http://www.gulf-daily-news.com/Story.asp?Article=168763&Sn=BUSI&IssueID=29317
Islamic finance needs 'standardised rules' LONDON: Standardised regulatory and accounting frameworks are needed to help take the Islamic finance industry to its next phase, Central Bank of Bahrain (CBB) Governor Rasheed Al Maraj said. He said that currently the regulatory treatment of Islamic finance varies enormously. "This creates competitive distortions, and supervisory risks, particularly in those jurisdictions which have not addressed Islamic finance with specific regulations," he said. "Where appropriate regulations have been developed, continued efforts need to be made to ensure effective compliance. Most Islamic financial institutions are relatively small and new, whilst expertise in the industry is in short supply. "A lack of standardisation in accounting standards similarly creates distortions and compromises transparency and market discipline." Mr Al Maraj was a keynote speaker yesterday at the Governor's Roundtable session at the Islamic Finance Summit in London. The two-day event is being organised by Euromoney. Mr Al Maraj said that a second challenge is the need for strong disclosure and business conduct standards in Islamic finance. "Of course, these issues are important in conventional finance as well; but the nature of Islamic profit-sharing contracts, and the equity-type relationship of many customers, makes it particularly important for Islamic financial institutions to achieve high standards in this area. "Investors must clearly understand the nature of the investment they are entering into, including in particular the potential downside risks to their capital. The allocation of costs and the calculation of profits must also be transparent. Furthermore, these must reflect in a fair manner the relative contributions of shareholders and customers. "If these areas are not successfully addressed, then certain parts of the industry risk damage to their credibility, which in turn may discredit the industry as a whole." Mr Al Maraj said that to some extent the industry has so far been shielded by the fact that its growth has mostly taken place against a backdrop of relatively strong economic conditions. "Strong transparency and conduct of business will become all the more critical and weaknesses in this area all the more apparent once the next downturn arrives, and investors find themselves facing significant losses." He said that there is also a need to develop standard market practices and greater Sharia convergence. "Greater standardisation in this area would also alleviate pressures on Sharia scholars, where the demand for those expert in both the Sharia and finance is fast outstripping supply. Greater standardisation in core products would allow Sharia boards to focus on new or non-standard products and transactions." +++ -------------------------- Want to discuss this topic? Head on over to our discussion list, [EMAIL PROTECTED] -------------------------- Brooks Isoldi, editor [EMAIL PROTECTED] http://www.intellnet.org Post message: [email protected] Subscribe: [EMAIL PROTECTED] Unsubscribe: [EMAIL PROTECTED] *** FAIR USE NOTICE. This message contains copyrighted material whose use has not been specifically authorized by the copyright owner. OSINT, as a part of The Intelligence Network, is making it available without profit to OSINT YahooGroups members who have expressed a prior interest in receiving the included information in their efforts to advance the understanding of intelligence and law enforcement organizations, their activities, methods, techniques, human rights, civil liberties, social justice and other intelligence related issues, for non-profit research and educational purposes only. We believe that this constitutes a 'fair use' of the copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/osint/ <*> Your email settings: Individual Email | Traditional <*> To change settings online go to: http://groups.yahoo.com/group/osint/join (Yahoo! ID required) <*> To change settings via email: mailto:[EMAIL PROTECTED] mailto:[EMAIL PROTECTED] <*> To unsubscribe from this group, send an email to: [EMAIL PROTECTED] <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
