Issuing of Islamic instruments are recommended- the conference of Yemeni Islamic banks

April 11, 2010

At the conclusion of the conference of Yemeni Islamic banks, participants recommended the need to carry out standards for the issuance of Islamic instruments because of their benefit to the community development.

This is the first conference of Islamic banks organized by the Yemeni Businessmen’s Club on 20-21 March in Sana’a under the slogan “Yemeni Islamic Banks: Reality and Future Prospects.”

The participants called for the appointment of a legitimate body in the Central Bank of Yemen to catch oversights in Islamic banks and to enable them to follow-up on all the work and activities of the Islamic banks. They asked Islamic branches of conventional banks to be abided by the standards and controls of the Islamic banking system.

The recommendations also suggested the establishment of a religious independent national body responsible for the issues of Islamic banks and interdependence insurance. The participants urged the establishment of a payment fund for the the liquidity needs in the Islamic banks. The recommendations called for the establishment of a joint committee between the private sector and government to follow-up on the implementation of the recommendations to improve the performance of Islamic banks and insurance institutions and activate its role in the development of society.

During the launching conference, Minister of Industry and Trade Dr. Yahya al-Mutawakel said that, “The conference comes at a time when Yemen’s circumstances are influenced by the negative repercussions of the global financial crisis. These circumstances require cooperation between the government and private sectors in order to collectively alleviate those repercussions.”

Al-Mutawakel pointed out that Islamic banks had a major role in terms of increasing monetary stability and strengthening the development, investment and social role of Islamic banks as being investment institutions having social objectives.

The funds and loans given by Islamic banks to finance private sector activities increased from 39.3 percent in 2008 to 44.5 percent in 2009 while the rest were funded by commercial banks in 2008, 2009.

Governor of the Central Bank of Yemen, Ahmed al-Samawi, spoke of the importance of the conference in providing an in-depth discussion of Islamic banking and deepening of the concepts and expansion of its role, especially as Yemen was among the first states to issue Law No. (21) in 1996 on the Islamic banks and the amendments made to it, including allowing conventional banks to open branches operateing in accordance with Islamic law.

The central bank governor said that many European countries prepare themselves to be the capitals of Islamic banking. He explained that the U.S. Congressional Research Service prepared a search for Islamic banking which described the Islamic finance lifeline of the financial crisis which is more robust in face of the global economic decline.

Ahmed Ba-Zara’a ,chairman of the Yemeni Businessmen’s Club, delivered an opening statement in which he referred to the objectives and themes of the conference to assess the experience of Yemen and the Islamic banks to achieve a comprehensive awareness of Islamic banking.

The conference addressed a number of themes, including the strengthening of the banks’ capacity to accommodate developments and the promotion of investment banking partnerships between divergent Islamic banks. The conference also highlighted the experiences of Islamic insurance policies in Yemen as well as the whole region, while assessing the role of Islamic banks in development. The conference evaluated the legitimacy of Islamic banks in Yemen and the impact of Islamic financing of macroeconomic variables and development in Yemen, comparing Islamic branches of conventional banks with those of banking sectors. The conference discussed the problems of liquidity management and investment in Islamic banks as well as the legislative and legal environment of Yemeni Islamic banks. it urged corporate governance within Islamic banks in Yemen.
The conference aimed to assess the experience of Islamic banks and raise awareness of Islamic banking, through the attendance of various members of the boards of Islamic banks in Yemen and local and foreign economists. According to a report issued by the Central Bank of Yemen, there are four Islamic banks from among 18 independent banks in Yemen.

Chairmen and members of boards and CEOs of banks, Islamic banking and Islamic insurance experts, businessmen and senior leadership of the Yemeni companies and economic professors as well as concerned people attended the conference.