PARIS: With commercial bank financing tight, Europeans have been taking a closer look at Islamic banking.
“The potential is there,” Ahmad Jachi, the first deputy governor of the Central Bank of Lebanon, said at a conference this past week in Paris. “It’s a matter of really enabling and creating the market.”
Islamic banking has already been integrated into the British and German banking systems, and banking executives at the conference said efforts were under way to allow Muslims in France to bank and invest under regulations that conform to Shariah, the legal code of Islam.
Estimates of the Islamic banking market’s current size vary from $500 billion to $1 trillion. It has only about 5 percent of the overall banking market, but attendees at the conference, which was sponsored by The Economist, said Islamic banking has a huge potential for growth, since one-sixth of the world’s population is Muslim.
The International Monetary Fund estimates that the Islamic banking sector has grown 10 percent to 15 percent a year over the past decade.
There is no specific code to govern Islamic financing. Businesses that are trying to be compliant usually set up a board of Islamic scholars who study the investment structures and products and reassure investors or customers that their money is being held under Shariah guidelines. Mufti Abdul Kadir Barkatullah, an imam in Britain and a Shariah scholar who is regularly consulted by corporations, said Islamic banking regulations generally require investors to be “very prudent and careful with your money, and you only put your money to very good uses.”
One general principle that has proved useful of late is that banks are not allowed to……….
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