Islamic finance
Infrastructure
Tariqullah Khan
Financial infrastructure comprises of
the resources, support, protection,
facilities and utilities that make the use
of architecture beneficial for
developing an inclusive, dynamic and
resilient financial system
----- just like water, electrical, lighting, heating,
communication, furniture etc., in a building that
make the utilization of the building’s full capacity
possible
Financial infrastructure shall be seen
as work in progress and must be
subjected to continuous
improvement
----- just like the water, electrical, lighting, heating,
communication, furniture etc., in a building that
need maintenance and improvement
The 5 Pillars of
financial
infrastructure
Pillar 1
Legal &
regulatory
infrastructure
Pillar 2
Transparency
& governance
infrastructure
Pillar 3
Pillar 4
Systemic
liquidity
infrastructure
Human
resources R&D
infrastructure
Pillar 5
Shariah
governance
infrastructure
□banking & company laws,
□contracts, □property rights,
□insolvency and creditor rights
regime, □financial safety nets,
□regulatory & supervisory regimes
Pillar 1
Legal &
regulatory
infrastructure
Pillar 2
Transparency
& governance
infrastructure
Pillar 3
Pillar 5
Systemic
liquidity
infrastructure
Human
resources R&D
infrastructure
Pillar 6
Shariah
governance
infrastructure
□monetary & financial policy
transparency and neutrality, □corporate
governance, accounting and auditing
framework, □disclosure regime & market
monitoring arrangements such as credit
ratings, and credit reporting systems
Pillar 1
Legal &
regulatory
infrastructure
Pillar 2
Transparency
& governance
infrastructure
Pillar 3
Pillar 5
Systemic
liquidity
infrastructure
Human
resources R&D
infrastructure
Pillar 6
Shariah
governance
infrastructure
□monetary and exchange
operations, □payment and securities
settlement systems, □
microstructure of the money,
exchange and securities markets
Pillar 1
Legal &
regulatory
infrastructure
Pillar 2
Transparency
& governance
infrastructure
Pillar 3
Pillar 5
Systemic
liquidity
infrastructure
Human
resources R&D
infrastructure
Pillar 6
Shariah
governance
infrastructure
□literacy, educational, training,
certification programs, □research,
advisory services & product
development, □Shariah governance
competencies, □information services
Pillar 1
Legal &
regulatory
infrastructure
Pillar 2
Transparency
& governance
infrastructure
Pillar 3
Pillar 4
Systemic
liquidity
infrastructure
Human
resources R&D
infrastructure
Pillar 5
Shariah
governance
infrastructure
□Legal protection for Shariah
supervision, □arbitration &
reconciliation framework, □governance
of Shariah supervision, □central
Shariah advisory board, □licensing of
Islamic financial
Pillar 1
Legal &
regulatory
infrastructure
Pillar 2
Transparency
& governance
infrastructure
Pillar 3
Pillar 4
Systemic
liquidity
infrastructure
Human
resources R&D
infrastructure
Pillar 5
Shariah
governance
infrastructure
Stakeholders
Macro
Level
Meso
Level
Micro
Level
Users of
services
Authorities concerned with legal,
regulatory and tax framework and
policies
Knowledge, educational, capacity
building, information and advisory
services and providers
Financial services and the institutions
and markets providing them
Uses and users
Individuals,
families and
households
International
and domestic
traders
Nonfinancial
businesses
Financial
businesses
Users of
financial
services
Not-for-profit
organizations
Governments
International
organizations
and
government
agencies
Banks (deposit
taking
institutions)
Fund
managers
Other nonbanking
financial
institutions
Debt
instrument
issuers
Micro level
components
of financial
services &
their
development
Equity issuers
Insurance
companies
Investment &
Strategy
advisory
services
Micro &
special finance
services
Payments and
remittance
services
Best practice
standard &
standard
setters
Legal and
advisory
services
Services of
associations of
service
providers and
users
Education
& literacy
services
Rating
services
Meso level
components
of financial
sector
development
Physical and
ITC
infrastructure
Markets and
market
micro
structures
Training
and
capacity
building
Data and
information
services
Private debt
markets
Equity and
share
markets
Money
markets
Quasi debt
markets
Markets and
market
micro
structures
Government
debt
markets
Foreign
exchange
markets
Legal
framework
Regulatory
&
supervisory
framework
Investors
rights
regimes
Macro level
components of
FSD
Corporate
governance
framework
Lender of
last resort
framework
Property
rights
Tax
framework
Macro
economic
policy
framework
Judiciary &
arbitration