IslamicFinance.de

Reserve Bank of India guidelines specifically state that banks are compulsorily required to charge an interest and pay taxes to the central government. However, the Muslim Fund Trust in Deoband headed by Haseeb Siddiqui is a financial institution that works on an interest-free loan module. The trust offers loans to only those who have a savings deposit account with them. Conventional banks demand security before issuing loans, which it has the option of falling back upon, in case the consumer defaults. The Muslim Fund Trust accepts only ornaments as security. Locals who avail the services of the Muslim Fund Trust identify Siddiqui as a social worker. Popularly known as Abbaji, Siddiqui has been politically active as a member of BSP. The trust neither has debit or credit cards, nor does it have netbanking facilities like other banks. The Muslim Fund Trust also runs an eye-care hospital, driver-training centre and an orphanage.

The First Investor (TFI) Qatar, a subsidiary of Barwa Bank Group has acquired a new office building in Frankfurt. The asset is another unique blend to TFI Euro Income Fund, which was launched in 2017 with sharia compliant stature. Europe continues to provide excellent investment and business environments given low inflation and low interest rate regime. TFI is keen to pursue its investment strategy with the aim to help clients achieve their objectives in a very challenging business environment. By that, TFI will soon launch another UK Income Fund and a US Income Fund together with many investment opportunities during 2018.

Almost half of Qatar’s outstanding sukuk, worth of over QR25bn, will mature in 2018. With the ongoing growth of Shariah-compliant institutions, new issuances are vital. If no sukuk are issued in the country to replace the maturing ones, Shariah-compliant investors might look to other sukuk investments outside Qatar. According to the joint research of Qatar Financial Centre (QFC), Thomson Reuters and Islamic Research and Training Institute (IRTI), retail sukuk remains an untapped segment in most of the countries in GCC. Qatar can capitalise on selling sukuk to the retail market to promote both the primary and secondary capital market. Financial institutions have been leading corporate issuance in the GCCIn Qatar, Ezdan Holding Group is the only corporation outside financial institutions to issue sukuk. Ijarah continues to be the most popular sukuk structure in Qatar. However, Qatari corporate sukuk have all been issued based on wakalah structure, which has been gaining popularity in the recent years.

The head of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has resigned. Hamed Hassan Merah presented his resignation after more than three years and the board of trustees accepted it. As a complex organisation with 200 institutional members from across 45 countries, the AAOIFI had been slow to respond to issues relating to conflicts of interest and product standardisation. Under Merah, the AAOIFI tackled such issues head on, launching a review of its accounting, auditing and sharia standards. In November, Merah said AAOIFI would now prioritize wider adoption of its standards by engaging national regulators in key markets, including Turkey and Malaysia. Saudi Arabia’s central bank joined AAOIFI as an institutional member in October 2017.

Robo-advisers are opening up investment advice to the masses. They can provide sound investment advice for a fraction of the cost of their human counterparts, making it affordable enough for those with as little as US$100 to invest. Junaid Wahedna has taken the robo-investment concept a step further, making it available for those looking for Sharia-compliant investment options. Wahed Invest charges far lower fees than those charged by a conventional wealth manager. The robo-advisor Betterment has accrued over $10 billion worth of assets under management in the US since its launch in 2008. Currently, all of Wahed’s clients are from the US and Mr Wahedna says it plans to start accepting international customers. The company has 50 full-time employees and it has offices in New York, London, Dubai and Mumbai. The company sees a lot of potential in India, having seen strong demand for Islamic investing in the country from its pre-registered clients.

The CEO of The International Islamic Trade Finance Corporation (ITFC) will be on an official visit to The Gambia on 16th January 2018. A new agreement will be signed by Eng. Hani Salem Sonbol, CEO of ITFC and H.E. Hon. Mrs. Fatoumata Jallow-Tambajang, Vice President and Minister for Women’s Affairs. Since its inception in 2008, ITFC has approved a total of 30 financing operations for The Gambia for a total of US$437 million. Hani Salem Sonbol will be available for face to face interviews. Only registered journalists will have access to the signing ceremony.

The proposed merger of Saudi British Bank (SABB) and Alawwal Bank has been delayed but not derailed. The two banks announced in April that they had agreed to start talks, but progress has since faltered because of the complexity of the deal. Progress on the SABB-Alawwal merger has taken longer than expected because the regulatory environment for bank acquisitions in Saudi Arabia is relatively untested. Meanwhile, dozens of princes, high officials and senior businessmen were detained in November in a corruption crackdown. Among those was SABB vice chairman Khalid Bin Abdullah al-Mulhem. Almost all banks in Saudi Arabia were affected by the crackdown when authorities ordered the freezing of more than 2,000 accounts across the sector. A merged Alawwal and SABB would rank as the third-largest bank in Saudi Arabia with assets of $77.6bn, behind National Commercial Bank and Al Rajhi Bank.

