Mr Anees Razzak

Topics: Sharia, Islam, Bank Pages: 5 (1252 words) Published: February 13, 2013
Re-discovery of Common Roots
Towards Islamic Banking

2. Bachelor’s Paper
IMC University of Applied Sciences Krems

Bachelor’s Programme:
Export oriented Management

Foziya J.

Area of emphasis: International Human Resource Management
Advisor: Mag. Gerhard Kormann
Submitted on: 10th December 2010

1 Suggested supervisor

This Bachelor Thesis will be coached by Mag. Gerhard Kormann.

2 Outline of the problems to be discussed

Despite exponential growth of Islamic banking in the last decades, Islamic finance is largely concentrated in specific parts of the Muslim world. The potential in non-muslim countries and remote parts of the world is overlooked in many instances. Nevertheless, increasing interest in Muslim and non-Muslim countries alike are contributing to the development of Islamic finance beyond historical boundaries.

This paper intends to discuss the cultural challenges which have to be faced by potential markets that present huge opportunities in the Islamic financial industry. Furthermore, there will be an in-depth analysis of the historical changes of the prohibition of interest. In modern economic systems interest plays a very important role. In fact, in the Western world people cannot think of any economic system without interest. It is remark here that lending of money for interest was abhorred and, in most cases, prohibited by all the monotheistic religions (Islam, Christianity and Judaism).

Additionally, there are certain areas which have always been a concern just like the Human Recource availability for Islamic financial institutions. When entering an Islamic bank sometimes one finds that conventional bankers are actually running Islamic banks and financial institutions. The first phase of Islamic banking and finance is about bankers who are trained in conventional traditions and have played an important role for the development of Islamic banking. However, now that Islamic banking has become mainstream and there is a growing number of products entering the market there is a need that the bankers who understand banking business, Shariah law and the spirit of Islamic banking should run these special institutions. When looking at the employees and managers of Islamic banks many times from the top to the bottom the people are not well trained in Islamic banking and finance. Hence, it is important for those who are involved in Islamic banking and finance to come up with measures which should develop human resources for the industry. There are a number of initatives taken by different parts of the Muslim world and in the West which are helping to develop human resources for the industry. For example, one of the initatives in the West was to set up an Institute for Islamic banking and insurance in London. This institute has played a pioneering role in creating a breed of new bankers who are well-versed in this field of Islamic traditions as well as those who have a background in conventional banking. In other parts of the world there were taken other initatives attempting to develop human resources for the industry as there is for sure a great need to have competent people. At this point of time when conventional financial services is facing a crisis there are a number of conventional bankers who are thinking of working for Islamic banks. This provides an opportunity for academic institutions as well as professional bodies to come up with programs which should attempt to develop human resources for Islamic financial institutions. Additionally, it is crucial for Islamic institutions to feel the need of investing in their employees. They should also have a specific budget in R&D and training of their staff so that they are in line with recent developments in Shariah, banking and finance and recent innovations.

Another major challenge is that Islamic banks should formulate and authenticate the Organization Structure which should be proportionate to the...
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