UBD Approved as Centre for Islamic Banking and Finance

The basic economic purpose of any commercial banking and financial system is to channel funds from surplus economic units to those that are in need of financial resources for their existing and or planned future business undertakings.  This was said by the Minister of Health at the closing of the International Conference on Islamic Banking and Finance, Wednesday.

Pehin Dato Seri Setia Haji Awang Abu Bakar then mentioned it is not difficult to imagine the importance of the financial intermediation for both developing and developed economies. Whether or not they recognize this fact, financial intermediates do serve this economic purpose when they seek to maximize profits for their owners.

He said there are three major parties involved in financial intermediation: first to have providers of funds or depositors, second the financial intermediaries and commercial banks in particular, and finally the users of funds such as producers and traders.  The profit and loss sharing schemes of Islamic banking and competition among Islamic banks should evolve into a system where all three parties get a fair share of profits as well as losses of the business.

The Minister in his speech also said, the Government of Brunei Darussalam with the financial cooperation of Islamic Development Bank Jeddah, has approved the establishment of the Centre for Islamic Banking, Finance and Management at Universiti Brunei Darussalam.  UBD has already started a minor programme in Islamic Banking and Finance, and the first batch of the programme will be graduating this year.

The Faculty of Business, Economics and Policy Studies of UBD is reviving its Entrepreneurial Development Unit.  The incessant availability of competent and honest entrepreneurs is one of the most important requirements for the successful implementation of Islamic Banking and Finance.  It is hoped that these two institutions at the UBD campus would become vehicles for progress and development of Islamic Banking and Finance.

The task of bringing all the practices of Islamic banking and financial institutions closer to the theoretical underpinning is enormous and challenging.  It has to work under the rules and regulations of Islamic finance by eliminating riba, gharar and mysir from their business dealings.  At the same time, it must be as efficient, stable and mindful of distributive justice.