Bahrain Keen On Tie-Ups With Islamic Finance Centres

From Mohd Iswandi Kasan Anuar MANAMA (Bahrain), Nov 22 (Bernama) -- Bahrain is keen to further establish partnerships with international Islamic finance centres including Malaysia to develop the industry further, said Central Bank of Bahrain, Banking Supervison executive director Khalid Hamad. He said the central bank will remain active in developing industry standards and the standardisation of market practices via the Islamic Financial Services Board, Accounting and Auditing Organisation for Islamic Financial Institutions and International Islamic Financial Market. "Current Islamic banking initiatives under way in Bahrain include work on developing a money market framework, developing liquidity, further strengthening the Shariah Basel II and further training and education provision," he told Bernama in an interview here on Tuesday. Khalid urged industry players to turn their attention to financing the education, health and agricultural sectors, saying these are important for economic growth while raising the quality of life. "There is a need to revitalise these industries that currently are being taken care of mostly by the public sector and less so by the private sector. There is a huge potential going forward, driven by a surge in demand," he said. He also said the private equity business will continue to become a key growth area for the Islamic finance industry, adding that industry players need to aggressively expand branches to tap a market that has been largely ignored for a long time. On the effect of the recent unrest in Bahrain, Khalid said the country continues to be a regional Islamic banking hub. "There is a huge potential for Islamic finance development here and Bahrain is the leader in Islamic banking given that we have the largest cluster of Islamic banks. We have made good progress in developing the industry and put shariah standards into practice as well," he said. Meanwhile, he said Bahrain's Islamic finance industry is going through a consolidation phase that will see several mergers in the near future, including Al Salam Bank-Bahrain and Bahrain Islamic Bank. "Currently, there are also three other major local Islamic investment banks in negotiations with each other but no announcement has been made yet and there is another possible merger between two retail banks -- Islamic and conventional," he said. In Bahrain, the growth of Islamic banking, or banking that complies with shariah principles, has been remarkable, with total assets rising to US$24.9 billion by December 2010 from US$1.9 billion in 2000. At present there are 27 Islamic banks in Bahrain. -- BERNAMA Malaysia