Islamic finance sector must address the current lack of focus in social welfare by including Sharia-based charity principles of ‘waqf’ and 'sadaqah' as priority areas, said Dato’ Dr. Abdul Halim Bin Ismail, a veteran in the Islamic banking sector.
Speaking at a special face-to-face session at the 10th World Islamic Economic Forum in Dubai today, Dato’ Dr. Bin Ismail said Islamic banking and finance sector has come a long way since the first Islamic bank was established in Dubai in 1975. However, despite considerable growth in the sector, especially in the last 30 years, development of the Islamic banking sector is still an incomplete job, Dato’ Dr. Bin Ismail pointed out.
The three-day 10th World Islamic Economic Forum, which concludes today, is being organised by the WIEF Foundation in collaboration with the Dubai Chamber of Commerce & Industry, as part of its efforts to support the vision of the emirate to become the global capital of Islamic economy.
“There are areas where more could be done to make Islamic banking sector more aligned to Islamic principles. In particular, Islamic banks need to address the gap in social welfare by prioritising ‘sadaqah’ as a key area,” said Dato’ Dr. Bin Ismail, who pioneered the setting up of the first Islamic bank in Malaysia.
Dato’ Dr. Bin Ismail urged banks to collect ‘sadaqah’ from private sector and utilise the funds for investments. Profits derived from such investments must be channeled towards charity, Dato’ Dr. Bin Ismail explained.
“Investment and fund management is the work of banks, and therefore Islamic banks should step up efforts to integrate management of ‘sadaqah’ funds as a focal area,” Dato’ Dr. Bin Ismail said.
Allaying concerns over lack of standardisation, stemming from differences in Sharia interpretation, Dato’ Dr. Bin Ismail said active harmonisation efforts are currently in progress in the Islamic finance sector, and many services provided by the sector are now being accepted globally.
Dato’ Dr. Bin Ismail said while Islamic banking initially aimed at addressing the banking requirements of the Muslim community, its current wider acceptance across the world is encouraging. However, he stressed the importance of evolving concrete mechanisms to ensure that funds are used in Sharia-compliant manner around the world.
Admitting that over exposure by some Islamic banks has been a recent concern, Dato’ Dr. Bin Ismail called upon Islamic financial institutions to guard against such maneuvers, and instead remain aligned to asset based financing.
The World Islamic Economic Forum is the largest international gathering of heads of government, economic experts and stakeholders to share experiences and knowledge about Islamic economy since its launch in 2004.
For more information, visit the 10th WIEF website: www.10thwief.org