IslamicFinance.de

The Indonesian government plans to merge the Shariah-compliant units of state-owned PT Bank Mandiri, PT Bank Negara Indonesia, PT Bank Rakyat Indonesia and PT Bank Tabungan Negara with paid-up capital of more than 15 trillion rupiah ($1.1 billion) next year, Gatot Trihargo, deputy minister for government-run enterprises, said. Financial Services Authority Chairman Muliaman Hadad said in January that the plan may materialize this year. In the Indonesian plan, the government will ask the four lenders to provide 5 trillion rupiah to 10 trillion rupiah of capital to their Shariah banking units before the planned merger, Trihargo said. The combined entity will help manage about 70 trillion rupiah and this would be used to fund infrastructure projects, he said.

1Malaysia Development Bhd (1MDB) today rebutted claims by former prime minister Tun Dr Mahathir Mohamad saying that a cabinet paper was presented and approved for the issuance of a government guarantee RM5 billion sukuk by Terengganu Investment Authority (TIA). TIA was renamed 1MDB in 2009 after the federal government took over. In a statement today, 1MDB also said that the guarantee was not off-budget, and that Putrajaya was fully liable for the amount it had guaranteed. 1MDB also denied Dr Mahathir's claim that the RM2 billion loan it obtained from Ananda Krishnan was used to pay interest on its loans. It also questioned the "motivation" behind Dr Mahathir's allegations, which it said had numbers and figures changing every time.

Maxim Tafintsev, President of the Arab European Lawyers Association, speaks on why Russia’s authorities this year are seriously going into the issue of opening the door to Islamic banking under Shariah Islamic law. For the past five years a certain practice has formed in the framework of the existing legislation, the practice, which allows using and employing certain products. Installment selling and leasing are allowed now, insurance products began to work as well. Specifically Russia needs to modify its banking laws to conduct credit and deposit policies. Particular changes in the tax legislation are required to help Islamic financial products be less costly. By the number of Muslim population in Russia, which is 20 million, their engagement in legal financial turnover may bring from shadow avalanchine sums of money.

Shahjalal Islami Bank has recently reelected AK Azad as its chairman and Mohammad Younus and Md Abdul Barek as vice chairmen. Azad is the managing director of Ha-Meem Group and president of Bangladesh Chamber of Industries. He is also the former president of the Federation of Bangladesh Chambers of Commerce and Industry. Azad is also the managing director of Channel 24 and Daily Samakal. Younus has business concerns in paper, fabric, and cold storages industries. He is also a director of NTV, the bank said. Barek is a sponsor shareholder of Shahjalal Islami Bank and Shahjalal Islami Bank Securities. He also owns Arju Electronics, Jony Electronics and Rony Electronics.

MasterCard partnered with Al-Arafah Islami Bank to launch the MasterCard Islamic debit, credit and prepaid cards in Bangladesh. five new MasterCard cards will be added to the bank's repertoire. The cards will offer the lowest monthly compliance fees, 50 days without any additional charges, along with discounts at over 600 merchants and vendors. Jamilur Reza Choudhury, vice-chancellor of Asia Pacific University, attended the launching ceremony as the chief guest along with Badiur Rahman, chairman of Al-Arafah Islami Bank, and Syed Mohammad Kamal, country manager of MasterCard Bangladesh.

Mustafa Anwar has been elected chairman of Islami Bank Bangladesh, while Yousif Abdullah Al-Rajhi and NRM Borhan Uddin have been elected vice-chairmen. Anwar, who is the chairman and managing director of Birds Group, started his career as an engineer of Bangladesh Water Development Board after completing his graduation in civil engineering from Bangladesh University of Engineering and Technology in 1964. Rajhi is the general manager-cum chief executive officer of Al-Rajhi Company for Industry and Trade, KSA. Borhan Uddin, who is currently chairman of audit committee of the bank, is the vice-chancellor of City University, Dhaka.

