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Regulators to play in 'sandbox' with infant #fintech firms

In #Indonesia fintech startups will be invited to a safe space where they can test any service under the supervision of the central bank before it issues regulations and allows full authorization. The safe space, known as a "regulatory sandbox", has been adopted in many countries around the world. The central bank will also set up a designated fintech office to overlook the sandbox. The Indonesian Fintech Association applauded the planned sandbox approach as it will serve as a tangible platform for all fintech initiatives to be tested into the regulatory system. The association's secretary-general Karaniya Dharmasaputra said this concept was a good one as shown by many countries implementing it toward success.

Islamic Finance’s total assets will reach $2.1 trillion by year-end, says S&P

S&P Global Ratings believes that the drop in Islamic finance growth is likely to continue in 2017. Nevertheless, it estimates the industry’s total assets will reach $2.1 trillion at year-end 2016. S&P Global Head of Islamic Finance Mohamed Damak said Islamic finance will maintain growth of around 5% in 2017. The oil price environment will weigh negatively on economic growth in the GCC for the next two years. A broader consensus around the need to standardize legal structures and Sharia interpretation could help the industry to progress. Another great help could be the industry’s potential contribution to the United Nation’s sustainable development financing goals.

Islamic banking has capacity of 40m people to explore in #Pakistan

State Bank of Pakistan Deputy Governor Saeed Ahmed said that there is a dire need to create awareness to promote Islamic banking. According to the Global Islamic Finance Report (GIFR) 2016, Pakistan ranks ninth in terms of development of Islamic financial services industry. However, there is still a capacity of 40 million more people in the banking market that the Islamic finance sector can explore. In June the State Bank of Pakistan (SBP) noted that the Islamic banking industry had witnessed a growth of 7.4% in April to June quarter. Its assets reached Rs 1,745 billion while its deposits also increased by 9.3%. This shows a market capitalisation of 13.2%. There is still room to grow and the Islamic financing institutions can increase their operations and market shares.

Stability, of a Sort: #Turkey’s Islamic Bonds

Islamic entities known as participation banks offer bonds with potentially greater upside and more stability than standard government debt. According to a recent report from Standard & Poor’s, participation banks doubled their share of the country’s overall banking assets to about 5% between 2005 to 2015. Turkish President Recep Tayyip Erdogan’s support for further integration of Islamic law into all walks of life means participation banks are likely to grow. The system’s assets could reach some $300 billion by 2025, according to the Participation Banks Association of Turkey.

As Raghuram Rajan departs, RBI opens door to Islamic finance

India's central bank has proposed working with the government to introduce interest-free banking. The Reserve Bank of India (RBI) made the proposal last week, as departing central bank governor Raghuram Rajan hands over the reins to Urjit Patel. Development of Islamic finance has been slow in India because of strong opposition from bureaucrats and politicians from the ruling Hindu-nationalist Bharatiya Janata Party. An estimated 180 million Muslims have been unable to access Islamic banking because of laws that require banking to be based on interest. The RBI said it would explore introducing interest-free banking products in consultation with the government, a key detail as this opens the prospects of supportive legislation.

Islamic banking in Africa

The African market for Islamic banking is unique for several reasons. The continent is witnessing an unprecedented economic growth in the last decade. Return on investment in Africa is higher than in any other developing region. Moreover, Islamic banking in Africa is supported by a growing openness and acceptability by many regulators and politicians. There is growing interest from sovereign states in issuing sukuk and countries such as South Africa, Senegal Ivory Coast and Togo have already tested the international market. At the same time, there is a need to be aware of the challenges facing the industry and how the associated risks can be mitigated. African regulators need to adopt the right policies and increase the level of cooperation. They should work closely with the multinational financial institutions such as the Islamic Development Bank, the African Development Bank and the World Bank.

Mohammad Faiz new Islamic Finance Consultative Group Chairman

The International Accounting Standards Board (IASB) has appointed Datuk Mohammad Faiz Azmi as chairman of the Islamic Finance Consultative Group. Commenting on his appointment, Mohammad Faiz said he hoped to be able to continue the good work of the IASB in the area of global finance. He appreciates IASB's commitment in helping the emerging markets adopt their International Financial Reporting Standards (IFRS). IASB Chairman Hans Hoogervorst said Mohammad Faiz had always been a valued member of the IFRS community and is renowned for his expertise in Islamic Finance.

