IslamicFinance.de

Zaki (fictual name) is a former civil servant who was declared bankrupt by the civil courts when he did not repay hundreds of thousands of ringgit to a bank. It all started when he was offered a bai’ bithaman ajil (BBA) scheme by a local bank to buy a new home costing RM90,485 and was expected to repay the bank over 25 years. When the unlicensed developer abandoned the project, Zaki stopped paying his monthly bank instalments. As a result, the bank recalled the facility and filed a civil suit against Zaki. The claim amount was lose to three times the buying price of the home, even though the bank had only disbursed RM36,000 to the errant developer.
His predicament is neither new nor uncommon. Many like Zaki signed up for the BBA — a home financing scheme that had been in existence for more than three decades until it was phased out in 2013 — and only learnt of the perils when they defaulted.

Muhammad Samiullah is currently associated with NBFI & Modaraba Association of Pakistan as Secretary General. From the platform of the Association, he has organized a number of workshops and seminars on different topics relating to the NBFI and Modaraba Sectors.
Samiullah is an active Member of FPCCI Standing Committee for Islamic Banking & Takaful. He is also a Member of the Arbitration Panel of Karachi Stock Exchange and holds a Master’s degree in Economics from Karachi University, Law Graduate and Dipomaed Associates of Institute of Bankers in Pakistan. He also has a Post Graduate Diploma in Islamic Banking & Takaful from Darul Uloom, Korangi. By profession Samiullah is a banker and has worked in Habib Bank Limited (HBL) in different disciplines for about 27 years, with his last posting in HBL as Vice President & Company Secretary, First Habib Bank Modaraba. He also officiated as Chief Executive of First Habib Bank Modaraba for quite some time.

“Ethical finance” is a term used to describe finance that is put to good social and environmental use. Interest in it has risen since the 2008 global financial crisis, with Islamic finance and socially responsible investment funds becoming its two fastest areas of growth. The World Bank Treasury has brought the two together by helping the International Finance Facility for Immunization issue two Sukuks in less than a year.
IFFIm is an international organization that finances child immunization and strengthens health systems related to it in some of the poorest countries of the world through Gavi, the Vaccine Alliance. Backed by nine sovereign governments—the United Kingdom, France, Italy, Norway, Australia, Spain, the Netherlands, Sweden, and South Africa—the organization raises money in the international capital markets.

Dear Readers,

The US Securities Exchange Commission has issued recently press release regarding equity crowd funding and its regulation:

"Washington D.C., Oct. 30, 2015 —
The Securities and Exchange Commission today adopted final rules to permit companies to offer and sell securities through crowdfunding. The Commission also voted to propose amendments to existing Securities Act rules to facilitate intrastate and regional securities offerings. The new rules and proposed amendments are designed to assist smaller companies with capital formation and provide investors with additional protections."

http://www.sec.gov/news/pressrelease/2015-249.html

Equity funding is discriminated threefold in finanical markets despite most people assume that a market economy would leave choices to market participants. The three key problems are: 1) Risk weighting of equity finance a multiple higher than debt finance, thus making it unattractive for banks to provide equity finance and consequently destabilizing economies with excess debt. 2) Tax deductibility of interest expense. 3) Entry barriers to the securities markets to raise equity.

Dubai’s Majid Al Futtaim this week became the first Gulf corporate to print a senior unsecured sukuk in 2015, as Middle Eastern issuers continue to dampen worries about liquidity drying up in the region - at least for Islamic bonds.

ax incentives under the 2016 Budget to promote Sustainable and Responsible Investment (SRI) Sukuk are timely as interest in these instruments are on the rise. The budget proposes that tax deduction be given for five years on issuance costs of SRI Sukuk. Maybank Islamic Bhd CEO Datuk Muzaffar Hisham noted that SRI Sukuk can also be the avenue for financial inclusion which has been strongly championed by the Islamic finance industry as a whole. RHB Islamic Bhd CEO and managing director Ibrahim Hassan said any project has to first be attractive to investors. The next stage will then be to choose the best funding option, and this is where the incentives for SRI Sukuk could make it a cost-effective option.

