5 Interactive Distance Learning Programs on Islamic Banking and Finance

Saturday, August 2, 2014

Making Pakistan a Centre of Excellence for Islamic Finance

Before the financial crisis ensued in 2007, there was an explosion of interest from a number of countries in becoming hubs for Islamic finance. These countries included Malaysia, Singapore and Hong Kong in the East; United Kingdom, France, Italy, Luxembourg and Ireland in the West; and Bahrain, Qatar and the UAE in the Middle East. Even countries like Japan and South Korea showed serious interest in Islamic finance in those pre-crisis days. Many of these countries, however, went cold on their claims during the financial crisis, leaving Malaysia as the most important global player in Islamic banking and finance (IBF).
Malaysia’s global leadership role is now once again being challenged by the likes of the UAE and Qatar, where the governments are actively supporting the promotion of the IBF. According to the Islamic Finance Country Index (IFCI) , published annually by Edbiz Consulting, Iran ranks number one in the global Islamic financial services industry. Malaysia and Saudi Arabia are second and third. Pakistan ranks ninth on the list. The current PML-N led government is the first democratically-elected government in the country which seems serious about promoting the IBF in Pakistan. The appointment of a dedicated deputy governor at the State Bank of Pakistan (SBP), with a focus on promotion of Islamic banking alludes to this fact. Apart from the developments at the central bank, advocacy of the IBF in Pakistan remains rather limited. The SBP has recently initiated a project to promote quality education in the IBF, by committing to invest in Pakistani universities and institutions of higher learning and develop them into centres of excellence.
In Malaysia, the prime minister himself keeps himself abreast of with new developments in the IBF. In the UAE, the ruler of Dubai is directly behind its initiative of making Dubai a centre of excellence for the global Islamic economy. In Pakistan, such a central leadership role has yet to emerge. Given the ongoing military operation in North Waziristan, political noise created by the likes of Imran Khan and Tahirul Qadri, and numerous other important engagements, the prime minister has not been able to embrace IBF fully. The finance minister also has a full plate and so has the secretary of finance. In such circumstances, there is a need that a full-time advisor be appointed to the prime minister, who should have multiple roles, including but not limited to, advocacy of IBF in Pakistan and overseas, liaison between different government departments (Ministry of Finance, Planning Commission, and SBP, etc) and international bodies like Islamic Financial Services Board and Accounting and Auditing Organisation of Islamic Financial Institutions for the promotion and development of IBF in the country, devising a national strategy on promotion of the IBF, developing a framework for enhancing the role of Pakistan as a global leader in the IBF and more specifically, preparing recommendations for the government to create a centre of excellence for the IBF in Pakistan.
It is absolutely imperative for Pakistan to work towards a leadership role in the global Islamic financial services industry to fully benefit from an industry that is fast approaching the important psychological mark of $2 trillion under management worldwide. This can be done by advocating the IBF nationally and by being involved in the decision-making of international forums related to Islamic finance. It should also look into hosting an international body related to Islamic finance. There are a number of other bodies that work for the promotion of IBF, including but not limited to the International Sharia Research Academy (ISRA)  for Islamic Finance and International Islamic Liquidity Management Corporation IILM — both hosted by Malaysia. The World Islamic Economic Forum (WIEF), supported by the Malaysian government, is also very active in advocating IBF. The Dubai Centre of Excellence for Islamic Banking and Finance is another body trying to pitch Dubai as the capital of the global Islamic economy. Pakistan, on the other hand, lags behind all these countries in such endeavours, despite having contributed significantly to the amount and quality of human capital to the global Islamic financial services industry.
There are a number of reasons behind this indifference to promoting and projecting Pakistan as a global leader in the IBF. First, the ongoing war on terror, and the law and order situation in the country did not allow the authorities to focus on this strategic area of paramount importance for the national economy. Second, the previous governments (the military government led by General (retd) Pervez Musharraf and the PPP-led government) shied away from anything Islamic, primarily due to the apologetic view of the Musharraf regime, and the aversion of the PPP government to be seen as promoting or backing any Islamic phenomena. Third, the lack of talent available in Pakistan was also responsible for not giving confidence to it to vie for a global role in the IBF. Finally, in the absence of a political push, the bureaucracy in the country has never considered the IBF with sympathy.
Despite all these obstacles, the share of Islamic banking in the banking sector has exceeded 10 per cent, and its growth is almost double of what conventional banking has witnessed in the last five years. Given this, it is recommended that Pakistan should now develop an international centre of excellence for Islamic finance, similar to the Dubai International Financial Centre (DIFC) and Qatar Financial Centre (QFC). These two centres are not exclusively for Islamic finance but are certainly engaged in the promotion of the IBF. The Malaysian International Islamic Financial Centre (MIFC), on the other hand, follows a different model to the DIFC and QFC, and is a virtual body connecting Ministry of Finance, Bank Negara Malaysia (the central bank), the Securities Commission Malaysia, other bodies in the government and international organisations. Pakistan should start with this model, eventually setting up a physical centre of excellence exclusively for IBF. This centre could be hosted on the outskirts of Islamabad as a ring-fenced financial centre like DIFC and QFC. The proposed special adviser to the prime minister on IBF should be given the task of developing a framework for setting up such a centre, among other things listed above.
The writer is an Islamic economist with PhD from Cambridge University.

