Canada bankruptcy may hurt Islamic finance in North America

By Shaheen Pasha and Cameron French

DUBAI/TORONTO (Reuters) – The insolvency of an Islamic mortgage lender in Canada may hinder the growth of sharia-compliant finance in North America, where the industry has struggled to gain traction in the absence of a supportive regulatory framework.

UM Financial Inc was ordered into receivership in October, leaving about $32 million worth of mortgages in the hands of Toronto’s legal system. Accounting and business advisory firm Grant Thornton was appointed receiver by the Ontario Superior Court of Justice.

The case has exposed uncertainty over the legal treatment of sharia-compliant mortgages in default, and questions over the transparency and oversight of smaller Islamic lenders. Industry experts said this could make investors in Canada and the United States more wary of considering Islamic finance in future.

Full story : Reutuers Canada

http://ca.reuters.com/article/businessNews/idCATRE7B40I820111205/

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