$105bn Waqf sector 'can boost Islamic finance'

Shari’a compliant philanthropy, or planned giving, is on the rise with the Waqf sector (Islamic endowment) estimated at around $105 billion globally, according to research conducted recently by Ernst & Young on the sector.

Ashar Nazim, director and head of Islamic Financial Services at Ernst & Young, says: “The Shari’a compliant endowment sector provides a unique impetus for the growth of Islamic finance including the nascent asset management industry.

“While Waqf has always been an integral part of Islamic countries’ economic system, it is only now that a more formal structure is evolving for professional investment management of this pool of money, with an emphasis on making a sustainable impact. More investment firms are eyeing this opportunity, adding a new dimension to the Islamic asset management industry.”

 

A significant majority of the Waqf assets are in the form of real estate, and could be as high as 70 to 80 percent of the total sector assets.

“The remaining money is deployed in Shari’a compliant money markets mostly with regional financial institutions.  Between Awqaf institutions (organizations that manage Waqf assets) and other entities, the Cash Waqf alone is estimated at $35 billion,” explains Nazim.

Investment management of Waqf pool, now a substantial amount globally, has not traditionally been the strength of Waqf administration entities. The institutions command good donor loyalty and are also strong in disbursing to the relevant social causes. However, the historical returns on managing these investments have been dismal, with the Cash Waqf mostly earning bank savings return. 

“The opportunity cost in terms of foregone wealth is staggering. The Cash Waqf sector would potentially generate an incremental $2-3 billion annually, simply by aligning with professional investment managers. The need is most critical given the high fiduciary responsibility of the trustees to manage the wealth in the best possible manner,” Nazim says. 

Islamic funds industry is still evolving, having been able to tap only 11 percent of the estimated $480 billion wealth pool at its disposal. Most of the products relate to vanilla equity markets and there is an urgent need to innovate and diversify to new asset classes. Islamic endowments, both real estate and cash pool, is likely to be the next breakthrough opportunity for the Islamic fund managers.  

  

Tapping into the multi-billion dollar Waqf pool first requires ensuring a credible governance and operational infrastructure to safeguard the sanctity of the Waqf charter. In addition, understanding the donor segment and their unique touch points is critically important to raise endowment funds. For Islamic financial institutions their existing investor base, comprising high net-worth individuals and family offices, makes for a good starting point, the research said. – TradeArabia News Service

Careers in Islamic finance tap into embryonic field

Choosing this line of work reflects a desire to leave a legacy for the next generation despite bumps and bruises along the way

By Rushdi Siddiqui, Special To Gulf News

My children, son (14) and daughter (11), asked a straight-forward two-part question as part of their homework assignment on parent car-eer choices: why did you choose Islamic finance? Will you retire in Islamic finance?

At surface level, they seem to be easy questions, but they are more difficult to explain than stock screening or writing about Sharia-compliant risk.

Query: Are there programmes or courses for children of parents in Islamic finance to train the next generation?

Entry

Today there are more roads leading to Islamic finance, but for those of us who got into this space in the mid-1990s, especially living in the West, it was not about the money, but an interest, a cause or an (job) opportunity to get into something during the post-formative stages of development, i.e., after establishment of IDB, DIB, KFH, Albaraka, Tabung Haji, etc.

All of us in one way or another want to leave a legacy behind for the ‘village' that raised us, and Islamic finance, being embryonic, better affords that opportunity, even today. Put differently, conventional finance and capital markets are older, more developed and efficient vis-à-vis Islamic finance, hence, less opportunity to make a mark.

For example, over the years certain people have been equated for achievements at certain institutions, even if affiliation is no longer evident. Iqbal Khan (founder of HSBC Amanah), Richard Thomas (UBK), Esmail Daddabhoy (Islamic repos at UBS), Governor Zeti Akthar Aziz (Islamic central banker), Michael McMillian (Special purpose vehicles for Islamic structures), and people have equated me to Islamic indexes (Dow Jones Indexes).

But there has to be due credit given to (western) conventional institutions, especially non-banks, that have embarked upon addressing the needs of the Islamic finance marketplace. To them, it's not about religious sentiment, but new market opportunities, as many of their existing markets are mature and saturated, hence, eroding margins.

