Bahrain working with UAE to develop Islamic banking rules

MANAMA - Bahrain is closely working with the UAE and other Gulf countries to enhance and develop regulations specifically addressing the unique features of Islamic banking, said Shaikh Ahmed bin Mohammed Al Khalifa, Governor, Bahrain Monetary Agency.

By From Salah Eldin Eltayeb

  • Follow us on
  • google-news
  • whatsapp
  • telegram

Published: Mon 13 Dec 2004, 11:18 AM

Last updated: Thu 2 Apr 2015, 11:47 AM

Speaking to Khaleej Times on the sidelines of the 11th Annual World Islamic Banking Conference (WIBC), Shaikh Khalifa said, "As GCC countries we are closely coordinating to implement the latest regulation pertaining to the islamic financial and conventional sectors to achieve greater recognition and attention from the global financial industry. We have no other choice but to integrate our effort and come out strong and more competitive."

Shaikh Khalifa added,"We have the strong platform to lead the world in the Islamic finance industry, if we maximise coordination and dedicated time for the issue."

He said,"Islamic finance is coming of age. It is losing its niche status and achieving growing recognition among the world financial industry. We are now experiencing strong growth and demonstrating credible innovation in developing new products and markets.

"If we look at the Takaful or Islamic insurance is now beginning to develop in a significant way benefiting from the experience gained in the Islamic banking and finance sectors.

"The Islamic finance sector is quite promising, however, there are challenges ahead that need to be tackled seriously. What has been achieved so far is substantial and it should sustain and rather improved.

To be an instrumental part of the overall effort to improve performance and ensure sustainable growth, Bahrain Monetary Agency (BMA) was probably the first reglator to develop regulation specifically catered to the unique features of Islamic banking, said Shaikh Khalifa. These various regulation will be re-issued in January in a single comprehensive volume, with the objective of enhancing the transparency and accessibility of our requirements.

"We have also been working over the past 18 months to develop a comprehensive framework for the insurance industry, following the transfer of regulatory responsibility for this sector to the BMA,in 2002.

These regulations are now nearly finalised and will also be published before the end of the current year, he added. These regulations will specifically cater for Takaful insurance and conventional insurers. In doing so Bahrain Monetary Agency is again taking a lead in regulatory developments.

"We see sound regulation not as an end in itself, but as an essential pre-condition for a healthy financial system, one more likely to enjoy stable, long -term growth.

"In Islamic finance and Takaful, sound regulations is doubly important in helping achieve worldwide credibility for the industry.Unfortunately there are some who still associate Islamic finance with weak regulation, said Shaikh Khalifa.

He said," We have to admit that the challenge is clear and that we must continue to work to enhance best practice and compliance with international standards.For institutions this includes the need to implement sound corporate governance and transparency standards. They should work towards full implementation of all relevant AAOIFI- Association of Accounting Organisation of Islamic Industry standards.BMA is currently focusing on these areas and developing further proposals tp put to the industry.

It is also important to look into the human capital as one tough challenge that lie ahead.The long-term success of Islamic finance and Takaful will depend on the development of a strong body of Islamic finance professionals, including Shariah board members that are equally well-versed in financial issues as in islamic law. The islamic financial industry also need to consolodate to grow bigger and compete with its coventional counterparts, said Shaikh Khalifa.

More news from