DOHA Oct 11 Qatar's regulator has proposed
extending its ban on onshore banks operating Islamic windows to
include financial institutions in the Qatar Financial Centre
(QFC), according to a consultation paper released this week.
Such windows allow conventional banks to offer Islamic
financial services, provided that clients' money is segregated
from the rest of the bank.
Last year the central bank banned Islamic windows in the
onshore banking system, requiring conventional banks to close or
divest their sharia-compliant businesses. Its motive was
apparently to ensure a level playing field for Islamic
Extending the ban would ensure that conventional banks could
not take advantage of the QFC to skirt the ban. "The Regulatory
Authority's proposal would create a consistent approach to
Islamic windows within the State," the regulator said in the
consultation paper, which is open to responses from the public
until Nov. 12.
"Adopting this policy will align Qatar with international
standing-setting bodies whose aims are typically focused on
reducing regulatory arbitrage."
Islamic windows present disadvantages because of
difficulties in properly supervising risks and the complexity of
financial reporting, the statement added. But it said the amount
of business conducted through Islamic windows in the QFC was
"The amount is very small. It's never been something that
the QFC has gone out of its way to attract. This appears to be
more of an attempt to achieve coherence across the financial
sector in Qatar, rather than something that is business-driven,"
said a Doha-based analyst, declining to be named.
The proposed ban would also extend to insurance companies,
although there are currently no conventional insurers operating
an Islamic window in Qatar.
(Reporting by Bernardo Vizcaino and Regan Doherty; Editing by