London is vying to be the capital of Islamic finance outside of the Muslim world, says the city's Deputy Mayor Sir Edward Lister.
A task force on building the UK's Islamic finance industry has
been at work since early 2013 and London will host the World Islamic
Economic Forum in October.
"The task force has just started and its aim is to make it easier for
banks in London to have Islamic products, which is still quite a new
concept to any of them," Lister told a press conference, reported Reuters.
"Only now people are beginning to understand what the products
actually mean and how they comply ... What you will see is a lot of
companies introducing those products."
Globally, the Islamic finance industry is forecast to be worth $2.6tn
(€1.9bn, £1.6bn) by 2017. It has grown by around 30% each year since
the millennium and consultancy firm Oliver Wyman predicts that there
will need to be at least 150 Islamic finance institutions by 2020 to
meet the ever-growing demand.
There are more than 20 UK banks offering Sharia-compliant
products, such as HSBC and RBS. There are also three Sharia-only
institutions, including the Islamic Bank of Britain (IBB).
By increasing the number of Sharia-compliant financial
services in London it will be easier to facilitate investment in the UK
from Islamic investors.
What is Islamic banking?
According to IBB's website:
"Islamic banking operates without interest which is not permitted in
Islam, as money in itself is not considered to have intrinsic value.
"As interest is income generated from money, it is seen as effortless
return. Instead money must be used in a productive way and wealth can
only be generated through legitimate trade and investment, which
involves an element of risk.
"Islamic banking therefore uses various principles recognised as
Sharia compliant such as Ijara (leasing), Musharaka (partnership) and
Wakala (agency agreement). Islamic banks use these principles to develop
Sharia compliant financial products, such as savings accounts and home
finance, which allow Muslims to conduct their finances in an Islamic
source : http://www.ibtimes.co.uk