MANAMA: Despite some challenges, the Islamic finance has had faced challenging times but hasn’t failed, according to Chairman AAOIFI.
Shaikh Ebrahim bin Khalifa Al Khalifa, the Chairman of AAOIFI board in his opening remarks at the opening of the 11th AAOIFI-World Bank Conference which opens on Monday at the Ritz Carlton Hotel and Spa explained that despite some mistakes the Islamic finance hasn’t failed.
Organised jointly by the Accounting and Auditing Organization for Islamic Financial Institutions(AAOIFI), the Central Bank of Bahrain (CBB) and the World Bank Group, the participants on the day one of the participants discussed the challenges, opportunities and development of the Islamic finance in the changing economic climate.
The main take away of the day was about the future prospects, innovation, differentiation between the capitalism and the Islamic finance as a whole many still believe that the capitalism model is continuing to dominate the way business is being done by the IFIs.
The oil prices slump which has generated a cogent reason for the bankers, the financial experts as well as the Governments across the region to do away with the old model of revenue streams principally based on the hydrocarbons, which is not the case since the 2014 due to the slump in the oil prices.
Shaikh Ebrahim bin Khalifa Al Khalifa, the Chairman of AAOIFI, in his opening remarks said the GCC has been the primary source of financial capital and internationalization of the global Islamic finance industry. “Excess liquidity meant that we were able build the supply of Islamic banking institutions across the promising markets,” he said, adding that the things were quickly changed when worst ever oil prices slump surprised many in 2014 that still continues.
“The rapid growth in the Islamic finance industry has fueled the development and advancement in the regulations, and the Central Bank of Bahrain (CBB) remains vigilant to the needs of the industry,” Dr Rasheed Al Maraj, the Governor at the Central Bank of Bahrain in his keynote address, said.
“The CBB would will introduce a set of new regulations for the Islamic Financial Industry,” Governor said, adding to do more in major areas of the Islamic finance such as Shariáh boards and governance, which according to him play a major role in the development and sustainability of the industry.
“The industry also needs to invest in the training and development of the human capital in addition to working on a succession planning as the first generation of the Islamic bankers are getting retired and we need to address the issue. The Kingdom of Bahrain is treading on the right path on development of the human capital but there are existing gaps in the industry’s broader picture which needs to be addressed,” he said.
The opening session featured two presentations on the topic which is quite important for the Islamic Financial Institutions (IFIs) operating in most markets having strong Islamic finance presence, as well as their governments and fiscal policy makers. The floor will be open to the audience for discussion and comments. Overall, the session was aimed to establish a link of the conference theme with the government fiscal policies and the budgetary deficits in the wake of economic changes brought in by the changing oil prices and the new vision of the regional governments of planning for the post oil economic scenario.
The main topics included the existing and the possible role of Islamic finance in bridging the budgetary deficits; Islamic finance and the government infrastructure projects – enhanced levels of interaction expected; role of sovereign Sukuk in region: from liquidity support to meeting the government funding needs; can Islamic finance meet the medium-term financing needs of the regional governments – does it have the capacity and capability to handle that? and new and innovative structures for supporting government funding needs.
The other important session titled “changing economic environment: effect on Islamic finance strategies” feature a panel discussion on the topic which is quite important for most markets having strong Islamic finance presence. The floor will be open to the audience for discussion and comments. Overall, the session would focus on the theme of the conference and the impact of macro-economic changes on the Islamic finance industry across the globe, but particularly in the oil rich Muslim countries where Islamic finance has the strongest presence.
