Dubai Islamic Bank inaugurates a three-day conference on Islamic finance

The event, which is taking place in cooperation with the Islamic Development Bank and Islamic Universities League, will feature eight discussion sessions on the development of Islamic banks. Dr Abdullah bin Abdul Mohsin Al-Turki, General Secretary of Muslim World League, Chairman of Islamic Universities League, were present at the opening ceremony. Prominent personalities in the field of Islamic finance as well as Islamic scholars, top bankers, and economic experts attended the event.

On behalf of H.H. Sheikh Hamdan bin Rashid Al Maktoum, Dr. Mohamed Khalfan bin Khirbash, UAE Minister of State for Finance and Industry and Chairman of Dubai Islamic Bank, delivered a speech. He said: " Leaders in the Islamic banking industry are gathering in this special event to discuss, analyse, and contemplate about the future prospects and challenges facing the development of this dynamic and significant sector."

Stressing on the leading role performed by Dubai Islamic Bank (DIB), the first Islamic bank to have incorporated the principles of Islam in all its practices in 1975, Dr. Khirbash said: "During the past 30 year, Islamic banks have developed across the world. Today, there are more than 280 Islamic banks in 48 countries with deposits approaching US$400 billion, added to that, about 300 traditional banks have established Islamic subsidiaries or offered Islamic products."

He added: "In Asia, the Middle East and Europe, more and more banks and their customers are turning to Islamic finance. The success of Islamic financial istitutions and banks extends beyond the Gulf region and to the international market. Terms such as 'Sukuk', 'Ijara', 'Musharaka', and 'Mudaraba' have become part of the language of finance the world over. Sukuks, in particular, have attracted large investor volumes, with subscriptions exceeding expected issuance even in big issues," he said.

Dr. Khirbash noted: "The value of Islamic issues in the Gulf States alone approached US$4 billion last year and these were invariably met with an enthusiastic response from both Islamic and non-Islamic financial institutions and banks. In fact, the contribution of non-Islamic institutions to such issues approached 60 per cent of the total. This proved Islamic finance not only offers an alternative to conventional finance, but also gives a wider range of investors the opportunity to participate."

He said: " Equally important is that more jurisdictions are now permitting Islamic finance. In a number of countries, institutions are converting from conventional practices to being Sharia-compliant."

In his speech, Dr. Abdullah bin Abd Al Mohsen Al Turki, said: "I hope that such functions would support Islamic banks that are facing serious domestic and foreign challenges such as bank and trade regulations, which are not Shariah compliant."

Highlighting the challenges facing the Islamic banking industry, Dr. Al Turki said: "Currently, Islamic banks do not have a reference to depend on for identifying whether their operations comply with the Islamic finance principles. This is considered a major barrier hindering the development of Islamic banks. Added to that, Islamic banks are also obliged to keep deposits in central banks, most of which operate on systems that do not comply with guidelines that Islamic banks follow."

He explained that Islamic banks also lack capital to keep pace with the latest developments taking place in the banking industry. "Supporting Islamic banks to overcome these challenges should be the responsibility of governments, organisations, thinkers, and businessmen. Islamic universities should also take part in backing the Islamic banking industry throughout establishing colleges and faculties specialised in Islamic banking and finance. Islamic universities should also cooperate with Islamic banks to establish training and research centres," he said.

Dr. Al Turki concluded that Islamic banks should consider establishing a central bank or an international body to enhance coordination between them and invest in human capital development.

Three session were held on the first day (Saturday, September 3, 2005) under the title "Islamic Banks, Vision of Founders", "Overview on experiences of Islamic Banks", and "Strengthening relations between Islamic Development Bank, Islamic Banks, and Traditional Banks".

The second day (Sunday, September 4, 2005) will feature three session on "Relations between official organisations and Islamic Banks", "Suggestions to develop Islamic Banking System", and "Islamic Banks, Guiding the way".

Participants will discuss "Investment instruments of Islamic Banks" and "Human Capital Development in Islamic Banks" in two sessions set to be held on the third and final day (Monday, September 5, 2005). Recommendations will also be announced on the conclusion day.