Dubai: There will be a continuous boom and fast growth in the Islamic Finance industry of the Middle East as compared to conventional banking and the market share of the Islamic finance will also enhance.
The industry specialists are very optimistic with the rapid growth of Islamic Finance in the Middle East region and they hope that despite the issues of Shariah standards across markets, regulations, tax issues and documentation standardization, Islamic Finance’s market share in the region will increase.
A technical seminar was organized on the Islamic Finance under the title “Emerging trends in Islamic Banking” by the Institute of Chartered Accountants of India (ICAI) – Dubai Chapter, in association with Khaleej Times last week. A good number of industry specialists and practitioners attended the seminar and agreed with one another that Islamic Finance has bright future in the Middle East.
The Secretary of ICAI – Dubai Chapter, Nimish Makvana, stated while opening the seminar, “The Islamic banking industry is considered to be one of the fastest growing sectors in the financial industry.”
Due to the increasing demand for Shariah-compliant investments globally by both Muslims and non-Muslims, the industry has grown by an estimated 20 percent annually in the last five years to reach $1.3 trillion in total assets in 2011 and is projected to touch $1.14 trillion by the end of 2012.
According to the CEO of Standard Chartered Saadiq (the Islamic banking business of Standard Chartered Group), Afaq Khan, over the last decade from 2000-2010 Islamic finance has grown significantly faster in the region compared to conventional financial sector.
While delivering a key-note address of the seminar, Khan said, “Whether we look at the UAE where Islamic market has grown from six percent of banking system to 22 percent in 2010, or Qatar where it has grown from 12 percent to 27 percent in the last decade. Other countries Kuwait, Saudi Arabia, Bangladesh, Indonesia, and Malaysia show Islamic banking growing faster than the conventional system.”
“If the Islamic market continues to grow at historical growth rates, it will become a significant part of the financial system in this region,” he added.
He also discussed the size and growth dynamics of the Islamic industry in the region in his speech and talked about the basic difference between lending and conventional banking and Islamic finance and how it can be conducted. He discussed the challenges around regulations, tax issues, differences in Shariah standards and standardization of documentation.
Khan observed in his speech, “Islamic finance experts with the guidance of the Shariah scholars try and come up with solutions for society living in the 21st century to meet their needs from buying a house, having a credit card while travelling, to raising working capital finance for their business, treasury risk management solutions to manage currency and rate risk movements all the way to M&A and acquisition and project finance.”
“At the higher level, we as industry players are lobbying and educating the various stakeholders including regulators on the need to amend the current statutes to accommodate Islamic finance in their jurisdictions and suggesting changes, which will address their legitimate concerns around ownership of assets by banks and tax issues while at the same time staying true to the basic principles of Islamic finance and Shariah,” he concluded.