The Infrastructure Organisations and Associations for the Islamic Banking Industry

The organizers and concerned parties of the Islamic banking industry have successfully established a large group of infrastructure organisations and associations that help incubating and supporting the Islamic banking activity and its instruments. This infrastructure has developed channels of understanding and cooperation with other conventional banks, the monetary authorities, and international organisations supervising the financial and banking affairs worldwide.

List of International Islamic Infrastructure Institutions:

• General Council for Islamic banks and Financial Institutions (www.cibafi.org).
• Accounting & Auditing Organisation for Islamic Financial Institutions (www.aaoifi.com).
• Islamic Financial Services Board - Malaysia. (www.ifsb.org).
• Islamic Development Bank. Jeddah (www.isdb.org.sa).
• Liquidity Management Center. (www.imcbahrain.com).
• International Islamic Trade Finance Corporation.
• International Islamic Financial Market. (www.iifm.net).
• Islamic International Rating Agency. (www.iirating.com).
• Islamic Corporation for the insurance of Investment & Export Credit. (www.iciec.com).
• International Islamic Center for Reconciliation and Arbitration(www.iicra.com).

General Council for Islamic Banks and Financial Institutions (CIBAFI)

CIBAFI was established as an international independent non-profit organisation in May 2001.

The main objectives of the council:

• - Defining Islamic financial services and disseminating the knowledge of their.
• - Enhancing cooperation amongst members of the council and similar institutions.
• - Making available all information and data pertaining to Islamic banks and financial institutions and other related Islamic Organisations.
• - Taking care of the interests of its members, facing obstacles and challenges, enhancing cooperation amongst institutions and also with other supervisory entities.
• - Issuing bulletins, books, periodicals, banking jurisprudent encyclopaedias, and other studies and researches.
• - Organising conferences, Seminars, Lectures, meetings and workshops.
• - Cooperation with entities concerned with issuing laws for Islamic banks and financial institutions and other related organisations, and also encouraging the issuance of governmental and non-governmental financial instruments.
• Establishing a data base to introduce the council's message and that of the Islamic economy and finance in an active manner using the available technological tools.ents.
• Participation in preparing the training programs to raise the professional expertise of the Islamic banking human resources.

Accounting & Auditing Organisation for Islamic Financial Institutions (AAOIFI)

Given the duality that exists in banking practices in each country at different levels namely,national, regional and international Islamic banks and financial institutions need the support of the accounting and auditing standards that are compatible with the principles and rulings of Islamic Sharia. This professional role is assumed by the Accounting & Auditing Organisation for Islamic Financial Institutions, which provides one of the major cornerstones for the sound progress and development of Islamic Financial pracies. The Organisation is an Islamic international independent and non-profit entity focusing on establishing the standards of accounting, auditing and good governance as well as the ethics of banking activity in accordance with the rulings of Islamic Sharia. The Organisation was established by the incorporation agreement signed by a number of Islamic financial institutions on February 1990, and is located in: In its efforts to realize its objectives, the Organisation provides training, organises seminars, undertaking researches and issues publications as follows:

• Issuing an integrated group of accounting and auditing standards.
• Good governance rules for Islamic financial institutions.
• Rules and legitimate requirements for the Islamic investment and finance.
• Purpose of capital adequacy ratio for Islamic banks and method of calculation.

All these previous efforts have led to introducing many Islamic instruments for investment and financing, some of which were never addressed by traditional banking school of thought.

Islamic Financial Services Board (IFSB)

IFSB was established in November 2002 as an independent board supervising the Islamic financial services industry worldwide. The Board is supported by the central banks and monetary authorities of some countries as well as some organisations and international institutions supervising and controlling the international banking industry. The Board is comprised of 65 members; 19 of which represent international supervisory bodies such as World Bank, International Monetary Fund and the International Bank for Settlements. The main function of the Board is to supervise, organise and set the rules of Islamic Financial Services Industry:

• Establishing origination of the principles and foundations governing the Islamic financial services industry and harmonizing them with the applied international standards guaranteeing their compliance with Islamic Sharia.
• Cooperation with international institutions responsible for setting the standards and principles governing financial and monetary stability.
• Supporting practices of Islamic financial services in risk management through researches, training and technical knowhow.
• Encouraging cooperation among member states to develop the Islamic financial services industry and support research work in Islamic banking.
• Establishing a data base for Islamic banks and financial institutions covering their products and services.

Islamic Development Bank (ISDB)

ISDB is an international financial institution incorporated in accordance with the resolutions of the Islamic Countries Finance Ministers' conference held in Jeddah. The Bank was officially inaugurated in October 1975 corresponding to Shawal 1395 H. The Bank aims at supporting economic development and social progress of the member states as well as other Islamic communities in non-member states subject to the rulings of Islamic Sharia.

• Participation in capital of projects, providing financing to institutions and productive projects in the member states, besides offering financial help to these states through other channels for the purpose of socio-economic development.
• Establishing and managing specific purpose Funds, receiving deposits and mobilizing financial resources in different legitimate methods.
• Enhancing foreign trade development of member states, together with commercial exchange amongst them especially for productive commodities and providing technical assistance for them.
• Encouraging member states to practice financial, economic and banking activities according to the rulings of Islamic Sharia.
• The Bank's head office is located in Jeddah - Saudi Arabia, and it has 55 member states and three regional offices in each of Malaysia, Morocco and Kazakhstan.