Here are the 3 major concerns of #fintech industry players in #Indonesia

Together with Fintech Indonesia Association, Deloitte released the Fintech Survey 2016 at the Indonesia Fintech Festival & Conference 2016. Conducted between June to August 2016, the survey interviewed 70 respondents from various Indonesian fintech companies. 27 different types of fintech companies participated in the survey. All of them shared three major concerns. A great number of fintech players agreed that the current regulatory process is "not so clear." Another pressing matter faced by Indonesian fintech players is talent shortage. The third concern is the local market’s low levels of financial education. Ironically, this problem happens not only among members of the general public but also among players in the conventional finance industry.

Fraudulent investment dressed up with religious symbols: Police

In #Indonesia the National Police have warned the public to be on guard against fraudulent investment companies. Criminal Investigation Department director Agung Setya said investors who understood investment often fell prey to fraudsters because of greed, while other were lured by religious symbols and public figures. He cited as an example the 2007 Gama Smart Karya Utama case and the 2012 Langit Biru cooperative case, in which the founders claimed to be spiritual leaders. Data show that fraudulent investments lead to billions of rupiah in losses per year. In 2007, losses amounted to Rp 16.13 trillion (US$1.21 billion), but decreased to Rp 604 billion in 2008. In 2011 and 2012, losses rose to Rp 68.62 trillion and Rp 10.22 trillion, respectively, but declined to Rp 235 billion (2014) and 285 billion (2015).

#Saudi builder Khodari renews $35.2m Islamic facility

Saudi Arabian construction firm Abdullah Abdul Mohsin Al Khodari and Sons has renewed an existing 132 million riyal (Dh129.2 million, $35.2 million) Islamic credit facility with Samba Financial Group. The facility will provide bonding commitments as well as capital and working capital requirements for projects and general business. Credit limits for projects covered by the facility will range from 36 to 60 months. Khodari has also won a 69 million riyal contract from the kingdom’s Ministry of Environment, Water & Agriculture for the maintenance of water networks. The financial impact of the project is expected to start in the third quarter.

Islamic Development Bank to finance TAPI pipeline

The Islamic Development Bank (IDB) will take part in financing of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline’s construction. Economic feasibility of the TAPI project is confirmed by experts of the countries participating in the project and independent international experts. They testify to the guaranteed capacity of Turkmenistan to ensure long-term gas supply via this route. The development of Galkynysh field envisages 33 billion cubic meters of natural gas per year. Turkmengas state concern has announced a tender for the provision of services on project management, which will be implemented with the participation of the IDB. The project is expected to be completed in late 2019.

Islamic Development Bank to finance TAPI pipeline

The Islamic Development Bank (IDB) will take part in financing of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline's construction.

Islamic finance becoming strong support factor for agricultural development

Islamic finance is making further inroads in agricultural sectors globally. The trend is increasingly adopted in Central and Westerns Asian countries, in Southeast Asia and in Sub-Saharan Africa. Firstly, the impact of Islamic finance can be higher than that of other financial products due to its asset-based structure. It can be applied in many fields, starting from the purchase of farming machines and equipment, seeds and pesticides, warehouses, as well as in the dairy, livestock and fishery sectors. Ijara contracts can be used for leasing or renting farm machines and other equipment. Other structures such as musharaka or mudaraba can be used for long-term developments such as rural housing, reforestation or irrigation. Secondly, Islamic finance can help broaden financial inclusion by establishing cooperatives or partnership-based financing structures. In Pakistan the state bank has now issued guidelines on Islamic agricultural finance. In Indonesia, the government has launched a new national master plan and has explicitly included agriculture as a field for Islamic finance.

FG Wants Increased Islamic Bank Financing for #Nigeria, Others

The federal government has asked for the scaling up of Islamic Development Bank’s (IDB’s) concessional resource and increased overall financing to Nigeria and other African member countries of the bank. Speaking at the inauguration of the IDB Country Gateway Office (CGO) in Abuja, the Minister of Finance, Mrs. Kemi Adeosun, said there are immense opportunities in Nigeria. The minister pointed out that Nigeria requires far more resources to face the challenges and diversify its economy. She also urged the the IDB Group to help in the recently constituted Buhari Plan for the Revitalisation of the Northeast Region of Nigeria.

