A Megabank based on Islamic banking is in the advanced stages of being formed and would likely be launched within the next 6 to 10 months. The announcement was made by an executive of the firm responsible in the project, at the recently concluded Summit on Islamic Banking and Finance held in Bahrain . Sheikh Saleh Abdulla Kamel, the chairman of Al Baraka Banking Group is a front leader in establishing this bank which is expected to become the world’s largest sharia-compliant lender. This new institution has about ten shareholders, as of now, which includes some of the biggest non interest based banks like Islamic Development Bank , Saudi Investment bank and the Kuwait Real Estate Bank.

This megabank is supposed to have a capital of more than $4 billion, which it would be lending without interest, based on the principles of interest free economy thought by the Quran.  With the western model of capitalist economy losing its ground due to the recent recession, alternative models for the economy are being considered by many economic analysts. The interest free economy model is being suggested as the best method to get out of the mess created by the flawed foundations of interest based economy where the rich become richer and the poor become poorer.

Moreover, the rising fuel prices have resulted in a lot of money getting concentrated in the Middle East. The western economic giants feel that the only way to get out of the credit crunch is to get more funds from the Middle East. Hence, a renewed interest into Islamic Banking has lead to the formation of such a megabank.

Malaysia and Bahrain are the top contenders to host the head office of the bank.

[Source: Reuters]