Thursday, August 09, 2007

Islamic banking flagging in Egypt, India could be the source of future growth

The lack of demand for Islamic banking in Egypt provides a stark warning for other countries' Islamic finance industry about enforcing adequate supervision & regulation. In the 1980s, many Islamic banks folded, taking the savings of many Egyptians with them. This produces a skepticism of Islamic banks generally among the population. In order to avoid a similar fate, other countries with Islamic banks need to take the utmost care to ensure that their country's Islamic banks are not taking excessive risk which could threaten their survival. One banking analyst in Cairo described the failure of many Islamic banks as "a social crisis," adding that "the image of Islamic banks still is not great"

Islamic banking has an additional challenge: fighting against perceived (and assumed) connections with terrorism through lengthy court battles.

Overlooked until now, India could be the next growth center of Islamic finance.

The Financial Times provides its take on the rapid growth of the sukuk market.

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