National Bonds website now offers up-to-date financial planning advice

#UAE based National Bonds has started providing financial planning tips and tools via its website. The new financial planning section offers valuable information in both Arabic and English to help customers achieve their financial objectives. Topics cover planning for retirement and children’s education, debt management, investment solutions, takaful and estate planning. In addition, the website offers practical financial planning tips on goal setting, cash management and budgeting, financial health, and the rule of 72. The portal also includes online calculators for accurately computing expenses, commitments and budgets. Mohammed Qasim Al-Ali, CEO of National Bonds, said the new online tool will save time and effort for those looking for simple and straightforward financial planning.

‘Endless investment opportunity: that is what we offer’

Dr. Bambang Permadi Soemantri Brodjonegoro, Indonesia’s former Finance Minister and current Minister of National Development Planning, discusses the recent tax amnesty legislation and current economic prospects for Indonesia. Hosting the recent 12th World Islamic Economic Forum (WIEF) in Jakarta aims to promote Indonesia to the Muslim community, sending a message that Indonesia is a reliable economy with a lot of potential. The WIEF tries to develop Islamic finance that is more inclusive. Indonesia wants to focus on Islamic microfinance and on Muslim-friendly tourism. Beyond tourism, Muslim fashion is a sector that already has a huge market and will be increasingly important for Indonesia.

Tax cut for Shariah compliant business to bolster Islamic finance

A 2% tax cut announced for all Shariah-compliant companies is bound to give a big boost to Islamic Banking in Pakistan. The government has introduced the 2% rebate for Shariah-compliant companies through the Finance Act 2016. The Finance Act also covers the entire national budget for the fiscal year 2017. The latest decision to expand the programme followed a report by the State Bank of Pakistan (SBP), which confirmed a continuing spread of the Islamic banking system in the country. Islamic banks currently have a 13% share of the conventional banking in Pakistan.

#Indonesia launches master plan to breathe new life into Islamic finance sector

The Indonesian government has launched a national master plan to develop its Islamic finance industry. Indonesian Islamic banks hold roughly 5% of total banking assets, compared with more than 20% in neighbouring Malaysia. According to Farrukh Raza, managing director of IFAAS, an Islamic finance consultancy which designed the 10-year master plan, the government would increase its use of Islamic debt instruments to as much as 50% of total issuance in 10 years time. Indonesia's pilgrims' fund would also see the establishment of a dedicated asset management arm to implement a more rigorous investment policy and attract external fund managers.

Bank Negara governor: Islamic finance key segment in financial system

In #Malaysia Bank Negara governor Datuk Muhammad Ibrahim said Islamic banking assets made up 27% of the total banking system, surpassing Bank Negara’s Financial Sector Masterplan. He said that there were 27 takaful players offering more than 100 financial products now compared with fewer than four Islamic banks and takaful players before year 2000. He added that the penetration rate for takaful now stood at 14.8% of the population, indicating growing acceptance of takaful products. On the launch of the Educator’s Manual on Shariah Standard Murabahah, Muhammad said that the manual was aimed to act as a comprehensive teaching guide to enhance the Islamic finance syllabus. It was jointly developed by Bank Negara in collaboration with the International Shari’ah Research Academy for Islamic Finance and IBFIM.

Taxation for Islamic banking: amendments in legal framework under review: MoF

In #Pakistan the Ministry of Finance stated that amendments in legal framework are under review to strengthen the framework of taxation proposals for Islamic Banking. The initiatives mainly include review of Mudaraba guidelines to align those with overall regulatory framework of Islamic Finance, issuance of Sukuk guidelines, issuance of Takaful rules and government Ijara Sukuk. A multi-tiered Shariah supervisory and compliance framework has been put in place. Also, a Shariah governance framework for Islamic Banking Institutions (IBIs) was formulated, which explicitly defines Shariah related rules and responsibilities of all key organs of IBIs. The initial Minimum Capital Requirement (MCR) for an Islamic Banking subsidiary was revised from Rs 10 billion to Rs 6 billion.

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