slamic finance is one of the fastest growing industries in the world today with over $1 trillion in its assets worldwide. Even though modern Islamic financing based on sharia principles was born in the Middle East in 1970’s, today it has reached our tiny nation.

Although an Insurance company based on Islamic finance was open on 2003, Maldivian Islamic finance industry really took its growth on 2011 with its first Islamic bank. The bank grew double in its size each year for the first few years and has since been growing steadily with the huge demand from the public. Building its out station branches on all major population centers and along with the introduction of an Islamic banking window at the national bank, Islamic banking is accessible in every corner of the nation.

Future of Islamic banking in the Maldives

Since the beginning Islamic finance has faced many obstacles in the country. Starting from legal issues to regulatory issues faced during its infancy in the Maldives,  it’s now fair to say that current market favors Islamic finance.

Today, Islamic financing regulatory bodies are formed and functional allowing the industry to grow in the right direction with oversight. More and more service providers are joining including private sector participation by companies who provide different products under the principles of Islamic finance.

Under the administration of President Yameen, the economy of Maldives was set to so that the Maldives would become an Islamic finance hub in the world. This initiative was launched under the umbrella of the Islamic university of Maldives  where teaching Islamic finance was made a priority. Today we see a reasonable number of graduates with thorough knowledge each year joining this industry ensuring the future of this industry is in good hands.

With proper investing options to Islamic financing providers such as a growing housing industry in Maldives where people prefer Islamic finance as the primary method to obtain a home and also with the current government’s intention to introduce halal tourism will create a whole new platform for Islamic finance to grow in the Maldives. Likewise with Islamic bonds (sukuk) Islamic finance today has enough opportunities to invest in the economy and grow along with it.

Although under the economic recession due to COVID 19 and due to huge number of loans of borrowed by the government, the Maldivian economic growth is at halt but the popularity of Islamic finance has grown significantly due to the burden people had to take due to interest from conventional banks. Mr. Ahmed Ali who talked to MNN said “I took a loan of MVR 70,000 two year ago, I had to differ my loan due to COVID 19 but I wished I had not because still my loan is nearly 70,000 due to interest occurred during the COVID period which if deferred the loan”.

With educated youths joining Islamic finance industry and increasing investment opportunities along with the public popularity Islamic finance has a bright future in this country.