‘Major differences’ between Islamic, conventional banking
This is the view of Shaheen Suliman, the chief operating officer of FNB Islamic Banking, who spoke at a media presentation in Cape Town this week ahead of the Global Islamic Finance Awards (Gifa), held on Monday at the Cape Town International Convention Centre.
Suliman said critics of Islamic banking often argue that it is nothing more than a “cut-and-paste” form of conventional banking, with the word “interest” being replaced by “profit sharing”.
Superficially, Islamic banking products resemble conventional products: on the retail side there are savings accounts, investment accounts and home and vehicle finance. But these products are underpinned by a strict ethical code (Shariah) that forbids the charging of interest, instead relying on a more equitable distribution of risk between lender and borrower in the form of profit sharing. Products must be approved by a Shariah board, consisting of independent Muslim scholars, and customer funds in those products may be used only in Shariah-compliant investments, which exclude industries such as alcohol, gaming, arms and interest-based finance.
Suliman says FNB offers the infrastructure for Islamic banking to exist alongside its conventional banking offering, so that people walking into any branch have the choice between banking the conventional way and banking the Islamic way. There is also pricing parity across the two options. However, the funds going into Islamic accounts are attributed a specific code, which assigns them to a ring-fenced treasury subject to Shariah compliance.
Islamic finance awards
At the Gifa ceremony this week, FNB Islamic Banking was named the Best Islamic Banking Window 2019 for the third consecutive year, and Suliman was recognised as the Best Upcoming Personality in Global Islamic Finance.
Amman Muhammad, the chief executive of FNB Islamic Banking, said: “Achieving this highly coveted and most respected accolade in a highly competitive environment, for the third consecutive year, is an honour that we don’t take lightly. This is testament to our commitment to deliver on our Islamic principles and core values of our business which are centred around help.”
Founded in 2011, Gifa celebrates excellence and best practices in Islamic finance across investment, insurance and banking categories, with the objectives of promoting social responsibility, adherence to Shariah authenticity and commitment to Islamic banking and finance.
Old Mutual also enjoyed recognition at the awards ceremony: its Old Mutual Albaraka Balanced Fund was named the Best Islamic Balanced Fund 2019. “The fund offers investors an ethical investment solution that delivers steady, long-term capital growth,” Old Mutual said.