Government promotes UK to become the hub of Islamic finance

Islamic finance is poised for a massive growth as London is soon to become the hub outside the Middle East. Gradually London is emerging as a key centre for practicing Islamic finance. Besides the Middle East, there is only one place that is backing Islamic finance the most and that is UK. Most financial institutions are aiming at becoming a part of the global market that is growing with time. As per current reports it is surveyed that Islamic banks deals with funds that amount to $200 billion and it is expected to go through a rise up to 15% per annum and reach an alarming level of $1 trillion by the end of 2010. Investors find a good way of investment in the sukuk bonds and they can utilize the proceeds in getting consolidation help if they are mired in debt.

The principles behind Islamic finance have to be in accordance with the Shariah, which is the legal law in Islam. According to the Islamic law, charging of interest rates are completely forbidden and this implies that they have not paid much attention to the recent economic turmoil. Instead of this such institutions have raised funds and provided liquidity while the other banks were struggling to perform well.

Islamic finance has long been stated as outside the mainstream finance and there are certainly some particular factors that have contributed to the sudden growth and popularity of the Islamic banks and their finance. The primary reason behind this growth is that there is an increasing number of Muslims who are interested in taking out mortgages for buying their homes and they are also investing money in bonds and other financial products. The most probable second reason is the high oil prices in the Middle East have created an increase in the demand of the local financial markets. This has resulted in the investors in the Middle East seeking a better alternative.

A large number of banks in UK are stressing on Islamic banking and opening Islamic windows in the conventional banks. But there lies a question as to why London has become the hub of Islamic finance. London has been the major financial centre for decades and it is always considered as more open to new ideas and innovations. The United Kingdom was the first member of the European Union (EU) to authorize the Islamic finance. Since the English law is highly respected throughout the world, it is most a preferred jurisdiction for most Islamic transactions. The most important reason behind UK becoming the hub of Islamic finance is that the government is boosting this growth and it has introduced a certain number of changes in the government policies to support Islamic finance.

The UK’s first Islamic bank, known as the Islamic Bank of Britain was opened in the year 2004 and now it has five banks operating in accordance with the Shariah and that has been registered by the Financial Services Authority which is UK’s banking regulator. Thus, with all these statistics, UK has been rightly deemed to be the hub of Islamic finance. Any debtor can easily invest in the Islamic market with care and gain huge returns. Someone who is in need of debt consolidation help, can utilize the proceeds of the investment.