Controversy over compulsory Islamic studies on foreign campuses

Posted by Indian Muslim Observer | 26 August 2013 | Posted in , , ,

By Yojana Sharma and Emilia Tan
An Islamic studies and Asian civilisation course, compulsory for students in Malaysia’s public universities, will also be mandatory for all private university students – including those at foreign branch campuses – from 1 September.

Amid controversy over the course content, Muhyiddin Yassin, Malaysia’s deputy prime minister and education minister, said the move was intended to “streamline the requirements” of private and public universities.

Vincenzo Raimo, director of the international office at the University of Nottingham in the UK, which has a branch campus in Malaysia, said the subject was being made compulsory across the board, including at foreign branch campuses.

TITAS, as the religion and civilisation course is known by its Malaysian acronym, has sparked considerable debate within the country, particularly among non-Malay communities.

Critics have called on the government to make the subject non-compulsory for non-Muslims; Malaysia has significant Hindu, Chinese Buddhist and Christian minorities, many of them attending private universities because of restricted places at public institutions.

Just over 60% of Malaysians consider themselves to be Muslim, according to official census figures.

Consultations on TITAS have been held with private universities and foreign branch campuses over the past year. Malaysia hosts eight foreign branch campuses and has just over 50 private universities and more than 400 private colleges.

In a written parliamentary reply on 11 July, Yassin said foreign students in private institutions would also be required to take Malaysian studies and Malay language courses. At Nottingham University’s campus in Malaysia, three hours a week will be allocated to the compulsory subjects.

Previously some students who had already studied TITAS could be exempt. “There are no exemptions under the new regulations,” Christine Ennew, provost of the University of Nottingham Malaysia campus, told University World News.

“Like other institutions in Malaysia, we have been delivering teaching in areas related to TITAS for some considerable time and already have significant capacity in this area, but we will need to scale up provision, and this will have significant cost implications.”

The subjects already taught at Nottingham’s branch campus include Malaysian studies, moral or Islamic studies and Bahasa Malaysia, the national language.

“We delivered these subjects to students as a supplement to the standard curriculum,” Ennew said, adding that the purpose of the courses was to provide students with some grounding in the national language, an understanding of the country’s history, and awareness of religious and moral debates.

But some academics have said that the use of many Malay terms in the course could make it particularly difficult for students who do not speak the language.


Since July the issue has become highly emotive, with some critics accusing the government of ‘creeping Islamisation’ and pandering to Islamist groups that support the government.

Although the government’s stated aim is to promote national harmony, critics' concern is that the focus will be on Islam and that students risk being taught by religious fanatics with little exposure to other religions.

Islamic groups in turn accused the critics of being ‘Islamophobic’.

The Ministry of Education insists the claims that the course contains Islamic elements and is unsuitable for non-Muslim students are inaccurate. TITAS also tackles “Malay, Chinese, Indian civilisations as well as civilisations of the future", the ministry said in a statement.

The subject is already being taught on a compulsory basis in the Malaysian provinces of Sabah and Sarawak on the Island of Borneo, where non-Muslims attained excellent results according to the ministry’s higher education department Director General Morshidi Sirat, quoted by the official Bernama news agency.

“It is about comparative Asian civilisations as well as the good and common values,” he said.

Member of parliament Ko Chung Sen, of the multiracial opposition Democratic Action Party, urged the government to withdraw the compulsory TITAS requirement. He cited the country’s constitution, which states: “No person shall be required to receive instructions in or of a religion other than his own.”

“How would this improve one’s studies to be a doctor, lawyer or engineer? Why would this be necessary here in Malaysia?” he asked in a press statement last month.

Others have argued that since TITAS is taught in Malaysia’s primary and secondary schools, there is little need for it to be mandatory for university students.

Compulsory vs elective

Gan Ping Sieu, vice president of the Malaysian Chinese Association, which is part of the ruling Barisan coalition, said the course should be made elective instead of compulsory, “as is the practice of top-ranked universities in the world.

“To make study of a single religion-civilisation compulsory for non-followers of that religion-civilisation is a step backward from national harmony. The ministry should instead introduce the general studies of all major religions-civilisations in secondary schools to promote better understanding and goodwill amongst our younger generation.”

