Recommendations for Islamic Banking System Development.
Some anecdotal recommendation to enhance the service of the Islamic bank, and development the operation all over the world.
Recommendations:
1. Islamic bank immediately need to develop financial instruments that will enhance liquidity preference; to develop secondary, money, and inter-Islamic bank markets; and to perform asset-liability and risk management. It well known that Future growth and development will depend largely on the nature of innovations, efficiency, variety of product introduce in the market.
2. Developed special liquidity management instruments that will include commodity murabahah, this instrument have spread rapidly based on its reliance on existing financial infrastructure and is being used in about 45 percent of jurisdictions with Islamic Bank presence. In contrast, its practicality will likely be limited by transaction costs, administrative process, the non-tradability of the contract, and Shariah concerns.
3. Developing liquidity facilities, the legal and operational frameworks of central banks need to be improved by permitting the development and use of Islamic liquidity management instruments. It would help to ensure the banking financial stability and increase the effectiveness of monetary policy.
4. Sometimes, lack of understanding of the correct environment of Islamic financing techniques may also be partially responsible for rather inappropriate policies often central banks towards Islamic banks; this is particularly true of musharakah and mudarabah. There may have important implications for reporting activities as well as control and regulation of Islamic banks by the central banks.
5. Central bank may interfere in the banks’ decisions with regard to monetary policy tools such as reserve requirements, open market operations and so on. This attempt would be desirable to determine the exact role of the Shari'ah council and take the central bankers into confidence.
7. Profession teaching, training and research is the necessity for the development of any discipline. As mentioned above, there is a serious shortage of scholars who possess even a working knowledge of both Islamic fiqh and modern economics and finance . Professionally, many managers of Islamic banks are not very well trained on the Islamic terms and implication of regulations.
8. The Islamic banks can encourage providing more profit-sharing finance, if arrangements are made to reduce the costs of appropriate arrangements as well as financial engineering consistent with the preferences of fund users. The benefits of direct investment in terms of economic development may not always be fully reflected in the rate of return of the fund supplier.
