Qatar Central Bank (QCB) announced its plans to centralise Qatar’s Islamic finance sector. Various efforts and initiatives have been taken by the Qatar Central Bank to establish a centralised Shariah supervisory body for Islamic banks operating in the country.
The decision to centralise Qatar’s Islamic finance sector illustrates a maturing Islamic finance industry in Qatar.
Qatar is following the examples of Malaysia, Indonesia and a few other GCC countries that already have a centralised regulation for Shariah-compliant banking products and financial services.
According to the new decision, a centralised Shariah supervisory body will be created along with new Shariah standards to govern Islamic banking products and transactions.
Earlier each Islamic bank in Qatar had individual self-governing Shariah board, a practice which created some controversies due to non-standard financial structures.
The details regarding the launch of the supervisory body and its operating has not yet been divulged.
As of now, Qatar follows the standards regulated by Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The QCB has to maintain consistency in these standards as they will be required if Qatar wants to do business with international Islamic finance institutions.
The establishment of a centralised body is expected to profit Qatar’s Islamic banking industry by offering Shariah governance more credibility and wider market reach.
Total assets of the four Islamic banks in Qatar as of the fourth quarter of 2018 slightly fell to $96.14 billion when compared to $96.73 billion over the same time period in 2017. The Islamic banking sector, in general, was profitable with a revenue of $9.51 billion in the fourth quarter of 2018.
The major profitable areas in the sector included real estate activities that earned $20.77 billion, construction activities at $4.24 billion and insurance activities that earned $2.02 billion.