Can religion and banking be a favourable combination?

Bahrain's AlBaraka Banking Group BSC, the world's fourth-largest Islamic financial services provider, will spend as much as $300 million to woo customers in India and China who want to invest their money according to Muslim tenets. The $300 million will be spent in four years building the business in Asia and used for acquisitions or to provide “capital for our subsidiaries there,” Adnan Ahmed Yousif, AlBaraka's chief executive officer said. The venture in India will be the first by an Islamic bank from the Middle East in the South Asian nation, adding to the Bahraini lender's presence in 12 countries, he said.

“India is a large market and we are working with partners to see how we can do it,” Yousif said. AlBaraka will compete with Standard Chartered, ABN Amro and HSBC in Asia by offering services that comply with Shariah, or Islamic law. The Islamic finance industry worldwide may grow to $2.8 trillion by 2015 from as much as $1 trillion now, the Malaysia-based Islamic Financial Services Board estimates.

“There is a lot of interest from Middle East investors in Asia, particularly China and more recently India,” said Dubai,United Arab Emirates-based Arul Kandasamy, head of Islamic financing solutions at Barclays Capital, the investment bankingunit of Barclays Plc. London-based Barclays in July said it will start a wealth-management team in India. Under Islamic law, or Shariah, the payment of interest and investment in businesses such as tobacco, alcohol and gaming is prohibited, making many conventional stocks, bonds and banking avenues off limits to Islamic investors.

Will an Islamic bank prove to be an optimistic opportunity? Is following religious tenets and texts as the guiding principle in banking practices a sustainable idea in today’s liberalised environment?