Mahaganapathy Dass, higher education bureau chair of the Malay Indian Congress youth organisation, said that if the intention was to provide students with some exposure regarding civilisations, the current focus on one civilisation should be reduced and more emphasis given to others. A new syllabus should be drawn up after discussion with academics, experts and teachers, he said.

Making TITAS compulsory “shows that there is a fear that it won’t be popular in the first place. Bureaucrats are scared that if a course is initiated and its undertaking is voluntary, classrooms would be empty save for a dedicated few,” said Aerie Rahman, a Malaysian student at the School of Oriental and African Studies, London University, who took TITAS classes while an undergraduate law student at Malaysia’s Universiti Teknologi MARA.

When he studied the subject four years ago at the public university, “there was some Islamic bent”, Rahman told University World News.

Even if the syllabus has been changed since then for private universities, Rahman said, “I don’t think it is appropriate for foreign or non-Muslim students, or even Muslim students. Students at university are not looking for what TITAS is offering. It is not useful to students, who need skills to secure a job on graduation.”

TITAS has been compulsory in public universities since 2006, although marks are not included in the cumulative grade point average that leads to a degree award.

Education ministry officials have said private institutions can decide how to assess and grade students.

“There is a specified curriculum which indicates the broad areas to be covered. We are in discussion with the ministry about a range of flexible delivery options and we are particularly interested to explore integration with other elements of our curriculum,” Nottingham’s Ennew said.

She added that the subject was “potentially of value to a ‘global citizen’ because it will help them understand modern geo-politics and its implications for their future working career. The skills elements included in the new diet of compulsory subjects is also one that is relevant to student employability.”

Academics who spoke on condition that they were not named said it was unlikely the government would withdraw the course – but there was still some scope for adjusting the content.

Innovative Pakistani mosque takes on sectarianism

Posted by Indian Muslim Observer | | Posted in , , ,

By Sebastian Abbot and Zarar Khan

Islamabad: In a country where sectarian violence is spiking, Zahid Iqbal is playing an innovative role in trying to bring peace to Pakistan's competing Islamic sects by simply not taking sides.

His mosque in the capital Islamabad markets itself as "sect free" and is open to everyone. Despite pressure, Iqbal has refused to follow convention and define the mosque as Sunni, Shiite or any of the other subgroups that divide Islam, sometimes violently.

"We don't belong with any sect of Islam," said Iqbal, a real estate businessman in his 30s who also serves as the mosque's president. "We only belong to Islam."

Much of the sectarian violence that Pakistan has experienced in recent years has been attacks by radical Sunni militants on minority Shiites they consider heretics. There were 77 such attacks between January 2012 and June 2013 that killed 635 Shiites and wounded 834 others, according to a recent report by the U.S. Commission on International Religious Freedom.

The schism between the Sunni and Shiite Muslims traces back to the early days of Islam and arguments over successors to Prophet Muhammad. But over time, the divide between the Sunni, which represent about 85 percent of the world's Muslims, and Shiite has taken an increasingly bloody turn across Pakistan and the greater Middle East.

There has also been occasional conflict between different strains of Sunni Islam in Pakistan, such as Wahabbi, Barelvi and Deobandi.

Iqbal said he thought the conflict between Islamic sects was based on ignorance and invited everyone to come to his mosque, including Christians and Jews, to learn "the reality of Islam." A large sign on the side of his mosque says it is "open to all Muslims irrespective of their sect."

The businessman collected nearly $300,000 to build his mosque, which first opened in 2010 but is still a work in progress. There are piles of red bricks and cinderblocks in the courtyard, and wooden polls hold up a shaky looking brick archway that marks the mosque's entrance.

Iqbal said he had difficulty registering the mosque with the government because authorities told him it must be affiliated with a specific Islamic sect. Amir Ali Ahmed, who heads the department that registers mosques in Islamabad, said there was no such requirement. However, he suggested a low-level employee could have pushed the issue since it's relatively unusual for a mosque not to identify itself with a sect.

"We would encourage someone to say they aren't attached to any sect," Ahmed said.

Iqbal said he also encountered difficulty when a rival imam and his students seized the property before the mosque was built, a common problem in a country where land is often taken by force. He managed to resolve the conflict by calling the housing society that donated him the property.

The businessman has faced persistent pressure from rival religious leaders to link the mosque to their sect, but always has refused, he said.

"I'm not afraid of them," Iqbal said. "I believe my life is in God's hands, not in the hands of others."