For Islamic finance, the credibility issue is neatly addressed when institutions like S&P, Thomson Reuters, Clifford Chance, and PWC enter the space, as these global brands will not risk tarnishing their brands without due diligence on a sizeable opportunity. And their decades of experience is the need of the hour for this niche market to become ‘conventionally efficient and competitive.'

Thus I got interested in Islamic finance after I read an article in the New York Times and then saw a Tombstone ad in the Financial Times about a deal closed by The International Investor (Kuwait). I wound up at an index provider after I pitched the idea about being the world's first Index provider to have an Islamic equity index, and they saw an opportunity for licensing revenue with Islamic indexes.

Exit

Once people get into Islamic finance they may job hop from one Islamic finance entity to another, usually based on compensation during the pre-crisis days, while others stay at one firm until a sense of accomplishment of the vision or retire. So, for career Islamic finance people, it's all they know and it's how they are generally type-cast/labelled.

 Query: Do non-Muslims in Islamic finance encounter the same labelling issue? Is it easier for non-Muslims (than Muslims) to go (back) to conventional finance, or is this too broad a generalisation question?

Query: What about a Sharia scholar leaving Sharia advising or changing profession to become an Islamic banker or lawyer? Muddassir Seddiqi, no relation, is a good example of a scholar turned scholar/lawyer. Is this a possible avenue for scholars going forward?

So, what kind of second career do Islamic finance people land? For example, Iqbal Khan, HSBC Amanah founder, is now founder/CEO of Fajr Capital, Hussain Al Qemzi, previous CEO of Sharjah Islamic Bank, is CEO of Noor Islamic Bank, and I went from being a Global director at Dow Jones Islamic Index Group (10 years) to Global head of Islamic finance and OIC Countries at Thomson Reuters.

The second career in Islamic finance is about a fire in the under-belly. It's a continued commitment to possibly (1) right some wrongs, (2) finish what you started, (3) make a difference, (4) pierce the Islamic ‘glass' ceiling, or (5) desire to go back to an unstructured environment to create value.

A career in Islamic finance is like raising a child; bumps, bruises and challenges at different ages, but also achievements and accomplishments along the way to adulthood. We get into Islamic finance for a cause and it becomes a causeway to a career.

Gulf News

UK leading the world in Islamic Finance

The UK has been praised as the leading Western centre for Islamic finance following the World Islamic Banking Conference (WIBC)

Following the success of the World Islamic Banking Conference (WIBC) in Bahrain, the UK has been praised as the leading Western centre for Islamic finance and one of the world’s most attractive destinations for Islamic banks.

The conference, supported by UK Trade & Investment (UKTI), included an expert panel from the UK, which led debates on the future of the sector, both in the UK and around the world.

This panel included three members of the UK Islamic Finance Secretariat, as well as representatives of leading advisory firms.

They spoke to a large audience of Islamic wholesale and retail bankers from across the Gulf region and beyond, as well as advisors and other professional service providers specialising in Islamic Finance.

The panel looked at the pitfalls and opportunities for Islamic finance in light of the global economic downturn and opportunities for growth in the sector, with some estimates putting its value at over US$4 trillion in the coming years.

Leading industry speakers said:

"Small corporates looking at sukuk issuance are favouring UK law - it's a safe pair of hands. We have recently been asked to look at several issuances particular for this reason and also due to the experience we have in the UK working with international institutions," said Kazi Rahman, Lawyer, Wragge & Co Richard Thomas, CEO, Gatehouse bank said, “The UK is the number one centre for co-operation with other Islamic finance centres such as Bahrain and Malaysia.”

“There is a great opportunity for investment and commercial banks to raise awareness of an alternative source of finance,” said Sultan Choudhury, Director at the Islamic Bank of Britain.

“The UK is one of the most attractive banking destinations, particularly when it comes to Islamic finance. Rules and laws facilitate the use of Islamic products,” said Darshan Bijur, Director of Islamic Finance Advisory, KPMG.