Tariqullah Khan, a prominent economist in Islamic finance, has called for the creation of an "apex body" that would set policy for the industry globally, to cut risks that could contribute to a financial crisis. The professor of Islamic finance at Qatar's Hamad bin Khalifa University proposed the body comprising national regulators, central bankers and other stakeholders. It would help to promote the standards of the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the Malaysia-based Islamic Financial Services Board (IFSB).

Japan's Bank of Tokyo-Mitsubishi UFJ (BTMU) has launched its Islamic finance business in Dubai, to focus on sharia-compliant loan syndications with later plans to offer project financing. In July, BTMU received approval from the Dubai Financial Services Authority to operate an Islamic window, which it plans to use as a hub for the wider region, said Shichito Tobari, BTMU's regional head for the Middle East. BTMU will initially target commercial loans and trade finance equivalent services, leveraging its existing client base of government-related entities, Tobari said. The next step is to expand the product line to ijara and istisna during the first half of 2016.

The planned slowdown in public spending in Saudi Arabia will prove credit negative for banks in the kingdom, ratings agency Moody’s Investors Service has said in a new report. Following years of high expenditure, the Saudi government is planning to moderate the pace of spending due to the persistent drop in oil revenues. The International Monetary Fund estimates that Saudi will face a budget deficit of over $100bn this year, amounting to 21.6 per cent of gross domestic product. Moody’s anticipates that government spending growth will slow to 2 per cent in 2014 and 4 per cent in 2017, from 14 per cent on average between 2010 and 2014.

After Bank Mellat obtained the right to expand its operations in Turkey in March 2014, Iran's Saman Bank has also applied to the Central Bank of the Republic of Turkey (CBRT) and the Banking Regulation and Supervision Agency (BDDK). The BDDK is now considering the Iranian bank's request; BDDK is expected to issue a reply around New Year's. Bank Tejarat and Pasargad Bank are also expected to reapply to be involved in the Turkish finance market after Saman Bank's application is approved. The approval of the expansion request of Bank Mellat, which had not been operationally active in Turkey due to sanctions and had downsized in 2012, also raised hopes for other banks.

From November 16 -15, Suriname will host a meeting of central banks and monetary authorities of the Organisation of Islamic Cooperation (OIC) member countries. This will be one of the first meetings of the OIC that Paramaribo will host to enhance its economic standing and raise its global profile. The meeting will bring together economic and financial officials from OIC member states under the theme: "Structural and financial policies to cope with international and domestic economic challenges in the OIC member countries." The first day of the meeting will be dedicated to the experts’ group workshop. On the second day, the meeting of governors will take place.

Crowdfunding is the latest buzzword to hit the financial industry. It is a form of alternative financing that has emerged outside the realm of the traditional financial system. To illustrate the rapid growth of the crowdfunding industry, such platforms raised US$89 million (RM369.6 million) in 2010, US$1.47 billion in 2011 and US$2.66 billion in 2012. Fast forward to 2014, and the total amount raised from crowdfunding had risen to US$15 billion. The amount is forecast to reach a massive US$34 billion this year. Crowdfunding will go a long way in helping the Islamic finance industry achieve one of its major goals, which is financial inclusion for all.

Entrepreneurship platform AstroLabs yesterday inaugurated the Middle East and North Africa’s only Google-partnered tech hub, AstroLabs Dubai, enabling top startups from around the world to set up in Dubai’s DMCC Free Zone while taking advantage of Google for Entrepreneurs’ global network and resources. AstroLabs offers scalable tech startups a custom coworking space, mentorship, and business licenses to start operating in the UAE. AstroLabs members join an exclusive Google for Entrepreneurs Passport Program, allowing them to access over twenty Google-partnered hubs across the globe, from Seoul to San Francisco.

