IIBI admit the faillings of Islamic Finance

Posted: June 10, 2015 in Islamic Finance
Tags: , , , , ,

http://www.islamic-banking.com/NewHorizonDigital/IIBIDec2014/index_Q2_2014.html

In his article written for New Horizon magazine, Mezbah Uddin Ahmad goes through the usual superficial discourse on why Islamic Finance is so unique and innovative (in its deceit), however in his concluding remarks, he lets the camel out of the sandbag and admits;

 The primary concern of the islamic banks is naturally survival, in addition to being Shari’ah-compliant. Customers expectations from banks and their willingness to participate in risk is one of the major challenges in implementing a truly profit-and-loss sharing banking system, as not all customers are willing to take the risk of loss. To ensure the sustainability of the banking model at the initial stage, therefore, Islamic banks came up with Shari-ah compliant financial products that in substance are not significantly different from traditional products. The apparent similarity between the two banking systems allowed the Islamic banking customer, therefore giving it the opportunity to grow.

A regulatory framework that caters primarily for the traditional banking system is another primary factor that forces Islamic banks to structure their financial services in a particular way, often resembling traditional banking services. Even though significant regulatory improvement has already occurred in some countries to accommodate specific needs of Islamic banking, there is a long way to go. 

….you heard it straight from the Camels mouth…

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