Master of Business Administration Executive

Faculty / School

Faculty of Business Administration (FBA)

Year of Award


Project Type

MBA Executive Research Project

Access Type

Restricted Access

Executive Summary

The Banker’s 2010 survey of financial institutions practicing Islamic finance reveals that Shariah compliant assets rose by 8.85% from $822 billion in 2009 to $895 billion in 2010. Islamic finance has had a compound annual growth rate (CAGR) of 23.46% from 2006 to 2010.

Since its inception almost four decades ago, the number of Islamic financial institutions has increased to more than 650 hundred across 54 countries. Though primarily concentrated in Middle East, African and South East Asian countries, a number of Islamic financial institutions are expanding into Europe and North America. Many of the growing number of companies being attracted to Islamic finance are conventional institutions looking to tap into rising market demand, alternative investment opportunities and fresh sources of funding, Major conventional banks have established Shariah-compliant subsidiaries and counters within their Western style branches. According to The Banker's ‘Top 500 Islamic Financial Institutions 2010” report 199 of these conventional institutions have opened Shariah-compliant counters. In fact, HSBC Islamic finance subsidiary, HSBC Amanah, is amongst the top 10 Islamic finance institutions. The other top Islamic financial institutions are Middle Eastern domiciled institutions.

Takaful, like other Islamic finance concepts, has more than 1,400 years of history, but the growth in Takaful dedicated companies is in its early stages. Iran, where Takaful is the compulsory form of insurance, is the largest market. It is followed by Malaysia, DAE and Saudi Arabia. Together, these four countries account for over three quarters of the global market. Other key markets for Takaful are Kuwait, Indonesia. Bahrain and Qatar.

As Muslim countries have grown outside of the Middle East, a number of Western countries, including Canada, have shown an interest in Islamic finance. Some countries, such as the United Kingdom have become significant centers.

In Pakistan Takaful Rules 2005 were promulgated making possible startup operations of Takaful operators. However, due to initiation of companies a cooling period of 5 years till 2010 was allowed from the regulator Security Exchange Commission of Pakistan (SECP) during which conventional insurers were not allowed to offer Takaful, hence window operations were not freed. Although conventional insurers were of the view that even ground should be allowed to them for Takaful services but one school of thought from Takaful veterans opposed it and registered their point of view that either conventional insurance companies should establish their separate entities for Takaful operations or they should be prepared to switch towards Takaful from conventional practices. Else Takaful operators should only be allowed to offer Takaful. However, with the lapse of those 5 years now draft Takaful Rules 2012 have been released by SECP with an idea to introduce window Takaful operations by conventional insurers. As we have also witnessed presence in banking sector that the conventional banks also have their Islamic Banking operations. According to the Ernst & Young World Takaful Report 2011 global Takaful contributions which were $ 9.15 billion in 2010 and $12 billion in 2011 are expected to touch $25 billion by 2012.



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