Bankers urge Islamic banks to develop their own financial reporting standard
Islamic banking needs separate regulations and reporting standard
Click here to add Auditing Organisation for Islamic Financial Institutions as an alert
Disable alert for Auditing Organisation for ...,
Click here to add BMI Bank as an alert
Disable alert for BMI Bank,
Click here to add Dar Al Sharia as an alert
Disable alert for Dar Al Sharia,
Click here to add Dubai as an alert
Disable alert for Dubai,
Click here to add Ernst & Young as an alert
Disable alert for Ernst & Young,
Click here to add Jamal Al Hazeem as an alert
Disable alert for Jamal Al Hazeem,
Click here to add Mashreq al Islami as an alert
Disable alert for Mashreq al Islami,
Click here to add Moinuddin Malim as an alert
Disable alert for Moinuddin Malim,
Click here to add Suhail Zubairi as an alert
Disable alert for Suhail Zubairi
Central banks of the Islamic countries have been urged to adopt a separate set of regulation including a complete new Islamic Financial Reporting Standard to reduce confusion among Muslim scholars, Islamic bankers said at a two-day conference.
They have also urged the regulators to develop an Islamic Inter-bank offered profit rate — to benchmark their rates and reduce dependence of the conventional interbank offered interest rates.
“Some scholars are trying to emulate the Islamic banking practice with that of the conventional banking which should not be the case,” Suhail Zubairi, Chief Executive of Dar Al Sharia, a Dubai Islamic Bank subsidiary, told delegates at the two-day Annual World Islamic Finance Conference that kicked off on Monday. “We have seen profits being calculated on an asset that was yet to be delivered. How is it possible? We should be honest to ourselves first.
“Islamic finance is ethical finance. It is completely separate from the conventional banking system,” he stressed.
In the absence of benchmark rates, Islamic banks continue to use the benchmark interest rates in offering profit rates — which officials say, should change immediately.
“There should be an Islamic banking governance to ensure that these Islamic banks follow Islamic norms. We should develop an Islamic interbank offered profit rate for Islamic banks to benchmark against,” Moinuddin Malim, Chief Executive of Mashreq Al Islami, said. “There are lots of ifs and buts when it comes to Islamic banking and we need to fine-tune them for all as base standard for the entire Islamic world.”
Global Islamic banking assets are expected to reach $1.8 trillion by 2013, according to Ernst & Young’s World Islamic Banking Competitiveness Report 2013, up from the $1.3 trillion of assets held in 2011. This forecast is significantly higher than some of the earlier industry estimates.
Accounting and Auditing Organisation for Islamic Financial Institutions (AAIOFI) has already set up a financial reporting standard for Islamic financial institutions.
Jamal Al Hazeem, Chief Executive of Bahrain-based BMI Bank, said, “Central banks should make proper decision on regulating the Islamic banks — which could not be regulated by the same guiding principles that control the conventional banking system.”
He said, AAIOFI should be the main reporting standard for Islamic banking. “We should also push for centralisation of the shariah boards and unify them and there should be a general agreement on products and services with the same standards guiding them,” he said.
“We should not confuse consumers with different standards for sukuks, murabaha and ijara, for example. These should be unified.”
Globally, the Islamic banking industry continues to record robust growth, with the top 20 Islamic banks registering a growth of 16 per cent in the last three years and Saudi Arabia emerging as the largest market for Islamic assets, it says.
According to the report, in 2011, the Islamic banking industry in Saudi Arabia, with an estimated $207 billion of Islamic assets, was ranked first. Malaysia, ranked second with total assets of $106 billion in 2011 and UAE ranked third with total assets of $75 billion.
Demand for Islamic tradeable securities, or sukuk, is expected to jump from $300 billion in 2011 to $950 billion by 2017.
- Nip, tuck: Dubai's grand plans for being a major player in medical tourism
- Zain, UNHCR, Facebook to bring free internet access to urban refugees in Jordan
- Yemen Central Bank headquarters to relocate from Sanaa to Aden
- IMF report details the crippling economic effects of conflict in MENA
- Start Up Lebanon entrepreneurs head to Silicon Valley Roadshow
- Islamic Finance urged to make inroads into CIS countries
- Banks urged to adopt new policies in Bahrain
- Islamic finance needs global standards -- Bankers
- Profitability of Islamic banks below that of conventional peers, report says
- Dubai Islamic Bank voted ‘Best Islamic Bank’ at Banker Middle East Industry Awards 2012