Central Bank of the UAE to enforce stricter rules for Islamic banking operations (By IFN)

Central Bank of the UAE to enforce stricter rules for Islamic banking operations

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UAE: The Central Bank of the UAE is looking into making it compulsory for local banks to make a clearer separation between their Islamic and conventional activities, said Sultan Nasser Al Suwaidi, its governor. He was responding to questions by Dr Yaqoub Al Naqbi, the Sharjah representative of the Federal National Council, the federal authority of the UAE. According to Dr Yaqoub, banks in the emirates, many of which offer conventional and Islamic services, are breaking a law specifying that banks offering Islamic banking services must either provide only Shariah compliant services or ensure its Islamic activities are offered at a separate branch from its conventional business, with separate budgets and management. Sultan however replied that banks in the emirates are allowed to offer both conventional and Islamic banking services in order to meet strong demand for Islamic products, stressing that conventional banks’ Islamic business must comply with Shariah. Nonetheless, with neighboring Qatar already putting in place its law separating conventional and Islamic banking; and growing public scrutiny over banking practices, could banks in the UAE be preparing to face the same fate as their Qatari counterparts?