We should go for an inclusive approach rather than being exclusive. It’s merit should be assessed as a financial alternative rather than a religious product. As far a secular nation like India is concerned it is about a highly potential market and more alternatives making the entire financial framework more competitive.
By
Padmanabhan R, Articled / Audit assistant, Finance student
| 10 12 2011 10:44:32 +0000
Islamic finance could lead banks' recovery Dubai: Islamic finance is gradually building momentum across the world and will likely lead the re-emergence of the global financial industry from the recent crisis. However, the industry needs a level playing field to achieve its potential, said Richard Thomas, Chief Executive of London-based Gatehouse Bank, in a recent interview with Gulf News. “Over the years, the conventional banking industry has been underpricing risk through excessively cheap debt. At such low levels of pricing it was impossible to compete with conventional banks,” Thomas said. He believes that competition has to be fair in the context of pricing and taxation. In the past, taxation rules in most developed markets favoured financing through debt compared to equity, but in the aftermath of the financial crisis that exposed the weaknesses of excessive leverage there is a move to create a level playing field for equity funding and asset-backed financing which lies at the core of Islamic finance. Segregation Thomas said the recent decision by the Central Bank of Qatar not to allow conventional banks to offer Islamic financial services is a move in the right direction to create a level playing field for pure Islamic institutions to compete with conventional institutions. “This should be the way forward as it brings more regulatory clarity on balance sheets as sources of funding and methods of financing leave no scope for ambiguity,” he said. Thomas believes that Islamic banks will continue to have good growth prospects in the UK as long as their offerings do not imitate those of their conventional peers. Gatehouse, a subsidiary of the Securities House Kuwait, says people are becoming more receptive to Islamic finance. The London-based wholesale investment bank’s business has picked up across all segments. “We are now taking business from conventional banks because we have a different business model and are not part of that mega-debt culture. We have seen a pick-up in business mainly in corporate asset finance, real estate, also the trade-related business.” Gatehouse focuses on wholesale merchant banking and investment banking and is looking at expansion into the Middle East and South East Asia. “Currently we have assets in the US, UK, GCC and a small exposure in Malaysia. We are confident about the long-term prospects of the GCC model and are keen to take more exposure here with a physical presence,” he said.
By
Kaisar Ahmad Mir, Program Manager, Jan Shikshan Sansthan (ANHAD)
| 07 09 2011 05:14:17 +0000
@Raju - Yes DI is a different topic but I wrote about DI because you brought it up ...@Munshi, how do you assume that Islam finance is opposed by Hindutva people and they can be bought over by a few suitcases full of money? Are they the ones who are indulging in the hawala and printing of fake currency notes?
By
Munshi Ramchand, Retired
| 07 07 2011 03:18:16 +0000
@Raju I have given you so many examples to prove my point. I have not said anywhere that other political parties are NOT involved. This is a fact (not my personal agenda) that DI survives in India using both major parties one of which is the BJP. If you do not like the argument/examples that I have given on the right hand side, then please get a copy of India Today dated June 6, 2011 which is a special edition dedicated to DI and it is titled "Dawood's Indian Empire - Why and how it continues to flourish". There are many more articles,news clips,write-ups etc regarding this. My whole point is "the Sangh Parivar and the BJP should not act as if they are 'holy' ...they are as bad as other parties when it comes to suitcases".
By
Munshi Ramchand, Retired
| 07 06 2011 17:01:39 +0000
@Munshi, I am surprised at your arguments against Hindutva. Ok. Dawood Ibrahem has a very big empire. This is a fact. But how are you ruling out the possibility of other parties, Congress, Muslim League, CPI, BJP, etc., helping Dawood Ibrahim? Why are you so much against Hindutva? This may be your personal perception.
By
Raju V P, Senior Manager, an International Bank
| 07 06 2011 16:39:32 +0000
@Raju I have no dispute with this "I dont see anything different between conventional banking and islamic banking. Conventional banking rewards the depositors in the name of interest while the same is named as profit in islamic banking. And to facilitate Islamic Banking, book entries are passed for buying and selling of (sometimes) non-existent goods." Perfect.
By
Munshi Ramchand, Retired
| 07 06 2011 04:34:22 +0000
Yes, we can overcome opposition and resistance.....sending a few suitcases full of currency notes to these hindutva people.
By
Munshi Ramchand, Retired
| 07 06 2011 03:37:55 +0000
Yes, Islamic finance is yet to be exploited but the right wing hindutva people will blindly oppose it because of the word "Islam" in it.
By
Munshi Ramchand, Retired
| 07 04 2011 12:13:35 +0000
Conventional Banking is a part of the financial system. It is not a complete financial system but when we talk about Islamic Banking we wish that all Shariah permissible financial activities should be carried out by a bank. The basic difference between profitable mode of investment in banking and Islamic finance is that trading is prohibited for the former and it is must for the later. There are some reasons for this prohibitions. There was a time when banking in combination of trading was practiced by bankers who happened to be merchants also. During the economic disaster of 1929-32 this combination of banking with trading proved to be fatal for a number of banks. Since then banking laws, over the world were amended to restrict banking activities to risk-free interest base lending. As such trading is now strictly prohibited for a bank. Instead of ignoring this historical fact we should take a lesson from it. In case of Islamic finance any kind of involvement in interest base lending is strictly prohibited. Therefore for an Islamic financial institution trading is the only option for making profitable investment. In view of the above clash of fundamentals of the two Islamic banking is not possible without bringing about a drastic change in the legal framework and the same is not expected in a secular and pluralistic society like India. To achieve our goals we should think in terms of Islamic financial system of which banking forms an important part. We should not insist on combination of trading with the banking when both the ends can be achieved separately. In the presence of such a clash of fundamentals where a trade-off is not possible Islamic banking shall remain restricted up to the activities which do not violate banking law such as mobilizing deposits in current accounts, making interest-free advances on actual service charge basis, collection of bills and cheques, safe deposits vaults, transfer of funds, agency services like payment of bills, payment of pension, collection of taxes etc. But the viability of Islamic bank on above fee based income where minimum capital requirement is Rs. 100cr and mobilization of minimum deposits of Rs. 1000cr within a year of its establishment looks doubtful. Under the circumstances as explained above we may propose following alternatives: In view of strong prohibition against any kind of involvement in interest, in Islam, a pious Muslim is reluctant to keep his savings even in current account with a bank which would utilize his funds for earning interest. In order to make deposits in current account fully compatible with Shariah we may suggest that deposits moblized from Muslims in current accounts by a bank should be utilized in making interest-free loans preferably to Muslims and the government. Deposits in these accounts should be treated by the dealing bank as government business like PPF. Since quarterly turn-over in comparison of balance outstanding is deemed to be quiet high, the turn-over commission for dealing this type of business may be separately negotiated by the government with the dealing banks. The necessary liquidity reserve as is applicable to the conventional bank deposits in terms of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) may be kept in government account as interest-free loan. Rest of the amount may be disbursed to public in general and Muslims in particular as interest free loans. The cost of operations for deposits and advances may be shared by government and borrowers proportionately.
By
S. Muralidharan, Executive Director, Knowledge Foundation & Campus Around the Corner
| 07 04 2011 10:08:40 +0000
Yes, I agree with you entirely. Few attempts have been made to channleize the thoughts and mechanism but they are few and far between. It has trememdsous scope, financially as well socially.
By
HASMUKH GANDHI, FILM AND TV PRODUCER, PROFESSIONAL
| 02 15 2010 07:28:52 +0000
Yes it is very true, islamic finance is a highly underestimated not only in India but globally.. The islamic finance works on strong fundamentals and the sharia law. The Indian stock market has lot of stocks that comply to the sharia law and so there are lot of opportunities, as Islamic Mutual Fund, PMS , Etc..
By
Japan Shah, H.O.D, Oxford School of Management
| 06 01 2009 17:27:39 +0000
The only reason why Islamic banking it has not been taking up by the Western banking elite except the few who knows how to exploit it for taxes purposes is because, buy accepting Islamic banking, some feels inwardly that they are endorsing the religion. Secondly, the greedy would benefit less in Islamic banking.
By
A. Yakin Rafiu, Team Leader -(NonTechnical), Bausch and Lomb
| 05 31 2009 17:17:14 +0000
Someone recently wrote an article in WSJ about Isalamic finance, advicing Americans to try out in these slowing times. I think it is already there in such countries which employ zero coupon bonds. Islamic fnance stipulate only profit sharing not interest on money lent. So the profit literely is like a full payment of debt issued at a discount.
By
Mathew Cherian, Research Associate/Analyst, Western Michigan University
| 05 30 2009 17:31:30 +0000
Dear Mr. Karamjeet, Islamic community have certain restrictions when it comes to investment. They cant take interest on investments. So few investment options are tailor made for them,, like the fund will not invest in such companies which do money lending,, etc.
By
vijayasaravanan , Partner, MS Contractors and Amway Business Owner
| 05 30 2009 13:25:04 +0000
It is really a good idea for the consideration of various Mutual Funds. The demand will automatically match supply.The handsome return due to expert handling of the fund will attract prospective investors. This neednot be subject to red tapeism and political/financial exploitation by the government.
By
Upendra Pratap Singh, Head/VP/GM-R&D, SAIL,Bokaro Steel Plant
| 05 30 2009 12:35:32 +0000
I too agree padmanabhan, that Islamic finance should be given more imporatnce there is a huge market which is untapped...
By
Esha Johar, Risk Analyst, Irevna
| 05 29 2009 14:38:41 +0000
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Islamic finance is also gaining acceptance where it is seen as an ethical alternative to the conventional system, bridging the gap between socialism and capitalism. According to the Vatican’s official newspaper Osservatore Romano in its March 2009 issue, “The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service.” Ethical investors also are drawn to the principles that underlie Islamic financial transactions. Therefore growth is expected to come from this segment of consumers as well who are not necessarily attracted by its faith-based appeal, but more from its socially responsible outlook.
