In the past few years, Islamic banking and financing sector has shown a rapid growth. This area is expected to expand further as a significant sector of the global financing industry. The economic crisis that hit the global economy in the year 2008 put various institutions, establishments and businesses to sleep. During those times,Halal banks and financial institutions that were compliant to the Islamic law showed extensive flexibility in helping the individuals and businesses facing financial crisis. This started in a few countries and later on, it grew up in the countries with Muslim minorities as well. Since then, the Islamic banking and financing sector is moving forward to reach new heights.
Challenges of Islamic banking
The Islamic finance and banking has its own challenges to face which demand for qualities like great leadership and management. The greatest challenge of this system is the interest charged over the amount. In Islam, interest is prohibited in all forms. In today's economy, interest is the very basis of a banking system. Islam considers interest as an equivalent to usury or money lent at exorbitant rate of interest which is an unethical or immoral activity. Thus, the Islamic financial system is developed on an interest free basis derived from the Musaharaka and Mudarabah which means a joint venture in which the profit made or the loss suffered is shared among the partners. Thus, the stakeholders do not have to face exorbitant rate of interest and are under obligation to share all the profits and losses.
Likewise, there are various other laws followed by this system that need strict management to run an Islamic financial system. Many financial advisors and other economic experts came forward and put their point of view regarding this system. Some of them stated that the system has a lot of potential and is more successful than the conventional banks. While others said that adhering to their strict laws, the system may succeed to attract more and more clients but they may fail to lure more investors for their business. However, the gradual growth shown by the system proved all these negative speculations to be wrong. These days, education for Islamic financing is provided in various universities and institutes where all the features of this system are taught and the required qualities are developed in the students.
Even after the launch of this Islamic law abiding monetary system, there is a huge mass of Muslims that avoid depositing their money in banks. However, according to economic surveys, if this huge amount of money is made available to banks, it can add a great deal to the economic conditions of the Muslim countries. This scenario calls for great leadership and management qualities to convince the Muslims to invest their money in banks and apply for loans as well. The Islamic professionals working in banks have to come forward and address the queries of the conservative Muslims to get a good response from this group.
For the support of the Muslims residing in Non-Islamic countries, there are various organizations that provide the
Islamic Financing, investment and banking requirements. To learn more in this context, you may visit http://www.mcca.com.au.
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