BANKING - Central Bank policies hurting Islamic lenders

Ufuk Uyan

Ufuk Uyan, general manager of Kuveyt Turk has told The Islamic Globe: “I believe non-interest banking will enter a new period of healthy growth worldwide, shrugging off the indirect effects of the global crisis.”

Uyan argued that global Islamic banking had sidestepped the worst of the financial crisis as it does not deal with complex derivative products or packaging and reselling of debt. (full story)




But Uyan is not happy with the policies of the Turkish Central Bank who despite their external claims to be supporting the participation banking sector has raised reserve requirements to curb loan growth and encouraged the increasing of deposit maturities which has hurt Islamic lenders even more than conventional banks.

“Ninety-five percent of the total loan portfolio of participation banks consists of funds that are used to finance the real sector,” Uyan said. “However, other banks have Treasury bill, bond and eurobond portfolios. In addition, participation banks are relatively newly-developing lenders – abrupt and sudden rises in costs and loan curbs hurt their relations with customers more than conventional banks.”

Source :  http://www.theislamicglobe.com/index.php?option=com_content&view=article&id=206:central-bank-policies-hurting-islamic-lenders&catid=8:artcile&Itemid=38 - April 6, 2011