INTERNATIONAL HERALD TRIBUNE: KUALA LUMPUR: Islamic banking is set to rise from its modest 2 percent share of bank assets as the government encourages growth and Muslims overcome their suspicion, sharia lender Gatehouse Bank said on Tuesday.
Islamic finance, which rejects interest-based lending and speculation in favour of profit and loss sharing between venture partners, has been in Britain since the 1970s, but only a small number of Muslims have embraced it.
In recent years, Britain has been viewed as the European leader in providing Islamic financial services, aiming to serve both domestic Muslim markets as well as tapping into the vast wealth of Gulf investors.
"The government is very keen on social inclusion and economic inclusion and it feels that still there are areas of the UK where there's not enough economic inclusion," Gatehouse Chairman Richard Thomas told reporters on the sidelines of an Islamic finance forum in Malaysia.
"So they feel that if they open up alternative finance such as Islamic finance then that will allow people to be included in the British economy in a way they weren't before."
He did not give estimates for the Islamic finance industry's growth.
Britain intends to issue its own sovereign sharia-compliant sukuk debt in a rolling programme worth around 2 billion pounds, although it has said legal barriers still remain and it will make a final decision later. >>> Reuters (Reporting by Liau Y-Sing) | Novemebr 18, 2008
THE GUARDIAN: Standardisation Moves to Help Sharia Finance-scholar
KUALA LUMPUR, Nov 18 (Reuters) - Efforts to standardise the reading of the sharia will not stifle the Islamic finance sector, a leading sharia scholar said on Tuesday, dismissing concerns that the industry risks being smothered by too much regulation.
A lack of standardisation in Islamic finance contracts is one of the biggest complaints among bankers in the $1 trillion industry, but there are also worries that a growing effort to harmonise across the globe could create a one-size-fits all approach in structuring deals.
"In Islamic law we encourage debate, research, scholarship and it is an ongoing process which cannot be stopped by anybody," Sheikh Nizam Yaquby, a highly regarded scholar, told reporters on the sidelines of an Islamic finance forum.
"However, for the purpose of standardisation, it is important to have certain prudential rules and basic contracts especially repetitive ones to be accepted among a group."
Sharia scholars are experts in Islamic law and international finance. They are seen as the industry's gatekeepers as they sit on the Islamic boards of institutions and rule on whether or not proposed products are sharia compliant.
Islamic law is open to diverse interpretations, resulting in some financing structures that aren't accepted by all Islamic markets.
An Islamic finance structure called bai bithaman ajil that is popular in Malaysia, for example, is not accepted by Middle East markets as Islamic.
Under bai bithaman ajil, a bank purchases an asset for its customer and sells it to him at a profit, with the sum to be repaid in instalments.
Recent attempts to harmonise industry standards include a plan by the International Swaps and Derivatives Association to launch standards next year for over-the-counter sharia-compliant derivative contracts. >>> Reuters, Tuesday November 18 2008
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