Islamic finance to outpace conventional banking

Islamic finance is set to grow at double the pace of the conventional banking sector, Singapore’s finance minister has claimed.

Lim Hung Kiang said he expects the sector to break through the $1 trillion mark in total assets by the end of 2010.

Speaking yesterday at the World Islamic Banking Conference Asia Summit in Singapore, Lim said increased take up in Islamic banking products is driven by rising interest in ethical investments.

“Due to its widening acceptance and its appeal as a means for ethical investment, the industry is expected to continue growing at twice the pace of its conventional counterpart,” he said.

“As such, surveys estimate that the industry will soon cross the US$1 trillion mark in total assets.”

Singapore has the potential to be a major player in Islamic finance, Lim added.

“Singapore, as a financial centre offering a full suite of financial services, is ready to play a wider developmental role in promoting Islamic finance in response to rising demand for Shariah-compliant products and services,” he said.

Key issues Islamic finance needs to face up to were also highlighted at the summit.

Delegates discussed the prominent challenges facing Islamic finance, including the wide range of interpretations by Islamic scholars of how Shariah law applies to twenty-first century financial institutions.

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