Pakistan

SECP registers Al Hilal as first Shariah advisory company in #Pakistan

The Securities & Exchange Commission of Pakistan (SECP) has registered Al Hilal Shariah Advisors as the first Shariah Advisory company in Pakistan. Al Hilal aims at converting the conventional interest-based economy to the Islamic financial system under the guidance of Shariah Scholars and financial experts. Al Hilal Shariah Advisors provides Shariah Advisory, Shariah audit and training services in the field of Islamic Finance. It is also active in the field of halal food certification. Al Hilal CFA Faraz Younus Bandukda said they were proud to be the first Shariah Advisory Company in Pakistan and hopeful that more companies would now implement Shariah regulations.

Three major banks are up for sale. Who will buy them?

For the first time in #Pakistani history, three perfectly healthy and viable banks are simultaneously up for sale. They are Bank Alfalah (BAFL), Meezan Bank (MEBL), and Faysal Bank (FABL). The Gulf Arab investors who initially put up the capital to create these banks have held their positions profitably for decades and are now looking for a suitable exit opportunity. The potential foreign acquirers of these banks would be the most interesting ones, since they are likely to be large foreign financial institutions, extending their presence into the Pakistani market. The most interested potential acquirers, however, are the domestic players, only some of whom have a history of previously owning and operating financial institutions.

Sharia #standards notified

The Securities and Exchange Commission of Pakistan (SECP) has notified seven more Sharia standards of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The general public is kindly asked to give their feedback for the adoption of these standards and bring harmonisation and standardisation in the business practices of Islamic financial institutions.

Govt plans ministry’s division for Islamic finance industry

The Pakistani government is mulling a dedicated division at the finance ministry to deal with Islamic finance. The Prime Minister's Finance adviser, Miftah Ismail said the committee would be set up for the promotion of Islamic banking in Pakistan. He also said that the country is set to achieve a six percent economic growth in the current fiscal year. Deputy Governor Jameel Ahmad at State Bank of Pakistan (SBP) said Islamic finance industry needs to expand its product menu with special focus to reach out to the unserved sectors and regions. Ahmad said development of all components of Islamic finance industry is imperative to achieve inclusive economic development.

Spearheading innovation in Islamic banking

In this interview, Zahid Parekh, General Manager of Habib Bank Limited (HBL), speaks about the evolution and future of Islamic banking. In his view, Islamic banking has evolved as a natural phenomenon in Pakistan. HBL's initial focus was to bring in the faith-based customers and as a second step, to target the sceptics through personalised awareness campaigns. These initiatives have made a difference in changing mindsets and expanding the customer base. HBL has a wide banking portfolio and is looking to introduce a new Shariah-compliant mortgage solution in the forthcoming months. HBL has been a frontrunner in FinTech, it established the Innovation and Financial Inclusion Department almost two years ago, with the sole purpose of digitising banking processes. The concept of FinTech is still new in Pakistan, but Parekh believes it will be a game-changer not only for the Islamic banking sector, but for the overall banking sector as well.

NAB arrests Modaraba corruption case accused

#Pakistan's National Accountability Bureau (NAB) has arrested Yasir Aziz accused in a Modaraba corruption case. The accused acted as finance secretary of M/S Elixir Group and signed the modaraba contracts issued by his brother Shahid Aziz. The public accuses Yasir Aziz of taking the investment and aiding his brother to misappropriate the money. Yasir Aziz also tried to sell the properties owned by the accused Shahid Aziz. NAB Director General Irfan Naeem Mangi confirmed that Yasir Aziz was arrested and assured that the NAB was committed to eradicate corruption from the country.

Ahmed Shuja Kidwai appointed CEO Al Baraka Bank

Ahmed Shuja Kidwai has been appointed as the new CEO of Al Baraka Bank (Pakistan). Kidwai replaces Shafqaat Ahmed, who led the bank for 25 years. Al Baraka Chairman Khalid Rashid Al Zayani thanked Shafqaat wishing him well in his future life and welcomed Ahmed Shuja Kidwai as the new Chief Executive Officer of the bank. Ahmed Shuja Kidwai has a diversified international banking experience of over forty years, he played a pivotal role in consolidating and establishing the bank's position especially in Karachi.

