Islamic Finance

Sharia Gold Standard – A new Opportunity?

Strict norms have hindered the development of gold related investable products in the Islamic finance world and restricted the investment only in the form of bullion and jewelry. A few gold related Islamic investment products which supported investors to buy and sell precious metals in a bulk form at competitive rates while, managing the supply chain to ensure secure vaulting existed prior to the introduction of the Gold Standard. However, lack of understanding and harmony of Sharia law with regards...

Should GCC banks be wary of Fintech entry?

The western countries, especially the US, have adopted technology at a much faster pace than the rest of the world. At present, almost 80% of Fintech investment happens in the US, followed by the UK. Developed markets in the Asia Pacific have also been investing and implementing Fintech solutions in recent times. However, adoption in the GCC is still in its infancy. But with growing awareness, Fintech is slowly breaking ground in the region.   Digital-only banking Digital-only banking is...

Islamic Finance: Areas for Innovation

Islamic finance industry has evolved and grown considerably since its inception in a rudimentary form during 1960s. The focus of the Islamic finance industry during its initial stage of inception was to create customer awareness and product development. However, the increased recognition and awareness, along with high demand resulted in rapid growth in the value and transformation of the industry over the next few decades. The global Islamic finance industry realised $2.1tn of assets in 2014 and is gearing up...

GCC: Sukuk – Key questions?

KEY QUESTION 1: What are Basel III norms and why are they important for application in Islamic Banking? The Basel III norms were introduced after the 2008 crisis to make the banking system more robust. Under the norms, banks shall hold 6% of Tier-I capital and 2% of Tier II capital. Tier I capital includes 4.5% of common equity and 1.5% of additional Tier-I capital which includes preferred stock and hybrid securities. Basel III norms are mandatory for all banks,...

Japanese Interest in Islamic Banking: Key Questions

Islamic banking derives its basis from the principles laid down in Sharia and unlike conventional finance prohibits payment of and charging of interest. It has caught the attention of the global financial services and banking industry. The growth in Sharia-compliant products and services has happened over the years as financial institutions took their time to understand the principles, and design products and services that comply with those principles. Modern banks started offering sharia-compliant products around mid-1970s. Japan, once an economic...