A study by “The Banker” said Islamic banking has expanded by 30 percent to more than $500.5 billion globally over the past year. It outpaces growth in business sectors in financial services. Even Western banks are providing the financial requirements of Muslim business, with the U.K. ranking as the 10th largest holder of Shariah-compliant assets.
The publication attributed the boom in Islamic banking to the spiraling price of oil in the international market and efforts by large Muslim nations like Saudi Arabia, Malaysia and the United Arab Emirates to become financial hubs for Islamic finance.
Under Islamic law or Shariah, charging of interest is not allowed, with profit sharing encouraged instead. It also prohibits investment in companies engaged in manufacturing of tobacco, alcohol or providing gambling facilities.
Iran tops the list of nations that holds the largest amount of Islamic financed assets, valued at $155 billion. Because of the presence of the Hong Kong and Shanghai Banking Corporation Amanah in London, the U.K. ranks 10th in Shariah-compliant assets, estimated at $10.4 billion.
Britain is aiming to capture more Muslim clients by planning an Islamic bond issue in 2008. The nation’s plan to issue it in the first part of 2008, however, may be delayed because of complicated regulations under the Islamic law, reported the International Herald Tribune.
The global interest in Muslim financing is experiencing growth not only in the banking sector but also in research and development. The Gulf News said over the past year, multi-billion dollar investments for R & D were initiated in many Arabic nations.
The U.A.E. in May 2007 created a $10 billion foundation to fund research centers in Arabic educational institutions. The Nigerian state allocated $5 billion as petroleum technology development fund, while Qatar started construction for an education city near Doha.