Takaful: its importance in Islam
Takaful is the
Takaful and retakaful are not understood or utilized as well as they should be. There is a great potential for growth in the
Takaful ta'awani (Islamic life insurance) programmes are virtually non-existent outside S.E. Asia. Bank Al-Jazira, a leading Islamic banking group from Saudi Arabia has recently introduced
An independent power project in Pakistan, the Hub River Project, was partially Islamically-financed. The project cost approximately $1.8 billion. A sizeable amount of that cost was covered through Islamic channels. Al-Rahhi (the largest Islamic bank) provided near $100 million.
The rapidly developing Islamic banking sector was stunned by the recent revelation that one of its oldest and most respected commercial institutions, Dubai Islamic Bank, had run into what was described officially as 'financial difficulties'. The number of entities in the sector is growing rapidly. There are now more than 200 Islamic banks. In addition, some multinational financial institutions, including Citibank and Arab Banking Corporation, are setting up subsidiaries or specialist divisions.
In searching for new investment products, Islamic banks and their shari'a boards have found a natural fit with project finance. In project finance, the success of your loan is tied in with the success of the project, as opposed to a conventional loan, where the success of the venture is nearly irrelevant. Islamic finance principles call for exactly this -the sharing of risks as well as rewards. While Islamic finance meshes well with project finance, industry watchers don't expect projects costing more than $200 million to be financed by Islamic funds alone.
U.S. companies doing business globally, particularly in countries with large Muslim populations, are turning to Islamic finance as an alternative source of funding for everything from trade finance to equipment leasing.