History of origin

Origination and development of the modern Islamic financial system begins since establishment of the saving bank “Mit gamr” in Egypt in 1963 that led to modern world Islamic banking system. The main activity of this bank is financing the agriculture with observance of the Sharia principles.

The same year a saving fund “Tabung Hadji” was created in Malaysia for the piligrims wishing to go to hadj in Mecca, the fund conducts vigorous activity till present day.

These events were the impulse for establishing new financial organizations, activity whereof corresponded to Islamic finance principles. Soon the Islamic banks emerged in UAE (1975), Sudan (1977), Egypt (1977), Luxembourg (1978), Bahrain (1979) and Malaysia (1983).

In 1973 on the first Finance ministers conference of the countries-members of the Organization of the Islamic conference (OIC) was signed a Memorandum of intent for establishing the Islamic Development Bank (IDB). The goal of the IDB activity based on the Sharia principles is assistance to economic development and social progress in the countries-members of the Bank and Muslim associations in different states, building solidarity and mutual cooperation between the Bank members and encouraging development of Islamic economy, finance and bank activity. Officially IDB began its activity on October 20, 1975.

In 1979 were established the first Islamic insurance companies in UAE and Sudan.

In 1990 Shell MDS Sdn. issued the first sukuk in Malaysia.

In 1991 the Auditing Organization for Islamic Financial Institutions (AAOIFI) was registered – an independent corporate body, developing accounting, audit, management, ethics and sharia compliance standards for Islamic financial institutions and industry. AAOIFI plays a principal role in the process of bringing standard legal acts and standards providing functioning of Islamic banks and financial institutions to compliance with Islamic finance principles.

In 1999 was established the Dow Jones Islamic Index in Bahrain.

In 2002 in Malaysia was formed the Islamic Financial Services Board (IFSB) - an international body regulating and controlling the organizations providing stability of the Islamic financial services industry that includes banking and insurance system and also the capital market. The main goal – is providing coordination of actions of countries’ monitoring bodies and development of common standards for Islamic financial institutions.

The same year was opened the Liquidity management centre (LMC) in Bahrain with a focus on access to qualified financial assets having secondary circulation, Islamic banks Kuwait Finance House, Dubai Islamic Bank and Bahrain Islamic Bank. The Centre accumulates assets that acquires at governments and financial institutions, securitizes them in the sukuk form and offers them for investing the temporary free money resources to financial intermediaries (banks).

In 2005 by the Initiative of the Islamic development bank was established the International Islamic Rating agency (IIRA). IIRA is a rating agency established with the purpose of providing a full range of capital market and banking sector appraisal primarily in the Islamic countries.

In 2009 was issued the first law on the post-soviet territory on the Islamic finance in Kazakhstan.

At the present time the current volume of assets in Islamic finance industry in the world makes more than 2 tln. USD that makes about 1% of the total volume of the world financial industry. Thus despite the situation on the world financial market this market segment shows growth. According to PriceWaterhouseCoopers forecast the aggregate assets cost of the Islamic finance institutes in 2017 shall make 2,6 tln. USD, by the results of Ernst&Young by 2018 this indicator shall be at the rate of 3,4 tln. USD.