5 Interactive Distance Learning Programs on Islamic Banking and Finance

Wednesday, April 16, 2014

Kazakhstan and Bahrain to promote Islamic banking in Kazakhstan

Kazakhstan and Bahrain will be working to promote Islamic banking in Kazakhstan, Tengrinews.kz reports, citing President Nazarbayev’s official website.
“The two sides have expressed their intention to promote Islamic banking in Kazakhstan. We are interested in Bahrain’s practices in this realm as the country is a major center of Islamic finances”, President Nazarbayev said following his talks with King of Bahrain Sheikh Hamad bin Isa bin Salman Al-Khalifa in Astana April 14.
The two sides condemned terrorism and extremism in all its manifestations, called to strengthen measures to counteract transnational and organized crime, illicit turnover of narcotic drugs and weapons, as well as to counteract other types of crimes posing threats to the global peace and stability.
Kazakhstan and Bahrain have agreed to place a priority emphasis on cooperation in investments, trade, agriculture, banking, and to further ties in education, culture and science. They have agreed to encourage interaction between universities and culture entities and facilitate exchange of students.

For more information see:http://en.tengrinews.kz/politics_sub/Kazakhstan-and-Bahrain-to-promote-Islamic-banking-in-Kazakhstan-252934/
Use of the Tengrinews English materials must be accompanied by a hyperlink to en.Tengrinews.kz


Source: http://en.tengrinews.kz/politics_sub/Kazakhstan-and-Bahrain-to-promote-Islamic-banking-in-Kazakhstan-252934/

Monday, April 14, 2014

Bank Islam still eyeing Indonesian market

KUALA LUMPUR: Bank Islam Malaysia Bhd has reiterated its interest in the Indonesian Islamic banking market despite previous attempts to penetrate the world's largest Muslim country meeting a dead-end.
Managing Director Datuk Seri Zukri Samat (pix) said Indonesia possessed tremendous prospects as the country, with a population of 240 million, is still underserved in the Islamic banking sector.
"Islamic banking penetration in Indonesia is about 3% to 4%, whereby Malaysia is between 23% and 24%. There is a huge Muslim population in Indonesia but Islamic banking penetration is very low, certainly (there is) a lot of business opportunity there," he told Bernama.
He said due to the low penetration of Islamic banking, the sector experienced a rapid growth annual growth of between 30% and 40%.
Zukri said Indonesia also had a large number of middle income population.
"I was told by an Indonesian party that by 2015, Indonesia is deemed to have a middle-income population of between 30 million and 40 million, that is larger that Malaysia's population," he said.
However, he said the regulatory system and company valuation remained challenging for the bank to enter the Indonesian market.
Zukri said new regulations in Indonesia have limited foreigners stake in local companies to up to 40% compared with 99% previously.
Furthermore, he said as more foreigners have shown interest to expand their presence to Indonesia, the valuation of the banks in the country have become more expensive.
Nevertheless, he said if a bank is available at the right price, interested parties should take a calculated risk of the changing regulation to venture into Indonesia market.
Zukri said, Bank Islam, however, was not in talks with any party from the neighbouring country right now for any potential acquisition.
"We are still trying but right now, we have not found anyone whom we can pursue further," he said.
Bank Islam's previous two attempts fell through.
One of it was the proposed acquisition of PT Bank Muamalat in 2012 but the deal was put on hold by the Indonesian party.
Meanwhile, on Bank Islam's domestic expansion plan, he said the bank would continue to increase its branches to 150 by 2015 as underlined by the bank's three years blueprint from 2013 to 2015.
"We think 150 is ideal for Bank Islam, after that, we will take a breather," he said.
He said infrastructure, staff allocation and cost constraints were the reasons why the bank was limiting the number of branches to just 150.
"We have to manage capital expenditure. One branch cost between RM800,000 to RM1 million (to set up), inclusive of IT equipment," he said, adding that the bank also needed to allocate experienced branch managers and capable staff for a new branch, which also added to the bank's operating expenditure.
Zukri added that the bank would also draw up a new blueprint in the middle of next year to replace the current blueprint after it ends. – Bernama

