Thursday, 31 March 2016

SECP issues directive on life insurance, family takaful

ISLAMABAD (APP) – The Securities and Exchange Commission of Pakistan (SECP) issued a directive to life
insurance and family takaful sector on product illustrations through a Statutory Regulatory Order (SRO).

Life insurance and family takaful products are long-term financial protection and savings vehicle for the individual policyholders, a statement issued by the SECP said here on Wednesday.
These products are long-term in nature, typically ranging over 10 to 20 years. Life insurers use product illustration to describe the life insurance policy benefits for each future policy year.
Hence, the product illustration is an integral part of the overall sales process for life insurance and family takaful policies.
The existing Guidelines of 2009 brought about significant improvement in terms of standardization of formats and calculation methodologies.
However, certain subsequent developments in the life insurance market have made it necessary to upgrade the existing Guidelines into a directive, among most important, such as bringing enforceability to the requirements to be placed on insurers and compulsory use of Urdu in addition to English in order to enhance policyholders’ understanding.
Additionally, the proposed directive will be a landmark step towards using real, i.e inflation adjusted rate of returns in projection of savings products.
The new directive have also brought the investment performance document into the regulatory ambit.

The SECP believes that the new directive will enhance policyholders’ understanding about insurance products and appropriately deciding the amount of regular premiums required in relation to identified financial protection needs.
(Daily Pakistan / 30 March 2016)
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Qatar International Islamic Bank plans Tier 1 Sukuk issue

The meeting delegated the bank’s board of directors' to decide the size of each issuance ,terms and conditions and issuance currency.

Doha-based Gulf Times quoted QIIB CEO Abdulbasit A al-Shaibei as saying the Sukuk would be issued before the end of April to boost the bank’s capital ratio. 
(C P I Financial / 30 March 2016)
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Tuesday, 29 March 2016

Malaysia Building Society becoming Islamic after failed mergers

[KUALA LUMPUR] After two failed merger attempts with Islamic banks, Malaysia Building Society Bhd is opting to transform into a Shariah lender by itself.
MBSB has stopped offering conventional loans and sees more room for growth in Islamic services, chief executive officer Ahmad Zaini Othman said in an interview on Monday. The mortgage provider and consumer lender, whose net income plunged 75 per cent last year, ended discussions with Bank Muamalat Bhd in February after a proposal to combine with CIMB Group Holdings Bhd and RHB Capital Bhd was called off in Jan 2015.
"MBSB's plan is not surprising as many see Islamic finance as the way forward," said Badlisyah Abdul Ghani, president of the Chartered Institute of Islamic Finance Professionals in Kuala Lumpur and the former CEO of CIMB Islamic Bank Bhd.

"People are not only wanting banks to provide Islamic products but are demanding them." Malaysia, which pioneered Shariah finance in the 1980s, aims to have 40 per cent of its banking assets complying with the religion's ban on interest by 2020 from 26.8 per cent at the end of last year.
A global Islamic population that's expanding faster than non-Muslims is driving growth in Shariah-compliant finance, with Ernst & Young LLP predicting the industry's worldwide assets will double to US$3.4 trillion by 2018 from 2013.
'Right Move'
Around 85 per cent of MBSB's outstanding loans are already Shariah-compliant and credit growth this year should be around 6 per cent to 8 per cent, in line with the industry, Mr Ahmad Zaini said. The company isn't looking at any other mergers for now and will maintain its focus on government contracts, particularly in the development of affordable housing, he said.
"Sustaining asset growth, while maintaining low operational costs and product innovation shall be our medium-term plan."
MBSB is 65 per cent owned by Employees Provident Fund, Malaysia's largest pension fund. Its share price fell 39 per cent to RM1.34 over the past year and net income dropped to RM256.7 million (S$88 million) in 2015 from RM1.02 billion in 2014. The Kuala Lumpur-based company said in a Feb 24 filling to the stock exchange that the drop was due to higher allowances for impairment losses on loans.
MBSB had RM34.1 billion of loans outstanding at the end of 2015 and RM41.1 billion of assets, according to data compiled by Bloomberg, and is planning to raise as much as RM2 billion from a rights issue. The company is already in compliance with Malaysian financial reporting standards and is stepping up efforts to adhere to banking standards, Mr Ahmad Zaini said.
The yield on the MBSB's sukuk due December 2021 fell 10 basis points this year to 4.83 per cent, according prices compiled by Bloomberg. The company, which last sold Islamic bonds in October, doesn't have any plans to sell more debt at this point, Mr Ahmad Zaini said.
"MBSB is making the right move as it already has the Islamic infrastructure in place," said Mohamed Azahari Kamil, president SEGi University & Colleges in Selangor, who was formerly Asian Finance Bhd's CEO.
"There's still a lot of potential for MBSB to be involved in retail and corporate Shariah financing.

