Monday, May 11, 2009

Singapore: Guidelines on Islamic banking

THE Monetary Authority of Singapore (MAS) has issued another two regulations on Islamic banking - an area which it says will become more popular in the post-crisis world. The regulations mean that with immediate effect, Singapore-based banks may enter into what is known as diminishing musharaka financing and spot murabaha transactions, MAS managing director Heng Swee Keat told an Islamic finance conference on May 7, reports Singapore's Straits Times.
A diminishing musharaka transaction, for example, is a joint ownership arrangement where a bank gradually sells its portion of the jointly owned asset to the customer. This allows the bank's share of the asset to 'diminish' over time. Ultimately, the ownership of the asset - which can be in the form of property, vehicles, machinery or commodities - is transferred entirely to the buyer, the report added.
The central bank has also issued a 'consolidated set' of guidelines that provide 'greater clarity and certainty' for financial institutions offering Islamic banking products here, the report said.
MAS said the guidelines basically consolidate the various regulations and clarifications that it has made about the 'regulatory treatment of various Islamic finance structures under its rules'.
Mr Heng, who was speaking at the sixth Islamic Financial Services Board summit, said Islamic finance will assume a more prominent role in the coming years.
'In this crisis, both conventional and Islamic financial markets have been affected, but the restrictions on the use of leverage and speculation has put Islamic finance in a better stead,' he said.
Global Islamic finance assets today range from US$700 billion to US$1 trillion, according to some estimates. Oliver Wyman, an international management consulting firm, has even estimated that global Islamic finance assets could potentially grow to US$1.6 trillion by 2012.
Mr Heng stressed that MAS will continue to work towards a regulatory approach that is clear, relevant and consistent across the range of Islamic financial activities.
'We face challening times, but the dynamism of Asia, including the Middle East, will return and the structural economic changes are likely to accelerate,' he said. 'The focus on the role of finance to develop productive sectors will raise the profile of Islamic finance, and create new opportunities.'

1 comment:

guroo13 said...

Very good information.

Osama Mirza
www.islamandspiritualism.com