There are at least three other mosques in Islamabad that aren't affiliated with a specific sect, Iqbal said. But he touted his facility in Islamabad's Sector E-11 as the only full-fledged Islamic center that also included a separate section for women and a library filled with books about various religions. Some of the more surprising titles included "Angels, Jinns and Satans" and "Sanctity of Circumcision in Bible."

More than 200 men and young boys filed into the mosque on Friday for prayers, lining up on rugs under whirling ceiling fans that sought to beat back the oppressive heat and humidity.

The imam, Mohammed Yasin Rashid, delivered his weekly sermon over a microphone headset that looked like something a call center employee would use. Rashid spoke of the importance of religious harmony.

"The best people are those who promote harmony and treat people well despite their affiliation," Rashid said.

But he did take a dig at Christians and Jews, saying they became cursed when they started worshipping prophets instead of a single God.

Most of the worshippers who attended the service said they come to the mosque because it is close to their home, not because of its sect-free stance. But they tended to support the message, saying Pakistan needed less conflict between the different sects.
"There are a few fundamentalists who brainwash the people," said Aftab Malik, a surgeon who was building a home nearby. "We do not believe in sects. Sunnis and Shiites are all one because they both believe in one God."

(Courtesy: Times-Standard)

Hispanic Muslims: Why are Catholic Hispanic Americans converting to Islam?

Posted by Indian Muslim Observer | | Posted in , ,

By Susmita Baral

Islam is most commonly associated with the Middle East and the Arab world, but the simple truth is that 85 percent of the world's Muslims are non-Arab. Current estimates suggest that one-fourth of the world's population is Muslim (roughly 2.6 billion). When looking at the countries with the largest Muslim populations, most are from the Eastern World: Indonesia, Pakistan, India, Bangladesh, Egypt, Nigeria, Ian, Turkey, Algeria, Morocco, Iraq, Sudan, Afghanistan, Ethiopia, Uzbekistan, Saudi Arabia, Yemen, China, Syria and Russia. But the prevalence of Islam doesn't just lie in the Eastern world, as new reports are suggesting that Hispanics are converting to Islam.

The Hispanic community is one that has strong roots in Catholicism, but yet BBC reports that the U.S. Census finds that Latino Muslims number between 100,000 and 200,000. BBC reporter Katy Watson spoke with Yousef, a half Colombian and half Ecuadorian. "I was very, I guess ignorant," said Yousef. "And I think what I saw enraged me -- I saw people falling from the towers. In the end, I hated Muslims. My hatred was diminished, it was extinguished really, my learning about Islam. My project I was given to learn about Islam in college. And once I did that, I made the decision to come to the faith."

In fact, in Union City in New Jersey, where more than 80 percent of the population is Hispanic, mosques and Islamic religious centers are popping up. One local mosque has a 30 percent Latino population and classes are held in Spanish to help converts learn more about the Qur'an. "We are a minority within a minority, growing very rapidly," says Nahila, a Mexican convert who works at an outreach center. "I think they're looking for that niche." Nahila goes on to explain that the hardest part of converting for a Latino is the feeling that they are leaving their family.

CNN reports that a 2011 survey by the Pew Forum on Religion and Public Life found that 2.75 million Muslims live in the United States and in 2008, four percent of America's Muslims identified themselves as Latinos. The vast majority of the Latino Muslim community were found in major cities, such as Atlanta, Los Angeles, Chicago and the Bronx. As for why Latinos are converting, the reasons are across the board ranging from marrying into the faith, disatisfaction in their birth faith, exposure to the religion during prison or attending interfaith events. One common factor found; however, is that most of the converts switch faiths in adulthood. 

(Courtesy: Latin Times)

Palestinian Islamic Bank pioneers sign-language banking

Posted by Indian Muslim Observer | | Posted in , , ,

By Hana Salah

Since the Gaza Strip branch of the Palestine Islamic Bank launched a service in June to provide direct transactions via sign language, it has become easier for people with special needs to bank without a mediator.

Amina Ziyara, who suffers from a hearing impairment and works at the Atfaluna Society for Deaf Children, previously had to have a friend interpret for her at the bank whenever she wanted to withdraw or deposit money, or even to receive her monthly salary. This situation has changed, however. The Palestine Islamic Bank now offers a service for people with special needs and has trained its staff to use sign language in their direct dealings with the disabled without needing a mediator to interpret for them.

