Islamic Banking

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Islamic finance assets projected to reach $3.8tr by 2022

According to the Islamic Corporation for the Development of the Private Sector (ICD), Islamic finance assets are projected to reach $3.8 trillion by 2022 from $2.2 trillion in 2016. In cooperation with Thomson Reuters, the ICD released its new report on Islamic Finance. In the report Bahrain features prominently among all GCC countries and second globally behind Malaysia. Bahrain is at the forefront of providing access to Islamic finance in addition to promoting it via education and financial literacy initiatives. The Central Bank of Bahrain recently released a new Shariah governance module which is impacting the Shariah compliance and governance standards of Islamic banks. Also, Bahrain continues to invest in technology and capitalize on the development of the ICT sector.

Digital currencies remain tricky subject for Islamic finance

The role and status of cryptocurrencies remains a hotly disputed issue in the Muslim world. While entrepreneurs and Islamic finance startups openly encourage the use of digital currencies, others keep thinking otherwise. The latest escalation in the dispute was a fatwa against all cryptocurrencies issued by the Egyptian Grand Mufti Shawki Allam. He said that since trading of cryptocurrencies was similar to gambling, it was forbidden in Islam. His fatwa came after Bitcoin in mid-December soared to almost $20,000 per token but then lost one third of its value in just 24 hours. In addition, Egypt’s legitimate bodies also do not consider trading a virtual currency to be acceptable. However, nations that play a substantial role in Islamic finance, namely Malaysia, Indonesia, UAE, Turkey and even Saudi Arabia have no problem to accept cryptocurrencies. In Dubai, OneGram was the first company to set up the Shariah-compliant cryptocurrency called OneGramCoin. There are already two real estate developers in Dubai, which accept payments in digital currencies.

An Islamic Bank for The Poor, Including 4% Hindus, Who Can't and Need Not Pay Interest

Reserve Bank of India guidelines specifically state that banks are compulsorily required to charge an interest and pay taxes to the central government. However, the Muslim Fund Trust in Deoband headed by Haseeb Siddiqui is a financial institution that works on an interest-free loan module. The trust offers loans to only those who have a savings deposit account with them. Conventional banks demand security before issuing loans, which it has the option of falling back upon, in case the consumer defaults. The Muslim Fund Trust accepts only ornaments as security. Locals who avail the services of the Muslim Fund Trust identify Siddiqui as a social worker. Popularly known as Abbaji, Siddiqui has been politically active as a member of BSP. The trust neither has debit or credit cards, nor does it have netbanking facilities like other banks. The Muslim Fund Trust also runs an eye-care hospital, driver-training centre and an orphanage.

Finance Minister: #Qatar's Islamic Banks is the third largest contributor to global growth in Islamic Banking

According to Qatar's Finance Minister Ali Shareef Al Emadi, Qatar's Islamic Banking sector is the third largest contributor to global growth in Islamic banking. At the 4th Doha Islamic Finance Conference, the Minister called for continued growth in the Islamic finance sector through concerted efforts to confront financial risks. The Minister noted that Islamic finance accounts for 50% of banking services in the GCC, where most GCC citizens prefer Sharia-compliant banking services. More and more international universities are adopting programs in Islamic finance, including the Master of Islamic Finance at Hamad bin Khalifa University in Qatar. The rapid growth of electronic financial transactions have brought new challenges requiring further cooperation, coordination and discussion. New products require the development of clear frameworks. Al Emadi added that increasing transparency in this field will help Shariah scholars to identify the correct structures and it will enable banks to make these products more attractive.

