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

Growth of Muslim banking in UK - Case Study ExampleAn important part of the piece is the approach of main regulator in UK to supervision and regulation of Islamic banking. Paper also specifically focuses on specific Islamic mortgage products and their phylogeny in UK market.Global size of Islamic finance has been long estimated between $200 and $500 billion with an estimated growth rate of 10-15% annually.A precise estimate escapes though.In comparability the sterling assets of UK banking sector alone descend to 2.5 trillion (around $4 trillion).Thus Islamic banking has some distance to cover . But that is just another way of emphasising the eggshell of the opportunity(Howard,2003). In the UK, with the exception of one purely Islamic bank there are only Islamic products on offer by Islamic mail of commercial banks(HSBC, Llyods TSB,UBS for example).A large and well-developed Islamic financial structure has not come about thus far. But there is already a significant amount of busi ness of various kinds focussed around relatively wealthy individuals or large institutions. Some London banks use the London Metal Exchange for Murabaha. The client buys and sells forward a metal on the London Metal Exchange and earns a profit(Howard,2003).The first service provider for islamic banking products Halal Financial operate 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 of import Executive Officer reported, At the moment it is halal mortgages but we are only looking at a matter of weeks before we see Takaful glide path to the market in the UK in the middle of July(2005). Of course HSBC Amanah has also launched the UKs first Sharia compliant pension plan as well. In the same linguistic context we tend to get involved in halal commercial finance, Murabaha based commodity benchmarked transactions and so on. We will con tinue to diversify our product endure as and when we can (Paul, 2005).Thus a vibrant Islamic banking products market is round the corner in UK financial markets. However strategic conditionalities as stated on a lower floor must be met before this happens. Competition with conventional banks Warren Edwardes says that Given a choice 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 leaf blade 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 rare 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 understanding 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 repeal it entirely, having a standardized set of Sharia