Newspaper article The Canadian Press

Canada Well Positioned to Become Islamic Banking Hub, According to Report

Newspaper article The Canadian Press

Canada Well Positioned to Become Islamic Banking Hub, According to Report

Article excerpt

Canada ready for Islamic banking: report

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TORONTO - Islamic banking is being touted as the next big thing for Canada's financial services sector, but experts say it's up to the new federal government to demonstrate that it welcomes Shariah-compliant investments.

"It's absolutely fundamental that the Canadian government signal that, in fact, it is open to Islamic finance," says Walid Hejazi, an associate professor at the University of Toronto's Rotman School of Management.

They could do so either by issuing sukuk -- Islamic bonds -- or by making a public statement, Hejazi says, noting that the previous government was on record as saying it welcomed such investments.

"If there is a risk that a change in government is going to change its view on that kind of investment, that spooks investors," he said. "So the government must be clear to say . . . 'We're open to Islamic finance, we welcome it,'"

Islamic finance -- which bans interest payments and investments in gambling, pornography, weapons, alcohol, tobacco and pork -- is a fast-growing niche in the financial services industry.

A study released earlier this month by the Toronto Financial Services Alliance and Thomson Reuters says Canada has a number of advantages -- including a growing Muslim population, a stable banking system and a favourable regulatory environment -- that make it well positioned to become a North American hub for Islamic banking.

"Islamic finance is one of the fastest growing kinds of finance in the world," said Janet Ecker, president and CEO of the TFSA.

"There are opportunities here which should be explored. Toronto is an international financial centre. ... This is another way to keep our reputation and our capabilities growing."

Hejazi says the Islamic ban on interest doesn't mean consumers borrow money for free -- it just requires loans to be structured more like partnerships between financial institutions and borrowers.

"The whole idea or the concept is to avoid people becoming buried in debt because, back in the days of the Prophet, ... when people weren't able to pay their debt they were enslaved or exploited," he said.

In the case of commercial loans, that means both the bank and the borrower must have a vested interest in the success of the underlying business. …

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