Istanbul: Islamic finance leaders on Thursday called for a broader and more socially responsible deployment of capital as the global economy grapples with geopolitical shocks, inflationary pressures, and disruptions to trade and investment. This appeal was made during the second day of the 3rd Global Islamic Economy Summit in Istanbul, where the discourse centered on aligning capital in Islamic economics with ethical principles, financial inclusion, and social welfare.
According to Anadolu Agency, the summit, organized under the Turkish Presidency and as part of the AlBaraka Summit Series, is being held at Halkbank's headquarters in the Istanbul Financial Center. The event features Anadolu as the global communications partner. The opening remarks, including those by Turkish Treasury and Finance Minister Mehmet Simsek, set the stage for the first panel of the day on 'Foundations of Capital in Islamic Economics: Concept, Principles and Purpose.' The session, led by Umar Oseni, secretary general of the OIC Arbitration Center, delved into the conceptual foundations of capital in Islamic economics, emphasizing its ethical and sustainable allocation.
Malek Khodr Temsah, General Manager of Albaraka Turk Participation Bank, highlighted the significant geopolitical and macroeconomic shocks experienced globally over the past six to seven years, impacting nations, societies, and individuals. He noted that such periods present both challenges and opportunities, underscoring that the responsibilities of capital providers and banks extend beyond mere financing.
Temsah advocated for financial institutions to foster financial inclusion, extend capital to underserved communities, support cross-border trade and investment during challenging times, and ensure that economic growth benefits all societal layers. He also emphasized the importance of providing finance and participation banking tools for disadvantaged groups excluded from financial systems.
Khurram Hilal, CEO of Islamic Banking at Standard Chartered Bank, pointed out the substantial challenges facing the Muslim world, including a leadership deficit. He noted that tariffs, geopolitical conflicts, and energy and commodity disruptions have intensified supply-side pressures and fueled inflation, with sanctions and blockades exacerbating economic hardship by raising prices and impacting lives.
Hilal cautioned that Islamic banks' traditional domestic focus leaves them vulnerable to regional crises, advocating for a broader, more diversified perspective rather than a reliance on local markets.
Rafe Haneef, Group CEO of MBSB Holding, which includes MBSB Bank and MIDF Group, argued that capital should be assessed not only for profitability but also for its social impact. He stressed that capital should not be directed toward socially harmful sectors, regardless of profitability, and should adhere to the broader objectives of Shariah, such as protecting religion, life, intellect, family, and property.
Haneef reiterated that while capital management often seeks double-digit returns, profit should align with the ethical and social objectives intrinsic to Islamic finance.