British International Campaign to Attract Islamic Investments

The UK's Department of International Trade has announced the launch of a wide-ranging campaign in the Middle East and the Gulf to encourage investment in the UK. London is considered the largest market for Islamic finance outside the Islamic world and has more than 20 banks providing Islamic financial services. According to the Dubai-based Media and Communications Center, Britain ranks 22nd out of 124 countries in the world that use Islamic banking, placing it first in Europe and fourth among non-Muslim majority countries after Singapore, Sri Lanka and South Africa. Supportive government policies created a tax and regulatory framework aimed at expanding the Islamic finance market, including the elimination of double taxation, the extension of Islamic mortgage tax and the reform of debt arrangements. The United Kingdom is the first sovereign Western country to issue sovereign sukuk. In September, London also hosted the fourth annual meeting of the Global Islamic Finance and Investment Group (GIFIG) to discuss inter-state cooperation.

Global Islamic Finance trends – Would the #digitization drive overcome a lack of standards?

Islamic Finance has seen massive growth since the recession in 2008 as sovereign and institutional investors consider them more stable than the conventional banking system. Fintech has been very popular in the West over the last few years, but the uptake to digitization in the Islamic Finance world has been relatively slow. 2018 is expected to be the year when Islamic Fintech players will start emerging across the world. This has its own challenges, in terms of awareness, regulatory standards across Sharia jurisdictions and product innovation. Islamic Fintech is on the rise in the GCC and Malaysia thanks to various ecosystems and institutions. Bahrain has recetnly launched ALGO Bahrain, the first Fintech consortium specializing in Islamic finance. Eight more regional banks are expected to join in the next 12 months. Dubai, Abu Dhabi and Bahrain have all launched their regulatory sandboxes namely Innovation Testing Licence, RegLab, and Bahrain’s regulatory sandbox (expected to be the largest in MENA).

Afreximbank taps Islamic finance to support Africa trade

The African Export-Import Bank (Afreximbank) has raised around $260 million via three Islamic finance facilities to support small- and medium-sized businesses in the region. The Egypt-based bank obtained a $100 million financing from the Islamic Corporation for the Development of the Private Sector (ICD). It also signed two financing agreements with the International Islamic Trade Finance Corporation (ITFC) worth $100 million and 50 million euros ($59.8 million) to help finance exports among African countries. Both ICD and ITFC are part of the Saudi-based Islamic Development Bank group of companies.

BTMU provides $353m Islamic #loan to Malaysian Saudi Telecom unit

The Bank of Tokyo-Mitsubishi UFJ has provided an Islamic syndicated loan to the Malaysian affiliate of Saudi Telecom. The ringgit-based loan amount is about 41.7 billion yen ($353 million). BTMU is the first Japanese bank to act as an agent bank for a syndicated loan in Malaysia. The loan will be provided with HSBC and Standard Chartered Bank of the U.K. Japanese banks in Malaysia mostly provide loans to Japanese companies operating in the country. Now, BTMU aims to expand operations in the country through Islamic finance. BTMU has extended foreign-currency Islamic loans in Malaysia since 2008 and ringgit-based Islamic loans since 2014. The ratio of Islamic finance to total loans in Malaysia rose to about 30% at the end of 2017, from 17% at the end of 2009.

Saudi Telecom gets 1.5 bil ringgit Islamic #loan

Saudi Telecom Co (STC) has obtained a 1.51 billion ringgit (US$378.5 million) Islamic loan through its Malaysian subsidiary. The company will use the Islamic loan to refinance existing debt originally used to acquire a stake in Malaysian mobile-phone firm Maxis. STC Malaysia Holdings hired Bank of Tokyo-Mitsubishi UFJ (Malaysia), HSBC Amanah Malaysia and Standard Chartered Bank Saadiq to arrange the deal. The syndicated financing uses a sharia-compliant structure known as commodity murabaha. Bank of Tokyo-Mitsubishi UFJ (Malaysia) will act as the investment agent to manage the cash flows of the facility and to execute the commodity murabaha transactions.

