Jeddah-based Islamic Development Bank (IDB) has entered into a three-year agreement with the World Bank to share their expertise in Islamic banking and finance and study their impact on global economy.
Under the agreement, both the banks will extend cooperation and critically study issues such as financial stability and best practices in the industry.
Karim Allaoui, senior officer at the IDB, said that people are looking for alternatives with an ethical angle, however, Islamic finance is yet to gain popularity. There has not been much documentation or research about different aspects and challenges that one would otherwise confront in conventional finance. With the new agreement, Islamic finance will be introduced in more countries.
Countries, like Tunisia and Libya, have shown interest in developing Islamic banking sectors and are seeking technical assistance. However, Allaoui cautioned: “The stakes are high; if people don’t do it right, this might discredit the industry.”
IDB is a group of 56 member countries that provides financing, loans, and technical assistance for development schemes based on Islamic principles. They avoid interest payments and monetary speculation.