issue no. 172 - july–september 2009 / rajab–ramadan 1430

IIBI NEWS
NEWHORIZON July–September 2009
Poznan University students visit IIBI
A group of ten students led by B
W Kulas from Poznan University
of Economics in Poland
called on the IIBI, as part of the
London Study Excursion, the
university’s prestigious business
meeting programme with professionals
from London’s financial
institutions. The group
was received by Mohammad
Shafique, the IIBI’s programme
development co-ordinator. It included
members of the Students’
Scientific Association of Capital
Investments, ‘Profit’, which is a
part of the department of investments
and capital markets at the
university. The overall purpose
of the visit to London was to
broaden the students’ knowledge
in local and international
capital markets. The excursion
was promoted by the Leslaw A.
Paga Foundation.
Shafique provided the group
with an overview of IIBI’s education,
training and publication
activities for raising awareness
of Islamic economic principles
and building a skill base for the
Islamic finance sector. He
briefed the group on Islamic
economic concepts, their applications,
and how the modern
Islamic finance industry has
evolved in the last three
decades. He also explained the
popular contracts used in Islamic
finance transactions and
how Islamic financial activity
needs to be
linked to real
activity. He
emphasised that
while the Shari’ah-compliant
industry may
play the same
role as a financial
intermediary
in its conventional
counterpart,
its activities are subject to
Shari’ah compliance, which restricts
debt creation out of thin
air, and its trading. This principle,
along with others, such as
avoidance of interest (riba),
excessive uncertainty (gharar)
and gambling (maysir) provides
stability to the financial system.
Shafique also explained the difference
in the concept of time
Poznan University students and Mohammad Shafique (far right)
value of money in Islamic and
conventional finance. He
pointed out that the requirement
for all activities to comply with
Shari’ah provided an extra layer
of regulation, with independent
Shari’ah scholars supervising
this function. It was the screening
criteria used in Islamic investment
that could be said to
have saved Islamic investors
from massive losses and shielded
Islamic financial institutions
from the effects of the global
financial crisis.
After the presentation, there was
a lively Q&A session. Students
raised various questions, such as
how 1400 year old concepts are
relevant to modern day financial
transactions and whether Islamic
banking is for Muslims only.
Shafique explained that business
principles of profit-and-loss
sharing were not invented by
Islam. These were there before
the advent of this religion, but
have been properly endorsed and
institutionalised in
Islamic commercial
law. These principles
are universal in nature
and very close
to the concept of
venture capital in
modern context.
However, due to
legal, regulatory
and tax reasons
these cannot be
applied fully by Islamic banks.
Islamic finance is an inclusive
phenomenon where persons
from all faiths or even no faith
may work as long as they subscribe
to the ethical and moral
principles emphasised by
Shari’ah that promotes socioeconomic
justice, such as not
undertaking an activity which
is harmful to society.
King Fahd University of Petroleum and Minerals calls on IIBI
Dr Nabil Ghalleb, assistant professor
of Islamic finance, and Dr
Salah Al-Shalhoob, assistant
professor of finance and economics
at the King Fahd University
of Petroleum and Minerals
(KFUPM), visited the IIBI. They
met with Mohammad Qayyum,
director general of the institute,
and Shafique. KFUPM is considering
enhancing its research capabilities
in Islamic finance, and
is in the process of establishing a
centre of excellence on Islamic
finance and banking. The centre’s
main objective is to spread
knowledge in the field of Shari’ah-compliant
finance through
academic and training activities.
It is expected to encourage and
enhance education and scientific
research as well as professional
development in the field.
The purpose of the KFUPM visit
was to learn from the experience
of other institutions like the
IIBI that will help KFUPM to
achieve its vision to become a
leading centre for the research,
training and teaching of Islamic
finance in the Middle East.
Qayyum briefed Dr Ghalleb and
Dr Al-Shalhoob on the continuing
role that the IIBI is playing
in the professional development
of human capital for Islamic finance
industry, and the challenges
the industry faces in terms
of shortage of qualified personnel.
KFUPM, established in 1963,
adopted advanced training in the
fields of science, engineering and
management as one of its goals in
order to promote leadership and
service in Saudi Arabia’s petroleum
and mineral industries. The
university also furthers knowledge
through research in these
fields.
32 IIBI www.newhorizon-islamicbanking.com