Growth in Islamic finance industry necessitates regulation advancement

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 at the opening of the 11th AAOIFI-World Bank Conference which opens on Monday at the Ritz Carlton Hotel and Spa, said the CBB would introduce a set of new regulations for the Islamic Financial Industry.

The CBB Governor also touched upon the major areas of the Islamic finance 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 Islamic bankers from the first generation are retiring and we need to address the issue. 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.

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 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 Ibrahim 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 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.