(15 October 2012 – Asia) The Asian Development Bank (ADB) signed an agreement to advance the adoption of Islamic banking throughout Asia.ADB signed a five year agreement with the Islamic Financial Services Board (IFSB) to help ADB-member countries adopt IFSB’s prudential standards.
The five-year agreement will see ADB support its member countries in legal and regulatory aspects of meeting IFSB standards.
The agreement will focus on Indonesia, Bangladesh, Pakistan, the Maldives, Afghanistan, Kazakhstan and the Philippines.
It includes encouraging these countries to align their infrastructure financing needs with Islamic finance, which could help meet Asia’s enormous demand for infrastructure investments.
ADB provided its first fully sharia-compliant financing last May when assisting the Jeddah-based Islamic Development Bank with two partial credit guarantees worth up to US$66 million (A$64 million) for two wind farms in Pakistan.
IFSB guidelines are widely used in the Islamic finance industry, but are not mandatory. It is up to national regulators to decide whether to adopt them.
Based in Malaysia, IFSB is an international standard-setting organisation that promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry.