Sheikh Saleh Kamil told investors at an Islamic finance conference in London on Tuesday, that creating viable, liquid Sharia-compliant financial instruments and a healthy secondary market for them requires adequately capitalised banks and financial institutions.

 

Calling the project Emaar International Group, Kamil said: "The authorised capital shall be $1 billion to be paid in instalments according to demand.

 

"Hence, it shall be the first private Islamic bank of its kind in capital terms."

 

Kamil said that only 10 Islamic banks have capital that exceeds $200 million, and only one has capital that exceeds $500 million.

 

He said that 73% of Islamic financial institutions have capital of less than $25 million.

 

Growth hampered

 

The Islamic financial sector, while growing rapidly, has been hampered by very shallow secondary markets and limited financial products.

 

Muslims who invest along Sharia guidelines will not buy assets that pay interest, or derive profits from alcohol, pork or  gambling.

 

The founders of the project will include Islamic banks, conventional banks, wealthy individuals, pensions, insurance and endowment funds, he said.

 

The Emaar International Group will be complementary to the roles of exiting Islamic banks, Kamil said.

 

He envisioned the group to "be a cornerstone for Islamic banking, and contribute to maximising exchange of benefits between Islamic banks and enhance sustained inter-banking activities".

 

It was not immediately clear where the group will be based, but potential candidates include Bahrain, Dubai, and Malaysia, banking sources said.