Consultation ends on introduction of Islamic finance to Malta

Points of Essence:

• Malta Financial Services Authority received good feedback when it consulted the public and financial services stakeholders to introduce Islamic finance in Malta.
• Following this consultation, Malta will be issuing a consultation document on Islamic Bonds (Sukuk) by the end of 2008 and another on Sharia Insurance early in 2009.

A public consultation period on the introduction of Islamic finance to Malta expires today, after which the Malta Financial Services Authority is to begin wading through feedback on the issue from financial services stakeholders and the public at large.

Following the present consultation, the MFSA intends to continue its work on Islamic finance by issuing a consultation document on Islamic Bonds (Sukuk) by the end of 2008 and another on Sharia Insurance early in 2009.

Islamic finance refers to financial services systems that are consistent with Islamic (Sharia) law. In particular, Islamic law prohibits usury, the collection and payment of interest, and prohibits investing in businesses that are considered unlawful, or haraam – such as businesses that sell alcohol or pork, or businesses that produce media such as gossip columns or pornography, which are contrary to Islamic values.

The MFSA envisages a number of opportunities for the setting up of Malta-based Islamic financial institutions as fully fledged banking institutions, as well as a number of opportunities for the setting up of Sharia compliant funds in Malta.

Publishing their joint feedback this week the Malta Union for Bank Employees, the Malta Employers Association and the Malta Institute of Managers welcomed the MFSA’s initiative and pronounced themselves as firm believers in Malta’s potential to attract Islamic finance.

The joint feedback from the MEA, MUBE and MiM advocated a good understanding of all available contracts in Islamic Commercial law by those responsible for the development of the sector while such persons must also liase with the main international bodies dealing with Islamic Finance and standardisation issues.

They also advised that, “Malta needs to avoid repeating the mistakes made with respect to the Pension Funds, which resulted in the failure to attract appropriate investment.

“In this respect, a team of experts should be set up in order to monitor the developments and study ways on how to attract Islamic Funds to Malta. This may be done within Finance Malta. However, the mechanics of this team should be different from that of the other expert groups in Finance Malta. Finance Malta needs to invest in this lucrative niche.”

The MEA, MUBE and MiM also advised that double taxation agreements be sought with major Islamic Financial Centres, while the foreign affairs ministry should also be involved in an expert group, particularly with experts of relations with Islamic countries.

A focus group set up by the trio, however, expressed concern over issues related to legal certainty and the role of Sharia Supervisory Boards, as well as on other issues on transparency and corporate governance

On the issue of the development of Sharia compliant funds, the group said it had some concerns along these lines but generally agreed with the MFSA’s approach toward the matter.

In its paper, the MIM, MUBE and the MEA stated they are “firm believers in Malta’s potential to attract Islamic finance”.

The organisations have also been organising activities and discussing matters related to Islamic Finance for a number of months. The organisations’ focus group is to continue actively working in the area so as to assist Malta in tapping the “lucrative market”. It adds it is “willing to meet with the appropriate section within the Malta Financial Services Authority in order to develop further its arguments and recommendations”.

Source: Independent.com

British Islamic bank plans Swedish expansion

Points of Essence:

• UK’s Islamic Bank of Britain will be expanding to Sweden. A Germany branch is next in the pipeline.
• The Swedish bank will be regulated by the Financial Supervisory Authority.

Sweden’s Muslim population could soon have their very own bank. A British bank is looking to expand its business and has been in contact with the Financial Supervisory Authority (FI), Sveriges Radio reports.

The Islamic Bank of Britain (IBB), which pioneered Islamic banking in the UK when it first opened its doors in 2004, could soon open a branch with the aim of serving the Muslim population in Sweden.

“We got in contact with the Swedish authorities a while ago. At the moment it is a question of preparing our next step,” said Shaher Abbas for IBB.

The Islamic Bank of Britain was formed in 2002 with the aim of meeting the financial needs of the British Muslim population and is backed by investors in the Middle East.

IBB now offers internet banking and savings products and has 60,000 customers at its eight branches across the UK.

The company is now planning a European expansion with branches in Germany and Sweden, according to Sveriges Radio.

IBB’s business is based on the principles of Islamic finance which stipulate that savings and loan products are offered without the use of interest.

“We make every effort to ensure that we do not compromise the principles of the Islamic faith by mixing our funds with interest bearing funds. We fund all our operations on a Sharia’a compliant basis,” the company explains on its website.

Despite its profile, the Islamic Bank of Britain welcomes both Muslim and non-Muslim customers.

“We have Christian customers, Sikhs and many non-religious customers also,” Abbas told Sveriges Radio.

The bank is regulated by the Financial Supervisory Authority (FSA) in the UK and is also subject to and approved by a Sharia’a Supervisory Committee – made up of three learned members of the British Muslim community.

Although the IBB would be Sweden’s first bank based on the Islamic principles of Sharia’a, it would not be the first to seek to avoid the use of interest bearing funds.

JAK members bank has been operating interest-free savings and loans under a banking licence since 1997. JAK is formally a cooperative bank with 35,000 members and a growth of around 5 percent per annum.

JAK is not a religious bank but has a certain missionary zeal and declares on its website:

“We at JAK work for a society with financial rules which do not create huge divisions between people and regions. For a just society without interest!”

JAK, a bank borne of 1970s idealism and thriving in a decidedly different age some three decades later, could soon be joined by a bank with a code of principles as old as the religion of Islam itself, and great ambition to boot.

“I think we can be much bigger, God willing,” said Saher Abbas to Sveriges Radio.

Peter Vinthagen Simpson news@thelocal.se+46 8 656 6518)

Nigeria: IMFB Introduces Islamic Banking

Points of Essence:

• Nigeria’s Integrated Micro Finance emerged a new Islamic banking player by introducing Shariah compliant banking products.
• It is meant to deepening the capacity and finances of the impoverish Nigerians.

By Chris Agabi
Lagos

The Integrated Micro Finance Bank has introduced Islamic banking in its financial and investment products.

Speaking in Lagos, Wednesday, Managing Director and Chief Executive Officer of the Bank Mr. Simon Akinteye said one of its products which is shariah compliant is the Ijara. This, he said will be based on daily contribution from the leased products and the bank, as well as the investor’s share in the profit.

He said it is leasing without interest but that the interest will be shared into three parts and the bank will take just one part while the customer takes two parts.

The other two Islamic products are: Musharaka Marana and Musharaka Nasat which would be the contribution of 12 weeks.

He said on this, the investor would be giving double the amount to invest and subsequently the profits would be shared with the bank and him.

He said the products would cater for Nigerians who wouldn’t want to do conventional banking.

The bank also said it is deepening the capacity and finances of the over 70 million poor Nigerians most of which are women and youths.

She said women particularly are impoverished in Nigeria even though hard working, hence the need to improve their finances. Launching the products, the

Speaking on another new product that was launched, Mr. Akinteye said: “The Business equipment Leasing Account (BELA) product would be useful to anyone who is ready create economic value to the least income generating assets like wheel barrows, generators, refrigerators, hair dryers, barbing saloon complete kit, vulcanizing machines grinding machines etc.”

He explained further that: “We are doing what the conventional commercial banks cannot do. We are really going down to the basics, to providing equipments to people to generate funds. They are going to be paying back gradually over a period of time. Repayment is as small as N200 per day, some N500 and others would pay on weekly say, a thousand naira” adding that “after they have fully paid, the equipments become theirs.”

Source: allafrica.com