India ‘learning potential of Islamic finance’

Updated 31 October 2013

India ‘learning potential of Islamic finance’

Organizers expect more participation of global leaders and policymakers to attend the 10th edition of World Islamic Economic Forum (WIEF) in November 2014 in Dubai.
The 9th edition, which saw Prime Minister David Cameron aggressively wooing Islamic investments into the UK, ended in London recently.
Jointly hosted by the UK and Malaysia governments, 18 global leaders, five central bank governors and more than 2700 delegates from 128 countries participated in the annual international conclave on Islamic economy.
“Dubai has good infrastructure and expertise to hold such big events. We expect wider and better participation of world leaders there,” said Musa Hitam, chairman of the WIEF Foundation.
Hitam, a former deputy prime minister of Malaysia, declared Dubai as the venue of the 10th edition of the WIEF at the closing session.
A memorandum of understanding was also signed between the Dubai Chamber of Commerce and Industry and WIEF Foundation.
Hamed Buamim, president and chief executive officer of the Dubai Chamber and Alan Duncan, Britain’s junior minister for international development also addressed the ceremony which was followed by a video presentation on Dubai.
Before the big event, the organizers are planning to hold roundtable meetings in various countries to promote the event.
Hitam said Europe realized the potential of Islamic finance and embraced it wholeheartedly after the global financial meltdown but countries such as the US, China, India and South Korea are shy of it and he wanted to see more active participation from such countries in Dubai.
“India is much more conservative, but they are slowly beginning to learn and understand its potential in the wake of the economic turmoil,” he said.
“I think it will not be long time before India hosts WIEF. We now have Indian representation on the international advisory panel and the country is very powerful to attract Islamic finance.”
One of the focus of the event, according to him, was standardization of rules and practices in different countries and the exercise of achieving the goal has just started.
A panel of the world’s leading central bankers gathered here to discuss the policymaking steps needed to standardize global standards in the Islamic Finance Industry also shared his concerns.
Sultan Bin Nasser Al Suwaidii, governor, Central Bank of the UAE, stressed the need for reducing the cost of financing.
“Prior to the growth of the industry there was a feeling that Islamic finance would be provided at a lower rate to conventional banking and what we see is the opposite… Our practice has been to look at the product. The UAE has always been open so there is no set of written rules for products. It is done on a case-by-case basis. We look at all products,” he said.
The panel discussed several issues with harmonization high on the agenda.
The need to standardize not just regulations but accreditations for Islamic scholars involved in banking was recognized by all the panel members.
The range and scope of Islamic finance was also discussed — all agreed that it must go beyond the issuance of corporate Sukuk.
“We are witnessing exponential growth in the Islamic financial system. We are also more significantly seeing cross-border transactions. Harmonization of global standards is key…we must distinguish between market practices and global standards… Shariah rulings in transparency and rationale will remain important,” said Zeti Akhtar Aziz, Governor, Bank Negara Malaysia (The Central Bank of Malaysia).
Hamood Sangour Al Zadjali, executive president of Central Bank of Oman, said: “Given the lead and nimble footedness of standard banks, Islamic banks need to be equipped with a range of products and services. This can come only through user-friendly approaches. It is not sufficient for markets to focus on sukuk only, but we must focus on SMEs… Greater consensus is required before the system can mature.”
Mallam Sanusi Lamido (CON), governor, Central Bank of Nigeria, said his country takes the position so as the market moves forward. Each year, they face circumstances without exact precedent.
“As long as we accept a need for pragmatism and balanced rules, we’ll find a way forward,” he said.
Paul Fisher, executive director for markets, Bank of England, suggested “deep and liquid markets” for the Islamic finance to become a force.
“But if you have markets based on buy-and hold investors, they are not normally liquid. We need higher frequency traders — I think this is acceptable — but we need to think about a wider participation for sharia products,” he said.
“The debate about harmonization is important. Products don’t have to be identical; but the legal basis underlying all of those must the same, so people don’t have to worry. Getting consistency over what is sharia complaint would reduce basis risks. People also want to see benchmark rates.”
The panel was moderated by Sayd Farook Global Head, Islamic capital markets, Thomson Reuters, UAE.


India’s Reliance to push on with retail deal in battle with Amazon

Updated 56 min 10 sec ago

India’s Reliance to push on with retail deal in battle with Amazon

  • The row is the latest development in a prolonged battle for dominance in India between Reliance

MUMBAI: Indian conglomerate Reliance has dismissed Amazon’s push to delay its acquisition of domestic retail giant Future Group, despite an arbitration panel suspending the deal following objections by the US online titan.
The row is the latest development in a prolonged battle for dominance in India between Reliance, owned by Asia’s richest man Mukesh Ambani, and Amazon, whose founder Jeff Bezos is the world’s wealthiest person.
Amazon, which owned a stake in one of Future Group’s firms that reportedly included an option to buy into the flagship company, claims that the $3.4-billion Reliance deal, announced in August, amounted to a breach of contract.
After an arbitration panel ordered the deal to be put on hold following Amazon’s request, Reliance said late Sunday that it would nevertheless “enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay.”
Reliance’s retail subsidiary RRVL said in a statement that it had followed “proper legal advice” before agreeing to buy Future Group, adding that the deal was “fully enforceable under Indian Law.”
Reliance, Amazon and Walmart-backed Flipkart have been locked in a frenzied contest for a share of India’s lucrative online market.
The acquisition of Future Group, which owns some of India’s best-known supermarket brands such as Big Bazaar, would strengthen Reliance’s presence in the hugely competitive e-commerce sector.
The arbitration panel has 90 days to give a final verdict on the Reliance-Future deal.