Central Asia

Dell Ends Software Maintenance With Iran Bank

Dell discovered that Quest Software had supplied software maintenance to Melli Bank, subsidiary of Bank Melli in Iran. The maintenance occurred before Dell’s buyout of Quest. In a letter to the SEC, Dell disclosed Quest’s small but potentially worrisome banking engagement. It said that the company’s Form 10-K contained information about the business transaction worth US$169.90. Although not much, any dollar amount flowing to a technology company from a bank with ties to Iran could have raised some serious red flags. It's unclear what type of e-discovery software Dell used to uncover the business transaction.

Insider trading: Dawood Capital Management licence revoked, CEO fined

The Securities and Exchanges Commission of Pakistan (SECP) revoked the licence of Dawood Capital Management and imposed a Rs20 million fine on its CEO Tara Uzra Dawood for insider trading. The SECP issued its order on Friday, after having conducted a nine-month investigation into the matter. According to the SECP’s findings, Dawood Capital Management had invested in corporate bonds issued by several companies that had defaulted on their obligations to bondholders. Dawood Capital Management said they are reviewing the order and reserve the right to appeal it.

Sheikh Ali Bin Abdullah, Inaugurates Doha Village for Pakistan Flood Victims

Sheikh Ali Bin Abdullah Thani J. Al-Thani, Chairman of Pak-Qatar Takaful Group, inaugurated the village for Pakistani flood victims on February 27. The Sheikh Thani Bin Abdullah for Humanitarian Services foundation allocated a significant sum for the establishment of the "Doha Village Project". Total area of the village is 11 Acres and total number of beneficiaries is around 1600-2000. It includes 200 residential homes, a school, shops and clean drinking water, among other services.

Iran holds 42.7% of total global Islamic banking assets

KFH-Research issued a report that stated that Iran's Islamic banking assets contributed 42.7% of the total global Islamic banking assets in 2012, followed by PGCC (34.1%) and Malaysia (10.0%). The report expected that Islamic banking will continue to grow in the PGCC region during this year, and that it will manage to enter new markets worldwide, driven by growth factors and increasing demand. Islamic banking assets are expected to reach USD 1.5 trillion by end of this year with an accumulative growth rate of up to 20%. Islamic banking represents the largest market share (80.3%) in the Islamic finance total assets.

Iran sentences 4 to death in biggest bank fraud case

Four people were sentenced to death on charges of corruption and disrupting the country’s economic system by the Iran Judiciary. The four are Mahafarid Amir-Khosravi, Behdad Behzadi, his legal advisor, Iraj Shoja, his financial solicitor and Saeed Kiani Rezazadeh, head of the Ahvaz branch of Saderat Bank. Other defendants were handed down sentences including imprisonment and cash fines. The defendants stood trial for misappropriating a total of USD2.6 billion of funds by using forged documents to obtain credit from banks to purchase state-owned companies. However, almost none of the companies involved in this case were ordered closed by the court.

Islamic banking facing regulatory challenges

The Takaful industry is growing but also facing certain challenges which include issues regarding re-Takaful, regulatory challenges, competition and lack of human capital. In order to overcome all these challenges and issues, Al Huda CIBE established a Takaful Consultancy Wing with consultant Captain Jamil Akhtar Khan. Khan has expertise on Takaful regulatory issues, establishment of Takaful companies and other related departments. Takaful Consultancy Wing will be an independent institution which will provide its services to other organizations for the establishment of new Takaful companies, research, advisory, training, re-Takaful, Shariah guidance and other Takaful related matters.

Islamic finance a boost for USAID's Afghan farm fund

Sharia-compliant loans are beginning to play a role in Afghanistan's farm sector through a U.S.-funded aid programme. In 2010, the U.S. Agency for International Development (USAID) set up the Agricultural Development Fund (ADF) which offers both conventional credit and Islamic financing. About $11 million of its loans approved between May 2011 and
April 2012, or 70 percent of them, were sharia-compliant. Juan Estrada-Valle, acting chief executive of the ADF, hopes that the credits will enable commercial farmers and other agribusinesses to grow at a rapid pace and contribute to the
growth of rural communities.

Iran bank to sue EU after winning sanction list case

The Iranian Bank Mellat plans to sue the European Union governments for damages after a European court annulled sanctions against the company. The reasons for the court's decision are that the EU failed to provide enough evidence that Bank Mellat was linked to Iran's disputed nuclear progamme. However, EU governments may appeal the decision. Bank Mellat now plans to resume trading in Europe although broader European sanctions against Iranian banks could still limit Bank Mellat's ability to function there.

EU court annuls sanctions on Iranian Bank Mellat

The European Court of Justice annulled the European Union (EU) sanctions imposed against the Iranian Bank Mellat in July 2010. According to the bank's Managing-Director Ali Divandari, the Court also required the EU to cover the costs of legal procedures. Additionally, Bank Mellat will receive all legal expenses as well as compensation from the EU for losses incurred because of these sanctions. Divandari also said vague reasons were used by the EU to impose the sanctions two and a half years ago.

IFC-BankIslami pact to spur growth

BankIslami Pakistan Limited on Tuesday joined the Global Trade Finance Programme, which promotes trade in emerging markets by supporting the flow of goods and services. The programme was established by the International Finance Corporation (IFC), who will support BankIslami’s trade finance business by providing partial or full guarantees for individual trade transactions. Since the trade finance programme’s inception in Pakistan in 2006, IFC has provided more than 3,500 guarantees worth $1.74 billion to financial institutions.

