Page 31 - Banking Finance October 2015
P. 31
PRESS RELEASE
Global Islamic finance industry to undergo first comprehensive
assessment of its 40-year history this December
Dhabi Islamic Bank (ADIB), are only a few of the pioneers
who will address the landmark gathering of more than 1500
attendees.
The World Islamic Banking Conference (WIBC), considered With regards to the question of convergence, Noor Abid, a
by many as the Islamic financial services industry's compass leading advisor to the Islamic finance industry for over two
for over two decades, continues to live up to its reputation decades, stated: "Islamic financial institutions (IFIs) need to
after officially announcing today that its 22nd annual edition structure their business models in such a way that the
will provide industry leaders with a unique opportunity to socioeconomic objectives go hand in hand with commercial
critically assess Islamic finance's 40-year history. This coming and profitability goals." Acknowledging WIBC as the
December, regulators, CEOs, scholars and other leaders definitive platform for shaping industry dialogue, he explains
from the Middle East, East Asia, Africa and Europe will further: "There are now conclusive studies suggesting that
assess and reflect upon the achievements, challenges and doing good to the society you serve, has the potential to
opportunities in the rapidly growing Islamic finance industry, generate positive long term economic performance. It is
currently amounting to US$2 trillion. time that IFIs calibrate their objectives and performance
measures such that they are able to serve their
communities in a positive manner, while aiming for high
quality returns."
Whilst it cannot be denied that Islamic finance has grown He concludes by suggesting next steps: "one way forward
tremendously in the past 40 years from a very small base, for the development of Islamic finance based on its true
there is a growing belief that the industry's progress should principles would be to adopt some of the leading practices
not be assessed purely on asset growth. As such, the from the impact investment communities and incorporate
industry is being called to address several questions. Should integrated reported initiatives".
there be a shift away from asset and profit growth towards
other variables such as Islamic authenticity and social & International standard setting organizations such as the
economic value? How can Islamic finance advance a truly Accounting and Auditing Organization for IFIs (AAOIFI) and
profit and loss sharing system in parallel to complying with the Islamic Financial Services Board (IFSB) have been
global prudential standards (e.g. Basel III)? How can the formative in helping the industry develop a more
industry develop a new regulatory architecture to support "integrated" approach, coupling profitability and values.
small and medium sized enterprises (SMEs), as well as asset-
backed financing in order to complement asset-based However, while the relevant standard setters may issue
structures and public infrastructure investment financing? appropriate frameworks or standards, it is essential to
secure joint commitment from all stakeholders within the
The momentum for historic discussions on these matters is system. This is partly because of the sheer challenges of
building up to December's WIBC, which will include a much adopting both international and industry standards. There
anticipated power debate between some of the industry's is growing concern about a disconnect between what is
eminent leaders. They will address the core question of how required by international prudential standards (e.g. Basel
the current system can converge with its original III) and the principles of Islamic finance. For instance,
proposition. Datuk Professor Rifaat Ahmed Abdel Karim, Islamic financial institutions have an affinity towards
CEO of International Islamic Liquidity Management investment management, as well as credit provision to
Corporation (IILM), Noor Abid, Board Member of Kuwait underserved segments (e.g. micro and small and medium
Finance House Group, and Tirad Al-Mahmoud, CEO of Abu sized enterprises (MSMEs)). Financing of MSMEs and the
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