The Maldives Capital Market Development Authority (CDMA) has signed a memorandum of understanding with the Ministry for Islamic Affairs to further develop an Islamic capital market in the country.
Among the most prominent details of the agreement was a joint commitment to establish the ‘Maldives Centre for Islamic Capital Market and Finance’.
“This is going to help in promoting the various services available in Islamic financial services under one organisation,” read a press release from the CDMA.
Other features of the arrangement include the scheduling of meetings between the CDMA’s Capital Market Shariah Advisory Committee and the Ministry’s Fiqh academy, a program of training events on the practice, and the ministry’s endorsement of Shariah advisors registered with the CDMA.
The CDMA is an independent body charged with regulating the capital market and the pension industry in the Maldives, with statutory powers to license brokers, asset managers, and investment advisors.
“The vision of CMDA is to develop an Islamic capital market parallel to the existing conventional capital market in Maldives,” reads the authority’s website.
The country’s first shariah-compliant bank opened just over 18 months ago, when the Maldives’ Islamic Bank (MIB) first began offering services to the public after what the company’s head described as strong demand.
MIB is part owned by the Ministry of Finance and Ministry (15 percent), with the remaining 85 percent owned by the Islamic Corporation for the Development of the Private Sector (ICD) – a Saudi based multilateral organisation designed to promote Islamic finance globally.
2011 also saw the first public offering for a Shariah compliant company on the Maldives Stock Exchange – Amana Takaful (Maldives) Plc – for which shares were oversubscribed, report the CDMA.
Amana Takaful offers Shariah compliant insurance services, including third party vehicle insurance, which became mandatory in the country earlier this month.
Director of Amana Takaful Osman Kassim explained at the time that Islamic finance was “a phenomenon worth 1.4 trillion and growing at a rate of 20 percent annually,” which functioned through the prohibition of riba, or interest.
“Taking a return without participating in the risk of the return is not allowed, be it 1 percent or 99 percent. Any additional revenue is riba,” he said. “Even if you give a loan and he gives a gift, and is not in the habit of giving a gift, that is also riba.”
Islamic finance in its current form emerged 40 years ago, Kassim explained, first in Egypt and the Arab Emirates.
“It promises to be a just system. Interest is oppression – the charging of something where nothing is due,” he said, noting that in the wake of the global financial crisis, “All major banks now have Islamic financing products, and the more adventurous have their own Sharia Councils.”
Islamic finance and financial products also differ from conventional services in that they abstain from ‘Maisir’ and ‘Gharar’ – speculative transactions – considered akin to gambling under Shariah.
Minivan News was unable to gain further comment from the Ministry of Islamic Affairs at the time of press.