The Australian Centre for Islamic Finance has set up an advisory board to help local businesses conduct sharia-compliant transactions, including developing financing options such as Islamic bonds, the centre's director told Reuters. The three-member board is the latest sign the industry is making headway despite Australia's lack of regulation catering to Islamic finance, which follows religious principles such as bans on interest and pure monetary speculation. The centre's sharia board members might not have the global name recognition as some of their Gulf-based peers, but familiarity with Australian law would appeal to local firms, said Almir Colan, director of the centre, an education and training body.
"We need people who will be able to apply classical fiqh (Islamic jurisprudence) principles within a modern context - the increased complexity of financial products and commercial transactions needs specialists."
The scholars have backgrounds in Islamic law and hold Islamic finance degrees from Melbourne's La Trobe University, while the board also aims to guide local Muslims on commercial matters."Their work will not be limited to corporate finance and auditing for sharia compliance but will also serve the wider community in Australia with regards to all issues regarding finance and commercial transactions," Colan said.
Last month, Melbourne-based First Guardian launched an Islamic pension fund in collaboration with local Muslim organisations to tap the country's private pension system, the world's fourth largest. Sydney-based fund manager Crescent Wealth plans to launch an Islamic fund investing in commercial property this year as it continues to expand its range of products.
Bangladesh's central bank is seeking to amend rules on its existing Islamic bond (sukuk) programme to broaden its use and allow for a sovereign issuance by the government, enhancing the prospects of Islamic finance in the country. Bangladesh, a majority-Muslim country of 160 million, has developed Islamic finance with marginal regulatory support but a lack of Islamic capital market tools are limiting the industry's expansion. A request for the amendments was now being considered by the finance ministry, which would allow sukuk to be used as a money market as well as a fiscal instrument, the Bangladesh central bank governor's spokesman A. F. M. Asaduzzaman told Reuters."Issuance of sukuk by the government is one of the major considerations in the proposed amendment," Asaduzzaman said.
The central bank has a small sukuk programme backed by legislation dating back to 2004, which issues short-term paper to help Islamic banks manage their liquidity, but a wide range of tenors is not available and there are no corporate sukuk. The proposal comes after a report by the Malaysia-based Islamic Financial Services Board (IFSB) highlighted the need to develop sharia-compliant funding instruments such as sukuk in the south Asian country.
The IFSB report said a sharia-compliant lender of last resort facility and an Islamic deposit insurance should be developed in Bangladesh to support an Islamic finance industry which has doubled in size in the past four years. The central bank is currently developing a lender of last resort framework for the entire banking sector which is expected by December of this year, with a sharia-compliant equivalent to be developed afterwards, Asaduzzaman said.
Islamic deposit insurance, however, was not under consideration with Islamic banks currently covered under the existing scheme managed by the central bank, he added. The IFSB lists Bangladesh as one of a handful of countries where Islamic banking has systemic importance, an industry which follows religious principles such as a ban on interest and monetary speculation. The country was gripped by political turmoil leading up to an election in January, with economic growth expected to slow to less than 6 percent in the financial year. In the previous year, the economy grew by 6 percent.