Islamic Banking growing at a rate of over 35% worldwide
Islamic Banking Growing at 35% P.K. Abdul Ghafour, Arab News |
JEDDAH, 2 June 2008 — Islamic banking is growing at an annual rate of 35 percent worldwide with assets of Islamic financial institutions amounting to a staggering $600 billion last year, Saleh Kamil, a prominent Saudi businessman and a pioneer in the field, announced yesterday.
Kamil, who is also chairman of the General Council for Islamic Banks and Financial Institutions, was speaking at a seminar organized on the sidelines of the 33rd annual conference of the governors of the Islamic Development Bank (IDB) Group. Custodian of the Two Holy Mosques King Abdullah will open the conference at Jeddah Hilton today, which will be attended by the ministers of finance, economy and planning of the 56 countries of the Organization of the Islamic Conference. IDB President Dr. Ahmed Muhammad Ali is expected to make some important comments during the opening session, especially on the bank’s plans to provide soft loans to poor member countries to stock food grains and expand micro financing as part of poverty-reduction measures. At least 50 IDB governors have already arrived in Jeddah. A senior bank official said it is the first time such a large number of ministers are attending the annual conference. “It is a good opportunity for the governors and senior IDB executives to discuss future challenges and opportunities,” the official, who requested anonymity, told Arab News. In his keynote speech at the seminar on “Human Capital Development for Islamic Financial Industry: Challenges and Initiatives,” Kamil said there are more than 470 full-fledged Islamic banks and financial institutions around the world. “Their number rose from 276 in 2005 to over 470 in 2007,” he pointed out. Islamic banking, which started as experiments of individuals like Prince Muhammad Al-Faisal and Kamil, has now become a full-blown industry recognized by international bankers and economists. “But its tremendous progress also carries a lot of challenges for those who work in the field,” said Kamil, the founding chairman of the Jordan Islamic Bank for Finance and Investments, the Arab Union Investment Company of Egypt and the Islamic Arab Insurance Company. He also emphasized the need for investing more in human capital development. “We know that humans, the makers of progress and success, are also behind failures and collapses,” he said emphasizing the need to focus more on education and training to strengthen the sector. Kamil also revealed a significant factor that 85 percent of the more than 300,000 employees working in Islamic banks and financial institutions lacked knowledge of Shariah, as they studied conventional banking systems. Dr. Mohammed Al-Beltagi, program manager of Shariah compliant banking at the Institute of Banking in the Kingdom, said employees’ lack of knowledge of Islamic banking principles would have a negative effect on the system, as they would not be able to market products effectively. Dr. Mehmet Asutay of Durham University in the UK urged Islamic banks and financial institutions to sponsor research projects and think-tanks in the field. He said some British universities such as Durham, Bangor and Reading are offering masters and doctoral programs in Islamic finance. The opening session of the conference today will be presided over by Bahrain’s Finance Minister Sheikh Ahmed ibn Muhammad Al-Khalifa. OIC Secretary-General Professor Ekmeleddin Ihsanoglu and Finance Minister Dr. Ibrahim Al-Assaf as well as ministers from Morocco, Togo and Bangladesh will speak at the opening session. More than 1,000 delegates, including bankers, economists and business executives are also taking part. Nabil A. Nassief, advisor in charge of Islamic financial services industry at IDB, stressed the bank’s plan to focus on micro finance services to fight poverty in member countries. He said the bank would carry out four pilot projects in Bangladesh, Indonesia, Sudan and Senegal as part of its efforts to promote Islamic financial services industry development. “We’ll also advise member countries on how to manage Zakah and Waqf successfully, following modern asset management principles.” The official noted the IDB’s strategic role in boosting the development of member countries and Muslim communities in non-member countries. IDB has so far given about $50 billion to finance agricultural, industrial, educational, health and infrastructure projects in the Islamic world. “The IDB was the first bank to introduce trade finance as a development tool,” the official said. “We are not a commercial bank. We are a multinational development bank,” he said when asked why the IDB was not extending conventional banking services. Standard & Poor’s and Moody’s have given triple-A rating to IDB. Khalid Abdullah Al-Bassam, chairman of Bahrain Islamic Bank, one of the oldest banks in the GCC country, is also attending the conference. He said the bank was expecting strong results this year as a result of its business expansion in retail, corporate and investment banking. He added that the conference was a good opportunity for government officials and private sector development challenges. One official said the meeting would not discuss the issue of rising oil prices, which concerns many member countries. He said oil-producing countries in the IDB were making generous contributions to the UN Food Program to resolve the world food crisis. Saudi Arabia alone has given $500 million to the agency. |
http://www.arabnews.com/?page=6§ion=0&article=110508&d=2&m=6&y=2008
Categories
Archives