Monday, 18 August 2008

Islamic banking is in its golden period of growth

Dr Jasim Ali (Gulf News)

Last week Moody’s Investors Services published an exceptional report about Islamic banking industry. Entitled, “Frequently Asked Questions: Notable Trends in Global Islamic Finance”, the report revealed some valuable insights into the potential of Islamic banking. Yet, one could disagree with some of the arguments made by the report’s author, Anouar Hassoune, vice-president and senior credit officer at the company.

Amongst others, the report claims that the Gulf Cooperation Council (GCC) countries do not want the private sector dominating the realm of Islamic banking. Accordingly, the GCC governments are increasingly entering as strategic investors in Islamic financial institutions (IFIs). Cases in point are Dubai government owning a controlling stake at Noor Islamic Bank (NIB). Set up 2007, NIB aims at becoming the largest IFI in the world within the next five years. Also, state pension funds own 30 per cent of Alinma Bank in Saudi Arabia. Set up in 2006, Alinma sold 70 per cent of shares through initial public offers earlier in the year. Likewise, the Qatari government partly owns Masraf Al Rayan.

The report suggests that government ownership should help making IFIs only more acceptable. “If governments have an increasing share of ownership in IFIs, the risk of consumers perceiving an IFI as insufficiently compliant with sharia is somewhat mitigated,” it said. However, existing IFIs are not suffering from a reputation of being overtly commercial.

continue reading at….http://tinyurl.com/564nhv

 

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