Draft Sharia rules for companies notified

The Securi­ties and Exchange Commission of Pakistan (SECP) has notified draft Sharia Governance Regulations 2018. The regulations concern Sharia-compliant companies and entities including the Sharia-compliant securities and Islamic financial institutions. The regulations are the first-ever holistic Sharia governance framework introduced by the corporate sector regulator. Considering the need for an extensive framework, IFD conducted consultation sessions with Sharia advisors, State Bank, Pakistan Stock Exchange, Institute of Chartered Accountants Pakistan, takaful companies, modaraba and NBFI Association. The regulations are now open to public consultation and stakeholders have the opportunity to share their comments and suggestions within two weeks.

SECP introduces auditing #standards for Islamic finance sector

The Securities and Exchange Commission of Pakistan (SECP) introduced three new international auditing and accounting standards. According to the commission, the AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) shariah standards have been notified after a thorough consultative process. The adopted standards include Shariah Standard No 17-Investment Sukuk, Shariah Standard No 18-Possession (Qabd) as well as Shariah Standard No 23-Agency and the Act of an un-commissioned agent (Fodooli). The commission said it has been playing a proactive role in providing an enabling regulatory environment for the growth of Islamic finance in the country.

Long-term Islamic financing facility launched

The State Bank of Pakistan (SBP) launched the Islamic Long- Term Financing Facility (ILTFF) based on Modaraba for exporters with a maximum limit of Rs1.5 billion. The central bank currently provides the Long Term Financing Facility (LTFF) through conventional banks. The ILTFF will allow exporters an opportunity to avail long-term refinance facility of SBP for purchase of new machinery from eligible Islamic banks. The period of financing under the ILTFF will not exceed more than ten years including a grace period of maximum two years. Islamic banks and Islamic banking branches of conventional banks may also apply to SBP. The allocation is subject to a maximum of 20pc of the limit under LTFF for utilisation under ILTFF. The State Bank’s move would support both the Islamic banking as well as exporters who achieved a positive growth after five years.

#Pakistan's Meezan Bank plans capital-boosting #sukuk

Meezan Bank aims to raise up to 7 billion rupees ($63.34 million) through a Tier 1 sukuk issuance. It could be sold either as a public offering or private placement. The bank did not give a time frame for the sale. Meezan had sold Tier 2 sukuk in 2016, raising 7 billion rupees through a 10-year private placement that used a mudaraba contract. There are five full-fledged Islamic banks and 16 Islamic windows in Pakistan, Meezan Bank being the country's largest sharia-compliant lender. The Islamic banking sector held 11.9% of the country’s total banking assets as of September.

Rs 7 billion #Sukuk launched by PSL

The Hashoo Group announced the issuance of rated, secured, long-term, privately placed Sukuk of Rs 7 billion by Pakistan Services Limited (PSL). PSL will utilize the Sukuk funds for construction and capital expenditure of new hotels and mixed-use developments in the cities of Multan, Faisalabad, Mirpur Azad Jammu Kashmir, Hayatabad Peshawar, Malam Jaba, Skardu and Gwadar. These properties are expected to open in 2018 and 2019. Present at the signing ceremony event was Murtaza Hashwani, Group Deputy Chairman & CEO, along with senior representatives of Hashoo Group, Yousaf Hussain, President & CEO of Faysal Bank, Fawaz Valiaani, CEO of Elixir Securities Pakistan and Basir Shamsie, Deputy CEO of JS Bank. Murtaza Hashwani said that the focus of Hashoo Group has always been growth of the hospitality industry, inbound tourism and the business events & conferences market in Pakistan. He further added that he was very positive about the future of Pakistan and of the of Hashoo Group.

BankIslami launches Shariah-compliant CP of Rs1.5b

BankIslami Pakistan has launched the country's First Shariah Compliant Commercial Paper (CP) Issue worth Rs1.5 billion for Hascol Petroleum. Hascol is Pakistan’s second largest Oil Marketing Company (OMC) in terms of volume managed through its more than 140,000 MT of oil storages and 498 retail outlets. BankIslami Pakistan acted as Mandated Lead Arranger & Advisor, Issuing & Paying Agent and Investment Agent for this CP Issue which was structured based on the Bai Salam cum Wakala model. The CP issue was oversubscribed by more than 80% of the issue size. The introduction of Shariah Compliant Commercial Paper is aimed to broaden avenues for Mutual Funds and other Institutional investors to invest in short-term/fixed income instruments in a Shariah-compliant manner.