The Panel challenged the audience to learn from UK experiences and implement changes within their own institutions. The UK, and especially London, has been working to move the Islamic Finance sector from niche to mainstream over the last decade, with wide expertise and a financial infrastructure that is uniquely placed to support Islamic banking.

In the UK there are 18 major law firms providing legal services in Islamic Finance; Five stand-alone Sharia-compliant banks; Providers of education in Sharia compliant finance; Five of the largest national professional services firms with Islamic Finance teams based in London providing Sharia-complaint services.

The WIBC has been running for 17 years, and is the world’s largest and most influential gathering of Islamic finance industry leaders. This year there were over 1,200 international delegates from more than 50 countries.

http://www.cpifinancial.net

Islamic Finance in Russia – Developments in 2010

It has been a year since the first conference on Islamic finance in December 2009. Over the year there have been quite a number of significant events taking place, all of which will influence the development of Islamic finance in Russia. Among these, the major milestones are the establishment of the Russian Association of Experts in Islamic Finance; the first Halal Expo Exhibition; publication of an authorized translation of the Accounting and Auditing Organization for Islamic Financial Institutions’ Standards of Islamic Finance Transactions; and the first Islamic finance deals on the Russian market.

As part of the wider growth process of specialists focusing on Islamic finance, the Association of Experts of Islamic Finance was established in early 2010. At present it has 76 members and 11 candidates from seven Russian regions. To become a member, candidates should demonstrate an adequate level of knowledge and obtain recommendations from two existing members of the association.

The first Halal Expo Exhibition took place in June 2010. This was a three-day event, which gathered more than 60 producers of halal goods and services from 10 countries. Companies demonstrated the advantages of their products to the several thousand visitors that attended. The event was supplemented with a seminar on Islamic finance that attracted the participation of representatives of one of the largest Islamic banks Al-Baraka and of the Malaysian Central Bank.

The first publication in Russian of the authorized Accounting and Auditing Organization for Islamic Financial Institutions, or Aaoifi, standards was one of the year’s important events. Assisted by Pepeliaev Group, the Russia Council of Mufties in association with the RAEIF translated and published such standards as “murabaha” (sale on credit), “sukuk” (securitization) and “takaful” (Islamic insurance).

The presentation of these published standards took place in Moscow in October 2010, with the participation of Aaoifi head Dr. Mohamad Nedal Alchaar.

One of the most important developments was investment by a Malaysian fund in facilities related to production and distribution of halal foodstuffs in Tatarstan.

Despite numerous complaints with respect to the tax and legal obstacles to implementing Islamic finance in Russia, it was possible to find adequate solutions for investment that were compliant with both Russian legislation and sharia principles. Russian lawyers, in cooperation with Malaysian colleagues, provided all the necessary support in respect of services required for this investment.

2010 saw issues of several sukuks in Europe, in particular in the field of aviation, i.e. the leasing of aircraft. Although transactions did not involve Russian companies, there are no major obstacles to conducting similar financing projects in Russia. We expect the first Russian sukuk to be issued in 2011, as the market is recovering and Russia appears to be attracting the interest of foreign investors, also from the Middle East and North Africa.

At present, the Russian legal and tax environment is able to accommodate most of the classical Islamic finance transactions, and there is growing number of experts who know the field, and so executing Islamic finance projects in Russia is rather more a matter of selecting the appropriate investment projects than issues relating to tax and legal support surrounding implementation. For the latter, there are appropriate solutions under existing laws.

http://www.themoscowtimes.com

Naymet Islamic Microfinance to launch Islamic microfinance product

Pakistan's AlHuda-Centre of Islamic Banking (CIBE) and Economics has signed a Memorandum of Understanding with Naymet Islamic Microfinance to develop Islamic Microfinance Products for Naymet Microfinance.

AlHuda CIBE will operate manuals of Islamic financial products. It will provide accounting and auditing measures, Shariah supervision, and help in training staff members. It will also facilitate Naymet Islamic Microfinance in advisory for Shariah complaint I.T solutions.

Mr. Muhammad Zubair Mughal, Chief Executive Officer, AlHuda CIBE said that Alhuda Centre of Islamic Banking and Economics is very eager to develop Islamic Microfinance products. He added that Islamic microfinance is not only developing within Pakistan but Bangladesh, Lebanon, Syria, Malaysia, Indonesia South Africa and other countries are also benefiting from the products of Islamic microfinance.

