The geographical spread of Islamic securities products and activities is likely to grow in the Europe, especially the UK and France, Asia Pacific countries, North Africa and the energy-rich Central Asian states, remarked Central Bank of Bahrain (CBB) executive director, financial institutions supervision, Abdul Rahman Al Baker.
'There are 101 Islamic funds incorporated and registered in Bahrain with total assets of $1.6bn as of June.' 'The CBB, through its enabling legislation, promotes the development of new products for investors in Islamic and traditional finance, while providing credible regulation in both areas,' the official said. The CBB, having pioneered the development of sukuk, remains active in the sovereign sukuk market, with $2.9 billion medium- to long-term sukuk issued, complemented by a regular programme of short-term issuance, revealed Al Baker. The CBB, he said, had successfully issued a five-year Islamic leasing sukuk in the local market with a value of BD200 million ($530.4 million) in April. 'The potential size of the Islamic finance market is vast, and the accelerated establishment of Islamic finance hinges on attracting these potential funds into Islamic investment,' he noted.
'However, it is important to ensure that Islamic investment industry has solid and strong foundations for future development and growth,' the expert added. While the issuance of sukuk has paved the way for the creation of a supply of Islamic financial instruments, it has not led as yet to the promotion of active secondary markets.
A greater focus is needed in this aspect, Al Baker observed. 'Islamic financial institutions also need to develop strategic alliances with other financial institutions globally, especially in the products structuring and offering, as such alliances will help achieve economies of scale and improve the services across the Islamic investment industry,' he added.
On the sidelines of the conference, he said that by issuing sukuk the CBB was establishing a benchmark for corporate sukuk to develop in the market. 'A lot of sukuk are being issued by the government and corporates and that is positive. Islamic finance is growing not just in banking but in insurance and asset management and that is positive,' he added.
source: Trade Arabia