Amwaj Island: The Kingdom of Bahrain, one of the pioneers in Islamic finance, has retained its title as GCC leader in the development of the Islamic finance for the fourth consecutive year.
This was revealed during the 23rd World Islamic Banking Conference (WIBC) which is being held at Art Rotana Hotel and witnessed the launch of the ICD-Thomson Reuters Islamic Finance Development Report 2016. The report confirmed Bahrain as a leader in the GCC Islamic finance development for the fourth consecutive year.
WIBC 2016 attracted over 1300 delegates and is being held under the patronage of His Royal Highness Prince Khalifa bin Salman Al Khalifa, Prime Minister of the Kingdom of Bahrain under the titled ‘Economic Uncertainties: Vigilance and Growth’ provided a right platform to the regulators, bankers, experts, shariáh scholars and industry stake holders to look into the opportunities and challenges for the Islamic finance in 2016 and beyond.
The report is jointly produced by Thomson Reuters, the world’s leading provider of intelligent information for businesses and profession-also, and the Islamic Corporation for the Development of the Private Sector (ICD), the private sector development arm of the Islamic Development Bank (IDB). The report is based on the Islamic Finance Development Indicators (IFDI) which is an annual barometer that rep-resents the overall development of the Islamic finance industry worldwide. It measures five key components that combine to depict the overall picture of the state of Islamic finance in a market – namely Quantitative Development, Knowledge, Governance, Corporate Social Responsibility (CSR) and Awareness.
According to the IFDI, Bahrain is ranked first in the GCC and MENA regions, and second only to Malaysia out of 124 countries that con-tribute to the US$2 trillion Islamic finance industry.
IFDI continues to rank Bahrain first globally in terms of Governance due to its well established regulatory environment and governance mechanisms. The regulations cover Islamic financial institutions including Islamic asset management and Sukuk.
Bahrain also has the most effective Shari’ah governance measures as indicated by its top ranking in Shari’ah Governance sub-indicator. It was further improved in October 2016 with the release of a comprehensive Shari’ah Governance module for market consultation. Among other things, the draft regulations require Islamic banks to engage an audit firm to conduct external independent Shari’ah compliance audit. Such a third-party audit is likely to lead to more transparency and less scope for conflicts of interest, thus increasing public trust in Bah-rain’s Islamic banking sector.
According to IFDI Bahrain is among the top ten countries for the other indicators as well. For the Knowledge indicator, its Islamic finance ecosystem is supported by 17 providers offering Islamic finance related education including universities and institutions. Bahrain Institute of Banking and Finance (BIBF) offers a number of Islamic finance courses which have global appeal. Similarly, University of Bahrain offers a bachelor program in Islamic Banking and Finance which com-bines Shari’ah studies with business, banking, accounting, economics and law, thus producing well-rounded graduates. The first batch from this program graduated earlier this year. Bahrain is also home to AAOIFI and IIFM, two of the leading Islamic standard setting bodies. The Waqf Fund, an industry initiative operating under the auspices of the CBB, has been instrumental in many Islamic finance training, education and research initiatives over the last decade.