Diversification of Islamic Financial Insturments
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Table 84. Policy Recommendations for Nascent Islamic Finance Destinations
Recommendation Specific Step Implementing Agency
Legal framework
Separate Islamic Banking,
Islamic Capital Markets and
Takaful Law.
Neutral Tax Law.
Remove any overlapping of
laws between Islamic and
conventional financial services.
Central Banks with assistance
from International Islamic
Financial Bodies
Promote Risk Sharing
Products
Develop policies which
promote risk sharing products
rather than risk transfer
products.
Create awareness amongst
Islamic bankers on risk sharing
as the key to Islamic finance.
Central Banks with assistance
from International Islamic
Financial Bodies
Takaful Development
Develop understanding of
Takaful and its uniqueness.
Create a purpose statement for
Takaful.
Incentivize Takaful companies
and products.
Central Banks with assistance
from International Islamic
Financial Bodies.
Enhance Islamic financial
literacy
Develop trained Islamic
banking professionals
More Shariah scholars with
sound financial knowhow
More financial experts with
sound Shariah knowledge
Islamic finance educational
institutions.
Central Banks with assistance
from International Islamic
Financial Bodies
Source: Created by Author
The policy recommendations section entailed a diverse set of policies ranging from broad
measures which are required at the governmental level to specific ones that need to be
undertaken by different groups involved in the Islamic financial sector. The main crux of these
polices focuses on a global coordinated effort for more legal and regulatory development and
harmonizing practices in different jurisdictions. A concentrated effort also needs to be
undertaken in further strengthening the Shariah governance frameworks, as the Shariah
compliance of Islamic finance is the underpinning of the confidence in the system.