Several vacancies for Islamic banking jobs in the Gulf

By Javid Hassan

Several vacancies have been reported in Islamic banks in the UAE and other Gulf states, reflecting the growing demand for Shariah-compliant investments that are projected to reach $1.4 trillion by 2010, up from the current level of $ 1 trillion.

Emails received by HNN during the last few days testify to the expansion of Islamic banking products and services in the UAE and Saudi Arabia in the credit control, auditing, marketing and other sections.

The surge in the demand for Shariah-compatible investments and other Islamic assets from an estimated 1.6 billion Muslims around the world has already spawned the growth in educational institutions offering such courses. The Institute of Islamic Banking and Finance in Hyderabad became the country’s pioneering venture in launching a course in the field of Islamic Economics, Banking and Finance.

Aligarh Muslim University (AMU) has now taken the plunge with its decision to introduce a one-year post-graduate diploma course in 'Islamic Banking: and Finance.' The course has been designed by Dr Mohammad Nejatullah Siddiqi, winner of the King Faisal International Prize in Islamic Studies, who also taught economics for several years at King Abdul Aziz University in Jeddah.

The course is modelled on Islamic rules of transaction, of which the cardinal principle is prohibition of Riba (interest), giving rise to the interest- free banking system. AMU’s academic council, which supervises academic affairs, endorsed the introduction of the course, which will start from the next academic session. Some 20 students will be admitted to the course initially.

In this system of banking the depositor shares the risk with the bank unlike other banking systems. The owner of the capital, however, is entitled to a share in the bank's profits, according to Dr. Siddiqui, who adds that this type of banking system curbs the tendency towards speculation or gambling with the depositors’ money. It was the corporate greed that triggered the housing mortgage crisis in the US with all its global consequences and more recently the Satyam scandal case, in which the banks and auditors played a major role in the cover-up. The course would enable students to launch a career in Islamic banking that is gaining momentum not only all over the Middle East and Southeast Asia but also further afield in the US and the UK. Dr. Siddiqui points out that as of now no university in India is offering a full-fledged course in Islamic Banking, though some research work on the subject has been done in Karnataka and Pune universities. It does not figure in the syllabus of any university.

Dr. Siddiqui believes that though there are no Islamic banks in India, a few non-banking cooperatives are operating on those principles in Karnataka and Mumbai. He is upbeat about the prospects of Islamic banking in India, as it can attract NRI investors. Some of the top Indian companies are also planning to launch Islamic financial products to cater to the needs of Muslims who comprise 12 percent of India’s 1.2 billion population.

According to Mohamed Ridza, a leading consultant on Islamic finance in Malaysia and managing partner of Mohamed Ridza & Co,
the Islamic financial system is projected to account for approximately 4 per cent of the global economy as part of its long-term growth.

Despite the overall gloom and doom on the international economic scene, the Islamic banking industry, currently worth an estimated $1 trillion, is widely expected to emerge as one of the fastest growing sectors in the world of finance. Islamic banks, Ridza points out, have cushioned the impact of global recession due to their built-in checks within their strict regulatory framework. This has improved their performance to a stage where the Islamic banking industry is now anticipating a growth rate of 15 per cent annually.

A major factor behind this trajectory of growth is the fundamental Islamic banking principle of profit and loss-sharing scheme, known as Mudarabah, under which banks forge partnership with entrepreneurs. This obliges the banks to be circumspect in their approach in terms of sharing their risk and evaluating each proposal carefully before providing funds to the investor. The other aspect is the cost plus scheme, or Murabaha, where banks own assets desired by customers and sell them on installment basis at an agreed price in line with the Islamic principle of interest-free payment.

That the system is working well has been documented by their impressive track record. Since the western banks, including the internationally renowned HSBC, have already introduced Islamic finance as part of their investment portfolios, Indian banks should seriously consider such an option in the interest of job creation and economic growth.