(Banking And Finance / 29 March 2016)
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Jordan to issue Islamic sukuk worth JD250m

AMMAN — An issue of Islamic sukuk (bonds) worth around JD250 million is expected in the second quarter of 2016, Central Bank of Jordan Deputy Governor Maher Sheikh Hassan said on Monday.

“We have completed all the legal and the legislative measures for the issuance of the Islamic bonds. We are in the final stages of some more minor steps and we are then ready to conduct the sukuk issue any time,” Hassan told The Jordan Times on Monday.

An Islamic Sharia-compliant issuance totalling around JD150 million will be issued to cover the purchases of the National Electric Power Company, while another worth JD100 million will be conducted for the benefit of the Water Authority of Jordan.

“A company was registered for the purposes of the issuance of the Islamic bonds as required by law and we expect the issuance to take place in the second quarter of this year,” said the official.

In 2012, Parliament passed the Islamic Finance Sukuk Law to allow both public and private entities to issue Islamic bonds in dinars and in foreign currencies. In April this year, the government chose the Islamic Corporation for the Development of the Private Sector, an arm of the Jeddah-based Islamic Development Bank, to support the country’s debut for the planned domestic sukuk offering.  


(The Jordan Times / 28 March 2016)
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Sunday, 27 March 2016

First Islamic banking center opened in Russia's Kazan

AhlulBayt News Agency - Russia's first center of partnership (Islamic) banking was opened today in Kazan. It will operate in full compliance with the principles of partnership funding, which are widely used in many countries of Southeast Asia and the Middle East.

The opening of the center was attended by the President of the Republic of Tatarstan, Rustam Minnikhanov, the first Deputy Chairman of the Bank of Russia, Alexei Simanovsky and the Mufti of the Spiritual Directorate of the Muslims of Tatarstan, Kamil Samigullin.

"We live in difficult times, difficult economic circumstances force us to look for new ways," the head of the republic said.

The center was opened in the framework of a cooperation agreement between the Spiritual Directorate of the Muslims of Tatarstan and Tatagroprombank, TASS reports.

The working group, which is headed by the first deputy chairman of the Central Bank, Alexei Simanovsky, drafted a "road map" for the development of partnership banking and related financial services in the Russian Federation in 2016-2017.

The center will conduct investment, leasing and trading activities. It will share financial risks with its clients.

The head of the department of stock markets and financial engineering of the Faculty of Finance and the Banking Business of RANEPA, Konstantin Korischenko, said in an interview with a correspondent of Vestnik Kavkaza that Islamic banking is very actively developing form of financing.

"The only difficulty in the Russian context is that the banking does not quite fit in with the Russian Civil Code. Since the principle of payment for repayment of resources does not correspond to the basic principle of Islamic finance, which proposes a joint profit from economic activities. So active discussions are under way if changes in Russian legislation are possible. There are even proposals for a regulatory change, but unfortunately the problem has not been solved yet," the expert said.

The head of the department of stock markets and financial engineering of the Faculty of Finance and the Banking Business of RANEPA recalled that there is only one kind of legislation in Russia, which is the legislation of the Russian Federation, which, unfortunately, does not support such a type of financing now. "So the problem is how legal contracts between the parties will be signed." So currently research and consulting functions of the center will be more in demand," Konstantin Korischenko concluded.

The president of the Association of Russian Banks, Garegin Tosunyan, expressed opinion that "every banking service is in demand here," so "we should welcome this practice." "This type of banking, in terms of the specifics of provided services, may be attractive for a particular group of customers," he said.

The expert also noted that such banks will not be radically different from the usual, but they will be characterized by "forms of specialization, in which preference is given to only investment programs and approaches, while putting a particular emphasis on the cultural and ethical aspects of business.


