Bahrain's Islamic investments and funds have grown by about 10 per cent annually for the last few years and prospects remain positive, a senior regulatory official has said.

Central Bank of Bahrain (CBB) executive director of financial institutions supervision Abdul Rahman Al Baker told the GDN that the kingdom's Islamic banking and takaful sectors have seen similar levels of growth, said a report in the Gulf Daily News (GDN), our sister publication.

Al Baker was speaking on the sidelines of the 11th annual edition of the World Islamic Funds and Financial Markets Conference yesterday (May 18).

In Bahrain, the mutual funds industry is one of the fastest growing segments of the financial sector, he said.

'With approximately $7 billion in assets under management, through more than 2,800 funds, the industry has been growing at a steady rate in recent years.

“Overall, there are 88 Islamic funds that are incorporated and registered in Bahrain with total assets amounting to $1.4 billion as of March.”

Earlier, in his keynote address at the conference, Al Baker said the CBB, through its enabling legislation, has promoted the development of new products for investors in both Islamic and traditional finance, while at the same time providing credible regulation in both areas.

“The existing regulatory framework for Collective Investment Undertakings (CIUs) has provided for a full range of investment funds catering to various types of investors, from retail to high net-worth individuals and institutional investors,” he said.

“In order to further enhance the existing CIUs framework, the CBB has issued the 'Volume 7 Rulebook' which provides comprehensive regulations on the authorisation and supervision of CIUs domiciled or offered for sale in Bahrain.”

According to him, the regulation has recognised the importance of expanding key areas such as corporate governance, as well as the role and responsibilities of each relevant party of a scheme.

“It also expands the variety of funds that can be established in Bahrain by introducing rules governing Real Estate Investment Trusts and Private Investment Undertakings (PIUs),” Al Baker said.

PIUs are a new breed of investment funds with a high degree of flexibility in structuring, aimed basically to facilitate private investments, like family-held investment, single investor or single investment type.

Due to the investment risk characteristics it may exhibit, such type of scheme can only be offered to high net-worth individuals and institutional investors, the official added.

The CIU rules also provide a solid foundation for the establishment and management of mutual funds that comply with Sharia principles, he said.

Detailed regulations covering the issuing, offering, floating and subscribing to different types and classes of securities, including sukuk offered to the public or through private placement in or from Bahrain, are contained in the 'Offering of Securities Module under Volume 6 Rulebook'.

Al Baker said the module also provides the procedures and documentation that need to be submitted by the issuer as part of their application to obtain the CBB approval in this regard.

The CBB, having pioneered the development of sukuk, remains active in the sovereign sukuk market through the issuance of medium-to long-term sukuk, complemented by a regular programme of short term issuance. - TradeArabia News Service