Liquidity Management Center (LMC)

LMC is incorporated in July 2002 and regulated by the Central Bank of Bahrain. It aims to provide optimal Islamic Financing and Investment solutions which contribute to growth of the Islamic capital market. LMC is committed to play a key role in the creation of an active and geographically expansive Islamic inter-bank market which will assist Islamic financial institutions in managing their short-term liquidity. The establishment and depth of such inter-bank market will further accelerate the development process of the Islamic banking sector. In addition, LMC will attract assets from governments, financial institutions, and corporates in both private and public sectors in key target Markets. LMC enables Islamic financial institutions to manage their liquidity mismatch through short- and medium-term liquid investments structured in accordance with the Sharia principles. It also facilitates investment of surplus funds with Islamic banks and financial institutions into quality short- and medium-term financial instruments structured in accordance with Sharia principles. LMC plays an active role in the primary and secondary Islamic financing market delivering innovative, adaptable and tradable Islamic Sharia-compliant short term and medium-term financial instruments to Islamic financial institutions.

International Islamic Trade Finance Corporation (ITFC)

ITFC is an autonomous entity within the Islamic Development Bank Group created with the purpose of advancing trade to improve the economic condition and livelihood of people across the Islamic world. ITFC has consolidated all the trade finance businesses that used to be handled by various windows within the IDB Group. It commenced operations in (January 2008 corresponding to Muharram 1429H. The consolidation of the IDB Group’s trade finance activities under a single umbrella increased the Corporation’s efficiency in service delivery by enabling rapid response to customer needs in a market-driven business environment. As a leader in Sharia-compliant trade finance, ITFC deploys its expertise and funds to businesses and governments in its member countries. Its primary focus is to encourage intra-trade among OIC member countries. ITFC’s catalytic role in enhancing the member countries’ trade, intra-trade and international trade potentials is clearly reflected in its mission statement.

International Islamic Financial Market (IIFM)

IIFM was established in April 2002 in Bahrain as a result of the coordination between financial and supervisory entities namely; Bahrain Monetary Authority, Islamic Development Bank, Central Bank of Sudan, Central Bank of Indonesia, Ministry of Finance in Tanzania and Foreign Investments Authority in Malaysia. IIFM principal activities and current focus:

• Tackling the absence of Islamic financial instruments and liquidity problems in Islamic Banks.
• Introducing new financial investment instruments to help create a secondary market capable of attracting investments of Islamic countries as an alternative to conventional markets.
• Organize specialized events, market consultative meetings and standardization specific seminars and workshops.
• Research and reports on Sukuk.

Islamic International Rating Agency (IIRA)

• IIRA was established during 2004 in Bahrain. It is the first agency specialised in classifying Islamic Banks and financial institutions. IIRA has been set up to provide independent assessments to issuers and issues that conform to principles of Islamic finance. IIRA's special focus is on development of local capital markets, primarily in the region of the Organization of Islamic Countries (OIC) and to provide impetus through its ratings to ethical finance, across the globe.
• IIRA was founded as an infrastructure institution for the support of Islamic finance as conceived by the Islamic Development Bank (IDB). This puts IIRA in league with system supporting entities like AAOIFI and IFSB. The IDB remains a prominent shareholder, and maintains oversight through its nominee, as Chairman to the Board of Directors.
• Capital is USD 10 million, with a majority shareholding allotted to the Islamic Development Bank amounting to 42%, and the remainder is distributed as follows: 11% to each of the Islamic Bank of Bahrain, Kuwait Finance House, Islamic Bank of Abu Dhabi and Takaful Company of Malaysia, 5% to Al-Baraka Group, 5.3% to J.C. rating - Pakistan and 2% to Capital Intelligence - Cyprus.
• The main objective of the Agency is to assist Islamic Banks in developing their Business and having their papers accepted by international markets. It will equally provide greater transparency of the activities of Islamic financial institutions in a manner that would help ascertain the volume of risks facing them.The role of the agency is expected to increase with the application of Basel II standards as of the beginning of 2007.

Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC)

ICIEC is a member of the Islamic Development (IDB) Group. ICIEC was established on 1st August 1994 corresponding to 24 Safar 1415H. as an international institution with full juridical personality.

• The idea for the establishment of an entity to provide investment and export credit insurance for Islamic Countries originated from the Agreement for the Promotion, Protection and Guarantee of Investment among Member Countries of the Organization of the Islamic Cooperation (OIC). This Agreement provided that the OIC, through the Islamic Development Bank, establishes an Islamic Insurance Company operating under Sharia principles, to provide insurance products for investments and export credits.
• Banks in general and Islamic Banks in particular shall benefit greatly from these services, especially the banking policy which provides direct insurance against the risks of non-payment. They can also benefit from the export opportunities in the high risk.

International Islamic Centre for Reconciliation and Arbitration (IICRA).

The International Islamic Centre for Reconciliation and Arbitration (IICRA) is an international independent non-profit organization that aims at organizing settlement of all kinds of financial, commercial, banking, investment and real estate disputes with compliance of Sharia Law through institutional reconciliation and arbitration.IICRA was established under an international agreement dated on 5th April 2005 corresponding to 26th Safar 1426H.