How is Ithmaar Bank pioneering Islamic banking in Bahrain?
Ithmaar Bank, a Bahrain-based Islamic retail bank, has played a pioneering role in the establishment and subsequent development of Islamic banking in the region. The Bank’s history dates back to 1982 with the incorporation of the Sharia-governed Faysal Islamic Bank of Bahrain (FIBB), the predecessor of Shamil Bank and later Ithmaar Bank. In the early 1980’s, the formalised infrastructure for Islamic banking in Bahrain was virtually non-existent and, as a result, the growing footprint of FIBB had a great significance on the banking and financial services industry.
Ithmaar Bank, historically as FIBB then Shamil Bank, pioneered and innovated many products and transactions that served as the foundation for Islamic banking in Bahrain and in the region. Among the many Sharia-compliant financial instruments they put forth, for example, was one for managing liquidity. At the time, most banks were investing and managing their liquidity through placements with conventional banks. Similarly, the Bank innovated cross-border syndicated facilities in the mid 1990’s, for the use of both Islamic and conventional banks, to service international transactions. This was a pioneering move that helped shape the industry at the time.
Moreover, the Bank was able to structure various financial products compliant with Islamic Sharia precepts, including a number of investment funds, that were introduced to the market, leading to widespread acceptance.
The Bank was also instrumental in laying the foundation stone for the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) in 1991. Based in Bahrain, AAOIFI is the leading international not-for-profit organization primarily responsible for development and issuance of standards for the global Islamic finance industry.
Even before there were any industry-standard Islamic Banking computer applications, for example, FIBB developed IBS, a system that was eventually implemented internationally. In fact, this FIBB-developed computerized system was implemented in banks in as far as West Africa, Yemen, Bangladesh and Pakistan, and adopted by international banks. It was a system that supported full banking operations, including both offshore banking units and retail banks. The system used Open Platform technology, an innovative concept at that time, and because of its experience, the Bank had a special deal with major companies to be a base for comprehensive Islamic banking applications that are now in use by many banks worldwide.
In April 2021, Ithmaar Bank, also became the first Bank in Bahrain that facilitates and streamlines its customers’ Zakat and Sadaqat transfer payments.
The Bank continues to contribute to helping reinforce the Kingdom of Bahrain’s already prominent position as a key banking and financial hub in the region by ensuring it remains at the cutting edge of technology. This was most recently demonstrated with the commissioning of two new full-service, digitally-focused branches at the end of 2021.
On the other hand, Ithmaar Bank’s role has always been about a lot more than simple philanthropy and, in addition to the financial support it provides through donations and sponsorships, the Bank also contributes directly to the community.
