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Thread: Share your Knowledge On Islamic Banking!

  1. #1
    LONDON — On a recent Friday afternoon, the Islamic Bank of Britain (IBB) branch in West London was bustling with a large number of customers, including non-Muslims.

    At a time many conventional banks have gone bust in the credit crunch and financial crisis, the IBB is reporting a growth of 5 percent in customer numbers and 13 percent in customer financing.

    The reason is that the bank "has been better protected from the credit crunch affecting mainstream banks," Sultan Choudhury, the commercial director at the IBB, told IslamOnline.net.

    A financial crisis swept the U.S. last month after the collapse of Lehman Brothers, the fourth-largest investment bank, and the financial woes of a number of Wall Street giants.

    This triggered a domino effect across the world leaving conventional banks, lending each other on the money markets, short of credit.

    World Economic Crisis (Special Coverage)

    Western government have since pumped billions of dollars into their troubled banks to keep credit flowing and prevent a complete financial meltdown.

    The British government recently unveiled a massive the £37bn bank bailout of taxpayer' funds to rescue Lloyds TSB, HBOS and Royal Bank of Scotland from liquidity shortage.

    Choudhury said the IBB does not take interest-based loans from other banks, and has high quality, asset-based investments.

    "That means that the bank avoided the instability the other high street banks have suffered," he explained.

    Islam forbids Muslims from usury, receiving or paying interest (known as Riba) on loans.

    Transactions by Islamic banks must be backed by real assets -- not shady repackaged subprime mortgages.

    Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.

    Investors have a right to know how their funds are being used, and the sector is overseen by dedicated supervisory boards as well as the usual national regulatory authorities.

    *
    Increasing

    Choudhury cited a rise in the number of IBB’s customers "looking for a safer option for their money."

    Abul Fozoll, the manager of the IBB Shepherds Bush branch, says Muslims make up the majority of customers.

    Most of the bank's branches are located in areas with a large Muslim population.

    However, the bank officials say more branches are to open in other areas as its profits and customer numbers are picking up.

    The IBB,UK’s first stand-alone Islamic bank, is reporting an increase in the number of non-Muslim customers.

    Bank officials said the numbers are growing because Islamic banking offers a "safer option" thanks to its operations which are based on no-interest schemes.

    However, they refused to give any breakdown of Muslim and non-Muslim customers.

    Non-Muslim customers are drawn to the IBB because High Street banks offer less opportunities for house mortgages during the crunch.

    Recent figures from the Council of Mortgage lenders have shown a continued slowdown in mortgage approvals and advances.

    Just 59,000 residential properties, worth more than £40,000, were sold during September, the lowest level since HM Revenue & Customs began issuing figures in this format in 2005.

    The number was well down on the 126,000 homes sold during September last year.

    The IBB has stepped in, launching new home purchasing schemes based on the Islamic financing principles of Ijara (leasing) and Diminishing Musharaka (reducing partnership).

    Along with financial advantages, Chodhury said that a growing number of non-Muslims is drawn to his bank's genuinely ethical offering.

    "It is ethical, as investing in businesses that are considered unlawful is prohibited. That includes companies that deal in gambling, pornography, tobacco and other commodities contrary to Islamic values."
    Source: IslamOnline


    As This article clearly defines the benefits of Islamic banking, I invite all of you to share the knowledge that you have in the field of Islamic commerce.

  2. #2
    CAIRO — British Islamic banks continue to grow steadily despite the worst financial crisis in almost 80 years amid growing demand for financial products that avoided paying interest.

    "What is important is that we are not leveraged and have not invested in toxic assets, unlike many of our mainstream competitors," John Weguelin, chief executive of the European Islamic Investment Bank, told the Financial Times on Monday, November 10.

    "This means Islamic banks are in a relatively strong position."

    The European Islamic Investment Bank was launched only in January of 2008.

    A global financial crisis swept the U.S. and the world in September and knocked down British markets.

    The financial woes have prompted the British central bank policymakers to decide to cut interest rates unexpectedly amid fears of recession.

    Toxic assets and derivatives have seen losses mount above $650bn (£415bn) at the latest count among the conventional banks.

    "We have not been affected to the same extent that the conventional banks have, although we have been indirectly impacted by the general lack of liquidity," insists Humphrey Percy, chief executive of the Bank of London and Middle East.

    The bank opened for business in July last year, a month before the August credit crunch surfaced.

    Britain is the only country in Europe that has established Islamic banks, while London has 21 conventional banks offering Islamic banking products.

    Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.

    Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.

    *
    Expanding

    The recent months also saw two British Islamic banks, the European Islamic Investment Bank and the Islamic Bank of Britain, expanding their services.

    The IBB launched its first Shari`ah-compliant residential mortgage in September, just as Lehman Brothers, one of Wall Street’s most renowned banks, collapsed under the weight of its credit exposure.

    "We are still growing, not contracting," said Sultan Choudhary, commercial director of the IBB, Britain’s only retail Islamic bank.

    "We never had the asset exposure in terms of the toxic assets that other banks have."

