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

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. 

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

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

Dubai to launch Halal Index

Dubai: Dubai Exports is looking to issue an online Halal Index to list all UAE-based firms that are halal, Saeed Al Awadi, CEO of Dubai Exports, told Gulf News.

The index will be set up by Dubai Exports, an agency of the Department of Economic Development (DED), and will include relevant information about all the halal companies, banks, financial institutions, Islamic products and Islamic services in Dubai.

“This Index will boost the businesses of these firms by encouraging to enhance their local industries and products and by providing these businesses with new export opportunities across new markets,” Al Awadi said.

Halal companies, are firms engaged in the business of production, marketing and distribution of products that are Sharia compliant.

Al Awadi said that this comes in line with the government’s initiative to position Dubai as the world capital for Islamic economy in two years.

He added that this index will facilitate the growth of Dubai’s halal exports, which are expected to lead the region soon.

Dubai could emerge as the leader in the next phase of the evolution of Sharia-compliant sectors, including finance and insurance, Halal food and lifestyle, and travel.

“This index will be a good platform for all halal firms in the UAE to gain the opportunities for halal businesses and Islamic industries, which is now well established across geographies,” Al Awadi added.

With a clear vision of establishing itself as the centre of a global Islamic economy, Dubai looks likely to be the one with the biggest potential.

With Muslim consumer expenditure globally on food and lifestyle sectors around $1.62 trillion (Dh5.9 trillion) in 2012 and expected to reach $2.47 trillion by 2018, Al Awadi pointed to the need to boost this business sector by providing the right infrastructure and services.

Dubai Exports is looking to boost the emirate’s export by 20 per cent this year through the expansion to new markets, Al Awadi said.

“Dubai’s export long–term strategies to grow with the exports will continue to provide support required for our local companies to grow with their businesses and in turn the emirate’s Gross Domestic Production (GDP).

“The infrastructure and facilities already in place provide simple export process to our local companies wanting to enter new markets,” he said.

Source: http://gulfnews.com/business/general/dubai-to-launch-halal-index-1.1301675

Islamic finance has gained confidence in Maldives: Deputy Islamic Minister Dr. Muneeza

Islamic finance has gained confidence in the Maldives with increased awareness among the public of its role in eliminating Riba(interest), according to Deputy Islamic Minister Dr Aishath Muneeza.

Writing in the Islamic Finance News website, Dr Muneeza stated that Islamic finance has been “spreading like wildfire” since the introduction of Islamic banking and capital market services in 2011.

“Demand for Islamic finance is evident and has proved that there is inherent demand for Islamic finance as the Maldives is a country with a 100% Muslim population. It is hoped that in the upcoming years the Maldives can be used as a global case study to prove the success of Islamic finance,” she wrote.

Under Islamic Shariah, any risk-free or guaranteed rate of return on a loan or investment is considered riba, which is prohibited in Islam.

In her article, Dr Muneeza explained that the first form of Islamic finance introduced in the country was Takaful in 2003, which involves mutual protection of assets and property and joint risk-sharing.

Conventional insurance is also prohibited in Islam because of forbidden elements such as Riba.

Following the wider introduction of Islamic finance in 2011, Dr Muneeza observed that it is now “considered as an integral part in the development of nation”.

The previous year meanwhile saw the introduction of “new innovative Islamic finance instruments” by both the government and private corporations, she noted.

In 2013, the government signed the first sovereign private Sukuk – an asset-backed bond which is structured in accordance with Shariah for trade in the market – deal in addition to the central bank issuing the first Islamic treasury bill.

Moreover, she added, four pieces of regulation governing Sukuk, Islamic securities, Shariah advisors, and the capital market Shariah advisory council were introduced last year.

The government-owned Housing Development Corporation also issued the first corporate Sukuk while the first Islamic hire-purchase product was unveiled by a private company, she noted.