Monday, July 28, 2014

Kenya's KCB to offer Islamic banking in all its branches

Kenya's KCB Bank, the country's largest lender by assets, plans to offer Islamic banking products through its entire branch network, accelerating the expansion of sharia-compliant banking in east Africa's biggest economy.
The move comes after Kenya's Capital Market Authority proposed a separate regulatory framework for Islamic finance, part of a broader strategy designed to boost the country's capital markets.
KCB has received all necessary approvals to launch Islamic banking across its 182 branches in the country, chief executive Joshua Oigara said in a statement. "In the long term, the product will...promote development in the marginalized areas of our country," Oigara said.
The lender will initially roll out Islamic banking services through seven branch centers, beginning from next month.
KCB joins Standard Chartered in offering Islamic banking services in Kenya, after the British lender launched its "Saadiq" brand in March.
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.
There are currently two full-fledged Islamic banks in Kenya - Gulf African Bank and First Community Bank (FCB) - as well as Islamic banking services at several conventional lenders.
KCB, which operates across east Africa from Burundi to South Sudan, already offers Islamic banking services in Tanzania.
Islamic finance is also being developed by several other sub-Saharan countries in Africa such as Nigeria and Djibouti.

In June, Kenya's finance minister said the government would consider issuing Islamic bonds, or sukuk, after a successful debut $2 billion Eurobond.

EiD Greetings from AlHuda Centre of Islamic Banking & Economics

Saturday, July 26, 2014

Islamic Financing To Overtake Conventional Banking In Kuwait

Commercial Bank To Provide Shariah-Compliant Products And Services

KUWAIT CITY, July 24: An increasing number of Kuwaiti lenders are moving away from traditional banking in a bid to tap into a booming market for Shariah-compliant financial products in the region — a move that could soon see Islamic financing overtake conventional banking in the Gulf state.
Commercial Bank of Kuwait (CBK) is the latest to unveil plans to turn into a fully-fledged Islamic institution. CBK announced in July that it had received regulatory approval to issue up to KD120m ($425.16m) in bonds in preparation for the transition, which received the approval of 85% of its shareholders in April. 

The move by CBK, to be completed by the end of 2014, will help Kuwait cement its position as a provider of Sharia-compliant products and services. There are already five other Kuwaiti Islamic banks; Kuwait Finance House (KFH), Boubyan Bank, Al Ahli United Bank, Kuwait International Bank, and Warba Bank, which was established in 2010. This compares with four conventional banks.
Kuwait’s Islamic banking assets grew by 8.7% during the first nine months of 2013, reaching KD22.5bn ($79.7bn), while Islamic financing grew by 11.2% to hit KD13.5bn ($47.8bn) during the same period, reported in The Banker in April. This exceeded the growth rates in the overall banking sector, which saw a 7.1% growth in assets and a 7.5% growth in loans between January and September. 
This move toward Islamic banking follows a broader regional and indeed global trend. Islamic finance industry’s assets worldwide are estimated to have grown 18.6% annually to reach $1.8trn at the end of 2013, according to KFH Research, which projects that total Islamic financial assets will reach $2.1trn globally by 2015. 

The Sharia compliant sector has expanded rapidly within Southeast Asia and the Gulf Cooperation Council (GCC), whose assets accounts for more than a third of the worldwide total according to KFH. Other banks in this region are also looking to make the switch to Islamic banking. Malaysia’s Agro Bank plans to convert to Islamic banking by 2015 while the country’s SME Bank is planning a full conversion by 2018 according to Reuters. In Pakistan, Faysal Bank and Summit Bank are mulling similar plans. 