Source: http://www.thesundaily.my/news/1015659

Monday, April 7, 2014

Financial systems: ‘Islamic banking better alternative'

KARACHI: 
State Bank of Pakistan (SBP) Deputy Governor Saeed Ahmad has said Islamic finance is going to become a better alternative to conventional banking.
Addressing a ceremony to mark the completion of 10 years of ‘Raast Islamic Banking programme’ of Bank of Khyber (BoK) on Saturday, Ahmad said the demand for Islamic banking will continue to grow in the coming years.
“Given its global outreach, growing recognition as a stable system, and its ability to provide financial solutions to all business needs, Islamic finance is all set to establish itself as a better alternative to the conventional financial system,” he said.
He noted the global financial crisis in 2008-09 made western financial experts look for an alternative under which the international financial system could overcome the weaknesses of the conventional system, which is based on a fixed, predetermined return in the form of interest.
“The search was for a system that leads to equitable treatment of all stakeholders under all circumstances. A lot of attention was focused on solutions, which are not far from Islamic financing where system allows fairness of return, sharing of risk and reducing income inequalities,” he said.
He said Pakistan was among the first few countries that undertook the ambitious aim of Islamising the banking system. Significant efforts towards this end were made during the 1980s, he said, adding that it went through a rough ride until 12 years ago when the SBP allowed three types of Islamic banking institutions i.e. full-fledged Islamic banks, Islamic banking subsidiaries of conventional banks and Islamic banking branches of conventional banks. Moreover, conventional banks having Islamic banking branches were also allowed to have Islamic banking windows in their conventional branches, he added.
Speaking on the occasion, Khyber-Pakhtunkhwa Chief Minister Pervez Khattak appreciated BoK management for increasing the branch network across the country. Khattak also invited the Karachi business community and participants of the conference to visit K-P to witness the drastic change that the province had undergone in the last 10 months.
BoK Shariah Supervisory Committee Chairman Mufti Muhammad Zahid presented a detailed paper on the prohibition of interest in Islam and other religions. Islamic scholar Muhammad Ayub presented a paper on the philosophy of Islamic banking and its future while financial markets professional Umar Mustafa Ansari made a presentation on governance in Islamic banking and finance.

Source: http://tribune.com.pk/story/691897/financial-systems-islamic-banking-better-alternative/

Saturday, April 5, 2014

Commercial Bank Of Kuwait To Convert To Islamic Banking

Around 85 per cent of shareholders had approved the lender's new move, the bank's chairman said.

Commercial Bank of Kuwait, the Gulf state’s fifth largest lender by assets, said a majority of shareholders had approved a plan to convert the bank into a full-fledged Islamic lender, state news agency KUNA reported.
The bank’s chairman Ali Mousa Al Mousa was quoted as saying on Wednesday that 85 per cent of shareholders had approved the move, adding that the measure would still require further approvals.
“The decision does not take immediate effect – it is just a first step in a legal process involving several studies and approvals.”
The bank also said it had received approval to raise 120 million dinars ($426 million) through the sale of subordinated bonds to help in its expansion plans.
The bank’s assets rose 7.1 per cent last year, reaching 3.9 billion dinars for the 2013 financial year.

Source:  http://gulfbusiness.com/2014/04/commercial-bank-kuwait-convert-islamic-banking/#.Uz-Yp6iSxOI

