Growth of Islamic banking in UK Case Study Example | Topics and Well Written Essays - 4000 words

Growth of Moslem swaning in UK - Case Study ExampleAn important post of the paper is the approach of main regulator in UK to supervision and regulation of Moslem banking. Paper to a fault specifically focuses on specific Islamic mortgage products and their development in UK market.Global size of Islamic finance has been long foretelld between $200 and $500 billion with an estimated growth rate of 10-15% annually.A precise estimate escapes though.In comparison the sterling assets of UK banking sector al wholeness amount to 2.5 trillion ( nigh $4 trillion).Thus Islamic banking has some throttle to cover . But that is just another way of emphasising the scale of the opportunity(Howard,2003). In the UK, with the exception of one stringently Islamic bank there are only Islamic products on offer by Islamic arms of commercial banks(HSBC, Llyods TSB,UBS for example).A large and well-developed Islamic financial structure has not come about and then far. But there is already a signifi groundworkt amount of business of various kinds focussed around relatively wealthy individuals or large institutions. Some London banks use the London Metal flip-flop for Murabaha. The customer buys and sells forward a metal on the London Metal Exchange and earns a profit(Howard,2003).The kickoff service provider for islamic banking products Halal Financial Services has been set up in 2005 as full fledged company. This is first in Islamic banking space. It is actively marketing products of Ahli Bank and HSBC Amanah and propagating the concept of halal mortgage. Its Chief Executive Officer reported, At the moment it is halal mortgages but we are only face at a matter of weeks before we see Takaful coming to the market in the UK in the midriff of July(2005). Of course HSBC Amanah has also launched the UKs first sharia compliant pension plan as well. In the equal context we tend to get involved in halal commercial finance, Murabaha based commodity benchmarked minutes and so on. We will continue to diversify our product range as and when we can (Paul, 2005).Thus a vivacious Islamic banking products market is round the corner in UK financial markets. However strategic conditionalities as state below must be met before this happens. Competition with conventional banks Warren Edwardes says that Given a plectrum between a pure Islamic bank and a highly rated reputable international bank providing the same service, a client would rather go to the one that has a brand name than the one that provides Islamic-only services, without the brand name - so special purpose Islamic Banks will just have to keep innovating to stay in business just like the old British Merchant Banks(Warren, 2002). To begin with renaming the Arabic terminology, such as Ijara with leasing or Musharakah with equity participation, will lead to a greater judgment of the Islamic banking system. If products are structured in islamically acceptable way then Islamic banks would address a niche market. In a system where both parties to a contract have to have their Sharia compliance status verified, and where a fault at any subsequent stage of the deal can void it entirely, having a standardized set of Sharia