Islamic Financial Infrastructure


Over the past twenty years, IDB has played a significant role in the creation and strengthening of specialised activities performed by various financial infrastructure institutions for the Islamic financial industry These include:

 

  1. 1425H (2004) International Islamic Centre for Reconciliation and Commercial Arbitration (IICRCA) - Dubai, U.A.E.
    Conduct mediation of disputes and to adjudicate on financial and commercial disputes which can arise between Islamic financial institutions, and between these institutions and/or third parties.

  2. 1423H (2002), The Islamic Financial Services Board (IFSB)- Malaysia.
    Promote development of prudent standards and effective supervision guidelines for the Islamic financial services industry and recommend their adoption by relevant regulatory authorities.

  3. 1423H (2002), The International Islamic Rating Agency (IIRA) - Bahrain.
    Conduct rating of entities, determine financial strength, fiduciary risk and credit worthiness of the issuer along with assessment of Shariah compliance.

  4. 1423H (2002), Liquidity Management Centre (LMC) - Bahrain.
    Facilitate development of inter-bank money market and to provide short-term investment opportunities with greater Shariah credibility.

  5. 1422H (2001), The General Council of Islamic Banks and Financial Institutions - Bahrain.
    Promote cooperation amongst Islamic financial institutions, develop concepts, rules, provisions, share related information, and develop better understanding with regulatory bodies.

  6. 1421H (2001), International Islamic Financial Market (IIFM) - Bahrain.
    Develop Shariah enhancement and guidelines for issuance of Islamic financial instruments, and to encourage active secondary market trading.

  7. 1411H (1991), The Accounting and Audit Organisation for Islamic Financial Institutions (AAOIFI) - Bahrain.
    Develop accounting, auditing and Shariah standards for adoption in the financial reporting of Islamic financial institutions.

  8. 1401H (1981) The Islamic Research and Training Institute, (IRTI) IDB - Jeddah, Saudi Arabia.
    To undertake research and impart training in Islamic economics and assist in the development of Shariah-compliant financial sector.

 

Ten-Year Master Plan Framework for the Islamic Financial Service Industry

The Master Plan launched as a joint initiative by the IDB Group and IFSB in 1426H (2005). The plan is a framework and direction-setter for the development of Islamic finance, both at national and international levels. The plan proposes a vision for the industry and a strategy to develop Islamic financial intermediation at national levels and focuses on building institutional capacity in various segments of the financial sector and envisages three phases of implementation: building institutional linkages; stimulating competition; and raising performance through international integration of the Islamic financial industry. In order to enhance the efficacy of the industry, a key issue is to develop a Shariah-compliant ‘insolvency and creditor rights system’. Since financing by Islamic banks is asset-based and based on risk-sharing principles, a legal system in member countries, which in the event of bankruptcy provides for rapid Shariah consistent realization of rights of Islamic financial institutions, will increase their competitiveness.