but withthe turn of the political tide, that goal has now been downgraded. However, the quest forIslamisation of the banking sector is in line with Mujib’s signing of the OIC’s Islamicdevelopment charter and is therefore the official state policy for the time being, althoughthe interpretation of how ‘Islamisation’ should take form varies largely between utopian(or counter‐constructed as fundamentalist) and pragmatist (Nienhaus, 1982).At the centre of the development vision for the Islami Bank stands a re‐casting of what

development should mean, although not necessarily how it is achieved. Although, in atechnical sense, IBBL focuses on banking without interest, this is deeply interwoven witha vision for how society, politics and the economy should be organised. Interestingly, thedestination here is not a futuristic utopia but the reclaiming of the past Golden Age ofIslam where, according to a constructed historical narrative, a welfare state existed, abjectpoverty was eradicated, and adherence to the Shari’ah caused rulers to reign with justiceover every aspect of the life of their subjects (see Farooq, 2008). In doing so, the IBBLnot only positions itself at a particular location on the contemporary Bangladeshi develop-ment ‘roller coaster’ but also casts its roots back to the construct of the Golden Islamic erawhere economic growth was believed to have been facilitated through a general adherenceto the Shari’ah and poverty alleviated through public works (Waqf ) and alms (Zakat). Thispositioning frames the Bank’s relationship with other actors in the development field, whoeither subscribe to or oppose this particular discourse.

11As an overall vehicle for pan‐Islamic political leadership, Saudi King Faisal encouraged the establishment of theinter‐governmental ‘Organization of Islamic Conference’ (OIC), which was set up in Rabat, Morocco, in 1969 butis headquartered in Jeddah, Saudi Arabia. Subsequently, the Islamic Development Bank was founded by the firstconference of OIC Finance Ministers in 1973 and is the primary multilateral development financing institution in theMuslim world.12The author has spent from November 2008 to May 2009 on ethnography‐inspired fieldwork as an intern with theIslami Bank, and interview, observational and documentary data for this article were gathered during this period.13Bangladesh Bank 2008. Annual Report 2009, Dhaka.

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In an effort to realise its vision of development from within an Islamic framework, theIBBL has two arms, which carry out its welfare and social development work, the IslamiBank Foundation and the Rural Development Scheme (RDS). The Islami Bank Founda-tion, a charitable subsidiary of IBBL, runs a number of projects throughout the country,which are archetypically traditional Islamic in nature: income‐generation schemes throughinterest‐free loans, education including Madrassahs, free or highly subsidised health care,relief work and Islamic propagation, which is further linked to the primarily Islamic micro‐credit operation through the RDS.Hence, IBBL combines a range of features that make it a very successful financial insti-

tution and social development agency. It uses programmatic interventions that aredesigned to promote development based on Shari’ah‐compliant social transformation,which will be further explored in the following section. Within the context of the Bangla-deshi development roller coaster, the IBBL also positions itself, wittingly and/or unwit-tingly, within the camp of political Islam through the way it articulates its practice inIslamic terminology and through references to the Shari’ah. On the other side of this dis-cursive relationship around the role of Islam in policymaking and politics in Bangladesh, aFoucauldian exclusion procedure has been created that seeks to label the Bank as the‘other’. Awami League state minister for law Qamru Islami recently alleged publiclythat the Islami Bank was involved in financing fundamentalism and needed to beinvestigated,14 although no substantiation of any such allegations have since been broughtforward. Thus, the IBBL, by the very way it articulates its practices along utopian Islamiclines, is both directly and indirectly embroiled within the political maelstrom that hasformed and continues to shape Bangladesh.

5 IBBL’S RDS: MATERIAL OR SPIRITUAL GROWTH OR BOTH?

The IBBL’s RDS focuses its efforts on the provision of micro‐credit to more than 500 000people in over 10000 villages throughout the country. Although essentially economic in nat-ure, the scheme also has a strong social development approach with a focus on promotion ofIslamic values and religious practice. One of the aims of the RDS is to develop ‘moral values’and create an awareness about social rights and responsibilities. Towards this end, in theweekly meetings with participants, field officers deliver lectures on different topics from anIslamic perspective. Internal IBBL policy and training documentation states that:

‘At a very basic level the disbursement of collateral free loans in certain instances isan example of how Islamic banking and microfinance share common aims. ThusIslamic banking and micro credit programmes may complement one another in bothideological and practical terms. This close relationship would not only provideobvious benefits for poor entrepreneurs who would otherwise be left out of creditmarkets, but investing in micro enterprises would also give investors in Islamicbanks an opportunity to diversify and earn solid returns’.15

14The Financial Express, Islami Bank, Ibn‐Sina Trust fuelling fundamentalism, alleges state minister for law, 10April 2010. Available at http://www.thefinancialexpress‐bd.com/more.php?news_id=97325 (accessed 10 May2010).15Quoted from an internal IBBL paper entitled ‘Grameen Bank vs RDS of the IBBL’.



