The economic crisis followed by the revival; world markets are poised to grow at an unexpectedly high rates barring some uneven European’s crisis and Korean’s geo-political tensions. However, Asian region capturing 50 per cent of world population has its own growth story, thanks to high consumption story. Emerging from the worst of the crisis, the global financial landscape will be a markedly different one from before. India and China’s stories support the theory.
Asia accounts about 60 per cent of world Muslim’s population which makes a case for Islamic Banking; however the industry has been facing challenges. Mr. Ng Nam Sin, Assistant Managing Director, Monetary Authority of Singapore says that
The industry faces several challenges. Let me just highlight three key issues facing Islamic finance in Asia. Firstly, as was noted by Governor Rasheed Al Maraj, most Shariah-compliant banks like conventional banks need to continue to improve their risk management and corporate governance standards. Asset-liability management, liquidity and risk concentrations are some of the key issues confronting financial institutions. They need to ensure their business models are sustainable in the long-term.
Secondly, the Islamic Financial Services Board (IFSB) has pointed out that Islamic banks need an international Islamic short-term liquidity market. This will further facilitate asset-liability management. In Asia, we need an active pan-Asian Islamic securities market to provide more short-term liquid instruments for Islamic banks as they expand across the region. It is encouraging that more countries in Asia are now familiarising with Islamic finance and its structures, and have expressed interest to issue sukuk. Several are adopting the necessary legal and regulatory frameworks to enable Islamic finance to take root and grow. More focus on growing the issuance of tradeable liquid instruments, over time, would help to improve liquidity and cross-regional flows.
Thirdly, a shortage of human capital; the number of financial professionals who are well-versed in Shariah-compliant products is still relatively small. We need more universities and training institutes to offer better quality education and training in Islamic law and finance in order to meet the rising demands of the industry as it embarks on the next phase of growth.
In this phase of organic transformation, Singapore has emerged as the major economy in developing Islamic Finance. Singapore boasts of largest Real Estate Investment Trust (REIT). Its Singapore Management University has set up an Islamic Law and Finance Centre, the first institution in the world to combine Islamic Law, Banking and Finance programmes in a single, multi-disciplinary university centre.
Some specific Muslims organizations have always been in focus for all wrong reasons which deteriorate their images all over the world, especially after 09/11. If they just dig their strengths and do well for their communities and bring a change in their thinking, many Muslim dominated countries will get benefitted.
Nice post, Dude!
ReplyDeleteBut in India there is still a long way to cover for Islamic Banking.