By
Kaisar Ahmad Mir, Program Manager, Jan Shikshan Sansthan (ANHAD)
| 07 15 2011 19:17:20 +0000
"Considering the the high population of conservative muslims in the country" No other secular nation like France switzerland or US takes into account what "Conservative muslims" want , better India should let Arab world follow its practices
By
Amit Pandey, Embedded Engineer, Electronics
| 07 08 2011 15:56:09 +0000
@Munshi, DI is completely another topic and I dont see how it fits into the topic about Islamic Banking. Can we restrict ourselves to Islamic Banking. With due apologies.
By
Raju V P, Senior Manager, an International Bank
| 07 06 2011 17:28:30 +0000
@Asooda, Will be glad if you can explain the mechanism of a deposit in Islamic Banking as well as how a loan to buy a car is granted. Also how a personal loan is granted.
By
Raju V P, Senior Manager, an International Bank
| 07 06 2011 16:35:57 +0000
@Asooda, Will be glad if you can explain the mechanism of a deposit in Islamic Banking as well as how a loan to buy a car is granted. Also how a personal loan is granted.
By
Raju V P, Senior Manager, an International Bank
| 07 06 2011 16:34:01 +0000
@Yakin, there is no reason for justifying the view that the greedy would be benefitted less by Islamic Banking. There is absolutely no difference between conventional and islamic banking except the terminology for the reward of the capital - interest in one case and profit in the other case. And the mechanism for implementing this difference in terminology.
By
Raju V P, Senior Manager, an International Bank
| 07 06 2011 16:28:22 +0000
Here is an example which shows link between Dawood, sena and the congress: http://www.udayindia.org/content_23oct2010/cover_story.html This proves that hindutva people can be bought for a few suitcases....
By
Munshi Ramchand, Retired
| 07 06 2011 05:30:13 +0000
Another example: Former Indian vice-president and BJP party veteran Bhairon Singh Shekhawat has said "money power was causing rampant indiscipline in the party". "Money power is the root cause of all problems in the BJP and this has resulted in rampant indiscipline within the party," "Even God cannot deny that corruption has increased in the BJP," he maintained.
By
Munshi Ramchand, Retired
| 07 06 2011 05:18:05 +0000
Example of BJP's money Power: Bharatiya Janashakti Party president Uma Bharti on Tuesday charged the BJP with using money power in a big way to ensure its victory in the Madhya Pradesh Assembly polls.
She claimed that her party had enormous popular support but it lacked money power and obviously could not use the administration in its favour.
Bharti said it was strange that a Chief Minister against whom a FIR had been filed could claim that he had a clean image.
She said that the assembly election results showed that poll can be won even by spending crores of rupees......
The BJP chief said that in many cases, her party could not give any money to its nominees who had to find for themselves from their own resources.
By
Munshi Ramchand, Retired
| 07 06 2011 05:14:20 +0000
Example for BJP's Money Power: NDA Convenor Sharad Yadav on Wednesday took an indirect swipe at alliance partner BJP as he railed against money power in electoral politics in Karnataka. "The amount of money being spent in elections here (in Karnataka), it's not spent in the entire country", the JDU president told a press conference. "If this does not stop, no meaning will be left to voters, democracy". "If votes are sold for Rs 5,000 and Rs 10,000, where is the need for political parties. In the coming days, it will be the rule of corporates. They can give more money," said Yadav
By
Munshi Ramchand, Retired
| 07 06 2011 05:10:33 +0000
@Raju So, the dispute is here..."how do you assume that Islam finance is opposed by Hindutva people and they can be bought over by a few suitcases full of money? Are they the ones who are indulging in the hawala and printing of fake currency notes?" The total estimate of Dawood Ibrahim's empire in India is about 10,000 crore rupees. How can this guy run such a big illegal empire without the help of the saffron party? Indian customs says that total loss to in the garment industry due to illegal smuggling through Nepal border is around Rs.500 crore. Other than suitcases with currency, what else can satisfy the BJP,MNS and Sangh Parivar? Mango? Apple? Today, BJP and MNS are going to beat up the director Ram Gopal Varma for casting a convicted actress. Hasn't any other director worked with a convicted actor before? Neither has this party fought against criminals in politics nor have they fought against crime and underworld. What are they aiming at, in this case with RGV? Good will of the people?? Joke...
By
Munshi Ramchand, Retired
| 07 06 2011 04:53:06 +0000
@Munshi, how do you assume that Islam finance is opposed by Hindutva people and they can be bought over by a few suitcases full of money? Are they the ones who are indulging in the hawala and printing of fake currency notes? I dont see anything different between conventional banking and islamic banking. Conventional banking rewards the depositors in the name of interest while the same is named as profit in islamic banking. And to facilitate Islamic Banking, book entries are passed for buying and selling of (sometimes) non-existent goods.
By
Raju V P, Senior Manager, an International Bank
| 07 06 2011 04:02:03 +0000
@Munshi... opposition and resistance is inevitable, that doesnt mean we cant overcome it and allow the prosperity to kiss oua feet. We can clear the doubts if any,present in the minds of people and am sure it will be welcomed and why nor after all it will lead us to harmony...
By
Mir Arif, Principal Consultant, Infosys Technologies
| 07 04 2011 12:28:19 +0000
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