IslamicFinance.de

Noor Bank has launched a 3.2 million dirhams ($871,000) waqf fund with Ajman University to benefit Islamic banking and finance studies. The current pledge of 3.2 million dirhams will benefit one professorship and four scholarships. Noor Bank’s head of Shariah Dr Adnan Aziz said that four scholarships will remain on offer every year, as long as the fund remains intact and continues to generate returns. The waqf amount will be held in perpetuity but the returns on investment will be used to benefit the scholarships. The basic criteria of the scholarships is a combination of academic excellence and financial needs of students registered on a course at the College of Business Administration at Ajman University. The scholarships are available for both undergraduate and postgraduate students.

Noor Bank has launched Noor Art Online Gallery, a new digital portal showcasing artworks from a range of galleries and artists in the region and around the world. Designed to display diverse genres of art, specially curated for Noor Wealth clients, the Noor Art Online Gallery aims to serve as a bridge to connect artists and high-net-worth individuals. The bank stated that the works are available for online credit card purchase by clients around the world and will be delivered to their doorstep. Noor Bank's Head of Retail Banking Mufazzal Kajiji said that art acquisition was a key area of interest and this platform would add value to the customer journey, as well as promote art and culture in the UAE.

Indonesia is planning further steps to make it easier for foreign banks to invest in local lenders as well as encourage domestic mergers. The Financial Services Authority, known as OJK, expects to amend the so-called single presence policy. The revised rule would relax the requirement that the acquiring banks have to merge all their local operations into one entity. Removing the single presence rule could make it easier for Standard Chartered to hang on to its 45% stake in PT Bank Permata. A large bank acquiring a smaller rival would be allowed to retain it as a separate entity without specifying the threshold for a merger requirement. However, even as the single presence rule is relaxed, foreign banks looking to acquire Indonesian lenders should still appoint Indonesian residents as president director and president commissioner.

Dubai's Emirates NBD has coordinated a $500m Islamic law-compliant syndicated loan for the government of Pakistan. The loan was provided by a consortium of 12 banks and was oversubscribed by more than 40%. The consortium comprised Emirates NBD, Commercial Bank of Dubai, Noor Bank, Allied Bank, Dubai Islamic Bank, First Abu Dhabi Bank, Mashreq Bank, Sharjah Islamic Bank, Samba Financial Group, Bank of Jordan, Habib Bank Limited and Union De Banques Arabes Et Francaises. The loan was organised as a murabaha.

Turkey's first institute on Islamic economy and finance aims to conduct international academic studies in Istanbul. University president Erol Ozvar said the Marmara University Institute of Islamic Economics And Finance (MUISEF) will expand its studies with further academic research. MUISEF is the first of its kind in Turkey in terms of being an academic institute. Ozvar added that the instruction language will be in English and will provide training on Islamic economy and finance for graduate and doctoral students coming from different disciplines. The institute was established under a joint protocol with the Finance Office of the Turkish Presidency and serves the purpose of making Istanbul a "finance center".

According to Amanie Advisors CEO Suhaida Mahpot, the existing skepticism towards crypto in Islamic countries is not a pure rejection, but rather a consequence of uncertainty. Mahpot compared the existing situation of cryptocurrencies with Malaysia’s controversial types of investment known as Amanah Saham Bumiputera (ASB) and Amanah Saham Nasional (ASN). The perception of ASB has transformed over the years and it was decided to consider it as "harus" in 2012, which means that it is neither prohibited nor encouraged by the teachings of the faith. Both ASB and ASN investments were finally declared permissible for Muslims by the Selangor Fatwa Committee, the same regulatory authority that previously prohibited them. Mahpot argues that the same goes for digital currencies and financial institutions and scholars need more education about cryptocurrencies and their benefits.

The Maldives Islamic Bank (MIB) has launched its Initial Public Offering on the Maldives Stock Exchange with the aim of raising MVR244 million (US$15.8 million), offering a 31% stake for public ownership. MIB is offering 6,975,000 shares at a price of MVR35 per share, including 4.5 million ordinary shares offered for subscription and 2.4 million offered for sale. According to the bank, buyers must subscribe to a minimum of 20 shares, which is equivalent to MVR700. Subscriptions exceeding the minimum amount must be in multiples of 10 shares. The expected date of listing of the shares or commencement of trading is November 12.

