The total value of Islamic banking assets in Bahrain increased by 50 per cent last year to $24.6 billion from $16.4 billion in 2007, according to figures issued by the Central Bank of Bahrain (CBB).

This increase, at a time when traditional banking institutions worldwide saw widespread depreciation in their assets, is a testament to the ongoing success and resilience of the Islamic banking system.

By its very nature it precludes some of the riskier practices that have led conventional banks into their current situation.

The sound basis provided by Sharia principles, and the asset based business model have jointly provided a firm platform for the strong performance in the sector, the CBB said.

Such has been the growth of Islamic finance in Bahrain that since 2000 the Islamic banking sector has seen assets increase by 1280 per cent and the number of Islamic finance institutions continues to grow.

The CBB has approved more than 33 licences for Islamic finance institutions since 2005.

Bahrain is widely recognised as a global leader in Islamic finance, playing host to the largest concentration of Islamic financial institutions in the world. Presently, there are 36 specialist Islamic banks operating in the kingdom whilst many conventional banks, recognising the growing importance of Islamic banking, have successfully integrated Islamic windows within their operations.

'Whilst the underlying principles of Islamic finance have safeguarded it against the worst of the economic downturn, it is Bahrain's tried and trusted world-class regulatory standards that have helped attract institutions to the country and led to the rapid growth of Islamic finance assets,' CBB executive director-banking supervision Khalid Hamad said.

'In recent months as the global financial crisis has deepened, many commentators have pointed out that Islamic financial institutions have escaped relatively unscathed from the severe downturn which is affecting most conventional financial institutions, CBB Governor Rasheed Al Maraj said.

'The continuing implementation of sound business principles should allow the industry to continue its rapid and successful growth of recent decades, and Bahrain is well-positioned to remain at the forefront of developments through the application of prudent regulatory standards.'

'The remarkable increase in Islamic finance is fresh evidence that Bahrain's national economic strategy is paying off, in terms of creating business, revenue and employment, Economic Development Board chief executive Shaikh Mohammed bin Essa Al Khalifa said.

'Fund managers, like many other businesses, are setting up in Bahrain because they know they will benefit from the region's most educated workforce, an ample supply of support services and infrastructure, and systems of regulation and taxation designed to make it safer, easier and more profitable to do business.

'At a time when so many financial systems around the world are in trouble- these results show that our culture of conservative regulation, based on ethical values and public/private partnership, is now more than ever the way forward.'-TradeArabia News Service