Bahrain: most developed Islamic finance market

Manama: For the second year in a row, Bahrain has been named the GCC’s leading Islamic finance market and second out of 92 countries worldwide, according to the ICD-Thomson Reuters Islamic Finance Development Indicator (IFDI).

In addition, Bahrain has also been applauded for its commitment to research and training and local awareness of the industry, Bahrain was also ranked as having the best governance in Islamic finance in the world, with the report praising the well-established regulatory framework covering all sectors, and high levels of disclosure.

The IFDI report, which was released at a panel session at the Global Islamic Finance Forum (GIFF 2014) in Kuala Lumpur (Malaysia), is the only numerical measure representing the overall health and development of the Islamic finance industry worldwide. The IFDI is a measure of five key components that combine to depict the bigger picture of the state of Islamic finance in 92 countries: Quantitative Development, Governance, Corporate Social Responsibility, Knowledge and Awareness.

“In 2001, the Central Bank’s predecessor, the Bahrain Monetary Agency, played a leading role in the development of regulatory regimes for the workings of Islamic financial institutions for more than two decades and contributed to the introduction of sharia-compliant products and became the first central bank in the world to develop and issue sukuk and Bahrain has continued to play a leading role in the introduction of these products through issuances. The ranking Bahrain has received is testament to the role we play in the Islamic finance industry,” Rasheed Al Maraj, Governor of the Central Bank of Bahrain (CBB), said.

“We are delighted at the ranking that Bahrain has received and the recognition of the investment that the Kingdom has made in developing the industry both here and internationally,” Kamal bin Ahmed, Minister of Transportation and acting chief executive of the Bahrain EDB, said.

“Islamic finance has an important role to play within the wider financial sector in Bahrain and the GCC and the growth that the sector has seen is testament to that. We are committed to helping the industry to grow in Bahrain, to working towards addressing ways of boosting international growth and also to working with countries across the world as they look to establish Islamic finance industries in their own markets.”

“The Islamic finance sector continues to expand rapidly, both regionally and internationally, and we are proud of the role we play in supporting its development, we will continue studying ways in which we can help to develop the industry – both here in Bahrain, by ensuring regulation continues to evolve and taking steps to strengthen the Kingdom’s Islamic finance institutions and internationally, by working with countries that wish to introduce Islamic banking. For example, in April this year we agreed a joint framework with the United Kingdom to enhance collaboration on Islamic finance at the UK-Bahrain Islamic Finance Summit in London,” Khalid Hamad, Executive Director of Banking Supervision, CBB, said.

Bahrain is home to the largest concentration of Islamic financial institutions in the world, including 32 Islamic banks and takaful and retakaful firms.

Bahrain is also host to a number of organisations dedicated to advancing Islamic finance policy and regulation, such as the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the International Islamic Financial Market (IIFM), the General Council for Islamic Banks and Financial Institutions, the Islamic International Rating Agency (IIRA), the Thomson Reuters Global Islamic Finance Hub and Deloitte’s Islamic Finance Knowledge Center, making the Kingdom a knowledge hub for the industry.