Wednesday, April 2, 2014

Indonesia's Islamic Finance Sector Broadens

(Reuters) - Indonesia's Islamic banks maintained double-digit asset growth last year while rural and non-bank segments made further gains, broadening the industry's consumer base in Southeast Asia's largest economy.
Indonesia has the world's largest Muslim population, but that potential has yet to fully translate into the country's Islamic banking sector which remains underdeveloped, lagging behind neighbour Malaysia.
Islamic banking assets grew by 24.2 percent to 242.3 trillion rupiah ($21.4 billion) last year, giving the sector a 4.9 percent share of total banking assets, data from Indonesia's financial service authority or Otoritas Jasa Keuangan (OJK) showed.
Indonesia's 11 full-fledged Islamic banks added 32.7 trillion rupiah worth of assets in 2013, a 22.2 percent increase, while the country's 23 Islamic windows added 14.5 trillion rupiah in assets, a 30.5 percent increase.
But beyond commercial banks, Islamic finance is making inroads in other areas which could help it tap the country's large consumer base - with a predominantly Muslim population of 240 million.
There are now 163 Islamic rural banks in Indonesia which posted a 24.1 percent growth in assets in 2013 to reach 5.8 trillion rupiah, lifting their share of total rural banking assets to 7.5 percent.
Such growth came despite the size of their branch network being almost unchanged with 402 branches across the country.
In a separate OJK report, Islamic financing companies posted a five-fold increase in assets in 2012 to reach 22.7 trillion rupiah. There were 35 such firms in Indonesia at the end of 2012, after 21 opened their doors that year.
Even Islamic pawn-brokers have made gains, they held a 9.8 percent share of total financing for that segment as of December 2012, the latest available data from OJK showed.
Indonesia's Muslim charitable organisations have also built large asset pools which could support efforts to reduce poverty, a study released on Tuesday found.
Regulators are also planning to roll out initiatives to develop other areas of Islamic finance, which follows religious principles such as a ban on interest and monetary speculation.
The OJK is now a full-member of the Malaysia-based Islamic Financial Services Board, a major standard-setting body for the industry. It said last week it would implement risk management guidelines for Islamic insurance companies.
Indonesia's central bank is also developing a market for the short-term sukuk issued by the International Islamic Liquidity Management Crop, to help address a lack of highly-liquid sharia compliant money market instruments.

Other proposed policies include regulating foreign exchange markets, introducing Islamic repurchase agreements as well as education and promotion initiatives.
Source: http://www.reuters.com/article/2014/04/02/islamic-finance-indonesia-idUSL5N0MU0QE20140402

Tuesday, April 1, 2014

Faisal Islamic Bank to participate in CBE Housing Initiative

Faisal Islamic Bank will participate in the Central Bank of Egypt’s (CBE) mortgage finance initiative, the bank’s chairman, Mohammed bin Faisal bin Abdulaziz Al Saud, said Saturday.
CBE announced in February that it had allocated EGP 10bn ($1.44bn) to finance low-income housing projects, with the aim of boosting the construction and real estate sectors.
The money will be sent to banks, in the form of deposits, over a period of 20 years at low interest rates. Low-income citizens who qualify to benefit from the programme will be lent the money at yearly interest rate of 7% to 8%.
Al Saud’s remarks came during a Saturday meeting between him and interim Prime Minister Ibrahim Mehleb, attended by governor of Faisal Islamic Bank of Egypt Abdulhamid Aboumoussa, in order to review the bank’s financial, commercial and investment activities in Egypt, according to a cabinet statement.
During the meeting, they also discussed the possibility of participating in industrial, urban and economic development projects.
Al Saud said that the deposit growth in Faisal Islamic Bank of Egypt averages from 7% to 10% year on year.
The bank, which has operated in Egypt since 1979 through more than 30 branches nationwide, will inaugurate new branches in Cairo’s Shubra neighbourhood and the Qena and Ismailia governorates.
Faisal Islamic Bank was ranked the fourth in a Forbes evaluation of Egyptian banks in October, the only Islamic bank of the 39 on the list, with $206.1m in revenues and $91.7m in profits during the 2012/2013 fiscal year.
However, Islamic banking remains unpopular in Egypt, with only 3% of adults using Islamic banking services and only 49% of adults even having heard of the service, a Gallup survey issued in January showed.

