Islamic finance must include lower income groups for more balanced growth: Zeti

KUALA LUMPUR: Islamic finance must be inclusive and accessible to all particularly the lower income groups and small businesses so as to achieve a more balanced global economic growth with reduced income disparities, Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz said. To this end, she said Islamic financial institutions must strive to enhance the access of their financial services to all segments of society by meeting the demand for more Islamic microfinance products. “In emerging as a new market niche, Islamic microfinance would meet the differentiated demands of low income communities and provide support to entrepreneurial activities,” she said at the 2nd International Shariah Research Academy for Islamic Finance (ISRA) Colloquium 2012 on Tuesday. Islamic microfinance, if supported by microtakaful, has the potential to provide a more comprehensive, sustainable and accessible financing and protection solution for the lower income groups and small businesses. Zeti also said the Socially Responsible Investment (SRI) is expected to become a mainstream asset class by 2015, reaching a projected total of more than US$26 trillion of asset-under-management, accounting for 15% to 20% of the global market. This growth was mainly driven by the demand from institutional investors which are increasingly prioritising the consideration of sustainability and social responsibility in their business conduct and institutional value system. “SRI has brought to the forefront the need for the financial system to be linked to the economy and for the need for greater and improved levels of transparency, fairness, ethics and social responsibility in modern finance,” she added. On the Islamic Financial Knowledge Repository Portal that she launched today, Zeti said it can contribute in meeting the need for more efficient information dissemination that would promote greater market transparency, price discovery and industry insights. As a knowledge database, the portal centralises Shariah rulings and its justifications, legal and regulatory requirements. This is enriched by the latest collection of research and development in Islamic finance. “This database will become an important source of reference and guidance for Shariah and industry practitioners, policymakers, researchers and academicians,” said Zeti, adding this initiative will not only promote greater understanding but mutual respect and recognition of Islamic finance. - BERNAMA source: http://biz.thestar.com.my/news/story.asp?file=/2012/11/27/business/20121127161421&sec=business