WHILE SHORT-SIGHTED COMMUNAL BRAHMINS BLOCKING ALL ATTEMPTS TO INTRODUCE ISLAMIC BANKING INTO INDIA, NOTWITHSTANDING ITS MANY ADVANTAGES TO THE PEOPLE AS WELL AS TO THE INDIAN ECONOMY; IT IS AN EYE OPENER TO GET THE NEWS THROUGH WIKILEAKS AS TO WHY UK IS OPENING ITS ARMS FOR ISLAMIC BANKING SYSTEM.
NOTHING IS LOST AND PRIME MINISTER MANMOHAN SINGH AND FINANCE MINISTER PRANAB MUKHERJEE SHOULD SHED THEIR COMMUNAL BLINDERS AND OPEN THEIR MIND TO SEE THAT INDIA'S INDIAN MUSLIM SHOULD GET THEIR WISHES TRANSLATED INTO GOVERNMENT ACTION AS WELL AS TO GET A BOOST TO INDIA'S INVESTMENT CLIMATE. TIME FOR FURTHER LIBERALIZATION AND GLOBALIZATION!!! GHULAM MUHAMMED, MUMBAI ---------- Forwarded message ---------- Date: Mon, Feb 7, 2011 at 12:06 PM Subject: *WikiLeaks: ISLAMIC FINANCE KEY TO ENSURING LONDON AS TOP FINANCIAL CENTER* http://213.251.145.96/cable/2009/01/09LONDON24.html Created: 2009-01-05 17:05 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy London SENSITIVE SIPDIS SUBJECT: ISLAMIC FINANCE KEY TO ENSURING LONDON AS TOP FINANCIAL CENTER ¶1. (SBU) Summary: The British government is promoting the growth of the Islamic finance industry in the UK, although HMT has decided against issuing a sovereign Islamic finance bond, a sukuk, in the current economic climate. HMG is courting Islamic finance, and eliminating barriers to its growth, to ensure London preserves its standing as a top financial center, despite the financial crisis. Islamic financiers, pleased with HMG's efforts, are also pressing to advance their presence in the UK. End Summary Pursuit of Islamic Finance --------------------------------- ¶2. (SBU) HM Treasury's policy objectives, released in December 2008, are to establish and maintain London as the gateway for international Islamic finance and to ensure that no person in the UK is denied access to competitively priced financial products on account of their faith. Islamic finance describes financial transactions in accordance with Islamic law (Shari'a). The key principles: prohibit the payment or receipt of interest; prohibit uncertainty or speculation; prohibit financing economic sectors considered to be socially detrimental; share profits and losses; and underpin financial transactions with identifiable and tangible underlying assets. HMG perceives supporting Islamic finance as a way to differentiate London from New York and advance London's image as the world financial center. London, being closer to the Middle East, has both a physical and time zone advantage over Wall Street, as well as necessary Islamic finance back office skills already present, which HMG is looking to exploit. ¶3. (SBU) The Bank of England first identified the potential for Islamic financial instruments in the UK in 2000. Since then, the Financial Services Authority (FSA), the key regulator of financial services in the UK, and HMT have introduced legislative changes to eliminate unfavorable tax treatment of Islamic financing structures and create a "level playing field". London also hosted the First Annual World Islamic Banking Conference European Summit in July 2008, and the government-sponsored organization UK Trade and Investment (UKTI) served as the conference's strategic partner and provided a specific UK pavilion. The UK now has the only stand-alone Islamic financial institution in the EU, the Islamic Bank of Britain. According to government figures, the UK has the highest value of Shari'a compliant assets (over BPS 18 billion worth) of any non-Muslim country and the eighth largest amount in the world. It is difficult to determine the exact size of the global market but the amount of assets under Islamic management worldwide has grown from $150 billion in the mid-1990s to around $700 billion in 2007, according to an HMT source. Prospects for growth from a Standard and Poor forecast assesses the industry to potentially contain up to $4 trillion of assets. Other estimates put growth figures even higher, since Muslims account for 20 percent of the world population. Presently only about 1percent of global financial assets are controlled under finance compliant with Islamic law. ¶4. (SBU) HMG, to overcome barriers to the growth of Islamic finance in the UK, is reforming taxation and regulatory codes; forming a set of commonly accepted standards for products and practices; raising awareness of the existence and availability of Islamic products; and ensuring a steady flow of personnel skilled in Islamic finance. The UK Islamic financial market is mainly aimed at British and international Muslims, but Islamic financial instruments are available to everyone. Products include the sukuk, an alternative investment bond; takaful, a Shari'a compliant mutual insurance arrangement, which was just launched in Britain for automobiles, a global first; and murabaha, a purchase and resale contract that functions similar to a mortgage. ¶5. (SBU) HMT decided in November, as announced in its 2008 