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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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