ISRA, a step forward to developing Islamic finance

IN yet another forward looking step to fortify Malaysia's lead position in Islamic finance, Bank Negara Malaysia (BNM) announced the establishment of International Shariah Research Academy for Islamic Finance (ISRA) to spearhead research in Shariah issues.

The establishment marks yet another proactive measure from the central bank in the co fastgrowing Islamic finance, which saw the size of global sukuk market, including sukuk denominanted in local currencies, growing rapidly to an estimated size of US$82 billion (RM262.72 billion) at end-2007. The setting up of ISRA comes after the central bank played a pivotal role in establishing the Malaysia International Islamic Financial Centre (MIFC) in 2006.

During the year, BNM said it granted 16 approvals to conduct international currency business operations, including an international Islamic banking licence to an investor from Bahrain as well as other domestic financial institutions to establish dedicated international currency business units.

In its March 26 announcement on the establishment of ISRA, the central bank also announced the appointment of local Shariah scholar Dr Mohamad Akram as executive director of the newly-established research academy.

The appointment of Dr Akram, a scholar at the International Islamic University Malaysia (IIUM) and also a Shariah scholar with HSBC Amanah, may also benefit International Centre for Education in Islamic Finance (INCEIF), the international Islamic finance university set up with a RM500 million endowment from the central bank.

It its statement, BNM said ISRA will be part of INCEIF which would enable the academy to leverage on the university's existing infrastructure and facilities as well as knowledge, expertise and resources of the academic faculty and post graduate students.

"INCEIF has been trying hard to rope in scholars. Dr Akram would be a great addition to the team," said an Islamic finance teaching staff from a local university.

BNM said the establishment of ISRA is to promote applied research in the area of Shariah and Islamic finance. It will also act as a repository of knowledge for Shariah views or fatwas and undertake studies on contemporary issues in Islamic financial industry. It noted that ISRA will contribute towards strengthening human capital development in the areas of Shariah and provide platform for greater engagement amongst practitioners, scholars, regulators, academicians via research and dialogues, both in the domestic and international environment.

It added that through pioneering research and rigorous intellectual dialogue, ISRA aims to promote innovation and dynamism into new boundaries of Islamic finance. It is envisioned that with greater research and dialogues, mutual respect and recognition would emerge within the Islamic financial industry globally. It said a council of scholars, comprising eminent local and international Shariah scholars, will be set up to provide input and assistance in the strategic direction of ISRA's research works. (The Malaysian Reserve, March 31, 2008, pg 32)