The Rise Of Islamic Finance In Britain.pdf.pdf

The Rise of Islamic Finance in Britain : A Summary Islamic finance aims to create business

activities that generate a fair and equitable profit from

transactions that are backed by real assets. This method of financing avoids usury, uncertainty, short selling and excessive credit creation whilst encouraging sound risk management procedures. Islamic finance reached the UK in the 1980s with the first commodity Murabaha transactions and the launch of the first UK Islamic bank, Al Barakara International in 1982. During the 1980s a number of investment banks offered bespoke Sharia compliant products to their Middle Eastern clients, mostly in the areas of trade finance, leasing and project finance. It was not until the industry received political and regulatory support that momentum started to build. In 2000 an Islamic finance working group was set up under the leadership of Andrew Buxton, former Chairman of Barclays Bank and Eddie George of the Bank of England. The working group included representatives from the Treasury, FSA, the Council of Mortgage Lenders, financial institutions and members of the Muslim community. Since the formation of this working group the UK Government and regulators have attempted, through the addition of Alternative Finance clauses to various Taxation Acts, to create a market environment where Islamic banks and their clients are not treated any differently to their conventional counterparties. There have been two key policy objectives of the UK Government. First, it aims to establish and maintain London as Europe’s gateway to international Islamic finance. On 29th October 2013, at the ninth World Islamic Economic Forum, David Cameron, the former Prime Minister announced the government’s plan for the United Kingdom to become the first non-Muslim state to issue an Islamic bond and will be issued on the London Stock Exchange in front of more than 1,800 political and business leaders from over 115 countries. This initiatives hopefully will allow London to ‘stand alongside Dubai and Kuala Lumpur as one of the great capitals of Islamic finance anywhere in the world’, and that such measures will act as a catalyst for greater investment and activity in the UK’s Islamic finance sector. Second, it ensures that nobody in the UK is denied access to competitively priced financial products on account of their faith. As muslim population grows significantly within the country, the need to cater muslim needs of finance soon is being recognized as a mean of financial inclusion. Islamic finance industry currently diversify into Banking, Investment Company, Insurance Company, and Indices. 5 Islamic Banks operates within fully shariah compliant, while 16 conventional counterparts offer Islamic products (2015) for widening the market outreach. Sukuk was prior and still becoming the most appealing instrument for investor to raise fund, both companies or sovereign issuer. Within the astonishing growth of demand for Shariah-compliant banking which is at an all-time high in the United

Kingdom since 2012 (449 percent in early 2017), Islamic finance has becoming an established part of British banking and industry as a whole. Summarize and sourced from UK Excellence in Islamic Finance (www.gov.uk), The Rise of Islamic Finance in the United Kingdom (Rowley, 2014), and Islamic Finance in Britain and How we benefit from it and bring it to Indonesia (Mukhlisin, 2017)