5 Interactive Distance Learning Programs on Islamic Banking and Finance

Friday, February 28, 2014

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.


Thursday, February 27, 2014

Short-term Islamic bonds in six months

KARACHI: Director Islamic Banking Department of the State Bank of Pakistan (SBP) Saleem Ullah has said that the mechanism for short-term liquidity instruments for Islamic banks is being evolved and the launch of these bonds is expected in the next six months.

Speaking at a two-day workshop for journalists held at the SBP’s premises on Tuesday, the director said that short-term Islamic sukuk (bonds) will be launched in the money market in the next six months.

Currently, Islamic banks can only invest in three-year government ijara sukuk.

“In order to address the difficulties in managing liquidity, there is a need to introduce an alternative to short-tenure Treasury bill bonds in the money market for Islamic banks,” he said.

Saleem said that Pakistan has sound Islamic banking and a shariah compliance framework, in terms of prudential rules and regulations. And that the minimum capital requirements for the conventional and full-fledged Islamic banks are the same as for conventional banks.

“A nominal Rs50 million is required for opening Islamic banking branches of the conventional banks, while their capital adequacy ratio is presently calculated using the same Basel II framework,” he explained.

Earlier, experts on Islamic banking and finance agreed the Islamic banks can invest in government activities and projects much like conventional banks but there is a need to create an underlying asset.

President Bank Islami Hasan Aziz Bilgrami said Pakistan’s share in the total global Islamic banking and finance industry is the lowest at just two percent, while Malaysia enjoys the biggest share of 91 percent and the rest is held by Middle Eastern countries.

Another expert said that while the industry has been partially successful in eliminating riba from banking transactions, it needs to introduce diversified products for those segments of the society, which want Islamic investment and financing.

Wednesday, February 26, 2014

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/

Tuesday, February 25, 2014

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/

Monday, February 24, 2014

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.

Sunday, February 23, 2014

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. 

Saturday, February 22, 2014

Oman: Islamic Banking On The Rise

The Omani banking sector is a small but prudent and well performing sector. Profitability among Oman’s banks has been healthy due to good margins, increasing non-interest income and good loan asset quality. In 2012, Omani banks recorded profit growth of around 20 per cent but 2013 growth may not match this. While government and state enterprises support sector funding by accounting for 35 per cent deposits, unlike other GCC markets their borrowings are quite small.
The private sector accounts for around 87 per cent of total credit and has represented the principal area of growth for banks over the past few years. However, more recently loan growth has slowed due to the implementation of macro prudential regulations by the Central Bank of Oman (CBO). The Omani banking sector’s loan asset quality is currently good, with NPLs at around two per cent of gross loans.
The banking sector in Oman is heavily concentrated with the top three banks (Bank Muscat, National Bank of Oman and Bank Dhofar) accounting for approximately two-thirds of total credit. Bank Muscat holds a commanding position in the sector.
Despite this, there are a number of small banks, and in early 2013, the Capital Market Authority publicly encouraged consolidation in the country’s financial sector and suggested limiting issuances of new bank licenses in the country. There has been some activity, with HSBC acquiring Oman International Bank’s operations to form HSBC Oman. Domestic Omani banks continue to grow and to support this have raised over $1 billion in capital and subordinated debt over the past year.
Islamic banking in Oman has become increasingly important since 2011 when the CBO announced its decision to license Islamic banking services with the objective of diversifying and widening banking services. A Royal Decree amending the banking law and the legal authorisation for Islamic banking was issued in December 2012. Detailed instructions by way of the Islamic banking regulatory framework have also been introduced.
Two new local banks – Bank Nizwa and Al Izz Islamic Bank – were granted approval to operate as Islamic banks. Bank Nizwa commenced operations in December 2012 and more recently Al Izz started business. The new bank’s deposit products include a current account based on the concept of ‘Qard-Hassan’, allowing customers instant access to their money in multiple currencies, using their international debit card. It is the first fully-fledged Islamic bank in Oman to offer Sharia-compliant titanium and platinum credit cards. A number of conventional banks have established windows for Islamic banking.
Good GDP growth in Oman and favourable monetary and fiscal policies has had a positive impact on the growth and performance of the commercial banks in Oman. The balance sheets of commercial banks have strengthened, further supported by the robust growth in deposits and credit. While credit to the government declined in 2012, credit to public enterprises and the private sector increased robustly. Lending to the private sector was fairly balanced between corporate and retail sectors. The latter comprises mainly of personal loans including residential housing, which account for around 46 per cent of the total retail book.
The short to medium-term outlook for the Omani economy is positive based on current expectations of relatively favourable world energy prices and ongoing and planned investment to boost oil and gas capacity. This favourable operating environment will thus continue to support Omani banks’ lending growth and profitability over the short to medium-term.
The CBO has over the past few years initiated a number of regulatory and supervisory measures to improve efficiency of the country’s financial system in general and the banking system in particular. The CBO also reduced the interest rate ceiling on all new personal loans from eight per cent to seven per cent and introduced new micro prudential norms for personal loans.
The debt service ratio for salary linked loans was capped at 50 per cent of net salary on non-housing personal loans and 60 per cent on housing loans. The tenor is not to exceed ten years for the former and 25 years for the latter (excluding maximum of two monthly waivers in a year).
Bank Muscat’s net profit for the nine months to the end of September 2013 was RO102.5 million against RO104.2 million in the same period of 2012. In part, the marginally lower performance was linked to provisions made earlier in the year against prepaid travel card fraud. Net interest income from conventional banking stood at RO163.8 million at the end of September against RO168.3 million in the corresponding period. Non-interest income was, however, higher.
National Bank of Oman (NBO), owned 35 per cent by Commercial Bank of Qatar, also reported slightly weaker operating profit in the first half of 2013 with revenues flat. Impairment charges also rose. However, the bank has good coverage and liquidity. NBO’s Islamic banking operations have also provided another source of revenue although contributions are modest at the moment.
The sultanate’s economy is expected to have grown by around six per cent in 2013 but could fall to below four per cent in 2014 due to a weaker oil price. The increased expenditure in 2013 is anticipated to give a boost to commercial and economic activity. Allocation for the development programmes of ministries and government units is to be enhanced by about 30 per cent to complete ongoing infrastructure projects, such as ports, airports, roads, water, sanitary drainage, and infrastructure projects for the Duqm special economic zone and other economic zones.
While the growth of the expenditure side of the budget is high and unprecedented, this is anticipated to be financed from real resources without the need to borrow or withdraw from funds in an unplanned manner if oil prices go down severely.
Going forward, with the reasonable economic growth conditions in Oman, the Omani banking sector should be able to expand both deposits and assets with returns remaining sound if not spectacular.

