Is­lamic bank­ing su­pe­rior to Western kind: Ma­hathir

The Pak Banker - - Front Page -

SINGAPORE: Malaysia's out­spo­ken ex-prime min­is­ter Ma­hathir Mo­hamad on Tues­day blamed Western lend­ing prac­tices for the world's fi­nan­cial prob­lems and hailed Is­lamic bank­ing as a "su­pe­rior" model.

Ma­hathir told a con­fer­ence on Is­lamic fi­nance in Singapore that the 2008 global fi­nan­cial cri­sis was sparked by ex­ces­sive lend­ing by Western banks. Is­lamic banks, in con­trast, are con­strained be­cause ev­ery deal needs to be backed by a real as­set un­der the prin­ci­ples of Sharia law, he said.

"So if you make a com­par­i­son, the Is­lamic sys­tem is in many ways su­pe­rior to the con­ven­tional bank­ing sys­tem," Ma­hathir said.

"The con­ven­tional bank­ing sys­tem is much more open to abuse than the Is­lamic bank­ing sys­tem," added the for­mer leader, who steered Malaysia through the 1997-98 Asian fi­nan­cial cri­sis and stepped down as prime min­is­ter in 2003. "So far, the Is­lamic banks have not been in­volved in the present cri­sis ex­cept those per­haps who dab­ble in the money mar­kets in the West," he said. "Is­lamic bank­ing is al­most im­mune to these kinds of crook deals."

Is­lamic bank­ing fuses prin­ci­ples of Is­lamic law, known as Sharia, and mod­ern bank­ing meth­ods. Is­lamic funds are banned from in­vest­ing in com­pa­nies as­so­ci­ated with to­bacco, al­co­hol or gam­bling.

Sharia-based fi­nance also bans in­ter­est, which is seen as usury, and risks are shared be­tween the cred­i­tor and bor­rower. -PB News

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.