The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Islamic finance needs solid foundations

Islamic banks have much potential to tap Islamic, ethical and conventional borrowers and investors. The key will be whether the industry can introduce the regulatory standards to reassure investors. Nigel Dudley reports.

BANK REGULATORS AND international organizations are launching a concerted drive to establish global standards for Islamic banking to bring coherence to the industry.

Last year, a number of central banks, led by those from the Middle East and Asia, set up the Islamic Financial Services Board (IFSB) to set and disseminate prudential and supervisory standards for the industry. The Kuala Lumpur-based IFSB is "already finalizing standards on risk management and capital adequacy and in the coming months will turn its attention to corporate governance", says its secretary general, Rifaat Ahmed Abdel Karim.

Senior figures from the Islamic financial services sector are negotiating with the IMF, World Bank and the Basle Committee to establish globally accepted standards. And much work has already been initiated by the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). It has issued more than 20 accounting, auditing and ethical standards.

Demands of growth There are more than 200 Islamic financial institutions, with more than $200 billion in deposits operating in more than 25 countries, and the sector is thought to be growing at about 15% a year. Zeti Akhtar Aziz, the governor of Bank Negara Malaysia (the central bank), says that the Islamic sector, which now comprises 10% of the banking system, is expected to grow to 20% by 2010.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree