Sharia-compliant Islamic bank to open in Maldives

Malaysian news agency Bernama reports that an agreement has been signed between the Islamic Banking and Finance Institute Malaysia (IBFIM) and the Maldives Islamic Bank to develop Shariah-compliant banking services in the country.

The agreement binds both parties to co-develop Islamic finance in Maldives through extensive study of Maldives’ legal and banking framework “to create a harmonious environment for the growth of Islamic finance”, Bernama reported.

The Maldives Monetary Authority (MMA) has issued a license to the Maldives Islamic Bank, making it the country’s first Islamic bank. Jeddah-based Islamic Corporation for the Development of the Private Sector (ICD), a subsidiary of Islamic Development Bank (IDB) hold 70 percent stake in the bank and the remainder will be held by the government of Maldives.

Sharia prohibits the payment or acceptance of interest fees for loans of money. In the case of a mortgage, a Sharia-compliant bank may instead buy a property for the customer and then sell it back to them at a profit.

Shariah-compliant assets reached about $400 billion worldwide in 2009.