Challenges For Islamic Banks

Ch exclusivelyenges for Muslim Banks The unique characteristics of Muslim shoreing give rise to a set of challenges that have to be addressed by Muslim banks. These include: Establishing appropriate draw and runniness focussing techniques Achieving reproducible sharia supervision Managing the gift pool Addressing legal and r level offue enhancement restrictions Establishing appropriate risk and liquid solicitude techniques: The risk profiles of Muslim finan¬cial institutions differ from those of their conventional restorationparts because of few of the Islamic financing techniques. For example, in an auto murabahah transaction, there is a risk that the customer bless not purchase the vehicle from the bank even though he commit¬ted to do so. The less standard¬ized the goods financed through murabahah, the greater the risk. This risk is even more relevant in the mutajarah business, in which the bank purchases indisputable assets or commodities and holds them as inventory. As a result, Islamic banks pick up to evaluate their risk instruction techniques and deploy appropriate capabilities to counter or mitigate risks. formulaic risk manage¬ment techniques and instruments are not overflowingy fitted for all Islamic banks.

When an Islamic bank engages in the mutajarah business, for example, risk associ¬ated with retentiveness inventory must be managed, and thus cross-indus¬ study know-how much(prenominal) as that of retailersneeds to be transferred and applied accordingly. A major challenge facing Islamic banks is the absence of short-run liquidity management and longer-term refinancing instruments. As a result, asset indebtedness management is becoming a objective worry. On the short-term side, sharia-compliant specie market instruments are in short run and commodity-based drive off murabahah transactions can just be regarded as an interim solution. A similar problem exists on the long financing side, where the issuance of sukuk is the only resource available nevertheless requires an rudimentary asset on which to...If you requisite to get a full essay, order it on our website: Ordercustompaper.com

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