Bahrain has topped a global ranking of Islamic finance regulations cementing the island nation’s standing as a leading pioneer in the sector.
Based on the Islamic Finance Development Indicator (IFDI), the report was jointly launched by the Islamic Corporation for the Development of the Private Sector (ICD), the private sector development arm of the Islamic Development Bank Group (IsDB) Group, and the London Stock Exchange Group (LSEG), a provider of financial markets data and infrastructure.
Assessing the global industry’s performance during 2022, the ICD-LSEG report demonstrated the transformation of the Islamic finance industry across the past decade, which began as a niche market and gained a competitive edge, spreading across several countries and regions. With noticeable growth across the Middle East, the report additionally determined a surge in the practice of sustainable finance at Islamic banks, which has led to the development of new frameworks covering ESG and sustainable investments.
The findings of the report were driven by the analysis of statistics from 136 countries around the world, compared across five indicators, namely financial performance, governance, knowledge, sustainability, and awareness.
The report outlined fintech, digital banking, and artificial intelligence (AI) as some of the key emerging trends, which resulted in pivotal impacts on the development of Islamic banking in the decade leading up to 2022. In addition to being recognised as a country where new digital banks were opening amongst leading countries across Asia, the Middle East, and Europe; Bahrain earned high rankings across key criteria.
Bahrain was recognised for an upsurge in hosting online events led by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), General Council for Islamic Banks and Financial Institutions (CIBAFI) and the International Islamic Financial Market (IIFM), all of which are headquartered in Bahrain.
According to Central Bank of Bahrain director of Islamic Financial Institution supervision Khawla Ibrahim the CBB is committed to fostering a robust, transparent, and dynamic Islamic financial sector by putting in place a regulatory framework aligned with international best practices while supporting innovation and growth in Islamic finance.
“The CBB will continue to provide a supportive ecosystem for investors and institutions alike to thrive within the kingdom’s financial services sector, particularly in areas like fintech, crypto assets, governance and sukuk,” she said.
The Bahrain Economic Development Board (EDB), the national investment promotion agency, has described the achievement as a testament to the calibre of the financial ecosystem in Bahrain, particularly when it comes to Islamic banking.
“Financial services is the largest contributor to nominal GDP and bolstered by its solid foothold, Bahrain is uniquely positioned to cater to the needs of Islamic Finance institutions as well as fintechs and startups institutions offering sharia compliant products and services,” said EDB executive director of financial services business development Dalal Buhejji.
Since its inception, the kingdom’s advanced financial services sector has continued to innovate by nurturing an environment conducive to the ongoing development of Islamic finance, on both a human talent and industry level. On the Islamic Finance Development Report, Bahrain achieved an overall ranking of fourth globally and second in the Middle East and North Africa (Mena) in the report.
The country was additionally ranked 1st in the Gulf for Islamic Banking and third globally for Islamic finance governance, indicating its excellence in regulation, corporate governance, and Sharia governance.—Zawya
