KARACHI: Islamic banking has become a mainstream financial sector, now operating in over 80 countries with assets surpassing $5 trillion. A recent report by Standard Chartered, titled Islamic Banking for Corporates: Broadening Horizons, projects that assets in the sector will reach $7.5 trillion by 2028.
The report highlights a significant growth in corporate Sukuk issuances, which have nearly doubled since 2020, resulting in a 38% increase in issuance volumes, reaching $58.8 billion in 2024.
However, it also points out that a lack of awareness about Islamic banking products is a key barrier preventing corporates from accessing the $5.5 trillion in global Islamic finance assets.
Khurram Hilal, CEO of Group Islamic Banking at Standard Chartered, emphasized the need for corporate understanding, noting, “Corporates that build Islamic finance capabilities stand to access specialised capital pools, preferential pricing, government incentives in high-growth markets, and ESG-focused capital pools.”
The report also underscores the alignment of Islamic finance principles with Environmental, Social, and Governance (ESG) criteria, citing that sustainable Sukuk were oversubscribed by an average of 4.3 times their issuance value in 2024, compared to 3.1 times for traditional Sukuk. This reflects increasing investor demand for instruments that combine Shariah compliance and sustainability.
Additionally, the report highlights how digital innovation is driving growth in Islamic banking, with advancements like tokenised Sukuk, blockchain-based settlements, and AI-powered Sharia-compliance tools revolutionising capital management, reducing costs, and enhancing cross-border governance.
Islamic banking is also seen as key to accessing critical trade corridors, particularly in the GCC, Southeast Asia, South Asia, and Africa, where Sharia-compliant finance is increasingly mandated. The $5.7 trillion South-South Corridor, which links these regions, now accounts for nearly a quarter of global trade.
