Islamic Banking and Finance in Singapore You Want to Know

Singapore has become an attractive destination and one of the top countries for Islamic Finance. Despite having a few Muslims in the country, many Singaporean banks provide both Islamic and conventional services. Moreover, Singapore is a top insurance center in Asia, with many international clients and intermediaries. Leveraging the critical mass of reinsurers based in Singapore, takaful players can also collaborate with reinsurers in Singapore to offer retakaful capacity.

Islamic REITs and Sukuk

Another segment in which Singapore holds a leading position is in the Real Estate Investment Trust (REITs) industry. REIT is a form of financial instrument that can efficiently be packaged to be Shariah-compliant. Besides, Singapore has set up its first Islamic REIT, Sabana, in 2010. The trust owns 22 properties. So far, there are three Shariah-compliant property funds in Singapore. They have funds of over US$1.35 billion earmarked for investment in Asian real estate.  

As an Islamic financial center, Singapore is appealing to more Sukuk issuers, including Emaar Malls Group, Damac Real Estate, and Turkiye Finans. So far, Singapore has issued a total of 31 Sukuk. The exchange lists several Sukuk Wakalah, Sukuk Murabahah issuances by the Export-Import Bank of Malaysia and Golden Assets International Finance. In 2012, the Axiata Group priced a CNY1 billion (US$158.06 million) Sukuk Wakalah, which at the time was the largest yuan-denominated Sukuk issued, as part of its Sukuk program worth up to US$1.5 billion. 

Banking and Finance

Currently, Singapore has 15 banks offering Islamic banking services. The most common four types of Financial products provided by Islamic banking in Singapore are including savings accounts, murabaha (Personal financing), term deposits, and Islamic bonds or Sukuk.

Industry experts state that Islamic assets under management in Singapore are worth almost US$4.37 billion. 15 Singaporean banks offering Islamic banking options hold over a third of those assets. Though Franklin Templeton Investments launched three new Islamic retail funds in 2013, fewer than 20 Islamic funds are available in Singapore.

As well as funds, certain Singaporean banks also provide Islamic financing. At the beginning of this year, The Islamic Bank of Asia (IB Asia) agreed on an SG$15 million (US$11.83 million) convertible commodity Murabahah facility agreement with Ley Choon Group Holdings. The investment is the first Islamic private investment in private equity transactions in Singapore.

Islamic Banking In Singapore

Compared to Malaysia, Islamic banking is in its early years in Singapore, due largely to a lack of awareness and a small domestic market. One of the local banks, OCBC is offering two Islamic deposit accounts in the consumer market in Singapore. However, it could not replicate the success it has had in Malaysia. In Malaysia, it is the second foreign player in the field with some RM457 million (S$204 million) in Islamic banking loans.

On the other hand, in Singapore, the climate for Islamic banking is improving. In 2005, OCBC became the first bank in Singapore and Brunei to appoint a full-time Shari’ah advisory board to provide direction for the bank’s Islamic banking activities. The bank handles the validity of such products and transactions and the council shall determine them. Furthermore, OCBC Bank launched Singapore’s first Shari’ah-compliant term deposit.

Singapore also plays a major role in the development of the takaful industry. HSBC Insurance (Singapore) has S$220 million worth of assets under management for takaful products. It is about 80 per cent of the market in Singapore.

Laws and Regulations

Islamic financial institutions in Singapore operates under the same legislation as the country’s Banking Act as conventional institutions. The capital adequacies and requirements are applicable to Islamic banking products in the same way as conventional ones. In 2013, the government allowed the five-year tax window introduced in 2008 on specific Islamic finance instruments to lapse. Although the tax treatment for Islamic instruments remains on par with conventional equivalents.

Challenges and opportunities

As GCC investors explore new markets, Islamic wealth management has been identified as a potential growth sector for the Islamic finance industry in Singapore. It includes the potential for distribution among investors in Asia and the Middle East. Malaysian and GCC banks have committed to expanding their operations in Singapore and expanding their Islamic financial capabilities.

Islamic financial institutions in Singapore are subject to the same legislation under the country’s Banking Act as conventional institutions. Islamic Finance has a potential area for growth in Singapore with possible greater support by Asia and the Middle East.


It is obvious that Singapore has established a highly credible brand name. Singapore has the utmost importance in the global banking and financial world. It is because of the four pillars : (a) strong political stability; (b) common law English legal system; (c) efficient regulatory regime; (d) solid financial infrastructure. Singapore is positioning itself to be the nexus for the convergence of both the conventional and Islamic banking and finance sectors in Asia.

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