In addition, the government formed the Maldives Hajj Corporation – of which Dr Muneeza is the chairwoman – as a pilgrimage fund and issued Halal certificates for fish products.

The Maldives Transport and Contracting Company (MTCC) hired a Sukuk advisor for real estate projects commencing this year, she added.

“Furthermore, regulatory consents have been given to the Islamic banking window of Bank of Maldives and the Takaful window of Allied Insurance Maldives to start their operations. Some products of these companies have been given consent by the Maldives Monetary Authority,” she wrote.

The government also planned to form “a national-level technical committee to monitor and supervise sovereign Islamic finance issues,” she revealed.

“Definitely, 2013 is a super duper hit year for the growth of Islamic finance industry,” Dr Muneeza suggested.

Developments expected in 2014 meanwhile included the inauguration of “Islamic windows” by the Bank of Maldives and Allied Insurance. The government anticipated that “a large number of customers will switch from conventional banking to Islamic banking when this takes place.”

Islamic fund management would also be introduced this year while the government had plans to “introduce an Islamic finance centre that will not only provide offshore Islamic financial services, but this centre will act as the Islamic finance hub for the whole South Asia region.”

Source: http://minivannews.com/business/islamic-finance-has-gained-confidence-in-maldives-deputy-islamic-minister-dr-muneeza-79176

Seeking sukuk success

The FINANCIAL -- The market for Islamic bonds, known as sukuk, is growing. Last year, the British Prime Minister David Cameron said that he wanted the UK to be the first sovereign government outside the Islamic world to use sukuk, suggesting he believes it will be an increasingly important part of global finance.

It shows London’s efforts to compete in the Islamic finance business, which is led by the Arab Gulf states and Malaysia.

The rise of sukuk is driven by customers who want investment and savings products compliant with Islamic law and principles (shariah). Demand is strong in the Gulf Cooperation Council (GCC) member states and in economies such as Malaysia and Turkey. For those seeking finance, offering shariah-compliant debt gives access to the large pool of capital in oil-rich countries in the Middle East.

While Islamic principles are at least 1,400 years old, modern Islamic finance emerged after the oil price rise in the 1970s, which transferred wealth to the Gulf energy producers and led to the founding of large Islamic banks. The global market for Islamic financial services is estimated to have risen to USD1.46 trillion in 2012, with corporate banking and sukuk products developing fast.

Sukuk in Arabic is the plural of sakk, a certificate showing ownership of the asset. The Ottoman Empire is believed to have first issued a sukuk in 1775, when it borrowed money against future income on tobacco customs levies.

Islamic law prohibits the payment of interest. Instead, those who invest in sukuk – for example, to help fund the building of an Airport – gain a share in owning the asset and so are entitled to a share in the Airport ’s revenues. Once the sukuk is issued, it can be traded on local capital markets.

The need for large investment in infrastructure – roads, railways, ports and housing – offers opportunities, notably in Asia and emerging markets in general. Since Malaysia began issuing sukuk in 2000, the bonds have grown in importance, while they are also becoming popular in Saudi Arabia and the United Arab Emirates (UAE), particularly Dubai. Recent entrants to the market include Kazakhstan, Egypt and Turkey, which could become a big market because of its need for infrastructure.

Like all financial services, Islamic finance needs an appropriate supervisory framework and legislation is often the first step towards opening a new market. Financial institutions also need to ensure they have sufficient shariah expertise and advice to develop appropriate products.

Three factors are driving the market’s growth. First, it is becoming part of normal retail and corporate banking in core Islamic countries, such as Saudi Arabia where its share of the banking market has doubled in recent years to more than 50 per cent. The current market dynamics in the Gulf are favourable.

Second, its growth appeals to other markets, particularly in the Muslim world, where borrowers are attracted by the prospect of cross-border flows from the Gulf countries.

The third driver is innovation. Two years ago, the sukuk market was limited and bonds were mostly restricted to five years or less. Now there are longer-term offers, perpetual bonds, and “hybrid capital” issues allowing a mix of debt and equity.

