Bahrain is ranked first in the GCC for Islamic finance knowledge and fifth globally, according to the latest annual Islamic Finance Development Indicator (IFDI). This year the kingdom, which has led Mena in all eight IFDIs to date, ranked third out of 135 countries in the index.
The IFDI is part of the annual Islamic Finance Development Report produced by Refinitiv and the Islamic Corporation for the Development of the Private Sector (ICD), the private sector development arm of the Islamic Development Bank (IDB). The IFDI provides an annual rank for each economy in the global Islamic finance industry, aggregating scores across five areas – quantitative development, knowledge, governance, corporate social responsibility, and awareness.
Bahrain is one of only six countries in the world have a full set of Islamic finance regulations and is the world leader with the highest Islamic finance assets to GDP ratio. The kingdom’s high ranking was based on its robust and supportive regulations well as increases in the number of Islamic banking assets.
Fahad Yateem, director of Islamic financial institutions supervision at the Central Bank of Bahrain, said: “I am delighted that Bahrain has once again scored so highly in the IFDI, and particularly for governance. The results are a testament to our longstanding strategy of pioneering yet comprehensive regulation, creating a framework conducive to digital and technological innovation in the industry.” According to Mr Yateem, the recently launched Bahrain Open Banking Framework, which provides detailed guidelines for the entire banking industry, is the first in the world to incorporate Islamic finance.
“As the report makes clear, the Covid-19 pandemic has further catalysed digital innovation in the industry as well as consumer uptake of technology. Moreover, it is these technological advancements within Islamic finance that will be a key driver of post-Covid-19 recovery,” he added. The Economic Development Board (EDB), Bahrain’s main investment promotion agency, said the high ranking reflected both the kingdom’s emphasis on innovation and the advanced financial environment for both established financial institutions and start-ups.
The EDB’s business development director for financial services Dalal Buhejji said: “Bahrain was the first in the region to develop a strong banking community and is now building one of the most concentrated fintech ecosystems in the world. The Islamic finance sector has been a key part of that development, with assets of $96 billion held in the kingdom, which amounts to 124pc of Bahrain’s GDP. “We are continuously implementing new initiatives and policy tools to further develop Bahrain’s standing in Islamic finance, including new takaful models and Sharia-compliant investment tools,” she added.
Bahrain is home to the region’s largest concentration of Islamic finance institutions that deal in almost every area of Islamic finance and Islamic products.—Zawya news