We Get To Know The Islamic Finance Ecosystem Closer

The size of the global interest-free finance system grew by 11.4% in 2019 compared to the year 2018, reaching approximately $2.44 trillion

MAGAZINE 05.03.2021, 00:51 17.03.2021, 12:04
We Get To Know The Islamic Finance Ecosystem Closer

The size of the global interest-free finance system grew by 11.4% in 2019 compared to the year 2018, reaching approximately $2.44 trillion.

Dear Readers, In this chapter, we want to introduce the Islamic finance ecosystem to you, which reached a volume of $2.4 trillion as of the end of 2019. First, we will introduce you the Islamic Development Bank Group and International Islamic Finance Authorities in this issue, and we aim to prepare comprehensive files through interviews with the managers of these institutions in the next issues. Enjoy your reading...


Established: In 1975/Jeddah

Founders: 22 member countries of Organisation of Islamic Cooperation (OIC) When IDB was founded in 1975, Saudi Arabia had the biggest share with 25%, followed by Kuwait with 12.4% and Libya with 10%. Turkey is the sixth founding partner with a 7.9% share.

Members: The bank's members increased to 57 over time. Membership to the bank requires membership to the Organisation of Islamic Cooperation. The Jeddah-based Institution has regional offices in Kazakhstan, Malaysia, Morocco, Senegal, Turkey, and Indonesia.

Purpose: As the first international Islamic bank, IDB aims to contribute to the social and economic development of Islamic countries that are in need through the capital surplus of other Islamic countries in compliance with the principles of Islamic law.


IDB has established subsidiaries to achieve its goals and conduct its tasks. These are:

Islamic Research and Training Institute (IRTI, 1981)

Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC, 1994)

The Islamic Corporation for the Development of the Private Sector (ICD, 1999)

The International Islamic Trade Finance Corporation (ITFC, 2005)

The Islamic Solidarity Fund for Development (ISFD, 2007)


Established: In 1991/Bahrain

Purpose: To set standards for accounting, auditing, ethics, management, and Sharia topics in Islamic finance and to resolve inconsistencies and contradictions in products and applications through these standards.

Founders: IDB, Dar al-Mal al-Islami (Bahrain), Al-Rajhi Banking and Investment Corporation, Bukhary Capital (Malaysia), Kuwait Finance House, and Dallah Albaraka Group

Standards: Standards in accounting, audit, ethics, management, and Sharia topics.

Certifications: CIPA – Certified Islamic Public Accountant, CSAA – Certified Shari’a Adviser and Auditor.

TKKB and AAOIFI signed a memorandum of understanding on January 3, 2020 to increase awareness and promotion of Islamic finance in Turkey and in the world. With this agreement, the two institutions aim to exchange information and execute mutual capacity increase programs for AAOIFI standards in Turkey and other countries.


Established: In 2001/Bahrain Founders: It was founded by the Islamic Development Bank (IDB) and other leading Islamic finance institutions.

Members: Has more than 130 members from over 34 countries around the world.

Aims: Conducting research and release publications in the field of Islamic finance, providing helpful programs to senior executives, advisory boards, product development managers, and other staff of Islamic financial institutions with regular trainings and seminars.

Members of TKBB and Albaraka Turk Participation Bank also represent Turkey in CIBAFI.


Established: In 2005/Bahrain

Founders: Islamic Development Bank (IDB) Its partners include financial institutions in member countries of the Islamic Development Bank and The Organisation of Islamic Cooperation. Kuveyt Turk Participation Bank from Turkey is also a member of it.

Function: IIRA contributes to the development of the Islamic finance market by evaluating and reporting institutions, investments, products, and credit risks in terms of their compliance with Islamic law. It is an independent and transparent rating agency with methodologies and analytical processes in compliance with international applications. BRSA is acknowledged by the central banks of Bahrain and Jordan.


IIRA provides ratings for all types of issuers and issues.