Source: http://www.dailynewsegypt.com/2014/03/30/faisal-islamic-bank-participate-cbe-housing-initiative/

Saturday, March 29, 2014

New Islamic banking Rules Launched

ISLAMABAD: Pakistan's central bank has issued new rules for the operation of Islamic banking windows, aiming to strengthen their role in the world's second-most populous Muslim nation.
The new requirements come at a time when Pakistan is stepping up efforts to develop Islamic finance, prompting several banks to expand their operations in the sector.
Banks will have to obtain written approval from the State Bank of Pakistan before opening each Islamic window, as well as providing the regulator with additional details on staffing, training and marketing arrangements.
As of December, Pakistan's full-fledged Islamic banks had a combined network of 767 branches while conventional banks had 441 Islamic branches and 96 sub-branches, the central bank said.
The rules could help consumers better distinguish Islamic financial products from conventional ones, improving the industry's perception and overall uptake.
Regulators in Pakistan hope to expand the industry's branch network and bring Islamic banking's market share to 15 per cent of the system by 2018.
As of December, Islamic banks held assets worth 1 trillion rupees ($10 billion), a 21.1pc increase from a year earlier and representing 11.2pc of total banking assets.
Some conventional lenders are also opting to convert their operations into full-fledged Islamic banks.
Last week, the majority shareholder of Karachi-based Faysal Bank said it would convert the bank into a full-fledged Islamic unit in the next two to three years.
Last year, Summit Bank said it would convert itself into a full-fledged Islamic bank over a three- to five-year period. It opened its first Islamic banking branch earlier this month.

Sources: http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=373781

Thursday, March 27, 2014

Islamic Banking reaching New Heights

2013 was a significant year for the growth and expansion of Islamic banking in Pakistan. From Bank of Punjabs entry into Shariah-compliant banking to Summit Banks announcement to turnaround its business model to a full-fledged Islamic bank, Islamic banking grabbed headlines all throughout 2013. 

Meezan Banks potential acquisition by a BVI-based group and MCBs potential acquisition of Burj Bank were some other stories that caught the eyes during the year. The Islamic banking bulletin recently released by the SBP also sheds light on some of the important milestones achieved during the year. 

With the addition of 207 branches in CY13, Islamic banking expanded its footprint in eighty seven districts across the country with industry-wide branch network standing at 1,304 branches. Besides, spreading its outreach in the existing districts, four new districts-Jamshoro and Umer Kot in Sindh, Buner in KPK and Baltistan in Gilgit-Baltistan-were taken into the folds of Shariah banking. 

The Islamic banking assets boasted a phenomenal year-on-year growth of 21.2 percent in CY13 whereby it touched a double digit market share of 11.2 percent in CY13 vis-à-vis 8.6 percent in CY12. 

The growth in Islamic assets primarily came on the back of Islamic financing that saw a year-on-year growth of 34 percent in CY13 to clock in at Rs330.2 billion. 

Conversely, owing to limited choice of equity instruments available to the Islamic banks and the non-issuance of GOP Ijara Sukuk over the last nine months, the investments of Islamic banks faltered in CY13. In terms of financing modes, Murabaha financing and diminishing musharaka take the lead, representing over 70 percent in the overall financing mix. 

Client-wise bifurcation shows that Islamic banking continued to be a conservative lender with 71.8 percent of its lending concentrated in corporate sector. The sectors supposed to be on priority--SME and agriculture --remained as step children with the representation of 5.1 percent and 0.1 percent, respectively, in total Shariah financing. Owing to its watchful lending stance biased towards lesser risky corporate clients, the asset quality of Islamic sector significantly kept improving in CY13 whereby it attained the infection ratio of 5.7 percent versus 7.6 percent in CY12. 

With a lot of conventional banks keen to expand their share in Islamic banking arena, the existing players need to distinguish themselves to retain and grow their clientele. The untapped segments such as agriculture and SME offer tremendous potential to those eager to build their unique selling proposition. 

Innovative product offering and better customer service besides spreading awareness will also go a long way in helping the counterparts to stay in limelight.



