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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

Gatehouse Bank appoints head of Shari’ah advisory and compliance

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Points of Essence:

  • UK based Gatehouse Bank recently announced the appointment of Mufti Muhammad Nurullah Shikder as its head of the Bank’s Shariah advisory and Shariah compliance. Shikder will oversee the day to day transactions of the Bank to ensure compliance with the Shariah as well as provide training in the related areas. He was previously with Dubai Islamic Bank and currently sits on on the Shariah Board of other financial institutions.

By: Staff Writer

Gatehouse, Dubai Islamic Bank, Shari'ah board, advisor, appointments,

Mufti Muhammad Nurullah Shikder previously spent three and half years with Dubai Islamic Bank in the Shari'ah Coordination Department and worked closely with Dr. Hussain Hamid Hassan, Chairman of the DIB Shari'ah Board.

Gatehouse Bank, a Shari’ah-compliant wholesale investment bank based in the UK, has appointed Mufti Muhammad Nurullah Shikder as head of Shari’ah advisory and Shari’ah compliance.

Gatehouse Bank said its Shari’ah Advisory and Shari’ah Compliance Department will be providing Shari’ah services in the following core areas:

Shari’ah Advisory:

• Assisting with the structuring of Shari’ah compliant products and offerings and issuing the relevant Fatwa;

• Reviewing transaction documentation in accordance with the principles of Shari’ah;

• Providing general Shari’ah consultancy/advice on an on-going basis.

Shari’ah Audit & Compliance:

• Providing Shari’ah audit services;

• Reviewing executed transaction documents to ensure continuous Shari’ah compliance;

• Preparation of Shari’ah auditor’s reports.

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Written by Suapi Shaffaii

October 29, 2008 at 8:30 pm

Malaysia courts may get expert help on sharia finance

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Points of Essence:

  • Malaysian courts are urged to seek guidance from the central bank’s Shariah advisors when deciding cases on Islamic finance. There is a fear that as non-Shariah trained judges, decisions may be reached without giving precedence to the Islamic principles.

KUALA LUMPUR, Oct 29 (Reuters) – Malaysian courts may need to refer to the central bank’s sharia advisers when deciding Islamic finance matters to ensure cases are handled by sharia experts, a newspaper reported on Wednesday.

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Written by Suapi Shaffaii

October 29, 2008 at 3:50 pm

McKinsey report on Islamic finance industry set for launch

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Points of Esence:

  • McKinsey will launch its Competitiveness Report on the Islamic Financial Industry to coincide will the 15th Annual World Islamic Banking Conference in Bahrain next month. The report will highlight the recent developments in Islamic finance, including growth and performance, the challenges and opportunities facing the industry in the context of the current economic climate and their implications on business models.

MANAMA: The challenges facing the Islamic finance industry will be highlighted in a report to be launched next month.

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Written by Suapi Shaffaii

October 29, 2008 at 3:44 pm

Islamic bond market ‘wrecked’ by critical remarks

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Points of Essence:

  • The sudden fall of the Islamic bond market was attributed to a strong Shariah view from a prominent Shariah scholar questioning the compliance of the bonds with the Shariah requirements. Sheikh Muhammad Taqi Usmani has since been blamed for the rapid decline of the bond issuance from $50 billion to just S14 billion last year.
File photo of a speaker at an Islamic Finance conference. (Getty Images)

MAJOR UNCERTAINTY: File photo of a speaker at an Islamic Finance conference.

by Jason Benham

Debates over how sharia-compliant Islamic bonds really are have “wrecked” the sukuk market, causing issues to fall to $14 billion this year from up to $50 billion last year, a leading expert said on Tuesday.

“The statements that were made by our sharia chairman about the sharia compliance of sukuk wrecked the market,” said Mohamad Nedal Alchaar, secretary-general of the Accounting and Auditing Organization for Islamic Financial Institutions.

