Gulf Arab states may have a single Shariah board for the region’s Islamic financial institutions by 2013 to standardise the industry and increase services available to Muslims, a Shariah scholar said.
Gulf Arab countries need a supreme Shariah council to give the industry “direction, because we would be concentrated less on proving other Shariah scholars wrong and more on using the Shariah to create more products,” said Hussain Hamed Hassan, who heads Dubai Islamic Bank’s shariah committee.
Regulators around the world, including Bahrain and Malaysia, are looking for ways to better evaluate risks of the Islamic banking industry and make products suitable for investors globally. Malaysia’s central bank is preparing a system that would enable cross-border transactions among Islamic financial institutions, Governor Zeti Akhtar Aziz said in May.
Islamic law, or Shariah, restricts investors to transactions based on the exchange of assets rather than money alone because interest payments are banned. Islamic products are reviewed and approved by a board of scholars and, without globally accepted standards, financial institutions and bond issuers rely on rulings by these scholars to offer services to devout Muslims.
“How can an industry progress when a bank in Sharjah cannot buy the sukuk issued by a bank in Dubai? The industry needs to have some stability in order for it grow,” said Hassan, who also serves on the Shariah board of the Bahrain- based Accounting & Auditing Organization for Islamic Financial Institutions.
Demand for Shariah-compliant products is increasing as the wealth of Muslims rises, spurred by export-led Asian economic growth and crude oil income in the Persian Gulf. Created in the 1970s, the Islamic finance industry’s assets may quadruple to $2.8 trillion by 2015 from about $700 billion in 2005, according to the Kuala Lumpur-based Islamic Financial Services Board.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.
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