In Kuwait, the sector’s history goes back to 1977 with the establishment of KFH Group, Kuwait’s largest Islamic bank. For the last three years to end-2013, KFH total assets grew at a compounded annual growth (CAGR) rate of 8.8% to reach KD16.1bn ($57.2bn).
CBK, the state’s fifth-largest lender by assets, is following in the footsteps of both Boubyan Bank and Ahli United Bank (AUB) Kuwait in converting from a conventional lender, drawn by the sector’s rapidly rising popularity and promising outlook for growth, which continues to outpace that of conventional lenders. According to Reuters, CBK’s conversion will increase Islamic banks’ market share in Kuwait above an estimated 40%. 
AUB Kuwait, (formerly known as the Bank of Kuwait and the Middle East) posted a record $579.4m in net profit in 2013, a 72.6% increase over 2012’s $335.7m, which Deputy CEO Ahmed Zulficar attributed to the switch to Islamic Banking: “Since the bank’s conversion to Islamic banking, our performance has improved”. 

Islamic finance expert Blake Goud, who writes for the Thomson Reuters Islamic Finance Gateway, noted that AUB had no debt when it switched to Islamic banking in 2010, which was beneficial due to the fact that less instruments had to be converted from conventional to sharia-compliant. 
As a result, it had converted the majority of its loans and advances to sharia-compliant financing by the end of its first year as an Islamic Bank. 
“Contrast that with a similar balance sheet from CBK which has significant assets and liabilities under a year, but will now have a sizeable additional interest-based liability longer than one year (17% of existing liabilities) that will remain on its balance sheet post-conversion,” said Goud.

Wednesday, July 23, 2014

Q&A: H Abdur Raqeeb on The Need for Islamic Banking in India

India's central bank is reviewing regulations on Islamic banking in Asia's third-largest economy.
The Reserve Bank of India has set up an internal committee to examine the matter, unnamed sources told Firstbiz.com.
The RBI has reportedly set up a three-member panel comprising senior RBI officials Rajesh Verma, a deputy general manager with the Department of Banking Operations, Archana Mangalagiri, general manager, Non-banking Supervision and Bindu Vasu, joint legal adviser.
Islamic banking is practiced in several countries, including in the UK, which in June issued an Islamic bond that attracted orders in excess of £2bn ($3.4bn, €2.5bn) from global investors.
What is Islamic Banking?
Islamic banking follows the Shariah law. The model differs from conventional banking in that it does not accept deposits, only investments, which essentially make banking a venture capital activity. The model also encourages interest free loans in a bid to boost financial inclusion.
Islamic banking is also based on profit and loss-sharing; the model forbids the payment and receipt of interest and prohibits investment in businesses that are considered sinful – such as adult entertainment or the production of alcohol.
Speaking to IBTimes UK, H Abdur Raqeeb, General Secretary of the New Delhi-based Indian Centre for Islamic Finance  (ICIF) told us how India stands to benefit from the roll out of Islamic banking.
Q: Do you think that India is a key place for growing the Islamic banking market and why?
Ans: The misconception among many Indians is that Islamic banking caters to only the Muslim population. The model promotes financial inclusion. India's small farmers and petty traders for instance are still not part of the banking system despite over 40 years of nationalisation of the country's major banks. They cannot go to the capital markets to raise money. Islamic banking can cater to [the millions] outside the commercial banking system.
In addition, Muslims' savings are not being ploughed back into the Indian economy as a large section of the Muslim population here does not bank with commercial lenders.
Q: What needs to be done in terms of rolling out Islamic finance in India?
Ans: Political will is necessary. The government has to take a decision on Islamic banking and the RBI has to regulate it. The central bank has to look into it.
We have been pleading with the government and have met Finance Ministry officials in the previous [Congress Party-led] regime.
Moreover, we don't have to use the term 'Islamic banking' in India. We can refer to it as alternate banking, which is what the UK calls it. Or, we could call it participatory banking, which is what they call it in Turkey.
Q: But, if India adopts Islamic finance on a broader scale, will this mean that a lot of the legal framework will have to change?
Ans: Not much actually. We in India can borrow and benefit from examples of Islamic banking in the UK or in Singapore.
India Reforms
The question about whether India should allow Islamic banking has been debated for long and RBI Governor Raghuram Rajan is no stranger to the debate.
In 2008, India's Planning Commission roped in Rajan, then a Professor at the University of Chicago, to head its High Level Committee on Financial Sector Reforms (CFSR).
The CFSR, tasked to identify 'real sector reforms', recommended that New Delhi 'permit the delivery of interest free finance on a larger scale, including through the banking system.'