Since 2008 Malaysia has led global sukuk issues, followed by Saudi Arabia and the UAE. Dubai aims to become the global “capital of the Islamic economy” and also to expand in takaful (Islamic insurance).

London is targeting cross-border flows, helped by its scale as a financial centre and its legal system which is recognised internationally. Sukuk issues on the London Stock Exchange have raised more than USD49 billion.

For some, using sukuk is a matter of principle, for others it is pragmatic: they will do so if the terms are better than a conventional bond. During the global downturn in 2008, sukuk issues hit a low. But they have recovered strongly, rising from USD19.5 billion in 2008 to USD42.8 billion in 2013. Issuance since 2008 is USD196.8 billion.

Looking forward, the Islamic economy is developing quickly. From finance to entertainment, to food, fashion and family travel, the growth of an economy that adheres to faith-based values is increasing in importance. Taken together, Islamic economies currently represent more than USD8 trillion in GDP with a large young population – 1.6 billion with an average age of 24 – growing at twice the rate of the global population. As consumption drives increased trade and economic links between these countries, and the Islamic economy grows, new opportunities will require financing.

Greater availability of sukuk gives more choice to companies and investors and allows issuers to offer products tailored to specific needs. This has underpinned the growth of the market both inside and outside its core countries.

Source: http://finchannel.com/Main_News/Banks/130052_Seeking_sukuk_success/

First Gulf Bank follows numerous institutions to find funding in Malaysia’s sukuk market

Abu Dhabi’s First Gulf Bank, the third-largest bank by assets in the UAE, will raise 3.5bn ringgit ($1.07bn) with Islamic bonds in Malaysia, according to a statement yesterday by credit rating agency RAM Ratings. 
The Islamic bond, or sukuk, programme will be issued by the bank’s funding unit, FGB Sukuk Company II Ltd RAM rated the program ‘AAA’ or Stable on the bank’s size and high likelihood of government support, as the Abu Dhabi ruling family owns 64% of the firm. 
First Gulf Bank follows numerous institutions to find funding in Malaysia’s sukuk market, the world’s largest. More than two-thirds of global sukuk issuance in the first half of 2013 took place in Malaysia, followed by Saudi Arabia and the UAE. 
“The ratings also incorporate the bank’s excellent profitability, robust capitalisation, expanding franchise and moderate asset quality,” said RAM. 
Funds from the programme will go toward expanding the bank’s day-to-day business. RAM did not indicate when the first issuance will take place.


Source: http://www.gulf-times.com/eco.-bus.%20news/256/details/383705/-first-gulf-bank-to-set-up-$1.07bn-sukuk-in-malaysia

Successful launch of Nationwide Road Show to promote Islamic Banking and Takaful

The awareness campaign has started from Peshawar, and will end in Karachi while passing through 30 different cities of Pakistan and organizing 100 events 

04-03-2014

(Peshawar) National awareness campaign “Road Show 2014” has started today  from Peshawar to promote the Islamic Banking and takaful, to trim down the rising criticism and objection on Islamic finance, thriving the Islamic Financial methods in Shariah perspective in the country to get rid of interest element by benefitting Islamic Banking and Finance. The awareness campaign named as “Khyber to Karachi” Road Show 2014 which will pass through 30 different cities of Pakistan from Khyber to Karachi, will conduct 100 free seminars and workshops especially in Chambers of Commerce and Industries, Trade Associations, Universities, Professional Institutes and Industrial Estates to equally benefit the businessmen, industrialists, professional experts and students.

