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Islamic finance reform call http://www.thenational.ae/apps/pbcs.dll/article?AID=/20100614/BUSINESS/706149894/1005 Tom Arnold Last Updated: June 14. 2010 9:21PM UAE / June 14. 2010 5:21PM GMT The central bank governors of the UAE and Bahrain have called for Islamic finance reforms to improve the industry’s prospects of expanding globally. Rulings by the Sharia boards of Islamic banks should be better co-ordinated and harmonised to enable the setting of credible standards for the lenders, said Sultan al Suwaidi, the UAE Central Bank Governor. A clearer distinction also needed to be defined between profit to shareholders and profit to investors and depositors, he said. “We need a standard formula to calculate profit in an equitable and fair way at all Islamic banks,” he said yesterday during a speech at the Asia Summit of the World Islamic Banking Conference in Singapore. Regulators, including those in the GCC, are examining ways to improve the assessment of risks of Islamic banks, sukuk and other Sharia-compliant products to raise their appeal to global investors. Since the incorporation of the first Islamic banks in the UAE and Bahrain in the 1970s, the industry has grown strongly in both countries. In the UAE, the assets of Islamic banks last year stood at US$65.8 billion (Dh241.66bn), representing 16 per cent of the total banking system. Bahrain’s Islamic bank assets were $26bn last year, accounting for 11 per cent of the total banking industry. A greater focus on saving rather than lending has enabled regional Islamic banks to weather the global credit crunch better than some conventional lenders, say analysts. However, Islamic finance has yet to make significant inroads into global markets to compete with providers of conventional finance products. The absence of a standard legal framework for Islamic financial contracts that has been recognised as Sharia-compliant by scholars from outside the sector was a barrier to enabling the industry to grow on a cross-border basis, said Rasheed al Maraj, the governor of Bahrain’s central bank. “The result has been that Islamic financial institutions have had a predominantly domestic focus and have not been able to achieve the scale economies that might make them viable competitors to conventional institutions,” said Mr al Maraj. The lack of economies of scale also increased the cost of Islamic financial products, he said. Bahrain has been at the forefront of attempts to develop standardised Islamic financial products through the International Islamic Financial Market (IIFM), which seeks to set regulations for Islamic securities. Mr al Maraj said the IIFM had recently drafted an agreement, approved by the IIFM’s board, providing a standardised documentation for Islamic derivatives. More work would have to be completed to ensure that standardised contracts for other Islamic products were developed with the support of Sharia scholars, he added. [email protected] - -- You received this message because you are subscribed to the Google Groups "Kantakji Group" group. To post to this group, send email to [email protected] To unsubscribe from this group لفك الاشتراك من المجموعة أرسل للعنوان التالي رسالة فارغة, send email to [email protected] For more options, visit this group at http://groups.google.com/group/kantakjigroup?hl=en سياسة النشر في المجموعة: - ترك ما عارض أهل السنة والجماعة. - الاكتفاء بأمور ذات علاقة بالاقتصاد الإسلامي وعلومه ولو بالشيء البسيط. ويستثنى من هذا مايتعلق بالشأن العام على مستوى الأمة كحدث غزة مثلا. - عدم ذكر ما يتعلق بشخص طبيعي أو اعتباري بعينه. باستثناء الأمر العام الذي يهم عامة المسلمين. - تمرير بعض الأشياء الخفيفة المسلية ضمن قواعد الأدب وخاصة منها التي تأتي من أعضاء لا يشاركون عادة، والقصد من ذلك تشجيعهم على التفاعل الإيجابي. - ترك المديح الشخصي.
