c banks provide traditional banking services to the extent that Shari’ah and the local government rules and regulations permit for example, they receive OPEC surplus funds and trade Eurocurrencies. SHORTCOMINGS OF THE ISLAMIC BANKING SYSTEMIslamic banks are able to provide almost all the services that are provided by other common banks. However, the only exception seems to exist in the case of letters of credits where there is a possibility of interest being present.There have been, however, some other major difficulties involved with Islamic banking that are mentioned as follows:1. Shortage of experts in Islamic banking - The supply of trained or experienced bankers has lagged behind expansion of Islamic banking. The training needs not only affect Arab domestic banks (both Islamic and non-Islamic) but also foreign banks. Academic institutions, international organizations, and translation firms must respond to the need by organizing training materials, lectures and workshops.2. Absence of accounting and auditing standards pertinent to Islamic banks - Uncertainty in accounting principles involves revenue realization, disclosures of accounting information, valuation, revenue and expense matching etc. Thus, the results of Islamic banking schemes may not be adequately defined, in particular, the profit and loss shares attributed to depositors.3. Lack of uniform standards of credit analysis - Islamic banks have no appropriate standard of credit analysis, especially for profit-and-loss-sharing (PLS) schemes. Similarly, there is a widespread training need involving related aspects such as financial feasibility studies, monitoring of ventures and portfolio evaluation.4. Potential conflicts with central banks - Islamic banks have been established as separate legal entities and therefore their relationship with central banks and/or other commercial banks is uncertain. Problems may be complicated when an Islamic bank is established in a non-...
