Central Asia

Jammu and Kashmir Bank mulls Islamic banking

In #India Jammu and Kashmir Bank said it was ready to offer Islamic banking, if the Reserve Bank of India approved the move. The bank's newly-appointed chairman Parvez Ahmad said there was a strong demand for such banking service in Kashmir but RBI would need to examine the proposal. RBI has recently suggested to explore the modalities of introducing interest-free banking products in the country in consultation with the government.

DIBPL first Islamic Bank to sign up for PayPak cards

Dubai Islamic Bank #Pakistan Limited (DIBPL) and 1-Link signed historic agreement for the issuance of PayPak cards in Pakistan. In line with State Bank of Pakistan (SBP) Vision 2020 to enhance and promote Financial Inclusion, 1LINK introduced Pakistan’s First Domestic Payment Scheme 'PayPak' which is aimed to provide efficient, cost-effective, and robust payments solutions. DIBPL remains committed to SBP vision to enhance and promote financial inclusion of unbanked population nationwide. PayPak’s strategic objective includes offering Domestic Payment Scheme to provide low cost payment services to every citizen of Pakistan.

J&K Bank willing to offer Islamic banking, says chairman Parvez Ahmad

In #India Jammu and Kashmir Bank is willing to offer Islamic banking to its customers. Chairman Parvez Ahmad said there was great demand for Islamic Banking in the state, so the bank would examine the proposal after taking the Reserve Bank on board. As far as the JK Bank positioning is concerned, it has 63% share on the asset side, 62% share on the deposit side, out of 862 branches, 745 are in the state, out of 1030 ATMs, 950 in JK state, 90% of the population is dealing with JK Bank. Ahmad added that other banks were only offering products and services, JK Bank was more concerned about the development of JK state as a whole.

IDB’s endowment fund to boost NGOs in #India

Muslim NGOs in India will be able to make use of Islamic Development Bank’s Awqaf Properties Investment Fund (APIF) to develop their endowments and generate funds for their various community development projects. According to Zafar Javeed, IDB’s national convener for India, APIF is in the process of identifying viable endowment projects. Javeed commended IDB group for financing about 300 educational and health-related projects across India over the past three decades. He said that the IDB was a big blessing for the Muslim community in India and there were many projects in the pipeline awaiting IDB aid. Referring to ongoing efforts to introduce interest-free banking in India, Javeed said former RBI governor Reghuram Rajan had hinted at introducing the system to achieve inclusive development.

#Sukuk auction criticised

In #Pakistan Chair­man of the Senate Standing Committee on Finance Senator Saleem Mandvi­walla has strongly criticized the issuance of $1 billion sukuk. He said that the hurried decision was an act of im­­maturity by the government and it was expected that the rates would be high. Senator Mandviwalla is surprised that Eurobonds which carry sovereign guarantees were sold at 8.25pc interest rate and sukuk, which are guaranteed by assets, are sold at 5.5pc. He said that the federal government also blamed the higher rate on Pak-India border tensions. He added that it would have been better to wait with the issuance for a more suitable time.

#Sukuk issuance to lure foreign investment

The re-entry of #Pakistan into the international Islamic bond market after a gap of two years with the issuance of one billion dollars Sukuk will help the country bolster its external account position. According to analyst Saad Hashemy at Topline Securities, Pakistan's ability to raise funds from the global financial markets at the historic low rates shows investors' optimism about the economic prospects. The government raised $1.0 billion through the issuance of five-year dollar-denominated Sukuk at the historic low rate of 5.5%. The investors across the world showed interest in parking around $2.4 billion in the bonds. Pakistan’s credit rating has remained stable or improved during the last few years. International credit rating agencies Moody’s, Fitch and Standard & Poor’s (S&P) rated Pakistan as B3 (stable), B (stable) and B (positive), respectively in their last ratings.

SBP aims to achieve 50pc financial inclusion by 2020: deputy governor

The State Bank of #Pakistan (SBP) is pursuing a three-pronged strategy to achieve the goal of 50% financial inclusion by the year 2020. According to Saeed Ahmed, deputy governor of the central bank, twenty million households need microfinance in Pakistan. The forum, organised by Shamrock Conferences International was held to strive for the expansion of financial services. Dr Mohammad Amjad Saqib, chairman of Akhuwat Foundation, delivered the keynote address and stressed the importance of microfinance. Speakers agreed that the microfinance specialists must create a sustainable model by offering competitive microfinance products, reducing costs and expanding their outreach.

