Manama, Bahrain – Held under the patronage of His Royal Highness Prince Khalifa bin Salman Al Khalifa, Prime Minister of the Kingdom of Bahrain, the World Islamic Banking Conference (WIBC) launches the ICD - Thomson Reuters Islamic Finance Development Report 2016. According to the report, Bahrain leads the GCC’s Islamic finance development for the fourth consecutive year.
The report is jointly produced by Thomson Reuters, the world’s leading provider of intelligent information for businesses and professionals, 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 represents 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 contribute to the US$2 trillion Islamic finance industry.
Strong governance mechanism puts Bahrain on top
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 Bahrain’s Islamic banking sector.
Solid performance in Knowledge, Awareness and CSR indicators
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 & Finance (BIBF) offers a number of Islamic finance courses which have global appeal. Similarly, University of Bahrain offers a bachelor program in Islamic Banking & Finance which combines 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.
“Bahrain will continue to play a leading role when it comes to Islamic finance” stated Mr. Khalid Hamad, Executive Director Banking Supervision at the CBB and the Chairman of the Waqf Fund. “The key factors in Bahrain’s success are regulatory clarity, government support for Islamic finance and the presence of support institutions such as AAOIFI, IIFM, IIRA, CIBAFI and the Waqf Fund. Bahrain has an ecosystem that works. Our consistent high ranking in the IFDI report is a testament to this,” Mr. Hamad said.
Bahrain’s Islamic finance awareness is strong, as the country hosted 20 Islamic finance related events in 2015 that include themes such as Islamic banking, takaful, Islamic capital markets and governance. Its industry was covered by 1,582 exclusive news articles and it was included in the GCC’s regional news that mostly discussed the effects of a drop in oil prices on the industry.
Meanwhile, its Islamic financial institutions continue to contribute socially, with US$ 18.5 million charity, zakat and Qardh al Hasan funds disbursed in 2015. Moreover, several of its Islamic banks are among the top performers in CSR activities, as measured by the CSR disclosure score in their annual reports.
Contact: External Communications Unit
Central Bank of Bahrain
Tel: +973 17547319/ 17547374
© Press Release 2016