Share of Shariah-compliant assets steadily rising

Growing at a fast rate, Shariah-compliant assets now represent 34.6% of the total assets of the Non-Banking Financial Institute (NBFI) industry. According to the Securities and Exchange Commission of Pakistan (SECP), the number of Shariah-compliant mutual funds has reached 109 and Shariah-complaint funds have 41% of the assets. In Pakistan the Takaful industry comprises of five dedicated Takaful operators and 21 window Takaful operators. Takaful sector assets represent 2.7% of the total assets of the insurance industry. During the year, the SECP took a number of initiatives for regulation and development of Islamic finance across the sectors it regulates. Tax neutrality for Sukuk was achieved by amending the Income Tax Ordinance. A new concept of a Shariah-compliant company was introduced through the newly promulgated Companies Act, 2017. To facilitate issuance of Sukuk, relevant regulations were amended both for public offering and for private placement.

The IFSB disseminates Q2 Islamic banking data

The Islamic Financial Services Board (IFSB) announced the dissemination of country-level data on financial soundness for Q2 of 2017 from 15 IFSB member jurisdictions. This eighth dissemination completes the availability of quarterly data from Q4 of 2013 to Q2 of 2017. According to Secretary-General of the IFSB, Zahid ur Rehman Khokher, the IFSB has both extended the coverage of PSIFIs banking sector database to several new countries, as well expanded the database coverage to Islamic insurance and Islamic capital market sectors. The PSIFIs project is currently collecting Islamic banking data on a trial basis from newly-joined contributors: Bank of England, Central Bank of Lebanon (Banque du Liban), Palestine Monetary Authority, and Qatar Central Bank.

Ibdar Bank: Islamic #fintech will foster a culture of change

In this interview Ayman Sejiny, CEO of Ibdar Bank, speaks about the future of Islamic finance. Ayman Sejiny believes that fintech is going to be one of the biggest drivers of change in the new Islamic banking era. Fintech initiatives will not only improve existing customer’s banking experience, but also have the potential to bring the two billion financially-excluded individuals into the banking system. Malaysia, Indonesia, the UAE and Bahrain, driven by an influx of start-ups in the crowdfunding and payment space, have already positioned themselves to lead the field. They started to formally regulate crowdfunding and implement sandboxes or special fintech licencing schemes. These markets should therefore see huge growth in crowdfunding, P2P and payments platforms and even an increase in the use of AI in the form of robo-advisers. The UK and even the US will also see more investment in fintech startups to meet the demand for Shari’ah products in these markets. Ibdar Bank has set out a comprehensive plan for the engagement with fintech service providers.

#Qatar plans central Shariah committee for Islamic banks

Qatar is planning to set up a central Shariah committee for Islamic banks to create consistency in Islamic finance. According to Central Bank Governor HE Sheikh Abdulla bin Saoud al-Thani, this move ensures that the country’s financial regulations are benchmarked to international standards. A recent report by the World Bank and the Bahrain-based General Council for Islamic Banks and Financial Institutions suggested further action by regulators to strengthen the sector’s governance. One of the action points of the Qatar Central Bank (QCB) is assessing remuneration and commission framework of financial advisers and insurance intermediaries and implementing an appropriate conduct of business regime. In 2016, the QCB issued new regulations for insurers on licensing, controls, accounting, risk management and actuaries’ reports and also stipulated minimum capitalisation levels and limits on risky asset classes. QCB's new strategy is looking at supporting the growth of the asset management sector through aligning requirements across regulatory frameworks.

Confidence, but some uncertainty remains: Islamic finance trends

In 2018 the expansion of Islamic finance into non-Muslim jurisdictions is set to continue. Conventional investors have started to appreciate the potential of Islamic finance at times of a persistent low-to-zero-interest rate environment. According to data collected by financial intelligence firm Dealogic, issuance of Islamic debt by non-Muslim countries climbed to a three-year high in 2017. Islamic finance is perceived by them as being more stable compared to the conventional banking system. However, the industry is likely to face a continued backlash in the GCC caused by the current economic woes in the region, particularly in Saudi Arabia. According to rating agency Standard & Poor’s, Islamic finance assets should be back in growth mode in 2018 in the GCC, but at a slow pace of just around 5%. One impulse for growth could be the creation of Shariah-compliant pension schemes modelled after Malaysia, as well as other obligatory social insurances in GCC countries. A new trend is likely to transform into a new Islamic finance asset class in 2018: green and sustainable sukuk, as part of impact investing.

