Global Islamic financing needs competent leadership, expert says

Need to develop Sharia, accounting, prudential standards, market practices, Al Maraj says

The leadership of Islamic financial institutions has to show exceptional professional competence and integrity to convince their stakeholders that they deserve to lead the industry to the next level of growth, Rasheed Al Maraj, Governor of the Central Bank of Bahrain, said at a major Islamic banking conference in Bahrain.

“A leadership that does not possess a global mindset cannot possibly establish and manage a global Islamic financial institution,” he said at the 25th World Islamic Banking Conference 2018 attended by 1,300 people from 50 countries.

“A multinational institution has to compete at the global level for human resources, finances and competitive advantage. Its leadership must provide a global vision and demonstrate its own capability to compete with the best-in-class worldwide. This is the only way to attract and retain a globally competitive workforce.”

Al Maraj stressed that leadership was one of four pre-requisites needed for regional and global growth in the Islamic finance sector. The others are standardisation, good governance and risk management and compliance. “Sharia standards, accounting standards, prudential standards and best market practices need to be developed for the Islamic finance industry with the global audience in mind,” he said.

“The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has been doing excellent work on Sharia and accounting standards while Islamic Financial Services Board (IFSB) has developed risk management and capital adequacy standards which conform to global best practices. The International Islamic Financial Market (IIFM) has made valuable contribution towards standardising money and capital market contracts as well as financing contracts,” he said.

“The recent endorsement by the IMF of the IFSB’s proposed core principles for Islamic finance regulation and their assessment methodology for financial sector assessments is great news for the global acceptance of Islamic finance.

“What we need now is to convince regulators and market players to adopt AAOIFI, IFSB and IIFM standards in their respective markets. People tend to forget the lesson learned from the global financial crisis. During the last decade the top ten global banks have paid over $250 billion in fines and penalties,” Al Maraj said.