IDBs Experience in the

Islamic
I l i Financial
Fi
i l Services
S i
Industry
I d t

Male - Maldives,
April 25, 2011

IDB Members

From 22 at inception to 56 (including 28 least developed

countries.)

28
8 in
i Africa
Af i

25 in Asia

2 in Europe

1 in Latin America

IslamicDevelopmentBankGroup
ICIEC
1994

ICD
1999

IDB
1976
97
ITFC
2006

IRTI
1981

IDB Mission & Strategic Thrusts

To promote comprehensive human
development,
development with a focus on the priority areas
of alleviating poverty, improving health,
promoting
p
g education, improving
p
g governance
g
and prospering the people.

Expansion
p
of the
Islamic financial
industry
y is one of the
key strategic thrusts

Components of the
Islamic Financial Services Industry
Commercial
&
Investment
Banking
Infra
structure
structure
Institutions

Micro
Finance
Islamic
Financial
Financial
Services
Industry

Zakat

Capital
Market
Awqaf

Industry Overview
Market size estimated in 2010 - US$ 1 trillion
(Assets) in over 500 institutions
Presence in over 75 countries. Growth rate of
over 20% for the past decade
Expected growth rate of 15
15--20% p.a. in
foreseeable future
Major Islamic banks spread across Middle East
g
of many
y
and East Asia. Emergence
multinational banks with Islamic windows or
subsidiaries

Wide ranging products: Simple retail to

structured wholesale

IFS Industry Major Issues

Coordinated
C
di t d policy
li and
d direction
di ti

Regulatory and supervisory enabling

environment

Proper
p utilization of Zakat and Awqaf
q

Access for the poor to Islamic Finance

S ll financial
Small
fi
i l iinstitutions
i i

Islamic Infrastructure Institutions

NameofInstitution
Accountingand
Accounting
and
AuditingOrganization
forIslamicFinancial
I tit ti (AAOIFI)
Institution(AAOIFI)

IslamicFinancial
(
)
ServicesBoard(IFSB)

Purpose
Est.March1991onBahrainasaNonProfit
Organization.
AnIslamicinternationalautonomousentitythat
preparesaccounting,auditing,governance,ethics
andShari'a standardsforIslamicfinancial
institutionsandtheindustry.
Est. November2002inMalaysia,asanorganization
ofcentralbanksandregulatoryagenciesforthe IFSI.
Servesasaninternationalstandardsettingbodyof
regulatoryandsupervisoryagenciesfor:
Soundness&StabilityoftheIFSI
S
d
& St bilit f th IFSI
PromoteaprudentandtransparentIFSI.

Islamic Infrastructure Institutions

NameofInstitution
GeneralCouncilforIslamic
BanksandFinancial
Institutions(CIBAFI)

Purpose
Est.May2001intheBahrain,byIDBandmanyother
Islamicfinancialinstitutions.
TobetheorganizationalumbrellarepresentingIslamic
To
be the organizational umbrella representing Islamic
FIs, developingtheIFSI byservingandprotectingitin
differentspheresandactivities,namely:Information,
MediaandAwareness,ResearchandProduct
Development,andHumanResourcesDevelopment.

InternationalIslamicFinancial Establishment
M k (IIFM)
Market(IIFM)
N
November2001inBahrain.
b 2001 i B h i
IIFMs primaryfocusliesintheadvancementand
standardizationofIslamicfinancialinstrumentstructures,
contracts,productdevelopmentandinfrastructure;and
,p
p
;
theissuanceofguidelinesandrecommendationsforthe
enhancementofIslamicCapitalandMoneyMarket
globally.

Islamic Infrastructure Institutions

NameofInstitution
InternationalIslamicCenter
forReconciliation&
Arbitration(IICRA)

IslamicInternationalRating
Agency(IIRA)

Purpose
Est. inApril2005inDubai/UAE,IICRA objectiveistosettle
allsortsoffinancialandcommercialdisputesthatmay
arisebetweenthefinancialorcommercialinstitutions
that opt to implement the Islamic Shariah to settle their
thatopttoimplementtheIslamicShariahtosettletheir
disputes,throughthereconciliationorthearbitration.

Est.inJuly2005inBahrain. Asaleadingcreditrating
agency,theIslamicInternationalRatingAgency(IIRA)
assiststheIslamicfinancialservicesindustrytogain
recognitionlocallyandinternationallyasstrongand
capablefinancialinstitutions,adheringtogreater
standardsofdisclosureandtransparency.
Itsmissionistosupportthedevelopmentoftheregional
Islamic capitalmarketandtoimproveitsfunctioning.