President Joko Widodo (Jokowi) has expressed hope that Indonesia will become a shariah financial center in view of the countrys huge potentials. He spoke at the launching of the "I Love Shariah Finance" campaign initiated by the Financial Service Authority (OJK). OJK chairman Muliaman D Hadad said that although the shariah finance has grown fast it is still relatively small compared to other national financial services. He said 12 shariah general banks with 22 shariah units in the country are owned by conventional banks and 163 shariah BPRs (local banks) with total assets worth Rp264.81 trillion and a market share of 4.88 percent. Until March 2015 total shariah shares traded at the shariah capital market reached Rp3,037.46 trillion with corporate bonds reached Rp7.1 trillion and shariah mutual funds Rp11.7 trillion.

Finance Minister of Bangladesh AMA Muhith has urged governors of the Islamic Development Bank (IDB) to push for a community-based partnership and come out of traditional financing models for a prosperous Islamic world. Muhith suggested leaders of the Islamic countries should work together to pull up the OIC (Organisation of Islamic Cooperation) region towards achieving healthy human development and securing strong, sustainable economic growth. He was speaking to OIC leaders at the 40th annual meeting of the Islamic Development Bank Group at Maputo, Mozambique. Currently, IDB's support for low-income members is stymied by not just a lack of adequate development funds but by its relatively higher cost as well, Muhith said.

Bank Islam Malaysia Bhd expects a moderate and slower performance in 2015 with assets to grow at 10% and financing at 15% due to the current economic challenges. The consumer market sector has been noticeably slowed down, especially with the guidelines of the introduction of responsible financing by Bank Negara (Malaysia), Managing Director Datuk Seri Zukri Samat said. Bank Islam, which currently has 142 branches nationwide, will open eight more branches, including in the rural areas by year-end, he added after presenting RM12.74 million in business tithe to Minister in the Prime Minister's Department Datuk Seri Jamil Khir Baharom in Kuala Lumpur. At the same event, Bank Islam introduced 'Mudah Zakat', a multi-channel tithe payment system to improve tithe management efficiency.

Malaysia's efforts to create a market for ethical Islamic bonds are the latest in a series of government-led initiatives to develop Islamic finance, but further expansion will require a greater buy-in from a sometimes reluctant private sector. In May, sovereign wealth fund Khazanah Nasional launched the country's first sustainable and responsible investment (SRI) sukuk, nearly two years after the format was first announced by the government. Last year, $74.9 billion worth of sukuk were issued out of Malaysia but only $13.5 billion came from corporate issuers. There is little sign of this changing soon.

The five-year strategy from Indonesia’s financial services authority, Otoritas Jasa Keuangan (OJK), charts an extensive agenda ranging from reducing fees on sharia-compliant products to developing education and training programmes. Authorities want Indonesia’s Islamic banks to hold at least 15 percent of the market by 2023, an ambitious target considering the sector’s growth is stalling. Part of the problem lies with low financial literacy among the public, with Islamic finance further behind, according to a nationwide survey commissioned by the OJK. The roadmap would expand on education and promotion activities, while developing rules and industry certification for religious experts that endorse Islamic financial products.

Bank Negara said it would finalise operating standards for all major Islamic finance contracts by the end of this year, creating the first comprehensive set of practical guidance for the industry. The set of 11 standards will complement existing sharia guidelines issued by Bank Negara, as the regulator aims to address inconsistencies in the use of Islamic contracts. Malaysia’s current sharia standards are enforceable and have been in place for years, but they are technical rather than practical and still open to interpretation, Mohamad Akram Laldin, deputy chairman of the sharia advisory council of Bank Negara said. The new standards could help regulators in other countries that are seeking day-to-day guidance for their own markets, said Laldin.

Singapore's strength in conventional financing and capital markets can be adapted to meet the needs of Islamic banking, said Monetary Authority of Singapore (MAS) deputy managing director Jacqueline Loh yesterday. She added that conventional finance and Islamic banking are similarly cross-border in nature. Islamic capital-market activities in Singapore have taken off, with 31 sukuk issuances over the past five years. Ms Loh said sukuks are ideal for funding infrastructure projects and would complement work by Singapore as they are asset-backed and can involve more capital-market participants. MAS is also working with the industry and other government agencies to establish sukuk regulatory and tax regimes.

