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He also mentioned that foundations for Islamic products should be developed in order to further the level of use and growth in Islamic banking. “As we look forward, we need to build on the strength and develop new products for propagating Islamic finance into our future. I love it very much. In fact, some writers do love it very much. As much as we have the Rockefeller Foundation and the Ford Foundation, there is no foundation set up to develop Islamic products and to develop and do research with Islamic products. We may have banking products mutually coming out spontaneously, say from various banks, or Dubai or even Malaysia. But where is the plan? I think it’s time we set up a foundation. In turn, we have the resources and we have the money.”
For Islamic banking to work, Zarook stated that the concept of trust has to be there between the client and the company. He added: “Rather than seek the differences between conventional banking and the non-conventional banking or the Islamic banking as we call it, let us look at commonalities and reach a consensus.”
Quoting from Islamist economist Mohammad Najatuallah Siddiqui, Zarook explained three comparative advantages of Islamic finance: “One, Islamic finance forges a closer link between real economic activity that creates value and financial activity that facilitates it. Islamic finance does not allow creating new risks to profit thereby. Islamic finance is global and cosmopolitan. Having committed itself to a text accessible to all and Prophetic precedents available easily, Islamic finance is open to any innovations that are in congruence with its fundamentals. It is not a closed system. It has no regional, ethnic or class affiliations. It may be argued that some of these advantages need state sponsorship to be pursued effectively. That is true. It took eight years for us to go for the amendments of banking laws, before we take up the issue of state sponsorship let us note that the real source of strength for Islamic finance has always been private initiative.”
To strengthen Islamic banking in the country, he stated that it is important to introduce a whole range of institutions.
Adl Capital Associate Director and Conference Chairman Azad Zaheed, also speaking at the conference, said: “To see Sri Lanka emerge as a hub for Islamic banking and finance in the South Asian region is a vision shared by many of us. However, the journey towards ‘hub status’ is no easy task and has its challenges that have to be met through the sharing of ideas and collective efforts of all stakeholders.”
He further acknowledged the support received from the banking regulator, the Central Bank of Sri Lanka, which licensed Amana Bank and gave approval to many licensed finance companies and registered leasing companies to offer Shariah compliant products and services to the public. He added that taking Islamic banking to the rural areas is a step they hope to achieve.
Elaborating on the needs for Islamic banking, he said: “The IB sector is also in need of enhancing its Shariah supervisory skills and expertise particularly to ensure that it can deliver solutions to a diverse and growing market.”
“However, as the industry evolves with the entry of more IBF players, increase in transaction volumes and transactions requiring complex financial structuring, the need to develop a sound working relationship between local and foreign scholars must be pursued,” stated Zaheed.
He also noted that the industry needs to focus on having skilled IT expertise, staff and IT systems in Islamic banking.
At the one-day SLIBFC, Adl Capital CEO and Managing Director Ishrat Rauff spoke on ‘A decade and a half of IBF in Sri Lanka’ while Capital Market Development Authority Head of Islamic Finance Islamic Aishath Muneeza spoke on ‘The Obstacles Facing the Growth of Islamic Finance in the SAARC Region’. Amana Takaful CEO Fazal Ghaffoor gave an interesting take on ‘Takaful – Its Purity and Some Home Truths,’ while Lifeskills Training Director and CEO Munshif Hussain spoke on ‘IBF: The Way Forward – Is HR the Solution or the Cause?’ and South Africa Registered Certified Shariah Advisor and Auditor Mufti Shafique Jakhura spoke on ‘General Comments and Islamic Finance in Africa’.
Four panel discussions were held on topics ‘Islamic Finance – Forging Ahead,’ ‘Investing in Sri Lanka’s Growth,’ ‘Youth in the IF Industry’ and ‘Expanding the IBF Landscape – Addressing the Needs of Rural Sri Lanka’. A question and answer session was also held with the Shariah scholars to clarify any misunderstandings about the Shariah laws pertaining to the IBF industry. UTO EduConsult will also organise the SLIBFC Felicitation Night and SLIBFC Awards for 2013. The SLIBFC Awards will recognise institutions and individuals that have made significant contribution for the year 2012/2013. The categories are Islamic Finance Entity of the Year, Emerging Islamic Finance Entity of the Year, Rising Islamic Finance Personality of the Year, Social Upliftment Award and Islamic Finance Technology Award.
Institutions willing to apply for the awards can get their applications from UTO EduConsult. The closing date for nominations is 31 August. For more details call Aakif on 0777466488.
