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Thursday, 25 December 2008

Islamic banking to be a $4 trillion industry

DOHA: Islamic banking is tipped to be a $4tr global phenomenon over the next five years, says an in-house magazine of the Qatar Islamic Bank (QIB) quoting the international ratings agency Standard & Poor’s. In its maiden issue entitled ‘Al Masraf’ (which QIB is known as in Arabic), the periodical said Islamic banking is a worldwide phenomenon spread across over 75 Muslim and non-Muslim countries.
A growing number of international financial centres are beginning to offer Shariah-compliant financial products and services, including London and Singapore.
The GCC region has taken a lead in global Islamic banking. The Qatari government, especially, is a strong supporter of Shariah-based finance, Islamic banking, which is regulated by the Qatar Central Bank (QCB), the country’s banking regulatory authority.
The worldwide Muslim population of 1.5 billion will continue to fuel global demand for Islamic banking services and products. It has been over three decades since Islamic banks first appeared as active players, and today Islamic banking and finance has become a force to reckon with.
Sukuk, or Islamic bonds, is one of the fastest growing segments of Islamic banking along with mutual funds. Qatar was one of the first Islamic countries to issue an international sukuk in 2003.
Today, the global sukuk market stands at a staggering $82bn. The International Monetary Fund (IMF) estimates the market to reach $150bn over the next three years. The ever-increasing demand for financing infrastructure development and other mega projects in the private sector will continue to be major driver of demand for sukuk.
The Islamic asset and wealth management market, which includes mutual funds, has also shown significant growth. This is especially so following the development of innovative Islamic investment fund structures, which today comprise around 250 Shariah-compliant mutual funds with an estimated $300bn in assets.
Another notable achievement in Islamic banking has been the establishment of benchmark indices, such as the Dow Jones Islamic market index which covers more than $10 trillion in market capitalization in around 40 countries.

(The Peninsula)

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