Sharia-compliant banking is expected to witness a global growth of 15-20 per cent, according to a banker.

Delivering a lecture on ‘Global banking scenario and challenges’, organised by the regional office of Indian Overseas Bank here on Saturday, Dr Rajesh Nayak, Director (Training), Central Bank of Oman’s College of Banking and Financial Studies, Oman, said that sharia concept of banking is attracting bankers in some western countries. At present, around $1 trillion of banking assets are under this concept of banking, he said.

Sharia-compliant banking emphasises on sharing risks than shifting risks. It is based on the principles of prohibition of interest and prohibition of uncertainty.

Explaining two techniques of this banking, he said one technique focuses on the joint venture between the banker and the customer. Under this, the banker contributes the capital and the customer his management capacities. Both of them share the profit in this technique.

The second technique is based on the cost plus sale model. The bank invests in the cost of the product and sells it with a profit.

If introduced in India, he opined, both the traditional banking and sharia-compliant banking can exist together.

vinayak.aj@thehindu.co.in

(This article was published on July 8, 2012)
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