Ethical Banking Islamic House Financing in The United Kingdo
From HodHood
Contents
Top 20 FREQUENT WORDS
islamic 78 client 41 financial 28 conventional 23 mortgage 23 banking 22 housing 22 purchase 22 payment 20 finance 17 monthly 15 ownership 15 iibu 14 ijara 14 price 14 rent 14 banks 13 financing 13 equity 12 profit 12
DOCUMENT KEY POINTS
- ethical banking islamic house financing in the united kingdom a comparative study submitting authors issam tlemsani and robin matthews centre for international business policy kingston business school kingston hill kingston upon thames surrey kt lb email i
- uk phone fax
- the paper examines the differences between the two and goes on to discuss specific problems of housing finance under islamic principles in the untied kingdom the paper conclude with a discussion of the implications of the case examples for islamic finance generally
- the principles differences between the two systems are found to be that equity ownership is shared under an islamic system where as this is not the case under a conventional system
- in the age of integrated global financial markets the instantaneous transformation of an entire financial sector to profit and loss sharing is very unlikely so what is the outlook for islamic banking khan has noted that the abolition of interest based transactions is not a subject alien to western economic thought
- there are many such examples the german hyperinflation of the s oil shock inflation s in europe of the s and banking crises in japan east asia russian and argentina default and enron bankruptcy and so on
- the fact is that no one knows how to do it and when political pressure mounts they can only resort to some kind of subterfugea it is not clear whom we are cheatinga the worst part of the story is that islamic economists as a body in their international monetary and fiscal conference held in islamabad in gave their unreserved approval to this arrangement
- manzil murabaha home purchase plan the murabaha plan is based on the principle of trading or buying and selling goods at a profit iibu contracts with the vendor and pays the deposit required when the contracts are exchanged
- billion according to wealth analysts data monitor hsbc the uk listed bank which has billion assets under management and three islamic funds is predicting growth of assets under management of up to per cent for year
- clients identify the property customer find a property requests the that wish to buy and agree the bank to purchase it to sell it to him at cost purchase price with the seller of the plus a declared profit
- clients first payment to the bank is made on the day of completion figure and is client s initial contribution is a minimum of of the purchase price
- the client can purchase those units periodically promise to lease contract purchase lc contract ppc clients purchase the the lc deals with property from the occupancy prior to bank for the original completion of the purchase price purchase spread over t years each monthly payment consists of a c rent a c contribution to profit the amount of the rent may be set annually and is normally aligned to the return required figure buy the banks investors
- two versions of ijara based mortgage ijara wa iqtina iwi or diminishing musharaka and lease to own model ijara model dmi bank buys the property from the financier and the client to the vendor participate in the joint ownership of a property customer enters into two the share of financier is contract
- iibu will then sell the property to the client as detailed in an agreement titled a promise to purchase the purchase price between iibu and client is the same price as the original purchase
- al baraka bank former al baraka bank in london now an investment company dallah al baraka ltd provided long term islamic mortgages to its clients between and
- client choose a property but client must have shares equivalent to at least of the first of the property value and of the difference between and the actual price up to
- prospective homebuyer must become a member of the ichc by paying membership fee plus buy at least shares of each in each calendar year in order to keep the membership active
- the cost of the above class a g preferred share will be determined by the board as of the difference between the present fair market value of the said housing unit minus the actual cost the cost of authorized major improvements and expansions and certain legal expenses
- as a result of sale transfer of the housing unit any gain or loss realized will be divided as follows a to the member and to the ichc if the member has already acquired more than shares
- in the event that a house has to be sold with mutual agreement prior to complete buy out of housing fund equity sale proceeds are divided between the resident owner and housing fund according to their proportionate ownership unlike a conventional mortgage where the balance must be paid off before homeowner gets anything
- credit references sources of income to be credit references sources of income to able to retune the loan before be able to retune the loan before birthdays
- perhaps one of the most damaging criticisms is that while relying on the secondary modes of financing they do not seem to be fulfilling faithfully the conditions laid down by the shri ah for the permissibility of these modes
- discussion and criticisms discussions have been taking place with the bank of england and the financial services authority fsa on these issues and khan is confident that they will be resolved in time so that hsbc amanah finance can begin offering islamic financial products in year
- in conventional banking the client owns all the equity and the banks loan to the client is secured on the value of the property
- could such an idealized system conceivably survive as a foundation of banking in a hypercompetitive global financial environment pure logic would dictate that this is not possible in a profit maximizing world that is if excessive includes interest rates that reflect high risk situations or situations of capital shortage both of which would require high interest rates that might be considered usurious
- so discussion of islamic finance in connection with global financial practices introduces an ethical dimension that is welcome
- the housing boom that forgot musli miss the observer june available online at http money
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DOCUMENT WORD ANALYSIS
Main Category
- AlHuda Material\islamic banking
KeyWords
islamic banks banking financial finance investment conventional institutions funds risk financing deposits assets services management international countries equity profit products
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DOCUMENT REFERENCES
Number of Pages
18
Published Date
2003-05-13 15:34:40