Stating the objectives of nationwide awareness campaign “Road Show 2014”, the Organizer, Muhammad Zubair Mughal, Chief Executive Officer – AlHuda Center of Islamic Banking and Economics (CIBE) said that the prime objective of the Road Show is to enhance the awareness of Islamic Banking and Finance among the masses and to eradicate the objections that has been put on Islamic banking and finance through different propagandas. He said that the promotion of Islamic banking and finance is necessary for the economic development and prosperity where we can benefit the agriculturists, industrialists and the whole economy with Islamic financial services by strengthening our financial institutions and also the Sukuk (Islamic Bonds) can be strengthened and poverty can be alleviated through the Islamic microfinance.

He said that the rationality behind Islamic financial system can be observed in the recent global financial crisis where thousands of interest based financial institutions were ruined but no Islamic financial institute was adversely affected by such upheaval although there are more than 1500 Islamic financial institutions working with interest free modes such as Asset Based Financing under ethical practices around the globe and number of international financial institutions are transforming towards the Islamic Banking and Finance. He said that Alhamdulillah, today, we started the awareness campaign “Road Show 2014” from Peshawar followed by seminars in University of Peshawar, Agriculture University of Peshawar and Khyber Pakhtunkhwa Chamber of Commerce and Industry etc and this road show, passing through 30 different cities, will conclude after a long way of 3 months at Karachi. After the Road Show a comprehensive report on Islamic Banking in Pakistan will be published. 

Bahrain financial sector 'grows on GCC demand'

MANAMA: Growing demand for more sophisticated financial products and services helped drive growth in Bahrain's financial sector during last year, according to the Economic Development Board (EDB) and Central Bank of Bahrain (CBB), with the trend expected to continue into 2014.

Bahrain attracted a number of businesses, with the number of registered financial services firms swelling to 415 by the end of the year, making it one of the largest financial centres in the region.

Among the businesses that established in Bahrain in 2013 were Cigna, a global health insurance and health services provider which launched its regional third party administration company employing 50 people in Bahrain, Julius Baer, the leading Swiss private banking business, and Takaud, the first specialist savings and pensions provider in the Mena region.

"The six economies of the GCC are worth a combined $1.5 trillion and with ongoing investment in infrastructure and an expanding population, demand for financial services is growing," said Transportation Minister and EDB acting chief executive Kamal Ahmed.

"Bahrain offers a highly-skilled bilingual workforce, a tried and tested regulatory framework, low operating costs and excellent connectivity across the region, with particularly strong access to the region's largest economy, Saudi Arabia.

"This makes Bahrain an ideal location for financial firms that want to establish a sizeable long-term presence in the GCC and take advantage of these trends.

"We have seen a number of these firms establishing offices in Bahrain in 2013 and we are confident that this will carry on into 2014 as demand grows and we continue to implement reforms that will enhance our role as a regional financial hub."

Alongside strong growth last year, the kingdom also developed a number of reforms to ensure that the regulatory framework continues to meet the sector's needs and encourage long-term growth.

The CBB has brought in new directives on banking remunerations and fees, updated directives on banks' internal audit function in line with new Basel requirements and issued new rules that meant that all applications that are prepared in accordance with the Unified Standards issued by the GCC by Gulf issuers will be accepted in Bahrain, easing the integration of GCC securities markets.

The CBB also recently implemented new rules set to boost the takaful sector by addressing some issues around solvency, which have had the potential to hold back the rapidly expanding industry.

The takaful industry in Bahrain has experienced a remarkable growth in the last ten years - the industry grew by almost 22 per cent in 2012 - and by continuing to evolve the takaful model, the kingdom will remain a leading jurisdiction for the sector.

CBB Governor Rasheed Al Maraj said high quality regulatory standards lie at the heart of a successful financial sector and this is why Bahrain is determined to work at adapting and maintaining our framework in line with international standards.

"The Islamic finance sector is also particularly important to Bahrain, so the CBB's leadership in the development of Islamic finance will be maintained and enhanced through developing new initiatives and maintain an ongoing dialogue within the industry."

Education and human capital initiatives were also a major focus last year, and the CBB worked closely with a range of organisations including the Bahrain-based Waqf Fund and the Bahrain Institute of Banking and Finance (BIBF).

