FACTBOX: Key facts about Islamic finance

MANAMA (Reuters) - The Islamic finance industry has grown rapidly as more of the world's 1.2 billion Muslims seek investments that comply with their religious beliefs.

A tripling of oil prices in the five years to July has flooded the Islamic finance business with petrodollars, accelerating expansion.

The following are some key facts about Islamic finance industry:

WHAT IS ISLAMIC FINANCE?

* Islamic banking complies with sharia, or Islamic law. A ban on charging interest and investing in prohibited businesses such as trading in alcohol, pork, arms, pornography or gambling, are among features that distinguish it from traditional banking.

* Malaysia, and the states that make up the Gulf Cooperation Council -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates -- are the world's two Islamic banking hubs, but Islamic banks are opening elsewhere. The European Islamic Investment Bank is Britain's first sharia-compliant lender.

* Islamic bonds, or sukuk, are typically backed by physical assets that pay a dividend or rent to bondholders rather than interest.

HOW BIG IS THE INDUSTRY?

* There are more than 300 Islamic banks and investment firms globally, according to the Bahrain-based General Council for Islamic Banks and Financial Institutions. The figure does not include traditional banks with Islamic operations.

* Islamic financial institutions, including non-bank operations such as insurance firms, manage more than $800 billion, according to data cited by the Islamic Development Bank in its 2005-2006 annual report.

* Islamic banks will hold 40 percent-to-50 percent of the savings of the world's 1.2 billion Muslims in eight-to-10 years, according to the International Islamic Finance Forum.

* The total value of sukuk issued in the last six years is about $21 billion, according to data from by the Bahrain-based Liquidity Management Center (LMC). In 2006, $7 billion worth of sukuk was issued, an 87 percent increase on 2005. Sukuk worth $20 billion are still outstanding, LMC data showed.

SOME OBSTACLES

* Differing interpretations of Islamic law are hindering the growth of the Islamic banking industry by making it difficult to standardize products across markets. Some scholars take the opposite view, fearing too much standardization will hinder innovation.

* Some Gulf investors believe the Malaysian interpretation of Islamic law is too flexible, stifling cooperation between the two regions. The Malaysian policy of allowing debt to be traded in some Islamic transactions is a key bone of contention.

* Malaysian Islamic finance deals are typically valued in ringgit, making them less attractive to Gulf investors, who prefer U.S. dollars. Malaysia's capital markets are deep and liquid enough to easily sell products in the local currency, unlike the Gulf, where dollars are used to widen appeal.  Continued...