IslamicFinance.de

A report by the World Bank and the General Council for Islamic Banks and Financial Institutions (CIBAFI) aims to encourage the sector’s governance. The findings are based on a survey of 77 Islamic banks across 22 countries, covering the industry’s core centres in the Gulf region and Southeast Asia and extending to Islamic banks in Africa and Europe. The report found risk governance was a weak spot for Islamic banks, recommending increased use of independent directors and strengthening the role of risk management officers. Sharia governance is another area of relative weakness, the big issues being the lack of diverse experience of the members on the sharia board and the infrequency of sharia board meetings. The report recommends the development of a new or revised standard for corporate governance that is specific to Islamic banks.

The Securities and Exchange Commission of Pakistan (SECP) has notified for public consultation three Shariah Standards of Accounting and Auditing Organization for Islamic Financial Institutions. These are: Shariah Standard No 17 - Investment Sukuk, Shariah Standard No 18- Possession and Shariah Standard No 23 - Agency and the Act of an un-commissioned agent.
The SECP has been playing an active role in the Islamization of the economy. It endeavored to replicate the best international practices in the Islamic financial services. In order to ensure harmonization and standardization in the business practices of Islamic financial institutions, it has been gradually adopting Accounting and Shariah Standards issued by Accounting and Auditing Organization for Islamic Financial Institutions as a benchmark for Islamic financial services while keeping in view the local business context.

According to RAM Rating Services, the infrastructure growth in Sarawak is expected to be mainly funded by Malaysia's vibrant sukuk market. This year sukuk has been the preferred funding route for Sarawak-based entities, with majority from the power sector. Issuers from the port, construction, property, manufacturing, plantation, oil and gas support services, financial services and telecommunication sectors have tapped into the sukuk market as well. RAM Ratings deputy CEO Promod Dass said Malaysia's sukuk market will remain a key funding avenue for the infrastructure development in Sarawak. He applauded the Malaysian government and Securities Commission for building a solid foundation for the sukuk market.

A joint initiative of the African Development Bank (AfDB) and the Islamic Development Bank (IsDB) will boost agriculture and enhance drought resilience in Nigeria, Somalia and Uganda. Stronger ties between the two banks will help ramp up agricultural production along important crop and livestock value chains. For example, in Nigeria the Plateau State Potato Value Chain Support Project of the AfDB and the planned IsDB’s Agro Pastoral Development Project in Kano State will promote higher household incomes through productive agro-pastoral activities. In Somalia, AfDB’s Say No To Famine project is providing emergency assistance support and facilitating drought resilience building through the restoration of community assets.

Brunei set up the National Financial Literacy Council for creating a prudent and saving-oriented culture. A study made in 2015 revealed that in Brunei 34% of the household respondents do not have a household budget, as for individual respondents 49% do not actively save, while 24% need credit to finance their everyday needs. The National Financial Literacy Council was established with the aim of ensuring that all Bruneians have access to well-suited financial products, independent and credible information and advice. Crown Prince Haji Al-Muhtadee Billah said the establishment of this council was timely and helpful in raising the quality of life of the people, specifically in terms of financial well-being.

The CEO of Al Rayan Bank, Sultan Choudhury, has received his Order of the British Empire (OBE) from Prince William. Choudhury was appointed OBE in the Birthday Honours of Queen Elizabeth II, in recognition of his services to Islamic finance. Choudhury was part of the management team that obtained Western Europe’s first authorised Islamic banking licence in 2004. He has since grown the Bank to become the UK’s largest Islamic bank. Al Rayan Bank offers the largest Sharia compliant product range in the UK. The Bank currently has more than more than 80,000 customers throughout the UK, more than a quarter of which it estimates to be non-Muslim.

Dana Gas reported a steep rise in third-quarter profit, benefiting from a $1 billion payment as part of a settlement agreement with the Kurdistan Regional Government (KRG). The agreement boosted Dana’s third-quarter earnings and net profit for the nine-month period ending on September 30, which amounted to $125 million against $26 million during the same period one year earlier. The settlement led to a reversal of the provision for payments to the KRG, with the balance of unpaid receivables booked to new petroleum costs. The company is at the centre of a legal dispute after having refused to redeem $700 million in outstanding Islamic bonds claiming they are no longer sharia compliant. It has started legal actions in UK and UAE courts to avoid redeeming the sukuk. Dana claimed being confident pursuant to independent legal advice of prevailing in its interpretation of the outcome.

