Business

Faizy Syed
Islamic Banking & Finance Advisor

Why can't we ignore

ISLAMIC BANKING?
If the word "Islamic" means a set of religious beliefs to you, you'll be surprised to know that the outreach & acceptance of Islamic banking & finance reaches far beyond its name, and the principles of Islamic banking & finance are making vibes across the globe
f the word "Islamic" means only a set of religious beliefs to you, you'll be surprised to know that the outreach & acceptance of Islamic banking & finance reaches far beyond its name, and the splendid principles of Islamic banking & finance are making vibes across the globe. It is a sophisticated banking & finance style based on moral and social values, which is attuned to the up to date financing needs, and therefore, it is receiving

overwhelming response from both the Muslims and the non-Muslims alike. When the official newsletter of the Pope, L'Osservatore Romano published an article praising the 'ethical' concepts of Islamic banking & finance encouraging the western banks to adopt the rules of Islamic banking & finance to restore confidence amongst their clients during the economic crisis, the world's attention was drawn to this lesser known area, which got its

boost during the times of the global financial crisis. Not only the Pope, Islamic banking & finance has numerous leading advocates which includes leading educational institutions as well as blue chip financial organizations. The Harvard had set up its Islamic Finance Project way back in 1994-95, followed by several other premier educational institutions worldwide. Similarly, most of the banking and financial giants like

48 | PEOPLES POST | April 16th - 30th, 2012

the HSBC, CitiBank, Portland Chase, Reliance, Tata to name only a few have also entered into the arena of Islamic banking & finance. Apart from this, several governments are making efforts to benefit from the multifold advantages of the Islamic banking & finance system. Countries like the United Kingdom, Luxembourg, North Ireland, Germany, Bermuda, or even France in the west, and Malaysia, Indonesia, Maldives, Turkey, Singapore, the entire Middle East, as well as Japan and Australia, etc. at the other sides of the globe are now well known names in this regard. Countries like Luxembourg, Bahrain, and Malaysia, etc. have made a strong and viable level playing field for Islamic banking & finance, and it is pertinent to note that Luxembourg last year reported world's highest per capita income, whereas Malaysia is fast on the way to become a developed nation. It is noteworthy that while Luxembourg has a very small population of Muslims, Malaysia, a Muslim dominated country, has more than 40% non-Muslims account holders in Islamic banks. It goes without saying that all these countries and players are eyeing the economic benefits of the Islamic banking & finance system, irrespective of the size of their Muslim populations,

world economy with more than 75 countries joining this field which is growing at a remarkable speed of about 20-30% annually. India, known for its secular fabric, happens to be home for approximately 150 million Muslims, and largely for this reason, is seen as the largest untapped market for Islamic banking & finance. However, the facts highlighted above guide us to believe that Islamic banking

it quickly received investment offers worth Rs. 100 billion from Oman alone to invest in vital developmental projects which include roads, bridges, flyovers, power, water supply and transport, industrial & information technology, tourism, ports, airports, railways & mass transportation and inland waterways across the state, etc. It is a good development towards opening the doors for the much needed investment in India, and promoting an unbiased and equitable banking and finance structure that will benefit all, irrespective of one's religious beliefs. India is among the world's fastest growing economies and shall be a leading economy of the world by 2020; however, to achieve this and to sustain this, it is high time India takes proactive steps for facilitating Islamic banking & finance in the country, which should include policy making, and introducing Islamic banking & finance courses at various institutions to educate the masses besides preparing quality professionals to cater to the rising demand. As per reports, India needs about US$ 500 billion to invest in projects crucial for building its vital infrastructure. The introduction of Islamic banking can easily provide this much needed capital, especially from

It goes without saying that all these countries and players are eyeing the economic benefits of the Islamic banking & finance system, irrespective of the size of their Muslim populations, and trying out diverse approaches to become top centres of Islamic banking & finance
and trying out diverse approaches to become top centres of Islamic banking & finance. Likewise, there has been a remarkable surge in the number of non-Muslim professionals providing Islamic banking & financial services throughout the world, which undoubtedly stresses that the magnitude and rewards of Islamic banking & finance extend far beyond its name. Recently while the world grappled with severe financial crisis, the Islamic banks and financial companies showed no cognizable signs of any affect of the crisis and rather continued to grow unabated defying the once well established yet exploitative economic laws. Islamic banking & finance system now holds a confident position in the & finance, irrespective of its name, is not for Muslims alone. It is for EVERYONE, and its benefits cannot be limited to Muslims alone. For this reason, there have been rising demands from different sections of the society, especially the economists and businessmen for the introduction of Islamic banking & financial services in India for the past few years, and some efforts have made in this regard, however, there seems to be a lack of awareness among the masses as well as the policy makers in terms of its application and benefits. One positive step in this direction came from the Kerala Government who participated in an Islamic finance venture in the state inviting much needed investment. With the green signal to the project in Kerala, the oil rich Gulf nations with billions of petro dollars looking for new markets. The importance of Islamic banking & finance is increasing and its integration in the mainstream economy is too big to avoid. It is high time the Indian policy makers provide for integration of Islamic banking & finance in the system. If India's infrastructure develops, every Indian will benefit, irrespective of one's religious beliefs. Mr. Faizy Syed is an Advocate by profession and an expert in Islamic banking & finance laws. He has worked with some top Islamic Finance advisors in various countries, and is an active supporter of the introduction of fully fledged Islamic banking & financial institutions in India. He could be contacted at faizy@ahmadsyed.com
April 16th - 30th, 2012 | PEOPLES POST | 49