President, Naymet Islamic Microfinance, Mr. Shahid I. Mohammad said, "It's our privilege to establish a working relation with AlHuda CIBE. Islamic microfinance products will be very beneficial in developing Shariah complaints industry. It will be a step forward to flourish a web of Islamic microfinance products network in Pakistan that will be very poverty alleviation and uplifting the economy of the country".

Islamic Banking, first choice: SME

Union of Small and Medium Enterprises (UNISAME) invited the attention of the Task Force (TF) on Islamic Banking (IB) in its first meeting at State Bank of Pakistan presided by Director IB Division Saleemullah that Musharaka and Mudaraba financing is the first choice of the SMEs and urged the TF to make it compatible for the sector for financing their needs for inland and international trading.

President UNISAME Zulfikar Thaver said the SMEs are disheartened by the conventional banks due to their unwillingness to take risk even in cases where the funds are provided by the SBP. The conventional banks do not have risk management expertise and are not well versed in collateral management and clinging to old methods of financing. They insist on immovable property as collateral and refuse to accept personal guarantees, goodwill of the firm, brand ownership and even goods in transit are declined as col lateral whereas in other countries of the world it is much easier for SMEs to get finance from the banks on the basis of their cash flows and track records.

He said the SMEs need running finance for their imports and exports, for purchase of raw materials and project finance for setting new industries. The SMEs also need finance for balancing, replacement and modernization.

He urged the members of the TF to develope products for SMEs for mutual benefit and said that there is much scope in the sector and especially in Venture Capital (VC) where innovative ideas could be put to use by the Islamic Banks.

Answering a question on lack of accounting systems he asserted that the micro sector lacks accounting system but the SMEs are now maintaining proper accounts and are growing constantly, they have become efficient and the younger generation is well aware of the fact that technology leads to success.

Challenges facing Islamic banking - UMER AHMED

The emergence and growth of the Islamic finance industry is a phenomenon that has generated considerable interest in the financial world in recent years. Given its ability to offer innovative financial solutions to an under-served market, it is seen as a socially responsible, faith-based banking niche with considerable growth potential.

In the Muslim world and increasingly in the West, significant segments of the institutional and retail markets are increasingly choosing Islamic finance for their financing and investment needs. Today, more than 500 Islamic financial institutions are operating throughout the world. Western banks are also doing Islamic banking, through their Islamic units in the UK, Germany, Switzerland, Luxembourg and other countries. The industry is growing at a rate of roughly 15 percent per year, and could serve 40 to 50 percent of the world's Muslim population within a decade.

State Bank of Pakistan's released figures indicate that branch network of Islamic banks in Pakistan has grown in excess of 649 branches in March 2010. The total asset base of local Islamic banking industry is Rs 366bn and the deposit base is - Rs 283bn. The industry has shown tremendous growth rate of 55% since inception. The ever-increasing share of Islamic banking in the local banking system stands at 5.9%.

Despite the impressive growth, the Islamic banking industry is facing a number of challenges that are preventing it from attaining an even higher pace of growth. Some of the most important issues are identified below. Short-term liquidity management: The lack of investment avenues, especially short-term, has been one of the major problems faced by Islamic financial institutions (IFIs) in Pakistan.

The IFIs cannot invest in conventional interest-based sovereign debt instruments such as T-bills and Pakistan Investment Bonds. Therefore, short-term liquidity management has been a key challenge. Although the government of Pakistan's Ijarah Sukuk in 2008 provided some relief as an alternative to PIBs; however, due to limited supply and increasing demand from Islamic treasuries, these Sukuk are rarely traded in the secondary market. A short-term liquidity solution is still awaited from the government.

