OPERATIONAL MECHANISM OF RDS UNDER THE IBBPLC: A LEGAL ANALYSIS BASED ON ISLAMIC MICROFINANCE

The Rural Development Scheme (RDS) under Islami Bank Bangladesh, PLC (IBBPLC) is a pioneering Islamic microfinance model aimed at poverty alleviation and financial inclusion. This study analyzes the operational mechanism of RDS, evaluating its adherence to Islamic Shariah principles, particularly in ensuring interest-free transactions, risk-sharing, and social justice. The paper explores the investment models used, such as Murabaha, Mudarabah, Musharakah, and Qard al-Hasan, along with the group-based lending structure that replaces the conventional financial lending collateral requirements. Furthermore, the research examines the impact of RDS on socio economic development, particularly among rural populations, with a focus on women empowerment and financial sustainability. The study critically assesses the challenges faced by RDS in maintaining its Shariah compliance, addressing default risks, and expanding outreach. The findings provide insights into how Islamic microfinance can serve as a viable alternative to conventional lending, promoting Islamic ethical financing and economic equity in Muslim-majority societies.