(ABNA / 27 March 2016)

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Malaysia: Sime Darby raises RM2.2b from sukuk issue

KUALA LUMPUR, March 24 — Sime Darby Bhd has raised RM2.2 billion from the issue of a perpetual non-call 10-year subordinated sukuk to largely refinance its debt obligations
President and Group Chief Executive Tan Sri Mohd Bakke Salleh said the perpetual sukuk was part of the company's deleveraging efforts and it is the first globally based on shariah principle of Wakalah.
“We are encouraged by the strong support shown by investors and this also indicates the market’s continued confidence in Sime Darby,” he said in a statement today.
The sukuk offering was over 1.8 times oversubscribed from its initial target, allowing Sime Darby to upsize and price the offering at the final yield of 5.65 per cent per annum.
As at mid-day break, Sime Darby's share price was four sen lower at RM7.95 with 471,500 units transacted.
( Malay Mail Online / 24 March 2016)

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Saturday, 26 March 2016

Malaysia: Sime issues RM2.2bil sukuk

PETALING JAYA: In a move to manage its debts, Sime Darby Bhd has issued RM2.2bil in Islamic debt papers at a final yield of 5.65%, which is about 179 basis points above similar-tenure Malaysian Government Securities.
The plantation heavyweight has issued a sukuk wakalah offering with a 10-year perpetual non-call tenure, which it said has been oversubscribed by 1.8 times.
This is the first call of an RM3bil programme that has been assigned a rating of AAIS by Malaysian Rating Corp Bhd (MARC).
Sime Darby said that MARC has accorded 50% equity credit on the issuance, which fits well with the group’s deleveraging initiatives.
It told the exchange that the fund-raising exercise was to manage its gearing level.
Sime Darby said the issuance has received strong order book via a limited book-build, allowing the company to upsize and price the offering at the final yield of 5.65% per annum.
Proceeds raised from issuance under the sukuk programme will go towards refinancing the group’s debt obligations and working capital requirements, it said.
The sukuk is the largest perpetual sukuk issuance globally by a non-bank, the largest ringgit perpetual sukuk issuance so far, and the first perpetual sukuk globally based on the syariah principle of wakalah.
Sime Darby president and group chief executive Tan Sri Mohd Bakke Salleh said the perpetual sukuk “is part of our deleveraging efforts”.
“We are encouraged by the strong support shown by investors and this also indicates the market’s continued confidence in Sime Darby,” he said in a statement.
Maybank Investment Bank Bhd (Maybank IB), which is the principal adviser, lead arranger and lead manager for the sukuk programme, said its participation in the transaction was holistic, whereby it delivered complete and end-to-end solutions.
“It is our privilege to work with Sime Darby again and jointly introduce the innovative sukuk wakalah to the market.
“The innovative sukuk structure, the first of its kind for an issuance of this nature, will further enhance Malaysia’s position as a global Islamic financial hub, and is a testament to our leadership in the global sukuk space,” said Maybank Kim Eng Group and Maybank IB CEO John Chong in a separate statement. Sime Darby had been under pressure to reduce its gearing following the acquisition of New Britain Palm Oil Ltd for RM6bil in March 2015.
In August last year, StarBiz reported that Sime Darby was looking at a RM6bil rights issue.
However, the proposal reportedly did not have the blessings of Sime Darby’s controlling shareholder, Permodalan Nasional Bhd.
Earlier this month, Moody’s Investors Service downgraded Sime Darby’s issuer rating and debt rating on sukuk issued by the company’s unit Sime Darby Global Bhd to Baa1from A3 with a “negative” outlook on the ratings.
It had also downgraded the senior unsecured medium-term note programme rating of Sime Darby Global Bhd to (P)Baa1 from (P)A3.
It said the downgrade reflected the extended period of weakness in the company’s financial profile after delayed plans to reduce its debt, and deteriorating cash generation across its key business segments.

Last month, Standard & Poor’s Ratings lowered its long-term corporate credit rating on the conglomerate, downgrading it to BBB+ from A- with a negative outlook.

(The Star Online / 25 March 2016)
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Malaysia: Takaful industry records growth in general and family sectors


KUALA LUMPUR: The Takaful industry recorded positive growth in both general and family takaful businesses in 2015, said the Malaysian Takaful Association (MTA).



Its chairman Ahmad Rizlan Azman said the general takaful business registered gross written contributions of RM2.3billion, an increase of 6.3 per cent over the same period in 2014.

Meanwhile, he said the family takaful business registered RM3.64 billion new business contributions in 2015, an increase of 3.9 per cent compared to 2014.



"The takaful industry is currently focused on the removal of Motor and Fire tariffs that is set to change the landscape of the general takaful industry seeing that these two classes combined make up the biggest component of the business," he said in his speech at the Takaful StarNite 2016 held at the Royale Chulan Hotel here today.



Currently in its sixth year running, the annual dinner and awards night was jointly-organised by MTA and Takaful practitioners in Malaysia to celebrate the achievements of the industry as well as the achievers who had performed outstandingly well last year.