Regulatory and tax reforms: The government patronage and regulatory/tax reforms play a pivotal role for any industry to grow with leaps and bounds. On the international front, governments, like the United Kingdom and Malaysia, are offering relaxed rules and taxation for tapping the great demand for Shariah-compliant investment by Muslim investors, especially from the Middle East. Pakistan too can become a regional hub for Islamic finance if proper regulatory reforms are introduced. To achieve this goal, the government needs to revamp the existing structure of taxes and duties to make them conducive to Islamic finance. The most important areas where incentives can be offered are:

i) Stamp duties: Stamp duties, especially the land revenue duties paid at the time of transfer of property increase transaction costs and hampers assets-based financing.

ii) Tax incentives for investors: Islamic banks are new players in the market and they should be given some relaxation in terms of taxation. Theoretically speaking, depositors in Islamic banks are partners with Islamic bank and they share in actual profits and losses, as against interest-based banks where depositors are creditors and their principal is protected. Therefore, to encourage people to invest in Shariah compliant products, the government should introduce incentives in the form of tax credits. When we look at international markets, for example, the Malaysian government has given certain incentives for investors in Islamic finance industry till the year 2016 to make Malaysia a regional hub for investment.

iii) Regulatory reserves and capital requirements: The regulatory capital requirements like minimum capital requirement (MCR), current reserve requirement (CRR) and statutory liquidity reserve (SLR) requirements serve to stabilise the financial sector. However, the nature of depositors in the Islamic banking industry is entirely different from that of conventional banks; therefore, percentages for regulatory reserves for Islamic banks should be relaxed further keeping in view their peculiar risk profile. This will create a level playing field and better reflect risk sharing nature of deposits in Islamic bank.

Human capital: Since the inception of the industry, the supply of trained or experienced human resource has lagged behind the expansion of Islamic banking. There is a dearth of qualified bankers, who are well-versed in Islamic laws as well as contemporary economics and finance. Currently, few universities and training institutes are offering courses in Islamic finance, but they also face lack of competent human resources to conduct these courses.

At the experts' level, there are only a few scholars with the requisite knowledge and expertise in the field of Islamic finance. Therefore, the industry has to rely on a handful of Shariah scholars for the product development needs and these scholars find it difficult to accommodate multiple requests for their time. To cater to the needs of the industry, both business schools and religious schools should offer specialist courses in conjunction with industry experts to prepare the next generation of Shariah scholars and Islamic-financial managers.

Investment avenues: Islamic principles stipulate certain conditions that need to be adhered to while developing Islamic banking products. Having left with no choice due to the absence of attractive investment avenues, Islamic banking products mainly rely on asset-based financing to generate returns for their depositors. The SBP figures indicate a heavy concentration of trade-based product of Murabaha (cost plus sale) in the total financing portfolio of Islamic banking to the tune of 37% as at March 31, 2010. Together, Murabaha, Ijarah and Diminishing Musharakah, which are all essentially asset-based, fixed return products, constitute more than 80% of the financing portfolio of Islamic banks in Pakistan.

Although no less Shariah-compliant, these fixed rate trade based products draw criticism from certain quarters of the economy due to their apparent resemblance with conventional, interest bearing counterparts, usually in terms of returns only. The critics demand a more 'Islamic' way of investment by way of profit and loss sharing arrangements for investments by the banks in the form of equity based financing rather than trade based financing. However, this is easier said than done; due to lack of documentation in the economy, Islamic banks are finding it difficult to enter the profit-and-loss sharing-based real business ventures with their customers instead of fixed return products. Moreover, entrepreneurs and industrialists are also reluctant to share profits with the financiers in low risk ventures.

Standardisation of contracts: The introduction of various Shariah standards by Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFIs) has started to bring some uniformity into the Shariah-based legal framework of the Islamic finance industry, but efforts are needed to bring these agreements in conformity with the local taxation and related laws so as to make them more acceptable among all users.

Perception of users: Due to unsatisfactory experiences in the name of Islamic banking in the past, some Pakistani customers are now skeptical about the authenticity of Islamic banking practices. Part of it could be attributed to psychological tendency to stick to the decades' old banking habits and perception of banking. Most customers have opinions that are based on misinformation and represent lack of understanding of Fiqh issues. Changing these perceptions has been one of the greatest challenges for Islamic banks that can only be addressed through collective efforts by all, especially the media.

