The Islamic Development Bank (IDB) Group and the World Bank Group have jointly produced a global report on Islamic finance.
Director General of the Islamic Research and Training Institute (IRTI), Prof. Mohamed Azmi Omar, announced today in Jakarta, Indonesia while launching a synthesis of the report, during the 11th IDB Global Forum on Islamic Finance. The Forum was organized jointly by IRTI and Bank Indonesia, in conjunction with the 41st IDB Group Annual Meeting, to deliberate on the role of Islamic Finance in achieving the Sustainable Development Goals (SDGs).
Prof. Omar said the Global Report on Islamic Finance aims to develop understanding of the theoretical foundation of Islamic finance and shared prosperity, review recent trends in Islamic finance, and identify policy tools to leverage Islamic finance in curbing poverty and fostering equitable wealth distribution.
The full report, titled ‘Islamic Finance: A Catalyst for Shared Prosperity?’, will be launched during the World Bank/IMF Annual Meeting later in the year. The synthesis launched today provides an overview of the main report, its objectives and scope, as well as summary of the policy recommendations.
Some of the key recommendations include having adequate policy interventions and financial infrastructure to enable Islamic finance serve as a catalyst for poverty alleviation and inclusive prosperity.
For the capital market sector, the report recommends creating a level playing field for debt and equity instruments by, among others, allowing tax-free transfer of assets in asset-backed sukūk.
It also urges Islamic non-bank financial institutions to provide Islamic financial services in countries where establishing Islamic banks is not possible due to legal and regulatory restrictions.
The report further recommends creating institutions and governance systems to support orderly function of the Islamic social finance sector.
Prof. Omar explained that the IDB Group’s collaboration with the World Bank Group on the report was initiated to produce a comprehensive document that will serve as a useful guide for all industry stakeholders.