Relation between islamic financial organization and nonlife-takaful in Bangladesh

Abstract

This study explores the evolving relationship between Islamic financial organizations and the nonlife Takaful sector in Bangladesh, aiming to assess the interdependence, institutional linkages, and mutual development dynamics within the framework of Shariah-compliant finance. In the past decade, the Islamic finance industry in Bangladesh has witnessed significant growth, supported by rising demand for ethical financial solutions and increasing regulatory support. Concurrently, the nonlife Takaful market—providing Islamic alternatives to conventional general insurance has expanded, though at a slower pace compared to the banking sector. This research adopts a mixed-methods approach, combining quantitative analysis of market data from Islamic banks, Takaful operators, and regulatory bodies with qualitative interviews of industry stakeholders. The findings indicate that Islamic financial institutions, particularly Islamic banks, play a pivotal role in the distribution, investment, and public acceptance of nonlife Takaful products. However, the sector faces structural challenges, including limited awareness, inadequate regulatory coordination, and lack of standardized Shariah governance. The study highlights the need for stronger strategic alliances, integrated product offerings, and enhanced regulatory frameworks to promote synergy between Islamic finance and Takaful in achieving financial inclusion and risk mitigation. Policy recommendations are provided to foster a more cohesive and sustainable Islamic financial ecosystem in Bangladesh.