Standardising regulation 'key to Islamic finance'
London, October 30, 2013
Standardising regulation of the Islamic finance industry is vital to ensure universality of application and keep the industry attractive, reliable and trusted and in demand, said the Bahrain Crown Prince at a key forum in London.
His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince, Deputy Supreme Commander, First Deputy Premier and Economic Development Board (EDB) chairman, was speaking at the ninth World Islamic Economic Forum (WIEF) which opened yesterday.
The Crown Prince encouraged the development of new asset classes within Islamic finance, covering private equity, infrastructure and liquidity products, while also calling for greater supply of existing products such as sukuk, reported the Gulf Daily News, our sister publication.
To facilitate the growth of the industry, the Crown Prince called for existing organisations to be empowered to apply regulation and enshrine accepted standards, the report stated.
"We have organisations like the Accounting and Auditing Organisation for Islamic Financial Institutions and others, capable of aiding the industry's development by protecting its fundamental attribute - the ability to deploy capital for Muslim and non-Muslim investors in a Sharia-compliant fashion," he said.
He emphasised it was vital that, while ensuring the industry had the scalability to meet growing demand, there was adequate protection of "the spiritual and ethical mandate that gives it fundamental acceptance among the consumer and maintains its integrity."
The Crown Prince stressed Bahrain's commitment - as host to the largest concentration of Islamic financial institutions in the world - to the industry's growth and development.
"Bahrain, as host to a number of organisations committed to the industry's development, is absolutely committed to working with our fellow pioneer, Malaysia, as well as with emerging hubs, such as London, to aid Islamic finance's growth," he added.
The Crown Prince also highlighted how Islamic finance serves as an example of a wider effort that can contribute to economic development across the region.
The Crown Prince is leading a senior Bahraini delegation which also includes Transportation Minister and EDB acting chief executive Kamal Ahmed and Central Bank of Bahrain Governor Rasheed Al Maraj.
They will discuss the future of Islamic economic co-operation under the theme 'Changing World, New Relationships'.
The WIEF, being held at the ExCel London, concludes tomorrow. Bahrain's EDB is a silver sponsor of the event, which is being held for the first time in Europe.
Ahmed will be speaking on a ministerial panel under the theme 'Policy Frameworks for Growth', alongside ministers from the UK and Malaysia at the forum.
"Islamic finance has very strong potential worldwide, as its growth in recent years has shown," Ahmed said ahead of the forum.
"If the industry is to continue to grow, it is important that the leading international players work together, and that governments create the right platforms and regulatory frameworks for sustainable expansion. The more complex and larger the sector becomes, the more important gatherings like this will be," he added.
The minister said as one of the leading international centres for Islamic finance, Bahrain plays an important role in the international growth of the industry.
"Islamic financial institutions account for more than 13 per cent of total assets in Bahrain."
The growth of Islamic finance has been remarkable in the kingdom, with total assets in this segment jumping from $1.9 billion in 2000 to $26.2 billion, as of August.
Presently, there are 24 Islamic financial institutions in Bahrain, whose assets under management total $26.2 billion and eight Islamic insurance companies (takaful and retakaful) companies.
Many conventional banks, recognising the growing importance of Islamic banking, have successfully integrated Islamic windows within their operations.
Organisations based in Bahrain, including Accounting and Auditing Organisation for Islamic Financial Institutions, General Council for Islamic Banks and Financial Institutions and Deloitte Islamic Finance Knowledge Centre and Thomson Reuters also sit at the heart of the industry's regulatory and research developments.
The delegation comprises senior figures from the Islamic finance sector including CBB executive director Khalid Hamad, BisB chief executive Mohamed Ebrahim, Deloitte Islamic finance advisory services head Dawood Ahmedji, Venture Capital chief executive Abdullatif Janahi, Bahrain Insurance Association chairman Younis Jamal, Hannover Re managing director Mahomed Akoob and AAOIFI secretary general Khaled Al Faqih.-TradeArabia News Service