• Sovereign Ratings

• Issuer Ratings

• Sukuk Ratings

• Takaful Financial Strength and Fiduciary Ratings

• Participation Banks Credit and Fiduciary Ratings

• Shari'a Quality Ratings (SQR)

• Governance Ratings

• Waqf Assessment (Development in progress)

• Collective Investment Scheme (CIS) Ratings Financial Data Portal (available through Subscription ) Rating and training workshops.


Established: In 2002/Malaysia

Founders: IDB, IMF, the Central Banks of Malaysia and Bahrain

Members: It has a total of 187 members from 57 countries, including 79 regulatory and supervisory agencies, 9 international public institutions, and 99 financial institutions. Purpose: The international organisation develops international standards and principles to support the stability and development in the Islamic finance sector. It has published 32 standards so far.

Albaraka Turk, BRSA, BIST, CMB, CBRT, Kuveyt Turk, the Undersecretariat of Treasury, Turkiye Finans, Ziraat Katılım, and TSPB from Turkey are also members of the institution.


Established: In 2002/Bahrain

Founders: It was founded under the leadership of the Central Bank of Bahrain and with the mutual support of IDB, The Central Banks of Indonesia, Malaysia, Sudan, Labuan Financial Services Authority, and Brunei Darussalam Money Center.

Members: 63 member institutions.

Purpose: Standardisation of documentation and related transactions in the Islamic capital and money markets. It has published 12 standards so far.

Ziraat Katılım, BIST, Türkiye İş Bankası, Kuveyt Turk from Turkey are among its members. Prof. Dr Hasan Hacak, Chairman of TKBB Central Advisory Board is also a member of the institution's Advisory Board, representing Turkey.


• Risk Management (IFSB-1)

• Capital Adequacy (IFSB-2)

• Corporate Governance (IFSB-3)

• Transparency and Market Discipline (IFSB-4)

• Supervisory Review Process (IFSB-5)

• Governance for Collective Investment Schemes (IFSB-6)

• Special Issues in Capital Adequacy (IFSB-7)

• Governance for Islamic Insurance (Takafuf) Operations (IFSB-8)

• Conduct of Business for Institutions offering Islamic Financial Services (IIFS) (IFSB-9)

• SharFah Goverance System (IFSB-10)

• Solvency Requirements for Takaful (Islamic Insurance) Undertakings (IFSB-11)

• Liquidity Risk Management (IFSB-12)

• Stress Testing (IFSB-13)

• Risk Management for Takaful (Islamic Insurance) Undertakings (IFSB-14)

• Revised Capital Adequacy (IFSB-15)

• Revised Supervisory Review Process (IFSB-16)

• Core Principles for Islamic Finance Regulations (IFSB-17)

• Retakaful (Islamic Reinsurance) (IFSB-18)

• Recognition of Ratings on SharFah-Compliant Financial Instruments (GN-1)

• Risk Management and Capital Adequacy Standards: Commodity Murabahah Transactions (GN-2)

• Practice of Smoothing the Profits Payout to Investment Account Holders (GN -3)

• Capital Adequacy Standard: The Determination of Alpha in the Capital Adequacy Ratio (GN-4)

• Recognition of Ratings by External Credit Assessment Institutions (ECAIS) on Takaful and Retakaful Undertakings (GN-5)

• Quantitative Measures for Liquidity Risk Management (GN-6)

• Development of Islamic Money Markets (TN-1)

• Stress Testing (TN-2)

• Disclosure Requirements for Islamic Capital Market Products (IFSB-19)

• Supervisory Review Process of Takaful/Retakaful Undertakings (IFSB-20)

• Core Principles for Islamic Finance Regulation [Islamic Capital Market Segment] (IFSB-21)

• Revised Transparency and Market Discipline (IFSB-22)

• Financial Inclusion and Islamic Finance (TN-3)

• Shan ah-compliant Lender-Of-Last-Resort Facilities (GN-7)

Fatma Çınar

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