Employees of Cham bank, a newly opened Islamic bank, stand in
front of an ATM machine at the bank's headquarters in Damascus
in August 2007. Islamic finance and insurance is growing at
double digit rates.
Banking Regulation Act does not oppose Islamic Banking: Ex-Director,
“Unless there are amendments in the Banking Regulation Act of India,
1949, Islamic Banking system can ....
Global Islamic finance industry worth over
$1tr in asset terms
With global finance on
its knees, this summer's business graduates face an even trickier
jobs market than most.
But there is one area
of banking still experiencing boom time – Islamic finance – and
universities have been quick to grasp its possibilities.
This September will
see new courses and postgraduate qualifications in Islamic finance
springing up throughout the UK and elsewhere in Europe, reflecting
the fact that it has become one of the fastest-growing sectors of
the global banking industry, expanding by between 15% and 20% a
Assets held by
institutions adhering to Islamic finance principles now amount to
nearly 1 trillion dollars.
In the UK, interest in
the sector also reflects the government's commitment to promoting
Britain as an Islamic finance centre. The UK already leads Europe in
the number of Islamic finance training courses it offers, from entry
to postgraduate level, and in 2006 saw the launch of the Islamic
Finance Qualification, a joint initiative between a Lebanese
business school and the Securities and Investment Institute.
Last December, the
Treasury published a paper setting out the government's aim for
London to be "Europe's gateway to international Islamic finance".
This acknowledged that the industry was still young and therefore
not yet experiencing skills shortages, but predicted that it soon
would be. It stated: "The pool of potential applicants in the UK
will have to keep up with the rapid growth of the market."
responded enthusiastically. Newcastle University is offering an MSc
in finance and law with Islamic finance from next academic year.
Henley Business School at the University of Reading has been
offering an MSc in investment banking and Islamic finance since last
year, with students spending the second part of the year in Kuala
Lumpur. The University of Bangor in Wales has also been running its
Islamic finance MA and MSc for a year and is considering introducing
a new MBA in the subject, while the first students to take an
Islamic finance option as part of an executive MBA offered in Dubai
by Cass Business School will graduate this summer.
Durham, which has been
offering postgraduate research degrees in Islamic finance for some
time, is now introducing a taught MA and MSc (the MSc is more
quantitative), to respond to demand.
Elsewhere in Europe,
Reims Management School is offering a new specialist course in
Islamic banking and finance for students on its masters in
management programme, taught in English.
Student demand is
driving the subject as much as any urging from governments.
According to Rodney Wilson, founder and director of the Islamic
finance programme at Durham, it is coming mainly from south-east
Asia, particularly Malaysia, and the Middle East, although there is
plenty of interest from the UK as well.
Joanna Gray, professor
of financial regulation at Newcastle Law School, says she is keen
that their new degree course is not just seen as something for
Muslims. "It's for anyone interested in a fast-developing industry
that in the UK has been quite busy in the past few years to
accommodate forms of investment in finance that are sharia-compliant."
Islamic finance really
dates from the mid-1970s, with attempts to make products available
through conventional banking, such as loans and mortgages,
compatible with sharia principles. Sharia law prohibits any
transaction that involves paying interest or investing in certain
economic sectors such as gambling or pornography. It demands that
both the investor and recipient of the investment must share any
risk, and transactions have to be underpinned by tangible assets.
In the years
immediately after 9/11, anything involving money and Muslims was
viewed with suspicion by many in the west because of fears about
terrorism, and Islamic finance is still taking off faster in the UK
and France than in the US. But in the current global financial
climate the principles it is based on have struck a chord.
"There is an extent to
which, to a westerner, Islamic finance products look very similar to
ethical finance products," says Stefan Szymanski, professor of
economics at Cass. "There is a demand for morally upright investment
vehicles, and Islamic finance is the Islamic version of that."
Philip Molyneux, head
of the business school at Bangor, suggests that even if western
banks do not want to introduce specific Islamic finance products –
and an increasing number do – they still want to know how it is that
many Islamic institutions escaped the worst effects of the credit
He has been surprised
that demand for the MA and MSc has come not just from recent
graduates and bankers wanting to improve their career prospects, but
also from sharia scholars, who play a key role in Islamic finance.
Any new financial product must be passed by them as sharia-compliant,
so many financial institutions must now have scholars standing by
ready to give their verdict.
These scholars often
disagree, and can even change their minds, but this offers plenty of
scope for the kind of intellectual arguments that universities
relish, not to mention graduate jobs.
On the whole, most of
the new Islamic finance courses steer well clear of religious issues
in favour of legal and financial questions because these are what
most interest students. Khalid El Sheik applied for Bangor's Islamic
finance MA because, having taken a first degree in computer science
in Sudan before switching to a career in marketing, he felt his CV
needed a business boost. He saw it as a chance to mark himself out
from other students and to have a headstart in an area that was
likely to offer plenty of future employment opportunities. "I had
read about Islamic banking and how it was going to increase in
future, and how most of the banking sector is now looking to it," he
says. His fellow students at the university, including one from
China, had the same idea, he says.
Szymanski agrees that
it is the idea of the moment in many universities, and while Cass is
still waiting to see how the market develops before introducing any
similar courses, it is certainly considering the possibility.
"You just have to
measure how many billions of dollars Islamic finance already handles
in a year," he says. "If that grows over the years, it will become a
universal part of every business school."
(courtesy: The Guardian)