Islamic News

Business on the canons of Shariah – Business – News

When Kazakhstanians hear the phrase “Islamic banking”, that represent the religious bankers who give the right and left free loans, and forgive them in the event of default. At least, so many lies, according to reports on local internet forums, this interesting and quite new for Kazakhstan financial instrument.

This interest in Islamic finance due to the fact that Kazakhstan will soon be enacted on Islamic Banking. It’s unusual for us and innovation – the very notion of those most-free loans, the principles of Sharia … What’s the difference this type of financing from the “traditional”, and under what conditions will be cooperation, told the deputy chairman of Kazakhstan Agency for regulation of the Regional Financial Center Almaty (RFCA) Chingis Kanapyanov.

It is necessary to say that most Western businessmen at first difficult to understand the specifics of Islamic business, and these financial institutions a long time remained something unusual and distant, despite the fact that long ago, for the recognition of many professionals, have great potential.

Principles of Islamic banking hardly touched the financial crisis, in many ways this is why the Arab banks are now among the largest investors in the world and for our growing economy can become a long-term source of funding.

– the Koran forbids usury – the issuance of money at interest. What, then, Arab bankers earn?

– usual for us the condition of the bank – the availability of property and borrowing interest rate of 20-25 per cent. And pay the bank must be independent of the company’s success. The principle of an Islamic banking – the bank with a company involved in a project on an equal footing, sharing the risks. If the effort fails, the bank will lose money, along with the company. But if the project succeeded, the profit is also divided into halves. That is one of the main principles of funding is the sharing of risks.

Due to the ban on compensation in the form of interest, the interest on deposits are not charged. Based on the principle of participation of all parties to the transaction at risk, is not guaranteed repayment, and fees on deposits. As a result of its Islamic investment bank distributes profits among investors in proportion to their investments, and in case of loss or customers, or an Islamic bank does not receive remuneration.

– In general, Islamic financial instruments involved in the development of infrastructure projects, but there are fundamental restrictions on areas of the company.

– Islamic investors have no right to finance projects that do not conform to the Sharia, as well as buying shares in companies that produce or trade in weapons, alcohol, tobacco, pork, representing the entertainment industry (cinema, casino) as well as financial and insurance companies, working through per cent of the transactions.

– So far in the country there was no legislative basis for the success of Islamic banking, however, it has developed very quickly – in just six months …

– One of the objectives of RFCA is to develop the base of new financial instruments. Why Islamic Banking? Many experts long talked about his prospects, but all precipitated a crisis point. Under the auspices of the Association of Financiers of Kazakhstan has established a working group that originally worked on the introduction of only debt instruments, but after hard work and careful consideration of the legislation, we realized that we need to add a few items in the legislation, and eventually it will turn out a complete package of instruments of Islamic banking.

Specialists National Bank, FMSA and RFCA were special courses in the existing Islamic banks. We have received a grant from the Islamic Development Bank, which invited experts from Malaysia, which are created in this country, the Islamic banking 25 years ago. They had a complete monitoring Kazakh legislation. It was not to get – have created a law on Islamic banking, which, after agreement was a “normal” not in conformity with the precepts of Islam. Continuing worked with potential players – domestic and foreign banks, which has sustained interest in new funding opportunities.

– Perhaps the focus does not do is on the notion of “Islamic” and the word “investment” …

– Of course, no one will look at your religious views, and how often do you go to the mosque. In the world of Islamic financial instruments work and a lot of non-Muslims. The uniqueness of our system is that, unlike the countries of Southeast Asia such as Malaysia and Indonesia, where there is only Islamic banking, we will continue to exist and the “traditional” banking service, and finance in accordance with Islamic law. We hope that when it works, Almaty will become a platform for Islamic finance to the region.

According to the “Euromoney Islamic Finance Review” Islamic financial market is growing annually at 15 percent. Today, its annual turnover has reached 750 billion dollars, and by 2016 they will grow up to 1 trillion. Many Western countries (U.S., Great Britain, the Netherlands) have already begun to issue Sukuk – Islamic securities, but there is still no legislative changes were made. The bill on the organization of Islamic finance in the country, currently before Parliament, provides for amendments and additions to several legislative acts. This will provide a full-fledged work of Islamic banks and investment funds in Kazakhstan, and will begin to issue Islamic bonds.

There is a saying that even to speak of “Islamic finance, investments and the Arab world, as a religious point play a big role, as it might seem. Much more important, how promising the announced project. And, of course, is that banks will share the risks with customers. It can be said, an innovative business approach.

Gazeta.kz