The Monetary Authority of Singapore has urged the region's banks to"step up their knowledge and understanding" of Islamic finance to meet what he believes will be "inevitable demand."
The executive director of the Monetary Authority of Singapore has urged the region's banks to"step up their knowledge and understanding" of Islamic finance to meet what he believes will be "inevitable demand."
Tai Boon Leong was speaking to the industry yesterday at the International Islamic Financial Market Industry Briefing on Islamic Hedging & Liquidity Management Instruments, at the Grand Hyatt in Singapore.
He said: "As you know, Islamic finance has grown to reach $1.3 trillion in total asset size. After originating in the Middle East, it has now spread to countries in East Asia, Europe and Africa. Around us, the industry is vibrant in Malaysia and expanding rapidly in Indonesia and Brunei. As activity increases in these countries, it is inevitable that there will be greater inter-bank and institutional demand for funding and hedging counterparties."
He added: "Hence, Singapore-based financial institutions will have step up their knowledge and understanding of Islamic structures and products in order to satisfy the rising needs of the region."
Since 2003 MAS has been working to "level the playing field" between Islamic and conventional finance. MAS has worked with the industry and other government agencies to ensure that Islamic financial players and end-users are not disadvantaged in terms of taxation, Boon Leong said.
"In the last five years, the range of financial instruments has expanded beyond Shariah-compliant credit facilities to capital market instruments such as Sukuk and REITs as well as unique and innovative funds under management."
StanChart Islamic Launch
The news comes as Standard Chartered Private Bank announced a new suite of Islamic financial solutions yesterday, including fiduciary deposits, property financing, equities and discretionary services, mutual funds (including exchange-traded funds), Islamic bonds (sukuks), and third-party structured products.
These solutions will become available to clients by mid June this year across the private bank’s booking centres in London, Geneva, Jersey and Dubai.
Islamic banking has become a significant part of the mainstream as the gap between conventional and Islamic banking solutions has narrowed substantially.
"With the fast development of this industry, Muslim HNW individuals are increasingly expecting Shariah compliance in managing their wealth," said the bank.
“Although Islamic banking solutions have become increasingly available, there are few viable Shariah-compliant alternatives for HNW individuals. Muslim HNW individuals are restricted to the conventional offering of traditional private banks. There is a need to adopt a more holistic view towards wealth management for this segment,” said Wasim Akhtar Saifi, group head of Islamic banking, consumer banking, Standard Chartered Saadiq.