Muhammaad is an AAOIFI-certified Shariah advisor and auditor who holds a bachelors in Islamic studies from the Islamic Madrasa of Quran and Sunnah in Dubai, and an MBA in finance and accounting.
Could you provide a brief journey of how you arrived where you are today?
I joined Dubai Islamic Bank’s Shariah coordination department. In 2007, I was involved in the establishment of Dar Al Sharia, where I was exposed to almost every aspects of Islamic finance including Shariah compliant product development, Shariah audit, structuring and such.
At the time when the Islamic finance industry witnessed a real boom on all levels, Dar Al Sharia provided its advisory services to establish several new Islamic banks, and windows. Funding for mega projects was provided using Islamic instruments such as Sukuk and Islamic syndication, which again were structured and engineered by Dar al Sharia.
With all the knowledge and experience I gained, I aim to contribute for the betterment of the Islamic finance industry worldwide. Throughout my career, I travelled from Dubai to Muscat to contribute as the head of Shariah compliance and audit in establishing a new Islamic window.
What does your role involve?
My role as the head of Shariah compliance and audit is also known as the internal Shariah reviewer of the bank. I am also the general secretary of the Shariah Supervisory Board.
Under the supervision of the Shariah Supervisory Board, my role is to inform the shareholders, staff and clients that all dealings and transactions are according to the Quran and Sunnah.
The Shariah compliance and audit role acts as the safety valve for any Islamic bank to make sure that all its activities, products, services, contracts and investments are Shariah compliant. In other words it maintains the Shariah compliance reputation which is an important asset of any Islamic bank.
Another important aspect is to increase the Shariah awareness not among the staff and executives of the Islamic banks but also the clients and public. Similarly, the Shariah audit aim is to point out any breach to the Shariah principle in order to minimize the non-compliance occurrence in the bank’s transactions.
What are your achievements for Islamic finance?
I attribute the achievement of Islamic finance to the team work. The Islamic finance can only keep its pace of growth if the Shariah scholars do the team work to come up with unanimous Fatwa and standards for Islamic finance and products.
The Islamic bankers contribute towards innovating new products based on the clients’ feedback and their realization of the market needs. Nevertheless, there is always room for new achievements.
Which of Islamic products/services deliver the best results?
The retail and corporate products are equally profitable for the Islamic banks. However, it is suitable to emphasize here that the core idea of the Islamic finance is contribution in their development.
What are the strengths of Islamic finance?
The transparency, by transparency I mean the level of Shariah compliance. The increasing client awareness about Islamic finance makes it compulsory for these Islamic banks to practice the highest level of Shariah compliance in their contractual relationship with the clients. The Shariah reputation has become an important element due to the fact there is competition among Islamic banks.
What are the factors contributing to the success of Islamic finance?
Its purity, for Muslims it is a Halal way of doing the things. In the earlier years many clients were ready to deposit their funds with Islamic bank even if they dot get any return. There around 2 billion Muslims in the world and more than 60 eventually all will be turning to Islamic finance.
However Islamic banks should give more care to Shariah compliance, products, quality of service and customer care to reward those loyal clients who wish to deal in Halal only.
What are the obstacles faced by Islamic finance today?
I would like to call them challenges instead of obstacles. Getting trained human resources is a challenge: the universities needs to provide more specializations for finance, legal and Shariah; especially for Islamic finance.
The second challenge is the lack of pure Islamic benchmarks, for interbank dealings. We need Islamic capital and money markets. We need secondary markets for Sukuk.
However, these and other challenges should be taken as an opportunity towards more innovation in Islamic finance.
Where do you see the Islamic finance industry in, say, the next five years or so?
Islamic finance industry has a promising future. Oman has entered into Islamic banking and it is predicted that it will enrich the cumulative experience, knowledge and process of the Islamic finance. Many other countries are opting to use Islamic finance option as solution for their financial needs such as Egypt which I predict will take lead in the issuance of Sukuk in the coming couple of years. The next five years has potential for Islamic finance to double its growth in MENA region.
Name one thing you would like to see changes in the world of Islamic finance?
I would like to see the Islamic finance option more feasible to retail and corporate clients and especially for small and medium sized enterprises. Its cost should be less, its services standard should be high and solutions should be simplified comparing to conventional banks. Islamic finance institutions should capitalize on their number of clients and not the profit they try to make per transaction. In this context, the Islamic banks need to have Shariah compliant interbank regulations, commodity markets and indexes. They should avoid using conventional benchmarks for pricing their products. It is time for the Islamic banks to take the lead for a new global financial system to replace the existing failing financial system.