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ihiBlog: Forbes’ critique of Islamic finance & the “Dubai of Southeast Asia” July 12, 2007

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ihiBlog: Forbes’ critique of Islamic finance & the “Dubai of Southeast Asia”

Forbes has an article on Islamic finance
in which it presents many of the critiques of Islamic finance. However,
the title, “Don’t Call It Interest” mirrors the theme of the article
which suggests that, because there are many practices in Islamic
finance which mirror conventional finance (or even are benchmarked to
an interest rate), that the whole industry is a farce. It is a shame
that the article focuses on “Islamic hedge funds” and ignores the
resemblance between Islamic finance & socially-responsible/ethical
finance and the concern for equity and fairness in business
transactions. Forbes could have used the article to present a look at
the positive and negative attributes of Islamic finance but instead saw
a few products which may be considered doubtfully Shari’ah-compliant
and used these to condemn the entire industry as an inefficient
exercise in financial engineering.

Brunei wants companies to issue sukuk in order to boost its bid to be a hub of Islamic finance. The Brunei Times describes hopes of becoming to the ‘Dubai of Southeast Asia’.


Islamic Bonds – Sukuk transparency at last – Middle East News July 11, 2007

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Sukuk transparency at last – Middle East News

In Economics Departments, a Growing Will to Debate Fundamental Assumptions – New York Times July 11, 2007

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In Economics Departments, a Growing Will to Debate Fundamental Assumptions – New York Times

For many economists, questioning free-market orthodoxy is akin to expressing a belief in intelligent design at a Darwin convention: Those who doubt the naturally beneficial workings of the market are considered either deluded or crazy.

But in recent months, economists have engaged in an impassioned debate over the way their specialty is taught in universities around the country, and practiced in Washington, questioning the profession’s most cherished ideas about not interfering in the economy.

Islamic Finance Affairs #30 on list of “Growing Blogs”… July 4, 2007

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Growing Blogs « WordPress.com

  1. #30. Islamic Finance Affairs

    News, articles, and answers on Islamic finance and related legal issues in Islam

Shaykh Buti on Riba (usury) in the West July 3, 2007

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Shaykh Muhammad Said Ramadan al-Buti on Riba (usury) in the West

live in a country, which is based on transacting with interest, and we
are unable to do anything without getting involved in making use of it.
I’ve got a family and have been planning to buy a house, but it is
impossible without getting a loan from a bank that, in turn, adds an
interest to it. Will you, please, advise me concerning what to do. This
is because the situation here is so hard while there are no Islamic
banks to make easy access to such services for Muslims.

Inquiring brother, I have said more than once, on this site, that
usury is prohibited. It is unlawful to deal in usury in the Western
societies the same as dealing with it in Islamic societies save for the
one who suffers necessity. You have, therefore, to consider your case.
If you feel it necessary to resort to usury, it is then permissible as
to you to deal in it, the same as the permissibility of eating the meat
of the dead animal and that of the pig as to the one that is
necessitated. I thank Allah that I am not one of those who cook up
legal verdicts according to the orders and whims of others.

Will you, please, give your verdict concerning taking loans
from a bank. In case of their being permissible in case of necessity,
would you mind, dear sir, clarify the quality of such necessity,
because I fear Allah, the Lord of the Worlds. This problem has widely
spread in our age, the age in which life has changed into struggle. It
may have even become Jihad (strife).

The necessity which allows usurious loans is the same necessity
which allows eating the meat of a dead animal, pig and the like, in
which case the one necessitated is exposed to perish from hunger,
nakedness or losing a lodging. Such is the necessity, which makes
prohibitions lawful.

Source: SunniPath Answers (http://qa.sunnipath.com)

Banking on Faith – Islamic Banking and Investments – Executive Articles – Portfolio.com July 3, 2007

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Banking on Faith – Islamic Banking and Investments – Executive Articles – Portfolio.com

To some, the divide between the Muslim and Western worlds has never been wider. But for the European Islamic Investment Bank’s John Weguelin, the two sides have never been closer.

