The Road to the SDGs

PURPOSE X Islamic finance is a growing segment of finance that conforms to Shariah (Islamic jurisprudence). Its mode of operation emphasises financial inclusion, which fits well with IsDB’s focus on attaining development impact and closing the financing gap for the SDGs in the projects it supports. It is a unique form of finance that attracts a distinct set of investors and funders from both the public and private sectors globally. X The Islamic financial sector (IFS) ecosystem consists not only of Islamic banks, Islamic insurance/takaful, and Islamic money and capital markets, but also awqaf and zakat, regulatory, supervisory and Shariah bodies/boards. X Despite its large size and rapid growth, the industry is impeded by several challenges. It has struggled to standardise and harmonise legal and regulatory frameworks across jurisdictions. This has limited the pool of available Islamic financial products in the market as well as the scope for cross-border, interbank transactions. X One of IsDB’s key strategic areas, articulated in both the P5P and the 10YS, is the development of the Islamic finance sector. METHOD X IsDB has developed an Islamic Financial Sector Policy with high-level strategic objectives that will guide IsDB interventions and investments in the IFS in MCs, in line with the P5P, the 10YS and the new business model. X The policy covers the following IFS interventions: – Technical assistance and advisory activities for developing an Islamic finance enabling environment as well as institutional capacity building – Equity and debt investments in Islamic financial institutions and awqaf – Establishment of Islamic infrastructure institutions – Development of financial products/ funds – Research and training activities – Islamic microfinance to promote financial inclusion. X Developing the IFS is a core strategic pillar for IsDB. The policy aims to build on this by pinpointing key areas that IsDB will focus on in its interventions and investments in the IFS sector. X By providing a basis for the development of IsDB’s Strategy and Islamic Financial Sector Policy I sDB's Islamic Financial Sector Policy has high-level strategic objectives that guide IsDB’s interventions and investments across all areas of its operations The policy identifies Islamic finance as an essential part of the global financial system and a key platform in closing the global developmental funding gap [ 74 ] SDGs