#Bahraini bank plans aggressive #expansion in #Pakistan

Bahrain-based Ithmaar Bank plans to add more than 100 branches in Pakistan this year through its subsidiary Faysal Bank. Ithmaar's deputy CEO Abdul Hakeem al-Mutawa says banking penetration is less than 20% in Pakistan, so there are good opportunities to grow. Ithmaar Bank's parent company, Ithmaar Holding, listed recently on the Dubai Financial Market. Al-Mutawa believes the company is well established now to approach the capital markets and the bank has no imminent plans to raise funds through a bond or loan. Ithmaar Holding is also exploring the sale of its 25.4% stake in Bahrain's BBK, which has operations in Bahrain, Kuwait, India and Dubai. Al-Mutawa declined to comment on the timeframe for the disposal of the BBK stake.

SBP voted as best central bank for promoting Islamic finance

State Bank of Pakistan has been voted as the Best Central Bank in Promoting Islamic Finance by a poll conducted by International Finance News (IFN). The central bank has also won this award in 2015. In 2016, Pakistan was awarded Global Islamic Finance Award (Advocacy Award) by Edbiz Consulting Limited, UK. This recognizes the dedication and commitment of State Bank of Pakistan for laying the foundations for the sustainable growth of Islamic finance. In September 2017, the share of Islamic banking stood at 11.9% in terms of assets, while in terms of deposits its share is 13.7% with a network of 2,368 branches across the country.

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.

Experts for strategy to use #fintech in Islamic finance

Islamic banks have been urged to adopt a strategy to make effective use of financial technology. At a seminar held recently, Ahmed Ali Siddiqui, director of Centre for Excellence in Islamic Finance at IBA, said there has to be a strategy for Islamic finance in the digital world. According to fintech expert Ashar Nazim, Pakistan is doing well in Islamic finance, but the country's finance industry has to adapt to fintech. Market Link Executive Director Ishan Kanji said that using fintech will support the agricultural sector by providing easy access of loans and facilities to farmers. He stressed on the need to tap into the informal economy, which is twice the size of formal economy in Pakistan. At the seminar Hasan Bilgrami, CEO of BankIslami, shared the success story of BankIslami being the first bank in Pakistan to use biometric technology.

Experts call for strategy to use #fintech in Islamic finance

Islamic banks have been urged to adopt a strategy to make effective use of financial technology. At a seminar held recently, Ahmed Ali Siddiqui, director of Centre for Excellence in Islamic Finance at IBA, said there has to be a strategy for Islamic finance in the digital world. According to fintech expert Ashar Nazim, Pakistan is doing well in Islamic finance, but the country's finance industry has to adapt to fintech. Market Link Executive Director Ishan Kanji said that using fintech will support the agricultural sector by providing easy access of loans and facilities to farmers. He stressed on the need to tap into the informal economy, which is twice the size of formal economy in Pakistan. At the seminar Hasan Bilgrami, CEO of BankIslami, shared the success story of BankIslami being the first bank in Pakistan to use biometric technology.

#Workshop on enhancing poor’s capability, financial #inclusion begins

An international workshop on "Enhancing the poor’s capability and financial inclusion from Islamic perspective" took place in Islamabad, Pakistan. On the first day, experts discussed the role of Islamic micro-finance in socio-economic development and economic empowerment of women. President of the International Islamic University Islamabad (IIUI), Dr Ahmed Yousif said Islamic financial institutions would have to play their role as objectives of value orientation. He called upon the Muslim world to stay united and include Islamic teachings in the economic system. Dr Atiq-uz-Zafar, director general of the International Institute of Islamic Economics of the IIUI, said that the session of the workshop would also include detailed research papers of the experts. The workshop will conclude today at Faisal Mosque campus.

US Dollar #Sukuk Market’s New Chinese Entrant

Chinese state-owned bank the Industrial and Commercial Bank of China (ICBC) has become the first Chinese bank to help arrange a dollar based sukuk. ICBC helped arrange Pakistan’s recent $1 billion 5 year Sukuk. Pakistan raised over $8 billion for its dual issuance of sukuk and a conventional Eurobond of $1.5 billion. China is building stronger trade ties with Asian countries under its "One Belt, One Road" strategy to rebuild Silk Road trade links with Asia and Europe. Additionally, the China–Pakistan Economic Corridor (CPEC) is a collection of infrastructure projects that are currently under construction throughout Pakistan. The value of CPEC projects is worth $62 billion and provides China with a vital route to the Arabian Sea for trade routes to the Middle East, Africa and Europe.

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