This content is from: Local Insights

Call for an Islamic bankers’ association

Nazir Mian Muhammad
Bankers' associations have been playing a very effective role in developing and promoting codes, best practices and standards for the banking industry. Being the representatives of the industry, these associations can feel the pulse of the industry and strategise the appropriate response to deal with the common issues affecting it. Islamic banking is a part of the overall banking and finance industry and as such is represented by the concerned bankers' association; nevertheless, considering the unique model which it follows, Islamic banking requires a little more financial literacy in terms of awareness with the principles of shariah.

Compliance with the principles of shariah by Islamic banks in all their activities and operations makes them distinct from conventional banks and as such requires different treatment for them in some specific areas. With the current pace of growth of Islamic banking, more particularly Islamic banks' transition from boutique banks to full-scale financial institutions offering, among others, a suite of complex banking solutions in full competition with conventional banks, it would be necessary to have a representative body for Islamic banks which understands their business model and their distinct requirements and can effectively represent them before the regulators and other stakeholders as an important section of the mainstream industry.

The UAE represents a sizeable portion of the total Islamic banking and finance industry and is offering a very friendly environment for the growth of Islamic banking and finance. It also hosts eight fully-fledged Islamic financial institutions and various Islamic windows of conventional banks. It is the right time for the UAE Islamic banks to set up an association – an Emirates Islamic Bankers' association (EIBA). The EIBA's primary focus should be to represent Islamic banks and Islamic windows in the Emirates Banks Association, the Central Bank of UAE and other stakeholders on all policy matters such as legislation, regulation and standardisation of Islamic banking and finance practices at the UAE level.

Mian Mohammad Nazir

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