IslamicFinance.de

According to a Qatar Financial Center (QFC) study, Qatar needs to reform interbank liquidity management to study leakages from Islamic banks through interbank finance. Moreover, there is also a need to develop a regulatory framework and promote green bonds and sukuk. So far Qatar has led the world in ensuring in the authenticity of Shariah-compliant bank assets with Qatar Central Bank and the QFC Regulatory Authority requirements separating Islamic and conventional banks. To ensure this segregation, there should be a review of interbank markets to limit flows from Islamic banks to conventional ones in their liquidity management operations using 'Murabaha'. The report also stressed the role of a centralised guidance on fit and proper criteria for Shariah scholars and promoting Fintech development.

#UAE-based MAG Lifestyle Development has announced that it will accept OneGramCoin (OGC) as payment for real estate it sells. This move offers real estate investors an opportunity to utilize their digital assets while also welcoming OGC into the mainstream with a practical application in the property sphere. Bitcoin and other digital currencies are struggling to enter the mainstream in the Middle East, where the fundamentally speculative and high-risk character of cryptocurrencies does not go with the local investment culture. As the first Islamic Sharia-sanctioned digital currency, OGC is entering to fill this void. Each OGC is supported by a gram of gold, something that makes sure the cryptocurrency stays capitalized and stable. According to MAG, trade will go live in June 2018. Investors will buy OGC to the price of the property and get a 5% discount on the property cost consequently. OGC will then go to MAG based on the payment plan, which is 35% over six to nine months and 65% on completion at 2019’s end.

Affin Hwang Asset Management has launched the TradePlus Shariah Gold Tracker (GOLDETF MK) on Bursa Malaysia, the first commodity-tracking ETF listed in Malaysia. The fund provides investors with exposure to gold through a shariah-compliant investment structure. The fund tracks the LBMA Gold Price AM Index by investing in physical gold bars purchased from London Bullion Market Association-accredited refineries. Datuk Seri Tajuddin Atan, CEO of Bursa Malaysia, said this ETF would allow investors to buy and sell gold in the same manner as trading shares on Bursa Malaysia. The government of Malaysia has also announced that ETFs traded on Bursa Malaysia will be exempted from stamp duty starting from 1 January 2018. GOLDETF’s annual fees (including management, trustee and custody fees) is 0.76%.

The African Export-Import Bank (Afreximbank) has raised around $260 million via three Islamic finance facilities to support small- and medium-sized businesses in the region. The Egypt-based bank obtained a $100 million financing from the Islamic Corporation for the Development of the Private Sector (ICD). It also signed two financing agreements with the International Islamic Trade Finance Corporation (ITFC) worth $100 million and 50 million euros ($59.8 million) to help finance exports among African countries. Both ICD and ITFC are part of the Saudi-based Islamic Development Bank group of companies.

2018 may prove to be a pivotal year for Islamic finance stakeholders and their approach to developments in FinTech. Potential areas for FinTech are remittances, insurance, investment advisory services and online trading. In the coming years, demand from consumers is expected to give rise to the faster adoption of these technologies. Instead of mirroring conventional financial products, commentators see the opportunity to provide genuine Islamic-compliant alternatives to the traditional banking model. In December 2017, KFH Bahrain, Al Baraka Banking Group and Bahrain Development Bank announced the establishment of ALGO Bahrain. It will be dedicated to research and development in the Islamic-compliant FinTech sector. In addition, the largest FinTech hub in the Middle East and Africa will open in February 2018. The new hub named Bahrain FinTech Bay is operated by Singapore-based fintech incubator FinTech Consortium.

President Nicolas Maduro announced that Venezuela would issue 100 million units of an oil-backed cryptocurrency known as the petro. Maduro said that the petro would be backed by 5 billion barrels in the Ayacucho block of the Orinoco Oil Belt. Based on the latest price of the country’s oil basket, the total issue would be worth about $5.9 billion. Maduro believes the cryptocurrency will help the South American country challenge the tyranny of the dollar, economic war and US-led financial persecution. Over the past year, the US Treasury Department has blacklisted numerous top-ranking officials, including Maduro and many of his ministers. Home to the world’s largest crude reserves, Venezuelan oil output fell to a 14-year low last July. Maduro didn’t comment on whether Venezuela bondholders would be paid with petros. At the start, the petro will be obtained through auctions or direct allocation by the country’s Cryptocurrency Superintendent.

The Bank of Tokyo-Mitsubishi UFJ has provided an Islamic syndicated loan to the Malaysian affiliate of Saudi Telecom. The ringgit-based loan amount is about 41.7 billion yen ($353 million). BTMU is the first Japanese bank to act as an agent bank for a syndicated loan in Malaysia. The loan will be provided with HSBC and Standard Chartered Bank of the U.K. Japanese banks in Malaysia mostly provide loans to Japanese companies operating in the country. Now, BTMU aims to expand operations in the country through Islamic finance. BTMU has extended foreign-currency Islamic loans in Malaysia since 2008 and ringgit-based Islamic loans since 2014. The ratio of Islamic finance to total loans in Malaysia rose to about 30% at the end of 2017, from 17% at the end of 2009.

Qatar's Ministry of Endowments and Islamic Affairs provided zakat to the needy families, the zakat totalled QR13,624,806 last December. The aid was distributed to the beneficiaries, including the permanent aid provided monthly and the irregular aid, which is related to specific needs and emergency conditions. The funds were distributed according to Shariah and after comprehensively researching each beneficiary case and undergoing a social and field research. The cases are then presented to specialised committees, who meet daily and assess the cases, guaranteeing the delivery of assistance to beneficiaries in need.

Saudi Telecom Co (STC) has obtained a 1.51 billion ringgit (US$378.5 million) Islamic loan through its Malaysian subsidiary. The company will use the Islamic loan to refinance existing debt originally used to acquire a stake in Malaysian mobile-phone firm Maxis. STC Malaysia Holdings hired Bank of Tokyo-Mitsubishi UFJ (Malaysia), HSBC Amanah Malaysia and Standard Chartered Bank Saadiq to arrange the deal. The syndicated financing uses a sharia-compliant structure known as commodity murabaha. Bank of Tokyo-Mitsubishi UFJ (Malaysia) will act as the investment agent to manage the cash flows of the facility and to execute the commodity murabaha transactions.

The Royal Award for Islamic Finance is on a global search for an exceptional individual in the field of Islamic finance. The biennial award is spearheaded by Bank Negara Malaysia and the Securities Commission Malaysia. It recognises Islamic finance visionaries who contribute significantly to the growth of Islamic finance. The award recipient is selected by an independent seven-member international jury chaired by Tun Musa Hitam. The most recent recipient of the Royal Award for Islamic Finance in 2016 was Prof Datuk Dr Rifaat Ahmed Abdel Karim. He was instrumental in founding the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board (IFSB). The closing date for nominations is March 31, 2018, and interested persons can submit their nominations online.

The Middle East faces a very tricky 2018. War rages in Yemen. Qatar and its neighbours are at loggerheads, in an inter-Gulf feud without precedent. Saudi Arabia is purging its princes. But bond and loan markets are placid. Overall borrowing in the region in 2017 came in at a much higher level than before the oil price fell in 2014. The feeling across the capital markets is firmly that although the region poses risks, it is also rife with opportunities for 2018. One country where that optimism might not be so high is Qatar. The political turmoil in the region has reined in debt capital market bankers’ enthusiasm about Qatar, once the jewel of the Middle East capital markets. On June 5 last year, Saudi Arabia, the United Arab Emirates, Bahrain, Yemen, Egypt and Libya cut diplomatic ties with Qatar and installed sanctions over allegations of the emirate’s links to terrorist groups. In December 2017, Qatar National Bank and Commercial Bank of Qatar approached the international loan market. Now banks are brushing their concerns aside and bankers are more optimistic about Qatar’s funding capability.

Dana Gas stocks rose by 13.2% on Christmas Day 2017, to complete a buoyant six months for the stock. This may be due to the company's arbitration victory against the regional government of Iraqi Kurdistan, over $2bn it and its consortium partners are owed in overdue payments. It also hints at shareholders’ belief that Dana will not be forced soon to satisfy its own creditors. The firm refused to honour its $700m sukuk bond claiming that it no longer complied with sharia law, therefore was 'unlawful' in the United Arab Emirates (UAE). In November a British court ruled that the company had to pay. The judges said that, because the bond was issued under English law, it had to be viewed on its merits under that law alone. The risk of non-compliance in the UAE, they argued, must fall squarely on Dana. The Islamic-finance industry cheered this ruling. However, to get hold of Dana’s domestic assets, creditors need a new ruling from the UAE courts. The Dana saga is a reminder not just that Islamic finance still lacks shared standards, but also that court judgments help creditors only when they are enforceable.

BEP Systems has added Gatehouse Bank to its roster of financiers using their customisable Apprivo2 system. Gatehouse Bank will use the new system to help make their business more efficient. For Gatehouse Bank, BEP have re-configured their systems to comply with Shariah requirements when dealing with home purchase plans. Charles Haresnape, CEO of Gatehouse Bank, said it was vital that the software house understood Shariah requirements and BEP Systems delivered excellent solutions across home purchase plans and buy-to-let financing. Chris Little, managing director of BEP Systems, said Gatehouse Bank had seen the advantages Apprivo2 and strategic advantages would be delivered to fit their business model. He added that Apprivo2 was the fastest growing system in the UK serving specialist finance providers.