Dana Gas reported a steep rise in third-quarter profit, benefiting from a $1 billion payment as part of a settlement agreement with the Kurdistan Regional Government (KRG). The agreement boosted Dana’s third-quarter earnings and net profit for the nine-month period ending on September 30, which amounted to $125 million against $26 million during the same period one year earlier. The settlement led to a reversal of the provision for payments to the KRG, with the balance of unpaid receivables booked to new petroleum costs. The company is at the centre of a legal dispute after having refused to redeem $700 million in outstanding Islamic bonds claiming they are no longer sharia compliant. It has started legal actions in UK and UAE courts to avoid redeeming the sukuk. Dana claimed being confident pursuant to independent legal advice of prevailing in its interpretation of the outcome.

#Kenyan operator Safaricom and Gulf African Bank are set to launch a Sharia-compliant banking service through M-Pesa to allow customers to open and operate M-Sharia bank accounts. The M-Sharia platform will be rolled out by next March, targeting the bank’s retail and merchant segments. Retail customers will be able to borrow cash through their mobile phones from as little as KES 100 to KES 200,000. Merchants will have a chance to buy stocks by borrowing through that platform from KES 50,000 to KES 500,000. The tenor for the retail service will be thirty days, while that for merchants will be three months.

Although Islamic banking and Sukuk comprise the lion’s share of Islamic finance assets, there are significant untapped opportunities in the securities, equity markets, investment funds, insurance and microfinance markets. For Islamic finance to flourish, time would be more valuably spent creating new financial products that are Shari'ah-based rather than adapting existing conventional products to become Shari'ah-compliant. The innovative magic is in the roots, not the branches. On 14 November 2017, the Dubai International Financial Centre (DIFC) will host the Global Financial Forum (GFF). The invited industry experts are set to provide valuable insights on the progression of the sector and innovation in Islamic finance.

Some of Saudi Arabia's most powerful men were arrested in October as part of a fight against corruption. The government freezed the accounts of the more than three dozen men totalling $33 billion of net worth. The series of arrests has implicated the country's richest people, including Prince Alwaleed bin Talal, Bakr Binladin, Mohammed Al Amoudi, Saleh Kamel and Nasser Al Tayyar. Prince Alwaleed bin Talal is No. 50 on the Bloomberg Billionaires Index ranking of the world's 500 richest people, with $19 billion. Two of the four Saudis on the Bloomberg index haven't been detained, hotel magnate Mohamed bin Issa Al Jaber, who has an $8.3 billion fortune, and Prince Sultan Bin Mohammed Al Kabeer, the biggest individual shareholder in food processor Almarai Co., who has $4.7 billion.

In Toronto the trial begins for Omar Kalair, accused of pocketing millions in 'Shariah-compliant' mortgages. The businessman not only pocketed millions in fraudulent mortgages, he also purchased over $2 million in gold and silver bullion. Kalair was helped by Yusuf Panchbhaya, the chairman of a board of religious advisers who issued fatwas sanctioning the businesses mortgages as Islamic. Kalair and Panchbhaya have both pleaded not guilty to the charges which include theft over $5,000, fraud over $5,000 and laundering the proceeds of crime. While technically interest-free, Kalair charged a fee to his clients at a sum higher than what borrowers would usually pay at market rates. Kalair first disappeared, then turned himself in in March 2014. The precious metals would end up in the hands of Joseph Adam who was designated by Panchbhaya as the Shariah board's manager of finance. Panchbhaya returned the silver to the court, but almost $2 million in gold is still missing. If convicted, the pair could face a maximum sentence of 14 years in prison.

In this article Efi Pylarinou shares a few takeaways from the Impact Summit-Faith in Finance held in Zug, Switzerland. Takeway number 1 is that Finance can become Holistic. Blockchain is the enabler for investing and managing all kinds of Digital Assets. The second takeaway is that Finance can become Holistic through the alignment with Faiths. The conference showcased a diverse selection of SDGs and ventures that are in alignment with the movement. Example ventures include: Equileap, focused on gender diversity, TBLI Group, educating asset managers about impact investing, MicroVest, a wholesale microfinance solution with a Faith alignment, SweetBridge, a blockchain solution for the inefficiencies in the Supply Chain, the Seratio Faith Coin, GoBeyond, angel investing empowering women, ThinkYellow, a gender led investing platform, Symbiotics, financing social SMEs, Kompotoi, the rentable composting toilet and 1Bank4All, the global social bank.