Moody's assigns (P)B3 to #Pakistan's sovereign #sukuk

Moody's Investors Service has today assigned a provisional (P)B3 rating to the proposed US dollar Trust Certificates to be issued by The Third Pakistan International Sukuk Company. The (P)B3 rating reflects Moody's view that the sukuk certificate holders will effectively be exposed to the sovereign credit risk incorporated in the government's issuer rating. Payment obligations represented by the securities are ranked pari passu with other senior, unsecured debt issuances of the Government of Pakistan. The rating for the Government of Pakistan captures moderate economic strength, structurally large fiscal imbalances, a high government debt burden and high susceptibility to political event risks.

ECC waives 10 types of taxes on Islamic bonds

The #Pakistani government waived 10 taxes on the upcoming international Sukuk bond issue, which is expected to raise at least $750 million. The government is going to tap the international debt market next month to borrow $750 million to $1 billion by pledging the Islamabad-Lahore Motorway. Headed by Finance Minister Ishaq Dar, the Economic Coordination Committee (ECC) of the cabinet granted tax exemptions on the Islamic bonds. This decision violated the Supreme Court judgment that barred the ECC from taking decision on fiscal matters without prior approval of the federal cabinet. The ECC also approved to reduce prices of imported urea fertiliser from Rs1,310 per bag to Rs1,200 per bag, giving Rs30.4 million subsidy.

Govt to raise up to $1bn through #sukuk issue in #US

In #Pakistan the Economic Coordination Committee (ECC) of the Cabinet finalised plans for immediate launch of $500 million to $1 billion sukuk in the US capital market. Presided over by Finance Minister Ishaq Dar, the ECC decided to start process for the launch of sukuk in Washington on Tuesday and wind up the transaction by Oct 5, 2016. The government has already hired a consortium of five banks – Citibank, Standard Chartered, Deutsche Bank, Dubai Islamic and Noor Islamic – as financial advisers to complete the sukuk transaction. Being Islamic mode, the bond is being raised against Lahore-Islamabad Motorway as collateral that should keep pricing slightly lower than conventional bonds. The government would decide about the exact size of the bond on the basis of investor response and pricing but would remain within $500m-$1bn band.

State Bank’s Vice President gunned down in Karachi

Senior Vice President of State bank of Pakistan (SBP) was gunned down in the area of Gulistan –e- Johar, within the jurisdiction of Shariah Faisal police. Superintendent Police (SP) Gulshan Doctor Fahad Ahmad said that Muhammad Sadiq Siddiqui was going to a bakery when two alleged dacoits attempted to snatch his vehicle. On resistance, dacoits opened fire on him. As a result, he sustained serious injuries and died, while dacoits managed to escape from the scene with car.

Islamic Banking Will Strengthen Democracy In #India

The Islamic Development Bank (IDB) is getting the final touch in before setting up office in India. With introduction of Islamic banking, Indian government will certainly gain diplomatic upper hand to make financial dealings with Muslim dominated nations. Islamic Banking will clearly ameliorate the deplorable condition of the poor and marginalized segments of society. However, it won't be very surprising to see if this banking system is turned into a political issue. Certain parties might abhor the use of the word "Islamic" and could term it as anti-Indian. They might argue that the very concept of Sharia banking would go against the secular fabric of the country.

This BJP Minister is responsible for Sharia-compliant Islamic banking in #India

India's first Islamic banking service began on Friday in Maharashtra’s Solapur district. Subhash Deshmukh, a BJP MLA from Solapur and state cooperation minister has launched Sharia-compliant Islamic banking. The BJP leader said that the bank has 9 branches, including 8 in Solapur and 1 in Pune, and all of them would get a separate counter for Islamic interest-free deposits and loans. Deshmukh added that other financial institutions and banks in Maharashtra should also follow and adopt this model. Interest-free deposits will be accepted from Muslims and non-Muslims at zero rates of interest to ensure their financial inclusion.

Islamic banking is here, thanks to BJP minister Subhash Deshmukh

In #India Maharashtra state minister Subhash Deshmukh has launched Sharia-compliant Islamic banking. Interest-free deposits will be accepted from both Muslims and non-Muslims and distributed to the needy at zero rates of interest to ensure their financial inclusion. So far, the Lokmangal Cooperative Bank has distributed Rs 2.50 lakh to poor Muslims and the minister will now call on other banks to follow suit and adopt this model. Deshmukh said that depositors, however, will not be able to withdraw their deposits prematurely as the money will be lent out.

