Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARDS :: form 3cd :: VAT RATES :: cpt :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: empanelment :: VAT Audit :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: TDS
« News Headlines »
 Here's how to calculate tax payable on your capital gains
 Income Tax calculations for the financial year 2016-17
 CPE Events 17 October - 22 October 2016
 High Court raps I-T Department for wrong tax demand
  CBDT signs 5 advance pricing pacts with Indian taxpayers
 Finance ministry warns tax officials of action against GST protest
 Big changes for small units under GST
 Parliament’s winter session to begin on November 16 to expedite GST rollout
 Income-tax (27th Amendment) Rules, 2016 - 92/2016
 Announcement - Clarifications in Respect of MEF 2016-17
 Non-taxing GST apps to make filing income tax return less painful

Ethical edge of Islamic finance
April, 17th 2008

How and to what extent are Basel II principles and techniques applicable to the regulation and supervision of Islamic banks, and what are the problems to be overcome in this context? These questions find answers in Islamic Finance: The Regulatory Challenge edited by Simon Archer and Rifaat Ahmed Abdel Karim ( ).

At least two factors make the book topical. One, the rapid development of Islamic banking since the early 1990s. Islamic Banking a Western Success, says Lahem al Nasser in an article dated April 14 (

When the British government stated that it was considering issuing a sovereign Islamic bond, or sukuk, it also issued a Treasury consultation document so that specialists and experts could consult and exchange views over this important step, Nasser observes.

The second factor, according to Archer and Karim, is the fact that international financial authorities such as the World Bank, the IMF (International Monetary Fund) and BCBS (Basel Committee for Banking Supervision) have understood the desirability of building bridges between Islamic (Shariah-compliant) financial institutions and the conventional (non-Shariah-compliant) financial sector.

On a related note, a story dated April 14 in speaks of a recent Moodys report titled, Islamic Banking in East Asia Growing But Not Without Challenges. Christine Kuo, the reports analyst and author has been quoted for the view that there exists a natural business potential for Islamic banking services in Malaysia as approximately 60 per cent of its population is Muslim. But it is government reforms during the past 20 to 30 years which have really helped develop the necessary legal and regulatory framework and institutions for the industry to flourish.

Also, while Islamic banking has achieved relatively high market penetration in Brunei and asset growth in Indonesia has been rapid, Islamic banking services available in the Philippines, Singapore and Thailand remain very small in terms of asset size, says Kuo.

Divided into five parts, the well-produced book elaborately discusses capital adequacy, securitisation and capital markets, corporate governance, and the nature and risks in Islamic banking.

Accountants may wish to know that the IFRS (International Financial Reporting Standards) are considered deficient when applied to Islamic banks. And that, to meet this lacuna, the Accounting and Auditing Organisation for Islamic Financial Institutions, created in 1991, has issued 18 Financial Accounting Standards (FASTs). In spite of the high quality of these standards, however, they have been adopted in only a handful of countries, fret Archer and Karim.

They highlight how in countries with highly developed markets a typical problem is of legal definitions. For example, deposits have the legal status of debt contracts and are capital certain, whereas Islamic banks accept deposits as profit-sharing/which cannot be capital certain. If the profit-sharing pool in which the funds are invested incurs a loss, the investment account holders must accept their share of the loss, the book explains.

From the narrow perspective of banking law, Islamic banks may better be termed finance houses rather than banks stricto sensu, but they perform the economic function of banks to the Islamic community and may therefore quite reasonably wish to call themselves banks for marketing reasons, the editors suggest.

They bemoan that some ideologists of free markets fail to acknowledge that markets do not exist in a pure economic space, but are part of a societal structure of which the law and the administration of justice are key components, along with education and business ethics.

A major advantage of the Shariah, the book argues, is the insistence on the ethical dimension of business. We hope that the coming decade will see important advances in the adaptation of legal systems, in education and training, in regulation and supervision, and in other relevant aspects of institutional development, so that Islamic finance may fulfil its true potential, the editors conclude.

Important read.


Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Mission

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions