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AIMS | Future outlook of Asset-Backed Islamic Financial System
Added: (Tue Nov 18 2008)
In the past three decades, the number of Islamic financial institutions has risen above 300, spread among 75 countries. The size of Islamic Financial System is 300 billion dollars and expanding at 15 percent a year. The system forbids the levying or payment of interest, preferring shared ownership and splitting of profits. Economic experts assert that the system of financial derivatives, which is based on ‘interest’ or ‘usury’, cannot bring real development. 'Financial derivatives create only money, with no real value, causing inflation and moral decadence. Current global financial crunch is an example that it has several fundamental problems', said Haris Ahmed, BDE, Academy for International Modern Studies (AIMS), United Kingdom
There is a global need for a radical and structural reformed financial system, and Islamic Financial System is the best answer. Islamic Financial system is based on the principles of Islam, and offers an alternative which could reduce risks. Islamic banks don't buy credit but manage concrete assets, which shelters them from the difficulties that American and European banks are experiencing.
Usury in prohibited in both Quran and Bible. In Quran, it is clearly mentioned in many places, for example, in 2:275 Allah (God) says “Those who charge riba are in the same position as those controlled by the devil's influence. This is because they claim that riba is the same as commerce. However, Allah permits commerce, and prohibits riba. Thus, whoever heeds this commandment from his Lord, and refrains from riba, he may keep his past earnings, and his judgment rests with Allah. As for those who persist in riba, they incur Hell, wherein they abide forever”. In Bible, usury is mentioned 24 times, and every time there is evidence that Allah (God) doesn’t approve of it. In Deuteronomy 23:19, as well as other places, He directly forbids it, “You shall not charge interest to your brother—interest on money or food or anything that is lent out at interest” (New King James Version).
The awareness of Islamic Financial system is increasing, especially after the current financial crises. The sub-prime mortgages has resulted in $400 billion losses to conventional banks the world over, the figures suggest that Islamic banks practising Sukuk have come virtually unscathed from the crisis. With the sub-prime crisis crippling the economic backbone of many, reports suggest that even United Kingdom Treasury and the Ministry of Finance in Japan have explored the potential use of Sukuk as a debt management tool in the wholesale sterling and yen markets. The United States Treasury Department hopes that "Islamic economic philosophy" could help right the listing financial ship without poking even more holes below the waterline. According to Arab News, Deputy Treasury Secretary Robert Kimmitt explained in a press conference in Saudi Arabia that "the U.S. government is currently studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisis." In addition, last week the Treasury hosted a half-day seminar entitled "Islamic Finance 101." Other upcoming Islamic financial markets includes France, India, Germany,
“Now, it is the responsibility of Islamic Financial institutions and associated professionals to strengthen the system. Theoretically, the Islamic economical system offers a complete and solid mechanism. However, practically speaking, the Islamic financial experience is still immature. Implementation of Islamic financial system with Islamic ideology requires several improvements, specially sincere (1) Staff who are fully aware of mechanism and rulings of financial instruments, and (2) Top management who make sure that ‘Law of Shariah’ is obeyed within their system”, said Mr. Haris Ahmed, Business Development Executive at AIMS (Academy for International Modern Studies).
Academy for International Modern Studies (AIMS), whose main objective is to facilitate individuals to become expert Islamic finance professionals and companies to establish better Islamic financial system has made a significant contribution in Islamic Finance Industry. Over the years it has maintained a purposeful mission of promoting industry professionalism and best practices in Islamic Banking and Finance industry through research, consultancy, corporate trainings, seminars, workshops and publications. AIMS also offers several certifications in Islamic Finance, Islamic Banking and Islamic Insurance.
by Haris Ahmed
AIMS (Academy for International Modern Studies)
United Kingdom
http://www.LearnIslamicFinance.com