Shari’ah Governance System
The existing framework of Islamic finance in various countries shows different practices and models of Shari’ah governance system. Some countries prefer greater involvement of regulatory authorities but some countries prefer little involvement of regulatory authorities. Until now, it is still debatable whether which one will be more appropriate for possible adoption. There are different types of approaches to differentiate the Shari’ah governance system. For United Kingdom, they applied reactive approach which is more popular in non-Islamic countries. Although several Islamic banking licenses have been issued to Islamic Financial Institutions (IFI), the regulatory authority is silent upon the Shari’ah governance framework. …show more content…
Islamic banking has been introduced in Malaysia since the early 80s to assists Muslims to a better banking system that obey Shariah principles. Nowadays, Islamic banking in Malaysia not only for Muslims but also open for non-Muslim customers. Since Islamic banking has been in Malaysia for almost 3 decades, undeniably the awareness towards Islamic banking among Malaysians has increased significantly. Awareness towards Islamic banking is one of the most critical factors to increase market share and profit of Islamic banking sectors. In the recent years, the Islamic banking sector continued to record growth with a total assets of RM426.16 billion in 2013, which is a 10% increase from RM389.3 billion in 2011. This has proved that the increase of awareness and acceptance of Islamic banking in …show more content…
Islamic banking in UK is much less informative than conventional banks, as well as comparing to Islamic banking in Malaysia. This is because Islamic banking in UK is lack of efficient information system and lack of proper marketing of the new launch Islamic products. Besides, there is limited number of Muslim population resides in UK who do not have complete information about Islamic banking system in the country. In UK, Islamic banks are not as easily assessable as conventional banks. There are only a few branches of Islamic banks, for example, there are only four branches of Islamic banks located in London to serve one million people. According to statistic, there are two million Muslim residing in UK, which almost 50% of them live in London. Obviously it is difficult to all the customers to access to the bank location in such a huge area for just four branches of Islamic bank. Due to lack of number of bank branches, people are for sure lack of information and awareness towards Islamic banking and will choose conventional bank over Islamic bank. Unlike Malaysia, Islamic banks are more common in Malaysia since Muslim is the official religion of the country, as mentioned above. For example like Klang Valley, people can easily access to Islamic banks because there are many branches in different areas. It is more convenient as compare to Islamic banks in London, UK which is much more lesser