Pious Indians bank on holy deposits
In a bank with no security gates, guards or locks, deposits from thousands of customers from across India are stacked on shelves, protected from theft by the grace of God. In a cramped room in a small house in the north Indian state of Uttar Pradesh, Ram Ram Bank offers no interest or loans, but has around 5,000 customers who flock to deposit documents bearing God’s name.
“There is no need for security as there is no fear of any theft,” said Lovelesh Tewari, who founded the bank 25 years ago. “People feel better by writing God’s name as it becomes a medium to release their pent up frustrations and eventually the faith makes them work toward their goals.”
The bank’s customers scribble “Ram,” the protagonist in the Indian mythological epic Ramayana, on pieces of paper as many as 100,000 times and deposit them in the bank. Ram is also known as Rama. Ram Ram used to accept scribbles on cigarette packs or on pieces of old newspaper. But now Tewari provides proper notebooks for the purpose, courtesy of one of his customers.
Religion is no barrier. Hindus, Sikhs and Muslims write the name of Ram in their native languages. Every six months the stacks of “deposits” are sent to be displayed in a temple in Ayodhya, the birth place of Ram.
Islamic finance outsources scholars’ supervision to grow
Bankers in Islamic finance are increasingly outsourcing sharia supervision due to a lack of scholars in the industry, but critics say this is making the sector even less transparent and slowing its development.
The $1 trillion industry rode a five-year oil boom until the 2008 property crash in the Gulf Arab region raised complaints that many of its investment instruments can be seen as mere copy-cats of conventional banking products, threatening the sector’s future growth.
Critics say growth and product innovation is being further stifled by the limited number of top scholars available to join the sharia boards of Islamic banks, some sitting on up to 80 boards.
“In banking you can lose a deal in one day,” said John Sandwick, a Geneva-based Islamic wealth and asset manager. “If the scholars are not responsive, and we know it is literally impossible for one man to provide so much work, then everyone suffers,” he said.
Instead of maintaining their own costly sharia boards with prominent scholars, bankers are increasingly using consultancy firms that directly deal with the scholars.
Short of talent, Islamic finance taps women scholars
When Malaysian Aida Othman signed up for the new law programme at the International Islamic University in Kuala Lumpur, she did not expect to become one the few women with their hands on the levers of the world’s $1 trillion Islamic finance sector.
Rising global demand for scholars who can advise firms on compliance with Islamic legal principles called sharia is behind the quiet and almost accidental way in which women are growing into a small but powerful force in a male-dominated business.
“There are not many women involved my job,” Aida, who manages the sharia advisory practice at Malaysia’s biggest law firm, told Reuters. “I’m glad to be able to show to young graduates and young scholars in my field if you’re interested enough there is a way into sharia advisory,” the 41-year-old, who went on to study at Cambridge and Harvard, said.
As Islamic finance expands 15-20 percent a year and enters new markets from Australia to South Africa, so the need has grown for more sharia advisers who can structure financial transactions according to Islamic rules that crucially include a ban on interest. A small circle of men dominates the boards of Islamic banks but there are now about 10 women sharia advisers in Malaysia, home to the world’s largest market for sukuk, or Islamic bonds.
Read the full story by Liau Y-Sing here. See also:
Islamic finance seems overwhelmed by tighter supervision of sharia advisers
Islamic finance is toughening supervision of its powerful religious advisers as shareholders worldwide demand increasing accountability from directors, but key reforms may do little to boost independence and transparency.
Key to these challenges is the small number of scholars advising a growing number of banks on increasingly complex financing structures, raising issues such as transparency of rulings, independence of advisers and how to groom new scholars.
But varying sharia standards, different regulatory approaches and vast disparities in development across markets stand in the way of reforms to streamline and boost supervision, which are critical to growth.
“Investors want to see the same degree of responsibility and professionalism going into sharia compliance as they expect from Moody’s for credit ratings and S&P for market information,” said John Sandwick, a Geneva-based Islamic asset and wealth manager.
Sharia advisers control the reins of the $1 trillion industry through their rulings on whether financial products satisfy Islamic law. Their role has been in focus following a recent attempt by Kuwait’s Investment Dar (TIDK.KW) to challenge its sharia board’s decision.
Some say regulating the issuance of fatwa would stifle ijtihad, or scholars’ reasoned judgment, and could stunt the growth of an industry which is still trying to come to terms with established conventional banking concepts like derivatives.
