Islamic banking gets the blues
Ultraconservative investing methods were supposed to make Islamic finance immune to the financial crisis. So what happened, asks Trends magazine.
February 3, 2010 3:55 by Sarah Abdullah
Proponents of Islamic finance should strive to lead by example and make it a system that can be used by all, Ali says. He says he’s found that the global economic crisis has highlighted the positive attributes of the Islamic finance system and has attracted supporters within conventional finance.
“Conventional financial institutions are now taking notice of what Islamic finance has to offer,” he says.
Financial institutions once strictly conventional have since the start of the recession begun to include Islamic investment products or have relaunched themselves as Islamic investment firms such as in the case of Fajr Capital Ltd.
The company’s chief executive officer told Trends that the institution, its shareholders, board members, management team, and advisors all share a common vision: for financial services in their target markets to obtain long-term growth, and to create value for both shareholders and greater society as a whole, a broad yet potentially lucrative goal.
“Key Muslim markets represent a distinctive investment opportunity, and the Islamic financial services industry is in the best position to realize that opportunity. Given the choice, we’ve found that Muslim as well as some non-Muslim consumers prefer banks that meet both financial and ethical needs,” the chief executive, Iqbal Khan, says.
The crisis has put investment opportunities at attractive evaluations in jeopardy, thus, Khan says, he is mindful of the need for heightened caution in Fajr Capital’s assessment of potential investments.
“As any industry matures, it will attract a wider set of institutions and that is to be expected, but the groundwork for the Islamic financial services industry has been laid by pioneers who wanted to offer better choices,” Khan says.