As scholars quibble, Shariah banks eye convergence

Jurists may never fully agree on how to interpret the Shariah but controversial Islamic finance structures are likely to be dropped eventually as the industry strives to reach wider markets. Disputed contracts like bai bithaman ajil and bai inah will probably be pushed to the sidelines while mudaraba and musharaka bond structures will be modified as governments and corporates try to narrow a gap in opinion that shuts out some investors, some bankers say.
"As more cross-border transactions take place and there is a need for meeting standards and requirements of a broader segment of market, naturally there will be a trend towards convergence," said Zarinah Anwar, chairman of the Securities Commission, which regulates Malaysia's capital markets. The interpretation of religious scriptures is key to the $1 trillion Islamic banking industry as issuers and investors look to the sharia to determine if contracts are halal or haram.