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Muslim nations plan to set up islamic bank Original Source Link: (May no longer be active)
http://www.forbes.com/home/feeds/ap/2005/06/22/ap2105297.htmlhttp://www.forbes.com/home/feeds/ap/2005/06/22/ap2105297.html
Associated Press
Muslim Nations Plan to Set Up Islamic Bank
06.22.2005, 06:22 AM
Muslim bankers and regulators announced plans Wednesday to set up a global Islamic bank by next year that could rival Western lenders and to chart a 10-year blueprint to bolster growth in the Islamic financial sector.
The Bahrain-based Albaraka Banking Group will take up a 10 percent stake in the US$1 billion (euro824 million) bank to be known as the Emaar International Group, said Saleh A. Kamal, chairman of the General Council for Islamic Banks and Financial Institutions, which proposed the project.
Other key shareholders are the Islamic Development Bank, which is the financial arm of the 57-nation Organization of Islamic Conference, and Malaysia's Islamic Bank, Kamal said.
Officials have said the bank will operate in keeping with Islamic laws, which means no interest would be paid or charged on deposits and loans.
Bahrain, Qatar, Dubai and Malaysia could be the host country for the new bank, Kamal said, adding that operational details are expected to be finalized in three months.
"We hope by early next year, it will be operational," he told some 400 officials and regulators at a forum in Malaysia to map out a blueprint for the Islamic financial sector.
Kamal said the bank's emergence could be a "vital turning point" for a sector whose growth has been hamstrung because 73 percent of some 285 Islamic banks and financial institutions are undercapitalized at below US$25 million (euro20.5 million). There is now only one Islamic bank that has capital exceeding US$500 million (euro410 million), and 10 others with more than US$200 million (euro165 million), he noted.
Membership to the Emaar group is open to private Islamic and conventional banks, pension, insurance and endowment funds, as well as individuals, he said.
The Islamic Financial Services Board secretary-general Rifaat Ahmad Abdel Karim told the Associated Press that a 10-year Islamic financial services master plan for OIC nations is expected to be completed by the end of the year and distributed to various regulatory bodies.
Malaysian Prime Minister Abdullah Ahmad Badawi, whose country currently chairs the OIC, told the forum that the masterplan would promote widespread development to "address the problems of extremism and terrorism" in the world's largest Muslim political grouping.
Twenty-seven OIC members are classified by the World Bank as low-income nations while 21 are severely indebted, he said.
Abdullah urged members to tear down tariff barriers, simplify trade procedures and harmonize regulations to boost intra-OIC trade.
Malaysia is spearheading efforts to help the OIC focus on economic development among Muslim nations to help lift them out of poverty and boost their financial clout.
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