Islamic Banking & Finance Page 28-04-2019


Islamic Banking and Finance in 2019-Moving Forward


Various released reports including Thomson Reuters, IMF, World Bank for the period ending Dec 2018, show buoyant figures for the Islamic finance industry and is positive for further growth in the near future.

According to the reports the global Islamic finance industry grew by 11% in 2017 compared to the previous year to $2.4tn in assets and showed compounded annual growth of 6% since 2012. These figures are based on data collected from 56 countries with Islamic finance industries, mostly in the Middle East and South and Southeast Asia, and there from a total of 1,389 fully-fledged Shariah-compliant financial institutions and windows.

Of the entire assets, Islamic banking accounted for 71%, or $ 1.7tn, of the industry’s total assets in 2017. Based on the report’s findings, the global Islamic finance industry will reach a total global asset volume of at least $3.8tn by 2023, which translates into further double-digit annual growth from 2018 onwards and represents an annual growth rate of 9.5% over the past decade.

The growth is mainly driven by expansion of Islamic finance into new territories, as well as by new and innovative capital market products and the development and adoption of sector-specific financial technology.

As per asset size, Iran, Saudi Arabia and Malaysia remain the largest Islamic finance markets worldwide according to the study, while Cyprus, Nigeria and Australia saw the most rapid growth.

The reports also point out that the digital revolution is beginning to transform the Islamic banking sector. There have been launches of several Islamic online banks, and a fast-growing number of startups are focusing on a broad range of fintech solutions for Islamic banking and are also innovating with new technologies such as block chain. New digital banking channels mean for traditional banks that they can increase their outreach to more under banked regions, and with the rapidly growing popularity of mobile banking, particularly among younger people, a growing number of disruptive digital-only banks with no physical branches have emerged that are attracting a sizeable number of clients and are becoming serious competition for established Islamic banks.


IMF to Add Islamic Finance to Market Surveillance in 2019 whereas CAIF Pakistan is already issuing such reports since 2016

The IMF now wants to encourage more consistency in applying Islamic finance rules, having previously warned over the complexity of some sharia-compliant products that could stifle growth and add to financial instability.

The industry is important for financial systems in more than a dozen countries, accounting for over 15 percent of total financial assets in countries such as Saudi Arabia, Kuwait, Qatar and Malaysia. The IMF says it views the growth of Islamic finance as an opportunity to strengthen financial inclusion efforts, deepen financial markets and develop new funding sources.

The International Monetary Fund will incorporate Islamic finance into its financial sector assessments of select countries starting next year, aiming to improve regulation in the growing sector.

The IMF has traditionally focuses on conventional banking, but it has been increasingly engaging with regulators in countries where Islamic finance is now deemed to be systemically important. Under a proposal by the IMF’s executive board, guidance issued by the Malaysia-based Islamic Financial Services Board (IFSB) would be incorporated into IMF assessments to address the regulation and supervision of Islamic banks.

Islamic finance, which bans interest payments and pure monetary speculation, is estimated to have over $2 trillion of assets globally and is expanding further.

In this regard we very importantly bring it in to information of all that Centre of Advisory Services for Islamic Banking and Finance (CAIF) (web: established in Karachi, Pakistan is already issuing Financial Sector Assessment Reports for Islamic Banking and Finance on yearly basis since 2016 and two reports for 2016 and 2017 are available whereas for 2018 the report is under preparation.


Position as of 2018 regarding banking activity, Return on Assets/Return on Equity, Financing type and Liquidity Ratio of Islamic Banking and Finance world wide







Please enter your comment!
Please enter your name here