The event was graced by the Sultan of Perak, Sultan Nazrin Muizzuddin Shah, the royal patron for Malaysia's Islamic Finance Initiative.



Ahmad Rizlan called on members to get acquainted with the new life Insurance and family takaful framework guideline, citing that it would become the new mantra for the industry as it requires improvement on efficiency and effectiveness of distribution channels and promote product innovation.


"Technology and innovation have fundamentally changed the way the businesses operate for many industries nowadays. I believe that the Takaful sector is no exception."


Ahmad Rizlan said the emergence of so-called online intermediaries or cyber agents in Malaysia, such as iMoney, Loanstreet, Ringgitplus and Insurance finder have set the scene in comparing and promoting financial products online.



"They are capable of explaining the complexity of Takaful in layman terms with greater ease using infographics and catchy articles.



"They provide facts and figures on how insurance and Takaful should be looked from customers' perspectives," he added



A total of 20 award categories were presented, including the Best Takaful Operator - Bancatakaful Business (HSBC Amanah Takaful (M) Bhd bagged the award), Best Takaful Operator - Agency Family Takaful Business (won by Prudential BSN Takaful Bhd), Best Bancatakaful Partners - Financial Institution (HSBC Amanah Takaful (M) Bhd), Best Takaful Operator General Takaful Business (Etiqa Takaful Bhd), Best Takaful Agency - Inter MTA member companies, Young Takaful Manager (Prudential BSN Takaful Bhd), and Corporate Social Responsibility (Etiqa Takaful Bhd).






(News Straits Times Online / 24 March 2016)
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Thursday, 24 March 2016

Malaysia: Perak Sultan tells Islamic financial scholars, ulama to keep up with times

KUALA LUMPUR, March 23 ― Perak’s Sultan Nazrin Muizzuddin Shah today told Islamic financial scholars and ulama to “think futuristically” in order to be current with contemporary developments.
He said they can act as “institutional game-changers” in helping Islamic finance grow, but must leave their “ivory towers” and become more involved in the industry.
“They, the ulama and the scholars, are in the best position to act as institutional game-changers through their research... Thinking strategically and futuristically is, after all, expected in other disciplines, from information technology to business to public policy to science and engineering.
“And so it should be no different in Shariah scholarship as well, if we are serious about transforming the Islamic finance landscape to become better and more impactful for the whole of society,” he said in his speech at a book launch here.
Sultan Nazrin added that no industry was immune to “social evolution”, making it necessary for these scholars to make the effort to produce relevant financial products.
He also said that it was important to inform the public more on the role of Shariah advisors in finance as their endorsement of an institution meant that it complied with the Islamic beliefs.
“Therefore, every endorsement by Shariah advisors is an assurance to the public that the institution in question is acting in accordance with religious tenets,” Sultan Nazrin added.
He was speaking at the launch of “Shariah Minds in Islamic Finance” book by Datuk Dr Mohd Daud Bakar today.
(Malaymail Online / 23 March 2016)
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Malaysia: RAM expects RM120bil of sukuk issuance this year

KUALA LUMPUR: Malaysia is expected to sustain its momentum this year with the issuance of between RM100bil and RM120bil worth of sukuk this year, driven by infrastructure projects, said RAM Rating Services Bhd (RAM Ratings).


In a statement on Tuesday, the rating agency said the domestic market recorded RM8.4bil of new sukuk in January, up 42.3% year-on-year.

“The Malaysian Government was the largest issuer for the month with RM10bil in conventional and Islamic papers,” RAM Ratings said. 

“Islamic securities made up 60% (or RM6bil) of this amount, underlining the Government's continued efforts to enhance the depth of the country's sukuk market,” it said.

RAM Ratings also expected Islamic private debt securities to continue accounting for half of the Malaysian bond market for the year.


(The Star Online / 23 March 2016)
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Wednesday, 23 March 2016