The Waqf Fund put in place its plan for a leadership training initiative being launched this year, to help develop the next generation of leaders in the Islamic Finance sector, whilst BIBF's Centre for Islamic Finance continued to expand its international footprint, and in July last year arranged a training event for 29 participants from 16 different countries.

Two independent reports from KPMG and Thomson Reuters also highlighted the core strengths of the financial services sector.

In December 2013, KPMG published a research report looking at the typical costs associated with operating a financial services firm in Bahrain, Dubai, and Qatar.

This included cost of operations, cost of set-up, and living costs, and the report concluded that overall, the total cost of doing business in Bahrain is almost half that of Dubai and Qatar. The ICD-Thomson Reuters Islamic Finance Development Indicator (IFDI), a numerical measure launched in December last year and representing the overall health and growth of the Islamic finance industry worldwide, highlighted Bahrain's developed Islamic finance sector, ranking first in the Mena region, with total assets worth $47 billion. Bahrain also had one of the most developed Islamic finance knowledge landscape, and performed well in terms of governance, with a comprehensive regulatory framework covering all aspects of the Islamic finance industry. All GCC countries made it into the top 15 worldwide, with Bahrain ranking first amongst them, demonstrating the overall strength of the Islamic finance sector in the region.

Source: http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=371666

Islamic banking opens a new window of opportunities

Dubai: Omani banks have started offering Islamic banking services following the introduction of the Islamic Banking Regulatory Framework (IBRF) in December 2012.

“We anticipate that Islamic banking operations in Oman could capture a 6 per cent to 8 per cent share of system assets within the next three to five years and this share will likely stem primarily from the ‘conversion’ of customers from conventional to Islamic banking services. As a result, we expect that Islamic operations will capture a disproportionate share of the anticipated total system annual growth of 8 per cent to 10 per cent over the next three to five years,” Elena Panayiotou, Assistant Vice President — Analyst at Moody’s, said.

Banks are expected to incur sizeable costs to establish brand-new Islamic banking franchises and build operational risk management infrastructures that ensure Sharia compliance.

Oman’s central bank expect the Islamic banking units will enhance the overall banking services in the country. “The creation of Sharia compliant units will enhance competition among them and thus improve the banking services for customers and lowering its cost, as well as raising the level of financial inclusion and the growth of Islamic banking in general along with the traditional banking,” Hamoud Bin Sanjour Al Zedjali, Executive President of the Central Bank of Oman (CBO), said in a statement to Oman News Agency (ONA).

Although competition will likely intensify as new Islamic banks come into the market, bankers and analyst do not expect major changes in the Omani banking landscape in the next three to five years. This is because the new Islamic windows of the existing conventional banks, and particularly that of Bank Muscat will be well positioned to capture a large market share in Islamic banking given their ability to leverage existing customer bases and infrastructure.

SPPP aimed to overcome public sector inefficiencies: Ishaq Dar

ISLAMABAD, Mar 2 (APP): The Finance Minister Senator Mohammad Ishaq Dar said the government sees Strategic Public-Private Partnership (SPPP) aimed at utilizing private sector management expertise to overcome public sector inefficiencies. He said this while chairing a meeting here at the Ministry on Sunday to review the reform and restructuring plan of PIA including strategic partnership, says a press release issued here. 

The Minister said over the year, mismanagement and structural inefficiencies in the state-owned enterprises (SOEs) have marred public sector governance. 

He said that continuous injection of resources into the SOEs is  fiscally not sustainable on an indefinite basis and the most viable option available is to restructure them through strategic partnership with the privatesector through 26% offloading of shares.

The Minister said that we aim to enhance welfare of the employees of  the SOEs by making these organizations profitable and interest of the employees will be protected. 

He said by injection of 26% private sector strategic partners will in  no way hamper the overall status of the SOEs other than to improve their performance and to ensure capacity building of their employees.