Monday, July 7, 2014

Islamic Banking VS Conventional Banking

Islamic banking has developed  recently.  Put forward  to be having high ethical criterions, the banking system upraises questions from many.  First of all, we should answer some questions like that in this field.   Are these standards just a sham —a smart  way to hide  that Islamic banks are basically like any other?  Are they a real attempt to reunite religious principles with finance in a capitalist world?
To answer if Islamic banking is totally different from the conventional banking system, we  should know the history of  this  interest-free  banking system.
Origin of Islamic banking
The most important property  of Islamic banking is its banning  of  interest. Doing business  without the use of interest-bearing loans, in the form of Mudaraba rules, advances the coming  of Islam.
Before Islamic period, Arabs  in Mecca, close to the crossroad  of old commerce  routes, coordinated  caravans to carry  goods between Syria and Yemen.  The Meccan merchants  sometimes  used agents to deliver the goods, buy, sell and report back with the numbers for profit or loss.  Later on, it  was  shared according to the traditional  principles  of Mudaraba.
When a merchant  united with others in a shared trading initiative, the profits or losses were shared, under an another principle called Musharaka, suitable  for an agreement between participating sharers in a trade.  Therefore,  the trading caravans were capitalized with  the principle of  sharing profits or losses, not by interest-bearing loans.
Smaller communities
Before modern banking system becomes popular, Mecca was a quite small town, and the forming  a trade caravan was a principal  occasion.  The travelers and their patrons were acquainted  with one another’s general fame  and status, and possibly knew each other as a  person.  That continued true of societies in the early Muslim period.
But, society is more disunited in today’s world.  Rich people  to invest do not need to know anybody  with an  initiative  that requires capitalizing, and people who have trade thoughts may have no contact  with possible investors.
The conventional banking system has grown up to intercede  between the groups of people, enterprisers and investors.  To exist, the banks obviously  have  to make a profit.
Prohibition on interest
The prohibition of  interest (riba) on loans in Islamic banking system is well known.  Riba is considered as haram, or forbidden in Islam.  But to operate  a bank needs  to charge some fees for its services.  For conventional banks, a principal  of profit is from revenue that is obtained from charging interest.
In contrast, Islamic banks make their profits in other ways such as ‘profit-sharing’.  Is it possible for Islamic principles of profit-sharing rather than interest taking to transfer from the  trading caravans to the anonymous banking system that we experience now?
The old systems of Musharaka and Mudaraba survive in the modern Islamic banking system.  They both refer to ways of sharing risk and reward in place of remuneration at a fixed interest rate.
Mudaraba is used for a more passive kind of investment or participating, in which  one side supplies capital or goods, and  the other side  carries out the work necessary  to gain  a profit.
Musharaka presents  a more active investment style by a person  who is either a partner in the business or  a supplier of money.
A very distinct  difference of the Islamic banking system over conventional banks is on the sharing of risk, that is equally spread to either the lender or borrower.

