Understanding Islamic Finance - Doha Academy of Tertiary Studies

Supply of Well-versed Human ResourcesThe Way Forward 479One of the major bottlenecks for the development of the Islamic financial industry at thisstage is the scarcity of trained human resources. Although IFIs are also intermediaries,like conventional banks, the mindset of Islamic bankers has to be significantly differentand requires special orientation. All incumbents of IFIs should not only be technicallycompetent but also well aware of Islamic finance principles and committed to their cause.Only committed and competent personnel, embedded with Islamic ethical values, can beinstrumental in marketing the products in Muslim and other communities and enhancing theacceptability of the new discipline. This challenge can be met by imparting quality trainingto all those who are related in one way or another to Islamic financial institutions about thephilosophy, products and practices of Islamic finance.The long-term growth of Islamic finance will require developing a framework for HRdevelopment, pushing up R & D activities and enhancing training and education facilities incollaboration with the leading academic and research institutions. It will require joint effortsby the Islamic financial institutions, Sharī´ah scholars, central banks/regulators, universities,business schools and the student community. The universities should sense the huge needfor providing competent human resources to the Islamic finance industry. In this context, thefocus has to be on the philosophy of Islamic finance as it has evolved today and the practicaloperations of Islamic financial institutions, without getting involved in any unnecessarycontroversies.18.4 CONCLUSIONThe prospects for Islamic banking and finance are bright but the task ahead is challenging. Itspractice is not only sustainable but also profitable in taking the form of a genuine business.However, there is a need for change in the procedures and the tools of business and the mindsetof the stakeholders, and also for coordinated work in order to develop innovative productswhile remaining within the Sharī´ah boundaries. This will require promoting collaboration atvarious levels, including global and local, public and private sectors, business/industry andacademia, Sharī´ah scholars and practitioners. Support from governments and regulators iscrucial. They may accommodate Islamic finance for reasons both of principles and practicalimportance.Realization of the potential of Islamic finance will require structural adjustments enablingIslamic financial institutions to deal with real sector business, implementation of trading,leasing and real-estate related contracts using Islamic modes of financing. Fixity of rates isno problem at all; nonfixity of prices and rentals rather makes the transactions invalid asper the Sharī´ah rules. The mindset for conducting trading, leasing or other such businesseswould enable IFIs to earn higher profits, as businesses in the real sector normally earn,and pass on a greater part of the profits so earned to the savers/investors. In addition tosecuritizing their asset portfolios, they may resort to fund management and invest in Shirkahbasedvariable income and trade and leasing-based quasi-fixed income operations to providea Sharī´ah-compliant investment facility to various classes of investors according to theirrisk profiles and preferences.Islamic banks’ operations must have positive socio-economic implications through realsector development and just and equitable pricing policies, in addition to cost efficiency andprofit adequacy. For this purpose, IFIs should look beyond the formal abolition of interest