Pre-Budget report, to not issue a sovereign sukuk because it currently "would not offer value for the money." Nonetheless, HMG pledged to keep the situation under review and wrote the UK government "remained committed to promoting the UK as a center for global and Islamic finance." The government plans to introduce new legislation into the 2009 Finance Bill to provide further tax relief. In a recent paper, HMG reiterated it would continue to examine the feasibility of issuing sovereign wholesale and retail Islamic finance products. Muslim Investor Preference for the UK ------------------------------------- ¶6. (SBU) For investments in Islamic finance made outside the Middle East, the UK is the preferred locale, according to conversations at closed roundtables hosted by the Centre for the Study of Financial Innovation (CSFI). The underwriting director at a London-based Shari'a-compliant insurance group stated many investors feel London is already the center of Islamic finance. Additionally, experts from outside the UK, who come to London to sit on boards composed of LONDON 00000024 002 OF 002 Shari'a scholars for UK-based Islamic finance businesses, are well connected to London, where many already have homes. There is a concept of 'London-Istan,' a CSFI director told us. Investors see the UK as the best place to start expansion into Europe because of the higher degree of openness, the support the UK government and FSA offer, and the belief that UK business models and products could be replicated throughout the EU. ¶7. (SBU) Clive Briault, the FSA's former Managing Director of Retail Markets, recently stated "English law is already the preferred jurisdiction for Islamic transactions." A strategic director for an Islamic finance company claimed at a closed conference sponsored by CSFI that the UK's large Muslim population offers an additional appeal for setting up shop in Britain, as Islam is the country's fastest growing religion. Most experts attending the conference agreed that since UK Muslims are engaged with their religion, Islamic finance products offer an additional way for them to further connect. The Effect of the Financial Crisis ---------------------------------- ¶8. (SBU) The financial crisis has heightened HMG's desire to court Islamic finance, but to date, the government has only done so largely through public rhetoric, rather than deeds. "In these times, it is more important than ever that we make the most of growing sectors like Islamic finance," the Chief Executive of UKTI, Andrew Cahn, stated in a November. UKTI has supported moves of the Association of Corporate Treasurers (ACT) to educate UK companies on the Islamic finance sector and its opportunities for growth during the financial crisis. ACT Chief Executive Richard Raeburn noted that the reduction in funding options and the more expensive rates in conventional markets made seeking alternative funding an increasing trend. "The credit crunch has made an understanding of the [Islamic financial] market essential," he said. HMT asserted in a December government paper that the financial instability in the global economy must not deter the government from its long-term objective for Islamic finance, and HMG will continue to support the development of Islamic finance in the UK. ¶9. (SBU) At separate Islamic finance events in the last months, the question was raised whether the credit crunch would have happened under an Islamic system. Experts argued that in a purely Shari'a compliant system, the financial crisis would not have occurred. Mohammed Amin, director of PricewaterhouseCooper's UK Islamic finance division, pointed out that Islamic practices based on Western products inherently could possess the same faults. However, in his opinion, some basic principles innate to Islamic finance should make a preventable difference, such as lending to only those who can afford it; using the right 'just' price instead of the market price; and following standards against complicated contracts and speculative activity. Comment ¶10. (SBU) Comment: Islamic finance is a small but growing sector, which the UK is actively pursuing, to preserve and increase London's credentials as the seat of global finance. Should London successfully position itself as a leading Islamic finance center, it could gain an edge on New York, when the global financial markets recover. With the UK's fast-growing Muslim minority, HMG also recognizes the potential political and electoral advantage of courting Islamic finance. TUTTLE -- H ABDUR RAQEEB Convenor, National Commitee on Islamic Banking General Secretary, Indian Centre for Islamic Finance (ICIF) D-309, Abul Fazl Enclave, Jamia Nagar,New Delhi-110025 Mob: +91 9444075501 Email: [email protected] Website: www.icif.in -- You received this message because you are subscribed to the Google Groups "humanrights movement" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/humanrights-movement?hl=en.
