Page 10 - Islamic Finance Practices

an asset is evidenced from the SPVs to the

investors, making it more like a conventional

interest-bearing bond.

Based on the above observations, Islamic finance

practices which are mainly driven by commercial

banks and Shariah regulators must look for more

viable options to diversify assets and funding that

can free itself from the dictates of interest rates. As
for now, clear evidence on convergence should

not be downplayed as minor glitches and

distractions. The move to introduce investment

account (IA) funds in Malaysia in 2014 via IFSA

2014 is a bold policy action that can help dilute the

high intensity of tawaruq utilization in financing and

deposit market. When banking shareholders have

now to embrace the environmental, social and
governance (ESG) criteria in banking operations,

and it should proceed to address fragility issues as

part of its social concern. It will be a tough agenda

indeed as it means a crusade against the system

of riba.