The World Bank and Fajr Capital have signed a Memorandum of Understanding (MoU) to set out a framework for collaboration between the two parties and facilitate international efforts to nurture the Islamic financial services industry.
Both institutions will also cooperate in contributing to wider financial sector development by jointly promoting best practices in corporate governance, ethical standards and socially responsible investing.
Specifically, the MoU adopts the following principles:
- Global Islamic Finance Development Centre: Support for the World Bank’s Global Islamic Finance Development Centre to foster cutting-edge research, development and innovation for the Islamic financial services industry
- Knowledge Sharing: Monitor and strengthen the legal, regulatory and institutional foundations within the financial services sector
- Thought Leadership: Promote the use of relevant knowledge and experience to build consensus on best practices in meeting regulatory standards
- Capacity Building: Enable the development of the Islamic financial services industry as a pioneering model for financial inclusion and discipline
- Dissemination of Best Practices: Encourage ethical, socially responsible investment in the real economy to facilitate long-term economic growth, and make a positive social impact
“The signing of this MoU sends a clear signal that both the World Bank and Fajr Capital are deeply committed to the growth of the Islamic finance industry,” said Iqbal Khan, CEO of Fajr Capital. “We look forward to working closely with colleagues at the World Bank to ensure that Islamic finance plays an important role in advancing financial inclusion, economic development and social responsibility across the OIC region.”
Dr Tunc Uyanik, Director, Financial Systems Global Practice, World Bank added, “The MOU with Fajr Capital is part of our efforts to collaborate more closely with market players in the Islamic finance industry, with a view to working together to develop Islamic finance globally.”
The core tenet of Islamic Finance is a system which promotes risk and profit sharing and the avoidance of interest. Global Islamic financial assets have increased exponentially from only USD 80 billion at the beginning of the last decade to around USD 1.8 trillion in 2013. Islamic finance has the potential to form a substantial share of financial services in many countries in the coming years, especially Muslim majority markets. Through the MoU, the World Bank and Fajr Capital will explore Islamic Finance as a potential tool supporting the efforts of public and private sector institutions to reach their development goals.