Indonesia $2.5b dollar sukuk 3.1 times oversubscribed

Jakarta: Indonesia raised $2.5 billion (Dh9.2 billion) from its sale of dollar Islamic bonds and got orders for 3.1 times the amount offered, according to a person familiar with the issuance.
The Southeast Asian nation sold $750 million of five-year sukuk and $1.75 billion of 10-year notes priced at 3.4 per cent and 4.55 per cent, respectively, said the person, who isn’t authorised to speak publicly and declined to be identified. Bids totaled $7.7 billion. Indonesia sold $2 billion of such debt due in 2025 at its previous offering last year at a coupon rate of 4.325 per cent and received orders for $6.8 billion, or 3.4 times the offer.
The Southeast Asian nation’s bonds have attracted more than $3 billion of inflows this quarter as the Federal Reserve said it’s only likely to raise interest rates twice in 2016 instead of the four previously envisaged, helping retain Indonesia’s yield advantage over US debt. The rupiah is also turning into a regional top performer after a more than 10 per cent slump in 2015 that pushed it beyond 14,000 a dollar for the first time since the Asian financial crisis.
“Indonesia timed its sukuk issuance to perfection as it comes after the dovish Fed’s statement,” said Hasif Murad, an investment manager at Kuala Lumpur-based Aberdeen Islamic Asset Management, whose parent company oversees the equivalent of $2.9 billion.The fact that Indonesia is the darling of Asia also helps.

A Bloomberg index of emerging-market dollar bonds has climbed 5.5 per cent this quarter, set for the biggest three-month gain since September 2012. And with Malaysia said to be planning another global sukuk, the outlook for Islamic note sales worldwide is already looking brighter than last year.
Issuance to date is $10.2 billion, exceeding last quarter’s $9.9 billion, based on Bloomberg-compiled data. Total offerings for all of 2015 dropped 29 per cent to $35.4 billion in the poorest showing since 2010.
The yield on Indonesia’s 2025 Islamic bonds issued last year rose one basis point to 4.41 per cent as of 11:39 am in Jakarta, less than the 4.95 per cent they were paying at the end of last year, data compiled by Bloomberg show. There’s no pricing available yet for either of the two new notes. The rupiah has appreciated 4.7 per cent versus the dollar in 2016, second only to a 6.6 per cent gain in Malaysia’s ringgit among Southeast Asia’s most-traded currencies.

(Gulf News Market / 23 March 2016)
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Islamic finance, an untapped funding alternative for PPPs

Public Private Partnerships (PPPs), arrangements between government agencies and private sector companies or investors to provide and maintain public assets and services are increasingly becoming popular, particularly in developing countries, to create infrastructure, utilities and healthcare facilities. In most cases, governments rely on the provision of private funding in exchange for fiscal benefits for the sponsor in the absence of sufficient sources of debt and equity financing on their own. However, the willingness of sponsors to invest in such public assets normally depends very much on their long-term risk-reward expectations – and they aren’t always met in countries with volatile economies or political instability.

Gaps in infrastructure financing could reach $70tn globally by 2030 as per estimates by the Islamic Development Bank Group, and increase further due to population growth, an increasing middle class and rapid urbanisation in developing countries. The need to address the shortfalls by looking into innovative solution has thus become obvious.

This has turned the attention to Islamic Finance as an untapped source of funding for cash-strapped governments seeking alternative sources to invest in critical infrastructure and services such as airports, toll roads, sea ports, independent power plants, hospitals and the like.
According to David Baxter, executive director of US-based Institute for Private Public Partnership, a globally active consultancy for PPPs, there are two reasons for the growing interest. 


“The first reason is the vast untapped resource of investment dollars from the Middle East that are being underutilised for PPPs,” Baxter says, “while the second pressing reason is the need to provide investment opportunities to Muslim investors who are interested in investing in projects that are Shariah-compliant.”


Additionally, two predominant Islamic finance structures are a perfect match for financing long-term PPP projects, namely ijara, a lease-purchase or operating lease model, and istisna’a, a long-term contract whereby a party undertakes to manufacture, build or construct assets and a client (in this case the government agency) can make deferred payments in instalments linked to project completion. 


In Islamic jurisdictions, both models are commonly used for the construction of power plants, factories, roads, railways, schools, hospitals, buildings and residential developments, and the perception has come up that they work well with PPPs projects, too. Other methods of funding could include the classic Islamic profit-sharing model of mudharaba, the rent-to-own model of murabaha, the joint-venture or project partnership model of musharaka, and also classic sukuk or a combination of sukuk with istisna’a and other structures.


“Islamic finance can bridge the investment gap in the PPP investment market,” Baxter says, adding that “it is a viable and compatible source of funding for PPP projects focusing on building infrastructure that contributes to the common development goals of a community or country,”


The World Bank and the Islamic Development Bank in its recently launched initiative “Mobilising Islamic Finance” also embarked on the possibility of tapping Shariah-compliant funding models for infrastructure projects and other public facilities in developing countries.


“Many governments are now looking to understand the legal and regulatory issues relevant to the flow of Islamic financing and what project structures can or cannot work well with these features,” says Fida Rana, senior PPP expert at the Islamic Development Bank.


