Despite the fact that Islamic banking covers a renowned market share, the growth rate is not as high as expected.
Article ISLAMIC BANKING CONTROVERSIES AND CHALLENGES
I have conducted some work on Islamic Banking & Sharia driven investments in India, for more details you can refer my research article. I spotted that Sharia as an investment tool is quite efficient, in fact it can outperform the mainstay our stock Market i.e. Sensex. But people still think, that it is confined to only a particular community. If the financial literacy increases & ethnic bias from traditional investment vehicles decreases then & then only it can grow in India. But as a researcher I can conclude that it is a silent but potent instrument as far as investment is concerned.
Islamic Finance is a comparatively recent development. Many issues are still debated, and there is a huge need for research in developing the "nuts and bolts" of the business side, even if the legal side is rather well developed.
Given the huge potential of the Islamic Market worldwide, even if it will be a slow development it is nevertheless a sizable one. There are several challenges facing Islamic Finance Organizations (IFO's):
1. IFO's must convince the Muslims that it is truly Islamic, not classic finance painted to seem Islamic
2. IFO's must develop new business strategies fitting their business model, "imported " business strategies are less effective considering the market specifics they target.
3. IFO's must develop their products to fit the needs of financing of the businesses and people while circumventing the classic way and following the Muslim way. This is a challenge because classic finance means are perfected based on a long experience and a huge practice base worldwide.
4. IFO's need to be competitive comparative with classic finance organizations regarding the services they provide. This is a tough nut to crack, especially outside Islamic countries. Just being Islamic will convince few Muslim businessmen, unless some benefits are very clear and measurable for them.
I truly agree with Bradut Vasile Bolos and in addition to his observations/comments, Islamic Financial generally lack clear concepts. In other words, its concepts are not clear at both academic and practices. Not only the banking sector, including the islamic insurance sector. All we need is re-evaluation of current systems objectively and reverse the movement. This can only be achieved by objective research not emotionally and value motivated research.
https://www.researchgate.net/publication/305815587_The_Dhaka_Mercantile_Co-operative_Bank_Limited_A_Case_of_Islamic_Shari%27ah_Banking_in_Bangladesh
Article The Dhaka Mercantile Co-operative Bank Limited: A Case of Is...
I personally agree with Bradut Vasile Bolos, Bikramaditya Ghosh and Lukman Olorogun.
Financial literacy is very valid point i totally agree.
What if we call the Islamic restrictions just restrictions and not link it with the term religion. The basic philosophy of these restrictions is to provide safety to stakeholders. Beside safety these restrictions are designed to promote mutual cooperation and win win situation. The above stated benefits are not just confined to Muslims in fact all the humans. So if the outcomes are investors friendly i think the scholars should come up with a strategy or design that is not linked with the word religion and where these islamic finance rules are called restrictions. May be it will help promote the growth.
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