Islamic banking open to anyone, competes with conventional banking products

The Islamic financial system is another product in the banking industry and should be seen as competing with other conventional banking products operating in the world. It is open to everyone and not Muslims alone, according to some of the views that emerged at a forum on Islamic banking.

This was during the second Islamic Finance Forum for South Asia ( IFFSA) 2017 under the theme ‘ Cooperation, Consolidation and Concentration’ which was held last week at the Colombo Ramada Hotel.

Expressing these thoughts to the Business Times, Ishrat Rauff, Group MD/CEO, Adl Capital, Sri Lanka, said this concept of banking began when the first Islamic bank was started in Dubai in 1970 and is now growing in various other countries. Interest has been shown in countries like the US and the UK and in fact the UK has several fully fledged Islamic banks which have become a trillion dollar industry and growing enormously.

Addressing the forum, he said that IFFSA has now become an annual event focusing on the Islamic Banking and Finance (IBF) industry in South Asia with Pakistan, Bangladesh, Maldives and Sri Lanka and it was also drawing visitors from West Asia, South East Asia and India.

The conference is the only one of its kind, with industry leaders and experts deliberating in the plenary sessions on a multitude of contemporary issues, primarily focusing on South Asia, he said and indicated that discussions would lead to the potential for IBF in South Asia, the role IBF could play in funding the infrastructure requirements of various countries, the SME market, etc.

During the first plenary session, delegates from the Maldives, India and Bangladesh presented their country reports.

Maldives delegate, Dr. Aishath Muneeza, Chairperson, Maldives Centre for Islamic Finance, said that the country is 100 per cent Islamic and the law stipulates that only Muslims can be citizens of that country. The legal and the financial system of the country is however not fully based on Islamic law and hence it would not be erroneous to state that the Maldivian legal and financial systems are pluralistic.

He said that his country has been recognised among the top 15 developed nations in the Islamic finance industry and it is also among the world’s most desired tourist destinations. The real economy of Maldives, he said consists of tourism, fisheries, construction and wholesale and retail trade.

Dr. Shariq Nisar, Director, Octaware Technologies, India presenting the India Country Report said that India has gained several milestones in the sphere of Islamic banking such as interest free banking for financial inclusion, permission to set up Shariah compliant Mutual Fund Scheme, interest free banking, etc. He said that one of the recommendations of a committee by the Reserve Bank of India is that commercial banks in India may be enabled to open specialized interest-free windows with simple products like demand deposits, agency and participation securities on their liability side and to offer products based on cost-plus financing and deferred payment, deferred delivery contracts on the asset side.

Presenting the Bangladesh Country Report, Mahmud Hossain, MD and CEO, Millennium Information Solutions, Bangladesh said that the first Islamic bank in that country was established in 1983 and now there are eight fully-fledged Islamic banks.