Rapid Rise in Sukuk

Figure shows Rapid Growth of Sukuk in Britain.

With $4.11 billion (Dh15bn) worth of sukuk, or Shariah-compliant bonds, listed on the Dubai International Financial Exchange, Dubai is ideally placed to play a leading role in Islamic finance, a senior official said on Wednesday. “A risk-based Shariah systems regulator, regulations based on international standards modified for Islamic finance, and a legal environment based on common law provides certainty and familiarity. Such strong Shariah foundations and a familiarity with Islamic concepts and contracts will help to support the proper regulation and implementation of Islamic financial mechanisms,” Nasser Al Shaali, Chief Executive of the Dubai International Financial Centre Authority, told delegates at the World Insurance Forum in Dubai. “One such mechanism that has recently started gathering momentum is the Islamic insurance and re-insurance sector – takaful and re-takaful. As the Arabic name indicates, it is based on the principle of co-operative insurance and mutuality. The global takaful market is expected to grow by some 15 to 20 per cent per annum to reach $7.4bn in annual contributions by 2015. In the GCC, there are some 23 takaful companies compared to 278 conventional insurance companies,” he said.

“Almost 30 years ago, Dubai pioneered modern-day Islamic banking. It is now one of the major centres around the globe for innovation in Islamic finance. Islamic finance is a $260bn international market, accounting for about 20 per cent of the world’s banking.”