Not long ago, Islamic finance was widely regarded as a specialised, if not obscure, backwater of global banking. Although the concept of tailoring financial services to devout Muslims has existed for more than three decades, this activity was largely limited to commercial banking – and focused on specific regions, such as Malaysia or the Middle East.
But in the last few years, Islamic finance – based on a strict interpretation of the Koran that bans the use of interest in transactions – has undergone huge expansion, partly driven by the oil-driven financial liquidity in the Gulf, and the fast growing number of Muslims seeking more religiously sanctioned products.