Islamic banking being a new concept is quiet complex, which Shariya standard will they adopt, the one convenient to them?
Vatican Bank head in money laundering probe–sources
The Vatican bank’s top two officials are under investigation for suspected money laundering and police have frozen 23 million euros ($30.21 million) of its funds, Italian judicial sources said on Tuesday.
They said President Ettore Gotti Tedeschi and director-general Paolo Cipriani were being investigated by Rome magistrates Nello Rossi and Stefano Fava in a case involving alleged violations of European Union money-laundering rules.
The Vatican confirmed the Rome magistrates’ action in a statement that expressed “perplexity and amazement” at the move and “utmost faith” in the two men who head the bank, officially known as Institute for Religious Works (IOR). It said the bank had committed no wrongdoing because it was transferring its own money between its own accounts.
The IOR primarily manages funds for the Vatican and religious institutions around the world, such as charity organisations and religious orders of priests and nuns.
Its cash point machines in the Vatican are perhaps the only ATMs in the world that allow clients to choose Latin as the language to perform operations.
Does that mean you can only ask for CDL euros, and not 450?
Islamic finance seeks young scholars to lead growth, improve products
With Islamic finance a $1 trillion industry globally and expected by ratings agency Moody’s to reach $5 trillion in time, students of sharia have more opportunities than ever before to take their skills beyond the mosque doors and into the boardroom.
Reflecting the change in times, many current scholars now prefer to call themselves sharia advisors or technicians to suggest that their duties are more professional rather than simply clerical.
Professionally, it can be a lucrative endeavor. Scholars working on Islamic finance deals are paid consulting fees, depending not only on the services provided but also the seniority and fame of the scholar.
Every Islamic finance company has a sharia board that monitors compliance, and ad hoc boards often set up for individual deals. While there is no benchmark for fees, a renowned chairman of a sharia board, for instance, could earn $50,000 to $100,000 per board as a result of retainer fees, fees for issuing edicts, audit fees and documentation fees. Junior scholars make significantly less.
Islamic finance has image problem in Christian-majority African states
Africa’s Islamic finance industry needs to overcome negative perceptions among non-Muslims to successfully expand into predominantly Christian sub-Saharan Africa, an industry leader has said.
Northern Africa is largely Muslim and countries such as Egypt and Sudan have offered Islamic banking for decades. Now some lenders are looking to expand into sub-Saharan nations, such as Uganda which is 80 per cent Christian.
Islamic banking operates on a small scale in a few sub-Saharan countries, such as Kenya, South Africa, Botswana and Nigeria. Industry participants say Tanzania, Malawi, Uganda and Zambia — which all have minority Muslim populations — would be next.
“This is a business and frankly we are indifferent to whether you are Muslim, Christian, Hindu, a non-believer or whatever,” said Suleiman Shahbal, chairman of Gulf African Bank, which was launched in 2008 and is one of Kenya’s two Islamic banks. “Some people are extremely hostile and they see a political agenda in Islamic banking. It is not political at all, we have no political agenda … Some even think we support al Qaeda, which is of course complete nonsense.”
Sharia boards face scrutiny amid financial crisis
Sharia boards face increased scrutiny and criticism as high-profile corporate defaults and cautionary comments from respected scholars cast a harsh light on the fast growth of financial products touted as Islamic.
Experts say rapid growth in the industry, which some estimates value at around $1 trillion, has put more pressure on scholars to sign off on increasingly complicated structures, wrapped in sharia packaging.
“In areas that have to do with capital guarantees, fixed income and derivatives … 40 to 50 percent of what’s being sent out is form over substance,” said Jawad Ali, managing partner at Dubai-based law firm King & Spalding. “Mistakes do happen when a sharia board focuses on the instrument being presented … and there is little scrutiny on how the structures are being implemented.”
Influential scholar Sheikh Taqi Usmani rocked the industry last year when he said many structures presenting themselves as Islamic didn’t meet the definition of true sharia compliance, raising concerns in the industry that some deals could be deemed un-Islamic after investors had bought them. Those concerns increased when Kuwait’s Investment Dar — which defaulted on a $100 million sukuk last May — presented a legal defense in the British High Court that one of its wakala, or agency deals, wasn’t sharia compliant.
