Islamic Banking

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Virus crisis highlights potential role of Islamic finance in reaching sustainable development goals

Amid an ongoing severe global healthcare crisis some research institutions and scientific entities are wondering if and how the world will change after the virus has eventually subsided. A new report issued last week is shedding light on the anticipated fundamental changes of the corporate world in terms of economic and social sustainability. The report is entitled "Islamic Finance and the SDGs: Framing the Opportunity" and is released as the first edition of the new "Thought Leadership Series" by the Islamic Finance Council UK (UKIFC) in partnership with the International Shariah Research Academy for Islamic Finance. The report states that the Islamic finance industry could play a key role in contributing to achieving the SGDs formulated by the United Nations. The UKIFC acknowledges that Islamic finance institutions are just at an early stage of engagement with the SDGs. Steps to be taken were therefore an improvement in understanding of how any given organization can effectively engage with the SDGs.

Launched World’s First Halal Angels Network to promote Innovation, Entrepreneurship & Startups to tap $5 trillion, Halal consumer market

The World’s First Halal Angels Network was launched to promote Innovation, Entrepreneurship & Startups to tap the $5 trillion Halal consumer market. It was launched during the COVID-19 pandemic to help investors, businesses, entrepreneurs & startups overcome these challenging times. The network is founded by Indian American Dr. Tausif Malik and is the first Angels Network backed by Blockchain technology. The areas of interest for investments would be future technologies (Blockchain, Fintech AI, etc), Modest Fashion & Cosmetics, Retail, Pharmaceuticals, Food Cafe & Restaurants, Processed Food & Tourism. Halal Angels Network is setting up offices in GCC, Europe, and South East Asia and is planning to host Halal Angels & Venture Capital Two Day Summit 2021, for Networking, Startup Showcase & Strategic Partnership.

Islamic finance gaining stronger foothold in #China

As this year’s GDP growth of China is forecast to reach a 44-year low of just 2.5%, there is enough ongoing in the background to prepare for a post-coronavirus rebound. One such sector bustling with activity is Islamic finance which has grown in importance since China embarked on the program of the New Silk Road, officially known as Belt and Road Initiative (BRI). Expanding across Central and Western Asia and eventually the Middle East, the BRI leads through many Islamic economies and jurisdictions, so it is obviously advantageous for Islamic finance and halal trade to join and contribute to the BRI. There is also development of the sector within China itself. Malaysia’s Affin Islamic Bank together with Hong Kong-based Bank of East Asia has been looking into the opportunity of launching Islamic banking services in Urumqi, the capital of Xinjiang. China’s Ningxia and Xinjiang autonomous regions are home to a Muslim population of about 25mn.

Saudi's Al Moammar Information Systems signs $77mln Islamic loan

Saudi Arabia’s Al Moammar Information Systems (MIS) signed an Islamic facility agreement with Riyad Bank for 290 million Saudi riyals ($77.15 million). The revolving facility will be renewable every year. MIS’s listing on Tadawul last year marked the first listing for a company from the IT sector on the Saudi bourse. The company reported a net profit after zakat and tax of 76 million riyals in 2019, compared to 64.5 million riyals in 2018. Revenues rose to 997.5 million riyals last year, compared to 886.2 million riyals in 2018.

Gulf bonds prove resilience amid virus-induced adversity

Gulf bonds are emerging resilient after yet another crisis. In the last few weeks the pandemic-induced investor worries soared and oil prices plummeted, but analysts still see them ending the year strong. According to capital markets expert Anita Yadav, total new bond issuances in 2020 will likely surpass the record $101 billion raised in 2019. So far this year, the GCC bond markets have comparatively stayed resilient, having in recent weeks only sold off 60% of emerging market debt and roughly 50% of high-yield debt. Year-to-date GCC issuers have priced more than $47 billion of USD denominated bonds in international markets, nearly matching the $47.8 billion raised during the same period last year.

Norton Rose Fulbright acts for HSBC on unique USD 1 billion Islamic financing

International law firm Norton Rose Fulbright (NRF) has been called on to advise HSBC and Tokyo-headquartered Mizuho Bank, on an Islamic financing facility worth USD 1 billion. The cross-border financing, which had to be compliant with Shariah law, is the first of its kind to align to the new requirements set by the United Arab Emirates Central Bank. The finance facility’s creation necessitated a deep understanding of the new rules surrounding commodity murabaha financing structures, which called on NRF’s Dubai-based banking team, representing the initial arrangers, book-runners and coordinators.

A new normal will require Islamic fintech to address financial inclusion

The COVID-19 pandemic has been an unexpected catalyst for digitalisation and this global crisis now may well be a boon to businesses promoting digital financial inclusivity. Approximately 40% of startups will not survive if the COVID-19 crisis continues after May 2020, according to a recent news report. Malaysia is now a nucleus for Islamic digital economic activity comprising of digital products and services catering to the Islamic crowd. The country has developed world-class regulation, driving new initiatives to accredit halal certifiers worldwide, granting the first Islamic fintech crowdfunding license and launching a new certification scheme for Muslim friendly hospitality. Islamic Fintech and Islamic Digital Economy encourage financial inclusivity by increasing awareness and providing access to SMEs through digital financial instruments.