Benchmark: Using the conventional interest-based benchmark (KIBOR) as the base of pricing an Islamic financial product puts Islamic banks as well as their customers at the mercy of movements in the interest-based money market. Also, a negative perception is created among the clientele that there is no real difference in Islamic banking products as these are also using the same interest based benchmark. It is argued that Islamic banks should have their separate benchmark for investment pricing. This was not possible initially due to limited market, however, some Pakistani banks have now taken the initiative and work has already started to develop an Islamic benchmark.

Conclusion: To succeed as a viable banking option, Islamic banks not only need passionate supporters, but also a number of supporting institutions/arrangements to perform functions, which are being carried out by various financial institutions in the conventional framework. Attempts should be made to modify the existing structure to provide better products and quality service within the ambit of Islamic laws. While interest-based banking has taken hundreds of years to mature to the level where it is today, expecting the same maturity from Islamic banking in its nascent stage will be expecting too much. To develop an economic system truly reflective of the sacred principles of Islam, all stakeholders should understand the limitations at this stage and work towards its advancement.

Key recommendations 

-- Dedicated R & D efforts to develop viable short term liquidity products for the industry

-- Dedicated learning centres at university level to train and develop competent workforce and Shariah scholars

-- Collective mass awareness campaign by Islamic banks

-- State Bank should take measures for uniformity of Islamic banking contracts and products

-- Dedicated research and product development teams should be developed at all Islamic financial institutions.

(The writer is attached with Product Development, Shariah Compliance and Islamic Financial Advisory Department (PDSC) Meezan Bank Limited)

How Islamic finance can close the credibility gap

The Islamic banking and finance sector risks losing a golden opportunity to demonstrate an alternative system that could prevent a future credit crunch and share risks. With the conventional banking sector slowly coming to terms with its high-profile collapses and bailouts, and the Islamic sector suffering only mild aftershocks, why are savers and investors not flocking to sharia-compliant banking? Could Islamic finance lack a certain degree of credibility? And if so, why?

The conventional banking sector has many years of experience, regulation and business culture behind it, whereas the Islamic sector has, without such a background, reached about $1000bn in assets worldwide in only 20 years. That certainly looks impressive, but it still represents less than 1% of banking assets globally, which makes the question of why many investors are still lacking trust in the system all the more important.

Islamic banking is regulated by sharia advisors, who are supposedly jurists specialising in Islamic law and economics. Their job is to direct, review and supervise activities related to Islamic finance to ensure that they are in compliance with sharia principles. However, they are not accountable for their actions - that is the responsibility of the banks that employ them. Sharia board members' responsibilities, qualifications, ethos, commitment and social responsibility can therefore be unknown or questionable, when they should be identified, regulated and accountable, both to the organisation they represent and to those affected by their decisions, which ultimately shape the Islamic finance system.

One problem is the opaque manner in which advisors are appointed. It is based largely on recommendations and friendships and there is little in the way of checks on qualifications or ability. But as they will rarely have to make an important decision, this hardly matters, as we shall see.

Spread too thin

Another problem is that such a small number of advisors is expected to serve an expanding sector. Instead of training new, young talent, the existing members are spreading themselves thinly around the world's sharia boards: more than 70 boards each in several cases. Financial institutions use these 'celebrity' names in their marketing materials to boost the self-importance and supposed credibility of both parties. Inevitably, the decision-making process is being squeezed in terms of time and commitment because it would be impossible to give a reasonable amount of time to so many boards. Important decisions will go on being rubber-stamped until a major change takes place, and it will not happen from within as long as board membership is such a lucrative business.

So who has the power to change the system? Corporate governance of Islamic banking is torn between the Islamic banks' national central banks, the Accounting and Auditing Organization for Islamic Financial Institutions, the Islamic Finance Services Board (IFSB) and appointed sharia board members. The IFSB recently produced a detailed draft on governance that has no mention of accountability, which sums up the state the sector is in and explains why many Western bankers see Islamic institutions as a risk too far.

Conventional banking may have taken a battering recently, but it remains years ahead in terms of transparency, due diligence and legal adherence. Excessive and inappropriate activities do of course take place in conventional banks but if they are detected, the result to individuals and institutions can be dire. Islamic board members, accountable to no one, can continue with impunity so long as they remain within the laws of the lands in which they operate. As well as the economic impact of such a relaxed attitude, there is the risk that devout Muslims are being misled when they are told that their accounts are run with strict sharia adherence at the forefront.

