The implementation of the Malaysian-based Islamic Financial Services Board (IFSB) rules and regulation among central banks should be made mandatory to bring the industry to the next level, said Bahrain Central Bank executive director Khalid Hamad. He said mandatory rules and regulation would help the industry to grow better and avoid disagreement on syariah adherence.
“If you want any industry to grow, you need proper rules and regulations, proper standards be it accounting, practice or prudential and skilled resources,” he told reporters here yesterday.
He said IFSB's role was equivalent to that of the Basel committee as the guidelines issued by the board was of the same standards as those issued under a conventional system.
However, he said the establishment of the IFSB did not require mandatory adherence by member countries to the guidelines as it was done on a voluntarily basis.
“Sooner or later this has to change. IFSB has to change with the acceptance of all their members. “The moment it becomes mandatory then it will serve the purpose better,” Khalid said.
Meanwhile, commenting on the development of Islamic finance, Hamad said the industry's growth in the region, as well as Africa, was encouraging.
Instead of considering the industry's development in other countries as a threat to Bahrain's ambition of becoming an Islamic financial hub, he considered it as complementing each other and creating cross borders business opportunities for the industry's key players.
“If you focus in one country, there will not be enough business opportunities. “(Also) there are openings in some highly populated African countries where there are many Muslims and massive opportunities for Islamic finance investment,” he said.
IFSB, which started operations in 2003, is an international organisation that issues guiding principles and standards within the banking insurance and capital market sectors in order to promote stability in the Islamic financial services industry.