DUBAI — Islamic finance has withstood the negative impact of the global financial crisis, proving its resilience, effectiveness and relevance to the global financial industry, said Farhan Al Bastaki, Executive Director for Islamic Finance at the Dubai International Financial Centre Authority.
While the world has been searching for an alternative to the conventional banking system deeply impacted by the global financial crisis, few have realised that a more stable, asset-backed and efficient system already exists, he said at a meeting of Shariah Advisory Panel of the International Islamic Financial Market, or IIFM — a body comprising 47 Islamic finance institutions from across the world.
IIFM is a link between regulatory bodies and financial institutions and is driven by its permanent members and the market. The meeting, aimed at obtaining guidance from scholars and to explain the benefits of its Tahawwut (hedging) Master Agreement, was hosted by the Dubai International Financial Centre. “The Islamic finance system is there, but its wider acceptability has to be created by spreading awareness as well as by providing depth to the market,” said
The DIFCA official said the IIFM had been making significant efforts to provide depth to the Islamic finance industry such as through its latest framework for risk management. IIFM is widely acknowledged as the foremost body responsible for developing and setting global standards in Islamic finance documentation, products and processes. The Tahawwut Master Agreement provides a framework and mechanism on hedging or risk management transactions that can be undertaken by the Islamic finance industry. The DIFC meeting focused on the key features and mechanics of the Tahawwut documentation, which the IIFM and ISDA have developed in consultation with market participants and under the guidance of the IIFM Shariah Panel. The meeting was attended by scholars on the panel, legal counsel, officials from IIFM and ISDA, in addition to few market participants.