Qatar, in requiring banks from HSBC Holdings Plc to Doha Bank QSC to close units offering Syariah- compliant services, is emulating Malaysia, the world’s biggest market for Islamic debt.
The Persian Gulf nation, whose economy is growing at the fastest pace in the world, sent an order to banks this week requiring non-Islamic commercial lenders to shut operations that comply with Syariah law by year-end, according to the central bank circular. Malaysia allows standalone Islamic banks and subsidiaries to provide the services.
“The central bank’s directives will help separate Islamic from non-Syariah resources in the banking sector,” Manoj Kulkarni, the head of credit research at brokerage SJS Markets Ltd in Hong Kong, said in a telephone interview yesterday. “It will also attract more Islamic banks to the industry. However, it’s not good news for conventional banks, which stand to lose revenue.”
Qatar’s decision sets the nation on a path towards developing its Islamic finance industry in the model of Malaysia, according to Mohd Daud Bakar, the Dubai-based Syariah scholar who has approved more Syariah-compliant bond deals than any other scholar, based on data compiled by Bloomberg. Malaysia has US$337.6 billion (US$111.2 billion) of Islamic banking assets, or 20 per cent of the nation’s total, the Finance Ministry’s 2010-2011 economic report shows.
“It is a positive step,” Bakar said. “This could be a good move for competition in Qatar.” — Bloomberg