This is indicative of the dual aim of the RDS, the promotion of Islamic ideals coupledwith the practical selling of a marginally profitable product for the bank.In spite of the Islamic terminology, the RDS is very closely based on the Grameen Bank

model of social collateral lending, and the technical development has been led by formerGrameen staff. RDS has made the group lending approach their own and bestowed ulti-mate legitimacy by using scriptural references: ‘The cardinal principle of the Rural Devel-opment Scheme’, an internal document states, ‘is the “Group Approach”. Allah loves those“who conduct their affairs by mutual consultation” (Al‐Quran 42:38). For all decision‐making activities, this mutual consultation is given high priority’ (Internal IBBL policyand training document). A senior source at the bank put it thus: ‘We have taken the wholeidea from Professor Yunus [the founder of Grameen], but whilst this is like mainstreamdevelopment we are also addressing spiritual needs’.The scheme has been ‘enhanced’ by re‐designing some of the lending modalities

according to the Shari’ah where the provision of money for a fixed return at a later stageis forbidden, by providing the loan ‘in‐kind’ (Murabaha). Importantly, the scheme carriesan Islamic educational dimension for the clients, and in the weekly meetings officiated byRDS field officers, discussion of different Islamic topics is given priority over the collection ofinstalments and personal savings and others. Each centre meeting is started by a recitationfrom the Qur’an and concluded by Dua (prayer) and chanting of the 18 commandments,directly derived from Grameen but enhanced with Islamic references:

18 Commandments for RDS membersThe members of RDS memorise and utter loudly the 18 decisions at the Centre Meetingto implement those in their practical lives. The decisions are memorised after becominga member and before investment. It is considered as pre condition of RDS investment.We shall

(1) seek help of Allah, the Almighty, in all conditions of life, speak truth and lead anhonest life;

(2) order others for good deeds and prohibit them from bad deeds;(3) be law abiding, not do illegal work and not allow others to do the same;(4) not remain dependent on others rather stand on our own feet;(5) bring prosperity to our family Insha Allah;(6) grow vegetables at the surroundings of our house, eat plenty of them and enhance

income by selling the surplus;(7) during the plantation season, plant as many seedlings as possible;(8) not remain illiterate, establish night school if necessary;(9) arrange education for the children;

(10) help each other, try to rescue any member of the Centre from danger if any;(11) give preference to others, compete in good deeds and encourage others in it;(12) build and use sanitary latrine, if not possible, build latrine by digging hole;(13) drink water from tube‐well, otherwise drink boiled water;(14) keep our children and environment clean;(15) take care of health, take balanced food;(16) not take or give any dowry at our son’s and daughter’s wedding, tell others that it

creates a social problem;

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Although this type of Islamic education may not be in itself problematic within the con-text of social mobilisation of clients in a Muslim‐majority country, a senior IBBL managerexplains that in his personal conviction, this Dawah (Islamic propagation) is actually thereal objective of the programme.16 In fact, this is what he regards as ‘development’.Another senior source at the Bank echoes this in a more contextualised manner by pointingout that in Islam, ‘development’ is ‘Dawah’, implying that the process of change mustencompass a social, economic, ethical and moral dimension, which is guided by theprinciples of the Shari’ah.The integrated vision of development as encompassing social and spiritual, as well as

economic development is further illustrated in an internal RDS document:

