By Jonathan Wright
DUBAI (Reuters) - Islamic bankers say they look forward to the day when a central authority can give their financial instruments a religious or regulatory stamp of approval, making them acceptable across the Muslim world.
At a two-day Reuters summit on Islamic finance, they said they already see convergence towards some standards for the industry, which has grown in leaps and bounds in recent years and is expected to keep expanding for the foreseeable future.
"For the industry to keep growing at the same pace, we do need at least to have some basic standards," said Nasser el-Sheikh, chairman of the Dubai-based Islamic mortgage lender Amlak Finance AMLK.DU.
But they also said complete conformity on religious aspects might not be possible, and some differences would probably persist, between scholars and between Islamic countries.
Except in Malaysia, which has a central board, Islamic banking institutions now follow the rulings of their own in-house panels of scholars on whether the bank's instruments meet the requirements of sharia, Islamic law.
Islamic law bans usury, usually understood to cover all forms of lending at fixed interest, and imposes restrictions on various other forms of lending.
As with other aspects of sharia, there is no one body widely accepted as the final authority, and banking practices can vary widely from one place to another.
In Saudi Arabia, for example, few banks will touch Islamic bonds or sukuk of a type that is not problematic for investors based in Bahrain or the United Arab Emirates. Continued...
© Thomson Reuters 2008. All rights reserved.
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