Islamic banking and finance law: The UK Government hopes that London will become the western hub for Islamic Finance and banking. London has long been established as a major global finance centre. Since the global financial meltdown, the focus has somewhat shifted to consider alternative and ethical investments. The extent to which the UK has accomplished this mission remains to be seen. 

UK-Bahrain Islamic Finance Summit – Islamic Finance Banking Law Tahir Ashraf barrister

Islamic Finance – Money Money Money

The case for why the UK should bother with Islamic finance is simple. Money.  Despite the UK government’s immigration policies, it does want to try to demonstrate that it is ‘open for business’.  Let us not forget that the Islamic finance banking industry is a $1,000,000,000,000 (that’s right, a trillion dollar) industry.

Islamic Finance Banking Law – Recognised in the UK

Unlike what the mass public might misconceive to be Islamic Finance is not all about religion. Islamic finance and banking principles do actually make good business sense. The UK government recognised the significance of Islamic finance in 2013. Rightly so, given that the Islamic finance industry is huge which means there are major opportunities to attract investment into the UK. This is because demand for Islamic finance has seen an increase from Sovereign Wealth Funds as well as ethically conscious investors.

Islamic Finance Law

Islamic finance principles are derived from Islamic law also known as ‘sharia’. One might say the principles are derived from the same source as the biblical prohibition on usury (interest), ‘God’.

Islamic Finance Works

Even as an introduction this article is far too small to do justice to how Islamic Finance principles work as a sustainable business alternative to traditional western banking businesses mechanisms. One might say though, that it benefits the economy in the global financial world because it promotes an economy based on a risk share basis. It is the risk-share basis which makes Islamic Finance an attractive and viable and indeed sustainable option for businesses when compared with traditional interest based finance.

A shared risk approach in the management of financial investment instruments makes for a stronger and sustainable economic growth of national economy. Unfortunately there is a lack of a comprehension of Islamic finance principles and their application to commercial contracts and ethical investments. This is why clients would want to obtain Islamic finance and banking law advice to try and ensure that the investments can stand up to scrutiny and perhaps more importantly, withstand the tests of economic tides.