SHAS­TRI BOODAN

The Agri­cul­tur­al De­vel­op­ment Bank (ADB) is hop­ing to in­tro­duce Is­lam­ic bank­ing ser­vices for its clients with­in one year. Jail Lelad­has­ingh, cor­po­rate man­ag­er, busi­ness de­vel­op­ment at ADB made the an­nounce­ment to the me­dia on Mon­day when he in­tro­duced Dr Ha­tim El Tahir, di­rec­tor, De­loitte and Touche, Bahrain, and Bas­sel Nadim, se­nior man­ag­er and strate­gist, De­loitte and Touche, Dubai.

The ADB brought the duo in­to the coun­try as con­sul­tants to ed­u­cate the pub­lic about Is­lam­ic bank­ing meth­ods and strate­gies. Lelad­hars­ingh said the ADB is ex­plor­ing the pos­si­bil­i­ty of set­ting up the bank to of­fer this al­ter­na­tive ser­vice to farm­ers. He said the ADB's Is­lam­ic bank­ing fa­cil­i­ties will be ac­ces­si­ble to Mus­lims and non-Mus­lims.

Lal­ad­has­ingh said the idea of set­ting up an Is­lam­ic bank with­in the ADB came out of a mem­o­ran­dum of un­der­stand­ing signed with the Gov­ern­ment and the Is­lam­ic com­mu­ni­ty last year. The prin­ci­ple of Is­lam­ic bank­ing is based on risk-shar­ing rather than the risk-trans­fer of con­ven­tion­al bank­ing. It in­volves con­cepts such as prof­it shar­ing (mud­harabah), safe­keep­ing (wa­di­ah), joint ven­ture (musharakah), cost plus (muraba­hah), and leas­ing (Ijar).

El Tahir said Is­lam­ic bank­ing is gov­erned by lo­cal laws and the Shari­am, the moral and re­li­gious laws of Is­lam. He ex­plained that it helps the less priv­i­leged who are with­out ac­cess to cap­i­tal and the ad­van­tage of shar­ing risks en­sures a com­mit­ment from the fi­nancier to­ward the growth of the com­mu­ni­ty.

Nadim said Is­lam­ic bank­ing fol­lows a dif­fer­ent busi­ness mod­el while still com­ply­ing with lo­cal laws. Its pop­u­lar­i­ty varies in the coun­tries where it has tak­en root. He said in Malaysia, a big por­tion of the Is­lam­ic bank's clients are non-Mus­lims, while in the Gulf States, Is­lam­ic banks con­trol 22-25 per cent of the mar­ket share.