DUBAI - Bahrain-based General Council for Islamic Banks and Financial Institutions (GCIBFI) plans to set up the largest Islamic bank in the world with  

DUBAI - Bahrain-based General Council for Islamic Banks and Financial Institutions (GCIBFI) plans to set up the largest Islamic bank in the world with an estimated paid up capital of Dh5 billion to finance projects and cater to the liquidity management in the Islamic countries, said Shaikh Saleh Kamel, chairman of GCIBFI.


"The idea of establishing an international Islamic bank is one of our tools to confront globalisation challenges. We have realised that one of the improtant factors to compete in the international financial markets of today is to have a wider capitalisation base," asserted Shaikh Kamel.

"We have taken some seriuos practical steps towards establishing the bank. We have already hired a reputed consultancy firm to carry out the feasibility study and to conduct an evaluation on the viability of the overall vision and business model," he said. It is envisaged that the study will be completed by the end of January 2005 and the practical steps towards setting up the bank will start immediately, confirmed Shaikh Kamel.

The idea is to transform the Islamic banking operations from smaller fragmented segments into a mainstream banking platform. There is more than $270 billion of Islamic capital in the world that needs to be managed and looked after very carefully. Without creation of a major financial pipeline — like the international bank we intend to set up, these capitals will find no suitable appratus to grow, said Shaikh Kamel. He said, "We look at this proposed institution as a large wholesale global bank as opposed to existing smaller regional banks, with a multilateral outlook for the Islamic banking industry, but it will be working on a profit making and commercial basis and will be managed by professionals having world-class skills and expertise.

The challenge of globalisation and financial liberalisation impose upon the Islamic banks a lot of important issues which have to be confronted, he said.

"We firmly believe that one of the solutions is focusing on the restructuring of the industry's institutions on one side and asserting our competitive ability represented by Islamic identity on the other side. We thought of mergers and alliances between Islamic banks to create a strong Islamic entity; yet creation of an Islamic gaint by its own was found to be the best solution, said Shaikh Kamel.

"In fact the Islamic finance has been developing at an astronomical rate and the future holds lot more excitments and opportunities as new solutions are being thought of," he said.

He pointed out that there is great demand for the Islamic banking by Muslims who seek Islamic products that is unique to their culture and beliefs. "The establishment of a wholesale Islamic bank has been recognised as crucial to cater for the abundant islamic liquidity. The bank will be entilted with the job of project finance in the Islamic countries and caters to asset securitisation and underwritting needs of the Islamic financial industry on a large scale, he added.

"Once established I expect that the bank will play an active role in promoting economic development within Islamic countries through its financial activities. In fact the establishment of the giant international Islamic bank is considered to be one of the major projects the General Council for Islamic Banks and Financial Institutions plans to excute.

"Created three years ago by the Islamic banks in the Islamic countries, the GCIBFI is playing playing an important role in promoting Islamic banking on the international scence. The council of Islamic banks supports Islamic banks and institutions in different ways including creating dialouge with western governments, central banks and monetary authorities," Shaikh Kamel added.