The Islamic Corporation for the Development of the Private Sector (ICD) signed a memorandum of understanding with China International Contractors Association (CHINCA) formalizing the parties’ cooperation in identifying and cultivating investment opportunities in the construction, infrastructure and other key industries by leveraging on areas of expertise and utilizing services currently offered by both parties. The strategic collaboration also aims to build a fruitful networking platform by developing and participating in business-matching forums as a means to identify forces shaping the industry and connect key industry players. CHINCA has more than 1,300 members to date, and about 800 members are engaged in international project contracting and investment.

Since the Islamic banking industry is still emerging in Bangladesh, it is essential to know at this stage if the products and services of Islamic banks are consistent with the practices that have been developed and universally accepted by the practitioners of Islamic banks across the globe. It is really important for Islamic banking industry in the country not only for the sake of outreach but also for the regulators to formulate policy which will enhance the credibility and international stakeholder's confidence. Until today, the development of Islamic financial products has generally been limited to the re-engineering of the conventional products to meet Shariah requirements. But there is a still scope for product innovation and differentiation.

Deputy Prime Minister Tan Sri Muhyiddin Yassin has launched a new National Higher Education Savings Scheme (SSPN-i), the SSPN-i Plus, a scheme which incorporates education savings with affordable and comprehensive takaful coverage. Muhyiddin, who is also Education Minister, said SSPN-i Plus was an initiative under the National Higher Education Fund Corporation (PTPTN), aimed at promoting the habit of saving for higher education among Malaysians. Depositors in this syariah-compliant scheme not only invest for their education but will also receive takaful coverage, coupled with competitive dividend returns and tax relief of up to RM12,000 a year.

Volatile currency markets could hamper Malaysian mortgage lender Cagamas Bhd's plans for its first foreign currency sukuk, the state-backed firm's chief executive Chung Chee Leong said. In November, Cagamas set up a US$2.5 billion (RM9.2 billion) programme to issue multi-currency sukuk in an effort to broaden its investor base. Chung said that at this moment, dollar was just not attractive, adding that US dollar issue was still the most likely option. He hopes the issue could still come this year. Asked about expansion plans, Chung said Cagamas was not working on opening subsidiaries in other countries, but would rather aim to take on loans that Malaysian lenders made outside the country through their Malaysian offices.

KazanSummit 2015, the 7th International Economic Summit of Russia and OIC countries, will be held in in Kazan, Russia on June 15-16, 2015. The international partner of KazanSummit 2015 is the Islamic Development Bank. Within the framework of KazanSummit 2015, the Russian-Arab Business Council will organize an event called «Business dialogue Russia– the Arabic world. New stage of interaction: trade, suborders, investment, and finance». TATNEFT became the golden partner of KazanSummit 2015. Find more information on the website http://www.kazansummit.com/

BIMB Holdings Bhd’s share price on Bursa Malaysia reacted well following announcement that its wholly-owned subsidiary, Bank Islam Malaysia Bhd aimed to increase the fund of two products under its Term Investment Account over the next six months. As at 10.26am today, the counter was four sen better at RM4.05 with 4,900 shares changing hands. Bank Islam is aiming for a RM2 billion fund for Waheed Investment Account (WIA Wakalah) and Special Investment Account (Mudarabah). Another account, the Al-Awfar Account, was also launched today. The bank also planned to maintain a RM2 billion fund size under its Transactional Investment Account.

Bank Negara Malaysia said it would finalise operating standards for all major Islamic finance contracts by the end of this year, creating the first comprehensive set of practical guidance for the industry.The set of 11 standards will complement existing shariah guidelines issued by Bank Negara, as the regulator aims to address inconsistencies in the use of Islamic contracts. The regulator has sought wide industry feedback and is expected to update the new standards regularly to keep up with changing market practices. Malaysia's current shariah standards are enforceable and have been in place for years, but they are technical rather than practical and still open to interpretation.