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Islamic banking needs to widen its scope

DUBAI — The fast growing Islamic Banking and Financial Services must expand its portfolio of offerings through new and innovative products and services that will meet the requirements of contemporary businesses, said Dr Al Shaikh Mohammed Abdul Rahim Sultan Al Olama, Professor and Assistant Dean for Research Affairs, United Arab Emirates University.

Announcing a Conference on 'Islamic Financial Institutions, Current Aspects & Future Prospects' Dr Al Olama said, in the globalised banking environment Islamic financial institutions face the challenge of offering products and services that appeal to the global business community.

“To become a viable global alternative in the world of finance, Islamic institutions must offer wide portfolio of products which will directly compete with those offered by the non-Islamic institutions,” he said.

The conference to be organised at the Dubai Chamber of Commerce and Industry (DCCI) from May 15 to 17, will have the active participation of banks including Standard Chartered, Emirates Islamic Bank, Abu Dhabi Islamic Bank, Sharjah Islamic Bank and Dubai Islamic Bank.

The event will address a host of issues including identifying the functions of Islamic Finance, rationalising and developing Islamic financial institutions, addressing the new challenges faced by Islamic institutions and encouraging investments.

In addition to the traditional Islamic financial solutions offered by the Islamic banks, there is a new breed of institutions which promise to offer alternative Islamic finance and investment solutions.

Meyer Capital Partners, a US based Islamic finance company last year launched an Islamic Hedge Fund. The fund managers believe that all the major hurdles have been crossed and it is just a matter of time that such alternate funds become popular among Gulf's institutional investors and high networth individuals.

The new hedge fund, according to Meyers and their associates, will allow hedge fund managers to use options and short selling in their portfolio management compliant with Sharia principles. Bankers from both conventional and Islamic banking sector agree that there is huge untapped potential for alternate investment strategies in the Islamic fund management sector especially in the Gulf region.