Islamic Finance

A new financial reform bill has made its way onto the Turkish parliament's order of business. The law's main change in current practice will be to bring the Special Finance Houses (Islamic banks) under the same body of legislation as interest-bearing commercial banks. That would require that the Islamic banks purchase another six percent of the Central Bank's treasury notes (interest-bearing), tie up more of their funds in regulatory demands rather than investments, and insure investors deposits (taking away the shared risk and return).

More than 100 financial institutions in over 45 countries practice some form of Islamic finance, and the industry has been growing at a rate of more than 15% annually for the past 5 years. Its continued growth in the face of eroding oil revenues reflects other factors, such as the desire for sociopolitical and economic systems based on Islamic principles.

The Islamic banking system is expected to face strong competition not only from the Islamic banks but also from well-established conventional banks offering Islamic products and services. In this study, an attempt is made to assess the degree of customer awareness and satisfaction towards an Islamic bank in Jordan. A sample 206 respondents took part in this study. The analysis of their responses revealed a certain degree of satisfaction of many of the Islamic banks facilities and products. The respondents expressed their dissatisfaction with some of the Islamic banks services.

In order to compete in the third millennium, today's Islamic banks need a considerable rethinking of their future policies and a serious effort to restructure themselves. Islamic finance offered by these banks represents a new dimension in the banking industry. The Islamic financing modes, actually practiced by conventional banks in several countries, are finding their way to mainstream banking. These new modes of financing are now becoming a part of the international financial market.

Abu Dhabi Islamic Bank was established on 20th May 1997 as a Public Joint Stock Company through. The Bank commenced commercial operations on 11th November 1998. All contracts, operations and transactions are carried out in accordance with Islamic Shari'a principles. Shuweihat Independent Water & Power Project is not only UAE's largest project financing to date it is also the largest combined power and water project financing ever to be done in the Middle East.

With yet another deadline for June this year to convert Pakistan's conventional banking system in to an Islamic one, the country's authorities have begun preparations for what could best be described as a dual system where more Islamic banks are expected to be licensed to function alongside regular banks.

Shaikh Nizam Yaquby is a shari`a scholar, a holy man and one of the most important people in the fledgling industry of Islamic banking. Why? Because he is one of a handful of people who can judge the shari`a compliance of financial instruments.

Islamic banks' contracts, operations and transactions are carried out in accordance with Islamic shari`a (Law). The fundamental principle underlying the shari`a approach to finance is that on one wishing to earn a return on money has any right to retain the initial sum intact: to earn a profit it is necessary to take a risk.

Bahrain's Islamic banking industry continues to grow and flourish, with the number of Islamic financial institutions operating from the country currently standing at 26. ABC Islamic Bank, a wholly-owned subsidiary of Arab Banking Corp., remains on course to issue the world's first Islamically- structured credit card. A company named International Credit Co. has been established in Bahrain by ABC Islamic and other banks which will issue cards to their clients. Regulation of the Islamic banking industry remains a top priority for Bahrain's authorities.

As clearly stated in its Constitution, the United Arab Emirates is a Muslim nation. As such, the UAE is ideally placed to play a leading role in the emerging field of Islamic finance.