Sheikh Muhammad Taqi Usmani, chairman of the board of scholars Read the rest of this entry »

Written by Suapi Shaffaii

October 29, 2008 at 3:37 pm

Plans to make Shah Alam international Islamic banking hub

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Points of Essence:

  • The Opposition-led State of Selangor in Malaysia plans to built i-City in its capital city Shah Alam as an international Islamic banking and financial center. This RM20 billion worth project will commence in the second half of next year provided the current financial crisis has subsided by then. The hub city  will be built on 72-acre freehold land with cutting edge infrastructure and facilities befit a banking and financial hub.
  • The announcement does not however clarify whether it will seek alliance with the MIFC, a BNM-led outfit to promote setting Malaysia as an international Islamic financial hub.

By LAW KAI CHOW

SHAH ALAM: The Selangor government plans to turn Shah Alam into an international Islamic banking and financial centre, in the wake of slower growth in the state’s manufacturing sector.

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Written by Suapi Shaffaii

October 28, 2008 at 12:19 pm

Europe takes closer look at Islamic financing

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Points of Essence:

  • Europe begins to look up to Islamic finance for funds as credit in the conventional financial system is scarcely available given the prevailing crisis.

By Brett Corbin

PARIS: With commercial bank financing tight, Europeans have been taking a closer look at Islamic banking.

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Written by Suapi Shaffaii

October 27, 2008 at 1:49 am

Posted in General Issue

Tagged with ,

Islamic bankers see sharia system strengthening

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Points of Essence:

  • Islamic finance has continued to march on despite the threat of a spillover from the current financial crisis which may threaten the very resilient system Islamic finance has. At a fraction of the conventional system figure-wise, with more than 300 Islamic financial institutions worldwide and that the sector is worth about $1 trillion, there is still room for Islamic finance to grow. Given the huge number of the world’s Muslim population, soon it will be realized.
File photo of Saleh Kamel (l) who heads the General Council of Islamic Banks and Ahmed Mohamad Ali, President of the Islamic Development Bank (2nd l). (Getty Images)

ISLAMIC FINANCIERS: File photo of Saleh Kamel (l) who heads the General Council of Islamic Banks and Ahmed Mohamad Ali, President of the Islamic Development Bank (2nd l). (Getty Images)

by Asma Al-Sharif

The global financial crisis is an opportunity for sharia-compliant Islamic banking to further its position internationally, bankers said at a forum in Saudi Arabia on Saturday.

Islamic banks have been barely bruised by the global credit crisis so far, although falling property and commodity prices and slowing economies are starting to affect the sector.

But bankers at the forum, on how the world finance crisis could affect Islamic banking, saw the sector strengthening.

“It is a must for Islamic finance to seize the opportunity that came with this global financial crisis,” Ahmad Ali, president of the Jeddah-based Islamic Development Bank (IDB) said at the discussion organised by IDB.
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Written by Suapi Shaffaii

October 27, 2008 at 1:40 am

Posted in General Issue

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US studying features of Islamic banking

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Points of Essence:

  • US looks upon Islamic finance for its key features to remedy the weaknesses of the financial system. The country will also tap on the experience of the member countries in the G-20 who have embraced Islamic finance in their banking system ,to steer clear of the financial crisis.

Md. Rasooldeen | Arab News

RIYADH: The US government is currently studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisis, Robert M. Kimmitt, US deputy secretary of the Treasury, said at a press conference held at the US Embassy here yesterday.

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Written by Suapi Shaffaii

October 27, 2008 at 1:10 am

Ismail: ‘Time for banks to study BBA further’

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Points of Essence:

  • There have been concerns on the implication of the recent judicial pronouncements on the BBA financing facility in Malaysia, thusfar, two related seminars were organized by ZICO and Skrine, respectively. ZICO and Skrine are among the biggest legal firms in Malaysia. During the seminars, Islamic banking practitioners called for alternative financing methods such as musharakah mutanaqqisah and the ijarah muntahiyyah bit tamleek to avoid the repercussions of the current judgment against the BBA.

By Habhajan Singh
The recent High Court judgments on Al-Bai’ Bithaman Ajil (BBA) will have serious implications if it is held by the higher courts as representing the correct view in law of the BBA transaction, says a local lawyer familiar with Islamic finance transactions.

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Written by Suapi Shaffaii

October 26, 2008 at 6:13 am