|Related Event||: 13th International Shari’ah Scholars Forum | ISSF13|
|Date||: 1st October 2018|
|Venue||: Kuala Lumpur, Malaysia|
The Islamic finance industry is a relatively new entrant to the world of finance because its operating principles differ from the conventional finance modes of operation. It operates in compliance with Islamic Sharia. This raises the need for developing appropriate financial product and services for the industry. The paper sought to analyze the challenges of product innovations in Islamic Syndicated financing and deliberate recent cases of Islamic syndicated financing. The study discusses grave shariah issues arise in product development of Islamic syndicated financing and their solutions such as lack of standardized documentation, NOC and charge on the assets, true implication of sale and purchase of assets, tax issues on sale and purchase and lack of related trained professionals. The study concludes that although the various financial innovations were indeed significant and have positively affected the Shariah compliant Syndicated financial service,. IFIs should focus their efforts on financial innovations and should introduce Shirkah (participation) based Islamic syndicated financing products because Shirkah (participation) truly reflects the Islamic concept of fair distribution of wealth among its stake holders. The study also figures out the risks associated with shirkah based syndicated financing and suggests actions which can address this issue and will ultimately help the growth of Islamic financing.
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