Friday, December 19, 2008

Legal review of Islamic financial products, private banking, Sri Lanka may consider Islamic finance

Malaysia struggles with how to accommodate Islamic finance within a non-Islamic legal system where judges are not familiar with Shari'ah requirements. In other parts of the world, Islamic financial products are structured in ways that legal systems are able to adjudicate without considering the Shari'ah-compliance of the products. This leaves little recourse for users of Islamic financial products who want to challenge the Shari'ah-compliance of products but allows the contracts to be constructed in legal systems where the outcome of challenges can be reasonably predicted from past case law.

The GCC is expected to have Islamic private banks developing in the next few years. An executive at Dubai Islamic Bank says that the Islamic finance industry should provide more alternatives catered to high net worth individuals.

Sri Lanka's government is looking at alternative sources of foreign finance and may be considering exploring Islamic finance (including Islamic microfinance) which is available in parts of the country which has a relatively small Muslim minority.

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