Shujaat Azeem, PM’s Advisor on Aviation briefed on the reforms being introduced in PIA. He also informed about the progress of leasing of more efficient airplanes to enhance the performance of the national carrier.

The meeting was also attended by Muhammad Zubair, Chairman Privatization Commission, Rana Asad Amin, Advisor to Finance Ministry and senior officials of the Ministry of Finance.

Source:http://www.app.com.pk/en_/index.php?option=com_content&task=view&id=269074&Itemid=1

Islamic banking represents 12 percent of industry: Deputy Governor SBP

Islamic banking industry in Pakistan has been growing at a fast pace ever since its re-launch in 2002 and now represents over 12 percent of overall banking industry with 19 Islamic banking institutions offering Islamic banking products and services through a network of over 1300 branches across the country. 

Speakers at two-day workshop, organised by State Bank pf Pakistan (SBP), for journalists on Islamic Banking said that recently SBP has announced five-year strategic plan for Islamic Banking Industry (IBI) aimed to provide a roadmap to the industry for the next level of development. Saeed Ahmed, Deputy Governor SBP, inaugurated the workshop on Monday and said that various conventional banks are interested to convert their operations into Sharia-based banking upon which the central bank is reviewing their requests whereas the central bank has imposed bar on Islamic banks to convert into conventional bank. 

"SBP prefers Islamic banking and to promote it has been allowing new Islamic banks, conversion from conventional to Islamic banking, opening up subsidiary or Islamic Banking Division", he said. He said that SBP has stopped issuance of license for setting up conventional banks in Pakistan. "We think the present number of conventional banks are enough to cater the needs of Pakistan's economy and there is need to setup/promote Islamic banking instead of conventional", he added. 

However, he said that, SBP has decided to strictly monitor the performance of the Islamic Banking industry aimed to ensure that they are operating as per Islamic Sharia. The Islamic Banks are more accountable to SBP and Sharia advisor than conventional banks, deputy governor added. He said that SBP is working on its major role to ensure the participation of every citizen in the financial system, through its Financial Inclusion Policy, and the system of Islamic Banking will prove to be a bridge to the way of success in the present scenario. 

Addressing the workshop, speakers said that government is making all efforts to develop an alternate system for all segments of the banking industry. They said that a plan of Islamic products for National Saving Scheme (NSS) is also under consideration and likely to be launch soon. Presently, Islamic banks are leaders in several sectors and three leading Islamic banks have some 85 percent portfolio of housing finance. 

Talking about the money market operations they said that there are two different models of interbank money market for Islamic banks which are under consideration and an improved money market system is likely to be launched in next few months, they revealed. Saleem Ullah head of Islamic Banking department SBP, Mufti Irshad Ahmed Ijaz, Shariah Advisor, Mufti Muhammad Najeeb Khan Sharia Advisor Summit Bank Limited, Mufti Khalil Ahmed Aazami, Hasan Aziz Bilgrami Chief Executive Officer BankIslami, M. Farhan- ul- Haq Usmani, Vice president Shariah Audit and Financial Advisory Meezan Bank, Muhammad Faisal head of products and business development BankIslami, Umar Siddique, spokesman (acting) SBP and Nighat Tanveer also speak on the occasion. 

Source: http://www.brecorder.com/money-a-banking/198/1157187/

Islamic Banking and Finance Society launched at Oxford University

The inauguration of the Islamic Banking and Finance Society (IBFS) at the Oxford Union Debating Chamber this month saw leading industry figures speak about the sector and represented another step in the growth of Islamic finance.

The event – titled Islamic Banking: Ethical Capitalism? – looked at the Islamic finance and banking sector and where its future lay. One keynote speaker, Baroness Warsi, senior minister of state and minister for faith and communities, described London as one of the key areas for Islamic finance and one in which the sector could grow.

