Islamic Banking & Finance. In the West with Concentrated Focus on the The United Kingdom. Dr Mohammad Javad Gohari (PhD Law) Vice-President OIIL Senior Advisor OIIBF. Islamic Finance 101. US Official Position. Hosted by the. U.S. Department of Treasury. In association with the.
In the West
with Concentrated Focus on the
The United Kingdom
Dr Mohammad JavadGohari(PhD Law)
Senior Advisor OIIBF
US Official Position
Dorsaf, Islamic Banking Finance and Commerce Conference Oxford 2012
Dorsaf, Islamic Banking Finance and Commerce Conference Oxford 2012
Speaking at the Islamic Finance and Trade Conference the chancellor said he wanted to make the UK "the gateway for Islamic finance".
He pointed to reforms of the tax system to make Sharia compliance easier.
"It is the vibrancy and dynamism of Britain's Muslims, combined with Britain's openness to the world and our historic ties with Muslim countries, that means the ambition you have set for yourselves - to make Britain the gateway to Islamic finance and trade - is one I believe Britain is well placed to achieve," Brown told a conference on Islamic banking in London.
There are thought to be about 1.8 million Muslims in the UK or 3 per cent of the population. 50% of these are estimated to reside in the London area. There are also estimated to be about half a million regular Muslim visitors to the UK and approximately 12 million Muslims living in the EU, principally in France & Germany.
The main centres for Islamic banking still tend to be concentrated in the Middle East and Gulf region. Assets controlled by Islamic banks at the global level are estimated to be $200-500bn and are growing at a pace of 10-15% per year.
The FSA's policy towards Islamic banks, and indeed any new or innovative financial services company, can be summed up simply as "no obstacles, no special favours". We are keen to promote a level playing field between conventional and Islamic providers. One thing we are clear about is that we are a financial, not a religious, regulator.
UK's first FSA (Financial Services Authority) approved Islamic bank established Sept 2004
First standalone Islamic retail bank in the Western world
As the first stand-alone, Sharia compliant, retail bank in the UK to be authorised by the Financial Services Authority we aim to provide a friendly, inclusive and personal service for all our customers.
Islamic Bank of Britain plc is incorporated and registered in England and Wales with Registration No. 4483430. Registered Office: Edgbaston House, 3 Duchess Place, Hagley Road, Birmingham, B16 8NH
Islamic Bank of Britain plc is authorised and regulated by the Financial Services Authority under Registration No. 229148. Islamic Bank of Britain plc is a member of the Financial Ombudsman Service.
EIIB was incorporated in January 2005 and received authorisation by the FSA in March 2006.
Headquartered in London, EIIB's range of products and services include the following Sharia’a compliant investment banking activities:
- Islamic Treasury and Capital Markets- Sharia’a Advisory.- Private Equity.- Asset Management
EIIB seeks to service a market for Sharia’a compliant investment banking services in Europe, the Middle East and Asia that it believes has been under-exploited by conventional and Islamic banks, and by non-banking institutions.
The founding shareholders of EIIB include Gulf based individuals and institutions, including a number of Islamic banks, as well as individuals and companies based in Europe.
Bank of London and The Middle East plc (BLME) was first incorporated in London on 7th August 2006 under the name House of London and The Middle East.
BLME believes that the future of Islamic finance depends on its ability to innovate and evolve. The UK and in particular the City of London provides direct access to a highly skilled and experienced workforce.
The key areas of business are Private Banking, Asset Management, Corporate Banking, Corporate Advisory and Markets.
HSBC Amanah applies a variety of Islamic financial instruments to develop its products. Often the same instrument is used in a variety of products, each product meeting the needs of a different type of customer. This section presents the three most common Islamic financial instruments and illustrates their uses in representative products offered by HSBC Amanah.
Each instrument is explained with a definition, an overview of the transaction process and its illustration in a representative HSBC Amanah product.
Musharaka is a partnership or co-ownership with profit and loss sharing. It allows each party involved to share risk and reward to achieve a return in the form of a share of the actual profits earned according to a predetermined ratio.
A Mudaraba transaction is an investment partnership. In a mudaraba arrangement, the contract is between an investor (or financier) and an entrepreneur or investment manager known as the mudarib. Risk and rewards are shared. In the case of a profit, both parties receive their agreed-upon share of the profit. In the case of a loss, the investor bears any loss of capital while the mudarib loses his time and effort.
A Murabaha transaction is a sale at a stated profit. In a Murabaha transaction, the bank purchases something from a third party and sells it to the client at a stated profit on a deferred payment basis. In this way, the client can buy something without taking an interest-based loan.
