The Southeast Asian nation expects more Islamic bank investors as it issues new permits this year for Islamic banks with a minimum capital of $1bn.
Islamic banking assets in Malaysia, the world’s biggest market for Shariah-compliant debt, rose 16 percent last year after the government approved new licenses and eased restrictions on foreign ownership, the central bank said.
Assets that comply with Islam’s ban on interest increased to 350.8 billion ringgit ($116 billion) and accounted for 21 percent of the total banking system, according to Bank Negara Malaysia’s 2010 annual report published in Kuala Lumpur on Wednesday.
“Malaysia’s position as the global hub for Islamic finance will continue to be reinforced, supported by a diverse set of institutions, deep, liquid and efficient financial markets,” the central bank said. Bank Negara will “focus on developing the players, infrastructure and expertise required to meet the needs of the growing economy.”
The Southeast Asian nation, where 60 percent of the 28 million people are Muslims, will issue new permits this year for Islamic banks with a minimum capital of $1 billion, Deputy Governor Mohd Razif Abd Kadir said Jan. 28. The central bank granted five licenses in 2010 to foreign banks including National Bank of Abu Dhabi PJSC. Four family takaful operators, or Islamic insurers, also received permits including a joint venture between AIA Group Ltd. and Alliance Bank Malaysia Bhd.
“With the expertise, global network and strong business capacity,” international institutions “will contribute to the future growth and diversity of Malaysia’s financial system, support new areas of economic growth and facilitate international trade and investment flows,” it said.
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