The initiative is also looking into special matters such as energy projects funded by both conventional and Islamic finance vehicles, trying to integrate these two financing classes in a single project. It also promotes the use of Islamic PPP finance for social projects that go beyond hospitals and schools and would support entire community-driven developments in poorer nations.



(Gulf Times / 22 March 2016)
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Tuesday, 22 March 2016

Kuwait's Boubyan Bank aims to issue $250 mln sukuk by April-end

Kuwait's Boubyan Bank aims to issue sukuk worth $250 million before the end of April, the lender's chief executive said on Monday.
Adel Abdul Wahab al-Majed told reporters of the plan after the company's annual meeting.
Boubyan Bank in January said it had received regulatory approval to issue a capital-boosting sukuk worth $250 million.

Majed added that the sukuk would allow the bank to fulfill Basel III requirements and cover its capital needs until 2018.
(Reuters / 21 March 2016)
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Monday, 21 March 2016

Islamic Corp for Development of Private Sector announces sukuk plan

Islamic Corporation for the Development of the Private Sector (ICD) has chosen ten banks to arrange a series of meetings with fixed income investors ahead of a potential sale of sukuk, a document from lead arrangers showed on Monday.
The unit of Islamic Development Bank will roadshow in Asia, Europe and the Middle East commencing on Mar. 23, with a dollar-denominated sukuk of benchmark size to be issued after the meetings, subject to market conditions.
Benchmark size is traditionally understood to mean in excess of $500 million.

Bank ABC, Boubyan Bank, CIMB, Dubai Islamic Bank, Emirates NBD, First Gulf Bank, HSBC, Mizuho, Societe Generale and Standard Chartered are the chosen arrangers of the meetings and potential sukuk issue, the document added.

(Reuters / 21 March 2016)
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Promoting Islamic banking: Centres of Excellence in educational institutions

LONDON: 
The State Bank of Pakistan (SBP) is pursuing an aggressive policy for the development of adequate human resources for the growing Islamic banking and financial sector in Pakistan.

As part of the plan, in phase 1, three ‘Centres of Excellence’ in ‘Islamic Banking and Finance’ have been set up at the Institute of Business Administration (IBA) Karachi, Lahore University of Management Sciences (LUMS) Lahore and the Institute of Management Sciences Peshawar.
Setting up these centres is indeed an impressive development as it is bringing the most prestigious and professional institutions of higher learning into the fold of Islamic banking and finance. At the same time, the role of more traditional Islamic academic institutions like the International Islamic University Islamabad (IIUI), in developing human resources for Islamic banking and finance industry is getting eclipsed.
The first international conference in Islamic economics, banking and finance was organised by the IIUI in the mid-1980s, and during the following decade the ‘International Institute of Islamic Economics’ at the IIUI provided useful input into delineating a comprehensive blueprint for the Islamisation of Pakistan economy. Now, the IIUI is in a great mess due to the continuous brain drain the university has experienced, with the departure of some of the most distinguished experts in the field of Islamic economies, banking and finance. Last year, the university organised an international conference on Islamic economics and finance but the introvert policy of the university did not help in creating any significant awareness.
Taking the limelight
With an increased focus on Islamic banking and finance and phenomenal growth in the sector, some other institutions have become more visible in the marketplace, most notably COMSATS Institute of Information Technology Lahore. The Centre of Islamic Finance at COMSATS organised its third ‘Global Forum on Islamic Finance’ in Lahore last week, in which delegates and scholars from around the world participated. Prior to that, University of Management & Technology (UMT) Lahore organised a two-day conference on Islamic banking and finance.
LUMS is scheduled to have its first ‘Islamic, Finance, Banking and Business Ethics Global Conference’ on March 27-28, 2016 in collaboration with INCEIF, a Malaysian university specialising in Islamic banking and finance. This would be the third such conference in a span of two months in the city of Lahore. While a welcome development in its own right, it also shows how unsystematic and opportunistic Pakistani institutions are with respect to Islamic banking and finance.
There is a need to devise a collaborative strategy to put Lahore on the global map of Islamic financial services industry. All the three universities in Lahore (namely COMSTAS, UMT and LUMS) should come together to organise something called Lahore Islamic Economic Forum (LIEF). Given the scarcity of human resources and funding for research and development, the three universities should also develop a joint research agenda to conduct applied research in the field of Islamic banking and finance.
Malaysia has developed the World Islamic Economic Forum (WIEF) as a truly global brand and the proposed LIEF should collaborate with it to bring Lahore to the attention of the global Islamic financial services industry.
Punjab, with an estimated population of nearly 100 million, is a viable market for any kind of financial services, including Islamic banking and finance. With the likes of MCB, Allied Bank, the Bank of Punjab, and FINCA Microfinance Bank, headquartered in Lahore, there is enough critical mass to develop Lahore as a centre for Islamic banking.

