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The Director of the Islamic Banking Department of the State Bank of Pakistan (SBP), Saleem Ullah, has said that the mechanism for short-term liquidity instruments for Islamic banks is being evolved and the launch of these bonds is expected in the next six months. Currently, Islamic banks can only invest in three-year government ijara sukuk. Earlier, experts on Islamic banking and finance agreed the Islamic banks can invest in government activities and projects much like conventional banks but there is a need to create an underlying asset. Another expert said that while the industry has been partially successful in eliminating riba from banking transactions, it needs to introduce diversified products for those segments of the society, which want Islamic investment and financing.

The theme for this 2014 Summit is New Markets and Frontiers for Islamic Finance: Innovation and the Regulatory Perimeter.

Please refer to http://www.ifsb.org/preess_full.php?id=240&submit=more for the announcement of the 11th IFSB Summit.

For any queries regarding the Summit, please contact the secretariat:

- Participants' registration

Ms. Yazmin Aziz at yazmin@ifsb.org

Mrs. Ida Shafinaz Ab. Malek at ida.shafinaz@ifsb.org

- Sponsorship and Media

Ms. Rosmawatie Abdul Halim at rosmawatie@ifsb.org

INVITATION TO A RESEARCH INQUIRY
Anti-Terrorism Legislation and Impact in Cross Border Giving

The World Congress of Muslim Philanthropy’s Academy of Philanthropy is leading a research inquiry in collaboration with Cass Business School’s Centre for Charity Effectiveness. After London and Doha, the last of the three dialogues will take place in New York.

This concerns the barriers to giving for international development and relief that affect donors and recipients alike, in the light of continuing international agreements and practices enshrined in legislation. Our work is seeking to identify ways forward for international dialogues to best support and enhance accountable giving and its efficient flow between nations. The findings of the research will be reported to the WCMP’s biennial Global Donor’s Forum, to be held in Washington, DC from April 14-16, 2014.

Donors, nonprofit and development sector representatives, and financial institution executives are welcomed to participate in the dialogue and share their experiences and offer suggestions.

Tuesday, March 4, 2014 - 10.00 am to 4.00 pm
Organization of Islamic Cooperation (OIC) Observer Mission to the UN

Islamic Development Bank’s top officials have traveled to Tehran to sign the contract with the Iranian officials for the first part of the 3 billion-dollar loan they had agreed before. The first part of the loan will be paid to a few cities in the Southern Iranian province of Fars for implementing sewage projects. But there are other areas for which the 3-billion-dollar loan will be used. So far, the IDB has allocated loans to Iran in railway, water sources, environment, automotive and other sectors. With almost ten percent of the shares, Iran is the third major shareholder of the bank. The ratification of Iran's parliament to increase the countrie's share in IDB is pending.

The Islamic Development Bank (IDB) will allocate a 144 million euro loan for wastewater projects in the Iranian southern Fars province. For that purpose, the IDB and the Fars province's Water and Wastewater Company have signed a memorandum of understanding on the issue. The company will implement wastewater projects in the Darab, Fasa, Sepidan, Abadeh, Neiriz and Firouzabad cities of the province using the IDB`s loan. The IDB has already allocated some 800 million euros of loans in total for Iran's water and wastewater projects, in Mashhad city, Qom and Kashan, and Tehran among others. The IDB has paid more than 3 billion euros to Iran for implementing its projects so far, of which 70 percent were spent on dam building and water and wastewater projects of the energy ministry.

The Securities and Exchange Commission of Pakistan (SECP) has notified the Securities and Exchange Commission (micro-insurance) Rules, 2014, which will also regulate the micro-takaful business in the country. According to the rules, the word micro-insurance may be used interchangeably with the word micro-takaful; life micro-insurance with family micro-takaful; non-life micro-insurance with general micro-takaful; premium with contribution and insurer with operator. The commission has limited the sums insured under different concepts of micro-insurance. The SECP has also issued Code of Consumer Protection applicable on all insurers / operators in the business of micro-insurance / takaful. Moreover, the commission issued the Code of Conduct for Micro-insurance Agents applicable on all micro-insurance / takaful agents and their specified persons.

