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29 March 2024

Islamic finance will be norm in near future: bankers

Panelists discuss issues related to Islamic economy and finance during the WIFE in Dubai on Wednesday (SUPPLIED)

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By Staff

Islamic finance will become a norm in the near future as the Shariah-compliant exchange traded funds (ETFs) listed on the New York Stock Exchange offer higher return and lower fees, bankers and analysts said on the second day of the 10th World Islamic Economic Forum (WIEF) in Dubai on Wednesday.

Thomas Polson, Chief Executive Officer and Co-Founder of Falah Capital, USA, underlined the potential of the global tradability of Islamic Exchange Traded Funds listed in New York, which contribute to higher returns with greater transparency and lower fees.

At the panel discussion, Dr. Adnan Chilwan, Chief Executive Officer of Dubai Islamic Bank, said that the potential for promoting Islamic finance among the Organisation of Islamic Cooperation (OIC) countries is tremendous and that Islamic finance and Islamic trade go hand in hand.

“Islamic banking will not be an alternative but the norm of banking in the near future,” he added.

Muzaffar Hisham, CEO of Maybank Islamic Berhad, Malayasia, said that regulatory frameworks have a strong role to play in promoting Islamic finance, citing the strong growth in business between Malaysia, Indonesia and Singapore, following the introduction of governmental policies to promote trade. “The hurdles between policymakers must be cleared to boost Islamic trade finance,” he noted.

Examining the support of Islamic finance to SMEs, the participants led by moderator Samad Sirohey, Chief Executive Officer of Citi Islamic Investment Bank in the UAE, were introspective on the role of banking institutions – both Islamic and conventional – in extending support to the sector.

Arif Usman, General Manager, Global Head of Wholesale Banking, Abu Dhabi Islamic Bank, said that securing funding for start-up SMEs is a challenge, while Toby O’Connor, Chief Executive Officer, The Islamic Bank of Asia in Singapore, said that along with financial support, SMEs also need human support through adequate advisory services. Dr. Chilwan pointed out that venture capital funding is practically lacking today for SMEs, despite the great emphasis that the region places on promoting the sector.

Clear-cut policies for liquidity transfer among OIC countries and the emerging role of Islamic finance in Sub-Saharan and East African nations were also highlighted at the panel discussion, which concluded on the note of optimism that Islamic finance is growing in the right direction and will claim its share in global trade finance.

Hussain Al Qemzi, Board Member of the Dubai Islamic Economy Development Centre and CEO of Noor Islamic Bank in the UAE, said that SMEs play a large role in driving Islamic trade finance, adding that more advanced supply chain optimisation measures are needed to promote their growth.

Underlining the need for finance support to facilitate cross-border trade, he pointed out that the share of Islamic trade finance on total global trade finance is still negligible at about 1.5 per cent. “Strengthening Islamic finance through proper documentation, increased customer awareness, ensuring industry standardisation and providing supportive regulatory frameworks are needed to boost Islamic finance, and in turn Islamic trade,” he observed.