There are other important institutions headquartered in Lahore, most notably Akhuwat that is a premier microfinance interest-free lender in the country. All these institutions may consider setting up an ‘Islamic Financial Inclusion Centre’ in the city to conduct research in poverty alleviation and reduction of income inequalities in the country.

(The Express Tribune / 21 March 2016)

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Saturday, 19 March 2016

ISLAMIC FINANCE KEY SOLUTION AGAINST FRAGILITY

Jeddah—Leading global experts have stated that Islamic finance would provide a key solution against fragility in Islamic Development Bank’s (IDB) member countries and beyond. The experts stated this during a high level meeting at theheadquarters of IDB in Jeddah, Kingdom of Saudi Arabia, under the umbrella of IDB President’sAdvisory Panel (PAP).


PAP is an advisory body of global experts who work with the IDB President to provideindependent advice on the overall strategy of the IDB, as well as give input into the policydirection of the Bank for the benefit of member countries. The theme for the panel this year is“Digital Development for Resilience.” According to the IDB President, Dr. Ahmad Mohamed Ali in his opening remarks of the PAP, IDB is interested in creating awareness on the potential role of Islamic finance for fragilecommunities.



“Fragility threatens human development. We therefore have to find innovative means to addressfragility by increasing levels of resilience in our communities,’ Dr. Ahmad Ali stated. “Our member countries are in a real danger of being left behind. Currently 24 of the 50 most fragile countries are OIC member countries.” He concluded. During his remarks, former President of Turkey, Dr. Abdullah Gul commended IDB in its effort to use Islamic Finance to address the challenges outlined in the Sustainable Development Goals (SDGs) which includes fragility. He suggested that IDB can help member countries to achieve digital development by sharing experiences and providing financing. Dr. Gul cited the exampleof a good practice from the Republic of Turkey where the use of e-government (i.e. e-visaservices) served 30 million visitors within three years.



Dr. Abdullah Gul added that we have not fully exploited the industrial revolution, but we can still take advantage of the digital wave.In his intervention during the panel discussion, Nobel Laureate, Professor Muhammad Yunusstated that the leading technology firms in the world are using technology for profit making. Therefore IDB should work with member countries to use digital technology and Islamic microfinanceas a social driver, so that people will create jobs by themselves. Professor Abbas Mirakhor, former Executive Director and Dean of the Executive Board of International Monetary Fund (IMF), encouraged IDB to work with member countries by addressing fragility through a policy framework that will integrate Islamic finance in national budgets. On his part, Dr.Jobarah Al-Suraisry, former KSA Minister of Transportation called for the establishment of a “Digital Fund” in order to address the imbalance between the developed and developing countries. In her contribution, Madam Bintou Sanogoh, former Minister of Finance of Burkina Faso stated that digital development can help low income countries to become middle income if we can improve connectivity.


(Pakistan Observer / 17 March 2016)

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SEC positions Nigeria for $2trn global Sukuk market


LAGOS— The Securities and Exchange Commission (SEC) has initiated moves to position Nigeria for a big role in the emerging global market for Islamic or non- interest finance valued at over $2 trillion. 

Director General of SEC, Mounir Gwarzo, said this in Sokoto at a regional roundtable on Non-Interest Capital Market. He said: “In Nigeria, the SEC has implemented a number of reforms aimed at deepening the non-interest capital market.

 The global Sukuk market continues to witness remarkable growth since after the 2008 global financial crisis. Annual issuances have grown from $15 billion in 2008 to almost $120 billion in 2014.” SEC has issued regulatory framework, reviewing the rules and introducing new ones on Islamic Fund Management and on Sukuk issuance. 

The legal frameworks have encouraged Islamic product innovation with the registration of five ethical/shariah compliant funds and the issuance of Nigeria’s first ever sub-national Ijara Sukuk by the Osun State government in 2013 which was oversubscribed. 

“We are also considering modalities for setting up a Sharia Advisory Council as a body of experts to advise SEC and the market on non-interest product and their applications,” Gwarzo said. Investors worldwide are increasingly allocating their resources into Islamic finance products. 

Hong Kong, with only about 270,000 Muslims, raised $2 billion from Sukuk sales in 2014 and 2015, which attracted $6.7 billion in total orders, while Indonesia plans to tap investors for the sixth year running and Malaysia is returning for its seventh offering this year. 