In the same context, Amina expressed her gratitude for the service that will enable her to directly deal with the bank's employees.

A Palestinian first

The direct sign language banking service launched by the Palestine Islamic Bank is the first of its kind in the Palestinian territories, according to bank officials.

Aziz Hammad, manager of the bank’s Gaza branch, told Al-Monitor, “We have trained more than 50 of the bank's employees on the use of sign language, and all our branches in the West Bank and the Gaza Strip can now operate in it.”

“This service will make it easier for people with disabilities to deal with the banks, giving them access to the operations carried out by ordinary people.” He explained that people with disabilities will be able to withdraw loans and make internal and external transfers upon their direct request.

In addition to this service, the bank issued a CD that translates banking terms into sign language in a bid to increase banking awareness among the disabled. The bank intends to launch a new service for people with visual disabilities right after Eid al-Fitr.

With this new service, blind people will deal with Braille printers that allow them to deposit and withdraw money and open accounts.

Astounding statistics

Ihab al-Madhoun, a sign language interpreter at Atfaluna Society for Deaf Children, told Al-Monitor, “Many deaf people have expressed their happiness that sign language services have been adopted by the banks,” adding, “We support and welcome the idea that goes hand in hand with our goal of deploying sign language in all public and private facilities of the community.”

Madhoun is also in charge of spreading knowledge of sign language among Gaza Strip associations. He added that about 50% of the society’s staff deal with various Palestinian banks. The Palestine Islamic Bank, however, was the only bank to adopt the service.

According to the Palestinian Central Bureau of Statistics, the number of disabled people in the Palestinian territories totaled about 113,000 in 2011. In the Gaza Strip, this amounted to 39,877 individuals, which is 2.6% of the population, 21,000 males and 18,000 females, according to the census of disabled people in the Gaza Strip in 2012.

The number of people with special needs aged 18 and above is 27,750, while the number of individuals under 18 with disabilities amounted to about 12,096 in the Gaza Strip. People with special needs in the Gaza Strip are divided into five major types: visual, physical, hearing, memory and concentration, and slow learning.

Calls to expand service

The director general of the General Union of People With Disability in the Gaza Strip, Awni Matar, stressed to Al-Monitor the need to expand the application of the service in all Palestinian banks operating in the West Bank and the Gaza Strip.

“Using this language in banks is a sign of progress, but the fact remains that people with disabilities carry out financial transactions outside of banks as well. Thus, there is a need for more efforts to deploy sign language in Palestinian society,” he said.

Matar noted that the proportion of disabled people to the total population in Palestine is the highest across the Middle East, if not the world, amounting to 7% of the total population. This is due to repeat Israeli attacks against Palestinians in the Gaza Strip and the West Bank, as well as genetic factors caused by the high proportion of marriages within the same family, Matar added.

Spreading the idea

Khaled al-Bohaisi, an economic researcher and professor of banking studies at the Islamic University of Gaza, expects other Palestinian banks to make haste in introducing this service based on the principle of competition.

“Banking is a competitive market in which banks rush to offer better services to all segments of the society,” he told Al-Monitor, pointing out that there are no provisions that deal with the transactions of people with special needs in the Banking Act related to the founding conditions of the Palestinian Monetary Authority (PMA).

But officials in the Palestinian Islamic Bank clarified that the bank is equipped to receive people with special needs, according to the licensing terms for banks set out by the PMA. Al-Monitor tried to reach the PMA concerning its role in facilitating banking operations for people with special needs and the possibility of applying the service in other banks, but its staff refrained from commenting on the subject.

It should be noted that the PMA takes on the role of the central bank by protecting the banking business. It does not, however, practice the power of using monetary and fiscal policies, as per the Paris Protocol, which is an economic supplement to the Oslo Agreement.

[Hana Salah is a Palestinian financial journalist based in Gaza, and has previously worked with Palestinian newspapers and Turkey's Anadolu News Agency.]

(Courtesy: Al-Monitor)

Muslim American group plans provocation on 9/11

Posted by Indian Muslim Observer | | Posted in , , ,

A Muslim group in the U.S. caused a media firestorm after announcing it plans to hold a mass protest march on September 11.

By Elad Benari

The 12th anniversary of the September 11, 2001 terror attacks is coming up, and a Muslim group in the United States caused an uproar over the weekend when it announced a “million man march” to take place on the anniversary of the horrible attacks.

