Central Asia

ICD and TUV SUD to develop private sector in Central Asia

The Islamic Corporation for the Development of the Private Sector (ICD) and TUV SUD signed a memorandum of understanding (MoU) to foster their joint operations in the countries of Central Asia. ICD's CEO Khaled Al-Aboodi and the managing director of TUV SUD Central Asia, Anar Ahmadov, signed the MoU on behalf of the two corporations in Astana, Kazakhstan. The aim of the MoU is to facilitate cooperation in promoting private sector participation and inform about business opportunities in countries of Central Asia. This partnership will enable the two institutions to work closely on market studies related to the transit and logistic sector in the common member countries.

Payment App for Foreign Tourists Wins #FinTech Award in #Iran

ZPay, a payment application for foreign tourists in Iran, has won Bank Pasargad Iran’s award for best fintech innovation at the First Fintech Festival. ZPay enables foreigners to shop in Iran while keeping their money outside the country. Iran is doing much to improve its fintech standing. Earlier this month, it was reported that Iran had launched a FinTech Association to push for further development. And yet, while the capital Tehran is home to a growing number of local fintech startups, Iran still has a long way to go before it can be considered a fintech hub.

Why do #Iranian #banks remain stuck with toxic assets?

On Feb. 26 the Iranian government got the parliament approval to sell a total of 10 trillion rials ($308 million) worth of excess properties owned by its ministries. The raised money is expected to help shore up the troubled Post Bank of Iran and the Cooperative Development Bank. According to economic newspaper Donya-e Eqtesad, toxic assets account for 40-45% of total banking assets in the country. Nearly 15% of these assets consist of immovable assets such as land and buildings. The rest consists of nonperforming loans and government debt. The sale of at least 33% of the surplus assets could have taken place in the fiscal year running to March 20, but banks eventually decided to find a legal way to postpone the sale process. Real estate expert Farhad Beizaei accused banks of wasting time so that they can sell properties at higher prices next year.

Islami Bank is not operating in Islamic way: Ibrahim Khaled

According to Bangladesh Bank's former deputy governor Khondkar Ibrahim Khaled, Islami Bank Bangladesh speaks about Islamic banking, but it does not act in that way. In his view, the private bank is not following Islamic banking rules of keeping customers as partners of profit or loss. He also alleges that remittances are dropping due to 'dishonest' mobile banking abroad. The statements were made at a seminar in Dhaka where several professors of Bangladesh Institute of Bank Management (BIBM) were present. Khaled said that remittances were dropping because money is being sent through illegal channels in the name of bKash. He advised the Bangladesh Bank to open a new wing to research mobile banking in order to stop transactions outside banking channels. In a research paper published at the seminar, it was said that a large section of the customers of Bangladesh's banks did not have clear ideas about the sector.

BankIslami signs strategic alliance with CompareOn

BankIslami Pakistan and fintech startup CompareOn Pakistan have signed a strategic alliance that will further enhance BankIslami’s reach. CompareOn Pakistan provides the online comparison platform Karlocompare.com.pk, which delivers product information and enables customers to apply without the need of visiting or calling BankIslami branches. The agreement was signed by Sumair Farooqui, CEO of CompareOn Pakistan and Yasser Abbas, Head of Islami Auto Finance. Speaking on the occasion, Sumair Farooqui said CompareOn Pakistan intends to serve the growing customer base of Auto Financing Industry and contribute to enhancing awareness around BankIslami’s products.

Can't share details of govt response on Sharia banking: RBI

The Reserve Bank of India (RBI) has said it cannot disclose the Finance Ministry's response about the introduction of Sharia banking in India. The RBI had earlier proposed opening of Islamic window in conventional banks for gradual introduction of Sharia- compliant or interest-free banking in the country. RBI was asked to give the copy of the letter sent to it by the ministry on the recommendation of its Inter Departmental Group (IDG) regarding Islamic banking.
The central bank had sought response from the Department of Financial Services (DFS) under the finance minister whether their letter can be disclosed under the Right to Information (RTI) Act. As advised by the DFS, the disclosure of information would cause a breach of privilege of Parliament or the state legislature.

Islamic finance

The International Monetary Fund (IMF) has released its guidelines for the Islamic finance sector. The guidelines noted the need to develop a policy framework in the countries where Islamic banking has become systemically important. While accounting for a small share of global financial assets, Islamic banking has established a presence in more than 60 countries and has become systemically important in 14 jurisdictions.
Although Pakistan finished the IMF loan programme last year, there are still numerous reforms that need to be undertaken. In recent years, the State Bank of Pakistan (SBP) has made efforts for the promotion of Islamic banking, but no real effort has been made by the private sector and the government. The growth of Islamic banking poses new challenges and risks for regulatory and supervisory authorities. The IMF has proposed support for developing and providing policy advice on Islamic banking-related issues in the context of fund surveillance, programme design, and capacity development activities.

#Iran to Establish Bank in #Azerbaijan: Report

Governor of the Central Bank of Iran (CBI) Valiollah Seif said the country plans to establish a bank in Azerbaijan with 100% Iranian ownership. The plan involves turning a branch of Bank Melli Iran in Azerbaijan into an independent Azerbaijani bank. Seif added that all the shares of the new bank will be owned by Bank Melli Iran and that the details would be discussed next week during the visit of the Azerbaijani delegation to Tehran. Seif emphasized that certain plans were on agenda for Iran and Azerbaijan to use their national currencies in mutual transactions. Currently 32 banks operate in Azerbaijan and 36 banks operate in Iran.

#Pakistan's National Savings Scheme may offer #Islamic #banking services

Pakistan's government-operated National Savings Scheme (NSS) is evaluating whether to offer Islamic banking services. This plan will help depositors put their cash into Islamic Shariah-compliant Ijara sukuk. As soon as that happens, millions of new accounts are expected to be opened, bringing a huge population of medium and small savers into the banking stream. Millions of others who are currently operating accounts in conventional banks may also be snatched away by the NSS. Investments in all types of the NSS go directly to the government of Pakistan, which uses this cash inflow to fill the budgetary gap and to fund its development projects. NSS deposits by people totalled Rs233 billion in 2015-16 and Rs337 billion in 2014-15. In the event of introduction of Ijara sukuk, some of these deposits are likely to be switched to this Islamic mode.

Islamic banking to start in Gujarat: What is it all about?

#India will soon have Islamic Banking facilities. The Saudi Arabia-based Islamic Development Bank will start its operations from Gujarat soon. During Prime Minister Narendra Modi's visit to UAE in April last year, the Indian Exim Bank had signed a memorandum of understanding with IDB for a $100 million line of credit to facilitate exports to IDB's member countries. The Reserve Bank of India had proposed opening of an Islamic window in conventional banks for introduction of Sharia-compliant or interest free banking in the country. The proposal was taken up to ensure financial inclusion for those sections of society which remain excluded due to religious reasons.

#Iran's Sovereign #Fund Eying International Markets

The National Development Fund of Iran (NDFI) plans to make investments in international money and financial markets. According to the fund's director, Ahmad Doust-Hosseini, the fund is also ready to support foreign investors as well as Iranian exporters by extending loans. Doust-Hosseini said from the next Iranian year (March 21, 2017), 30% of revenues from the sale of oil, gas and their related products will be deposited with the NDFI. He added that the fund belongs to the private sector and non-government enterprises, so state-owned entities will not receive any loans. Ali Salehabadi, CEO of the Export Development Bank of Iran (EBDI), said his bank will allocate working capital to export projects in the form of foreign exchange and rial loans in partnership with NDFI.

Blow to #Islamic #Banking in #India

Before handing over his charge to present Reserve Bank of India (RBI) Governor Urjit Patel, former Governor Raghuram Rajan had proposed working with the Government to introduce Islamic Banking. Most recently, Union Finance Ministry said that Islamic banking was not relevant any more as the Government has already introduced several programmes for all citizens towards financial inclusion. Finance Minister Santosh Kumar Gangwar said various legal changes are needed if even limited products were to be introduced under Islamic banking. It is estimated that 180 million Muslims in India are unable to access Islamic banking because of non-availability of interest free banking. RBI in its report had said it would explore to introduce interest-free banking products in consultation with the government, but before the consultation could be held, the Government of India derailed this whole process.

Unlocking Islamic finance potential in #CPEC, beyond

The Centre for Excellence in Islamic Finance (CEIF) IBA held an International Forum on 'Unlocking Islamic Finance Potential in CPEC and Beyond'. The China-Pakistan Economic Corridor (CPEC) consists of $45 billion worth of domestic infrastructure projects planned by the government of Pakistan. The Forum analyzed the effects and impact of CPEC on the Islamic Finance industry in Pakistan. In his keynote address Irfan Siddiqui, President & CEO Meezan Bank, highlighted that CPEC is not just a need of China but also of Pakistan. From the government Chief Economist Nadeem Javaid stated that there are four main components of CPEC: Energy, Infrastructure Development, Economic Incentives and Industrial Cooperation. He said that CPEC will greatly lower the per unit cost of energy, incentives such as exemption from local duties and materials, whereas suspension of trade union activities will give opportunities to investors. Therefore, designing cost-effective, Shariah compliant finance options is the need of the hour.

Middle East: #Iran’s banks struggle with expectations

Banks in Iran have made progress since the signing of the nuclear deal, yet many obstacles to doing business internationally remain. The deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), was meant to free up Iran’s economy and banking sector by lifting the sanctions imposed on the country in exchange for curbs on Iran’s nuclear programme. Under the nuclear sanctions, the US fined several big banks for dealing with sanctioned countries. For that reason, many large international banks fear being fined again if they re-engage with the country, even though they are now allowed to do so under the terms of the JCPOA. So far, only small banks have been willing to re-engage with Iran.

CPEC likely to unleash potential of Islamic finance schemes

The planned China-Pakistan Economic Corridor, or CPEC, is expected to bring the full potential of Islamic finance in infrastructure funding into action. The CPEC will see €54bn in investments up to 2030 to create or expand highways, railways, ports, airports, power plants, solar parks and wind farms, pipelines and optical fibre lines. Pakistan’s Finance Minister Ishaq Dar has repeatedly emphasised that Pakistan wanted to make Shariah-compliant financing its first choice for infrastructure and long-term financing needs. In fact, the government plans to shift between 20% and 40% of its debt financing to Islamic sources from conventional ones, which is also the case for CPEC projects. Co-financing for the corridor comes from Chinese state loans, as well as from the Asian Development Bank and the new, China-backed Asian Infrastructure Investment Bank. The CPEC is predicted to create more than 700,000 direct jobs up to 2030 and add two to 2.5 percentage points to Pakistan’s annual economic growth.

#Iran Key to Islamic Banking Outreach

For Islamic banking, the opening up of Iran is a huge development, as Iranian banks make up the world’s largest financial system based on Islamic law. A large number of sukuk and other Islamic securities from Iran are expected over the next few years. Estimations are that there are over 150 Iranian companies considering Islamic sukuk sales. Iran also requires funds for its infrastructure development programs estimated at around $1 trillion over the next decade, according to a report published by Forbes. Islamic banks in the region are building their activities in key sectors of the economy. Retail banking has traditionally been the mainstay of Islamic banking in the region. Here, investment in digital and smartphone banking will be crucial in future.

#China-#Pakistan corridor set to unleash potential of Islamic finance schemes

The planned China-Pakistan Economic Corridor, or CPEC, is expected to bring the full potential of Islamic finance in infrastructure funding into action. The CPEC will see €54bn in investments up to 2030 to create or expand highways, railways, ports, airports, power plants, solar parks and wind farms, pipelines and optical fibre lines. Pakistan’s Finance Minister Ishaq Dar has repeatedly emphasised that Pakistan wanted to make Shariah-compliant financing its first choice for infrastructure and long-term financing needs. In fact, the government plans to shift between 20% and 40% of its debt financing to Islamic sources from conventional ones, which is also the case for CPEC projects. Co-financing for the corridor comes from Chinese state loans, as well as from the Asian Development Bank and the new, China-backed Asian Infrastructure Investment Bank. The CPEC is predicted to create more than 700,000 direct jobs up to 2030 and add two to 2.5 percentage points to Pakistan’s annual economic growth.

#Iran's #Life #Insurance #Sector on #Growth #Track

Iranian insurance firms generated 21.7 trillion rials ($525.9 million at market exchange rate) from selling life policies during the eight months to November 20, marking a 37.19% growth compared with the same period of last year. Central Insurance of Iran’s database also shows that life insurance accounted for 12.15% of insurers’ total premium income during the period. The share was recorded at 10.66% during the same period of last year and 11.98% in the month ending October 21.

Insurers paid 7.4 trillion rials ($179.3 million) to 240,000 life policyholders as indemnity. The payout ratio of the category stood at 34.2% for the eight months to November 21.
According to Sanhab data, insurance firms collectively earned 179 trillion rials ($4.33 billion) from selling 34 million insurance policies in all categories during the eight-month period. A year-on-year comparison of data indicates a 20.4% growth in premium income and 9.8% increase in the total number of sold policies. The total paid claims amounted to 101 trillion rials ($2.44 billion) during the period, marking a 25.6% growth YOY.

#Debate #continues in #India about #Islamic #finance

It seemed as if the path had been cleared for the introduction of Islamic finance in India after the country’s central bank made a proposal to launch Islamic banking windows at conventional banks. With two crucial effects awaiting: Firstly, greater financial inclusion of unbanked Indians, not necessarily only around 170mn Muslims, but also those interested in ethical banking, and, secondly, an increased influx of investments from Muslim regions, namely the Gulf, into India.
However, the proposal got rebuffed in December by the Indian finance ministry which, in a surprising declaration, argued that Islamic banking was “not relevant” any more in achieving the objectives of financial inclusion as the government had already introduced other programmes for all citizens towards that end.

India’ Minister of State for Finance Santosh Kumar Gangwar also said that a number of legal changes would become necessary even if limited Islamic finance products were to be introduced, which would result in “numerous legal hurdles.”

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