Islamic finance is surging across the globe, gobbling up an ever-increasing share of the more than $220 trillion in international assets outstanding. It’s a trend that has accelerated since the 2008 crisis shook confidence in conventional banking, prompting most of the world’s financial capitals—from London to Dubai—to join the battle to dominate the industry.
That is everywhere except in India-Canada-America !
Why India tends to follow these countries,is reflecting there images is the only way to proove their so called developing nation since independence?What happen if this industry is giving profit and has a tag of Islam,it will be for every profitable thing.
what RBI thinks of itself,no definition of it,even the govt. of west bengal wanted a moratorium on interest.
some lights on this—-
What is Islamic finance?
Islamic finance is much like traditional finance except that the services and products it creates conform to Islamic teachings, also known assharia. The most well-known of these is the prohibition against charging interest—known as riba in Arabic—and a term whose explicit meaning is in dispute (more on that below).
Anyone who’s ever used a credit card knows you can’t borrow a dime without paying interest, but in Islamic finance, banks must find other ways to make money off their loans and other products. They usually do this by charging a service fee and/or engaging in profit-and-loss-sharing contracts. The most popular of such methods for home financing, for example, is called murabaha, which is similar to rent-to-own schemes. A bank purchases a house for a customer and then sells it back at an agreed-upon markup.
Islamic assets must also follow other ethical norms. Investments in high-risk ventures, gambling, non-halal foods, alcohol, pornography, and so on are all off limits. In addition, the rules generally require that risks be shared between the lender and borrower, and that all finance be directly backed by real assets—a far cry from some of Wall Street’s exotic creations that bear only a distant relation to an actual asset.
The industry is growing so quickly because its primary demographic comprises one-sixth of the world’s population—most of which is based in the Middle East—and one increasingly interested in parking its growing wealth outside the region. This is creating a pressing need for financial products and services that conform to Muslim beliefs.
Islamic finance is a fast-growing market
The overall market in Islamic assets has grown at an average pace of 20% a year since the financial crisis struck in 2008.
According to the Dubai-based Al Huda Centre of Islamic Banking and Economics, the industry is projected to boast more than $2.5 trillion in assets this year.
Islamic bonds, or sukuk, are perhaps the most prominent segment, with companies and governments expected to sell about $145 billion of the debt in 2015.
Iran, Malaysia, and Saudi Arabia currently dominate the industry, but many Western countries are vying to become European and international hubs for Islamic finance.
The UK in particular has been pushing hard to get in the game. Last year, it became the first Western country to issue an Islamic bond. The former lord mayor of London, Roger Gifford, went so far as to say that Islamic finance should be as British as fish and chips.
Yet in a 2014 ranking of 42 countries with some form of Islamic finance activity, the US placed 15th and Canada last—a puzzling reality given the importance of each country’s banks to the global financial system