The proposed Shariah regulatory authority in the UAE will greatly benefit the local Islamic banking and finance industry an also help reduce the cost of institutions offering Islamic financial services, said Mubarak Rashed Al Mansoori, Governor of the UAE Central Bank.
“Islamic banking industry will greatly benefit from single reference offering for financial services to harmonise different rules and principles. It will help the institutions offering the Islamic financial services to reduce the cost and also help regulatory oversight of the industry,” he said.
The proposed Shariah authority will have the key objective of – among others – issuing fatwa for products and services; introduce new and adopt existing international standards; documents regulations related to Islamic financial services; advise central bank on Shariah bank regulations to conduct monetary and financial surveillance.
Islamic banks have unique models and the central bank is working on a number of initiatives for the supervision of the banks in line with the global guidelines and Basil rules, he said, adding that regulations of Islamic financial services are an involving process to make sure that they are understood clearly without hurting the industry.
Al Mansoori said banks in the UAE have been innovative and creative in terms of introduction of the new Islamic products and their efficiency contributes to the profitability.
The UAE has eight full-fledged banks. As of Q2 2015, Islamic banks assets have grown 9.8% since the beginning of year to Dh445 billion.
In 2014, Islamic finance assets stood at $1.8 trillion, 74% percent of which fall under Islamic banking.
The value of assets in the Islamic finance sector is expected to increase by 80 per cent over the next five years, reaching $3.24 trillion in value by 2020, according to initial findings garnered from the upcoming State of the Global Islamic Economy (SGIE) report.
Al Mansoori highlighted that the local Islamic banks are also expanding in foreign markets.
Of late, Abu Dhabi Islamic Bank has expanded in Egypt while Dubai Islamic Bank is foraying into Kenya and Indonesia which is the largest Muslim country in the world in terms of population.
He also noted that the global economic growth is slowing but some economic relevant to the UAE have been able to secure high growth rates.
Growth in Mena in 2015 is projected at the same as in 2014 in oil exporting countries at 2.4 per cent. For oil importing it is expected to increase from three per cent in 2014 to four per cent in 2015 as they will benefit from the decline in oil price.