Success of Islamic banking

Islamic banking is growing rapidly worldwide with the Gulf region grabbing the lion's share, the head of the General Council for Islamic Banks said on Tuesday, March 14.

"We used to see banks with $40-$70 million capital each; now we hear of $1 billion and more," Izzedine Khojah told Reuters in an interview on the sidelines of an Islamic banking conference in Damascus, Syria.

Khojah said that the impressive strides made by the Islamic banking has whetted Western appetite to expand its Shari`ah-compliant dealings.

BNP Paribas has recently expanded its operations in Islamic finance and place it at the center of the French bank's Middle East retail strategy, Reuters said.

Deutsche Bank, Germany's biggest bank, is also planning to expand in producing services and products aimed at Muslim clients.

In 2003, HSBC banking group became the fist high street bank in Britain to offer mortgages and current accounts in accordance with Shari`ah.

Islamic banking operates by sharing profit or loss between the bank and its clients, instead of interest, which is forbidden by Shari`ah.

Under the system, the bank works closely with clients on financing, such as jointly setting up projects with the aim of selling them to third parties.

"Success came through raising the mantra of sharing profit and loss and furthering Islamic principles," said Khojah.

Source: Islam Online (English)