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Foundation of Islamic Finance

Islamic Finance - Foundation Part # 1

Hello Friends!!!

Islamic Finance is the means by which Corporate including banks and Financial institutions raise the finance in Muslim worlds in accordance with the Muslim/Islamic Laws.

Islamic Finance is new branch of Financial System evolving as a strong foundation in modern monitory system. Nowadays Islamic Financial System getting greater recognition.

1. Golden Era of Islamic Civilization -

The Early Muslims engaged in the Transactions based on Sharia and Islamic Economic Principles are found in the middle ages from the mid-7th Century to mid-13th century.

Islamic Civilization in the world is 24% of total population in the year 2015.



2. Foundation of Islamic Finance:

  1. Islamic Finance is Newly established system of Finance. First Islamic Bank firmed in the year 1963 in Egypt "Mit Ghamr Saving Bank".
  2. In the Year 1970 -Oil Boom Rapids the Economic growth of Islamic Financial System.
  3. In Dubai, First Islamic Bank and In Saudi, Islamic Development Bank (IDB) were Established in the Year of 1975.


3. Growth of Islamic Finance:

Growth of Islamic Bank are clearly visible in the initial years. 73% growth was noted in the year of 1965 as compared to 1964 in the no of depository, same is continued in the year of 1966 and 1967 as 400% and 65% respectively.

Growth of Islamic financial system is still observable in 21st century.






4. Internationalization of Islamic Banking and Finance (IBF):

Large countries started developing Islamic banks. 
1. Indonesia has started Islamic bank in the year 1992. 
2. Brunei has started Islamic bank of Brunei in 1993. 
3. Singapore, recently announced the envisions to develop the hub of Islamic finance.
4. Thailand approved the draft bill for establishment of Islamic Bank in the year 2001.

5. Statistics of IBF Industries:

1. Islamic Financial Assets under management: USD 750 Million which is growing at 15-20% P.a. of  magnitude.
2. Islamic Mutual Funds: USD 300 Million with Growth rate of 23% P.a.
3. Global Market Capitalization of Dow Jones Islamic Index: USD 10 Trillion

6. Legal Framework:

Lets take a look at Malaysian legal framework of ISLAMIC world.





















7. Conclusion:

Islamic Financial Systems has its own peculiar mechanism of assets management. We will study the same in upcoming blogs on Islamic Finance.

Keep Reading!!!!

Thanks!!!

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