Islamic Banking

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Madina Kalimullina: "Islamic banking recognized in #Russia"

In this interview Madina Kalimullina, adviser on Islamic economics, speaks about the Moscow Halal Expo and Islamic banking in Russia. Although legislation for Islamic banks is still missing, special groups in the Central Bank and the State Duma have been working on this topic. Today the state officially recognizes the concept of partner banking, which can be called Islamic banking. At the Moscow Halal Expo a halal installment plan was proposed, which removes all elements prohibitied from the point of view of Islamic standards. Over the last 8 years all international Sharia standards of Islamic financing were translated into Russian. So banks are gradually testing new products. This year's exhibition has two main topics. The first is cryptocurrencies and the second is multi-level marketing.

National Bank of Fujairah Structures Shari’a-Compliant Financing Solution for Malabar #Gold

National Bank of Fujairah (NBF) announced the completion of a Shari’a-compliant bullion financing transaction with Malabar Gold. It is the first bullion financing in accordance with the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) standards on gold in the UAE. This partnership follows the launch of the AAOIFI Shari’a Standard on Gold in December 2016. The standard lays out a clear guidance on the permissibility to trade in gold in a shari’a compliant manner. It also enables Islamic finance institutions to develop new gold-based products and transactions. Vince Cook, NBF’s CEO, said he was delighted to be at the forefront of this major transaction in the gold and jewellery market. He thanked for the support of partners Malabar Gold, Amanie Advisors and World Gold Council.

Developing #Indonesia as Islamic finance hub

The world’s financial landscape has changed fundamentally over the last few years. Islamic equity funds experienced strong growth during the second half of the 1990s. In 1996, there were 29 Islamic funds, valued at US$800 million. Nowadays, Indonesia plans to become a leading Islamic finance hub. The Jakarta Islamic Index has 30 sharia shares accounting for Rp 2.1 quadrillion with 32.7% of market capitalization.

Islamic finance in #Malta

In 2008, the Malta Financial Ser­vices Authority was the first EU regulator to issue guidelines on Islamic finance, which were updated in 2015-2016. In 2016, the Malta Stock Ex­change launched an Islamic Equity Index in order to attract investment and business from the Middle East. From a legislative aspect, Malta is already well-geared to welcome new structures that provide for Islamic finance. Malta is the only EU member country whose regulatory framework provides for protected cell companies and incorporated cell companies. Thus it may easily accommodate Takaful insurance solutions. Islamic investors are given the opportunity to set up their funds as Special Purpose Vehicles, Undertakings for Collective Investment in Transferable Securities, Alternative Investment Funds or Professional Inves­tor Funds. Islamic finance institutions may also generate funds by listing on the Malta Stock Exchange.

Reserve Bank says no to Islamic banking: All you need to know

After examining the details of Islamic banking, Reserve Bank of India (RBI) has decided not to pursue the matter any further. It all started in late 2008 when former RBI governor Raghuram Rajan had stressed on the need for a closer look at the issue of interest-free banking in the country. Later, an inter-departmental group (IDG) set up in the RBI examined the legal, technical and regulatory issues for introducing Islamic banking in India. It recommended an "Islamic window" in conventional banks for gradual introduction of Sharia-compliant banking. However, no deadline was given for the proposal. This Sunday the central bank has refused to go on with the idea saying the decision was taken after considering the opportunities available to all citizens to access banking and financial services.

#American University Offers Graduate #Certificate in Islamic Finance

American University is offering a graduate certificate in Islamic Finance to prepare professionals for both emerging and established markets. The curriculum includes courses that focus on the role of Islamic finance in the global economy and Islamic capital markets. For Ghiyath Nakshbendi, an executive at American University, the graduate certificate is a dream come true. He regularly brings in experts to speak to classes. Speakers who visit and Skype in include CEOs, lawyers and high-profile Islamic finance professionals from Kuwait, Qatar and Bahrain. Nakshbendi does not want finance professionals to be deterred by the "Islamic" in Islamic finance. Students enrolled in the certificate program come from a variety of backgrounds and religious traditions. He believes that the program will help redefine the way professionals do business.

Unified industry practices key to Islamic finance growth: AAOIFI

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) will prioritize wider adoption of its standards by engaging national regulators in key markets. Islamic finance has grown fast in part due to self-regulation, but the approach is now viewed as a barrier to growth. AAOIFI secretary-general Hamed Hassan Merah said wider adoption had a direct link to the qualitative growth of the industry. AAOIFI has recently signed Borsa Istanbul and the Saudi Arabian Monetary Agency as institutional members. Special attention will be given to Malaysia and the convergence of AAOIFI standards with the local rules. An AAOIFI survey of 213 scholars found 78% of respondents favour making AAOIFI sharia standards mandatory. On the other hand, 82% of respondents said Islamic finance institutions should adopt them on a voluntary basis.

