Islamic finance in India: ‘With political will, and if regulators want, it could happen fast’
Mohamed Damak, the global head of Islamic finance at S&P Global Ratings, talks about the opportunities and challenges for Islamic finance in India.
Is India a potential market for Islamic finance?
Yes, we think India could well be a potential market for Islamic finance. There’s 180 million Muslims in India that might or might not be interested in Islamic financial services. There’s also a number of investments that could be financed through Islamic financial solutions. In any country where Islamic finance develops, you have to go through a certain number of prerequisites to create an enabling environment, including political support and adjustment of the regulatory and legal frameworks to make it friendly for Sharia-compliant operations, and an assessment of whether or not there is a demand and whether or not Islamic finance could add economic value to the country.
Could there be opportunities for UAE Islamic banks and UAE banks offering these services if India adopts Islamic finance?
Probably, yes, because there’s a large Indian population in the UAE. If we were to see development of Islamic finance activities by UAE banks in India, it could create some opportunities for the growth of the industry in India, through for example money transfer or offering financing solutions to the Indian expatriates in the UAE who want to invest in their home country.
How long would the process of launching Islamic finance actually take if the support emerges in India?
It depends on the speed at which the regulators want to take this forward. Things can go pretty quickly. Some African countries, such as Senegal, that have tapped the sukuk market managed to adjust the regulatory environment pretty quickly. But it can take a lot of time. An example is France, where regulatory adjustments were made in 2008, but since then there hasn’t been a real take-off of Islamic finance in France. It depends also on the local appetite of the local customers and the local corporates and whether they are interested in Islamic financial services.
Could the slowing growth of the Islamic finance industry globally make it less attractive to India?
We wouldn’t say that. Although we are seeing a slowdown in growth, there are untapped opportunities for the industry.
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Published: September 10, 2016 04:00 AM