The American Muslim Political Action Committee caused a media firestorm in the United States over the weekend after announcing it plans to hold a mass protest march in Washington D.C. on September 11, reported the Israel Hayom daily.

In a statement posted on its website, the group said it is planning to stage a "million-Muslim march" on the 12th anniversary of the deadliest terror attack on American soil, adding it is demanding that Muslim-Americans' "civil rights be protected by our government" and that "laws be enacted to protect [their] First Amendment [rights]."

The group further urged President Barack Obama to "fulfill his promise from his first campaign for presidency of a transparent government” and is “asking for the release of the 9/11 commission report to the American people," reported Israel Hayom.

"We American Muslims reject violence and terrorism, and defend the constitutional rights of all Americans. Every year on September 11, beginning in 2013, we will be marching in Washington, D.C., as we build toward our goal of bringing one million American Muslims to march in our nation’s capital," the statement declared.

"On 9.11.01 our country was forever changed by the horrific events in New York. The entire country was victimized by the acts done on that day. Muslim and non-Muslim alike were traumatized, but we as Muslims continue 12 years later to be victimized by being made the villains. To this day every media outlet and anti-Islamic organization has committed slanderous and libel statements against us as Muslims and our religion of Islam. Yet our government either sits idly by and does nothing to protect our freedoms, or it exacerbates the problem with its constant war on terrorism in Islamic countries, congressional hearings on Islam in America, and its changes to the NDAA [National Defense Authorization Act] law," the statement by the group claims.

"It is time for Muslim and non-Muslim Americans to join together to defend our Constitution," the group said.

The protest will condemn "FBI traps" and the "illegal tapping and surveilling of Muslim Americans," as well as "media propaganda making the word terrorist synonymous with Muslim," Isa Hodge, one of the march's organizers told U.S. News and World Report.

The harsh criticism leveled at the organization following its decision to hold the march on 9/11 initially prompted it to changed the event's name to "Million American March against Fear," Fox News reported, but the name did little to gain much traction and the group had apparently reverted back to its original title.

Dr. Zuhdi Jasser, president of the Islamic Forum for Democracy, was quoted by Fox News as saying that the American Muslim Political Action Committee was a "problematic group … trying to exploit 9/11. They're basically a bunch of 'truthers' who think that America is to blame for everything."

The Anti-Defamation League, Jasser said, has identified some of the leaders of the march as "being virulent anti-Semites who think 9/11 was a conspiracy theory."

According to Russian news network RT, the group hopes to repeat the success of the 1995 Million Man March, in which an estimated 1.5-2 million protesters stood up for African-American civil rights to "convey to the world a vastly different picture of the black male."

Last year on September 11, the deadly attack on the U.S. consulate in Benghazi, Libya, took place. Christopher Stephens, the U.S. ambassador to Libya and three other Americans were killed in that attack.

The United States Justice Department recently filed sealed criminal charges against a number of suspects in the attack in Benghazi.

One of those charged is Ahmed Abu Khattalah, founder of Libya's Islamist militia Ansar al-Sharia.

Abu Khattalah was seen at the compound when it was overrun, according to intelligence officials. In interviews with reporters, Abu Khattalah has admitted being at the scene but denied involvement in the attack.

Meanwhile, a U.S.-born jihadi and Al Qaeda spokesperson has called on Muslims to attack U.S. diplomats, and appealed to wealthy Al Qaeda sympathizers to provide financial incentives for such attacks.

Adam Gadahn, who is himself the subject of a $1 million bounty by the U.S. government and believed to be hiding in Pakistan, made the call in a 39-minute recording posted on an Islamist forum, and translated by the SITE counter-terrorism monitoring group.

(Courtesy: Arutz Sheva 7)

From Muslims in America, a novel protest against Quran burning

Posted by Indian Muslim Observer | | Posted in , ,

Washington: In an effort to overturn the image of Muslims as fire-breathing, sword-slashing conquerors and avengers, a Muslim group in America will resort to a pacific response to the provocative burning of the Quran by a fundamentalist Christian evangelist.

Pastor Terry Jones, the notorious Christian extremist who riled Muslims across the world with his inflammatory burning of the quran in 2011, has upped the ante by threatening to burn 3000 copies of the Quran on September 11, the anniversary of the terrorist attack on America that killed nearly 3,000 people. But instead of getting provoked, the so-called " World Muslim Congress" in the US said it will "reclaim the standard of behavior practiced by the prophet concerning scurrilous and hostile criticism of the Quran."