According to Qatar's Finance Minister Ali Shareef Al Emadi, Qatar's Islamic Banking sector is the third largest contributor to global growth in Islamic banking. At the 4th Doha Islamic Finance Conference, the Minister called for continued growth in the Islamic finance sector through concerted efforts to confront financial risks. The Minister noted that Islamic finance accounts for 50% of banking services in the GCC, where most GCC citizens prefer Sharia-compliant banking services. More and more international universities are adopting programs in Islamic finance, including the Master of Islamic Finance at Hamad bin Khalifa University in Qatar. The rapid growth of electronic financial transactions have brought new challenges requiring further cooperation, coordination and discussion. New products require the development of clear frameworks. Al Emadi added that increasing transparency in this field will help Shariah scholars to identify the correct structures and it will enable banks to make these products more attractive.

The UK's Department of International Trade has announced the launch of a wide-ranging campaign in the Middle East and the Gulf to encourage investment in the UK. London is considered the largest market for Islamic finance outside the Islamic world and has more than 20 banks providing Islamic financial services. According to the Dubai-based Media and Communications Center, Britain ranks 22nd out of 124 countries in the world that use Islamic banking, placing it first in Europe and fourth among non-Muslim majority countries after Singapore, Sri Lanka and South Africa. Supportive government policies created a tax and regulatory framework aimed at expanding the Islamic finance market, including the elimination of double taxation, the extension of Islamic mortgage tax and the reform of debt arrangements. The United Kingdom is the first sovereign Western country to issue sovereign sukuk. In September, London also hosted the fourth annual meeting of the Global Islamic Finance and Investment Group (GIFIG) to discuss inter-state cooperation.

Sharjah Islamic Bank (SIB) has successfully completed the issuance of Dh266.8 million worth of Sukuk convertible into equity of the bank to the Sharjah Social Security Fund (SSSF). SIB chairman Abdul Rahman Al Owais announced that income generated from the bank’s dividends will be used for uplifting social activities in the emirate. The Ruler of Sharjah nominated an entity engaged in endowment activities to subscribe to Sukuk equal to 10% of SIB’s capital and converting it into equity for the bank at a nominal value of Dh1 each. Al Owais expects that the capitalisation ratios will be strengthened by around 100 bps with the issuance of this capital. He added that by virtue of this exercise, SIB’s shared capital has increased from Dh2,668,050,000 to Dh2,934,855,000.

According to ratings agency S&P Global, the outlook for Islamic bonds remains uncertain for the coming year. Global Sukuk issuance in 2017 reached $97.9 billion, an increase of 45.3%, from the $67.4 billion recorded in 2016. The increase was underpinned by large issuances by GCC countries, particularly Saudi Arabia. Non-GCC countries also contributed to the rise, with Hong Kong tapping the market again last year and Nigeria issuing its first Sukuk. Morocco and Tunisia are expected to issue Sukuks this year. The report said while core Islamic finance countries will continue to have "significant" financing needs in 2018, the Sukuk market could be held back by tightening global liquidity.

Al Baraka Bank Syria was granted a BBB investment grade rating by the International Islamic Rating Agency (IIRA). The bank was also assigned a sufficient credit capacity, with a rating of (71-75) as a total credit score. It also earned a strong credit rating, with a rating of 76-80 for the Asset Quality Management. The Bank’s corporate governance was assessed in the range of 66-70, and the Shari’a governance within the range (71-75). Mohammed Abdullah Halabi, CEO of Al Baraka Bank Syria said this result confirmed the accuracy of the strategy adopted by the Bank and the high quality performance of the management team.

Islamic Finance has seen massive growth since the recession in 2008 as sovereign and institutional investors consider them more stable than the conventional banking system. Fintech has been very popular in the West over the last few years, but the uptake to digitization in the Islamic Finance world has been relatively slow. 2018 is expected to be the year when Islamic Fintech players will start emerging across the world. This has its own challenges, in terms of awareness, regulatory standards across Sharia jurisdictions and product innovation. Islamic Fintech is on the rise in the GCC and Malaysia thanks to various ecosystems and institutions. Bahrain has recetnly launched ALGO Bahrain, the first Fintech consortium specializing in Islamic finance. Eight more regional banks are expected to join in the next 12 months. Dubai, Abu Dhabi and Bahrain have all launched their regulatory sandboxes namely Innovation Testing Licence, RegLab, and Bahrain’s regulatory sandbox (expected to be the largest in MENA).