Bridging Islamic Finance and Impact Investing

The 2017 Annual Impact Investor Survey from the GIIN showed that respondents committed more than $21 billion to impact investments in 2016 and planned to commit 17% more in 2017. Geographically, however, the Middle East and North Africa (MENA) only makes up 2% of assets under management. Islamic finance is largely concentrated in three markets, Iran, Malaysia and Saudi Arabia, but it spans nearly every part of the world. Globally there are largely untapped markets that show immense potential for Islamic finance, such as sub-Saharan Africa. There, the primary driver of the region’s Islamic economy is the need for quality infrastructure. For example, the Nigerian government recently announced the sale of a N100 billion ($326 million) debt sovereign sukuk on the local market, meant to fund road infrastructure in the country. The principles of Islamic finance and impact investing have many areas of overlap. Islamic finance can be a strong source to finance sustainable development in many areas around the world.

Asia ripe for Islamic finance as #fintech comes to the fore

According to Zahid ur Rehman Khokher, secretary-general of the Islamic Financial Services Board (IFSB), the growth potential of Islamic finance in the Asian market is much bigger than might be expected. He emphasized the developing role of fintech within the sector and the IFSB's role in setting standards. He noted the importance of Islamic microfinance in addressing issues of financial inclusion and improving participation in the financial sector. With the range of new services that are emerging, Zahid feels that capacity building is the biggest challenge at the moment. He feels there is a need for developing human resources and appropriate expertise within central banks, Shariah boards, as well as in commercial financial institutions.

DMCC and Dubai SME to develop Shariah compliant #trade finance #platform for SMEs

DMCC has signed a Memorandum of Understanding (MoU) with Dubai SME to create a web-based trade finance platform for SMEs. The platform will be Sharia-compliant and operate under the DMCC Authority regulatory framework. Present at the signing ceremony was Gautam Sashittal, CEO of DMCC and Abdul Baset Al Janahi, CEO of Dubai SME. Gautam Sashittal said this cooperation between DMCC and Dubai SME opens a new avenue for funding and financing SMEs. Al Janahi said the SME sector in the UAE has evolved remarkably during the past decade chiefly due to support from the government. He added that this MoU was among a series of partnerships created after identifying the gap that existed in the SME landscape in terms of mobilising resources. DMCC is using Alternative International Management Services (AIMS) to make the platform Sharia-compliant.

#Bangladesh’s Islamic finance market in need for proper regulation

Bangladesh has a burgeoning Islamic finance industry focused on the retail market, but there is no comprehensive legal framework for the sector. Bangladesh has 8 Islamic banks and 15 non-Islamic banks that offer Islamic-banking services through Islamic windows. Currently, the Islamic finance sector in the country is led by Islami Bank Bangladesh which manages around 90% of Islamic-banking assets and deposits. Takaful is also growing in popularity. Bangladesh currently has 11 companies for both the life and non-life takaful market at a combined asset base of close to $1bn and a market share of 17%. The central bank has been working for considerable time on an industry-wide regulation to expand beyond retail banking. At present there are no regulations for sukuk issuances even though there would be huge market for both sovereign and corporate sukuk. Other challenges than the absence of comprehensive regulations are a lack of service diversification and a lack of a skilled workforce.

#Saudi Arabia joins AAOIFI, bringing potential boost to finance sector

Saudi Arabia’s central bank has joined the Islamic financial regulator Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The move could increase cross-border financial deals in the region, as guidelines will apply to all financial institutions within Saudi Arabia. Both conventional and Islamic banks will now be subject to the same standards, potentially encouraging deals with other Muslim countries. AAOIFI Chairman Sheikh Ebrahim bin Khalifa Al Khalifa stated that the addition of the Saudi central bank would help foster closer collaboration with the kingdom. Saudi Arabia may now hold ambitions of becoming a global heavyweight in the Islamic finance sector. However, it will face intense competition from Malaysia, South Africa and the UK.

Dubai Economy launches Sharia-compliant #smart #programme

Dubai Economy in partnership with Dar Al Tawreeq has launched a Sharia-compliant smart programme to offer receivables finance to suppliers dealing with government entities in Dubai. Dubai Economy is the first government entity to offer such a financing option to suppliers. Faster payment will support businesses in growing sustainably and maintaining cash flows. Businesses working with government entities can use the smart software developed by Dar Al Tawreeq to ensure liquidity by obtaining financing on their invoices. The programme also provides easy access to on-demand working capital for businesses at no additional cost. The programme was launched by Khalid Al Kassim, Assistant Director General in Dubai Economy and Haitham Al Refaie, CEO of Tawreeq Holdings. The programme emphasises the principle of public-private partnership adopted by Dubai in its evolution into an Islamic Economy Capital.

