At a recent meeting in Dubai, lawyers from several international firms talked about the legal issues surrounding Islamic finance. In spite of their reputation, involvement from lawyers signifies maturation of the market. More than 75 countries are involved in Islamic finance, and there are consulting firms built around advising companies and banks about Shariah-compliance.
“Where we are in Islamic finance today is where [foreign exchange] was in 1971. We are on the cusp, technology is the next phase,” the global head of Islamic finance for Thomson Reuters, Rushdi Siddiqui, says. But while these developments give reasons to hope that Islamic financing will soon move from an alternative to a mainstream option, the market still faces critical challenges. Experts say a lack of consistent rulings on Shariah compliance, short supply of Shariah scholars, isolation from broader financial markets, and constraints on the time-frame of debt instruments are major challenges to the growth of Islamic finance.