Our middle east is seeing an increase in Islamic banking as devout Muslims search out financial products in line with their beliefs the Organization of Islamic Cooperation which is meeting in Istanbul this week is now hoping to grow the idea of Islamic financial services beyond just banking and repair due plessy reports
Although it has traditionally focused on conventional banking as of last year the International Monetary Fund started including Islamic finance in its monitoring of global financial sectors with an estimated two trillion dollars in assets worldwide it accounts for more than 15% of financial assets in nearly a dozen countries
Central to Islamic finance is the idea that money doesn’t have any intrinsic value meaning Muslim bankers aren’t allowed to benefit from lending or receiving money worldwide banks are increasingly offering Sharia compliant products aimed at an untapped market of over 1 billion Muslims we still primarily depend on conventional banking
But these banks aren’t allowed to profit from selling services they make their money through trading instead of offering me an attractive interest rate at this Bank they’re promising me a target profit basically it’s a promise by the bank that they will try to grow my money by investing it in compliant
Investments that means the money I deposit at this Bank is traded in Sharia compliant businesses like Turkey’s biggest retailer BIM it’s applicable such companies as retail which owns or rents or leases assets like real estate or trucks or cars so and so it is applicable to all those assets which are
Utilized for for the business itself the 57 member states of the Organization of Islamic Cooperation are now planning to extend Islamic finance products beyond banking but with less than 5 percent of Muslims and countries like Turkey have an Islamic bank account much still needs to be done to market the idea of banking
Without earning interest joining me now is refuting Chico the CEO of Dena Standard thank you so much for joining us first of all how does Islamic finance relate to the common man thank you so much Islamic finance is has two wide circles of influence one is to the
Global Muslim population when we look at over 1.6 billion citizens of the world a lot of their needs are driven by Islamic law and those consumption needs not only relate to financing but how they eat their food how they clothe themselves how they travel even and all of this
Today is starting to converge into this notion of a halal or an Islamic lifestyle market and they want to finance their home financing or car financing or have an investment fund or a savings account or a deposit account that is Shariah compliant but the the adoption and awareness is very weak and
There are various challenges in terms of how the products are being communicated for example 80 percent of Muslims or 88 percent will eat halal food but you know the can define Islamic financing their financing only 5 percent in many of the major Islamic countries are Islamic and the rest is conventional financing so
There is this dicot there’s this huge gap and the demand is there from a consumer point of view
