Islamic Banking In 5 years

Australia could have its first Islamic bank within five years and become an Islamic banking hub if regulatory hurdles can be addressed, government and business leaders say.

Assistant Treasurer Nick Sherry said yesterday the Federal Government was committed to making the regulatory framework governing banks flexible enough to accommodate Islamic banking products and services while still protecting consumers.

Senator Sherry said there were concerns state stamp duty on property sales and other taxation might be hindering the development of Islamic finance in Australia and these issues needed to be addressed.

''Islamic banking has its own set of regulatory issues relating to capital adequacy and accounting requirements,'' Senator Sherry said at an Islamic banking and finance conference in Melbourne.

Former Liberal Party leader and Global DC chairman John Hewson said Australia was likely to have at least one Islamic bank within five years, if regulatory hurdles could be overcome.

''I believe strongly that not only will we see one or more Islamic banks in Australia, but I think we could emerge as the dominant Islamic financial centre in the Asia Pacific region,'' Dr Hewson said.

He said the time was right to attract a foreign Islamic bank to Australia or to turn local Islamic banking co-operative, the Muslim Community Co-operative (Australia), into a bank.

Australia's need to fund major infrastructure projects during the next 20 years could see the wealth of the Middle East and Asia channelled into infrastructure funds if they were run in a Shariah-compliant manner, Dr Hewson said.

Islamic finance differs from conventional finance by complying with Shariah Islamic law and prohibiting all interest charges.

Islamic banks are also governed by a supervisory board of Muslim clerics to ensure compliance with Shariah law as well as banking regulations in the countries in which they operate.

The London head of Islamic finance with global consultancy PricewaterhouseCoopers, Mohammed Amin, said that Islamic finance was a subset of conventional finance.

From Canberra Times