Two Important Steps before Becoming a Loan Guarantor in UAE
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When we talk about the financial trends of UAE, 2007 economic down turn comes in our mind immediately. Established in 1970’s, UAE imposed strong foot print in the different industries and became a point of attraction for big players of Global business sector.
Financial sector is the most important sector of UAE, 60 percent economy of UAE is based on it. Before 1970’s all the economic transactions were controlled by conventional banking. Covering 90 percent of the whole financial sector. But gradually after 1970’s a new concept was been evolved which amazed the whole global financial industry which also effected the financial sector of UAE, and the concept was of, ISLAMIC BANKING. The reason behind the Islamic financing popularity is that it doesn’t help only one people, rather it benefits the society as a whole.
Let’s discus how the concept of Islamic financing introduced in UAE? The concept of Islamic financing was introduced in 1970. Dubai Islamic Bank introduced the idea back in 1970s in the first Islamic conference held in Makkah. The idea of Islamic principles and Shariah based banking given by Dubai Islamic bank was so successful that it laid the foundation of new banking system in UAE and all round the globe.
Soon after the popularity of Dubai Islamic bank, Islamic financial achieved another mile stone in the form of another international Islamic development with the collaboration of Saudi Arabia and UAE, and then a new era of Islamic financial banking geared up in the UAE. When different scholars and researchers started investing in Islamic financing.
Different products and solutions were suggested by leading financial scholars which helped this concept to widen its horizons and therefore takaful solutions, shariah compliant management, ijara and Islamic loaning system were the initial development in this area. Today, Islamic banks now grab a total 25% market share in UAE Financial sector. (An estimate by Ernst & Young)
With the success of initial Islamic Banks, others took the opportunity and entered into the same market.The list of some leading Islamic financial institutions operating in UAE right now, is given below;
The Islamic financing idea which started in 1970’s has now become an important financial system of UAE and most of banks are operating on the same system. The Islamic Financing idea was so successful that the Government itself regarded “Islamic Financing as the future of UAE Financial Systems”. Moreover, a recent discussion with Prime Minister quotes the fact; “The UAE has what it takes to become a hub for Islamic finance”(Sambidge, 2013)
UAE, a country recently coming out of the economic downturn is trying hard to boost the growth in every sector and especially financial sector which is the heart of Economy. It is reported that Dubai, a leading state of UAE is in stage of developing a separate Islamic Business sector that will attract small medium enterprises from the Middle East and south-east Asia.Development is still going on and the day is not far when Islamic Financing will totally outright other systems and will be the leading the financial structure of UAE.