Sources: http://www.brecorder.com/br-research/44:miscellaneous/4243:islamic-banking-reaching-new-heights/

Monday, March 24, 2014

'More sukuk needed to maintain liquidity'

The seminar highlighted the importance of issuing sukuk in the Oman market. The instrument help diversify portfolio and investment opportunities in the form of new asset class. Bank Muscat plans to raise OMR500 million by way of Meethaq Sukuk Programme. - Supplied photo
Muscat: Tapping into reasonably good demand for Sharia-compliant products in the Sultanate, Shaikh Abdullah bin Salem Al Salmi, executive president of the Capital Market Authority (CMA), is optimistic that Oman will see the issuance of more sukuks. This follows the announcement by Bank Muscat to raise OMR500 million by way of Meethaq Sukuk Programme.
Speaking on the sidelines of a seminar on 'Developing a sustainable Islamic banking industry in Oman' here yesterday, he said, "Sukuk is needed not only for the capital market but also for the Islamic institutions to manage the liquidity. I feel it is equally important for the government and its various arms to roll out some sukuks. So, we are expecting more sukuk from the government as well as the private sector in the months ahead."
Sukuk is a certificate of undivided interest in the asset to be procured or constructed out of the amount pooled by the investors.
Thomson Reuters, the leading global news and information provider for the world's businesses and professionals, in partnership with Meethaq, the pioneer of Islamic banking in Oman from Bank Muscat, hosted a seminar on 'Developing a sustainable Islamic banking industry in Oman' yesterday at the bank's head office.
Sustained growth Shaikh Abdullah bin Salem Al Salmi presided at the high-profile seminar attended by policy makers, Sharia scholars and key representatives of the Islamic banking industry in Oman and the region, in the presence of Abdul Razak Ali Issa, chief executive officer of Bank Muscat .
Shaikh Abdullah bin Salem Al Salmi commented, "The seminar echoes the Islamic banking industry's consolidation phase in Oman focusing on investment opportunities and liquidity management tools to achieve sustained growth during the coming period."
Abdulhakeem Al Khayyat, managing director and chief executive of Kuwait Finance House, Bahrain, delivered the key-note address.
Sulaiman Al Harthy, group general manager (Islamic Banking), said, "Against the backdrop of the Islamic financial services industry gaining momentum in Oman, the seminar seeks to provide a strategic assessment focusing on innovative Islamic financial instruments and liquidity management products. The Islamic finance industry is growing very rapidly worldwide and this is a great opportunity for new Islamic banks as well as conventional banks to come together and create an environment which should make all of us proud, balanced with the Sharia law, Central Bank of Oman's guidelines, public demands and expectation and the rule of law as a whole."
Dr. Sayd Farook, global head (Islamic Capital Markets) of Thomson Reuters, said: "The seminar deals with a very important and timely assessment of the future of Islamic banking industry and how Islamic financial institutions in Oman can grow in an increasingly competitive environment."
Islamic banking future A session on the future of Islamic banking industry covered the strong demand for retail market potential in Islamic banking in Oman, exploring the options of full conversion to Islamic banking rather than opening dedicated windows, how Islamic banks can differentiate themselves and what customers are looking beyond Sharia-compliant in Oman.
In another session on capturing the opportunity with sukuk as a catalyst for foreign investment in Oman, the seminar highlighted how sukuk can offer local investors and financial institutions added portfolio diversification and investment opportunities in the form of new asset classes, whilst issuers can benefit from increased liquidity by tapping into the growing demand for Sharia-compliant investment products.
The session also addressed the investment sourcing potential which has not fully developed among corporates, while regulators are proactively trying to enhance the regulatory framework to support issuance. The session discussed regulatory aspects and ways to enhance issuance and attract market participants in order to build a vibrant market for Omani sukuk.
Another important discussion centred on developing indigenous and innovative solutions for liquidity management for Oman's Islamic finance industry. The session explored new liquidity management products to fill the yield curve and liquidity management issues faced by the Islamic banking industry.

Source:https://www.zawya.com/story/More_sukuk_needed_to_maintain_liquidity-ZAWYA20140324040701/