Improving insurance profitability is expected to result in Islamic insurance players refocusing their sectors. According to Moody’s analyst Mohammad Ali Londe, the motor and medical insurance sector have benefited most from the recent premium rate increases in Saudi Arabia and UAE. Therefore, Moody's expects Takaful operators to refocus their underwriting and servicing operations on these lines. Previously, weak underwriting results in the core medical and motor lines forced Takaful insurers to widen their product offerings. GCC Takaful insurers’ results for the first nine months of 2017 reveal that underwriting profitability has improved in most countries. In UAE, motor premium rates rose in 2017 as a result of the country’s new unified motor policy which provides standardised coverages. The improvement in Takaful insurers’ underwriting profitability has started to reverse the previous deterioration in their capital adequacy.

Akkas Uddin Mollah has recently been elected chairman of Shahjalal Islami Bank. The election took place at the 259th meeting of the bank's board of directors in its head office in Dhaka. The meeting also reelected Khandoker Sakib Ahmed and Mohammed Golam Quddus as vice chairmen. Mollah is the chairman of Osman Memorial Hospital and Russel Spinning Mills. Ahmed is the managing director of Zuairia Group, while Quddus is a director of the bank representing Anwer Khan Modern Hospital.

Growing at a fast rate, Shariah-compliant assets now represent 34.6% of the total assets of the Non-Banking Financial Institute (NBFI) industry. According to the Securities and Exchange Commission of Pakistan (SECP), the number of Shariah-compliant mutual funds has reached 109 and Shariah-complaint funds have 41% of the assets. In Pakistan the Takaful industry comprises of five dedicated Takaful operators and 21 window Takaful operators. Takaful sector assets represent 2.7% of the total assets of the insurance industry. During the year, the SECP took a number of initiatives for regulation and development of Islamic finance across the sectors it regulates. Tax neutrality for Sukuk was achieved by amending the Income Tax Ordinance. A new concept of a Shariah-compliant company was introduced through the newly promulgated Companies Act, 2017. To facilitate issuance of Sukuk, relevant regulations were amended both for public offering and for private placement.

The largest seminary in #India, Darul Uloom Deoband, has issued a fatwa asking Muslim women to not marry into a family whose members work in banks. Deoband argued that the income from banking jobs is considered haram (forbidden) earnings. The edict was pronounced after a person asked Darul Ifta if he should marry his daughter to a man whose father worked in a bank. The Islamic scholars have upheld the fatwa, contending that the religious body’s stand was in line with the Islamic law. Islamic researcher Maulana Nadimul Vajdi said that if a person, knowingly or unknowingly, has indulged in haram earning, the person concerned should quit the job and find another one in which the income was not considered forbidden under the Islamic law.

The growth in Sukuk’s popularity can be traced back to the global financial crisis in 2008. Since then, several sovereign and sub-sovereign bonds were issued under Islamic principles. In Africa it is Kenya that has commited to positioning itself as a regional Islamic finance hub. Finance Minister Henry Rotich outlined the steps as part of the country’s 2017/2018 budget aiming to level the playing field between Islamic and interest-based transactions. The primary objective is to prepare the groundwork for a sovereign sukuk but also to attract corporate sukuk from the region. Nigeria’s seven-year N100bn Sukuk bond offers an avenue for a competitive alternative to the conventional banking system and a path towards sustainable economic recovery.

The Islamic Financial Services Board (IFSB) announced the dissemination of country-level data on financial soundness for Q2 of 2017 from 15 IFSB member jurisdictions. This eighth dissemination completes the availability of quarterly data from Q4 of 2013 to Q2 of 2017. According to Secretary-General of the IFSB, Zahid ur Rehman Khokher, the IFSB has both extended the coverage of PSIFIs banking sector database to several new countries, as well expanded the database coverage to Islamic insurance and Islamic capital market sectors. The PSIFIs project is currently collecting Islamic banking data on a trial basis from newly-joined contributors: Bank of England, Central Bank of Lebanon (Banque du Liban), Palestine Monetary Authority, and Qatar Central Bank.

Islamic insurance services were formally launched yesterday in Kano, Nigeria. The launching ceremony of Jaiz Takaful Insurance was held at the premises of the palace of the Emir of Kano. The managing director of Jaiz Takaful Insurance, Mahmud Moussa Joof disclosed that the sector has currently recorded 25 to 35% global growth. He added that Takaful insurance was open to everybody as against contrary insinuations from certain quarters. At the ceremony, the Emir of Kano, Muhammad Sunusi II lamented over the faulty payment system by insurance service providers in Nigeria. The Emir urged operators of the Islamic Insurance business to be honest to Kano people, while urging Kano people to form cooperative groups to access the Islamic insurance services, affirming that, subscribing to insurance services is permissible in Islam.