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Japan is planning to introduce Shari`ah-compliant
dealings into its beefy banking system in a bid to attract lucrative Middle
Eastern oil money, a Japanese newspaper said on Sunday, June 18.
The government-backed Japan Bank for International Cooperation (JBIC) has
formed a four-man advisory board of Islamic legal scholars from Saudi Arabia, Malaysia
and Pakistan,
the Nihon Keizai Shimbun
said.
JBIC will also study Islamic-style finance in a tie-up with Sumitomo Mitsui
Banking Corp., Mizuho Corporate Bank and Bank of Tokyo-Mitsubishi UFJ, the
business daily said, quoting sources close to the plan.
Japan Asia Investment Co has separately set up an advisory panel of Muslim
scholars to confirm that the Shari`ah Asian
Investment Fund it manages jointly with a US firm for Middle Eastern
investors conforms to religious teachings.
Islamic banking operates by sharing profit or loss between the bank and its
clients, instead of interest, which is forbidden.
Islam forbids Muslims from receiving or paying interest on loans.
Observer
The government also intends to take part as an observer in the Islamic
Financial Services Board, a Malaysia-based organization set up by Muslim
countries.
The aim is to help Japanese private financial institutions enter the Islamic
financial market, according to the paper.
The Islamic banking industry, which began almost three decades ago, has made
substantial growth and attracted the attention of investors and bankers
across the world.
There are an estimated 300 Islamic banks and financial institutions worldwide
holding $300 billion in assets predicted to grow to $1 trillion by 2013.
Deposits grew by 13.7 percent per year from 1998-2003, while in the Gulf
region deposit growth reached almost double that in the last few years.
The fastest growing region has been the Gulf Cooperation Council, a region
seeing windfall oil revenue, with 60-70 percent of new deposits there going
into Islamic banks.
Europe's giants like Britain
and Germany
expanded over the past three years in producing banking services and products
aimed at the Muslim clients.
Britain's
fifth-biggest bank, Lloyds TSB, on Wednesday, June 14, began to roll-out its
Islamic financial services across the country.
British Muslims, estimated at 1.8 million, will now be able to open a Shari`ah -compliant current account in any of Lloyds'
2000 branches in England, Scotland and Wales.
Deutsche Bank, Germany's
biggest bank, set up a committee in 2004 to examine to what extent its
products conformed to Islamic law and hoped to create products that did so
without diminishing the financial performance clients would expect.
Islam Online & Newspapers
June 18, 2006
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