IslamicFinance.de

RAM Ratings sees Malaysia’s leadership in Islamic finance as a catalyst for environmental, social and governance (ESG)-driven investment. RAM Ratings CEO Foo Su Yin said for ESG growth the government needs to follow a similar path to that which has led to Malaysia’s leadership position in Islamic finance. PRI managing director Fiona Reynolds said that fiduciary duty remains the biggest barrier to ESG integration. She added that investors and policymakers need to work together to ensure sustainability issues continue to gain traction. There are compelling national-interest reasons for policy makers to promote the incorporation of ESG factors into investment practices in China, Hong Kong, India, Malaysia, Singapore and South Korea.

According to S&P Global Ratings, banks in the Gulf Cooperation Council countries will remain under pressure for the remainder of 2016 and 2017. The operating environments in these emerging markets are suffering from the effects of low commodity prices and weakening local currencies outside the GCC. S&P thinks that not only will banks' loan growth decline, but profitability will also drop. On a positive note, S&P thinks that the deterioration will be largely controlled and that banks have the capacity to absorb the negative impacts thanks to their strong asset quality, good profitability, and strong capitalisation.

Moroccan state-owned bank Credit Agricole (CAM) received the approval of the Ministry of Finance to open an Islamic subsidiary with The Islamic Development Bank (IDB). Credit Agricole will reportedly own 50% of the Islamic banking window as a joint venture with the IDB with an initial capital of 200 million dirhams. The two institutions have expressed plans to raise it to 400 million dirhams eventually. The central bank said earlier this year it had received seven requests to open Islamic banks and three to open windows selling Islamic finance products.

The Islamic Microfinance Summit takes place on September 26-27, 2016 in Dubai and is organized by Uniglobal, a Prague-based provider of workshops and conferences. The theme of this conference is "raising awareness and ensuring compliant and targeted product development to aid poverty alleviation." Its goal is to promote Islamic microfinance, particularly to the international donor community.

To close the severe gaps in financial inclusion in the Middle East and North Africa, more and more governments are starting to develop national financial inclusion strategies driven by evidence-based studies. So far, demand studies on Islamic finance have produced mixed results. To examine the distinction between preference and actual choice, CGAP, Yale University and Tamweelcom took a novel approach to the study of demand for Islamic and conventional loans in Jordan. According to the experiment, more people opt for the Islamic microloan than the conventional one when offered both (17% versus 2%). Sharia certification appears to have no significant impact on loan take-up at all. The study found that in Jordan people who are more religious are willing to pay a higher price for an Islamic microloan.

Turkey’s Saving Deposits Insurance Fund (TMSF) has probed more than 1.6 mn bank accounts because a number of public institutions wanted to learn whether any of their employees had an account with Bank Asya. The bank was linked to the controversial Gülen movement, which was believed to be the mastermind behind the failed July 15 coup attempt. In line with these probes, some 700,000 people have been searched since the end of 2013. When suspending public officials after the failed coup attempt, one of the main criteria under consideration was whether they were a Bank Asya customer and if they had made financially suspicious banking transactions. Turkish regulators canceled the banking license of Islamic lender Bank Asya on July 24.

Malaysian corporate sukuk sales are rebounding from a four-year low. RHB Investment Bank sees issuance rising 7% to RM60.2bil in 2016, encouraged by Bank Negara’s monetary easing in July. AmInvestment Bank forecasts as much as RM70bil. Sukuk sales have picked up after Najib kicked off US$16bil of road and subway projects this year in partnership with the private sector. This month the Public Sector Home Financing Board sold RM3.4bil of Government-guaranteed Islamic notes, while Lebuhraya Duke Fasa 3 Sdn. offered RM3.64bil of syariah debt to finance a highway in Kuala Lumpur. Fundraising is needed for construction of 1,800km of roads being built in Sabah and Sarawak. Other potential issuers include Prasarana Malaysia, which is financing a RM10bil extension of Kuala Lumpur’s light-rail network.

Moroccan state-owned bank Credit Agricole (CAM) has won authorisation to create an Islamic subsidiary with The Islamic Development Bank (IDB). Morocco’s central bank is in the final stages of launching an Islamic finance industry. The North African kingdom adopted legislation allowing Islamic banks and insurers in the domestic market, and the central bank has set up a central sharia board to oversee the new industry. IDB and CAM will inject 200 million dirhams ($20.55 million) of capital into the offshoot of the new subsidiary before doubling it to 400 million later. The Moroccan bank will hold 51% stake in the new banking unit.

A tax waiver is needed, especially on asset transfers, to make Islamic financing in Indonesia more competitive with conventional financing. According to Qudeer Latif, a partner at law firm Clifford Chance, in the UK and Malaysia, the asset transfer tax is annulled, they categorize the asset transfer in the Islamic financing structure as a financial transaction, rather than a sales and purchase transaction. Another problem, he continued, stemmed from the high building transfer fee, which varied from 5% to 7%. The central government had tried to reduce it to 2.5%, but some regional governments still objected to it. According to the expert, changing the taxation rule will create a level playing field between Islamic and conventional financing.

Senior Vice President of State bank of Pakistan (SBP) was gunned down in the area of Gulistan –e- Johar, within the jurisdiction of Shariah Faisal police. Superintendent Police (SP) Gulshan Doctor Fahad Ahmad said that Muhammad Sadiq Siddiqui was going to a bakery when two alleged dacoits attempted to snatch his vehicle. On resistance, dacoits opened fire on him. As a result, he sustained serious injuries and died, while dacoits managed to escape from the scene with car.