Thursday, July 3, 2014

Islamic Banking Sector in South Africa shows healthy growth

ABOUT half of Africa’s population is Muslim and businesses are gearing up to meet the needs of this growing market with Islamic finance and banking products.
Just less than a decade since the market was created, the local Islamic banking sector is estimated to be worth R80.6-billion in terms of assets under management.
On the African continent, the market’s assets are estimated to be more than $1.6-trillion (about R17-trillion) and are expected to surge to more than $5-trillion by 2020. These numbers may seem a stretch, but Africa is home to more than 500 million Muslims — about a quarter of the world’s Muslim population.
The growth of Islamic banking has not gone unnoticed by the National Treasury. Earlier this year during the budget speech, former finance minister Pravin Gordhan revealed that South Africa will launch Islamic bonds — better known as sukuk — before the end of the year. Sukuk are normally based on property or infrastructure and are designed to pay a fixed profit rate rather than a coupon.
Absa, FNB, Al Baraka Bank and HBZ Bank offer Islamic commercial and corporate banking products in South Africa.
Standard Bank has Islamic banking offerings in other countries on the continent, and Nedbank is rumoured to be assessing the possibility of dipping its toes into the market.
Islamic banks do not require their clients to be Muslims. “We are not pushing a religion here. We are pushing a [financial] product that has certain requirements,” said the head of Islamic banking at Absa, Uwaiz Jassat.
Those requirements have to be compliant with sharia law, which prohibits the taking and receiving of interest and also rules out certain other practices in conventional banking.
For example, when Islamic banking clients deposit money in their savings accounts, the lender will then trade the money to earn a return on it and those returns are shared with the customers.
Jassat said this method sometimes beat the return on a conventional interest-bearing savings account.
Last year, the returns for Absa Islamic banking saving accounts were 2% higher than for conventional ones.
So it is not surprising that more people are opting to switch to Islamic banking. About 10% of Absa’s Islamic bank customers are non-Muslim. Although Absa’s Islamic banking division is relatively small, its contributions are quite significant to the parent company’s bottom line, according to Jassat.
Al Baraka, the first stand-alone Islamic bank to operate in South Africa with a full bouquet of financial products, has more than 40 000 customers.
Al Baraka, whose parent company is based in Bahrain, has eight branches nationwide, most of them in Muslim communities. Last year, total assets grew 18.7% to nearly R4.4-billion, and advances swelled 13.1%. Al Baraka’s deposit book grew 18.6% to R619.1-million and the equity finance book increased 23.1% to R126.6-million.
Al Baraka’s CEO, Shabir Chohan, said about 30% of the Muslim population — which is estimated to be more than two million strong in South Africa — was using Islamic banking products provided by local banks.
The total Islamic banking sector in South Africa is estimated to be worth as much as R12-billion. Chohan said this meant his bank had the potential to grow eight to 10 times its current size.
Absa’s Islamic banking division is eager to introduce vehicle and home-loan products. Jassat said that once more products were introduced, “customer numbers will skyrocket”.
However, if it does not move fast, it might end up eating its rivals’ dust. FNB’s Islamic banking unit already offers these products and recently launched a term-deposit product.
The CEO of FNB’s Islamic banking unit, Amman Muhammad, attributed the success of FNB’s Islamic banking products to the fact that they were underpinned by strong values and principles that, he said, covered much more than just finance.
Much like Absa, which is controlled by Barclays, FNB has its sights set on expansion beyond South Africa’s borders.
“Africa provides a large opportunity for growth,” said Muhammad. “Muslim entrepreneurs play an important role in the African economy, so the need to provide appropriate financial services through the correct channel is paramount.”

Friday, June 27, 2014

Al Huda CIBE extending its services to the USA market

Al Huda CIBE extending its services to the USA market
Islamic Banking & Finance has a Bright Future in the United States: Zubair Mughal

(Lahore) AlHuda Center of Islamic Banking and Economics (CIBE), continuing its commitment to bring Islamic finance to the United States, announces a joint-training workshop in Islamic Banking and Finance in conjunction with FAAIF and the University of New Orleans on October 06 and 07, 2014 in New Orleans, Louisiana, USA.  Al Huda CIBE, having conducted hundreds of successful training workshops all over the world is excited to enter the American markets to bring fascinating and complex Islamic finance and banking products and structures to the citizens of the United States. 

Muh. Zubair Mughal, Chief Executive Officer of AlHuda CIBE, said that Islamic Banking and Finance has immense potential in the USA market and it has come up with a blooming prominence after the emergence of International financial crisis, thereafter Islamic financial system has appeared as a sustainable and reliable financial system in the world which does not have such flaws which were the root causes of International financial crisis. He mentioned that about more than 30 Islamic financial institutions are operating in the USA but the potential is much higher as USA is suppose to be regional hub for North America, South America, Latin America and Caribbean countries, a handsome demand of Islamic financial products already exist in Brazil, Argentina, Canada and others countries. American continent is dwelling 8 million approx Muslim population, amongst them Canada have 2% Muslim Population, 0.8% of the U.S. population, Muslims constitute about 1 percent of the North American population and Argentina has the largest Muslim population in Latin America with up to 2% of the population, which shows a big appetite of Islamic financial products in the region.

He mentioned that we have chalked out a detailed strategy to penetrate into the region with our services and this workshop is our entry point to introduce Islamic financial services in this region. He also mentioned that the collaboration of University of New Orleans and FAAIF for upcoming workshop will further strengthen our vision to achieve our optimum goal for the development of Islamic finance Industry.

