Islamic Finance Can Help Prevent Future Crisis

SOME of the features and underyling principles of Islamic finance may avoid or minimise the impact of future economic cycles, said the acting chief executive of the Centre for Islamic Banking, Finance and Management.

Makhtar Abdullah, who is a moderator for the 16th Asean Federation of Accountants Conference 2009, said, “The recent economic crisis which evolved around the financial system will further stimulate and hasten growth of Islamic finance as an alternative to the conventional system.”

He said the world is looking for alternatives in the wake of the crisis.

Now, he said, the push for Islamic banking will be faster and in bigger scale, so there will be more acceptance in the global economy.

The crisis, he said, might even be seen as an advantage for the Islamic banking sector as players were not directly affected.

Makhtar said on a global scale, education is still needed to get the knowledge and confidence across on Islamic finance.

“Everybody has to play their roles and Brunei is positively projecting the same image as after four decades of evolution, Islamic finance has a firm footing in developed markets globally,” he said.

Makhtar said the main feature of Islamic banking is that the foundation isn’t so much on liability and borrowing but more on the sharing of risks.

“It would be beneficial because customers would have a say in what they want and transactions would be more transparent as whatever business leads the financial institution wants to get involved. There will be more disclosure involved so it makes more sense to everyone,” he said.

In Brunei, Islamic finance has a good and positive image and the establishment of his group is part of the image Brunei is projecting.

“As people involved in Islamic banking work more with other global players their knowledge increases and (they) become more well trained with the proper infrastructure to accompany that,” he said.

Source : TBT

Canada Centennial College to offer Islamic finance course

Louise Brown

EDUCATION REPORTER

Scarborough’s Centennial College, one of the most diverse campuses in the country, has become the first in Canada certified to teach Islamic finance – a system that does not charge interest or invest in commodities that contravene Islamic law.

The one-term course will be offered online, starting this fall, to students across Ontario for about $500.

One major bank has already expressed interest in training some of its staff in the basics of Islamic banking, said John Harris, chair of the college’s accounting and financial services programs.

“We have created the course in response to demand from a number of sectors – including one of the major banks that said it wants to be able to talk the same language as clients whose background is based in Islamic finance,” said Harris, adding that the course will be taught by Islamic scholars.

“They want to be able to structure contracts without offending their client base.”

The London-based Chartered Institute for Securities and Investment has accredited Centennial to deliver the new Islamic Finance Qualification.

Students will learn how to draw up alternative contracts for lending money that might include a letter of credit or a guarantee, said Harris, rather than the application of interest over time – which Islamic law sees as punitive to the borrower.

“The funds are provided as more of a partnership, an agreement between two parties that avoids the promise to pay interest,” he said.

There has been a growing market for Islamic-compliant mortgages, which are often structured so that the borrower ends up leasing to own the property: essentially paying rent instead of interest.

A study by the Canada Mortgage and Housing Corp. recently concluded there is no legal impediment to offering such financing in Canada.

At a regional summit last spring on reviving the GTA’s economy, federal Liberal Finance Critic John McCallum suggested making Toronto a global hub for Islamic finance, a field said to be the fastest-growing segment of the financial services industry, expanding by 20 per cent each year since 2001.

A study of Islamic finance by the law firm Stikeman Elliott projected that by 2017, Muslims will make up between 3.7 per cent and 4.9 per cent of Canada’s population.

“Consequently, there is expected to be increased demand for Islamic financial services in Canada in the coming years, potentially providing a tremendous opportunity for financial firms prepared to serve this growing community,”

The course can be taken online as a stand-alone course through the continuing education service “Ontario Learns,” through corporate training or as a credit course in one of Centennial’s two-year accounting programs.

 source : Toronto Star