Why Islamic banks escaped crisis: Capital FM

BY CHARITY KATAGO
Updated 20days 23 hours 6 minutes ago

NAIROBI, Kenya, Apr 28 - The current global economic downturn would never have happened if the banking sector had pegged its business on the Islamic banking, an industry player said on Tuesday.

Gulf African Bank CEO Najmul Hassan says none of the 375 banks that practice Islamic banking globally has been affected by the crisis so far.

“The reason for this is that Islamic banking does not go into the products that got these banks into this downfall. Look at Societe Generale, it lost billions in speculative transactions; Somitu Corporation lost because it was speculating on prices of copper,” Mr Hassan explained.

“These are the very things that Sharia banking disallows.”

Mr Hassan noted that Islamic banking is based on neither speculation nor interest but real growth.

“All the trading that happens in this world is not interest-based; there is real trading taking place. Some assets are purchased, you add value, and you sell them out. That is what Islamic banks do,” he said.

Mr Hassan explained that Islamic banks buy assets, add value and sell them on deferred payment and make their profit from taking part on real economic activity in a society as opposed to conventional banks which makes money on fractional lending which he described as ‘paper business’.

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Alkhaliji opens Islamic bank branch; plans more products: Gulf Times

Alkhaliji yesterday launched its Islamic banking branch to cater to the wholesale business, including small and medium enterprises.
The move comes as part of efforts to cash in on the growing appetite for Islamic banking, which has 20% share in Qatar’s total banking assets and loans, and about 17% in deposits in third quarter of 2008.
The new branch ‘Alkhaliji al Islami’ at Al Jazi Tower in West Bay, offers a range of products and services of Islamic current account, foreign currency exchange, domestic and international funds transfers in eight foreign currencies and commodity Murabaha.
“Islamic banking and finance is no longer a niche market in the international arena. It has reached the status of mainstream banking as more and more countries across the continents have established players in their own markets,” Alkhaliji chairman Sheikh Hamad bin Faisal bin Thani al-Thani said.

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Milestones in rise of Islamic finance: Reuters

Islamic finance has grown to a $1 trillion industry, after taking off in the private sector in Gulf states such as Dubai in the 1970s.

The sharia-law-compliant system, which prohibits interest, is the national norm in Sudan and Iran, and in a parallel banking system in Malaysia, Bahrain and a few other Gulf States.

Here are some key moments in the modern sector's development:

1950s-1960s: First experimental Islamic banks develop interest-free savings and loans societies in Pakistan and the Indian subcontinent. Egypt and Malaysia see pioneering ventures in 1960s. New banks develop during the 1970s as oil money pours into Gulf states.

1975: First commercial Islamic bank opens, the Dubai Islamic Bank (www.dib.ae). Close to 30 such banks set up over the next decade.

In October 1975, the umbrella Islamic financing institution, the Islamic Development Bank (www.isdb.org) opens in Jeddah, Saudi Arabia. Between 1975 and 2005 it funds more than $50 billion worth of projects in Organization of the Islamic Conference (OIC) member countries.

1979: Pakistan becomes first nation to "Islamize" banking practices at state level. Process continues until 1985.

July 1983: Malaysia opens its first official sharia-compliant bank, Bank Islam Malaysia. Other banks also offer Islamic products and are supervised by the central bank, which is advised by a board of sharia scholars.

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RBS sees big growth in Islamic finance: Reuters

DUBAI (Reuters) - Royal Bank of Scotland sees big growth opportunities in Islamic investment banking, expecting asset growth rates to remain 15-20 percent annually and profitability levels to increase, a leading executive said.

Navid Goraya, RBS' global head of Islamic banking, said margins have increased as financing costs have fallen, putting the Islamic sector on a solid footing this year.

"Profitability has not been hurt," he told the Reuters Islamic Banking and Finance Summit on Monday. "You could see profitability go up."

In the six countries of the Gulf Cooperation Council -- the world's biggest market for Islamic financial services -- asset growth will remain at 15-20 percent annually, despite the global wealth destruction caused by the financial crisis, he said.

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A Tale of Two Shari'a Finance Articles: Europe News

By David J. Rusin

Journalistic skepticism is rare when it comes to Shari'a banking. In January this blog highlighted an Associated Press puff piece on the subject, deeming it an early "contender for the most one-sided story of 2009." However, a new frontrunner has emerged: another Shari'a banking article.

Stephen Magagnini's March 30 piece in the Sacramento Bee presents Islamic finance as a panacea, a "socially responsible" way of doing business which has ensured that "the recession gripping the nation has taken less of a toll on American Muslims who follow age-old Islamic laws." The money quote can be found in the third paragraph:

"If everybody was Shari'a-compliant, there would be no recession," said Farouk Fakira, a Yemeni immigrant who moderated a discussion on Islamic finance [in Sacramento].

The next eighteen paragraphs feature not a single voice to scrutinize this stunningly saccharine assessment and not a single hint of Islamic banking's many troublesome aspects: that unaccountable clerics determine which arrangements are Shari'a-compliant; that charitable donations required to "purify" proceeds have been used to fund terror in the past and could leave investors legally liable for attacks in the future; or that Shari'a banking is a modern invention designed by Islamist thinkers to propagate their radical, separatist ideology.

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Islamic insurance to grow up to 40 percent: Reuters

By Jason Benham

DUBAI (Reuters) - The emerging Islamic insurance or takaful industry could grow at 30-40 percent annually in the next three to five years as more people switch from conventional to Islamic insurance, a senior executive said.

"I think the takaful industry is in a growth mood for two reasons," Noor Takaful's managing director Ahmed al-Janahi told the Reuters Islamic Banking and Finance Summit in Dubai on Tuesday.

"Every day, people need to insure and there is a departure from conventional insurance. A lot of people are switching," he said. "Growth is expected at 30-40 percent going forward as people in Muslim countries are switching from conventional to takaful."

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Islamic banking attracts rising number of non-Muslims: Expert: Peninsula

Source ::: THE PENINSULA / BY MOBIN PANDIT

DOHA: An increasing number of non-Muslim expatriates here are getting attracted to Islamic banking, says a senior Doha-based banker.

R Seetharaman (pictured), CEO of Doha Bank, told world leaders of Islamic banking at a key convention here yesterday that Islamic banking windows of commercial banks in Doha had grown at an impressive 18 percent annually over the past three years.

Qatar, unlike some other countries in the region, allowed hybrid banking and a significant development had been that a lot of non-Muslim customers were ‘deflecting’ from commercial to Islamic banking, he said.

“I can clearly see that more and more expatriates are trying to open accounts in Doha Islamic (the Islamic banking arm of Doha Bank).”

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