In a speech to the Fourth Conference on Islamic Finance held at Al-Zahra University in the capital Tehran, Chief Executive Officer of Central Securities Depository of Iran (CSDI), Hossein Fahimi, elaborated on the strategy for the competitiveness of Islamic financial institutions in Iran.
The conference was held under the theme "The Role of Islamic Financial Institutions in Economic and Foreign Exchange Inflation Stability."
In an address to the gathering, Fahimi said, "It has been two decades since the Islamic financial market has been organized and introduced to the world as an organized entity with Islamic nature."
The CSDI CEO reiterated, "Even a look at a number of harshest financial crises over the last decades suggests a high degree of Islamic financial institutions inflicted the minimum damage."
Hossein Fahimi continued that this very nature of Islamic financial institutions encouraged even non-Muslim countries to show interest in them, so much so that even Britain hosts the largest number of Islamic financial institutions in Europe.
Highlighting the fact that Islamic Republic of Iran is the sole country in the world that enjoys an Islamic finance based on Shia jurisprudence (Fiqh and Shari'a), the CSDI chief went on to say that, "Non-Islamic activities – unlike other countries – pose no threat whatsoever to the Iranian financial industry."
However, Fahimi warned that "during recent years, we have witnessing a reducing trend in the competitive nature of Islamic financial institutions in comparison with other conventional financial institutions in the world."
In closing, the CSDI chief enumerated the most significant criticisms generally made on Islamic finance and suggested strategies to resolve them.
1. Complex nature of some Islamic finance principles which might pose a challenge for more risks of deviation from Shari'a Laws.
• Application of risk and deviation management procedures to reduce threats and boost controls.
2. Deep concerns about cooperative contracts; a big threat to banking industry.
• Move to replace cooperative contracts with exchange contracts.
3. Lack of attention toward macro policies and social responsibilities in Islamic financial institutions
• Need to pay attention to the goals of Shari'a and Islamic values in determining social responsibilities in Islamic financial institutions.
4. Failure to respond to critical financial implications.
• Policy makers the central bank need to pay more attention to the potentialities of juristic committees in a different way from Islamic financial institutions.
5. Lack of competitiveness compared to conventional finance
• Need to pay attention to the competitive nature of Islamic financial institutions compared to conventional competitors in equipping resources and providing financial services.
Release Date: 12/3/2018