Islamic banking not sparking in most of Asia

Moody's Investors Service has said the Islamic banking industry in Asia will need more support from regulators.

Moody’s claims the Islamic banking service has been patchy and will need help to grow.

The ratings agency said in a report that only Malaysia had shown how the Islamic banking sector could benefit from government reforms to develop the necessary legal and regulatory framework for the industry to flourish.

The adoption of various incentives, including tax breaks, had proven a boon to the business in Malaysia.

Islamic banking in Malaysia now accounts for 15.4 percent, or US$62 billion, of the country's banking system assets.

Islamic banking brings together the principles of Islamic law and modern banking.

Islamic funds are banned from investing in companies associated with tobacco, alcohol or gambling.