National and Global Islamic Financial Architecture:
Prolems and Possible Solutions for the OIC Member Countries
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finance has diversified and has grown rapidly to become a significant global sector. The
evolution of different Islamic financial institutions over time is shown in Table 2.2 and key
milestones are discussed below.
Table ‎2.2: Evolution of Islamic Financial Institutions and Markets
Period Financial Institutions Financial Markets
1970s  Banks
 Takaful
1980s  Retakaful
 Mudarabah companies
 Microfinance institutions
 Cooperatives/Credit Unions
 Mutual Funds
1990s  Private Equity & Venture Capital
Firms
 Project finance
 Pawn shops
 Investment banks
 Islamic indices
 Corporate sukuk
2000s  Awqaf Properties Investment Fund
 Infrastructure fund
 Leasing companies
 Sovereign sukuk
 Hedge funds
 Islamic REITs
2010s  Crowd funding platforms
1970s: After the formation of the Organization of Islamic Conference (OIC) in 1973, the
Islamic Development Bank (IDB) was established in 1975 in Jeddah, Saudi Arabia. In the same
year, the first Islamic commercial bank, Dubai Islamic Bank, was established in UAE. Realizing
that conventional insurance had objections from a Shariah point of view, two Islamic insurance
companies were launched in 1979, the Islamic Arab Insurance Co. (IAIC) in UAE and the
Islamic Insurance Co. in Sudan.
1980s: The 1980s witnessed the launch of a number of non-bank financial institutions.
Modaraba companies were established in Pakistan after the promulgation of the Modaraba
Ordinance 1980. One of the earlier Islamic microfinance institutions was Al-Fallah Aam
Unnayan Sangstha in Bangladesh, established in 1989. In non-Muslim countries where banking
laws did not allow the establishment of Islamic banks, Islamic cooperatives were introduced.
The first Islamic cooperative in the Western world, Ansar and Islamic Co-operative Housing
Corporation Ltd. was established in Toronto, Canada in 1981 to provide Shariah compliant
home financing to Muslims of the country. The Muslim Credit Union was established in
Trinidad and Tobago in 1983 and Pattani Islamic Saving Cooperative started operations in
1987.
Bank ABC, an investment bank based in Bahrain launched its Islamic services in 1987, thus
starting Islamic investment banking. With the expansion of takaful companies, retakaful
companies emerged in the 1980s (NuHtay et. al. 2014). Furthermore, larger Islamic financial
institutions also emerged during the 1980s that established other financial institutions such as
banks, takaful companies and investment banks in different parts of the world. One the first of
these institutions was the Dar al Maal Islami Trust that was established in Switzerland in 1981.