IslamicFinance.de

New rules for Islamic banking in Qatar released by the Central Bank in late August will change the way conventional banks offer sharia-compliant services and likely boost the performance of banks that focus solely on such services, reports Global Arab Network according to OBG.
The new regulations, made public on August 29, prohibit conventional banks from allocating more than 10% of issued capital to Islamic banking operations and from opening additional branches for Islamic banking. There is also a limit on mudaraba (profit-sharing) and musharaka (joint ventures) to 5% of a bank’s total Islamic operations.
The message seems to be that banks can either focus on conventional or sharia-compliant banking, but not both. The new rules come into effect immediately but banks have until the end of 2011 to fully comply.
While that may be true in the short term, the limits on conventional banks may spur them to increase product offerings in other areas and will likely increase competition among institutions that offer only sharia-compliant services.