Spotlight on Islamic Financial Literacy in the Maldives

The Maldives Islamic Bank (MIB) – a leading Shariah compliant financial and banking service provider in the Maldives | Photo: MFR

Disclaimer: the following article has been prepared and provided by the Maldives Capacity Development Governance Institute (MCDGI)

Financial literacy is now globally recognized as an essential life skill. In a typical Muslim community like the Maldives, many people face financial decisions and are already consumers of Islamic financial services, from bank accounts to prepaid debit cards. Islamic financial education is acknowledged as a complement to financial consumer protection, inclusion, and regulation, to improve individual decision making and well-being, and to support financial stability and inclusive growth. As such, people are required to know and understand more than just financial information. They are required to understand whether the instrument they are using in an Islamic financial institution is following Islamic law. Hence, generating an in-depth understanding of the extent of Islamic financial literacy among the people of Maldives warrants investigation.

MCDGI has conducted a survey distributed across the main 24 atolls in the Maldives. The study shows that the majority of the participants have their own bank account and ATM card, as well most of the time use internet banking services. The respondents were generally agreed that banking is an integral part of their lives so that everyone must be educated about banking. They also believe that Islamic banking is unique and different compared to conventional banking. Unexpectedly, most of the respondents have never been clients of an Islamic bank, although many of them view that Islamic banks provide enough products and services. Meanwhile, people think that the investment of Islamic banks in permissible products and services is beneficial for the welfare of society. The respondents know that conventional financial institutions are involved with interest. However, there is a notable lack of knowledge among people about Islamic banks services in the Maldives, such as Sukuk, general and family Takaful undertakings, Shariah compliant-stock market, and purchases based on Islamic finance structures.

Hence there is much to be done to fill the gaps in Islamic finance education and awareness. The government, financial policymakers and regulatory bodies in the Maldives can take steps to increase the general level of financial literacy, and Islamic financial literacy. People need to be aware not only of Islamic banking services but also aware of the different concepts used in Islamic banking. Thus, it will not ensure the adherence of people to Islamic financial products unless they are in line with their understanding of Shariah and their operational expectations.

About MCDGI

MCDGI is a leading institute in the Maldives, providing high-quality professional Training and Consultancy services to uplift the professional capacities of the workforce while supporting the corporate sector to up- hold the governance standards to the international level. MCDGI provides tailor-made training programs to diverse industries to build capabilities by drawing the relevant expertise from its pool of local and global level professionals and working closely with the state authorities and key policy-making bodies.


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