World Bank to help Islamic finance evolve binding rules

World Bank to help Islamic finance evolve binding rules

Reuters/Manama. Available at: http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=332140&version=1&template_id=37&parent_id=17

The World Bank plans to support standard-setting bodies of the Islamic finance industry in turning their voluntary standards into binding banking regulations, a bank official said. The fledgling Islamic finance industry is governed by a patchwork of national banking regulators, its own standard-setting bodies and rulings of scholars interpreting Shariah, or Islamic law.

Bodies such as AAOIFI – the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions – are providing standards to Islamic banks but they have been adopted by only few national regulators. James Adams, World Bank vice president for East Asia and Pacific, told Reuters on the sidelines of an Islamic finance conference that the World Bank was in talks with several standard-setting bodies on how to help them turn their rules into national regulations.

“Clearly, in today’s world standardisation would be an asset both in terms of the ability to regulate with consistent standards, but also for the businesses it’s an enormous asset if they’re able to rely on consistent standards and not be subjected to different standards, “he said on Monday. “What we can provide is access to the governments … particularly through the central banks and ministries of finance, so I think our role is very much to work with the standardisation organisations to facilitate a dialogue (with governments),” Adams said.

Bankers have said that the lack of universal standards in Shariah interpretation and product regulation is a key obstacle for the industry to realise its growth potential. Acceptance of products can differ substantially between its main regions, the Gulf Arab region, South East Asia and Europe.

“Bank failures are caused by depositors who don’t deposit enough money to cover losses due to mismanagement”. Dan Quayle

Best Regards
ZULKIFLI HASAN
DURHAM, UK

  • With Dr. Azzam Tamimi, the director of Institute of Islamic Political Thought at Trafalgar Square, London

    3 thoughts on “World Bank to help Islamic finance evolve binding rules

    1. Mal An Abdullah says:

      Good news for Islamic finance.

    2. Muhammad says:

      SALAM TO ALL

      “World Bank to help Islamic finance evolve binding rules”
      That is the last thing Islamic Banking movement needs.Those people who invite the “wolf’ into the ‘sheep pen’ should learn from mistakes by Iraq under Saddam and Afghanistan under Najibullah.

    3. Mohamed E. El-Basri says:

      The mere suggestion that the Islamic finance industry could harmonize
      its practices through the standardization of its regulations across the many
      different political boundaries they currently operate within is to say the least surprising. Financial regulators in some Islamic countries equate such a move with attempts to Islamise society at large with all the politcal ramifications attached to that. With the current state of affairs in the Muslim world, voluntary regulation is the best that one could hope for in Islamic finance or indeed accounting.

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