Pakistani Meezan Bank has launched Meezan Kafalah, a Shariah-compliant alternative to Bancassurance, in collaboration with takaful firm Pak Qatar Family Takaful Limited (PQFTL). Meezan Kafalah is a savings product through which customers can save money for their future plans. In addition, the customers also get Free Takaful coverage through PQFTL that in the case of the customer’s death during the savings period, the Takaful Partner will provide the funds needed for completing the savings. This new product, thus, offers a combination of saving, investment and protection. A differentiating feature of Meezan Kafalah is the accumulation of 100% cash value from day one of the investment with flexibility and ease of exit from the plan without any penalty or charges.

The central bank of Pakistan is stepping up its push to develop Islamic banking, encouraging lenders to expand their operations in the world's second most populous Muslim nation. As of September, Islamic banks held 926 billion rupees ($8.8 billion) of assets or 9.5 percent of the total, up from 8.1 percent a year earlier. The central bank aims to double the industry's branch network and reach a 15 percent share of the banking system in the next five years. To achieve that, the central bank named a new deputy governor to focus on Islamic banking and enlisted renowned scholar Muhammad Taqi Usmani to its sharia board. Moreover, the central bank's media campaign is expected to intensify in coming months and such educational efforts could attract previously unbanked clients to the sector.

For many years we see in the media experts believing in inflation and even hyper inflation. However, in the same time we face proponents warning against deflation. So far we all noticed.

Only a about a week ago I read an article by Myret Zaki clarifying that unfortunately inflation and deflation co-exists.

Myret Zaki's thesis is that we face inflation on financial markets, and deflation in the real economy (in French):

http://www.bilan.ch/myret-zaki/redaction-bilan/inflation-et-deflation-co...

In my view there is a general major shift in the price matrix and I still try to figure the magnitude and implications thereof. It is a bit irritating as at University we learned about neutrality of money:

http://en.wikipedia.org/wiki/Neutrality_of_money

This means any extra supply will increase prices equally, 5 % more money, all prices going up 5 %. Pretty plausible at first hand. However, it seems it does not work in reality any more (or never did).

The Islamic Development Bank Group (IDB) announced its intention to invest into four new EXPO-2017-oriented projects in Kazakhstan in 2014 through the Islamic Corporation for the Development of the Private Sector (ICD). ICD, Baiterek Holding and LGK Holdings signed a memorandum to create the Central Asian Fund of Renewable Energy with the initial capital of $50 million. Moreover, ICD is going to cooperate with the Investment Fund of Kazakhstan in the development of float-glass production in southern Kazakhstan, a project worth$200 million. Besides, ICD will provide $10 million for procurement of manufacturing lines and raw materials during the first year of a new Aluminum Extrusion Plant's operations. ICD has also achieved an agreement with OLZHA Holding to cooperate in the construction of a grain terminal and elevator western Kazakhstan. The construction is expected to begin this summer.

Iran's Bank Mellat seeks to file a claim of at least 500 million pounds (USD 820 million) in compensation against the British government for loss of business caused by illegal sanctions on Tehran over its nuclear energy program. It is the first time that an Iranian lawsuit over sanctions has reached the stage of claiming compensation. On June 19, 2013, Britain’s Supreme Court overturned a ruling against Bank Mellat over its alleged links to Tehran's nuclear energy program. The European Union General Court decided in January to quash sanctions imposed against Bank Mellat in July 2010.

Federal Finance Minister of Pakistan Ishaq Dar Wednesday urged to further push the process of Islamisation of banking and finance in the country at the roundtable conference on ‘Potential of Islamic banking in Pakistan’. He said that a committee had already been constituted on the subject with a fairly broad mandate assigned for the realisation of its cherished goal. The committee which would suggest a road map and timeframe for progression of various phases of Islamic banking in the country by December 31, 2014, has initially set the following key areas of investigations: removal of all difficulties being faced by the existing Islamic financial institutions in the operations vis-à-vis conventional institutions and design of new products that may enable government to conduct its resource mobilisation operations through Shariah compliant methods.

In Pakistan, Mudaraba companies and Mudarabas (Non-Banking Islamic financial institutions (NBIFIs)) attracted the major business groups of the country since the early 80s. The Mudaraba sector recorded rapid growth until 1996, when the fall back of NBIFIs began and the country witnessed a large number of closures and mergers during the next fifteen years. This left many of doubts and questions as to the future, viability and adoptability of Islamic finance. The causes of failure can be categorized into seven M's: management, money, major defaults manipulation, mismatch, moral hazards and monitoring. However, most of the national NBIFIs managed to survive and generate lucrative profits for their investors, which shows that it was not failure of the Islamic financial system rather a failure of the management.

