The past year has seen a number of firsts in the Islamic finance industry, including the first sovereign sukuk from the West. This represents a huge step forward for an industry previously considered niche. Islamic players now must consolidate on these gains by broadening their product offerings, expanding their customer bases and targeting new levels of interoperability with global markets.

While the growth in Islamic finance slowed down in 2013 for some smaller, less-developed markets, others such as Malaysia and the Gulf countries, saw strong results.

The growth of 'hard' currency sukuk issuance is pushing the market to the next level, as new issuers and new investors flock to the sharia-compliant finance space to capitalise on the growth prospects of emerging economies in the Gulf and Asia. 

After a false start, Islamic banking has become the fastest growing segment of the Pakistani banking industry, with the full support of the government. Apart from the ever-present challenge of liquidity management, most local Islamic bankers agree that their most important task now is to build awareness in the country.

Four leading representatives discuss the impact of Basel III on the Islamic banking industry, what benefits the regulations will bring and why Islamic banks are well positioned to meet the requirements. 

Bursa Malaysia is the leading global centre for Islamic capital markets. Its chief executive tells James King that the exchange is still looking to innovate, with expanding the borders of Islamic finance a key priority.