Islamic banks ‘better in crisis’

Indonesian President Susilo Bambang Yudhoyono has called on Islamic banks to take a leadership role in the global economy, amid the financial crisis.

He was speaking at the opening of the World Islamic Economic Forum in the Indonesian capital, Jakarta.

The forum has brought together political and business leaders from 38 countries to discuss the global economic slowdown.

They will also discuss ways to achieve energy and food security.

Mr Yudhoyono said it was time for Islamic banks to do some missionary work in the West.

Islamic financial institutions, he said, had not been hit as hard as their western counterparts because they did not invest in toxic assets.

Banks run in accordance with Muslims laws on interest payments and the sharing of credit risks are seen by many as fairer than traditional banks, less focused on profit and kinder to the communities they work in.

Demand for Islamic financial products has been growing in the Muslim world for years but Mr Yudhoyono said that many in the West were now ready to learn from them.

Islamic law prohibits the payment and collection of interest, which is seen as a form of gambling.

Transactions must be backed by real assets, and because risk is shared between the bank and the depositor, there is added incentive for the institutions to ensure deals are sound. (story Link)