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Tuesday, 18 November 2008

British government seen helping Islamic finance

KUALA LUMPUR: Islamic banking is set to rise from its modest 2 percent share of bank assets as the [British] government encourages growth and Muslims overcome their suspicion, sharia lender Gatehouse Bank said on Tuesday.
Islamic finance, which rejects interest-based lending and speculation in favour of profit and loss sharing between venture partners, has been in Britain since the 1970s, but only a small number of Muslims have embraced it.
In recent years, Britain has been viewed as the European leader in providing Islamic financial services, aiming to serve both domestic Muslim markets as well as tapping into the vast wealth of Gulf investors.
"The government is very keen on social inclusion and economic inclusion and it feels that still there are areas of the UK where there's not enough economic inclusion," Gatehouse Chairman Richard Thomas told reporters on the sidelines of an Islamic finance forum in Malaysia.
"So they feel that if they open up alternative finance such as Islamic finance then that will allow people to be included in the British economy in a way they weren't before."
He did not give estimates for the Islamic finance industry's growth.
Britain intends to issue its own sovereign sharia-compliant sukuk debt in a rolling programme worth around 2 billion pounds, although it has said legal barriers still remain and it will make a final decision later.
Thomas said the country's Muslim population of 3 million could help drive the industry's growth, although they needed to overcome their suspicion about Islamic banking.
"The domestic side has been much slower because British Muslims find it difficult to trust Islamic finance," he said.
"They had an experience with BCCI which said it was Islamic when it wasn't. They need to be persuaded that the tools that are being used actually are Islamic."
BCCI or the Bank of Credit and Commerce International, which had the Abu Dhabi government as its majority shareholder, collapsed in 1991 after evidence of massive fraud and links to organised crime.
London-based Gatehouse was set up in May 2007 and specialises in Islamic capital markets business, institutional wealth management and sharia advisory services.
It is owned by the Securities House of Kuwait.
(Int'l Herald Tribune)
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