A number of Shariah compliant firms don't adhere to globally accepted standards.
The Islamic finance industry, with assets of about $1 trillion, is “under regulated” and should better manage risk to bolster its reputation, according to Deloitte & Touche (ME).
A “sizeable” number of Shariah compliant financial institutions don’t adhere to globally accepted standards, the Manama, Bahrain based Islamic Finance Knowledge Center said in a report released today, after a survey of more than 40 Islamic institutions and officials in the Middle East.
A report by Deloitte's Islamic center said: “The survey findings emphasize the importance of introducing new or revised regulatory measures, chief among them being Islamic accounting standards and risk management."
The Shariah compliant industry needs to develop global standards to attract funds from the world’s 1.6 billion Muslims and to sustain growth, Hatim El Tahir, director of the Islamic center, said today in Dubai.
Assets under management may quadruple to $2.8 trillion by 2015 from about $700 billion in 2005, the Kuala Lumpur based Islamic Financial Services Board predicts.
Islamic law, or Shariah, bars investment in industries such as gambling, alcohol and banking services that don’t adhere to the religion’s ban on interest. Sukuk, or Islamic debt, are typically backed by assets such as real estate.
Banks in the Middle East should diversify away from investing in real estate linked assets, El Tahir said.
Property prices in Dubai, the Arabian Gulf’s financial hub, have dropped about 50 percent from their peak two years ago, and Credit Suisse Group AG estimates a further decline of as much as 20 percent.For all the latest UAE news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.