Wednesday, March 19, 2014

StanChart opens Islamic Banking in Kenya, Eyes Region By Bernardo Vizcaino

(Reuters) - Standard Chartered (STAN.L) has launched Islamic banking services in Kenya, the first foray of its "Saadiq" brand into Africa, and it will use Kenya as a test bed for expanding the brand across the continent, a bank executive told Reuters.
The move comes after Kenya proposed a separate regulatory framework for Islamic finance, part of a broader strategy designed to boost capital markets in east Africa's biggest economy.
"Our experience and success in this market will certainly determine our future strategy for the rest of Africa," said wasim Saifi, the bank's global head of Islamic consumer banking.
"I would expect the next two to three years to be focused on building the Kenya business before we evaluate other markets in east and West Africa."
Standard Chartered will offer its full range of Shariah-compliant products in a market currently served by two full-fledged Islamic banks and the Islamic windows of a handful of conventional banks.
The lender, which makes 90 percent of its profit in Asia, the Middle East and Africa, will use its existing 28-branch network in Kenya; selected locations in Nairobi and Mombasa will have dedicated Islamic windows, Saifi added.
Standard Chartered will roll out products covering current and savings accounts, mortgages and auto finance, as well as trade and term finance.
Islamic finance, which follows religious principles such as bans on interest payments, accounts for roughly 2 percent of total banking business in Kenya, where Muslims make up about 15 percent of the population of 40 million.
Standard Chartered, however, hopes to attract a broader client base.
"We are not looking to target market share from the 1.5 to 2 percent share that Islamic banking has today, but to target the 98 percent that currently is not with Islamic banking."
The development of a specific regulatory framework for the industry would provide a platform for growth; this has been observed in countries such as Malaysia and Pakistan, Saifi said.
"Similarly in Kenya, as the industry develops, we will expect to see the regulatory framework also expand and refine to enable this development."
Earlier this month, Standard Chartered said it expected income and profits to remain "challenged" in the first half of this year after the bank reported its first drop in annual profits for a decade.

Kenya is attracting interest from at least one other Islamic bank; Dubai Islamic Bank's DISB.DU chief executive told Reuters this month that it planned to expand operations into Kenya.


Source: http://uk.reuters.com/article/2014/03/19/UK-islamic-finance-Kenya-idUKBREA2I08020140319

Friday, March 14, 2014

Dubai Islamic Bank Eyes Kenya, Indonesia For Expansion

Dubai Islamic Bank plans to expand its operations into Indonesia, Kenya and other African countries as it emerges from a period of consolidation, the bank’s chief executive said.

The emirate’s largest sharia-compliant lender, which currently makes some 95 percent of its revenue within the United Arab Emirates, says it is entering a growth phase domestically and internationally.
“We are exploring opportunities in Indonesia, Kenya and surrounding countries in Africa, the Indian subcontinent and the GCC (Gulf Cooperation Council),” Adnan Chilwan said in an interview late on Wednesday. “We could acquire, set up a JV, establish a finance company or start a greenfield operation as long as we keep management control and operate under our brand.”
Like many other banks in the UAE, the sharia-compliant lender saw its profits nosedive after Dubai’s financial crisis erupted in 2009 and it was forced to set aside billions of dirhams (hundreds of millions of dollars) to cover bad loans.
The bank focused over the last few years on strengthening its balance sheet and reducing costs, and says it has now dealt with most of its bad loans. Last year DIB completed the takeover of Dubai-based mortgage lender Tamweel, in which it already held a majority stake, through a share swap.
DIB posted a 66 percent jump in fourth-quarter net profit to 518 million dirhams ($141 million), beating analysts’ forecasts, on the back of lower financing costs and impairment charges. Net profit for the full year increased 42 percent to 1.72 billion dirhams.
Chilwan, who was promoted to CEO in July last year, described Africa as virgin territory for Islamic finance. In Kenya, most estimates put the number of Muslims at only about 15 percent of the population of 40 million, but the financial regulator is preparing a ten-year capital markets development strategy that includes Islamic finance.
“Both consumer and wholesale opportunities are there, especially in the countries we are targeting and while the initial investments are not too intensive, the returns are extremely decent and more than acceptable in our line of work,” Chilwan said, without giving details of his plans for Africa.
He added, however, that entry into one country would ease expansion into other countries around the region.
“Given a five-year scenario, we expect a decent franchise spread across these countries with stable and solid yields across all sectors.”
However, Chilwan said the bank also expected strong growth in its domestic market, so the balance between local and international business would not change radically.
“We are pretty much skewed towards the domestic franchise with nearly 95 percent of the contribution coming from the UAE.
“With all the plans in place, we do not expect a dramatic change in the medium term, with international business perhaps getting at best 10 percent to 15 percent of the overall group numbers in about six to eight years.” The bank’s liquidity position is strong so “there appears to be no current requirement to enter capital markets at this time,” Chilwan added.


