This research plan will be a hub of attention to inspect the opportunities of progress and growth as well as the major challenges to Islamic banking in the UK. The UK is the hub of Islamic banking and contains importance in Islamic financial sector due to its fast growing Muslim population. Islamic banking is facing some great challenges in the UK because the financial system is more favourable to conventional banking.
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There are greater opportunities in the UK for development and growth of Islamic financial system because Muslim community is eager to take financial products and they are willing to spend their lives according to their religion. There is need to educate the Muslim community toward Islamic financial products; service providers need to improve the information system within the communities and Islamic banking institution is need to work hard for survival and compete with conventional banking system in the sector of regulations and supervisions. The keywords in this research are Islamic banking, Islamic finance, Muslim population, Muslim scholars, Islamic banking growth in the UK and Islamic banking challenges.
According to the figures of Office for National Statistics 2001, there was 1.6 million (2.8%) Muslims living in the United Kingdom but according to Home Secretary the Muslim population is increasing with high growth rate. In just seven years there is an increase of 40,000 Muslims in the UK and figures reached on 2 million which consist of 3.3% of total UK population. There was no any facility available to Muslim community before 2000 but the Muslim population want to spend their lives according to their faith. According to Islamic teaching interest is strongly prohibited in Islam and they want to take banking services such as saving accounts, current accounts, home finances, insurance and loan according to Islamic Sha’riah law. The United Kingdom is non-Muslim country and all its financial rules and regulation in favour of conventional banking. Because the Muslim community is active part of the UK economy, there was need to start a system which is acceptable to these people. Islamic banking is started in the UK in 2003 with authorization of Financial services Authority. From 2003 to 2009 there is enough improvement and development in Islamic banking system. Currently two main high street conventional banks and one wholly Islamic bank are involved in Islamic banking services. But Islamic banking institution is still in the growth and infancy stage and Islamic banking is facing different challenges in this Western society such as socially, economically, fund management and regulations. With increasing popularity of Islamic banking in Western countries especially in the UK there are some difficulties in the way of Islamic Sha’riah law, Islamic banking system as well as the role of Financial Services Authority and UK Government are the critical issues.
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