It cited a quranic verse that says, "To overcome evil with good is good, and to resist evil by evil is evil," and said it is also strongly enjoined in the Quran in the same verse 41:34 that "Good and evil deeds are not equal. Repel evil with what is better; then you will see that one who was once your enemy has become your dearest friend."

The Texas-based outfit said many Muslim organizations across America will go on a "blood drive" to save lives and serve humanity with kindness on the same day pastor Jones has said he will burn the copes of the Quran.

"As Muslims and citizens we honor the free speech guaranteed in our constitution. We have no intentions to criticize, condemn or oppose pastor Terry Jones' freedom of expression. Instead, we will be donating blood and praying for goodness to permeate in our society," said Mike Ghouse, an Indian-American Muslim community leader who has been promoting inter-faith harmony in the US for several years.

Ghouse said the organization hoped that the blood drive event and the message will remind Muslims elsewhere in the world that violence is not the way. "Muslims, who react violently to senseless provocation, should realize that, violence causes more violence, and besmirches the name of the religion that we hold so dear. We believe that Prophet Muhammad was a mercy to the mankind, and we ought to practice what we believe and preach. We must not insult Islam by the negative reactions of a few," a statement from the organization said.

Jones's Quran burning capers have caused universal revulsion, including in the United States, and also led to sporadic episodes of reactive violence in some countries. US government officials, from the federal, state, and local levels, have repeatedly condemned his antics.

"It's regrettable that a pastor in Gainesville, Florida with a church of no more than fifty people can make this outrageous and distressful, disgraceful plan and get, you know, the world's attention," former US secretary of state Hillary Clinton said when Jones first announced his provocative move in 2010.

But Jones has kept at it despite universal condemnation, including promoting a movie called the "Innocence of Muslims" that vilified Islam and conjuring up September 11 as "International Judge Muhammed Day." Although dismissed as a wingnut in the US, he still gets enough attention to rile up some Islamic extremists.

(Courtesy: The Times of India)

Ethica launches Master Class series to teach AAOIFI's Islamic Finance standards

Posted by Indian Muslim Observer | | Posted in

Ethica Institute of Islamic Finance in Dubai, the certification and career advancement institute, announces the launch of an online master class series to teach AAOIFI's Islamic finance standards. The series is limited to only 30 seats.

IMO News Service

Dubai: Ethica Institute of Islamic Finance in Dubai, the certification and career advancement institute, announces the launch of a new online master class series to teach AAOIFI's Islamic finance standards. The highly exclusive launch is limited to only 30 seats. AAOIFI is the Accounting and Auditing Organization for Islamic Financial Institutions and the de facto standard in 90% of the world's Islamic finance jurisdictions.

Ethica's spokesperson said, "Professionals want practical knowledge, not theory. Learning AAOIFI standards from a practitioner who has years of experience of actually working inside an Islamic financial institution gives one an immense advantage over untrained and uncertified peers. Competition for the fewer jobs available in the current Islamic finance market means that we are seeing more professionals turn to institutes for practical knowledge, certification, and career advancement." The Dubai-based institute's clients include large institutions like Mashreq Bank which trained 1,000 employees using Ethica, Abu Dhabi Islamic Bank, and La Trobe University.

Only 30 individuals will be permitted to enter into the launch of this highly exclusive master class series. "We want online attendees to have a highly interactive relationship with the trainer. Spots are limited to only 30. We begin with the essential standards and work our way through to ancillary topics." Ethica's online CIFE, or Certified Islamic Finance Executive, program covers the core Islamic finance products in less than 4 months while the Ethica master class series on AAOIFI is an ongoing program which goes into greater detail for those who want to go beyond the basics. Space is limited to only 30 spots for this master class on a first-come, first-served basis. Reserve your spot by sending an email to masterclass@ethicainstitute.com.

For details, Contact:

Ethica Institute of Islamic Finance
Sameer Hasan
9714 455 8690

Islamic Banks could be the answer to America's over-reliance on Credit and Risk

Posted by Indian Muslim Observer | | Posted in , ,

By Christopher Harress

If second quarter results are anything to go by, America’s banks are recovering nicely. Most made respectable gains and have improved investor and public confidence in America. However, many people who advocate for changes in the banking system feel that just recovering from the financial crisis is simply not enough, and that serious changes must be made to avoid future banking meltdowns.