She noted how far the industry had come in the last two years and pointed out Islamic finance is growing 50% faster than traditional banking in Britain. By the end of 2014, an industry expert previously predicted that the sector will be worth $2 trillion (£1.2 trillion) globally, with London and Dubai competing to become the global hub.

It’s not just Muslims that are driving the growth. The Islamic Bank of Britain, which recently launched theUK’s first Islamic ISA, estimates that around 87% of new applications for fixed term deposit accounts are from non-Muslim customers. Instead, ethical savers and investors are using Islamic banking as a way to ensure their values are reflected in their money decisions.

Islamic and ethical finance are similar in many ways. Sharia principles mean Muslims cannot invest in certain industries, many of which are so-called ‘sin stocks’ such as tobacco, gambling or alcohol. The payment of interest is also banned.

Speaking to Gulf Times after the inauguration, chairman of Islamic Finance Salah Jaidah said, “The base of Islamic finance is definitely the ethical part and most of the conducts with Islamic banking prevent the over-leverage that we have seen in the conventional banking side. Every transaction has to have an underlying asset, so there is value creation for the person who is taking the finance or the person who is extending the assets.”

He added that if these principles and the spirit of profit sharing were ingrained in more financial institutions this would give everybody the responsibility of making sure that due diligence, asset value and potential investments are recognised. As a result it could benefit the whole sector, as everybody would have to take on a portion of the loss if areas failed.

Source: http://blueandgreentomorrow.com/2014/02/21/islamic-banking-and-finance-society-launched-at-oxford-university/

AlHuda CIBE will Organize African Islamic Banking and Finance Road Show

Int’l conferences will be organized in Tanzania, Tunisia, Nigeria, Kenya, Ghana, South Africa and Mauritius during the Road show

 (Lahore): AlHuda Centre of Islamic Banking and Economics (CIBE) is committed to hold an International Road Show on Islamic Banking and Finance that will be started from April 2014 form Tanzania and will successfully be ended by September 2014 in Mauritius by organizing Int’l conferences on Islamic Banking and Finance in seven (07) African countries during this entire road show so that African region could progress by taking benefit from the practices of international Islamic banking. Besides Islamic banking and finance, Takaful, Sukuk, Islamic Funds, Islamic Microfinance and various other relevant topics would be discussed during the programs.

Addressing to the announcing ceremony of the Road Show, Muhammad Zubair Mughal, Chief Executive Officer, AlHuda CIBE said that Islamic banking and finance is rapidly increasing all over the world and its assets would reach to 2 trillion dollars by the end of 2014. But unfortunately, the development of Islamic banking and finance is very slow in the entire African region while the 54 African countries could rapidly progress by implementing Islamic finance and Sukuk. The dilemma of African countries is mainly poverty and it could also be overcome through the implementation of Islamic mode of banking and finance in the region where almost 50% population is Muslim while Muslims and non-Muslims both can take benefit of Islamic banking and finance.

While giving reference of Islamic banking and finance in Africa, he further added that there are various countries of Africa where serious efforts are observed for the development and promotion of Islamic banking and finance i.e. Sudan, Tunisia, Egypt, Morocco South Africa and Nigeria while there are a few countries that are taking rapid initiatives towards Islamic banking like Kenya, Mauritius, Libya, Ghana and Senegal. Current economic conditions have further highlighted the need of Islamic banking and finance and African region would definitely take advantages of it. 

He further said that besides the promotion of Islamic banking and finance, the purpose of the road show is also to acknowledge the need of giving hype to the system beyond any political and religious refrains. Specialized training workshops on various relevant topics will also be part of the international conferences like Takaful workshop in Tanzania, Sukuk workshop in Tunisia, Islamic Microfinance in Nigeria, Sukuk in South Africa, Takaful workshop in Mauritius. The core objective of the entire program is to strengthen the foundations of Islamic banking and finance in African region to give back to the progress of Islamic mode of banking and finance there. 

