The #continuing allure of #Islamic #finance

The total Islamic finance industry was estimated at around $ 1.9 trillion in assets for the year end of 2016, and it pales into insignificance compared with traditional finance. However of special interest is the growing popularity of Islamic finance from both the Muslim and non-Muslim financial institutions and investors. Islamic assets are very much concentrated in the banking sector which holds $1.5 trillion in total, with the Islamic bonds or sukuks worth $320 billion, and investment funds and insurance or so called takaful worth $56 billion and $25 billion respectively.
The majority are purchase and sale or murabaha and leasing or ijara transactions. Some major Gulf companies are turning to the sukuk market to raise funds, with Saudi Aramco and the Government of Saudi Arabia both successfully launching sukuk tranches which were heavily oversubscribed.
Globally, the Islamic finance market is mainly found in two main regions in the Muslim world – Malaysia and in the Arabian Gulf, an Bahrain set a precedent there in supervising and granting of Islamic banking licenses but Dubai is now becoming a global hub for the sector. Other financial centers, especially London, have been quite vigorous in trying to capture a part of the growing Islamic finance business and the UK is far ahead of other Western countries, with 20 banks offering Islamic finance services, compared with 100 in the US and 4 in Switzerland.
Some western banks like Citibank and HSBC have been in the forefront of Islamic finance and established Islamic finance subsidiaries, like HSBC Amana even before fully owned Muslim Islamic finance institutions were set up. Of the 20 UK banks, five are fully Sharia compliant – Abdu Dhabi Islamic Bank, Al Rayan Islamic Bank, Bank of London and the Middle East , Gatehouse Bank and QIB UK. According to some estimates, there are more than 100,000 Islamic banking retail customers in the UK and even non-Muslim retail investors are also opting for Sharia compliant Children Trust Funds in screened ethically investing companies.