Saudi Arabia is one of the largest markets for Islamic banking and finance in the world, accounting for a substantial share of the sector’s total assets valued at nearly $1.6 trillion, said Mohammed Azmi Omar, director general of Islamic Research & Training Institute (IRTI), an affiliate of the Jeddah-based Islamic Development Bank (IDB).
Mohammed Azmi Omar, director general of IRTI, second right, while launching a book on Islamic banking in Jeddah. (AN photo)
The Kingdom’s domestic market share in Islamic banking reached 49 percent or $207 billion in 2011.
“The nascent sector is growing at the rate of 20 percent annually,” he told Arab News, adding that the Islamic banking and finance market is estimated at between $1.3 trillion to $1.6 trillion, which is less than five percent of the global financial market, with Saudi Arabia holding 7.1 percent of the market or $147.4 billion in 2011.
He said the popularity of Islamic banking, which is value-based and production-oriented, is growing rapidly especially after the global financial crisis. “Islamic banks finance productive projects that can boost real economy and do not engage in speculative and unethical business activities,” he said. Asked why many countries are still reluctant to adopt the Islamic system, Omar said there is a lack of knowledge about the system, its benefits and how it functions. The IDB and IRTI have been spearheading a campaign to promote the system by organizing international conferences and seminars, conducting research and publishing books.
“Many people, including central bank officials, still don’t know what is Islamic banking and its benefits and how it operates.”
He emphasized the significance of sukuk market, which is growing faster than Islamic banking, adding that it offers a good instrument to finance infrastructure projects.
“The sukuk market in Saudi Arabia is expanding rapidly with new sukuk issues by public and private sectors to finance their projects and there is good demand for sukuk,” he said.
*This article was published in ArabNews.com. Read the original article here.