In Iran more than a dozen people have been killed and thousands have been arrested in demonstrations over the last few weeks. Massive numbers of Iranians say their savings have been lost because of the collapse of poorly regulated or fraudulent institutions. According to Suzanne Maloney of the Brookings Institution, banks are shutting down without any kind of notice. The Iranian President’s recent budget proposal decreases subsidies to the poor at a time when the spending power of Iranians is also declining. Not being able to meet day-to-day expenses, respond to emergencies or take advantage of opportunities are a significant source of stress. The client protection principles, Smart Certification and the tools developed by the Smart Campaign offer resources for stakeholders in any country. They can ensure responsible treatment of clients and thus long-term sustainability. Iran's case shows the importance of quality financial products as a part of broader financial, economic, and social development.

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.

Emirates REIT has issued the first sukuk by a real estate investment trust (REIT) in the MENA region. It's also the first REIT from the region to have a credit rating (BB+). REITs have not traditionally issued sharia-compliant bonds, and have instead preferred to tap conventional debt markets for their financing needs. The only previous issuance of this type was in Malaysia in 2014, when KLCC REIT sold $930 million of Islamic bonds. This new issuance was hosted by The Irish Stock Exchange and relied on underlying wakala and murabaha contracts. The entire timeline of the deal was less than two months. This was to ensure Emirates Reit didn’t miss the favourable issuance window. Standard Chartered Bank acted as sole global coordinator, ratings advisor and joint lead manager of the sukuk issuance.

The growing popularity of Islamic finance has led to the constant development of new Shariah-compliant investment products. Most of those products have been developed and popularised in Malaysia. Islamic Exchange Traded Funds, or Islamic ETFs have become increasingly popular among both institutional and retail investors globally. They have low management costs, high liquidity, relative safety and solid appreciation potential as a mid- to long-term investment. The main difference from conventional ETFs is that Islamic ETFs track only benchmark indices that consist of Shariah-compliant stocks or assets. An Islamic ETF is managed strictly under Shariah principles and overseen by an appointed Shariah committee. This naturally increases costs and results in higher fees compared to conventional ETFs. To tap the huge potential, Islamic ETFs need to be made cost-effective and get incentivised by governments to attract both institutional and retail investors. In the Gulf Cooperation Council (GCC) countries ETF is relatively new. In the GCC more promotion is needed to bring Islamic ETFs out of their niche.

Green Dome Financial Services has launched the UK's first Sharia-compliant home insurance policy. The company has begun selling policies that meet Islamic restrictions on uncertainty and usury, or unreasonably high interest rates, while falling within the scope of the U.K.’s Financial Conduct Authority.

Bahrains's Arcapita has acquired 75% interest in Mentor-based signage and lighting services firm MC Sign. The deal is worth more than $100 million. Atif A. Abdulmalik, Arcapita's CEO, said the company was well positioned to acquire market share in a highly fragmented industry that is dominated by locally-focused, sub-scale service providers. Arcapita's investment in MC Sign reflects the firm's global presence, with offices in Bahrain, Atlanta, London and Singapore. The investment firm has been active in the Middle East too. In October 2017, the firm partnered with Bahrain's sovereign wealth fund Mumtalakat to acquire 90% stake in Abu Dhabi's NAS United Healthcare Services. This was preceded by another deal through which Arcapita acquired logistics assets worth $150 million in Dubai.

According to Standard & Poor’s (S&P), global sukuk issuance increased 45.3% year-on-year to $97.9bn in 2017. This performance was primarily driven by good liquidity conditions in the Gulf Cooperation Council (GCC) countries. S&P head of Islamic Finance, Dr Mohamed Damak said the outlook for sukuk in 2018 looked uncertain. He added that tighter global liquidity conditions, mounting geopolitical risks and slow progress on the standardisation of Islamic finance products would continue to hold the market back. The US Federal Reserve is expected to increase rates by 75 basis points. Central banks in the GCC countries would probably mirror such an increase due to the peg of their currencies with the US dollar. Regarding retail sukuk, the agency believes that development of this part of the market necessitates a specific regulatory framework. Retail sukuk issuance has been successful in some countries where authorities provided a tax incentive to drain a portion of the savings toward this market.