London: Discussing the future of Islamic finance in Europe, financial experts have debated aspects of Islamic finance and banking at Oxford Union, offering future economists a platform to better understand the booming industry, Gulf Times daily reported.
"The skyline of London is being changed by Islamic finance," said Baroness Warsi, Senior Minister of State and Minister for Faith and Communities, and the Ministerial lead on Islamic Finance.
"It is important for there to be "an Islamic finance market that doesn't sleep," Warsi, who launched the UK's first Islamic Finance Task Force in 2013, added. "We need to make sure that all time zones are trading in terms of Islamic finance products."
Warsi was speaking at the inauguration of the Islamic Banking and Finance Society (IBFS) held at Oxford Union Debating Chamber last Wednesday.
The new society aims at acting as a platform for the Islamic finance as well as creating relationships between professionals in Islamic banking and finance students at Oxford.
"Two years ago, someone said to me that a sovereign sukuk in Britain 'is impossible,'" Warsi said. "Having fought the battles through that and shown that it can be achieved, I'm confident that standardization is something that we can make real headway on."
Praising the economic benefits of the Islamic finance, Warsi said: "As a Muslim, I believe in the principles of Islamic finance."
"As a Conservative, I can see the huge economic benefits of Islamic finance and as somebody who feels that Britain's best days are still ahead of us. I feel that Islamic finance provides another opportunity to reach out to the world and bring the benefits of that for our citizens," Waris added.
Nigel Denison, executive director of Bank of London and the Middle East (BLME), shared a similar opinion.
"It's a very young industry; one of our big challenges is educating people around Islamic finance in a non-Muslim country," Denison said.
Last October, the British PM, David Cameron has announced plans to encourage investment by Muslim countries, saying he wants to make London "one of the greatest centers for Islamic finance anywhere in the world".
The United Kingdom is one of the leading countries in the European Union to have Islamic banks. It is also developing its takaful market for Islamic insurance.
The UK also has a strong foothold in developing products such as commodity murabaha – Islam's version of interbank short-term lending and syndicated loans.
London is also advanced in Islamic retail services, with institutions offering a range of Islamic banking products, such as mortgages and car loans.
The Islamic Bank of Britain, granted a license in August 2004, became the first Islamic bank in the UK and has continued to attract customers for mortgages.
Addressing attendants at the event, Salah Jaidah, vice chairman of Mena (Middle East and North Africa) at Deutsche Bank, pointed to the ethical nature of Islamic finance.
"The base of Islamic Finance is definitely the ethical part and most of the conducts within Islamic banking prevent the over-leverage that we have seen on the conventional banking side," said Jaidah, who is also the chief country officer for Deutsche Bank Qatar. "Every transaction has to have an underlying asset, so there is value creation for the person who is taking the finance or the person who is extending the assets."
Presentations from Islamic finance Experts have highlighted the ethical spirit of Islamic finance.
"With these principles I think if institutions used similar ethics and built in this spirit of profit sharing," Jaidah said.
"And in case of failure, everybody has to take a portion of the fault. That's the spirit of Islamic banking. How much it is practiced in reality," Jaidah added.
Organized to act as a platform for the Islamic finance, the new society aims to extend a bridge between the Oxford's future economists and the Islamic finance industry.
"I think it is very important to educate the future leaders of tomorrow," Azeemeh Zaheer, vice president of Gatehouse Bank and former vice consul, US oil & gas sector head for the British Consulate General, said.
"Islamic finance a growing industry but it is only 1% of the entire assets under management globally. So we have huge potential to grow. One of the big issues is lack of intellectual capital. "We need new, fresh talent, not just from the Muslim world and that will enable us also to sell to non-Muslims," Zaheer added.
Islam forbids Muslims from usury, receiving or paying interest on loans. Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork. Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.
Investors have a right to know how their funds are being used, and the sector is overseen by dedicated supervisory boards as well as the usual national regulatory authorities. The global market in Islamic investments is rapidly expanding, rising by 150 per cent since 2006 and expected to be worth £1.3 trillion in 2014.
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