The 2025 Islamic Finance Development Indicator (IFDI) assessed 140 countries, with the global average score declining to 11 due to new entrants scoring low in most indicators. The top 10 countries remained unchanged, led by Malaysia and the UAE, which excelled across all five indicators. Notable shifts include Bangladesh dropping out of the top 10 due to Islamic banking sector challenges, while Tanzania showed promise with Sukuk issuance and sector growth.
In Islamic jurisprudence, money (mal) serves primarily as a medium of exchange, a store of value, and a unit of account. Classical jurists such as al-Ghazālī and Ibn Taymīyah stressed that money must not be used for speculative ends or to generate guaranteed returns (riba), nor should it expose transacting parties to undue uncertainty (gharar) or resemble gambling (maysir). Extending these timeless principles into the digital age, a Shariah-compliant CBDC must preserve the objectives of Islamic law (Maqāṣid al-Sharīʿah) by fostering economic justice, preventing harm, and promoting communal welfare.
It is suggested that the SBP makes amendments in the Digital Banking License Framework so that only Islamic licenses will be issued. This will ensure that future digital banks that are established in the country also operate under Islamic banking principles. Deposits in Islamic banking have grown more swiftly than in conventional banking. Hence, it is in the best interest of any new player in this market segment to offer Shari’ah compliant financial services than otherwise.
Financial inclusion of the poor requires a different approach in product design, pricing and delivery. This requires innovation, flexibility, efficiency and committed leadership. Fintech can be a key catalyst in increasing the penetration and outreach of Islamic banking in Muslim majority countries.
Islamic Economics Project 