DOHA, Oct 11 (Reuters) - Qatar's regulator has proposedextending its ban on onshore banks operating Islamic windows toinclude financial institutions in the Qatar Financial Centre(QFC), according to a consultation paper released this week.
Such windows allow conventional banks to offer Islamicfinancial services, provided that clients' money is segregatedfrom the rest of the bank.
Last year the central bank banned Islamic windows in theonshore banking system, requiring conventional banks to close ordivest their sharia-compliant businesses. Its motive wasapparently to ensure a level playing field for Islamicbanks.
Extending the ban would ensure that conventional banks couldnot take advantage of the QFC to skirt the ban. "The RegulatoryAuthority's proposal would create a consistent approach toIslamic windows within the State," the regulator said in theconsultation paper, which is open to responses from the publicuntil Nov. 12.
"Adopting this policy will align Qatar with internationalstanding-setting bodies whose aims are typically focused onreducing regulatory arbitrage."
Islamic windows present disadvantages because ofdifficulties in properly supervising risks and the complexity offinancial reporting, the statement added. But it said the amountof business conducted through Islamic windows in the QFC wasalready limited.
"The amount is very small. It's never been something thatthe QFC has gone out of its way to attract. This appears to bemore of an attempt to achieve coherence across the financialsector in Qatar, rather than something that is business-driven,"said a Doha-based analyst, declining to be named.
The proposed ban would also extend to insurance companies,although there are currently no conventional insurers operatingan Islamic window in Qatar.
(Reporting by Bernardo Vizcaino and Regan Doherty; Editing byAndrew Torchia)
Keywords: ISLAMIC FINANCE/QATAR