Qatar Central Bank (QCB) is preparing to establish a centralised Sharia’h supervisory in Sharia’h governance. Currently, the Sharia’h governance structure of Islamic banks is mostly decentralised. Individual banks have their own Shaira’h Supervisory Boards to oversee their operations and ensure their compliance with the Islamic principles. The establishment of a centralised Sharia’h supervisory body will help achieve greater market-wide consistency and credibility. Qatar’s Islamic banks have registered a Compound Annual Growth Rate of 10.3% since the segregation of Islamic business from the conventional banks back in 2012. Conventional banks lag behind at 9.8% annualized growth during the same period.

Four Gulf countries are laying the groundwork to be aligned to Environmental, Social, and Governance (ESG) standards through their sovereign wealth funds’ undertakings. Abu Dhabi Investment Authority (ADIA), Kuwait Investment Authority (KIA), Qatar Investment Authority (QIA), and Saudi Arabia’s Public Investment Fund (PIF) are among founding members of 'One Planet Sovereign Wealth Funds'. The aim is to accelerate integration of financial risks and opportunities related to climate change in the management of long-term asset. A recent Moody’s report said that ESG risks are becoming more significant as regulatory policies, market developments and social attitudes change rapidly, putting the banks under growing pressure to integrate ESG considerations into their investment decisions.

Islamic International Rating Agency (IIRA) has reaffirmed the international scale credit ratings assigned to Al Baraka Banking Group (ABG) at BBB+ / A3 . IIRA also reaffirmed the national scale ratings of ABG at A+ (bh) / A2 (bh) with a Stable outlook. The Group’s fiduciary score has also been raised to the higher level of “81-85”, the highest among the Islamic Financial Institutions in the region. IIRA recognized the substantial contribution of the Group’s four key subsidiary banks based in Turkey, Jordan, Egypt and Algeria. Moreover, IIRA said that the Group benefits from a wide geographic diversification with most jurisdictions possessing a low economic correlation, thereby improving the overall risk metrics.

Fintech startup Dana is looking for another strategic investor. Currently backed by Ant Financial, Dana offers services such as QR-code based transfers and online credit-card transactions for individuals as well as merchants. Dana is considering expanding its footprint in Indonesia by offering other financial services such as insurance. The startup is wary of becoming labelled a shadow bank operating outside of regulatory jurisdictions. Indonesia’s internet economy, the largest and the fastest growing in the region, reached $27 billion in 2018 and is poised to grow to $100 billion by 2025, according to a report by Google and Temasek Holdings Pte.

Bank Islam Malaysia is the top domestic sukuk broker for the first half of the year (1H), after helping issue US$5.15 billion (RM21.21 billion) worth of sukuk in the market. Bank Islam’s market share of the sukuk issued accounted for 29.03% of the total ringgit-denominated sukuk issued in the 1H. The bank advised on 10 issues for the period. The second-largest issuer in the 1H is Maybank Investment Bank, which was ranked first last year for the same period after having helped issue US$4.1 billion of sukuk. Analysts expect the local sukuk market to remain active driven by capital raising by government and corporates for major construction works such as the East Coast Rail Link, Light Rail Transit Line 3 and Mass Rapid Transit Line 3 projects.

Saudi-based Lendo has engaged Shariyah Review Bureau (SRB) to help support its Shariah supervisory function by overseeing its offerings, crowdfunding structures and operations. Lendo has been working to acquire its license in Saudi Arabian Monetary Authority’s sandbox regulation while continuing to focus on developing peer to peer funding practices in light of Shariah compliance. Lendo CEO Osama Al Raee expects Shariyah Review Bureau to contribute to the further optimization and improvement in Sharia supervisory oversight and optimize their Sharia risk management system. SRB founder Yasser S Dahlawi said the focus will be to evaluate and optimize existing Sharia control procedures and business processes to ensure well-grounded Sharia structural guarantees.

