What does it take to succeed? What does it take to make a breakthrough? Guts, perseverance and belief. IMHO, none of that is presently present in the Islamic banking and finance industry. No, I’m not putting those hardworking Islamic finance professionals down. All I’m saying is the guts to develop a product which is not based on the conventional platform is absent. All the products from the BBA mortgages to the Inah based personal financing and even the Sukuk Musharakah is tailored to run on the conventional platform especially from the pricing aspect. Granted that different prices for identical products cannot happen in efficient markets but one must remember that a Shariah based mortgage and a conventional based one albeit having the same objective (i.e. home ownership) is drawn upon different principles and hence cannot be priced identically.
What we need is the courage to come up with a product or solution that is not only Shariah compliant in form but also in substance. Can we have an Ijarah based mortgage whose pricing is directly tied to the prevailing rental rates regardless of the base financing (lending) rates? It is after all a lease based mortgage. A Sukuk Musharakah in my opinion should not be priced and traded like a debt based bond; it should be priced and traded like an equity based instrument.Shariah based financial solutions are tied to real assets and actual economic activity and hence should be priced and traded accordingly. We have to breakaway from doing things based on the conventional norms and platforms if we are serious about promoting Islamic banking and finance.
No comments:
Post a Comment