RM100b corporate bonds, #sukuk issuances to be expected

The Securities Commission Malaysia (SC) is expecting up to RM100 billion worth of corporate bonds and sukuk issuance this year. The regulator said the Covid-19 outbreak and the resultant disruption on businesses have affected fundraising activities. Thus any non-payment of profit arising from the current challenging operating landscape is very likely due to credit rather than Shariah issues and would therefore be dealt with from a credit perspective. SC deputy CEO Datuk Zainal Izlan Zainal Abidin said that Malaysia continues to maintain its leadership in the Islamic capital markets (ICMs). The SC noted that ICM represented 63.57% of Malaysia’s capital market, with market size of RM2.04 trillion as of December 2019, an 8.23% growth over 2018. The SC added that the Islamic fund management industry also witnessed new and innovative investment product offerings. These include Islamic exchange-traded funds based on gold, SRI Islamic funds, as well as social and green sukuk.

#Malaysia’s BIMB Investment launches Shariah-ESG robo-advisor

BIMB Investment launched a robo-intelligence investing platform focused on sustainable and Shariah-ESG assets. BEST Invest will give investors access to a suite of BIMB Investment’s Shariah-ESG unit trust funds across asset classes including global equities, Asia Pacific equities, sukuk, and money market. BIMB Investment became an official signatory of the United Nations-supported Principles for Responsible Investment (UNPRI) in July last year. At the time, the company’s CEO said it had integrated more than 250 ESG metrics in its investment process since 2015. The new robo-advisor will allow users to either start investing for themselves or enable the system to identify and select the best investment methods. Investments start at 10 ringgit with a zero sales charge.

Islamic finance to expand in 2020 as demand for Shariah-compliant products grows

According to Moody’s Investors Service, Islamic finance is poised to expand in 2020 and beyond, helped by growing use of Shariah-compliant products in the GCC region and Malaysia. Moody's vice president Nitish Bhojnagarwala expects sukuk issuance to remain stable at around $180 billion (Dh661bn) this year, and the takaful insurance market will see steady growth as insurance premiums pick up in newly-penetrated markets. However, downside risks are rising because of the coronavirus outbreak. Mergers between Islamic and conventional banks in the GCC will drive one-off increases in assets, as they did in 2019. Saudi Arabia will remain the world's largest Islamic banking market, while the sector will continue to expand rapidly in Malaysia.

BOFIA Act Should Be Reviewed To Enhance Islamic Banking In #Nigeria - Abdul -Wahab Saadudeen

According to Imam Abdul-Wahab Saadudeen, the Banking and Other Financial Institutions Act (BOFIA) should be reviewed to enhance Nigeria's Islamic banking industry. He believes the regulatory bodies must take into cognizance the principles of Islamic Finance to create an enabling environment for its growth in Nigeria. The Islamic scholar noted that over the years, the Islamic Banking legal framework has not been reviewed to reflect the developments taking place now. He made a strong call for a competent Sharia Advisory Board to ensure that Islamic Banks and Financial Institutions are not exposed to avoidable systemic risks. He also called for more clarity in Islamic Banking because it seeks to boost financial inclusion, achieve sustainable development and economic prosperity for all Nigerians.

New Islamic endowment trust seeks to be UK’s first waqf to combine commercial and social investments

A new charitable foundation is being set up in the UK that aims to become a £1 billion waqf fund combining commercial and social investments. Sultan Choudhury, Executive Chairperson of the new One Endowment Trust (OET) said that the vision of the trust is to present Islam in a positive way through contribution to UK civil society. OET’s first investment is a £1.75 million 21 residential apartments with planning for four more in Creative Lofts in the Yorshire town of Huddersfield. The returns generated from OET’s portfolio of assets will cover the Trust’s costs and also be reinvested in designated social projects with partners. OET expects to begin investing in social projects particularly in the area of social care in 2022.

#Nigeria: Islamic Finance - Opportunities, Challenges and Policy Direction

Despite its growing acceptability around the world, there are untapped opportunities that can be accessed through Islamic finance in Nigeria. When the Central Bank of Nigeria (CBN) granted approval to the defunct Habib Bank to operate an Islamic banking service window, the attempt did not register a significant success but it kickstarted Islamic banking in the country. The Securities and Exchange Commission has issued Rules on Islamic Fund Management and Sukuk Issuance. Similarly, the Nigerian Stock Exchange and Lotus Capital have developed an Islamic capital market Index. The National Pension Commission had in 2019 issued Regulation on Investment of Pension Fund Assets which recognised Government Sukuk as one of the accepted classes of assets for pension funds investment. In all, the Nigeria Islamic Finance Industry is fairly backed by regulations, sound supervisory structure and fragmented legal framework.

