Though Islamic banks came into existence relatively late compared to conventional banks, the number of Islamic banks increased significantly because of great interest and support by the public and government in the last decades.
The Mit Ghamr Local Savings Bank
The first Islamic bank, called the Mit Ghamr Local Savings Bank, was established in Egypt in 1963. The bank carries on its operations based on Shari’ah law. The services of the bank were able to meet customer needs particularly related to savings and credit. The Mit Ghamr Local Savings Bank succeeded in its operations and proved that Islamic banking is a wise business option.
The Nasir Social Bank
Furthermore, The first social bank named the Nasir Social Bank was founded in 1967. It started to function following Shariah principles as well. Besides different financial transactions, the Nasir Social Bank also offered interest-free loans to its clients. Following the initial successes of these two banks, several other Muslim countries began to establish Islamic banks in the Middle East onwards.
Here is the list of Islamic banks in the mid-1970:
The Islamic Development Bank in Saudi Arabia (1975)
The Dubai Islamic Bank (1975)
The Faisal Islamic Bank in Egypt (1976)
The Faisal Islamic Bank of Sudan (1977)
The Jordan Financial and Investment Bank (1978)
The Jordan Islamic Bank (1978)
The Islamic Investment Company Ltd in The United Arab Emirates (1978)
Kuwait Finance House (1979)
After the establishment of several Islamic banks, its coordination has turned to be necessary. So, an International Association of Islamic Banks was established in 1977, headquarters locating in Saudi Arabia. Next years witnessed the establishment of Islamic banks even in a non-Muslim country. For instance, the Luxemburg government established the International Islamic Bank of Investment and Development in 1980.
Islamic banks established in the 1980s are the following:
The Abu Dhabi Islamic Bank (1980)
Islamic counters in Pakistan banks (1981)
The Qatar Islamic Bank (1981)
The Malaysia Islamic Bank Ltd (1983)
The Mauritania Islamic Bank (1985)
The Iraq Islamic Bank (1985)
The Zanzibar Islamic Bank (1985)
The Turkey Islamic Bank (1986)
From the mid-1970s to the mid-1990s, people showed greater awareness of Islamic finance as an alternative to trading and banking in Southeast Asia. Malaysia has been particularly effective in promoting its Shari’ah-compliant products and services to position itself to become the center of the international Islamic capital market in the region.
Nowadays, Islamic banking is a serious business of banking centers, especially in Kuwait, Dubai, and Bahrain. Since 2000, eight countries, including Malaysia, Indonesia, Iran, Saudi Arabia, Pakistan, Sudan, Bahrain, and Kuwait, have been trying to adopt a standard and unified Islamic banking system.
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