Takaful premiums are estimated to increase by 30 per cent to $8.9 billion (Dh32.6bn) this year globally with GCC holding a lion's share of 70.4 per cent of the total, and this growth is expected to continue, backed by strong fundamentals, said an executive from Kuwait Finance House.
"Even as short term growth of Islamic finance is likely to have an impact of the weak global financial performance, the medium to long term prospects are quite strong," said Baljeet Kaur Grewal, Managing Director and Vice-Chairman, Kuwait Finance House.
"The potential for Islamic finance far outstretches the global crisis and has vast opportunities to grow further," she said.
Encouraged by growth in Muslim population and non-Islamic countries also warming up to the concept of Islamic banking, the value of assets managed by Islamic banks is expected to grow to $4 trillion by 2020.
Currently, there are over 300 Islamic financial institutions worldwide including banks, mutual funds, Takaful and mortgage companies.
Islamic bank assets have shown over 10 per cent of annual growth in the last decade reaching $770bn at the end of 2009.
She said small and medium enterprise (SME) financing is another area where the sector can look forward to immense opportunities. Quoting a market survey of 125 institutions in 19 Muslim countries, Grewal said Islamic micro finance providers reached 3,00,000 clients in Bangladesh and 80,000 clients in Indonesia.
"Thus SME market offers huge opportunity of growth given the still largely unserved market. It will provide Islamic financial institutions with portfolio diversification, opportunities to cross sell products and it becomes a source of stable income."
"This," mainly as "Islamic finance stresses the importance of financing real, tangible economic activity and this focus on real assets fits very well with the goals of micro finance."