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Archive for October 2008

IFSB approves guiding principles on Islamic schemes

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Points of Essence:

  • There was a general consensus during the Council meeting of the IFSB that Islamic banks have generally absorbed the shock of the current financial crisis. It was also urged that the IFSB should focus on capacity building of the industry and create better understanding of its approved prudential standards among the stakeholders of Islamic finance.
  • At the meeting, two more IFSB standards will be issued regarding Capital Adequacy Requirements for Sukuk Securitizations and Real Estate Investments and Guiding Principles on Governance of Islamic Collective Investment Schemes.

KARACHI: Islamic Financial Services Board (IFSB) has approved two exposure drafts of Capital Adequacy Requirements for Sukuk Securitizations and Real Estate Investments and Guiding Principles on Governance of Islamic Collective Investment Schemes.

The board approved these drafts and principles in a meeting in Dubai on Wednesday. State Bank of Pakistan Governor Dr Shamshad Akhtar presided over the 13th Council meeting.

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Written by Suapi Shaffaii

October 31, 2008 at 5:57 pm

Posted in General Issue

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So many jobs, but so few experts for Islamic finance industry

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Points of Essence:

  • When those in conventional finance line are hit hard by the job cutbacks, the Islamic financial industry is hiring. But it only hunts for the right talents. The booming Islamic finance has created acute shortage of vital human resources for the industry which may hamper its growth.

KUALA LUMPUR – The swift rise of the Islamic finance industry could hit a wall in the coming years as the sector struggles to find enough experts to do the job, an industry official said on Tuesday.

Sharia banking’s sudden popularity has created a scramble for bankers, scholars and lawyers conversant in both conventional finance and Islamic economics, and produced a shortage that sometimes compromises the quality of products, experts say.

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Written by Suapi Shaffaii

October 31, 2008 at 1:39 am

Posted in Human Talent

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Malaysia RHB Islamic Bank switches focus to retail

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Points of Essence:

  • In a strategic response to the current global financial crisis, Malaysian based RHB Islamic Bank plans to cut back on its corporate financing and shifts to consumer financing. This is due to a possibility of higher default rates among corporate borrowers in the event of an economic downturn.

KUALA LUMPUR, Oct 30 (Reuters) – RHB Islamic Bank Bhd, the sharia arm of Malaysia’s fourth-largest lender, plans to make more consumer loans next year as a looming global slowdown threatens corporate lending growth, a company executive said on Thursday.

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Written by Suapi Shaffaii

October 31, 2008 at 12:18 am

BNM to review SAC’s role

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Points of Essence:

  • The recent court cases on Islamic finance in Malaysia have put the Malaysian Islamic banking services industry under a spotlight. This does not augur well to the country as it is positioning itself to emerge a primary global hub for Islamic finance. The central bank is reportedly taking necessary measures to contain the possible far reaching effects of the court judgements to the industry as a whole. This includes to necessitate mandatory reference to the Shariah Advisory Council upon  judicial authorities when presiding over Islamic finance cases.


By Halim Wahab & Habhajan Singh
PLANS are underway to compel the High Court to refer to the Shariah Advisory Council (SAC) of Bank Negara Malaysia (BNM) when presiding over Islamic banking and finance-related cases, unlike presently, where High Court judges are neither required to consult the Shariah experts or heed their advise.

It is learnt that the central bank is reviewing the necessary laws to make this possible. This follows the recent controversy over Islamic financing under the Al-Bai’ Bithaman Ajil (BBA) concept and the confusion over the role of the SAC in determining the compliance status of Islamic finance products.

To date, BNM has not responded to queries from this newspaper on the implications of the judgment to the Islamic banking industry or if plans for changes to the SAC’s role and powers are underway.

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Written by Suapi Shaffaii

October 30, 2008 at 11:31 pm

Posted in Islamic Finance Legal

Tagged with ,

Islamic banks insulated from crisis; realty exposure a worry: expert

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Points of Essence:

  • There is a likelihood that Islamic finance may gets entangled with the current credit crunch as it has some exposures to real estate and private equity even though it is generally spared from the crisis.

DOHA: Islamic banks have largely been unscathed by the global financial crisis, but some concerns regarding their heavy exposure to real estate and private equity remain, according to an expert.
Islamic banking/finance would not just survive but grow more rapidly in the coming years, Yehia Elbatrawi, deputy CEO for retail, private and wealth management at Ahlibank said.

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Written by Suapi Shaffaii

October 29, 2008 at 10:41 pm

Call to set up procedures to regulate Islamic banking

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Points of Essence:

  • Central banks in Islamic countries are urged to form their legislative platform to deal with Islamic banking as clear rules are a prerequisite to regulate the related industry.

Doha • The 3rd Annual World Islamic Infrastructure Finance Conference opened here yesterday with prospects of the Islamic banking in the context of the current global financial crisis topping the discussions.

In his keynote address at the conference, Minister of Finance and Economy H E Yousuf Hussain Kamal stressed the need for central banks in Islamic countries to set up procedures to regulate Islamic banking. Yousuf Hussain said central banks rules should include a chapter dealing with Shariah compliant financial transactions.

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Written by Suapi Shaffaii

October 29, 2008 at 10:18 pm

IDB to set up financial crisis monitoring team

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Points of Essence:

  • Despite the perceived resilience of Islamic finance from the current credit malaise , IDB took a proactive role in establishing a financial crisis monitoring team.  The global Islamic financial industry will indeed benefit from this set up as apart from an opportunity to gain deep understanding of the current crisis so as to shield Islamic finance accordingly, it will promote better communication and exchange of information between the stakeholders of Islamic finance to encourage them to be well prepared for any eventuality of the crisis to also affect Islamic finance.

JEDDAH – The Board of Executive Directors of the Islamic Development Bank (IDB), endorsed on Monday the formation of a work team composed of experts and practitioners to study the effects of the international financial crisis on the Islamic financial industry and the economies of member countries.

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Written by Suapi Shaffaii

October 29, 2008 at 9:04 pm