    Principal Insurance, Britain and Europe's first Islamic insurance company, was launched in May.

    It provides the country's more than two million Muslims the opportunity of insuring their cars or houses in a Shari`ah-compliant way.

    With the Islamic finance sending positive signals through London's economic gloom, the government remains committed to launching sovereign Shari`ah-compliant bonds, sukuk.

    Officials at the Treasury Department affirmed there is a "powerful momentum" behind the plan, first unveiled in April 2007, to issue sukuk.

    Despite the current economic troubles, both government officials and bankers are convinced that the political and financial benefits of issuing sukuk would outweigh worries about its cost.

    They also believe the bonds would cement London’s position as the leading western center for Islamic finance.

    Sukuk, which conform to Islam's prohibition of receiving or paying interest, typically work as profit-sharing vehicles.

    Companies that issue Islamic bonds make payments to investors using profits from the underlying business, instead of paying interest.

    Bankers note that conventional companies and non-Muslim individuals are turning to Islamic finance as an alternative because it offers an increasingly competitive way to raise money.

    "I firmly believe that, in spite of the credit crisis, the prospects for Islamic finance remain positive," says a confident Weguelin.
    Source: IslamOnline

  3. #3
    26 November 2008 JEDDAH - The financial institutions sector has grown and expanded significantly in recent years, he pointed out that the expected volume of Islamic banking during 2010 to increase at an estimated of $1 trillion, said Abdulrazak Elkhraijy, the head of the National Commercial Bank (NCB)Islamic Banking Development Group, who is heading the bank delegation participating at a conference in Bahrain on Nov. 27-28 organized by the Accounting and Auditing Organization for Islamic Financial Institutions Accounting and Auditing Organization for Islamic Financial Institutions in collaboration with the Bahrain Monetary Agency and the World Bank. He said some recent statistics in this area indicate that the number of Islamic financial institutions reached more than 300 institutions distributed in more than 75 countries, including 110 Islamic Takaful company and other Islamically-compliant investment funds that deal $1.3 billion worth in assets. In addition, it issues Islamic bonds during the current year worth $14.7 million. He added that the large portion of the Kingdom's investments will be placed in new economic cities, infrastructure, energy and development of the private sectors. He also indicated that a large portion of the required finance is Islamically compliant. The conference will discuss a number of discussions including "harmonizing the legal rules and regulation", followed by "international accounting standards and the possibility of violating the rules of legitimacy". The third discussion is titled "Mechanisms and standards shift from traditional to commercial insurance company of Islamic Takaful". On the second day, meetings will discuss "Capital markets and investment management in Islamic financial institutions in light of the current global financial crisis." The second meeting will address "Islamic bonds and securities" followed by a "negotiable debt" between legality and reality. The fourth meeting will discuss "Tawarruq mechanisms and uses." The bank will participate in the exhibition accompanying the conference.

    © The Saudi Gazette 2008

  4. #4
    "There should be no doubt about our determination to establish a platform for Islamic finance in Hong Kong," Hong Kong Mary Authority (HKMA) Deputy Chief Eddie Yue told a forum on Islamic finance, reported Bernama news agency.

    "Our priority is to push ahead with the development of an Islamic bond market," he explained.

    Sukuk, which conform to Islam's prohibition of receiving or paying interest, typically work as profit-sharing vehicles.

    Companies that issue Islamic bonds make payments to investors using profits from the underlying business, instead of paying interest.

    But money can not be invested in alcohol, gambling, pornography, tobacco, weapons or pork.

    Yue insisted time is ripe for Hong Kong to get a foothold in the globally-thriving Islamic banking industry.

    "We believe that this is a good time to do the groundwork of installing the necessary legal, taxation and market infrastructure," told the one-day forum.

    The Sukuk market has reached $111.9 billion in the eight years to 2008 and a further $69 billion is expected to be issued in 2008/2009, the International Islamic Financial Market said.

    Western countries represent 50 percent of the Sukuk market, the IIFM estimated.

    * Competition

    Officials believe venturing into the booming Islamic finance industry will help Kong Hong, long seen as Asian financial hub, to lure more investors.

    "There are opportunities for us to extend our reach to potential Islamic investors and financiers in the Middle East and Asia," says Yue.

    "The addition of Islamic finance as a new asset class in our financial system will add value to Hong Kong as a thriving financial centre and a leading financial services hub in Asia."

    Hong Kong will be completing with neighboring Singapore which is also planning to launch its sukuk issuance facility early next year to promote the growth of Islamic finance.

    Singapore Central Bank's Managing Director Heng Swee Keat said Monday that a number of financial institutions have already expressed interest in the sukuk.

    Both countries, however, will face a major challenge from neighboring Malaysia, already a hub for Islamic banking and finance.

    Islamic finance, already one of the fastest growing sectors in the global financial industry, is estimated to be worth US$1 trillion.

    Source: IslamOnline

  5. #5
    The issuance of Islamic bonds this year worth $ 14,700,000 e He added that many of the Kingdom of investments will be placed in new economic cities, infrastructures, energy and private sector development. He also indicated that much of the required financing are consistent with Islam.

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