The system must be changed; there are enough brilliant minds throughout the Islamic world and global finance to make a difference. The most pressing remedial measure is to limit the number of boards a member can sit on to one, and attendance should be part of the deal. Second, board membership should not be a guaranteed job for life; members' continued employment should be dependent on biennial elections. Third, board members must have a noticeable effect on the bank's organisation; this can include product development and training. Fourth, corporate governance should be strengthened to include sharia board members' accountability, just as boards of directors are accountable. And finally, the veil of secrecy needs to be lifted on members' appointment, qualifications, activity and performance; relevant information must all be openly accessible and transparent.

Does the Islamic banking sector have the nerve and the will to enact the massive changes necessary, given that the existing system is of immense benefit to the sector's narrowly based leadership? If enough serious thinkers begin to make themselves heard, perhaps the bankers will realise that the party is over. They will have to choose whether to be part of the change or to move on before the pace of change overtakes them.

Dr Aly Khorshid is an Islamic finance consultant and sharia scholar at Academy UK, and was previously a sharia board member at Al-Barakah International Bank UK

http://www.thebanker.com/news/fullstory.php/aid/7661/How_Islamic_finance_can_close_the_credibility_gap.html

Islamic Finance Heads Down Under: Australia Launches its First Islamic Finance E-Learning Program

Ethica Institute and La Trobe University Launch Australia's First Ever Islamic Finance E-learning Program

DUBAI, UAE - December 6, 2010

How do you bring Islamic finance to the far corners of the world? Ethica Institute in Dubai and La Trobe University in Australia have solved this problem.

Today Ethica, the Islamic finance training and certification institute, announced the launch of a new Islamic finance for-credit course at one of Australia's leading universities. This will be the first time ever that a 100% online course in Islamic finance is offered as part of an on-campus course. Enrolment for the award-winning Islamic Finance Professional Development (IFPD) course is now open and online classes begin next month on January 15, 2011.

The international education industry is Australia's largest services export, contributing over 550,000 students and $12 billion annually to the country's economy. Moreover, the Australian government actively began promoting Islamic finance in recent years by exploring tax neutrality for Shariah-compliant products.

La Trobe University's Associate Professor Ishaq Bhatti said, "With Ethica, our Islamic finance program now extends far beyond our physical campuses. For the first time ever, we now tap into the tremendous demand for Islamic finance from students all over the world." This year, La Trobe's Islamic finance program won numerous awards including the prestigious Australian Learning and Teaching Council (ALTC) Award for excellence.

Ethica's Managing Director, Atif Khan said, "E-learning is the best way to address Australia's growing demand for certified Islamic finance graduates. La Trobe is already a pioneer in the field with one of the world's only Master’s programs in Islamic banking and finance, and now with an e-learning component, they scalably grow their campus across the globe."

Earlier this year Mashreq Bank rolled out Ethica's e-learning program across its entire Islamic banking network. Dow Jones affiliate Zawya.com and New York based Banker's Academy also signed on with Ethica recently.

About Ethica Institute of Islamic Finance: In 2010, Ethica (www.EthicaInstitute.com) was chosen by more professionals for Islamic finance certification than any other organization in the world. The Dubai-based institute received the award nomination for "Best Islamic Finance Training Institution" in 2009 and 2010 by Islamic Business and Finance Magazine. Ethica's clients include banks, universities, and professionals in over 20 countries.

About La Trobe's Islamic Finance Professional Development (IFPD) course: Recipient of the prestigious ALTC 2010 Award, La Trobe's Islamic finance program is the first university-level Islamic finance program in Australia. Enrolment for the program is now open on a first-come, first served basis with online classes beginning next month on January 15, 2011. To learn more, visit http://www.latrobe.edu.au/lawman/ifpd or contact Almir Colan at A.Colan@latrobe.edu.au.

For more information about this article, or to schedule an interview with Ethica Institute of Islamic Finance, please call Sameer Hasan at +971-4-305-0782 or e-mail atinfo@ethicainstitute.com.