FPCCI lauds FM’s efforts for promoting Islamic Banking

The Sr. Vice President FPCCI has lauded the decision of Finance Minister for formulating a Committee for the implementation of recommendations of the Steering Committee for the promotion of Islamic Banking. The expansion and promotion of Islamic banking is the need of the hour because it is risk-sharing and asset-backed nature and was growing and unaffected in the period of global financial crisis.

Sr. Vice President FPCCI Shaikh Khalid Tawab, elaborated that Islamic Banking has become an emerging field in global financial market and the time has proved that it has tremendous potential and is growing at a very fast pace all around the world. He added that Pakistan, with more than 95 % Muslim population, and a constitutional obligation of ensuring a riba free economic system, has huge potential of expanding Islamic banking. This is, if the deposits are used on the basis of detailed analysis to get rate of return more than the conventional banks because at present the return on the Islamic banks instruments is lesser than the conventional banks.

Govt gears efforts to test international appetite for Shariah-compliant papers

The Pakistani government plans to tap international investors’ appetite by offering sukuk worth as much as $750 million for sale. The finance ministry said the structure of the sukuk will be flexible and the issue will have a maturity of at least five years. According to former finance minister Salman Shah the completion of the IMF (International Monetary Fund) programme and reclassification of Pakistan Stock Exchange to MSCI emerging market index would send a positive signal to the investors. Analysts said improved macroeconomic indicators and China-Pakistan Economic Corridor related activities are attracting positive credit ratings.

Musharika, Modaraba and Wakalah: three modes of Islamic financing given exemption from Kibor

The State Bank of Pakistan (SBP) announced exemption from KIBOR as benchmark rate for Participatory (Musharika & Modaraba) and Wakalah-based products. For this exemption Islamic Banking Institutions (IBIs) will be required to ensure some conditions. IBIs will take adequate measures to mitigate equity investment risk in participatory mode based products. In addition, for Modaraba and Musharika based products, IBIs will ensure compliance with minimum Shariah requirements and AAOIFI Shariah Standard No 12 and No 13 as adopted by the SBP. For Wakalah-based products, IBIs will be required to use Arabic version of AAOIFI Shariah Standard No 23 on Agency as guideline in consultation with their Shariah Board.

SECP drafting Shariah regulatory framework: Hijazi

The Securities Exchange Commission of Pakistan (SECP) is in the process of drafting a Shariah regulatory framework. Addressing at the second day of "World Islamic Finance Forum" (WIFF), SECP Chairman Zafar Hijazi said SECP has established a full-fledged Islamic finance department to co-ordinate the Islamic finance initiative. He said SECP is fully supporting Shariah compliant business and the government has implemented the SECP's tax proposal for offering Sukuk. SECP is currently working on harmonisation and standardisation of regulations for a uniform regulatory environment. The commission has an independent Shariah Advisory Board to review product development and adjudicate on Shariah matters.

Dar suggests investment in research to Islamise economy

Speaking at the World Islamic Finance Forum, Pakistan's Finance Minister Ishaq Dar suggested investing in research in order to Islamise the whole economic system of the country. He said Islamic finance industry leaders should play an active role in promoting the industry. At the same time, the leaders should not remain complacent with the traditional model, but should help the finance industry evolve and innovate products based on Shariah compliance. Dar said economic growth in Pakistan had crossed 4% and had remained steady at 5% this year. This growth rate is expected to accelerate to 7% in fiscal year 2017-18. Later referring to a BBC report, he said Pakistan would become the 18th largest economy of the world by 2050 from the current 44th position.

IRTI, Thomson Reuters and IBA launch new study on the outlook of Islamic finance in #Pakistan

The Islamic Research and Training Institute (IRTI), Thomson Reuters and the Institute of Business Administration (IBA) launched the Pakistan Islamic Finance Report titled "Innovation at Asia’s Crossroads". The ceremony, which took place in Karachi, was attended by senior government officials, market executives and industry professionals. The report highlights that the Islamic capital market sector registered a double-digit growth rate in the past decade, recorded mostly by Islamic mutual funds. In all Islamic finance industry segments, finance professionals and investors maintain a positive economic outlook, and Islamic finance institutions have built strong fundamentals.

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