"Sharia fintech": Startups race to tap #Indonesia growth by aligning with Islam

Winning over conservative Muslims is both a challenge and multi-billion dollar opportunity for fintech firms in Indonesia. Questions about compliance with Islamic law are a significant hurdle for the adoption of digital payments and other fintech services. Indonesia's top Muslim clerical body has issued an edict deeming virtual money acceptable, as long it met specific conditions. To showcase the compliance of their services with Islam, fintech firms are organising forums with Islamic scholars and sponsoring religious festivals. GoPay has partnered with the Indonesian Mosque Council to enable digital donations, including zakat, or compulsory alms giving, in its 800,000 mosques. Some of the startups say they are finding their appeal extends beyond Muslims. One of them is peer-to-peer lender Alami, which has disbursed over $7.5 million in sharia-compliant financing to small and medium enterprises since May.

Saudi's Fawaz Abudulaziz Alhokair secures $800mln Islamic finance

Saudi-listed retail group Fawaz Abdulaziz Alhokair Company has signed a Murabaha facility and a revolving credit facility agreement with a syndicate of Saudi banks. The $800 million debt facility is composed of two tranches, including a $650 million Murabaha to be fully utilized in refinancing existing debt, and a $150 million revolving standby credit facility to finance the business’ operational and expansion needs. The Murabaha matures in 7 years, while the revolving credit facility’s tenure is 3 years. The banks participating in the loan agreement are: Al Rajhi Banking and Investment Corporation, the National Commercial Bank, Samba Financial Group, Arab National Bank, Mashreqbank, Abu Dhabi Islamic Bank.

StanChart betting big on Shariah-based banking

Standard Chartered is bullish about the fortunes of its Islamic banking business in Bangladesh, Saadiq. The global lender introduced Islamic banking in Bangladesh 15 years ago and has been a trendsetter since. It was the first to introduce Islamic credit card in Bangladesh in 2007 and arrange Sukuk transaction in 2019. The bank has introduced a product, Saadiq Hajj Savers, to provide its customers a one-stop solution for Hajj and Umrah. This account will enable customers to deposit a fixed amount every month and earn profit on their monthly average balance at an attractive rate. Saadiq has another savings product in the works: the Saadiq Graduate account targeting fresh university leavers.

ShariaPortfolio rolls out portfolio management services in #Canada

ShariaPortfolio has introduced portfolio management services in Canada. The firm recently launched offices in Vancouver as well as Toronto. Plans are on to expand the employee strength of ShariaPortfolio Canada in additional provinces eventually. ShariaPortfolio imbibes halal ethical standards in its investment selection, taking a long-term perspective to wealth management. The firm has been operating in the US since 2003. It oversees $115m in assets for clients across 26 states. Besides, it delivers institutional level services to support collaborations with traditional financial services providers looking to incorporate Islamic portfolio management.

Indonesian Islamic P2P lender Ammana Fintek Syariah eyes international expansion starting with #Malaysia

Indonesian Islamic peer-to-peer lender Ammana Fintek Syariah is keen on entering international markets and is starting its expansion with neighbouring Malaysia. Ammana is also eyeing Brunei and Dubai as part of its international expansion. The Shariah-compliant fintech is in the process of applying to become a member of the international Islamic finance standards body the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Ammana Fintek Syariah was established in July 2017 and disbursed 17.6 billion rupiah ($1.29 million) in financing in 2019.

BSP to jumpstart Islamic banking in PH

The central bank of the Phillipines has issued regulations to kickstart the implementation of Islamic banking in the country. Special emphasis is on bringing banking services to the underserved areas of Muslim Mindanao.
The Bangko Sentral ng Pilipinas (BSP) adopted the regulations with supplementary requirements relevant to Islamic banking operations and Shari’ah compliance. The law was signed into law on August 22, 2019 and became effective on September 15, 2019. It provides the BSP with the legal authority to issue a broader set of rules and regulations on Islamic banking.

Turkish Islamic banking set for fast growth after slow start

According to Moody's Investors Service, Turkey's Islamic banking assets are set to double within 10 years from a low level as government initiatives drive growth in the sector. Turkey's Islamic finance sector currently is smaller than other large Muslim countries. The main reason is the relatively small number of Islamic banks and their limited distribution networks within Turkey. Islamic banks are called participation banks in Turkey and are regulated by the Banking Regulation and Supervision Agency (BRSA). They are required by law to become a member of the Participation Banks Association of Turkey (PBAT). Between 2014 and 2015 the Turkish government established two new state-owned participation banks and a new one in 2019. Turkey's ambition is to establish Istanbul as a global financial center. It aims to raise the share of financial services in Turkish GDP to 6% by 2023 from 3% at the end of 2018.

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