The Islamic banking and finance industry is advancing around the world with number of countries tapping into this lucrative sector. Developing regulatory clarity and sound sharia governance framework can further the growth of Islamic banking industry worldwide.
Standardization and harmonization is equally important in developing regulatory clarity in order for the industry to further prosper.
In order to maintain the momentum of the growth that Islamic finance industry is foreseeing, ,there needs to be implementation of efficient regulations where business and investors can follow easily . regulatory clarity is imperative in order to see the succession of the industry grow with potential. Many major Islamic financial hubs such as Malaysia recognized clarity and have thus excelled in performance of their respective Islamic banks and financial institution. In addition countries that have implemented regulatory measures through accommodative legislation for Islamic finance have witnessed accelerated growth in profitability.
The Islamic financial framework extremely important and in order to ensure effective Sharia governance in Islamic banking an institution needs to abide by the principle of Islamic finance. If an Islamic financial institution operates according to the principles outlined by the Sharia then it will be easier for institution to implement effective legislation that can help to regulate the industry accordingly.
Creating a specialized regulatory framework from the initial onset can help Islamic banking institution to perform better and gain optimum market share within their company. Many Islamic hubs already identified the need for an initial customized framework for regulation that needs to be implemented in order for the Islamic financial institution to further prosper.
One of the main challenges that Islamic banks and institution have around the world is the need for a separate regulatory framework that differs from the one that is outlined for conventional banking As the Islamic banking industry operates on the basic of completely different principle in comparison to conventional banking there needs to be different level of regulation in its operation.
Many countries may consider the best way that they have created a separate framework for the implementation of Islamic banking. There are many countries around the world that are keen to establish Islamic banking institution and Islamic financial centers such as Kenya, Nigeria, Iraq , India and Libya. These diverse countries could help to spur accelerated growth of the Islamic banking industry not only in their respective countries but also around the world.
Although there is potential for the progression of Islamic banking industry through regulatory clarity and Sharia governance there is also inevitable challenges that need to be addressed. The Islamic banking and finance industry would be on the road to success once these challenges are recognized and addressed accordingly. There are many countries that need to develop Sharia governance and regulatory clarity in order to further succeed on their Islamic financial product offerings and banking institutions.
Azhar Mazim of Global Islamic Banking at Ernst and Young said the regulatory clarity is extremely important. Because the investor like a predictable well-articulated and distinct framework.
Due to the fact that many countries have not yet developed separate legislation that differs from the conventional banking legislation, it has been difficult to implement Islamic banking effectively and in compliance with a Sharia governance framework. When a separate legislation framework is created and challenges are identified and addressed, it would be easier for countries around the world to implement Islamic banking and further aids The Islamic banking industry is expected to growth to a staggering rate by 2018 establishing global connection and networking for much industry to further excel. Many countries are tapping into the lucrative sector that also holds great ethical values in helping people to manage their finance. There are significant Muslim population that can increase demand for Islamic banking and finance around the world and particular in Asia. Leading Islamic financial hubs such as Malaysia have already addressed regulatory clarity and Sharia Governance that is one of the reasons why the industry is boom in the country.
In addition, Islamic financial centers such as the UAE have increased opportunities for Sharia compliant investments and enable the industry to have opportunities for cross selling. The Islamic financial and banking industry has a bright future with the years to come through efficient regulatory clarity and Sharia governance amongst many others factors which can have a positive impact on the global industry.