By Mohammed Abbas
MANAMA (Reuters) - Islamic banking is poised to burst from its hubs in Malaysia and the Gulf and spread into regions which until now were unlikely hosts for the sector, but the booming industry now faces its greatest challenges yet.
As the industry expands into non-Muslim or secular states, Islamic lenders must pay greater attention to educating others about the sector, experts say. Meanwhile, banks are suffering a chronic shortage of staff with knowledge of Islamic finance.
Islamic bonds, the industry's hottest product, are under the spotlight after a top standards body said almost all do not comply with Islamic law, while controversy over the most common Islamic banking contract could shake the industry to the core.
Regulatory differences in different regions continue to plague efforts to build true cross-border Islamic banking, and links between the world's two biggest Islamic banking hubs in Malaysia and the Gulf are still at a nascent stage.
Next week, Reuters journalists in London, New York, Dubai, Bahrain, Geneva and Kuala Lumpur will bring together the industry's heavy hitters to ask them how they will overcome those challenges, and where they see future opportunity.
Interviewees at the Reuters Islamic finance summit include Malaysia's finance minister, Bahrain's central bank governor, Islamic banking experts from the world's top banks as well as regulatory and ratings agencies.
Demand from the world's 1.3 billion Muslims for investments that comply with their beliefs has soared, and assets that comply with Islamic law are set to hit $1 trillion by 2010 and are growing at a rate of about 15 percent a year, experts say.
Four out of eleven bankers and analysts polled by Reuters this week picked Indonesia, the world's most populous Muslim state, as the next big growth market for Islamic bonds. Continued...
© Thomson Reuters 2008. All rights reserved.
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