December 01, 2008

Islamic banking is gaining ground with non-Muslims worldwide due to its strict lending principles, Singapore's third-largest lender OCBC said on Monday, reflecting industry efforts to transcend religious beliefs to gain market share.Sharia finance is a blend of Islamic economics and modern lending principles and its products can be sold to Muslims and non-Muslims.While it was previously a small market catering to Muslims who wanted to avoid interest-based conventional banking, Islamic finance has become popular in recent years due to cash-rich Gulf Muslim investors and rising demand for ethical investing.

Non Muslim investors have also been looking for less risky alternatives since the onset of the global credit crisis over a year ago cast doubt on many Western risk management practices.But the Islamic finance sector is still relatively small and the industry wants to grow its market share to become a global alternative to conventional banking.Many banks including OCBC (OCBC.SI: Quote, Profile, Research, Stock Buzz) have set up Islamic banking businesses to tap opportunities in the $1 trillion industry. OCBC's Malaysian unit launched its Islamic banking subsidiary, OCBC Al-Amin, last month.