POLL: Is Goldman Sachs “doing God’s work”? Its CEO thinks so
Check out the headline at the bottom left of the Sunday Times front page. The man the London paper calls the most powerful banker on Earth says he is “just a banker ‘doing God’s work’” .
The report says Goldman Sachs chief executive Lloyd Blankfein“proudly pays himself more in a year than most of us could ever dream of — $68m in 2007 alone, a record for any Wall Street CEO, to add to the more than $500m of Goldman stock he owns” .
Goldman Sachs looks set to pay about $20 billion in bonuses for its top traders this year, at a time when the fallout from last year’s financial crisis is still being felt and the United States unemployment rate has hit 10.2 percent, a 26-1/2-year high.
In his defence, Blankfein said in the interview: “We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It’s a virtuous cycle … We have a social purpose.”
If your god’s name is satan, yeah they are doing a great job making people miserable , breaking up families , putting people on the street.Shame on you Esau’s children!!The time of Jacob’s trouble is almost over so enjoy making misery while you can!
France courts Islamic finance, as long as it’s not too obvious
In researching an article on what lay behind government plans to develop France as a European hub for Islamic finance, I was struck by the uneasy atmosphere surrounding the subject. On the one hand, the government sees it as a way to attract Middle Eastern money and wants to push the idea. But on the other, there is a clear sense of apprehension over how Islamic finance would fit into French society, where the policy of laïcité – the strict separation of church and state — tries to keep anything religious out of the public sphere as much as possible.
The bankers, lawyers, government officials and Islamic finance specialists trying to get Islamic finance off the ground in France speak publicly about the bright prospects they see for the market. France has the biggest Muslim population in Europe at over five million. The government is pushing the idea hard. There is a huge need for financing of future projects.
But privately, many admit that French companies and banks may hesitate to do anything that uses the label Islamic as this could highlight sensitivities over social and cultural divides. Ever since the French Revolution, France has upheld the idea that its people are all individual and equal citizens and not members of regional, ethnic or religious minorities. Stressing membership in a sub-group is considered divisive. The French frequently point to the multicultural approach taken in Britain and the United States as the source of political and social problems — such as ethnic or religious “ghettoisation” and “identity politics” — that they want to avoid.
Given this outlook, some French fear the Muslim community here is seeking to nurture its own identity in a way that sets them apart from ordinary French citizens and undermines the unity of the nation. The way in which Muslims openly speak about religion, rather than keeping their faith to themselves, looks to these French as a challenge to the principle of laïcité.
Not every charge of laïcité violation is necessarily valid. As one analyst put it: “You can see in so many papers that Islamic finance is a threat to laïcité , which is a complete nonsense. It proves that the people who write about this know nothing about Islamic finance. It has nothing to do with religion. It is making financial transactions according to a set of rules … these rules are ethical because they are Islamic.”
One expert admitted that the label Islamic would “not help” when French companies were deciding whether to raise cash by issuing Islamic bonds or conventional ones. Another said it would be “absolutely crazy” to call an institution conducting such business an Islamic bank. The Idea that a bank branch would have a giant sign reading “Banque Islamique de Paris” or something similar is so outlandish as to not even come up in conversation.
“The crux of the problem is that nobody wants it except for the Muslims and the Muslims have no power in France. They are not organised enough and have no lobbying power to see Islamic retail banking see the light of day,” said one industry specialist on condition of anonymity.
It is archaic method for a bank to pronounce that they are adhering to a certain set of rules. Naming a bank as Islamic always give the impression that it is only serving a particular religious group and engaging business with them indicate adherence to that specific religion. It makes non-Muslims uneasy and doubtful whether it is religiously correct for them to do business with them.
They should come up with a certain neutral rule set, calling it something like the Vienna Laws or something, which is able to serve both the Muslims and non-Muslims.
A Islamic bank has one too many terms Islamic terms in their offerings for their own good.
Society as a whole should embrace a secular institutions rather than regress back to the medieval ages when things are segregated by faith.
We must not bow down to these Islamic pressure. Especially Europe which had been at the forefront of human civility and societal advances. Integrate, immigrants, not isolate!! ( Don’t confuse with assimilate) After all, if you wish to migrate to France or any other European nation, you must be prepared to absorb their culture and their way of life, rather than pressuring them to adhere to yours.
Unless you’re an illegal immigrant who knows no better. If that’s the case, go back home. Don’t create trouble here, and make a bad name for the rest.
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Resident FaithWorld Expert
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