Qatar's decision to ban conventional banks from offering Islamic banking services has shocked banks in the UAE.
Although many bankers said they do not expect a similar action in the UAE, many said it is setting a wrong precedent and the decision has created uncertainty in banking business in the region.
Qatar's central bank has ordered commercial banks to close Islamic banking operations by the end of 2011. The central bank reportedly issued a circular on February 1, saying "it has been decided to terminate the activities of the Islamic finance services" offered by conventional banks. The order is effective immediately but provided lenders with a grace period until December 31 to shut Islamic banking operations.
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