South Africa National Treasury is considering issuing Islamic bonds to diversify its investor base and on Tuesday asked interested banks to submit bids.

"There is a great interest in the sukuk market and this is the first step towards meeting the growing appetite for government-backed Shariah compliant investments," said Lungisa Fuzile, Director General of the National Treasury, in a statement.

The National Treasury asked banks to submit proposals by the close of business on 21 December for the issuance of sukuks and short-listed bidders will be informed by 20 January.

Islamic banking is one of the world's fastest growing financial sectors, according to industry estimates putting its annual growth at 15 to 20 per cent.

Global issuance of sukuk -- or Islamic compliant bonds -- is likely to rise 60 per cent, to above US$22 billion in 2011, a Reuters poll showed.