Islamic banking system is growing at a rate of nearly 35% around the world with the assets of financial institutions valued at $600 Billion in 2007, says Saleh Kamil.
According to Chairman, General Council for Islamic Banks and Financial Institutions, Saleh Kamil, Islamic banking is witnessing strong continuous growth at a rate of about 35% across the globe with assets of financial institutions reaching the phenomenal $600 Billion in 2007, as reported by arab news.
He further revealed that around 470 fully developed Islamic banks and financial institutions are operating worldwide. The number of these banks reached nearly 470 in 2007 from 276 in 2005 and they consist of 85% of over 300,000 employees.
The introduction of new Shariah-compliant products like “Takaful” (insurance) services, comprising ‘life takaful’, by Islamic banks are considered as main growth driver for Islamic banking. These products are offered by various foreign banks through special divisions in Western countries due to increasing demand for these value-based services.
Moreover, a large number of customers are shifting from conventional system of financing to Islamic finance as it is more safe and stable than traditional systems because banks and clients together take decisions and share risks, leading to strong growth in Islamic banking.
Furthermore, in traditional financing systems, there is a risk of receiving inappropriate information with wrong client who might not be able to repay debts to bank. This results in huge losses to the bank. But the Islamic bank tries to maintain bond in the society by assuring fair and just distribution of profit and wealth among all the parties and general economic growth.
However, most of the financial institutions are unaware about Shariah as they have the knowledge of traditional banking only. Also, their employees are unaware of principles of Islamic banking and it is likely to badly affect the Islamic banking system as they will be unable to pitch the products well.
A Research analyst at RNCOS said, “It is necessary to launch joint Islamic banking projects with diverse Shariah-compliant products to support the global economy. And to achieve these goals, banks should develop new projects and take steps for implementing Islamic takaful. Also, to develop ideal Shariah-compliant products and to analyze various business fields, scholars of Islamic banking are required.”
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