It is to be noted that AlHuda Centre of Islamic Banking and Economics is an international organization working for the promotion of Islamic banking and finance that is working for education, trainings, advisory and consultancy. For further details: www.alhudacibe.com.

Islamic banking gaining momentum across the world: SBP deputy chairman

Islamabad: Deputy Governor of the State Bank of Pakistan Saeed Ahmad has said that Islamic banking is getting momentum not only in Pakistan but across the world.
He was addressing the inaugural session of two-day International Conference on Islamic Business (ICIB 2014) in which speakers discussed various aspects of Islamic business and finance.
Organised by Riphah Center of Islamic Business, a constituent institute of Riphah International University in collaboration with International Islamic University Islamabad (IIUI) & the State Bank of Pakistan (SBP) is being attended by world renowned Islamic scholars and economists from across the globe.
The theme of the conference is “Equity, Venture Capital, Corporate Governance and Institutional Development for Equity Investments: Prospects and Practices from Islamic Perspective”.
The Deputy Governor of State Bank of Pakistan Saeed Ahmad was the chief guest at the inaugural session of the conference while Prof Datuk Syed Othman Al Habshi from Malaysia and Prof. Khurshid Ahmad, Chairman, Institute of Policy Studies Islamabad were the Keynote speakers on the occasion.
Deputy Governor of the State Bank of Pakistan Saeed Ahmad also said that the State Bank as a regulator in banking is playing an important role in projecting Islamic banking and finance in the country. The government has established a committee for the purpose and prominent bankers and Islamic scholars are its members. The Deputy Governor himself is head of this committee. The committee is working with full swing to prepare guidelines for Islamic banking and finance as per teachings of Quran and Sunnah.
He lauded the efforts of Riphah International University for organising series of such conferences giving an opportunity to researchers and scholars to discuss the Islamic banking and finance in depth.
This is the 3rd International Conference on Islamic Business organised by Riphah International University. Earlier two conferences were held in February 2011 and February 2012.
The President of Islamic International University Islamabad Dr Ahmad Yousif A Al-Draiweesh, in his address in Arabic, expressed the confidence that the conference will be much helpful in projecting Islamic business and finance.
It will provide a platform for dialogue and discussions between researches, policymakers, corporate leaders, business managers, practitioners of Islamic banking and finance.
Prof Khurshid Ahmad, in his key-note address, spoke on the risk and equity based investments and financing and explained how the Islamic business and finance could help to resolve the global economic problems.
He said the economic crises in 2008-09 could not be handled by the western system of finance and the people have to suffer because of this debacle. He said the institutions practicing finance under shariah not only provided the solutions of the problems faced by the world economy but also provided a clear path to meet such challenges in future.
Prof Datuk Syed Othman Al-Habshi, in his speech, said Islamic banking so far is moving in right direction and has crossed a number of milestones over the period of last four decades. He hoped this conference will help in formulating the strategies to meet the challenges being faced by Islamic finance.
Earlier, the Pro-Chancellor of Riphah International University Hassan Muhammad Khan, in his remarks, said by organizing such conferences of international level Riphah University intends to provide a platform for discussing the vital issue of development of the Islamic business, banking and finance so as to create awareness about shariah complaint businesses. The Vice Chancellor of Riphah International University Prof. Dr. Anis Ahmed, in his welcomed address, said this event is designed not just for creating awareness about shariah conforming business principles but its major objective is to enhance talent and understanding of the practitioners and researchers on problems faced by the financial managers and the investors.
The conference held four working sessions on the opening day today on various subjects relating to the Islamic business and finance. These included equity, investments, trust and institution building for promoting Islamic finance and corporate governance of Islamic institutions. There will be four working sessions on Tuesday (today) besides the concluding session at 5pm at Quaid-e-Azam Auditorium Faisal Mosque campus in Islamabad. 

Source: http://www.dailytimes.com.pk/business/11-Feb-2014/islamic-banking-gaining-momentum-across-the-world-sbp-deputy-chairman