Last year was widely considered a landmark year for Islamic finance, especially with landmark debut Sukuk issuances by countries such as the UK, Hong Kong, Senegal, South Africa, and Luxemburg. 

A Sukuk is part of Nigeria’s strategic framework through 2017, the Debt Management Office (DMO) said recently.

(Vanguard / 15 March 2016)


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Friday, 18 March 2016

PACRA MAINTAINS IFS RATING OF PAK-QATAR GENERAL TAKAFUL AT “A”

Lahore—The Pakistan Credit Rating Agency (PACRA) has maintained the Insurer Financial Strength (IFS) of Pak-Qatar General Takaful Limited at ‘A’ (Single A). The rating assigned to PQGTL recognizes its strong capacity to meet policy-holders’ and contract obligations, while it also reflects sound risk-absorption capacity of the company, due to its adequate capitalization and liquidity profile.


The PACRA report stated that; Pak-Qatar General Takaful – being an early entrant in Islamic insurance (Takaful); both General and Life – has achieved good brand recognition. This gives strength to PQGTL’s business profile.

The Chief Executive Officer of PQGTL – Mr. Javed Muslim stated, “It is a pleasure for us to see that the robust performance of PQGTL, in all aspects of its business, has also been recognized by a credible rating agency like PACRA. It is a reflection of the consistent hard work of our highly competent team. I congratulate all team members for winning this strong financial stature and respect as a robust financial institution.



(Pakistan Observer / 16 March 2016)
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Global Islamic finance industry assets over $2 trillion in 2014

Total assets under management in the global Islamic finance industry was in excess of $2 trillion (about N394 trillion) by the end of 2014, the director-general, Securities and Exchange Commission, SEC, Mounir Gwarzo, has disclosed.
Mr. Gwarzo said the industry growth had continued to flourish with the globalSukuk market recording remarkable expansion after the 2008 global financial crisis.
Sukuk is an Islamic finance certificate – similar to a bond in Western finance – that complies with Islamic law, Shariah.
The director, who spoke at the second Regional Roundtable on Non-Interest Capital Market in Sokoto on Monday, said annual issuances from Sukukinvestment had grown from $15 billion in 2008 to almost $120 billion in 2014.
Mr. Gwarzo said the focus of the roundtable was on Sukuk – one of the most important components of the Islamic financial system.
He said while most people identify capital markets as an important source of medium-to-long term capital, few realise the amazing potential of capital markets to serve as a catalyst for financial inclusion.

“SEC is determined to unlock this potential of the Nigerian Capital Market.
He said in particular, SEC was aware of the need to deepen the non-interest capital market space to enable millions of Nigerians and people of the Islamic faith to invest savings ethically.

“Investors worldwide are increasingly allocating their resources into Islamic finance products,” Mr. Gwarzo said.
The DG said last year was widely considered a landmark year for Islamic finance, especially with debut Sukuk issuances by countries such as the United Kingdom, Hong Kong, Senegal, South Africa and Luxemburg.
He said the year also witnessed continued strong interest from key markets of Malaysia, Saudi Arabia, the United Arab Emirates (UAE) and emerging markets like Turkey and Indonesia.
Mr. Gwarzo added that the Sukuk market was emerging on a global scale as a viable alternative source of funding.
In Nigeria, the SEC boss said the commission implemented a number of reforms aimed at deepening the non-interest capital market.
For example, he said, the commission focused on the regulatory framework, reviewing the rules on Islamic Fund Management and introducing new rules on Sukuk issuance.
These two legal frameworks, Mr. Gwarzo pointed out, have encouraged Islamic products innovation with the registration of five ethical/Shariah compliant funds and the over-subscription of Nigeria’s first ever sub-national Ijara Sukuk by the Osun State government in 2013.
He said SEC was also considering modalities for setting up a Sharia Advisory Council as a body of experts to advise SEC and the market on non-interest product and their applications.
Mr. Gwarzo said the state governments could leverage on the Sukuk market to raise funds for developmental projects.
Going forward, he said, the focus of the SEC would be on massive public enlightenment and also stronger capacity building initiatives, adding that was what informed the idea of hosting regional events as the Roundtable
He said the commission was working with the Debt Management Office, DMO to ensure Nigeria issued her first sovereignSukuk that would provide the needed benchmark for other categories of issuers.
“We are hopeful there will be a significant progress on this front before the end of 2016,” he said.


(Premium Times / 14 March 2016)
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