A special group of police officers will be assembled and sent to Canada for searching and arresting the former head of Bank Melli Iran, Mahmoud Reza Khavari. Since Canadian officials haven't found Khavari yet, Iranian police are asking for one week in order to search for him in Canada. The fraud case originally started in 2007 and involved the use of fraudulent documents to obtain credit for an investment company. Khavari, as the head of Bank Melli Iran, was reportedly involved in the fraud case. However, Khavari escaped to Canada. Iran requested Interpol to announce an international search for him. In June of 2012, Fars news agency reported that Interpol placed Khavari on its Red Notice Wanted list.

Under an interim deal between world powers and Iran last month, the Islamic republic agreed to freeze part of its nuclear programme in return for modest relief from sanctions. The unwinding of sanctions in the Iranian context will prove quite challenging and difficult in part because as the sanctions have grown over time, they’ve been layered with elements of sanctions building on themselves. The issue of sanctions with Iran have not just been about nuclear issues but also about human rights, support to president Bashar Al Assad in Syria, support to Hizbollah, support to Iraqi militias. Under the interim sanctions deal, the Obama administration has estimated that the sanctions relief will be worth US$6 billion to $7bn. Banking and oil sanctions will remain in place while negotiators attempt to reach a permanent deal over the next six months.

Pak-Qatar Family Takaful Limited is a progressive and a technology-driven Shari'ah Compliant company providing Takaful solutions in Pakistan. Beginning operations in 2007, the company has an independent Shari'ah Advisory Board chaired by Mufti Muhammad Taqi Usmani which certifies all products and operations for Shari'ah compliance. The company is rated A (having Stable Outlook) by JCR-VIS Credit Rating Co Ltd. The paid-up capital of Pak-Qatar Family is in excess of Rs 700 million. Pak-Qatar General Takaful Limited is chaired by Sheikh Ali bin Abdullah al-Thani and sponsored by several financial institutions form the State of Qatar. The company is present in all major cities of Pakistan, and is on track to further expanding its branch network.

The Pakistani Islamic Banking Industry (IBI) is in a nascent stage compared to the rest of the world, but has shown constant growth in the past years. Islamic Banks (IB) hold a lion-share of 64 percent in the IBIs total assets. In terms of share, IBs contribute only 30 percent to the IBIs total advances, the rest being provided by the Islamic Banking Divisions (IBDs), i.e. conventional banks offering Islamic banking. IBDs are more efficient in recovering their loans with their infection ratio clocking in at just 1 percent of their advances. Conversely, full-fledged Islamic banks have an infection ratio of 8 percent. With the growing competition in the Islamic banking industry, the Islamic banks must rethink their asset deployment strategy, which is currently more inclined towards Investments. SME and agriculture sectors which are untapped thus far could be the potential avenues to hit.

Pakistan's Ministry of Finance has set up a committee to explore areas to promote Islamic banking in the nation, including studying converting conventional banks into sharia-compliant ones. Regulators in Pakistan are rolling out a range of initiatives, such as a media awareness campaign, to expand Islamic banks' share of the total banking sector to 15 percent by 2017. The committee will submit recommendations on 10 areas by December 2014, including legal obstacles to converting banks into Islamic ones and changes required to remove those obstacles. Other tasks for the committee include formulating a comprehensive policy framework and timeframes for the industry's progression. The commitee comprises scholars and regulators as well as bankers.

The European Union will maintain sanctions against all but two Iranian firms that won challenges to the bloc's sanctions regime in EU courts in September. The EU will on Wednesday formally announce it is maintaining sanctions against almost all the firms by "re-listing" them for new sanctions breaches. The EU hopes that by re-listing companies and providing additional evidence, it can secure its Iran sanctions regimefor the foreseeable future.

Vision Financial Holdings Limited has shown its intention to acquire 49.11 percent or 492 million shares of Meezan Bank Limited (MEBL), subject to the approval of regulatory authorities. The terms of transaction are yet to be known; however, initial estimates suggest that the deal is likely to settle at a price of Rs47-50/share at premium of 25-30 percent at the current market price. The total size of the deal will be between $214 and $230 million. Interestingly, Noor Financials Investment Limited currently holds 49.11 percent share of Meezan Bank, which is the same proportion required by the acquirer. Therefore, probability of share transfer between the two parties is high. Meezan Bank Limited is currently trading at 136 percent premium to its book value.