Source: http://www.dailytimes.com.pk/business/14-Mar-2014/dubai-islamic-bank-eyes-kenya-indonesia-for-expansion


Thursday, March 13, 2014

Poverty in Muslim World is Rapidly Increasing: Zubair Mughal

Poverty can easily be driven away through Islamic Microfinance

Zubair Mughal, CEO, AlHuda CIBE is receiving the plaque of appreciate from H.E Dr. Mounir Tlili, Minister of Religious Affairs of Tunisia during Int’l Islamic Microfinance Symposium which was organized by Islamic Development Bank, Tunisian Association of Islamic Economics & GIZ

(Tunis) Half of global poverty reside in Muslim world while the Muslim population is 24% of the total global population, if the dangerously increasing poverty in the Muslim community is not controlled soon then it will be alarming. These concerns were addressed by Muhammad Zubair Mughal, Chief Executive Officer, AlHuda Centre of Islamic Banking and Economics while speaking at Islamic Microfinance Symposium that was held at Tunis – Tunisia which was organized by Tunis Association of Islamic Economics with association of Islamic Development Bank (IDB) and German Donor Agency GIZ. 

He mentioned the various causes of rapidly increasing poverty in the Muslim world i.e. lack of education, lack of employment political instability and so on. But on the other hand, the main hitch is unavailability of the proper financial products which are in line with the Muslim’s religious values and social norms. Micro financing is not utilized by Muslim population due to interest and thus is excluded from financial inclusion. On the other hand, Muslim world can be led out of the poverty by extending financial inclusion through Islamic microfinance. He said that the according to the statistical information of multilateral development agencies, 300 million people were graduated from Micro to SME level in past year, and the countries mentioned in the list are China, India, Brazil and Chili etc. but when we look at the enlisted countries we will come to know that then countries mentioned in the list are not Muslim and by this we will come to know that the poverty is decreasing in non Muslim countries and increasing in Muslim world. 

He further added that unfortunately, Islamic microfinance is not given the proper place in the poverty alleviation strategies of International development agencies (e.g World Bank, UNDP, IFC, USAID etc) in the way it should have been given. Islamic microfinance is just 1% of the total micro financing of the world that is just 1 Billion USD. He said that there is no religion of poverty but religion plays an important role in poverty alleviation. This is the reason; Islamic microfinance should be given a proper place in the modes of poverty alleviation through which both Muslims and non-Muslims can take benefit. He added that there are various non Muslim countries where Islamic micro fiancé has been used so effectively to alleviate poverty. 

Experts from 15 countries including Morocco, Kenya, Yemen and Pakistan had taken part in the symposium. A mutual declaration about the legal frame work of Islamic microfinance was given at the end of the event. 

Wednesday, March 12, 2014

Islamic Banking need to be promoted in SME sector

Saturday, March 08, 2014 - Karachi—The Union of Small and Medium Enterprises (UNISAME) has submitted recommendations for the serious consideration of the policy makers in the forthcoming budget and trade policies in order to stimulate the economy which can only be done by promoting the majority SME sector wholeheartedly and giving them a comfortable environment. The Union believes that SME promotion and development is no charity but it is the right of every SME and responsibility of the state to uplift the sector. The state must provide them equitably and make dedicated efforts to make doing business easy.


The SME sector includes traders, manufacturers, farmers and service providers. There are millions of SMEs all over Pakistan including many hospitals schools and consultants’ services. We were told 15 years ago that they were 3.2 millions SMEs but we are sure if you also include the SME farmers there would be almost 6 millions by now. We have created awareness about the importance of the sector and identified the impediments and have submitted recommendations every year for inclusion in the budget, trade policy, industrial policy and have urged the ministry of industries to revisit the SME policy made in 2007. We keep voicing the requirements of the sector all the time. The SME issues are poor law and order, loadsheding, poor infrastructure, lack of finance, information, transfer of technology, incentives and defective taxation system other than the corruption, non implementation of SME policy in right earnest. The union has submitted the following recommendations to SMEDA for onward submission to the concerned policy makers.