Source: http://gulfbusiness.com/2014/02/oman-islamic-banking-rise/#.UwnEj_mSwsc

Friday, February 7, 2014

Two Research & Training Giants of Islamic Banking & Finance signed Agreement

AlHuda CIBE & INAYAH Joined Hands to Promote Islamic Banking & Finance Globally 
(Jordan) An agreement to promote Islamic Banking & Finance was signed between AlHuda Centre of Islamic Banking and Economics (CIBE) and INAYAH Islamic Finance Research Institute (IIFRI) in an impressive ceremony, which was held today in the Capital of Jordan, Amman.  The Agreement was mutually signed by Dr. Nidal Alsayyed, President and CEO of IIFRI and Muhammad Zubair Mughal, Chief Executive Officer - AlHuda CIBE. According to the agreement, both institutions will jointly work together for the promotion of state of the art applied research and training in multi Islamic Finance areas, particularly in Sukuk and Islamic Microfinance through research, publications, Training, Consulting, Public awareness, and capacity building services in the Middle East and North Africa (MENA) region.
Dr. Nidal Alsayyed, President and CEO – INAYAH said that there is an immense need of synergizing for enhanced Islamic Finance awareness and capacity building at present. He also added that such joint initiative taken by AlHuda CIBE and IIFRI is a promising one, which will prop up Islamic Finance in the region. He said that  INAYAH, collaborating with AlHuda CIBE, shall collectively enhance the awareness and capacity building in Islamic Banking and Finance through master level programs in many other countries including Pakistan.
Muhammad Zubair Mughal, CEO – AlHuda CIBE, highlighted the importance of the agreement, admired such a joint initiative in Islamic Finance taken by AlHuda CIBE and IIFRI and said that it is actually a unique proposition between two dedicated research institutions of Islamic Finance where both of the institutions, connecting their regional and professional expertise, shall work together for joint research on Islamic finance related topics, publications, reports, capacity building, and other related important aspects. He said that agreements, MOUs, and mergers between Islamic Banking and Financial Institutions is the routine practice, but this agreement for joint research in Islamic finance has a unique proposition, which will have a positive impact in the Islamic finance industry. He said that there is an immediate need for research in different aspects of Islamic finance, particularly Islamic Microfinance and Sukuk.  Mughal emphasized that while AlHuda CIBE has substantially worked on different assignments of Islamic microfinance, INAYAH has special expertise in Sukuk structuring and Training, therefore both of the institutions will strategically pool their resources, expertise, and skill to grow the Islamic Microfinance and Sukuk  based platforms on a regional level.
INAYAH is a Jordan based institution, which is working for the growth of Islamic finance having offices in Malaysia, Saudi Arabia, UK, and other countries, while AlHuda CIBE has been aggressively working for the Islamic Banking and Finance industry with state of the art education, research, advisory, and consultancy services for the last ten (10) years.