Le #Luxembourg a misé sur la finance islamique comme outil de diversification, mais les investisseurs se font encore attendre. Basé sur les règles de la charia et assez complexe, ce modèle fait pour l’instant du sur-place. Le Luxembourg a espéré, depuis plusieurs années, l’implantation d’une banque islamique sur son sol. Selon Eleanor de Rosmorduc, responsable du dossier pour Luxembourg for Finance (LFF), si le Luxembourg n’abrite pas de banque islamique, c’est avant tout parce qu’il n’y existe pas la population musulmane suffisante pour lui permettre d’exister. La principale difficulté pour le secteur au Grand-Duché, c’est surtout que les acteurs qui pourraient alimenter ce secteur ne sont pas basés au Luxembourg, mais au Moyen-Orient et en Asie. C’est cependant en train de changer.

According to Moody’s, the growth prospects for the Islamic finance sector are still strong despite new sukuk issuance remaining subdued this year. Moody’s global head of Islamic finance Khalid Howladar said growth in the Islamic banking sector continues to broadly outpace that of conventional banks in most systems in which Islamic banks have been established. The sector also has potential for further growth, especially in countries in which the penetration of Islamic banking assets remains relatively low, at between 5%-10% of Islamic financing assets. New sukuk issuance volumes in 2016 are expected to remain flat, at around US$70bil. Growth in the Takaful sector is also slowing, but the rating agency expects it to remain at double digit levels into 2017 and for gross contributions to reach US$20bil by next year.

According to Moody’s, the growth prospects for the Islamic finance sector are still strong despite new sukuk issuance remaining subdued this year. Moody’s global head of Islamic finance Khalid Howladar said growth in the Islamic banking sector continues to broadly outpace that of conventional banks in most systems in which Islamic banks have been established. The sector also has potential for further growth, especially in countries in which the penetration of Islamic banking assets remains relatively low, at between 5%-10% of Islamic financing assets. New sukuk issuance volumes in 2016 are expected to remain flat, at around US$70bil. Growth in the Takaful sector is also slowing, but the rating agency expects it to remain at double digit levels into 2017 and for gross contributions to reach US$20bil by next year.

The Islamic Development Bank (IDB) is getting the final touch in before setting up office in India. With introduction of Islamic banking, Indian government will certainly gain diplomatic upper hand to make financial dealings with Muslim dominated nations. Islamic Banking will clearly ameliorate the deplorable condition of the poor and marginalized segments of society. However, it won't be very surprising to see if this banking system is turned into a political issue. Certain parties might abhor the use of the word "Islamic" and could term it as anti-Indian. They might argue that the very concept of Sharia banking would go against the secular fabric of the country.

In #Kenya the Higher Education Loans Board (HELB) is set to introduce Shariah compliant products. The proposal to make the students loan provider Shariah compliant is currently being reviewed by the Attorney-General, prof Githu Muigai. Once approved, the law will improve access for Muslim students to educational financial support helping them to obtain loans which do not infringe on their religious beliefs. The number of Muslim students at universities has been on a gradual rise and the move will be of great benefit. HELB Chief Executive Charles Ringera said the board was with Islamic finance experts in the implementation of the policy.

Azzad Asset Management has joined a consortium of responsible investors in support of a United Nations' call to end antibiotic use in global food supply chains. The UN statement calls member nations to bring clarity to antibiotic use through national and regional regulations. Antibiotics are frequently used for rapid growth promotion in livestock and poultry and to prevent illness in animals living in cramped and unhealthy conditions. Experts say that the overuse and misuse of antibiotics in the meat industry has contributed to the rise of antibiotic resistance in the US and across the world. It is estimated that this public health issue is responsible for 2 million infections and 23,000 deaths each year.

For the majority of the 1.4 billion of the world’s poor agriculture is the main source of income and employment. Many farmers live in areas lacking access to basic financial services, leaving them vulnerable to shocks and prone to low-risk, low-return investments. Improving access to financial services can help farmers make profitable investments that increase their yields. At a macro level, higher yields increase the total global supply of food. At a micro level, higher yields increase household income and food security for the world’s 1.5 billion living in smallholder households.

India's first Islamic banking service began on Friday in Maharashtra’s Solapur district. Subhash Deshmukh, a BJP MLA from Solapur and state cooperation minister has launched Sharia-compliant Islamic banking. The BJP leader said that the bank has 9 branches, including 8 in Solapur and 1 in Pune, and all of them would get a separate counter for Islamic interest-free deposits and loans. Deshmukh added that other financial institutions and banks in Maharashtra should also follow and adopt this model. Interest-free deposits will be accepted from Muslims and non-Muslims at zero rates of interest to ensure their financial inclusion.

In #India Maharashtra state minister Subhash Deshmukh has launched Sharia-compliant Islamic banking. Interest-free deposits will be accepted from both Muslims and non-Muslims and distributed to the needy at zero rates of interest to ensure their financial inclusion. So far, the Lokmangal Cooperative Bank has distributed Rs 2.50 lakh to poor Muslims and the minister will now call on other banks to follow suit and adopt this model. Deshmukh said that depositors, however, will not be able to withdraw their deposits prematurely as the money will be lent out.

Retail-focused Islamic banks in GCC countries have strong liquidity coverage ratios (LCRs) due to their large base of core retail customer deposits and low reliance on market-sensitive wholesale funding. According to Moody’s, retail deposits in 2015 comprised around 67% of Islamic banks’ customer deposits for the three GCC countries, compared to 40 for conventional banks. Islamic banks in GCC countries have become systemically important and continue to increase their market penetration, outpacing conventional banks. Sustained lower oil prices continue to reduce the flow of deposits and could lead to a gradual weakening of the LCR metrics for both Islamic and conventional banks.