Islamic financial institutions in Kuwait post strong growth

Kuwait's Islamic financial institutions currently manage more than $5 billion (Dh18.35 billion) in assets, a bank official said.

"In 2000, there were about 10 Islamic financial institutions managing no more than $1.4 billion [Dh5.1 billion] in assets.

The current figures show [their assets] have [increased] at least five times [in total size]," said Shaikh Salem Abdul Aziz Al Sabah, the governor of Kuwait's Central Bank.

Shaikh Salem spoke at the opening session of a seminar titled Legal Aspects of the Islamic Financial Industry.

Islamic financial institutions worldwide have grown tremendously in the past 30 years, Shaikh Salem said. These institutions now manage about $250 billion (Dh917.5 billion) in 75 countries, he said.

The two-day seminar was organised by Kuwait's Islamic Financial Services Council (IFSC) and the Federal Reserve Bank of New York.

Kuwait Finance House was the only Kuwaiti institution to base its operations on Sharia until 2004. That year Bubyan Bank was offered a new licence, and the Kuwait Real Estate Bank was allowed to become an Islamic bank.

The IFSC was established in 2002. It serves as a body working to improve the quality of Islamic financial services.

A law has also been enacted to govern the workings of those institutions and ensure they are accountable. "The challenge facing Islamic banking institutions is that they can operate in a limited number of countries, as many nations have not passed laws regulating their activities," Shaikh Salem said.

Constant monitoring of developments and changes in the global banking industry must remain a priority, said Thomas Baxter, advisor and executive vice-president of the Federal Reserve Bank of New York.

A number of US laws were amended and various items of legislation were changed to handle issues connected to the banking sector since the attacks of September 11, he said.

The rise of Islamic banks internationally and, in particular, in the United States, should be widely studied, he said.