Questions About Practices Of Private Iraqi Banks

Private banks in Iraq have almost utterly ceased to fulfill their traditional functions, e.g. giving out loans, lending credit and issuing letters of credit. The reason is the risk of default. That is why Iraqi private banks resort to participation in the currency auction regularly held by the Iraqi Central Bank instead. In order not to face defaults on payments, they demand exaggerated guarantees for the granting of any loans to local investors. Banking experts say that the value of some loans is not able to cover more than 40% of the guarantees which are demanded by the banks.

Islamic banking industry still has much to achieve

2013 is the 38th year for the global Islamic banking industry in its contemporary phase. The start of the new year is filled with invigorated optimism, partly due to its continued proliferation in new markets, particularly in Oman and Arab Spring countries. Another reason for the optimistic attitude is the impressive momentum of the sukuk market. However, the Islamic finance industry tends to be beguiled by its own relative success largely because of the absence of independent evaluation of its performance and policy and architectural development.

Meezan Bank to provide Shariah-compliant financing

Meezan Bank has become the first bank in Pakistan which offers Shariah-compliant agricultural financing by extending a Shariah-compliant financing facility to the agriculture industry of Pakistan. Adhering to the financial arrangement, the bank will sell DAP, urea, pesticides and seeds to its clients on a Murabaha basis. Expansion of the scope of this facility to other geographical areas is planned. Furthermore, a comprehensive Agricultural Financing Policy and detailed procedural manuals for this initiative has been developed.

Gassner's picture

Outlook & Review 2012/2013

Dear Reader,

Islamic finance had another great year. Many of its market segments progressed, like for example the Sukuk market gaining more maturity. Despite the ongoing debt crisis a good sign of hope and happiness.

Nevertheless we are - as an industry - still not satisfied with the achievements. Islamic finance shall grow stronger in terms of social impact and in terms of substance:

Hence, please allow me to re-iterate my call for participating in international initiatives beyond just our own industry to learn and spread knowledge and experience:

Calling Islamic financial institutions to become member of the United Nations Finance Initiative

Inshallah we see more Islamic financial institutions taking a lead in SRI, Social Impact Investing and other approaches while contributing with Islamic finance knowdledge to the conventional industry. The time is now; and there are signs that Malaysia aims for a lead:

Islamic microfinance can bring people above poverty line

Islamic microfinance can bring people above the poverty line as well as enable self-reliance through a regular source of income. According to Muhammad Zubair Mughal, CEO of AlHuda Centre of Islamic Banking and Economics, adopting Islammmic microfinance can rid Muslim countries of poverty. Non-Muslim countries, however, are currently the leaders in this area. The Centre of Excellence on Islamic Microfinance will start operations simultaneously through its partners offices in other countries in order to contribute to the elimination of poverty through Islamic microfinance.

Islamic Development Bank Opens Clean-Energy Fund in Central Asia

The Islamic Corporation for the Development of the Private Sector gave start to a fund aiming to finance renewable- energy projects in Central Asia and plans another in Africa. The fund is worth $35 million and is situated in Kazakhstan. In the very near future the North Africa fund containing $35 million to $50 million is to be opened. Financing for renewables ventures is targeting emerging markets due to the governments' striving to curb reliance on fuel imports and cash-strapped nations in Europe cut subsidies for clean power.

Azerbaijan bank plans $150m Islamic loan

International Bank of Azerbaijan (IBA) considers to raise $150m using an Islamic syndicated loan at the beginning of 2013. Thus, the bank intends to double its Islamic banking assets by the end of next year. According to the bank's director of Islamic banking - Behnam Gurbanzada - signing a mandate in January and closing the deal in April is planned. The deal will be a one-year private syndication. It will contribute to IBA's intention to cater to the estimated 93% Muslims of its 9 million population.

Higher risk, higher return: ABL Asset Management to set up Islamic equity fund

Pakistani ABL Asset Management has announced the establishment of an Islamic equity fund. The fund is expected to tap the growing market of investors who want to make their investments in stocks of Shariah-compliant companies only. In contrast with the current offer of the company - the Islamic Income Fund - the new Islamic equity fund will entail higher levels of risk and return. The date of release is not known yet but according to the company's CEO Farid Ahmed Khan, it will be rather soon.

Meezan Bank approves first ever air-time Sukuk

Meezan Bank Limited has received the approval of its Shariah Supervisory Board (SSB) for the concept for the air-time based Sukuks which will be issued in Pakistan. Furthermore, detailed guidelines for Islamic banks involved in sharing of security with other banks for long-term Islamic projects and structured financing have been approved. The resolution was made at the 19th meeting of the SSB of Meezan Bank at Darul Uloom Korangi, Karachi. There, a summary of Meezan Bank's Shariah audit was presented to the SSB.

New Islamic financial products

Al Baraka Islamic Bank announced the introduction of new Islamic financial products. Furthermore, it will open several new branches in Pakistan with the purpose to facilitate the consumers of Islamic products. According to Adnan Ahmad Yousaf - president and CEO of Al Baraka Islamic Bank - Islamic banking is a modern alternative way of banking today and continuously attracts funds. Its aim is to generate economic activity and to spread money throughout society.

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