Put simply, the Great Recession was caused in part by banks that advanced credit to people who could not actually afford the repayments on their homes, which led to a housing bubble that eventually burst. Beneath the surface, the problems were toxic mortgages; financial firms acting recklessly and taking on too much risk; and a mix of excessive borrowing and risk by households and Wall Street that put the financial system on a collision course with concurrent systemic breaches in accountability and ethics at all levels, according to a report by the Federal Reserve.

However, nearly five years later, banks are still paying huge fines, and they are still subject to criminal and civil investigations from government agencies, so it’s hard to see what has actually changed in America’s banking system.

But don’t worry, there is an alternative.

Islamic banking is a growing option in America as various Islamic banks pop up across the country to service those who wish to preserve Shari’aa law or those who just want to use an Islamic bank. They welcome all customers, and there are some very interesting features that could make you consider turning to an Islamic institution before you take out that next loan.

The underlying principles of Islamic banking are fairness and shared responsibility. Traditional banks will lend you money if you’re creditworthy, with little concern about the actual thing in which you intend to invest. A house, for example, can either be a successful or unsuccessful investment, but when it loses value, you still owe the bank the same amount of money you borrowed in the first place, plus interest. Islamic banks, on the other hand, have more stringent rules and won’t help you invest in something they don’t consider affordable or a good investment for them. And that’s the key to these banks: the risk is shared.

This culture of shared responsibility and willingness to change the banking world for good has been a goal of Dr. Yahia Abdul-Rahman’s for 45 years.

Abdul-Rahman is currently the CEO of LARIBA, an Islamic-centric financial institution that offers interest-free banking, or as he calls it, RF banking, meaning Riba Finance or responsible finance.

For Lariba, every transaction is an investment that uses the lease-to-purchase model.

“We get the address of the house and ask for three live-market document estimates of how much would this house rent for if you were buying it as an investment, and the customer's finance officer does the same,” Abdul-Rahman said. “Then we use a proprietary model to calculate the rate of return on the investment using the rent estimates. If the rate of return on investment is higher than what the shareholders and investors of the house are expecting, then this makes it a very good investment, and we tell our customer that they’ve found a home that makes economic sense and we are going to invest with them and we’re going finance it.”

However, if the financial models show that the borrower is making a bad investment, the bank will tell them that it’s a bad economic decision and it will not invest with them.

The beauty of the model, says Abdul-Rahman, is that the bank will share the responsibility in the event of losses, so the borrower is not burdened with all of the bad debt if the house should lose value. For example, if you own 50 percent of a house valued at $100,000 and the bank owns the other 50 percent, but then suddenly the house loses 20 percent of its value, you will both lose $10,000 on your investment rather than you losing $20,000 and still owing the bank the original loan and interest. However, the strict rules in place and financial models mean that the bank rarely makes bad investments. The idea for the consumer is that they will slowly buy their house from the bank over an agreed-upon period of time at an agreed-upon price without paying any interest. On the downside for the borrower, however, is that the banks get a share of the profit, based, again, on the rentable value of the house before the borrower sells it.

If you’re in the housing business to make maximum profit and you’ve spotted what you think is a bargain, then this model may not be for you, but if you’re like the millions of people who lost money in the housing crash, this may be a much better and less risky model to consider that can get you on the property market with just a 5 percent deposit.

In addition, the bank will not be on your deed for the house, so if a worst-case-scenario happens to the bank, which seems to happen a lot to small banks in America these days, you don’t need to concern yourself or worry about what’s going to happen to the banks' partial ownership of your house. It's still your house and no one can force you to sell it.

The underlying message is that the borrower is in a partnership with the bank, so there are no hidden fees, and the consumer can buy the bank's share of their home at any moment without any penalty fees.

Abdul-Rahman came to the United States from Cairo, Egypt, in 1968 with $17 in his pocket, a fitting start to life in America for someone who likens himself to the protagonist of "It’s a Wonderful Life," which tells the story of a banker with a good heart who always tries to do the right thing for the community.