Law & Order: We have suggested the formation of SME Liaison Committee (SME-LC) on the pattern of the CPLC to arrange collective protection squads in industrial areas as the SMEs are threatened by gangsters and politically patronized miscreants. The SMEs need a strong committee to work as liaison between the police and the entrepreneurs and to exert pressure on the police to trace the culprits and prosecute them. The SME-LC chief must get the status of honorary first class magistrate to prevail on the police department and the relevant S.H.Os. 

Energy Crisis: We have suggested that alternate energy systems must be promoted and those SMEs willing to install alternate energy devices of solar, wind, Biomass be encouraged and the government needs to exempt the import of alternate energy systems on duty and leasing facilities must be provided on special affordable mark-up. Finance: This is a very important issue, as banks are demanding immovable property as collateral. The banks need to be educated on the subject of SME financing and taught risk management. The commercial banks need training and education on collateral management, warehouse financing, also financing on the basis of positive cash flows and the government must promote Islamic financing, leasing, hire purchase, commercial property leasing. The union has urged the government not to privatize the SME Bank but make it an SME Bank in the real sense.

The union has also urged the State Bank of Pakistan (SBP) to establish the SME Guarantee Insurance Company to insure SME financing and indemnify the banks against default by the borrowers. The SME needs venture capital and the system of venture capital needs to be promoted. The SMEs are looking forward to the establishment of the Exim bank as promised in the trade policy. Infrastructure: The infrastructure is poor and the SMEs are disabled due to poor infrastructure in the industrial areas. There is need for industrial estates and the need for government to allot land at concession for industrial estates. The leasing companies must adopt commercial property leasing to finance the SMEs to buy shops, workshops, warehouses and factories under commercial property leasing.

Technology Transfer: The SMEs need to import technology to manufacture quality goods and the government should facilitate collaboration with advanced countries to enable SMEs to manufacture goods with indigenous raw material and also import substitution goods in Pakistan.

Source: http://pakobserver.net/detailnews.asp?id=235662

Tuesday, March 11, 2014

Turkey has great potential for Islamic insurance, report says

Turkey has significant potential in the sector of Islamic insurance, as participation banks in Turkey held $39 billion in Islamic assets in 2012 and these are expected to grow to $121 billion by 2018, according to the Global Islamic Insurance Forecasts Report prepared by Ernst & Young (EY) for the period 2013-2014.

The report also stressed that Turkey's high potential for Islamic insurance is based upon its young population, along with ongoing regulatory reforms and a government that is willing to promote financial inclusion through participation banking.

However, as only four participation banks currently operate in Turkey, there is a major supply-side constraint, as well as limited legal infrastructure in the Islamic finance sector. In a press statement released on Feb. 28, EY Turkey Audit Partner Seda Hacıoğlu stressed that Turkey does not have a clause on Islamic insurance in its insurance law yet, adding that the lack of a developed Islamic capital market by world standards is the primary obstacle to the spread of Islamic insurance in Turkey.
Another factor negatively affecting Islamic insurance in Turkey is the problematic pricing of this insurance, which leads prices to remain relatively low in the sector. Hacıoğlu said that Islamic insurance is based on making profit at the end of a certain period, stressing that this factor constitutes a threat and weakness in the sector.

According to the EY report, global Islamic Insurance assets had reached $11 billion in 2012, a 16 percent increase compared with previous year. Islamic insurance is widespread in Arab countries, Malaysia, Indonesia and also Europe and the US. “It is estimated that currently over 200 Islamic insurance firms operate in 33 countries, while 51 percent of the participation was from Saudi Arabia, followed by the Asian region with 25 percent, in 2012,” Hacıoğlu stated.

Hacıoğlu predicts that as the variety of Islamic bonds starts to diversify, asset management in the Islamic insurance sector will also begin in Turkey, along with an increased trade volume and interaction with Arab countries.


Source: http://www.todayszaman.com/news-341612-turkey-has-great-potential-for-islamic-insurance-report-says.html