#Nigeria: How #Islamic #Finance Can Stimulate #Economic #Recovery'

Regarding its economic situation and the quest for a solution in Nigeria, Islamic Finance is believed to be able to redeem it because of the ethical and moral values within the Islamic banking system.
Alhaji Sulaimon Yusuf, who spoke at the Muslim Association of Nigeria 34th Triennial National Conference in Lagos, said that Islamic finance is playing an important role in promoting socially desirable investments, economic empowerment, employment opportunities and resuscitation of real sector of economy. Further he said: "We have confidence in the economic packages and policies of the present administration and feel that a lot more needs to be done to alleviate the suffering of the masses"

Islamic funding becomes more attractive for the non-Muslim world

Islamic finance has traditionally been dominated by Muslim-majority countries in the Middle East and Southeast Asia. It has transformed from a niche corner of global banking to a growing source of funding for the rest of the world. The government of Singapore was one of the earliest non-Muslim entrants into the space, followed by the United Kingdom, Luxembourg and Hong Kong, which issued their first sukuk in 2014. African nations such as South Africa, Nigeria and Ivory Coast have made legal and tax changes to make it easier for borrowers to issue sukuk. The value of sukuk bonds issued outside the Middle East and Southeast Asia by non-Muslim countries reached 2.25 billion USD for the period from January to November. By comparison, the volume in 2016 was 2 billion USD, and in 2015 was 1 billion USD. Islamic finance is seen as a more stable alternative to the conventional banking system and offers a more ethical approach to managing money.

Bank Islam issues bank cards corresponding with Sharia law

Bank Islam recently presented its first Sharia-compliant bank cards to the #Kazakhstan retail market. Customers will not be able to pay for goods and services that are prohibited under the Sharia law. Therefore, the cards cannot be used in night clubs, casinos, bookmakers, tobacco and liqueur shops. Card holders can pay for goods and services in Kazakhstan and abroad, receiving a cashback of 0.5-1% from each purchase. It also allows carrying out purchases through the internet, transfers from card to card, online payment of taxes and fines. Debit cards of the bank are issued in two categories, Master Card Gold and Master Card Platinum. In the beginning of next year, the bank plans to launch its first credit cards. Cards are currently available for residents of Astana, Almaty and Shymkent.

Islamic finance is becoming so attractive that even non-Muslims want in

Islamic finance has traditionally been dominated by Muslim-majority countries in the Middle East and Southeast Asia. It has transformed from a niche corner of global banking to a growing source of funding for the rest of the world. The government of Singapore was one of the earliest non-Muslim entrants into the space, followed by the United Kingdom, Luxembourg and Hong Kong, which issued their first sukuk in 2014. African nations such as South Africa, Nigeria and Ivory Coast have made legal and tax changes to make it easier for borrowers to issue sukuk. Islamic finance is seen as a more stable alternative to the conventional banking system and offers a more ethical approach to managing money. The industry's size is expected to expand further to $3.5 trillion by 2021 as countries and companies look for alternative funding sources.

#Malaysia seeks to catapult Islamic finance to the next level

Malaysia’s Islamic finance industry has grown tremendously since 2004, when Bank Negara Malaysia began issuing Islamic banking licenses to foreign Islamic banks. The strong growth is also reflected in the country's Islamic asset management industry, with Malaysia accounting for 34% of the US$78 billion global Islamic assets under management as at the end of 2016. Malaysia strongly believes that Islamic finance must continue to appeal to the broader community.

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