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Bankers dismiss Islamic pricing benchmark plan - Islamic Finance ... http://www.business24-7.ae/banking-finance/islamic-finance/banke... Bankers dismiss Islamic pricing benchmark plan 03 June 2010 Malaysian Shariah bankers yesterday dismissed as impractical a proposed Islamic pricing benchmark, highlighting the financing industry's struggle to replace conventional interest rates as a pricing tool. Despite the Shariah's ban on usury, Islamic financial products are routinely priced using conventional rates such as London Interbank Offered Rates (Libor) in the absence of a Shariah-compliant benchmark. The International Shariah Research Academy for Islamic Finance (Isra), a research group backed by Malaysia's central bank, has proposed that Malaysian Islamic banks use industryspecific benchmark pricing rates that are derived from underlying assets. But the plan drew a lukewarm response yesterday, with discussions largely focused on the difficulties of running two policy rates within one banking system. "Can the country actually afford a system where suddenly the price of Islamic financing is lower than conventional, then everyone flocks to Islamic [banks]?" Nasiruddin Kamaruddin, COO of Standard Chartered Saadiq, told the meeting. Azidy Daud, treasurer of Asian Finance Bank, said the proposed benchmark was better suited for private equity ventures. "This is a good benchmark but it is not applicable to the banking industry," he said. 1 1 ﻣﻦ 21/06/2010 12:54 م