FAAIF CEO Camille Paldi is looking forward to this tremendous opportunity to bring Islamic finance to the people of the United States, which is her home country, and she is very much hopeful that the American people are just as excited as she is about learning this distinct form of Holy Book finance.  Not only does Paldi hope to enrich the lives of US citizens, she aims to help US companies stay competitive in the International financial markets and keep America strong #

Thursday, June 5, 2014

AlHuda CIBE Eyes African Islamic Finance Market

AlHuda Centre of Islamic Banking and
Economics (CIBE) chalks down the strategy to offer its services in African
countries to promote Islamic banking and finance through consultancy, Research,
education and capacity building where there is an excellent potential related
to this industry. This was said by Mr. Muhammad Zubair Mughal, Chief Executive
Officer, AlHuda CIBE, while talking to the media in the opening ceremony of “6
months road map for the strategy of Islamic Banking and Finance in Africa”.
According to the strategy, AlHuda CIBE will begin different initiatives on 15
African countries from June 2014 to December 2014. In this, AlHuda CIBE will
establish Islamic microfinance institutions; will offer Takaful consultancy
services, technical and Shariah support, and help giving education and capacity
building to the relevant personnel. AlHuda CIBE has also chalked the plan of
organizing “African Islamic Banking and Finance Road Show 2014” in 6 African
countries i.e.
South Africa, Tunisia, Kenya, Mauritius, Tanzania and Nigeria for the awareness and
remove the capacity constraint from the mentioned countries.

He further added that
this is quite a wrong conception that Islamic finance is only taking its roots
in North African countries e.g. Tunisia, Morocco, and Algeria etc, rather its
potential exists in all African continent. Islamic banking and finance is
growing rapidly in Nigeria, Libya, South Africa, Kenya and Morocco, while Egypt,
Sudan, Tunisia have already taken good initiatives in the mentioned field. He
said that there is also a rising trend of Islamic banking and finance in
Senegal, Mauritania, Uganda, Ghana and Ethiopia. He said, to tap the African
Islamic finance market in better way, Alhuda CIBE has been incorporated in
South Africa, Uganda and Dubai to provide better and prompt services to their  clients according to International standards.

Analyzing Islamic financial
industry of Africa, he added that, according to a careful estimate the total
volume of Islamic finance in Africa is 78 Billion USD, which is less than 5%
share of global Islamic finance industry, out of that Islamic Banking have 81%
share, Islamic Fund 7 %, Sukuk 5 %, Takaful 6%, and Islamic microfinance have only
1% share in the African Islamic Finance Industry,  while  96+
Islamic banks, 29 Islamic Funds, 31 Islamic Microfinance Institutions and more
than 41 Takaful companies are working over there.

He also emphasize that
the increasing trend of poverty in Africa can be reduced by utilizing Islamic
Microfinance methodology, the multilateral organizations e.g. African
Development Bank, Islamic Development Bank, GIZ, IFAD and world bank can play a
pivotal role in this direction to achieve the optimum goal of poverty
alleviation and social development # 

Wednesday, May 14, 2014

Pakistan and Sudan Leading in Islamic Microfinance Industry Active Client Base of Islamic Microfinance have exceeded 2 Million: Zubair Mughal

Muhammad Zubair Mughal, CEO, AlHuda CIBE speaking at Int’l  Workshop on Islamic Microfinance Business Models, which is jointly organized by IRTI – Islamic Development Bank & IIUI in Islamabad.

(Islamabad) The demand of Islamic microfinance is rapidly increasing in order to serve poverty alleviation and social development, Its active client size have exceeded to 2 million now from which more than 700,000 belong to Sudan and more than 400,000 clients of Islamic Microfinance Institutions are from Pakistan. On the other hand, Yemen, Indonesia, and Bangladesh also have a good number of clientage and Islamic Microfinance has satisfactory demand in Morocco, Senegal, Nigeria, and Tunisia. This was stated by Mr. Muhammad Zubair Mughal, Chief Executive Officer, AlHuda Center of Islamic Banking and Economic (CIBE) in addressing to International Conference on Islamic Microfinance Business Model that was jointly organized by IRTI – Islamic Development Bank and International Islamic university Islamabad. He further added that Islamic microfinance has been successfully utilized for poverty alleviation. Both Muslim and non Muslim are taking equal befit from this role model. He said that in a few countries including e.g Nigeria, India, Tanzania, and Ethiopia, Islamic microfinance is being utilized as only for Muslims communities but this is quite wrong, Islamic microfinance should be used as a business model not as religious intervention, Islamic Microfinance is a system which can be utilized and operated by all the segment of society without any religious discrimination. Yes, there is an extra benefit for Muslims that it is in accordance with their religious belief but for non-Muslim it is an ideal financial instrument for poverty alleviation and social uplifting.
He added that there are lots of challenges faced by Islamic microfinance i.e. squeezed volume of organizations, lack of technical expertise and quality HR, lack of standardization of the products etc but the main hurdle is lack of funds for Islamic microfinance institutions, this is why the growth is not so constant of this influential system but It can be rectified with venture capital, Social Sukuk, Centralized Zakat System, revitalization of Waqf concept, Islamic banking charity to be used in Islamic microfinance, Crowed funding platform and create liaison between Islamic banking and Islamic microfinance Institutions.
He said it is quite wrong thinking that Islamic microfinance is a complicated financial product; actually It can easily be implemented in any country in any type of Islamic Microfinance Institutions. All Islamic microfinance products whether that is Grameen Model, Village Banking Model, Credit union model, Cooperative Model or self help group etc are all in line with models of micro-finance credit. He further added that before using Islamic microfinance in Conventional micro finance system, minor changes are to be done in the system i.e. use of Islamic microfinance products instead of interest based products, Islamic insurance (Takaful) instead of Conventional insurance, and the Shariah method of savings and investment etc.

