ISLAMIC finance continues to grow at a double-digit pace but the industry clearly needs to be rid of the distractions for it to have a “meaningful narrative”, said HSBC Amanah Bhd chief executive officer Arsalaan Ahmed.
Continued discussions on technicalities had distracted from the main purpose of Islamic finance and its core principles, he added.
“All the constant talk on conversion of standards, on the Middle East does this and Malaysia does that, plus arguments of whether it should be more debt- or equity-based are distracting,” he said in an interview with NST Business recently.
More popularly known as Oz to his colleagues, Arsalaan has helmed the full-fledged Islamic bank for nine months now and it affects him to see these distractions continuously discussed in forums and conferences.
“The main challenge of Islamic finance is saying what part of the financial services narrative does it own. In my opinion, that is around social justice and social impact — which is the entire reason for the existence of Islamic finance in promoting social justice,” he said.
Finance involves complex transactions but the general public should not feel the burden when they take up debt.
“Islamic finance is created to provide greater social justice and the reason is it provides positive social impact. ‘What are the society’s needs and let us provide products and services to meet those needs’ — that is an important aspect.”
The talent base in Malaysia, he said, was commendable with the support provided by the many institutions, including Bank Negara Malaysia.
This is what makes Malaysia a successful hub, he explained, pointing to the support of banks and regulators as well as support from institutions, both professional and academic.
With the tidal waves of the global financial crisis ebbing, what has become clearly visible to financial institutions is the exposed DNA, or genetic material.
“Islamic finance captures the essence of transparency and discourages speculation and it is this very DNA which has appealed to conventional banks and prompted regulators to step up on the number of requirements for transparency and regulating speculative types of transactions.”
One of his notable achievements was his role in the first-ever public sukuk related to Makkah development, the first non-OIC (Organisation of Islamic Cooperation) sovereign sukuk and the first vaccine sukuk.
Although Malaysia can be well categorised as an advanced capital market in Asia with Islamic bonds taking up a major part, it was important to carry on advancing it further.
HSBC has played an important role in most of the sukuk issuances in Malaysia but Oz is also excited to be in Malaysia working on world leadership initiatives.
HSBC Amanah, which has a footprint of 26 local branches, has rolled out several products that include Amanah MPower Platinum Credit Card-I, its “most hardworking” Islamic cash back card, the Premier education programme, and Perks@Work — a retail success story within the banking group.
Malaysia is a market which Oz remains enthusiastic about in sukuk issuance even if Saudi Arabia and Indonesia have made waves in terms of the size and frequency of bonds issued.
“In the US dollar sovereign space, Malaysian issuances have innovation in their structure — and that marks leadership because corporates and sovereigns around the world and within Malaysia adopt these structures to make it easier for them to issue sukuk.
“No other market could compare to Malaysia in this regard,” he added.