1. Could you please introduce yourself, describe your career path and your main goals?
I have worked for the Islamic Finance Council based in the UK, where I was part of teams which - gave the Islamic finance governance frameworks for the Nigerian Central Bank’s insurance and pension commissions, have provided Islamic finance capacity building and training to Bill and Malinda Gates Foundation backed African financial inclusion entity Efina, have worked with one of UK’s largest credit union - ScotWest Credit Union to structure Islamic financial products, have given the investment strategy for Islamic Relief International’s Waqf (trust) fund among other work.
My most recent position is to help establish an Islamic Finance center at COMSATS - the 2nd highest ranked university in Pakistan. At the CIF till now, I have conducted training sessions for Islamic finance professionals and bankers, have been involved in the course design of the MBA and MS Islamic Finance qualifications, have actively participated in marketing CIF internationally and helped organize Pakistan's largest international Islamic finance conference the Global Forum on Islamic Finance (GFIF 2015).
I have also been part of the Global Islamic Finance Report 2015 and IFN Islamic Finance Guide 2015 and also contributing a chapter on a Wiely published book on risk management in Islamic finance among other publications. I have also worked on Basel III and implications to the Islamic banking industry.
Academically, my undergrad is from the London School of Economics and MSc Investment Analysis from Uni. of Stirling. I also have three specialized Islamic finance qualifications including CIFP from INCEIF, for which I received the Central Bank of Malaysia's scholarship.
2. What are your thoughts about the future of Islamic finance within the global banking?
The future of Islamic finance in the global economy looks bright with 10 of the world’s 25 fastest growing markets being Muslim majority countries. The Islamic financial services industry was reported to have averaged a growth rate of 17.5% from 2009 to 2013. According to EY, Islamic banking assets with commercial banks globally crossed US$1.7 trillion in 2013 suggesting an annual growth of 17.6% over the last four years.
3. What are the differences with regards to Risk management between conventional and Islamic institutions?
The risk management process – for both an Islamic or conventional financial institution is initiated with an assessment of the financial institute’s overall risk profile, financial condition, viability and future prospects. The appraisal process includes both on and off site examinations to the extent considered necessary.
In case of Islamic financial institutions (IFIs), there are unique risks that need that require additional attention such as the contractual role of the IFI when analyzing the risks inherent in the bank’s assets and liabilities – for example in an Islamic bank’s balance sheet, the liability side demand deposits are based on Amanah i.e. a trustee relationship while investment accounts can be structured using Mudarabah or Musharakah – a principal agent or partnership basis. On the asset side, financing can either be executed through sale based contracts such as Murabahah, Salaam, Istisna or Islamic leasing – Ijarah. All these contracts and the banks position in these contracts have different risks associated with them e.g. in a sale based contract, the bank as a buyer has a different risk profile and the bank as a seller faces different risks.
4. Do you think Islamic finance could be as successful in a conventional dominated country than a Muslim dominated country?
I strongly believe that Islamic finance - both as a banking system as well as a policy tool can be very successful in non-Muslim countries. 2014 saw issuance of Sukuk bonds (Islamic bonds) in jurisdictions such as Hong Kong, Luxembourg, Senegal, South Africa and the UK— giving a boost to the Islamic finance industry. We also saw Goldman Sachs and Japan’s Bank of Tokyo-Mitsubishi float Sukuks.
I would also like to point out that Islamic finance is not only for the Muslim consumers, it's underlying philosophy is based on ethics, social development and responsibility, therefore can also be very attractive to the socially and ethical conscious consumer.
5. What challenges do Islamic Banks face?
As I mentioned in the previous question, Islamic finance is rapidly growing - that brings with it a host of challenges as well. One of the challenges Islamic banks face is to successfully make a transition from a niche to mainstream finance. This can only happen when Islamic banks and financial institutions evolve to non-Muslim majority markets and attract non-Muslim consumers.
Islamic banks also face a huge dearth of Shariah compliant Islamic financial instruments for liquidity management. Another pertinent challenge facing the Islamic finance industry, which should be addressed at war-footing, is to address a serious lack of banking professionals who understand both the workings of conventional as well as Islamic financial theory and practices. According to some professional estimates, the Islamic banking and finance industry will be creating 10,000 jobs in the next 5 or so years and there is an urgent need to address this.
6. What are the main improvement areas in Islamic Finance in the coming years from your point of view?
As with any industry in the development phase, the Islamic banking and finance industry needs many improvements to evolve. In my opinion, the Islamic finance industry needs cross jurisdictional regulatory harmony. Currently, there are different regulations and standards governing different Islamic financial products and contracts in different Muslim jurisdictions. This makes cross jurisdictional dealings quite a challenge. I must add that this issue has started being addressed by Islamic financial regulators and standard setting bodies such as the Islamic Finance Services Board (IFSB) and I am hopeful that this problem should considerably decrease in the future.
Another improvement the Islamic banking and finance industry needs is to deal with risk management practices especially risks which are unique to Islamic banking and financial institutions. Also, I strongly believe that the Islamic finance industry should move from simple compliance to actually adhering to the actual ethical and socially responsible teachings i.e. the spirit of Islam.
7. Why have you decided to create the course and who will benefit from it?
I developed this course because I did find any material specifically catering to risks faced by Islamic financial institutions and their mitigation. This course was developed in collaboration with leading practitioners and organizations in the Islamic finance industry, with a view to offer expert advice and training aimed specifically at professionals.