The government yesterday received a huge response from investors centring its initiative to raise Tk 3,000 crore through sukuk, a Shariah-compliant bond, to fund the construction of bridges to connect rural roads.

In an auction of 7-year bonds, Bangladesh Bank (BB) received bids worth Tk 10,925 crore from Shariah-based banks and financial institutions, relevant branches and windows of conventional banks, provident funds, and individual investors.

The subscription amount was 3.64 percent higher than the face value of the bond, the BB said in a press release.

Due to the oversubscription, the BB proportionately allotted the sukuk among bidders, with the highest share worth Tk 2,144 crore going to Shariah-based banks.

The Islamic banks had submitted 10 bids totalling Tk 5,663 crore.

Conventional banks with Islamic branches and windows received the second-highest allotment, followed by individual investors and provident funds.

The BB said the annual rate of return on the sukuk -- a financial certificate similar to a treasury bond and structured to generate returns in compliance with Islamic finance principles -- will be 9.25 percent.

In the fourth week of January this year, the BB announced the government's plan to raise funds to build bridges to connect rural roads, boost agricultural production, and improve socioeconomic conditions at the grassroots level.

With the latest auction, the government raised a total of Tk 22,000 crore through the issuance of sukuk.

Since its launch in December 2020, the Shariah-compliant bond enabled the government to raise Tk 19,000 crore over the past four years for the financing of various projects.

The BB said the CIBRR-2 socioeconomic sukuk, the fifth of its kind, will be used for the project titled "Construction of Important Bridges on Rural Roads", initiated by the previous government at the start of 2017.

The Tk 6,500 crore project is scheduled to be completed in June 2026.

The fifth sukuk will have a positive impact on rural road communication and socioeconomic development, the BB said.

The government issued the Shariah-compliant bond after the BB increased the proportion of sukuk subscriptions reserved for individuals, provident funds, and deposit insurance to 20 percent from 5 percent, all in an effort to attract high-net-worth individuals.