Agenda What does “Islamic banking” stand for?

Tested strength in the financial crisis

• Islamic banking, a booming $US1 trillion global industry that prohibits speculation and high levels of debt, has been relatively unscathed by the credit crunch.
• Islamic banking model’s basic principles of
• financing “real” trade and economic activities,
• no financing of speculation
• No engagement in debt trading
• Asset backed and project-financing approach to help hedging risks
• As a result, the lessons from the crisis;
• Islamic banking is inherently stable
• Islamic banks outperformed the conventional financial institutions

• Banking and finance needs

• Right positioning and definition of Islamic banking - 1

• Principles filter

• Islamic banking and finance solutions

• Prohibition on:
• Interest
• Speculation

• Religious basic sources
• Ijma’ (jurist consensus)
• Qiyas (analogy)
• Ijtihad (reasoning)

• Musharaka (Partnership)
• Mudaraba (Fund management)
• Murabaha (Purchase-resale)
• Ijara ( Lease)
• Istisna’ ( Manufacturing contract)
• Salam -(Forward sale)

• Asset-backed transactions with investments in real, durable assets

• Standart contracts

• Principles sources

• Prohibition of certain investments:
• Sectors (e.g.: alcohol, armaments etc.)
• Instruments (e.g. Leveraged interest products, toxic assets type of derivatives etc.)

• Credit and debt products are not encouraged

• Banking and finance needs

• Right positioning and definition of Islamic banking - 2

• Principles filter

• Islamic banking and finance solutions

• Religious basic sources
• Ijma’ (jurist consensus)
• Qiyas (analogy)
• Ijtihad (reasoning)

• Musharaka (Partnership)
• Mudaraba (Fund management)
• Murabaha (Purchase-resale)
• Ijara ( Lease)
• Istisna’ ( Manufacturing contract)
• Salam -(Forward sale)

• Standart contracts

• Principles sources

• With the development and boom of Islamic banking, it became clear that :
• Islamic banking has roots in religion and ethics but it is not a “religion activity” and “not confined to Muslim population”
• Islamic banking is not something “from and for GCC or Muslim world”, it is a global concept
• Islamic banking has some limitations and border lines, but it is acknowledged that it can provide solutions in a wide scope of areas ranging from retail banking to investment banking.