‘ Development is basically a multi‐dimensional process. No progress can take placeunless appropriate steps are taken for the uplift of education, income generation andproviding Health & Medicare services. The Bank, being a profit earning financialinstitution, can hardly afford time and attention to the areas and sectors other thanincome generating activities. Education and Health & Medicare are still not profityielding commercially viable sectors especially in the rural areas. Islami Bank Foun-dation, a non‐profit service oriented sister organization of Islami Bank, providessupport programs to RDS. […]Beside the financial activities, [the] Bank has also a program to develop their [i.e. theclients’] moral values and to get them aware about their social rights and responsibil-ities. For the purpose, in the weekly centre meetings the Field Officers deliver lec-tures on different important topics. They also speak on health & hygiene todevelop their health consciousness. Moreover, Islamic Shariah model of micro‐finance like RDS seems to be more effective, than GB [Grameen Bank], in incomegeneration and poverty alleviation as it gives Islamic teachings to the members tolead the life according to tenets of Islam which provides moral values and spiritualstrengths to be more disciplined, professional, hard working and to take care ofothers, maintain competitiveness in good deeds and productive activities, lead anhonest life and not to waste anything particularly, time, money and energy. All thesequalities also contribute, it has been observed, to lead integrated social life based onIslamic brotherhood, an Ummatic concept. Since Islam prohibits interest, there existsa sheer abhorrence against interest‐based system in the society; the exploitativeNGOs are being countered by the Islamic micro‐finance program like RDS. IslamicShariah is the basis of banker‐customer relationship in RDS, while interest acts as amajor deficiency factor in banker‐customer relationship. The distinguishing featuresof Islamic banking established an ideological and improved relationship with itscustomers.’

(17) follow discipline, unity, courage and hard work in all walks of our lives;(18) keep words (Wadah) with others, not embezzle the deposit (Amanah) and never

tell a lie.

Source: IBBL internal document.

16However, it is important to point out that a number of IBBL clients have been intentionally selected from theHindu community, and it is then that Hindu ethical teachings are utilised in the motivational dimension of theRDS. As to why an Islamic bank targets particularly non‐Muslims as clients is a pertinent question, and IBBLmanagers admitted that it is important for the bank to be seen as impartial.



Hence, the development focus of the RDS can be understood as both material develop-ment and individual and societal reform through Islam, which provides both the moral fra-mework through the Shari’ah and a way of life as an Islamic brotherhood or Ummah(community of believers). As a former director of the Islami Bank pointed out, this under-standing of development is different from the ‘Western’ view as it focuses comprehen-sively on the human being rather than on material well‐being. This is expressed througha reference to the maqasid‐ul‐shari’ah, the purpose of Islamic law, which seeks first topromote and protect faith, then intellect, health, progeny and wealth.In this sense, the vision for development is re‐cast by the Islami Bank Bangladesh.

Although its commercial banking operations are only driven technically by Islamic econom-ics and offer products that, judging by their commercial success, resonate with the widerpublic, it is actually its rural development work that is explicitly committed to Shari’ah‐compliant social development. Through an emphasis on Islamic values, prayer and fasting,which become part and parcel of receiving a loan, the scheme is creating its own powerrelationship with clients.IBBL’s RDS is hence clearly engaged in material growth programmes akin to social

development work that is at the core of rural finance programme of Grameen. However,the objectives of this social development programme that the RDS constitutes is basedon their Islamic conceptualisation of development, in which the purpose of human materialexistence is spiritual and transcendental and can, in their eyes, only be achieved if it is inaccordance with the Islamic Shari’ah. Thus, by subscribing to this type of Islamic dis-course in development policymaking, an antagonistic frontier is created, at which the IBBLpositions itself wittingly and unwittingly as outside, if not opposing, the current main-stay of secular development objectives, championed by the majority of developmentnon‐governmental organisations, such as Grameen, and indeed by the current AwamiLeague‐led government.

6 MAPPING OUT IBBL’S POLICY FOOTPRINT: A HEAVY BOOTTREADING LIGHTLY

It is astonishing, given the size of its banking operations, that there are practically no refer-ences to IBBL in the local academic literature, let alone internationally. It looks as ifIBBL’s RDS almost does not exist in the academic or policymaking world, despite theinterest both the lending model and its possibly controversial social development conceptshould generate.When mapping out the RDS policy footprint, two issues became evident. First, the

IBBL has neither strong links with the International Finance Institutions or multilateraldonors, although it finances a large proportion of Bangladesh’s export‐oriented industries.Second, most organisations that the IBBL would describe as stakeholders are those thatwould be considered outside the mainstream development field. Upon asking about therole and importance of the government’s PRSP to the work of the Rural DevelopmentDivision, a senior manager’s reply was: ‘The PRSP is a government strategy and weshould consult it and work towards it’. Yet there are no visible linkages in IBBL policywork, and neither does the PRSP for Bangladesh, as a Muslim majority country, reflectmuch Islamic thought on poverty reduction. This might be for reasons to do with the pro-blematic concept of country ownership, which many PRSPs have failed to achieve (Stewart