Abdul-Rahman started Lariba in 1987 but quickly expanded and bought the Bank of Whittier in California in 1998, which was, and remains, a small bank that only has two branches. It has been run with what Abdul-Rahman calls the American RF, which he says allows people to go out and participate in the "American dream" without over-indulging and renting money by paying interest through the abuse of  "charge cards" -- credit cards and loans.

This approach has largely worked for Whittier and Lariba. As dozens of small banks failed during the financial crisis, Whittier spotted it early. In 2006, he began advising its underwriters to be extremely cautious and tight in its standards.

Islamic bank also offer Islamic bank accounts.

“We look at every demand account or checking account as a trust around our neck," Abdul-Rahman said. "We cannot use it in lending, it’s a trust. That’s why you’ll find 15 to 20 percent of our cash in the Federal Reserve, because these funds are entrusted in our hands by the checking account holders."

World Islamic Retail Banking Conference set for 26-27 November in Dubai

Posted by Indian Muslim Observer | | Posted in

IMO News Service

The conference "brings forth the opportunity to grasp and brainstorm market trends and insights, in-depth dialogues from global and local practitioners and phenomenal networking opportunities with key policy makers, Islamic scholars, global Islamic retail bankers and business decision makers," said a media statement.

The 5th World Islamic Retail Banking Conference (26 - 27 November 2013, Shangri- La Hotel, Dubai - UAE), "brings forth the opportunity to grasp and brainstorm market trends and insights, in-depth dialogues from global and local practitioners and phenomenal networking opportunities with key policy makers, Islamic scholars, global Islamic retail bankers and business decision makers," said a media statement."ADCB Islamic Banking is the Strategic Partner for this conference, and through their knowledge sharing presentations will enlighten the audience about the Islamic banking practices adopted by them," the release continued.

"Akif.M.Shaikh, SVP - Head of Products & Segment Banking - Personal Banking Group at Al Hilal Bankwill enlighten the audience about the truth behind wealth management. Moments of Truth is a business model designed to fully understand the client experience, define its service proposition and increase its success in business development. It is based on the fundamental belief that a service business performance is based upon its countless interactions with its clients. It's an ideal tool for institutions which aim to deliver an exceptional affluent proposition. Al Hilal Bank is one of the Gold Sponsors for this conference.

"With the advancement of technology in banking proceeding, Islamic banking procedures are in dire need to adopt and adapt to technological methodologies. Ismail Ali, Director of Banking Marketing and Global Operations at ITS, will focus on Islamic banking trends, competitive landscape and technology as an enabler in his presentation entitled "Harnessing Technology to pave Islamic Banking Road". However with use and dependency on technology, challenges related to information technology are inevitable. TamÁs Erni, Managing Partner at LOXON Solutions Ltd, will address issues pertaining to IT Risks in his presentation. ITS and LOXON Solutions are also Gold Sponsors of WIRBC 2013.

"Presentation from Veripark Gulf, the Premium Silver Sponsor of this conference will be conducted by the Engagement Director, Gaith Halabi. Halabi, in his presentation titled The Innovative Direct Selling for Banking (VeriTouch DSA), will elaborate on its new technique which determines fast capture of customer information of the customer, check eligibility and provide the best terms using products calculator.

According to Moinuddin Malim, Chief Executive Officer at Mashreq Al Islami - "The future of Islamic retail banking will be driven by service quality, turnaround time and simplified documentation as price and service charges will no longer be the only factor. " Mashreq Al Islami is the Silver Sponsor of this conference that will also witness knowledge-sharing presentation from Tooran Asif - Head of Personal Banking at Mashreq.

"Adastra Business Consulting (Bronze Sponsor), is a boutique consultancy which focuses on business model optimization especially in the fields of risk management, sales and marketing for banks, consumer finance, telco operators and insurance companies. Jiri Zivnustka, Partner of the company will address the audience elaborating on the need of developing customized operating models in Islamic banking environment.

"This forum will witness presenters and industry experts from Al Baraka Banking Group, Standard Chartered Saadiq Berhad, Mashreq Al Islami, Noor Islamic Bank, Dubai Islamic Bank, Islamic Bank of Britain, Meezan Bank Ltd., Syarikat Takaful Malaysia Berhad, Bursa Malaysia, Bahrain Islamic Bank BSC, Sohar Islamic - Bank Sohar, Bank Nizwa, Bank Islam Brunei Darussalam, Islamic International Arab Bank, Islamic Banking, Bank Alfalah Limited and many more," the release concluded.

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