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DOHA: The Chief Executive Officer of First Finance Company, a Qatari based Islamic Finance Services (IFS) institution, has applauded moves by the Central Bank of Qatar to impose greater regulation on conventional banks offering Islamic services over concerns that “unhealthy competition could lead to over-aggressive practices”.
Khalid bin Ibrahim Al-Sulaiti, who is also Vice Chairman of IFS consultancy Bait Al Mushara, told Oxford Business Group (OBG), the global publishing, research and consultancy firm, that the constraints of Qatar’s market also highlighted the likelihood of consolidation within the sector.
“The market is too small to allow more conventional banks to open Islamic windows,” he said. “The Central Bank needs to issue more conditions that conventional banks operating Islamic windows must meet. While we want a competitive market, we do not want unhealthy competition that leads to over-aggressive practices.”
Al Sulaiti said prospects for growth within Qatar’s IFS industry looked promising, with figures indicating that customers were prepared to pay more for services which instilled confidence and were also in line with their beliefs. “The dedicated Islamic banks are doing well as customers realise they are more reliable,” he said. “A large percentage of banking customers are willing to pay a premium for Shariah-compliant services as it’s about their belief system.”
He was also upbeat about the opportunities for growth in Islamic bonds but admitted that this could be hampered by delays in approvals. “The sukuk market has strong growth potential in the coming years but the approval process in Qatar takes too long,” he said. “By the time approval is granted, market conditions have often changed.”
Al Sulaiti was interviewed by OBG’s team as part of the research undertaken for the Islamic Financial Services Chapter of The Report: Qatar 2011.
Al Sulaiti voiced his concern that the rate of growth within IFS in Qatar was far outpacing human capital development for the industry. “Islamic banks in Qatar often hire CEOs from conventional banks because there are not enough candidates with specialist expertise to fill these positions,” he said. “There is more work to be done in Qatar in terms of giving attention and care to the Islamic Financial Services sector, especially in education and human capital development.”