IDBs
IDB s Modes of Intervention
Advisory Services including capacity building
and technical assistance
q y Investments in Islamic Financial
Equity
Institutions
q Sector Development
p
and Investments
Awqaf
Capital market interventions Sukuk
g in the field of Islamic
Research and Training
banking and finance

Advisory Services
The Bank offers comprehensive
p
p
program
g
to
address different aspects developmental needs of
the industry.
industry. These are:
are:
1 Technical support initiative: Legal,
1.
Legal Regulatory
and Supervisory enabling environment.
2. Microfinance Development Program
3 Awqaf Development Program
3.
4. Zakat Development Program

TAs for IFSI Globally

Technical assistance under
implementation / under approval for:

National Bank of Tajikistan

Ministry of Finance & Economy,
Economy Senegal
Central Bank of Nigeria
Central Bank of Uganda
g
Central Bank of Djibouti
Central Bank of Libya
Central Bank of Mauritania
FSA/Central Bank of Kazakhstan
N ti
National
l Bank
B k off Kyrgyz
K
Republic
R
bli

Microfinance Development Program

Objective
j
of this p
program
g
is to p
provide access to
Islamic finance to the poor through strengthening
existing institutions by using TA, and/or establish
new institutions.
Pilot projects are being implemented in
Bangladesh,
g
, Indonesia,, Sudan and Senegal
g under
the Microfinance Development Program (IDB(IDBMDP).
This program will be subsequently replicated in
other IDB member countries.

Awqaf Development Program

The objective
j
of this p
program
g
is to revive this
sector as an important tool for poverty
reduction..
reduction
The Awqaf Development Program focuses on
development of Awqaf sector through
financing of suitable real estate projects and
to provide capacity building to Awqaf
institutions..
institutions

Zakat Development Program

Integration of the Zakat sector into the
economy as a tool for poverty reduction is also
being undertaken.
Primary
y objective
j
is to p
provide capacity
p
y
building for organizations responsible for
Zakat collection and distribution.

Portfolio Highlights End 1431

Current portfolio consists of 70 enterprises with
total approved amount of ID 424
424..26 million
57 through Direct equity (ID 414.
414.31 million)
13 through
g Lines of Equity
q y extended to NDFIs ((ID 9.95
million)

Net amount disbursed to these enterprises:

Through Direct Equity
Through Lines of Equity
Totall

ID 262
262..7 million
ID 14
14..8 million
ID 324
324..7 million
illi

Regional Distribution of Active Portfolio

DisbursedAmount(IDMillion)
Regional
14.48
5%

Africa
65.20
20%

MiddleEast
118.06
36%

Asia
110.12
34%
EEurope
16.86
5%

Sectoral Distribution of Portfolio

Textile
Other 1%
Mining/Metals
5%
3%

Agro--Industry
Agro
2%
Cement
9%
/
Chemical/Petro
chemical
13%
13
%

Energy/Utilities
2%

IFIs
60%

Healthcare/Phar
ma
5%

Equity Investment Division

Current Portfolio
(ID Million)
Number

Amount
Disbursed

Companies

43

128.22

Islamic Financial Institutions

27

196.50

Total

70

324.72

Awqaf Properties Investment Fund

1. Approved Five Projects during 1431
1431H
H amounting to
US$
US
$ 110 million in U.A.E, Sri Lanka, Qatar, Sudan
and Lebanon
Lebanon..
2. Since inception the Fund has approved 40 projects
amounting to more than US$
US$ 820 million
million..
3. The Fund also has a line of technical assistance for
helping Awqaf entities in the preparation of
feasibility studies
studies..

Priority Programs & Projects

A
Awqaf
f Investment
I
t
t Di
Division
i i

Creation of an International Awqaf Development

Bank,
B k for
f integrating
i
i
Awqaf
A
f into
i
the
h development
d
l
agenda, resulting in poverty reduction
reduction..

Support and develop the Awqaf sector by making

available project financing in member and non
non-member countries

Establish strategic partnership with Awqaf financing

institutions, to develop new financing products and
enhance
h
resource mobilization
bili ti

A few
f
examples
l off APIF projects
j

APIF Projects
Bandar
Abbas,, Iran:
Abbas
300 Room
Residential &
Commercial
Complex

24

APIF Projects
Chittagong,
Bangladesh:
B
l d h
International
Islamic
University of
Chittagong

25

APIF Projects
Beirut,
Lebanon:
L b
Bazerkan
Commercial
Center

26

APIF Projects
Khartoum
Sudan:
S d
AlAlMagzoub
Commercial
&
Residential
Tower

27

APIF Projects
Fujeira, UAE
Fujeira,
UAE::
Nama
Nama
Commercial
&
Residential
Building

28

APIF Projects
Madina
Munawarrah,,
Munawarrah
Saudi Arabia:
Hotel
Abuthaar

29

If you are interested in

Starting a new Islamic financial
institution,, such as a bank,, microfinance
institution or Takaful company
Developing a piece of land as a Waqf (Trust)
for charitable purposes
Contact:

Wasim A. Abdulwahab

wabdulwa@isdb.org
bd l @i db
30

Together
g
we build a better future

Thank you
Shukkriya
31