… As managing director of E.I.I.B., the West’s first investment bank to comply with sharia, Weguelin is a central player in Islamic finance’s transformation from exotic niche market to mainstream investment…

The cornerstone of the bank’s Islamic nature lies in its
transactions and ventures, which are guarded by its Sharia
Board—four Islamic scholars who vet funds and deals to make sure
they don’t contravene Koranic bans on earning interest and making
profit from alcohol, pork, or unethical activities. Before the bank
undertakes a new investment, emails between the sharia scholars and the
London office fly, allowing for what Weguelin says are ultimately
“very relaxed” meetings that occur once every six weeks.
“We’ve got one of the strongest sharia supervisory boards
in the business,” says Weguelin.

That’s a feat. Fast growth in the Islamic banking
industry—about 20 percent annually over the past few years, to an
estimated $500 billion—means that competition for top sharia
scholars with financial knowledge is stiff. “There are about 150
scholars who are globally accepted in the finance world,” says
Rushdi Siddiqui, director of the Dow Jones Islamic Market Index.
“About 20 of them are the rock-and-roll stars.” Suddenly,
Islamic scholars are becoming consultants for world-class players like Deutsche Bank,
which last year started a sharia-compliant mutual fund, and Credit
Suisse, which this spring launched Islamic banking services. E.I.I.B.
has snagged a clutch of leading sharia experts, including Sheikh Nizam
Muhammad Seleh Yacouby Yacouby, who also advises Citigroup, A.I.G., H.S.B.C., and others.

this brave new world, more-bullish analysts speculate that Islamic
banking could someday even overtake conventional banking. Both the
German state of Saxony-Anhelt and a Texas oil company have already
issued sukuks, or Islamic bonds. “Islamic banking is in its
infant stage, but it’s been born, it’s alive and kicking,
and maybe even crawling,” says Sheikh Yacouby….

Though conventional banks like
H.S.B.C. have set up sharia-compliant banking services, E.I.I.B., as
the only entirely Islamic investment bank based in the West, is at the
industry’s cutting edge. It’s a good place to be, insists
Weguelin: “Islamic banking is the fastest-growing sector in the
high-net-worth industry in the world at this time.” Already,
around 80 percent of investors in sukuks are non-Muslim, says Weguelin,
citing last year’s Dubai Ports flotation as an example of a sukuk
that attracted money from non-Islamic sources. “When you figure
that the Muslim population will be in the region of 30 percent of the
global population in the next 10 years and then you say that
there’s no reason conventional investors won’t buy the
products, then you can see the potential,” Weguelin says….

Europe, of course,
isn’t Weguelin’s final destination. He’s now eyeing a
variety of investments in the U.S. He admits, though, that it will be a
challenge, especially since Muslim investment in the States dropped
significantly after 9/11. But Islamic investors are starting to regain
interest in America, says Weguelin. “If you’re going to run
a diversified portfolio, you’re going to look at the U.S.”
And with plenty of wealthy, return-hungry investors of all faiths and a
growing Muslim population, Weguelin may find a ready and willing market. [Read full article]

Waqf Fund for Education & Training in Islamic Finance planning expansion July 3, 2007

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Gulf Daily News – Waqf Fund for Education & Training in Islamic Finance planning expansion

A Bahrain-based specialist fund which supports education and
training in Islamic finance is preparing for a new round of expansion.

The Waqf Fund was established last year with an initial capital of
$4.6 million by the Central Bank of Bahrain (CBB), in partnership with
several Islamic financial institutions (IFIs).

The new work programme includes public awareness programmes,
roundtable discussions and Sharia programmes, in addition to financing
professional and academic studies of individuals working in the Islamic
finance industry.

The new action plan for the Waqf Fund was discussed and approved at
a meeting of the fund’s board of trustees on Saturday, and was chaired
by chief of the Waqf Fund and executive director in banking supervision
at the CBB Khalid Hamad.

“The board discussed the enhancement of co-operation with the
Bahrain Institute of Banking & Finance, the fund administrator,”
Hamad said.

“It was decided that the fund should take a more proactive role in
developing Islamic finance training and education programmes offered by
BIBF’s Islamic Finance Studies Learning Centre.”