‘Islamic finance is key to solving credit crisis’

Doha: Doha Bank group CEO R Seetharaman yesterday said ethics-based Islamic finance is the only solution to the current global financial crisis and potential future fallouts.

Speaking at the International Islamic Finance Forum in Dubai on “Seamless Integration of Islamic Finance with the International Financial Markets, he highlighted the growth of Islamic finance in the GCC and Asia Pacific regions as well as the world as a whole.

Explaining the innovations that had taken place in Islamic finance, Seetharaman showcased the products structuring under Murabaha, diminishing Musharaka, Islamic credit cards structured under Murabaha and Musawama and Tawarruq among others.
He spoke about sukuk, which are the Islamic finance mode for funding “big-ticket” infrastructure projects.

Seetharaman said more Islamic products with high liquidity and product diversification are the need of the hour. Shariah-based sovereign wealth funds helped global financial institutions to tide subprime crisis to the tune of not less than $30bn, he added.
He said these sovereign wealth funds have well diversified investment portfolios towards high yielding equities, alternative investments and emerging markets.

“Islamic Finance has attained key significance in the regional and international financial markets due to its growing demand on account of its strong and ethical fundamentals.

However to integrate Islamic finance with the global financial markets, strong efforts to develop various standards, such as legal, regulatory, accounting and corporate governance frameworks are required at a faster pace.

Such integration will subsequently promote changes in international standards,” he said. The conference focuses on ethical financing, micro-financing, review of issues pertaining to Islamic financing and exploring alternative Islamic asset classes among other issues.