ICIEC chief highlights knowledge gaps in Islamic finance

Islamic_financeA leading figure in the Islamic finance market has called for a greater effort to counter the absence of third-party guarantees in sharia-compliant financing transactions. Oussama Kaisi, chief executive of the Saudi Arabia-based Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) also warned that the problem could affect liquidity in the market and hinder the growth of Islamic finance and the Islamic bond or sukuk market especially. His comments came at the London Sukuk and FinTech Summit held in London, an event held to demonstrate the growing international appeal of Islamic or sharia finance. The value of sukuk issuance was $115 billion in 2018, helped by an increase of issuance in the Gulf Cooperation Council region. However, this growth could be curtailed by the absence of third-party guarantees which are used to ensure that investors will be repaid in the event of a borrower’s default. The sukuk structure means that they cannot be guaranteed by the issuer but could be backed by third parties instead. Kaisi said he is engaging with central banks in some of the biggest Islamic finance states including Saudi Arabia and Turkey to raise the issue. “There is a lack of knowledge that we need to address and we have to learn from the West,” he said. ©2019 funds global mena

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