Qatar Central Bank Orders Closure Of Islamic Banking Windows In Conventional Banks
Qatar Central Bank (QCB) has ordered the closure of islamic banking windows in conventional banks in the country. This is presumably due to mixing of conventional and sharia funds, compromising Sharia compliance. Qatar Central Bank (QCB)'s move to close down sharia banking has given rise to a lot of protests in the country.
Qatar Central Bank To Close Down Islamic Banking
Kerala High Court had recently permitted setting up of interest-free financial institutions in the state, modeled on the Islamic banking principles. But the Central Bank of Qatar has ordered the closure of Islamic banking windows of the conventional banks. Here is an extract from the Arab News, published on 6th Feb, 2011.
The Qatar Central Bank (QCB) has reportedly issued a directive requiring the country's conventional banks, which have opened Islamic banking windows to close them down by the end of 2011.
The move is ostensibly because the Qatari regulator feels that there is rampant co-mingling of conventional and Islamic funds, which consequentially comprise the Shariah compliance of the Islamic banking windows.
The arbitrariness of the directive and the way it was introduced without market consultation has surprised some of the local banks including Qatar National Bank (QNB), the largest bank in the emirate; Commercial Bank of Qatar; Doha Bank; HSBC Amanah; Ahli Bank; Al-Khaliji Bank and International Bank of Qatar (IBQ), which between them have 16 Islamic banking branches in Qatar.
Already the pressure is mounting on QCB Gov. Sheikh Abdullah bin Saud Al-Thani to review his decision, which ironically comes at a time when Islamic banking has been flourishing in the emirate as in neighboring ones in the Gulf Cooperation Council (GCC) region. The Islamic banking sector has a 20 percent market share of the total banking industry in Qatar, which also has four dedicated standalone Islamic banks of which the largest and oldest one is Qatar Islamic Bank (QIB).
It was way back in 2005 that the QCB allowed conventional banks to launch Islamic Banking Units (IBUs), which have contributed to the growth of the sector and to the profitability of the banks, and which have attracted an estimated customer base of just under 100,000. In fact, embarrassingly for the QCB, Gov. Al-Thani recently opened a branch of HSBC Amanah, which according to his new directive will have to cease the activities of the branch by the end of the year.
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