Islamic finance sector needs more sharia scholars
Articles about Islamic finance are usually long on finance and short on Islam. Knowing that the various schools of Islam can interpret and apply sharia in different ways, I recently wondered how this looked in the financial sector, especially since Islamic banking has spread in recent years and non-Muslim institutions and investors were getting into the business. A conference on Islamic banking in France brought several sharia scholars to Paris, so I took the opportunity to interview them for the news story posted here.
While the financial side wants as much standardisation as possible, the scholars insist it would be un-Islamic to impose rules that apply fully around the world. So rulings from the sharia boards of financial institutions can differ, although the existence of voluntary standards — such as those worked out by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) in Bahrain — has helped to harmonise them. Also, the fact that individual scholars sit on several sharia boards at the same time brings a certain conformity.
But, as Mufti Barkatulla told me, there are not enough young scholars entering the field. A sharia board needs a minimum of three members and can have up to 10, depending on its workload, he said. The problem is that acquiring the needed knowledge can take years. Barkatulla himself was a sharia judge at London’s Central Mosque for 30 years, mostly ruling on family issues such as divorce, before getting involved in Islamic finance five years ago. Like him, Sheikh Nizam Yaquby of Bahrain, another scholar at the Paris conference, continues to decide such family cases in addition to his work in the world of finance.
In my story, Mufti Ahmed Said Louqman Ingar from Reunion, the French Indian Ocean island, explained how Islamic financing products there needed approval by local scholars before clients would trust them. Jérôme Pignolet de Fresnes, a French banker with experience in Islamic finance in Reunion, said his bank gets two sharia rulings for its new products, one from a local and one from a foreign sharia board. “We try to take the lowest common denominator so everyone can accept the product,” he said.
The non-story at the conference was the question of Islamic retail banking in France. The government is adjusting local regulations to allow French financial institutions to compete with London in the lucrative Islamic bond market. But although bankers outside France often point to its 5-million-strong Muslim minority — the largest such group in Europe — as a natural market for Islamic retail banking, a Finance Ministry official said there was no demand for it there and so no plans to accommodate it.