Source: http://www.alhudacibe.com/pressrelease36.php

Monday, April 28, 2014

MoU signed to promote Islamic Finance in France Al Huda CIBE and SAAFI France will jointly initiate various projects

MoU signed to promote Islamic Finance in France Al Huda CIBE and SAAFI France will jointly initiate various projectsL
Lahore - Islamic finance is not confined to Middle East or Muslim countries rather it has gripped its roots in European countries and America as well. And the determination and efforts to become financial hub of London is the distinct example of the promotion of Islamic banking and finance. There is no denying the fact that the organizations of Islamic finance are rapidly growing in European countries and France is one of the destinations of the list. AlHuda Centre of Islamic Banking and Economics and Solutions d'Acce's a I'Assurance et la Finance Islamiques (SAAFI) have signed an MoU in Paris France that was signed by Mr. Muh. Zubair Mughal, CEO, AlHuda CIBE and Mr. Ezzedine Ghlamallah, Director, SAAFI.

While addressing to the ceremony, M. Zubair Mughal said that France is the country that identifies the largest Muslim community in Europe with nearly 6 million Muslim residents that is 9% of the total population of France. It is to be noted that Islamic finance is not only the interest of Muslim population rather non Muslim are taking good interest in Islamic finance. There are various non Muslim countries where Islamic banking and finance is providing their customers state-of-the-art services above all religious differences.

He added that according to this MoU, both organizations will work together to strengthen the abilities of Islamic banking and finance in France, and to provide technical and Shariah advisory, trainings and other services. He said that AlHuda CIBE is keeping an eye on Islamic banking and finance of European countries and AlHuda CIBE and SAAFI will mutually conduct training workshops on Islamic banking and finance on 23rd & 24th June in Paris.
In the MoU singing ceremony, Mr. Ezzedine Ghlamallah said that Takaful, along with Islamic Banking, is also growing with rapid pace in Europe and particularly in France where it has enough potential. He added that AlHuda CIBE's entry in Europe is a constructive initiative which will strengthen the diversified Research, Trainings and Shariah advisory in Islamic Banking and Finance in European countries i.e. Germany, France and Switzerland and it will definitely result in the ultimate growth of Sukuk, Takaful and Islamic Microfinance Industry.

Saturday, April 26, 2014

Islamic banking to be promoted under strict Sharia Laws

KARACHI: Islamic banking industry could develop at faster pace under true spirit and principles of sharia by professionals of banking and religious scholars of the field of finance.
Speakers at the concluding session of third Islamic Finance Exhibition and Conference (IFEC) held on Friday, said that they lauded the efforts of scholars, Islamic bankers and regulators in the promotion and development of Islamic banking as a replacement of riba or interest-based banking.
They praised the efforts of State Bank of Pakistan (SBP) for devising a five-year strategic plan and sharia guideline framework for the Islamic Banks, which they term, will expand Islamic banking industry with check and balance.
Saeed Uddin Khan, Head of Islamic Banking Division, Sindh Bank, said the promoting Islamic banking for meeting the need public financial needs could be possible if products and services should be completed based on sharia complaints.
He said customers at large could be attractive through boosting their confidence in Islamic banking, its offers and products must be truly in accordance with principle of Islam.
The high confidence of customers in Islamic banking will guarantee expansion of Islamic banking industry and its business throughout the country. It could be done through building a strong perception of Islamic banking in line with its sharia framework, he added.
Mufti Ahsan Waqar Ahmed, Sharia Adviser of National Bank of Pakistan, said the research and development work on the products and services should be continued for the improvement in the system, and gearing up the penetration of the sharia based banking in the society.
The Islamic banking professionals in the bank should be well trained of the principles of Islamic banking and financing from top level to grass root for real change and betterment in the banking practices.
The board of directors makes development plan and business strategy of the bank hence their decisions should be highly influenced under the guidelines of Islamic banking for its successful penetration across the board of financial institutions.

