National and Global Islamic Financial Architecture:
Prolems and Possible Solutions for the OIC Member Countries
55
insurance schemes enhance the confidence of the clients in such cases and promote financial
system stability (Calomiris and White 1994; FDIC 998). The scheme should be complemented
by a sound and prudent regulatory and supervisory framework so that its use is kept to a
minimum.
As the conventional deposit insurance schemes may not fulfill the Shariah principles, there is a
need to have Shariah compliant deposit insurance schemes. While there is no issue to protect
depositors of current account holders by using Shariah compliant deposit insurance, issues can
arise to insure PSIA depositors. Contractually, PSIA deposits are mudarabah contracts that
share the risks and cannot be guaranteed (IFSB 2015: 70). Restricted PSIA are treated as CIS by
IFSB as they cannot be guaranteed under the scheme. The case with unrestricted PSIA,
however, is more complex. As in most jurisdictions, the unrestricted PSIA are treated as
deposits for capital adequacy purposes, and there are arguments for giving them the same
protection as deposits of conventional banks to level the playing field between Islamic and
conventional banks (IFSB 2015: 70).
3.7. Human Capital & Knowledge Development Framework
In order to be compliant with the Shariah, Islamic finance requires specific knowledge and
skills on finance, Shariah and the laws of the host country. However, being a relatively new
industry, there is a scarcity of qualified professionals who are proficient in these areas. There is
a need for talented professionals not only at the level of financial institutions but also at the
level of regulatory bodies. In a survey carried out by MEGA (2016), 63.5% of the respondents
identify the availability of qualified Islamic finance staff to be limited and 18.2% indicate it to
be very scarce (p. 47). In the same survey, more than half of the respondents identify
developing human resources as a top priority that needs the most attention (p. 48) and 28% of
the respondent identify a shortage of qualified personnel to be one of the biggest internal
threats facing Islamic finance (MEGA 2016: 51).
The rapid growth in the Islamic finance industry is expected to create a huge demand for skills
and knowledge in the field. A report by A.T. Kearney (UAE) Ltd in December 2006 indicated
that the booming Islamic banking sector will need 30,000 jobs in the Gulf in 10 years. Another
study by AlJarhi of the International Association for Islamic Economics indicated that the
Islamic banking and finance industry will need about 300,000 new staff educated and trained
in Islamic finance and banking. One of the key challenges that will need to be resolved is to
ensure that there is enough manpower with the knowledge and skills of different aspects of
Islamic finance (bankers, lawyers and Shariah scholars) to support the growth of the industry.