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and Wang, 2003). Nevertheless, it constitutes an antagonistic frontier dominated bymainstream discourses.It is evident from both its funding sources and a stream of visiting delegations that

in its international policy relations, the Bank focuses on Jeddah, where the IslamicDevelopment Bank is located. IBBL and its Rural Development Division operate suc-cessfully within a context where the Islamic development discourse is dominant, andthe discussions are about the Miskin (the poor), the Shari’ah (Islamic Law), Zakat (char-ity) and Dawah (inviting to Islam). Hence, it appears that IBBL’s focus is on the Islamicstage, and as a result, it operates primarily outside the mainstream arena, both internationallyand nationally.The RDS, by name at least, seeks to associate itself with the mainstream development

discourse but does not appear to be seeking funding or recognition from Western donors.Reasons for this may lie in either the lack of capacity of key staff or in a lack of an internalmandate or desire to engage. At the local level, the Bangla term ‘Unnayan’, which means‘development’, also is used and utilised by secular organisations. No references are madeto Arabic or Islamic terminology, although other bank products are clearly labelled as Isla-mic. Senior managers have expressed fear that if the RDS or indeed the Bank is seen as tooclosely Islamic then in the current (2008/2009) circumstances, a link to Islamic fundament-alism could be easily construed. This is a very interesting paradox, given that the enormousgrowth of Islamic banking in the domestic finance sector has caused mainstream banks toopen Islamic ‘windows’, and it seems to be acceptable to brand products with Islamic ter-minology. However, the development sector is still dominated by a secular discourse, towhich the RDS seeks to associate itself so as not to appear to be challenging the statusquo. At the same time, the RDS, despite its lack of an Islamic label, resonates with thosewho share IBBL’s worldview. Within that context, it has gained widespread admirationand has become a benchmark within the Islamic economics and finance circles of SouthAsia and the Gulf.

7 CONCLUSION

Islamic economists have largely constructed the Western mainstream development dis-course as a monolithic entity that focuses on material growth and individual wealth accu-mulation. They have counter‐constructed an Islamic discourse that claims to provide socialjustice and addresses all aspects of human existence, starting with the spiritual but alsoincluding the material dimension. For the IBBL, driven by an Islamic discourse that alsoprovides the underpinning for political Islam, this entails the creation of an economicand social system that is based on the Islamic Shari’ah. Within these parameters, a visionis constructed for the way development should create a particular socio‐economic orderand how politics should be organised. This antagonistic frontier of opposing worldviewsconstitutes the power relationships between mainstream and utopian Islamic developmentactors.Despite the fact that programmatic interventions, such as the IBBL’s rural development

programme, are very similar to, and even inspired by, the mainstream Grameen model, theconceptualisation of development espoused by IBBL seeks to instil a particular Islamicethos in its clients and, more broadly, to contribute directly or indirectly to the Islamisationof Bangladesh’s economy. The Shari’ah‐based development truths constructed by theIBBL about the organisation of the economy, governance, society and the ideal‐type of



human being could be seen as overtly challenging the current mainstream paradigm ofsecular post‐liberation Bangladesh, whose policies are based on post‐Washington consen-sus principles, such as free financial markets and liberal democracy, although the role ofthe state, particularly under the Awami League government, is considerable. The challengethat the IBBL represents can be found primarily in the way that it has re‐conceptualiseddevelopment as a strategic convergence of religious, political and broader socio‐economicobjectives, while having taken up the mantle of a successful modern business. Yet the visionof development upheld by the IBBL and manifested in its RDS can be seen as clearly identi-fying with a very traditional utopian Islamic concept of development, as manifested in theexample of the Islamic Ummah as an ideal society.The Islami Bank thus seeks to reclaim dominance for the Islamic discourse and

does so successfully within Islamic circles, both nationally and internationally. How-ever, importantly, by claiming a position of historical pre‐eminence through linkingitself to an Islamic history of 1400 years, an inversion of the ‘dominant’ and ‘alterna-tive’ roles became part of the Islami Bank’s narrative. In this way, the mainstream forthe Islami Bank is an economy without interest and with all other aspects of life gov-erned by the Shari’ah, which has only very recently been challenged by colonialism,Mujibism and capitalism. The development truths constructed by the IBBL, in responseto their construction of ‘Western’ development as purely material, are therefore a re‐cast-ing of development as a holistic process that is both material and spiritual with an ultimatelyhigher transcendental goal.

ACKNOWLEDGEMENT

I would like to thank the Board of Directors of the IBBL for facilitating my research, whichwas funded by the Economic and Social Research Council as part of my doctoral study. Ialso acknowledge the valuable advice of the two anonymous referees.

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