Bank Indonesia (BI) has acknowledged a new challenge for the national economy – the rise of global small and medium enterprises (SME) and their increased penetration of the local domestic market. According to BI, in order to compete, local SMEs need to be strengthened through massive financing, including through Islamic banking. The challenge is getting more serious as the economy opens up with developments like the Asean Economic Community (AEC) agreement, which will come into effect soon, leading to massive corporate foreign investments that will bring foreign SMEs to Indonesia, BI deputy governor Perry Warjiyo said.

Dubai Islamic Bank will require capital in 2016 to boost its capital adequacy ratios, the bank's chief executive said on Wednesday. DIB's total capital adequacy ratio, a combination of Tier 1 and Tier 2 capital -- regarded as one of the key indicators of a bank's health -- stood at 16.5 percent at the end of the third quarter, up from 14.9 percent at the end of 2014, Adnan Chilwan said in an analysts' conference call.

Guidance Investments has announced the first closure of its Logistics Real Estate Investment Fund, South East Asia's first Fund focused on the logistics and industrial sectors, at USD 100 million. The first close puts the Fund in a strong position to hit its target of USD 400 million with a number of additional closings planned over the next 18 months. A Malaysian financial organization is the anchor investor of the landmark Fund. Other investors include pension funds, a supra-national institution, endowment funds and family offices from the GCC and the Middle East. The Fund has secured 3 transactions to-date, with a steady pipeline in active negotiations.

Malaysia's Royal Award for Islamic Finance commenced a global search to honour an exceptional individual in the field of Islamic finance. The Royal Award, which was inaugurated in 2010 as a biennial award, is spearheaded by Bank Negara Malaysia and the Securities Commission Malaysia in support of Malaysia as an Islamic finance marketplace. The Royal Award recognises Islamic finance visionaries who contribute significantly to the growth of the global economy and social progress of communities around the world. The closing date for nomination is 14 December 2015, and interested persons and parties can submit their nomination online via the website www.theroyalaward.com.

Bahrain Islamic Bank (BisB) announced that its Extra Ordinary Shareholder Meeting has approved all agenda items, in the meetings which was held yesterday Tuesday 27th October 2015 at 10:00 am at BisB Headquarters – Al Salam Tower – Diplomatic Area. The items included the following the reduction in issued and paid-up capital of BisB aiming to write-off accumulated losses and the issuance of up to 200,000,000 Ordinary Shares with Nominal Value of BD 0.100 each. The EGM has empowered the Board of Directors to decide upon the terms and conditions of the Rights Offer. The EGM then exempted any existing shareholder whose ownership may increase up to 30% or more to make a mandatory offer to all shareholders.

Since regulations were finalised in late 2012, Oman's Islamic banks have been the most dynamic part of the banking sector and are expected to take an ever more significant share of the overall market in the next few years. Mik Kabeya, analyst in the financial institutions group of Moody’s Investors Service estimates that the asset base of Oman’s Islamic banking sector grew by 68 per cent in 2014, compared to growth of 11 per cent in the conventional banking arena. Islamic banks could account for around 10 per cent of the banking sector’s asset base within 2-3 years, compared to around 6 per cent at the moment. Earlier this year the Muscat government also said that it would issue its first sovereign sukuk.

State investment fund Khazanah Nasional Bhd is expected to dispose off its entire 30 per cent interest in Bank Muamalat to major shareholder DRB-Hicom Bhd ahead of the proposed merger between Bank Muamalat and Malaysia Building Society Bhd (MBSB) materialises. There is no point holding on to the stake since its holdings would diminish in the merged entity. Moreover, it would not be a problem for DRB-Hicom which already owns 70 per cent interest in Bank Muamalat to purchase Khazanah’s interest. Khazanah managing director Azman Mokhtar had told reporters that it would wait for the outcome of the merger talks before deciding what to do with its stake.