What is Islamic Banking and what does the future hold?

In this latest podcast episode, “What is Islamic Banking and what does the future hold?”, Darren Franks chats with Mohammed Kaka, COO at Al Baraka Bank.

In this podcast episode Mohammed Kaka, a seasoned professional in Islamic banking, shares insights into his journey, Al Baraka’s evolution, and the intersection of finance and technology.

Al Baraka’s 18-Year Evolution

Over the past 18 years, Mohammed has played diverse roles at Al Baraka, from finance and audit to forex and sales. He now oversees sales and digitalization, reflecting the industry’s shift toward becoming IT-centric service providers.

Principles of Islamic Banking

Islamic banking, often referred to as ethical banking, is rooted in principles guided by the Quran. The key differentiator is the prohibition of interest. Islamic banking operates on profit-sharing, cooperative models, ensuring a risk-sharing approach. Contrary to popular belief, Islamic banking is open to everyone, not just followers of Islam. It provides an alternative for those seeking financial services aligned with ethical and Sharia principles

Asset-Backed Financing and Benevolent Loans

Al Baraka primarily engages in asset-backed financing, avoiding interest-driven transactions. The bank aims to foster partnerships in financial endeavors, ensuring risk-sharing and adherence to Islamic principles.

Regulatory Landscape and Collaboration

In South Africa, Al Baraka collaborates closely with regulators like the Reserve Bank. Regulatory support is crucial for Islamic banking’s growth, evident in recent developments, such as the government’s issuance of a REN-denominated Sukuk.

Challenges and Opportunities in Cryptocurrency

Mohammed acknowledges the speculative nature of cryptocurrencies but believes that with proper regulation and reduced volatility, they could become more acceptable within the Islamic banking framework. A Sharia board assesses investments to ensure compliance with ethical standards.

Global and Local Perspectives on Islamic Banking

While Islamic banking has deep roots in the Middle East, South Africa has made significant strides, with regulators actively engaging and adapting tax legislation to accommodate Islamic finance transactions.

As Islamic banking continues to evolve globally, Mohammed’s journey at Al Baraka reflects the industry’s dynamic nature. From its foundational principles to embracing digitalization, Islamic banking navigates the intersection of tradition and innovation, offering ethical financial solutions to a diverse clientele.

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