The Islamic banking sector is likely to grow in tandem with economies of the Islamic world, predicted Abdullah Saif, Bahrain's minister of finance and the national economy, at the opening of the 2000 World Islamic Banking Conference, which is taking place in Manama. The Middle East region can conservatively be estimated to control worth more than $500 billion, he said, adding that Islamic institutions should be capitalized quickly and consistently to establish an equitable share of the market, reported the Khaleej Times..
The strength of Islamic banking has to come as a result of a realization within the Islamic world that financial services can be provided in conformity with the principles of Shariah, Saif said. Furthermore, it is important that governments provide an adequate regulatory framework within which the Islamic banks may operate.
Today, Saif stated, there is a general acceptance that Islamic financial institutions have to conform to supervisory standards in accordance with the best international practices. At the same time, governments must provide a legal infrastructure that is appropriate for the development and expansion of Islamic banking. In some cases, it must accommodate characteristics that are specific to Islamic banking. These include instruments designed to aid in liquidity management.
In a keynote address to the conference, Shaikh Abdulla bin Khalifa, the governor of the Bahrain Monetary Authority (BMA) said the growth of Islamic financial institutions will greatly depend on international acceptance of the regulating regime under which they operate. The BMA, he stated, had developed a framework, known as Prudential Information and Regulations for Islamic Banks (PIRI), which incorporated standards developed by the Accounting and Auditing Organization of Islamic Financial Institutions and the various Basle Committee guidelines.
The meeting was also addressed by Shaukat Aziz, Pakistan's finance minister, and Dr. Zeti Aziz, Malaysia's Central Bank governor.
One Islamic financial institution that is breaking new ground is the Abu Dhabi Islamic Bank (ADIB), which has just entered the long-term mortgage financing business with an initial Dh50 million. For that purpose, the bank has launched a long-term property financing for nationals to purchase property. Called Tamleek, it is Shariah-compliant product, and has a 15-year repayment period with financing of up to Dh2 million per individual. Under Tamleek, nationals of the UAE can build or buy a house, or buy land on which to build a house. The client is entitled to ownership after repayment is complete.
The bank does plan to increase the initial sum, depending on market demand. – (Albawaba-MEBG)
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