Politics a force majeure in Gulf Islamic banking (By IFN)

GLOBAL: Recent developments in the Gulf’s political scene have shown that governments play a major role in the growth and inception of Islamic banking into the mainstream economy, particularly in countries such as Egypt and Turkey.

Egypt, which had been under the rule of the Supreme Council for the Armed Forces for the last 16 months, up until the 24th June, when Mohamed Morsy of the Muslim Brotherhood’s Freedom and Justice Party was elected in the country’s first ever democratic elections, had seen a slowdown in its Islamic banking efforts under military reign.

The Egyptian parliament, which prior to its dissolution and subsequent takeover by the Armed Forces, constituted a 70% Islamist majority. According to Mohamad el-Beltagy, president of the Egyptian Islamic Finance Association, the dissolution of parliament had delayed the formation of the necessary supervisory bodies for Islamic banking in Egypt, and previous pressures by the Islamists to encourage the central bank to allow more freedom to banks to provide Islamic banking services; and for more banks to apply for Islamic banking licenses, had waned.

Comparing the Egyptian Islamic banking market to more autonomous Islamic banking markets in Asia and Europe, industry players in the country believe that the growth of Islamic banking in the country should be parallel to market needs and demand, instead of political will.

Turkey, on the other hand, is showing signs of progress in its participation banking sector, with the recent appointment of Mukim Oztekin, formerly of Bank Albaraka Turk Katilim Bankasi and Bank Asya as chief of the country’s banking regulator. Oztekin’s appointment follows the central bank’s appointment of Sabri Orman, an expert on Islamic economic thought, in November last year. This new appointment is expected to further boost the country’s efforts to become a leader in Islamic banking in the region.

See: http://redmoney.newsweaver.co.uk/lz0jitj3gfwh38rwoni3wx?email=true&a=6&p=25259175&t=21509045