I have been reading on the rise in Islamic banking since the World Islamic Banking Conference was set up and started meeting 14 years ago. It seems that banks like Citigroup, HSBC, Deutsche Bank, Morgan Stanley and Goldman Sachs are all incorporating Islamic banking in their institutions.

All I know about sukuk is that it is only permitted to invest in halal products, prohibits riba (usury) and hoarding of wealth and makes makes zakat compulsory (2.5% of all profit to be donated to social charity or welfare schemes).

How does this affect present day banking practice? What would be the impact?

Correct it if I am wrong, Islam forbids charging interest on lending money, perhaps because at the time of Mohammed (peace be upon him) money lender were charging loan shark rates and causing lot of misery among poor people.

So, in order to charge that interest, the financial institutions have come upon with all sorts avenues with the blessings of a lot of mullahs since the old days. That does not change too much in international banking practice - otherwise a lot of poor countries with large Muslim population would have benefited by now. Greed never ends...

I have been reading on the rise in Islamic banking since the World Islamic Banking Conference was set up and started meeting 14 years ago. It seems that banks like Citigroup, HSBC, Deutsche Bank, Morgan Stanley and Goldman Sachs are all incorporating Islamic banking in their institutions.

All I know about sukuk is that it is only permitted to invest in halal products, prohibits riba (usury) and hoarding of wealth and makes makes zakat compulsory (2.5% of all profit to be donated to social charity or welfare schemes).

How does this affect present day banking practice? What would be the impact?

It would be impossible to say without knowing just how much money is involved. Otherwise, it would just a wild unsubstantiated guess.

Correct it if I am wrong, Islam forbids charging interest on lending money, perhaps because at the time of Mohammed (peace be upon him) money lender were charging loan shark rates and causing lot of misery among poor people.

So, in order to charge that interest, the financial institutions have come upon with all sorts avenues with the blessings of a lot of mullahs since the old days. That does not change too much in international banking practice - otherwise a lot of poor countries with large Muslim population would have benefited by now. Greed never ends...

Uh no idea :o

Here is what I got from wiki

In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. However, the fact that it is profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is registered to the name of the buyer from the start of the transaction. This arrangement is called Murabaha. Another approach is Ijara wa Iqtina, which is similar to real-estate leasing. Islamic banks handle loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining ownership of the vehicle until the loan is paid).

There are several other approaches used in business deals. Islamic banks lend their money to companies by issuing floating rate interest loans. The floating rate of interest is pegged to the company's individual rate of return. Thus the bank's profit on the loan is equal to a certain percentage of the company's profits. Once the principal amount of the loan is repaid, the profit-sharing arrangement is concluded. This practice is called Musharaka. Further, Mudaraba is venture capital funding of an entrepreneur who provides labor while financing is provided by the bank so that both profit and risk are shared. Such participatory arrangements between capital and labor reflect the Islamic view that the borrower must not bear all the risk/cost of a failure, resulting in a balanced distribution of income and not allowing lender to monopolize the economy.

more banks? will they be the same as the other banks or different interest rates?

It would be impossible to say without knowing just how much money is involved. Otherwise, it would just a wild unsubstantiated guess.

Okay. Here is what I obtained from the news

The Islamic banks of London are preparing to gain more business from the 15 million European Muslims, who, other than those who live in London, they have had little effect upon.

By 2010 it is predicted that Islamic banking will reach a value of $1 trillion, a prediction that has led the UK to woo the sector with laws passed to enable easier transactions and the intention to deliver a sovereign Islamic bond.

London has approximately £3.5bn/$7.14bn Islamic bonds listed, with many large Islamic bond and loan deals occurring through the city, providing the British capital with an advantageous position compared to its European counterparts.
http://www.bankingtimes.co.uk/13122007-islamic-banks-aim-to-expand-into-europe/


Big banks, including Citigroup, HSBC and Deutsche Bank, as well as financial capitals like London, Tokyo and Hong Kong, are all going into the Islamic banking business. An estimated 300 Islamic financial institutions hold at least $500 billion in assets, an amount that is increasing more than 10 percent a year.


http://www.iht.com/articles/2007/11/22/business/islamic.php

Okay. Here is what I obtained from the news

http://www.bankingtimes.co.uk/13122007-islamic-banks-aim-to-expand-into-europe/



http://www.iht.com/articles/2007/11/22/business/islamic.php

NOW we've got something to start working with! :) To answer the original question, though, we'd have to also know what their assets are without that money. No doubt that it's helpful to the economy - but the question of how much still remains.

NOW we've got something to start working with! :) To answer the original question, though, we'd have to also know what their assets are without that money. No doubt that it's helpful to the economy - but the question of how much still remains.

They are banking in sovereign funds.

Kuwait’s KIA has long beena conspicuous investor. In 1974, it snapped up St Martins Property Corporation. Then, in 1983, it bought Autobar, one of Europe’s largest drinks and food-vending business. And in 1987, in the aftermath of the disastrous privatisation of BP, the Kuwaitis took a 22% stake in the British oil company. Today, Kuwait is reckoned to own about 2.5% of BP.

Other states in the Middle East have followed in the KIA’s footsteps. The Abu Dhabi Investment Authority (Adia), founded in 1977, is the next oldest sovereign fund. It is also one of the most opaque; estimates of its funds vary between $250 billion and $1,000 billion.

Qatar, Kuwait and Abu Dhabi have the Gulf’s biggest sovereign funds. Saudi Arabia has two funds that invest externally. But the big Saudi money is in the hands of family concerns, such as Olayan Group and holding companies, the best known of which is Prince Al-Waleed’s Kingdom Holdings.

The pattern of Middle Eastern states recycling their income into overseas investments is therefore well established.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2752048.ece

The Christians were forbidden to charge interest on money for many years, and relied on the despised Jews to handle the moneylending.

That started to become awkward, as the Church became a wealthy landowner, and the Bible found new interpretation.

It is beginning to become awkward for the Muslims to continue to rely on the Christians to handle their moneylending, as they become wealthy landowners. My guess is that interpretations of the Koran will be found, and workarounds established.

If so, the amount of money involved will be about the amount of money used to buy oil between 1950 and 2050.

Arrangements will be made.

Islamic banking is going bye bye as central banks take over the Axis of Evil countries America deposes.