Source: http://www.dailytimes.com.pk/business/26-Apr-2014/islamic-banking-to-be-promoted-under-strict-sharia-laws

Monday, April 21, 2014

'Nation Leads In Islamic Banking'

PIONEER: Syariah-compliant system serves as model for other countries, says Najib.
THE government has succeeded in developing the Islamic financial system,   as the country has become the   centre of reference for others around the world, said Prime Minister Datuk Seri Najib Razak.
He said Malaysia was not only known for pioneering the Islamic banking and financial system, but also as the only nation that had developed such a system through a holistic approach.
Najib said the nation's Islamic financial system offered syariah-compliant products and fulfilled the community's needs, as the nation had developed an infrastructure for the system to run well.
"Alhamdulillah (praise to God), the government's initiatives have been fruitful, as the country is now an international referral centre for a syariah-compliant Islamic financial system," he said at the launch of the week-long Malaysian Unit Trust Week 2014, themed "PNB 360 Investment", at the Rural Transformation Centre in Tunjong here yesterday. More than 5,000 people attended the event.
Najib said Malaysia continued to be a global leader in the international sukuk market, accounting for more than US$82.4 billion (RM266 billion), or 68.8 per cent, of the total international sukuk issuances last year.
"Islamic bank assets showed a growth of up to 16.5 per cent, with a market share of 25.7 per cent, of the total banking system assets last year," he said, adding that total transactions involving foreign exchanges managed by international Islamic banks had increased to RM18.1 billion last year, compared with RM14.6 billion in 2012.
He said the figures showed that syariah-compliant Islamic financial transactions had gained a foothold not only in Malaysia, but also at the international level.
Najib, who is also finance minister, said the government, through Bank Negara, had allocated RM500 million to establish a special university to nurture quality talent, with the aim of expanding the Islamic banking and financial industry.
He said another RM200 million had been channeled to set up an international-standard syariah research centre to ensure all components of Islamic finances strictly complied with syariah principles.
"The government's seriousness in empowering and raising the standards of the Islamic financial system can been seen from various governing and legal initiatives."
Under the legislation, he said, syariah was placed high up in the Islamic Financial Service Act 2013, whereby any financial institution found to have breached syariah principles in its business transactions faces a jail term of up to eight years, fine of up to RM25 million, or both, upon conviction.
Najib said the implementation of the initiatives to develop the system was among the key factors that caused the nation to receive the world's attention.
"What we envision is an Islamic financial system that is truly respectable, not only in its label and logo, but also for fulfilling the true essence of Islam."
He said in the latest development, the World Bank had indicated its interest to open a branch office in the country, with one of its main objectives being to gain experience and learn from Malaysia to develop the Islamic financial system.
"This is another endorsement for the country, which is a model, driver and pioneer in the agenda to raise the standards of the financial system, based on syariah, on the international stage."
Najib said Permodalan Nasional Bhd's (PNB) role in empowering the Bumiputera economy could not be denied, as it successfully managed investors' funds from the public, especially the lower-income group.
He said 75 per cent of Bumiputeras were living below the poverty line at the beginning of Malaysia's independence and held only two per cent in equity in the 1970s.
"The formation of PNB as an important New Economic Policy instrument has helped the national affirmative policy to restructure society through Bumiputera-share ownership in the corporate sector.
"This has provided an opportunity to Bumiputera professionals to contribute directly to the country's wealth creation and management.
"After 36 years, more than RM267 billion in the people's funds was managed excellently by PNB, through trust funds such as Amanah Saham Nasional, Amanah Saham Bumiputera, Amanah Saham Malaysia, AS1Malaysia and proprietary funds."
Najib said this had led the way for Bumiputeras to venture into strategic sectors, which they had never dreamed of doing.
"This innovation, allowing the rakyat to be shareholders with as low as RM10, has made PNB the most successful public institution, becoming a model to the world.
"This proves the government's commitment to realising the spirit of 'Maqasid al-Syariah' in the context of wealth management, fulfilling the principles underlined by Allah SWT."
He lauded PNB's initiative to expand the syariah-compliant portfolio.
He said one of PNB's most important portfolios, Maybank, had shown tremendous Islamic banking asset growth through Maybank Islamik, which expanded from RM3.6 billion to RM127 billion in assets.
"Maybank operates as the third-largest Islamic commercial bank in the world in terms of assets and is the largest in Southeast Asia."
Source: http://www.malaysiandigest.com/business/497908-nation-leads-in-islamic-banking.html

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'

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/