Wakala refers to an agency appointment to act on behalf of the principal. In Wakala, the bank acts as an agent to the client to buy the asset according to the specific terms and conditions.
An ijarah is an Islamic lease. The bank purchases an asset and leases it to a client for fixed monthly payments. An ijarah may include an option for the lessee to buy the asset at the end of the lease, though such a provision is not required.
HSBC Amanahstataes that “Shariah compliance of its business operations as its most important and strategic priority. This is reflected in its Corporate Values. In developing our products and services, we are committed to the highest Shariah standards in the Islamic banking industry. HSBC Amanah employs a team of qualified professionals to ensure that the guidance and advice received from the Shariah Committees is implemented in letter and spirit.”
A Bahraini, he holds a Ph.D in Islamic Law from the University of Wales in the United Kingdom and a BA in Economics and Comparative Religion from the McGill University in Canada, he sits on the boards of various banks as a respected Shari'ah advisor.
He is a member of 46 Sharia Boards including Abu Dhabi Islamic Bank, Barclays, BNP Paribas, Credit Agricole CIB, Dow Jones Islamic Index, HSBC Amanah, Lloyds TSB, and Citi Islamic.
The FTSE Shariah Global Equity index series is based on the Large and Mid Cap stocks in the FTSE Global Equity Index Series universe. Screening is then undertaken by Shariah consultants, Yasaar Research Inc., against a clear set of guiding principles.
These indices exclude businesses that offer products and services that are considered non- Shariah-law compliant, such as stocks of companies that operate in alcohol, entertainment, financial services, pork-related products and tobacco, as well as companies where debt is more than 33% of the total assets. Yasaar scholars, who apply the Shariah screening to the FTSE Global Equity Index Series, represent all of the major Shariah schools of thought, creating a best practice approach that has credibility across all regions of the Islamic world.
In addition to the FTSE Shariah Global Equity Index Series, FTSE works with a range of stock exchanges around the world to offer domestic Shariah-compliant solutions. These include the FTSE Bursa Malaysia EMAS Shariah Index Series, FTSE NASDAQ Dubai Shariah Index Series, FTSE SET Shariah Index and FTSE SGX Shariah Index Series. More recently FTSE has extended its Shariah investment opportunities to include other asset classes such as commodities; with the world's first Shariah-compliant FTSE Physical Industrial Metals Index Series.
In response to the rising demand for Shariah-compliant investment opportunities, FTSE has developed a range of Shariah indices that provide a broader Shariah index solution for Islamic investors.
Spread of sharia banking in Britain and America is a significant part of the attempt to Islamise Britain and America.
Acceptance of sharia finance furthers the Islamist objective of gradually legitimising Islamic sharia law more generally in the west.
The most important point to grasp is that Islam recognises no authority superior to sharia. Sharia banks will therefore not recognise the superior authority of the law of the land. When trillions of pounds and dollars are locked into them, who will argue with them?
America is losing the financial war on terror because Wall Street is embracing a subversive enemy ideology on one hand and providing corporate life support to state sponsors of terrorism on the other hand.
1- Shortage of Expertise in Industry
2- Lack of Regulatory Harmonisation (v standardisation)
3- Lack of Demand among Muslims (Some Muslim Scholars Opposition and Conceptual Perplexity = Falafel Syndrome)
4- Limited Choice for Customers
5- Poor Performance of Funds (Lack of all inclusive marriage of state backed and meticulously planned products and instruments)
6- Insufficient Profitability of Business Model
7- Shortage of Scholars to Approve Products
8- Inconsistent Religious Interpretation
9- Lack of Sophistication in Risk Management
10- Reluctance of Regulators to Grant Licences
11- Fragmented Nature of Industry
12- Negative Perception of Islamic Financial Products and Services
13-Lack of Product Diversification
(Islamic Finance, Challenges & Opportunities, BDO)
Abundantly existing expertise to make international contributions
Constitutional Integrity of Islamic Law
Contribution towards harmonisation of regulatory systems
Introduction of Assurances that Iran as an Islamic state can provide to financial markets both inside and outside Iran
Dissemination of the diversity of the Islamic financial products, instruments and schemes developed in Iran
Dissemination of knowledge about the wealth of literature generated in the country addressing the interpretative foundations of law allowing for the recruitment of instruments and products. Also works towards reemphasising the underlying jurisprudential and rational arguments and reasoning in order to remove stigma often attached to the Jafari school of law.