The growth of the global Islamic finance has provided a niche market with solutions through a well-defined Islamic ethos. Unfortunately, Islamic finance has been criticised for having diverted from its core principles of socio-economic empowerment. As a model, Islamic finance has advocated the narrative of a sharing economy through risk-sharing and fairness. However, the growth of Islamic finance has been witnessed primarily in wealthy nations without equally impacting those that are less fortunate. International organisations such as the International Federation of Red Cross and Red Crescent Societies (IFRC) and United Nations Development Programme (UNDP) are now actively considering Islamic finance solutions. In terms of sukuk, the era of the 'Green' Sukuk is upon us. With regards to research, the International Centre for Education in Islamic Finance (INCEIF) initiated a whole unit dedicated to Social Finance.

The theme of this year’s Financial Inclusion Week is how new products and partnerships can enable financial inclusion. Promoting inclusion is not only the right thing to do, but it’s also critical to the future of business. A good example can be found in the joint report by Center for Financial Inclusion at Accion and the Institute for International Finance, entitled "How Financial Institutions and Fintechs are Partnering for Inclusion: Lessons from the Frontlines". The report recognizes Mastercard's collaboration with Kopo Kopo, a fintech start-up, and Diamond Trust Bank. They managed to create a QR-payment ecosystem in Kenya that allows customers to pay with their phones, by simply taking a photo of a QR code and manually entering the transaction amount.

The first Sharia-compliant robo advisers plans to start operations in the UAE soon, as it looks to a US$2 million funding boost this week from the Dubai venture capital firm Beco Capital. The digitally automated investment adviser Wahed Invest launched in the USA five months ago. CEO Junaid Wahedna said the company was in the process of moving to a new office in Dubai which will become the company’s new global headquarters. Wahed Invest expects to start regional operations by mid-Nov­ember, focusing initially on the UAE. According to Wahedna, the target for ethical, Sharia robo-advisory is the younger demographic, 25-35 years old, digitally savvy and educated millennials. The minimum investment of $100 enables it to tap into a broader customer base.

The world's growing Muslim population opens up near limitless potential for Islamic finance. However, the pool of talent is very limited at the moment. The International Center for Education in Islamic Finance (INCEIF) welcomes students from all over the world. Since its opening in 2006, half of the 1,300-plus graduates have been Malaysians, but the other half have been from over 70 countries. The list includes predominantly Muslim nations, like Indonesia, Pakistan and Somalia, but one does not have to be Muslim to enroll. Malaysian authorities are encouraging other educational endeavors, too. The Islamic Banking and Finance Institute Malaysia will launch two new programs offering professional certifications in Islamic finance. The two certifications, chartered Islamic banker and chartered takaful practitioner, are the equivalent of conventional financial qualifications.

Islamic fintech finance in Asia is anticipated to be bigger than originally thought. According to the secretary-general of the Islamic Financial Services Board (IFSB), Zahid ur Rehman Khokher, Islamic finance has the potential to expand further into the Asian market. He noted that the IFSB has been closely monitoring global developments in fintech. Yet, he feels there is a shortage of staff with the appropriate skills. Earlier this month, it was reported that Malaysia was the idea test bed for developing fintech solutions. According to Marzunisham Omar, assistant governor at the Bank Negara Malaysia, even though Islamic finance is still growing within the country, now is the time for the sector to embrace the fintech wave.

The scope of waqf funds need to be expanded in Malaysia beyond the traditional norms of building mosques and Muslim cemeteries. Bank Rakyat chairman Tan Sri Shukry Mohd Salleh said the waqf funds can be fully utilised in other programmes. Cash waqf, he added, had been identified as one of the major tools that could resolve poverty issues in Malaysia. In order to eradicate poverty, Shukry said waqf funds should be distributed within four key sectors, namely health, education, economic development and financial assistance for small enterprises. He also said that even though a lot of waqf efforts have been made, the waqf collection system needs to be streamlined and improved professionally.

The #Philippines House of Representatives has approved the government’s plan of tapping the bond market to finance the reconstruction of Marawi City. Ben P. Evardone said the Bureau of Treasury should pursue the issuance of a P50-billion 'Marawi Bond' considering the low interest rates prevailing in the market. By tapping the bond market to finance Marawi’s reconstruction, the lawmaker said this will free up a huge part of the regular budget for government’s other programs. According to Budget Secretary Benjamin E. Diokno, the government would allocate P15 billion to Marawi City in the next two years. He also added the tax settlement paid by Mighty Corp. and Philippine Airlines would be used to finance the rehabilitation of the war-torn city.