The International Islamic Financial Market (IIFM) expects to finalise capital market related “Sukuk Al Ijarah” standard suite of documentation later this year. The Perpetual Tier 1 and Senior Unsecured Sukuk Al Mudarabah standard suite of documentation is currently ongoing and is expected to be completed by the end of the third quarter of 2019. The standard-setting body also started translation work on its standards and is expected to come out with French versions by early 2020 to cater for French language jurisdictions. It is also looking to develop training material for its standards in collaboration with consultants and training institutes to offer technically oriented workshops to the users.

The Inland Revenue Board of Malaysia has released new guidance on restrictions to the deductibility of interest expenses. The rules are based on the recommendations of the OECD in Action 4 of its base erosion and profit shifting (BEPS) Action Plan. The rules are intended to prevent tax base erosion through the use of excessive interest expense deductions to reduce domestic tax. There are parts that have been customized based on domestic circumstances. The Malaysian rules cap allowable interest expense deductions at 20 percent of a taxpayer's income before interest, tax, depreciation, and amortization (EBITDA). Disallowed deductions for one year can be carried forward to the subsequent year.

Halal-focused investment firm Wahed Invest has debuted its first ETF – the Wahed FTSE USA Shariah ETF (HLAL US). Listed on Nasdaq, the fund provides exposure to US firms that comply with Shariah principles. The ETF is linked to the FTSE USA Shariah Index which screens the constituents of the parent FTSE USA Index to determine their Shariah status. The most notable sector difference between the FTSE USA Shariah Index and the FTSE USA Index is that the former has zero allocation to financials stocks (vs. 18.5% in the FTSE USA). Consequently, the index has a larger allocation to technology (28.6% vs. 22.0%), healthcare (22.2% vs. 12.7%), and oil & gas (13.1% vs. 5.0%). While there are a few Shariah-compliant ETFs listed in Europe, with issuers DWS and BlackRock offering products, the space is relatively untouched in the US.

Muslim countries are increasingly working on establishing an ecosystem called "inclusive Islamic digital economy."
Such a concept aims at combining the core sectors of what today constitutes the digital economy under Shariah compliance, besides Islamic finance and investment products, also e-commerce, food, transportation and logistics, the sharing economy, as well as lifestyle, travel and entertainment. Forecasts say that the global Islamic digital economy will reach an estimated value of $277bn as of 2020. This data suggests that the Islamic digital economy is going to be a huge opportunity for businesses in the future and cannot be ignored by any market player. In Islamic finance, micro-financing, co-investment platforms and online investment advisory are currently the most prevalent services. However, there is still accumulated demand for online incubation funds and start-up financing, including Islamic crowd funding.

Worsening climate change impacts are having a negative impact on agricultural food production, livestock value chains and livelihoods. To tackle Sustainable Development Goal number 13, financial inclusion can be used as a tool to provide much-needed access to financial services. This in turn can help vulnerable communities break a vicious cycle to better prepare and cope with climate change shocks such as droughts or floods. Islamic microfinance institutions can fill a vital gap not met by conventional microfinance institutions by targeting pastoralists. A social collateral approach is taken by Crescent Takaful Sacco. The microfinance institution lends money to groups instead of individuals. This group-based lending approach is similar to the concept of asabiyah, otherwise known as social solidarity.

Over the decade from 2007 to 2017, government restrictions on religion increased markedly around the world. Social hostilities involving religion also have risen since 2007. The latest data of the Pew Research Center show that government restrictions have risen in several different ways. Laws and policies restricting religious freedom and government favoritism of religious groups have consistently been the most prevalent types of restrictions. Government limits on religious activities and government harassment of religious groups have also been rising over the past decade. However, interreligious tension and violence has declined markedly since the baseline year.

India is considering a ban on cryptocurrencies. A draft bill explains that a Digital Rupee, which will be issued by the Reserve Bank of India (RBI), would be approved as legal tender, while all other digital currencies would be prohibited. However, the ban does not apply to anyone using distributed ledger technologies (DLT) or other related technologies for experiments or research, as long as cryptos are not being used for payments. The proposed penalty for violating the ban would be a fine or up to 10 years’ imprisonment, or both. The news comes after reports that RBI has been developing a blockchain platform for banking in its R&D branch. However, RBI has denied it had any involvement in the proposed legislation.