Islamic bankers see Sharia system strengthening

By Asma Alsharif

JEDDAH, Saudi Arabia (Reuters) - The global financial crisis is an opportunity for Sharia-compliant Islamic banking to further its position internationally, bankers said at a forum in Saudi Arabia on Saturday.

Islamic banks have been barely bruised by the global credit crisis so far, although falling property and commodity prices and slowing economies are starting to affect the sector.

But bankers at the forum, on how the world finance crisis could affect Islamic banking, saw the sector strengthening.

"It is a must for Islamic finance to seize the opportunity that came with this global financial crisis," Ahmad Ali, president of the Jeddah-based Islamic Development Bank (IDB) said at the discussion organised by IDB.

"Global investment banks should be set up that realise the Islamic economy and offer the world a new vision and different way to manage assets, invest wealth and create products."

Sharia-compliant finance bans the receipt of interest and investments in companies dealing in alcohol, gambling and pornography.

Islamic financing deals are backed by assets, commonly real estate and commodities, due to the Sharia requirement that transactions must involve real economic activity.

There are more than 300 Islamic financial institutions worldwide and the sector is valued at about $1 trillion (628 billion pounds) , just a fraction of the conventional global banking industry.