Bahrain, the UAE and Saudi Arabia have ranked in the world’s top five Islamic finance economies, according to the latest annual Islamic Finance Development Indicator (IFDI).

The kingdom, which has led MENA in all eight IFDIs to date, ranked in third place globally this year, with the UAE and Saudi Arabia ranking fourth and fifth respectively. A total of 135 countries are ranked as part of the index.

The IFDI is part of the annual Islamic Finance Development Report produced by Refinitiv and the Islamic Corporation for the Development of the Private Sector (ICD), the private sector development arm of the Islamic Development Bank (IDB).

It provides an annual rank for each economy in the global Islamic finance industry, aggregating scores across five areas – quantitative development, knowledge, governance, corporate social responsibility, and awareness.

Bahrain’s high ranking was based upon its robust and supportive regulation for Islamic finance and banking as well as increases in both the number of Islamic banking assets.

Fahad Yateem, director of Islamic Financial Institutions Supervision Directorate at the Central Bank of Bahrain, said: “The results are testament to our longstanding strategy of pioneering yet comprehensive regulation, creating a framework conducive to digital and technological innovation in the industry.

“The recently launched Bahrain Open Banking Framework, which provides detailed guidelines ensuring the holistic implementation of Open Banking for the entire banking industry – the first in the world to incorporate Islamic Finance.

“As the report makes clear, the Covid-19 pandemic has further catalysed digital innovation in the industry as well as consumer uptake of technology. Moreover, it is these technological advancements within Islamic finance that will be a key driver of the industry’s post-covid recovery.”

Dalal Buhejji, director, Business Development, Financial Services at the EDB, said: “Bahrain was the first in the region to develop a strong banking community and is now building one of the most concentrated FinTech ecosystems in the world. The Islamic finance sector has been a key part of that development, with $96 billion of assets held in the kingdom, which accounts for 124 percent of Bahrain’s GDP.

“We are continuously implementing new initiatives and policy tools to further develop Bahrain’s standing in Islamic finance, including new Takaful models and Sharia-compliant investment tools.”

Bahrain is home to the region’s largest concentration of Islamic finance institutions that deal in almost every area of Islamic finance and Islamic products. The Bahrain Islamic Bank was established in 1979 and Bahrain has since worked to nurture concepts, rules, and standards of Sharia banking compliance in Islamic banks.

The report recognised the UAE’s efforts in the governance space, highlighting the banking, takaful and sukuk regulations that were introduced in 2019, as well as the unified global legal framework for Islamic finance launched in May.

The UAE was also recognized as the top Islamic Finance educator in the region boasting the highest number of Islamic Finance Education Providers across the GCC at 52 – including 12 that provide degrees.

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