Global Islamic finance assets, the composition of Islamic banking, Sukuk, Takaful, and Islamic Fund, got the highest momentum during the last few years. The assets are currently USD1.3 trillion in size and are expected to reach USD1.6 and USD6.5 trillion in 2012 and 2020 respectively. It is estimated that the assets may grow by 10 to 15 per cent in the next three years if the current demand can be sustained.
Experts opine that the rapid internationalisation of Islamic finance needs to be underpinned by three key factors to ensure sustainability. Firstly, a wide range of globally accessible and high-quality Islamic financial products and services must be created to meet the requirements of international businesses. Secondly, the intermediaries and market participants including Islamic Banking, Takaful and capital market players that venture beyond domestic boundaries to tap global opportunities, must also be diverse and dynamic. Thirdly, business enablers will facilitate effective linkages and connections between global financial markets, particularly in the area of legislation, taxation and regulation.
Various institutions of Saudi Arabia, Bahrain, Malaysia, Iran, Pakistan, and Bangladesh have played vital roles in evolving this real finance industry. Islamic Development Bank (IDB) of OIC (Organisation of Islamic Conference) member states, Accounting and Auditing Organisation for Islamic Finance (AAOFI), International Islamic Financial Market (IIFM), and Liquidity Management Centre (LMC) of Bahrain, and General Council for Islamic Banks and Financial Institutions (GCIBAFI), Islamic Financial Services Board (IFSB) and International Islamic Liquidity Management (IILM) of Malaysia are working relentlessly to streamline the expansion of this alternative way of finance. Among these institutions, AAOFI - an Islamic international autonomous not-for-profit corporate body - plays the vital role of fixing standards for Islamic finance. It prepares accounting, auditing, governance, ethics and Shari'ah standards for Islamic financial institutions and the industry. Professional qualification programmes (notably CIPA, the Shari'ah Adviser and Auditor "CSAA," and the corporate compliance programme) are now organised and offered by AAOIFI in its efforts to enhance the industry's human resources base and governance structures.
The growth of the industry is getting momentum with the innovation of related research institutes like Islamic Research and Training Institute of Islamic Development Bank (IDB), International Shariah Research Academy for Islamic Finance (ISRA) of Malaysia, and Islamic Economic Research Bureau (IERB) of Bangladesh. These research institutes aim at (a) conducting applied Shari'ah research in Islamic finance, (b) enriching resources of knowledge in Islamic finance, (c) providing avenues for development of Shari'ah practice in Islamic finance, and (d) propagating harmonisation and mutual respect in Islamic finance practices.
With the objectives of fostering human talent for the industry some quality education and training institutes like Bahrain Institute of Banking and Finance (BIBF), Islamic Banking & Finance Institute Malaysia (IBFIM), International Centre for Leadership in Finance (ICLIF), International Centre for Education in Islamic Finance (INCEIF) etc. are working extensively. These institutes are committed to elevate and advance Islamic financial knowledge, develop future leaders in the Islamic finance industry through learning programmes and serve as the centre for collaboration with other Islamic financial educational centres.
In the context of Bangladesh, the country has ample scope to develop in the area of legislation, institutional setup, product development, capital market index and so on. Among the four components of Islamic finance industry - banking, takaful, sukuk, fund - only banking and takaful are available. In the absence of an apex body of the industry, these components are not integrated to bring optimum results for the industry.
The Islamic banking system retains more than eighteen per cent of total deposit and twenty one per cent of total loan/investment and advances of banking system of Bangladesh. There are strong legislative measure (like Islamic Banking Act) to patronise the industry. Islamic banking is operating here under a guideline of the Central Bank. The scenario is different in Thailand where Islamic Banking Act came one year earlier (in 2002) of the establishment of its first full-fledged Islamic bank in 2003. Islamic capital market or Islamic share index are yet to be developed in Bangladesh while we find Bombay Islamic Share Index in India.
More than 20,000 employees are working at Islamic banks of Bangladesh but still there is no full-fledged Islamic banking/Islamic finance subject/course in the public universities of Bangladesh while we see an Islamic finance university named INCEIF in Malaysia. Islamic finance industry in Bangladesh even lacks a dedicated training institute like BIBM.
Finally, the strength of Islamic finance industry attracts strong legislative framework and innovative institutions to cater to human capital, diversified products and scientific practice of Islamic finance.
