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Tuesday, 13 October 2009

Maldives: Islamic banking to be introduced

The government has signed an agreement with the private sector arm of the Islamic Development Bank to introduce Islamic banking services in the Maldives.

The signing ceremony between the Maldives and the Islamic Cooperation for the Development of the Private Sector (ICD) was held during an annual meeting of the World Bank and International Monetary Fund in Istanbul, Turkey last week.

Finance Minister Ali Hashim told Middle Eastern news portal that the partnership reflected investor confidence in the Maldives.

“The signing ceremony takes us a significant step closer toward the establishment of what will certainly prove to be a truly pioneering venture,” said Hashim.

“We have long maintained that this type of partnership is very important for the government, particularly due to its efficient contributions to national development.”

Khaled Al-Aboodi, CEO and general manager of IDB, told the online paper that the initiative symbolised another milestone in the bank’s relationship with the Maldives.

”I am confident that the establishment of Maldives Islamic Bank, the country’s first Islamic bank, will spur the economic growth of the country,” said Al-Aboodi. “Indeed, IDB is proud of this partnership and hope that it will be a fruitful initiative for both the bank and the country.”

Islamic banking is a system compatible with the principles of sharia law, which prohibits riba (usury and interest) and investing in businesses that provide goods or services that are considered haram (forbidden in Islam).

Islamic banks have advisory committees or consultants that ensure the bank’s activities confirm to sharia law.

Speaking to Minivan News today, Ismail Shafeeg, permanent secretary at the finance ministry, said the details were yet to be confirmed but the introduction of Islamic banking would benefit Maldivians who were hitherto unwilling to invest in other banks because they believed charging interest was un-Islamic.

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