SOMETHING TO THINK ABOUT.....

Excerpts from Bernama

Islamic finance is a viable alternative to the current economic system but its global potential has yet to be fully optimised.

In stating this, HSBC Bank Malaysia Bhd's deputy chairman and chief executive officer Irene M. Dorner said there is also still a lack of understanding about the Islamic finance concept.

"Philosophically, it is the right solution because you will get true finance with underlying assets," she told reporters on the sidelines at the 13th Malaysian Banking Summit 2009 here Monday.

"But it is not proven that the world economic crisis couldn't happen if the world banking system is Islamic because it haven't got the scale yet across the world, that's the huge scope for Islamic finance," she said.

Industry players have said that Islamic banking is safe from the effects of the global financial crisis as it is prohibited from buying debts under the Shariah law.

Islamic banks also do not rely on bonds or stocks, and are not involved in the buying and selling of debt, unlike most conventional European and American banks.

Dorner said she believed that the Islamic finance could help to mitigate the impact of the economic crisis but more needed to be done to ensure the acceptance of the industry around the globe.

"If we carry on that way, with the philosophy and its principles, it could be the answer for the future," she said.

On HSBC, Dorner said the bank would not change its credit lending policy and would continue to fulfil the needs of customers.

"We have not changed our credit criteria at all, we are supporting all our customers as we believe that it is important to provide sufficient credit in the market, especially during the current situation," she said.

My comment

The way I see it, if the industry players follow the main philosophy behind Islamic finance all the way, there should not be any headaches/crises whatsoever in the first place.

The impact to Islamic banks are still there because they do not follow what is Islamic finance all about in the first place – Shariah is not the culprit here, the people are. This is something to ponder seriously about. It is high time for the Malaysian bankers especially to seriously consider, as Malaysia has establish Islamic banking since more than 2 decades ago and yet, the Islamicity of our financial products are still being questioned.