Risk Management in
Islamic Financial Instruments
3
1.2.1 Asia Region
At present, Islamic banking service is available in Malaysia, Indonesia, Brunei, Sri Lanka,
Thailand, Singapore, Bangladesh, China, Philippines, Russia, Pakistan Kazakhstan, Azerbaijan
and Afghanistan. Among them, Malaysia constitutes 72.1% of total assets, followed by
Indonesia (10.8%), Bangladesh (5.4%), Pakistan (4.9%) and Brunei (3.4%), while other
countries constitute the remaining 3.4%. (GIFF 2012)
1.2.2 Mena Region
A majority of Islamic banks in the MENA region belong to the private sector and co-exist with
the conventional financial institutions, with the exception of Iran, where all banks are
classified as Islamic banks, and the majority of them are state owned. Among the MENA
countries, Bahrain, Kuwait, Qatar, Saudi Arabia, and The United Arab Emirates are home to
some of the industry’s largest Islamic banks. Oman is the latest GCC member to introduce
Islamic banking through the issuing of two full-fledged Islamic banking licenses. (GIFF 2012)
1.2.3 Sub-Sahara Africa Region
At present, 38 Islamic financial institutions are operating in Africa. The Islamic banking
industry in Africa can be divided into four main regional markets: Kenya, Nigeria, Sudan and
South Africa. Among these four regional markets, Sudan represents the highest proportion of
Shariah-compliant banking services with 81.5% of total assets. Like Iran, the Sudanese
financial system allows only Islamic banking. More recently, some African governments have
taken measures to review and reform their respective banking laws to allow Islamic financial
institutions to operate. The Central Bank of Nigeria has approved a banking license to launch
the country’s first Islamic bank and has recently issued guidelines for non-interest banking.
(GIFF 2012)
1.2.4 QISMUT Countries (Qatar, Indonesia, Saudi Arabia, Malaysia, Uae,
Turkey)
Islamic banks are serving about 38 million people across the world, with two-thirds of the
customers being concentrated in seven countries: Qatar, Indonesia, Saudi Arabia, Malaysia,
UAE, Turkey, and Bahrain. Excluding Bahrain, the other six countries have been identified as
rapid growth markets due to their economic growth potential and pertinence to the global
economy. The six countries are referred to as QISMUT.
QISMUT constituted more than three-fourths of the total global Islamic banking assets in 2012
and was observed to have a 5-year CAGR of 16.4% between 2008 and 2012 (EY 4-15). The
country-by-country 5-year CAGR and share of the QISMUT Islamic banking assets can be
viewed in Chart 1.1 and Chart1. 2.