Islamic banking sector has 'lots of room' to expand

Islamic banking sector has 'lots of room' to expand

Islamic banking has emerged as one of the fastest growing banking sectors in recent years but industry leaders believe that there is a lot more room to expand.

The sector, in which Singapore is a small player, is set to burgeon not just in volume but across countries and in sophistication too.

The bullish outlook for Islamic banking, amid rising demand, was laid out by a panel of industry leaders at a global seminar held at the Pan Pacific Singapore hotel on Monday.

Islamic financial products are designed to comply with the principles of Islam, by not offering interest or investing in businesses such as alcohol or gambling.

Last year, the global industry grew 18.4 per cent over 2011. This rate of growth is expected to rise to 25 per cent a year in the next few years, said Bank Indonesia deputy governor Halim Alamsyah.

"The Islamic financial market has a diverse range of financial products throughout the Middle East, Europe and Asia, with assets of approximately more than US$1.3 trillion (S$1.6 trillion), " Dr Halim added.

The sukuk - the Islamic banking version of a bond - has been one of the best performing asset classes in recent years.

The International Islamic Financial Market's (IIFM) Sukuk Report said global sukuk issuance has grown by 20 per cent to 30 per cent annually since 2008.

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