8 Background to Islamic Finance
Islamic insurance (takaful)company was established in 1979−the Islamic
Insurance Company of Sudan.
The 1980s saw national economic systems declaring their intent to go to
full Shari’a systems, backed by the 1981 Organization of the Islamic
Conference in Khartoum. The International Monetary Fund started to
publish information on Islamic financial structures and across the Muslim
world, scholarly interest increased and a wide spectrum of products
developed.
With the establishment of the Accounting and Auditing Organisation for
Islamic Financial Institutions in 1990, and the Islamic Financial Services
Board in 2002 setting out new standardsforIslamicfinanceanddevelopment
of financial services, the institutional infrastructure started to become much
more sophisticated and western banks and institutions started to involve
themselvesthroughofferingnon-interestbearingbondsandindicesdesigned
for the Shari’a market.
A century after Barclays opened its Cairo branch, the Islamic finance
sector was just starting to broaden its appeal to the mass retail market. It
has developed at a substantial rate in the last quarter of the 20thcentury,
each decade seeing more and more sophistication and broadening of its
market. In the early years of the 21stcentury, it is poised to expand
exponentially into the retail banking sector and become the fastest growing
element of global banking. As it grows, the examination of financial products
and business processes by senior Muslim scholars continues to become more
sophisticated and profound. Debate and controversy will continue as certain
new products emerge, which some may consider to go against the spirit of
Shari’a, although their constituent elements themselves are permissible.
Only through this continual invention, appraisal and reappraisal will a
strong, flexible yet compliant Islamic finance structure fully develop, and
expand across the world’s markets.