Monday, September 24, 2007

Canadian Islamic banking applications

Two unidentified companies have applied to the Canadian banking regulators asking to be allowed to open Islamic banks in the country and four more groups may be contemplating applications. Some critics are worried that the difference in product type may be difficult for regulators and may pose increasing risk, particularly if they are not able to become members of the Canada Deposit Insurance Corporation, the Canadian equivalent of the FDIC in the U.S.

Islamic finance is becoming more widespread in Pakistan and West and South Asia.
An interesting comment from M.A. Mannan, deputy CEO of Dubai Islamic Bank, was that "80% of Pakistanis would prefer Islamic products if all things are equal". This sets a high bar for Islamic banking given that over 95% of Pakistani's are Muslims and that Shari'ah-compliant products are costlier than their conventional equivalents.

Standard & Poors, the credit rating company, will begin issuing stability ratings for Islamic banks that have profit-sharing investment accounts.

UK needs to do more to bring Islamic finance into the market on equal footing with conventional financial institutions, says Lloyd's TSB product manager Aktar Ahmed. Lloyd's TSB, which last week made a public commitment to expand Islamic finance in the U.K.

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