#UK savers struggling to make money should consider Islamic banks

Islamic banks are becoming increasingly popular with non-Muslim savers due to their attractive rates and their ethical principles. In the UK, Islamic banks come under the same governance as high street branches and other private banks, offering the same statutory protections under the Financial Services Compensation Scheme (FSCS). This scheme means savers get their money back if a bank or building society goes bust, although there is a cap of £85,000 per lender. According to Robert Parker, founder of Holborn Assets, with Islamic finance profit schemes, after-tax return needs to be compared between schemes to judge potential before making decisions on return rates alone. Islamic banks offer competitive rates, although savers will have to be prepared to tie up their money for at least a year to access the best deals.

Interview: How #Bahrain Is Aiming To Position Itself As A Regional #Fintech Hub

In this interview David Parker, Executive Director of Bahrain's Economic Development Board, talks about the kingdom's efforts to position itself as a fintech hub. He recognizes that certain regulatory requirements can make it more challenging for firms to experiment. To mitigate this, the Central Bank of Bahrain launched a regulatory sandbox to help enable innovation. A number of accelerators and incubators have also launched operations recently, including the region’s first cloud accelerator, operated by C5 and powered by Amazon Web Services (AWS). When determining the structure of the regulatory sandbox, the Board was in close consultation with the industry. An agreement was signted with the Singapore Fintech Consortium and advisory firm Trucial Investment Partners to support the local Fintech ecosystem. The Central Bank also issued directives on crowdfunding for both Shariah compliant and non-Shariah compliant platforms and launched a national e-wallet.

MITI approves RM1.6b under shariah-compliant #SME financing scheme

The #Malaysian Ministry of International Trade and Industry (MITI) has approved funding totalling RM1.595 billion under the Shariah-compliant SME (Small and Medium Enterprises) Financing Scheme. Deputy Minister Datuk Ahmad Maslan said since the scheme was started in 2012, 1,181 applications had been received but only 971 applications had been approved. He added that the scheme would be administered by 13 participating Islamic banking institutions and the Federal government would bear 2.0% of the profit rate. The rebate is specifically to assist the SMEs which carry out business activities in all Shariah-compliant sectors. Ahmad said in Penang some RM112.6 million had been approved to-date to 76 SMEs which were Shariah-compliant.

FNB re-launches 10-year-old #Islamic #banking offering

First National Bank of #Botswana is re-launching products and service offering to the local Muslim community. Held at the Travel Lodge Conference Centre in Gaborone, the re-launch seeks to sensitize patrons and attract new customers. FNB Botswana CEO, Steven Bogatsu, said the re-launch has been long coming since the product was launched ten years ago in 2007. According to FNBB Islamic Banking Representative, Tahera Mhaisker, the offered services encompass transactional banking, vehicle and asset financing, as well as property finance for both residential and commercial properties. Mhaisker added that the re-launch was the culmination of an exciting journey for the bank.

Danajamin an unsung hero of Islamic capital market

In #Malaysia Danajamin is of national importance because of its role to ensure continued flow of credit in the financial system. It contributes to the democratisation of the capital market by giving financial guarantee insurance to companies that are raising funds from the market through the issuance of bonds and sukuk. Danajamin has provided credit enhancement guarantees for RM9 billion bond/sukuk programmes issued by 31 Malaysian companies across various sectors. These include guaranteeing sukuk issuances to finance the West Coast Expressway Project, connecting the west coast of the peninsula from Banting, Selangor, to Taiping, Perak. Recently, Danajamin has become the first financial guarantee insurer in the world to issue its own sukuk. The agency issued its maiden Tier II Subordinated RM500 million Sukuk Murabahah, with a tenure of 10 years and priced at a yield of 4.8% per annum on Oct 6. The demand from investors was so encouraging that Danajamin decided to upsize the issuance from an initial RM300 million to RM500 million.

#Russia's Sberbank considers Islamic finance entity, to propose regulatory change

Sberbank is considering setting up an Islamic finance entity and will propose regulatory changes to facilitate sharia-compliant business. Vnesheconombank and Tatfondbank are also developing Islamic finance products. Legislation will need to be passed in Russia to make Islamic finance cost-effective. Taxation is often an obstacle, as transactions have double or triple tax duties since they require multiple transfers of underlying assets. Sberbank is currently testing pilot transactions in leasing, financing food production and trading. Oleg Ganeev, deputy chairman at Sberbank, said the decision on whether to set up a separate entity could come by next year. He added that local businesses could also consider issuing sukuk, as they have a variety of tangible assets that can support such deals.

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