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Archive for October 2010

Sukuk Roadblocks May Rise With National Shariah Boards: Islamic Finance

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By Khalid Qayum and Dana El Baltaji – Oct 28, 2010 7:38 PM GMT+0800 Thu Oct 28 11:38:07 GMT 2010

Points of Essence:

  • The AAOFI-led National Shariah Board plan to oversee Sukuk sales may face resistance from the Islamic finance practitioners even before its inception saying that would create another layer of bureaucracy as there has been sufficient regulation to monitor Sukuk. This will according to them stifle the growth of Sukuk and hamper its evolution speed
  • AAOFI insisted that the Board will play a pivotal role in synchronizing and standardizing the sukuk regulations with the international standards which in turn may help clarify standards and bolster investors’ confidence in the Sukuk industry.

The plan to create national Shariah boards to oversee sukuk sales is drawing criticism from bankers and lawyers who say the groups would increase bureaucracy in the $1 trillion Islamic finance industry.

The Accounting & Auditing Organization for Islamic Financial Institutions, a leading global regulator, is in the final stages of a plan recommending governments appoint panels of scholars and experts at the national level to rule whether products comply with the religion’s tenets, Mohamad Nedal Alchaar, secretary-general of the Manama, Bahrain-based body, said in an interview in Kuala Lumpur on Oct. 26. The proposal will be submitted early next year, he said.

The regulator says such a system will help clarify standards and bolster investor confidence in an industry whose assets are forecast by the Kuala Lumpur-based Islamic Financial Services Board to almost triple to $2.8 trillion by 2015. The changes risk adding bureaucratic hurdles and slowing approvals at a time when sales are down 19 percent this year, according to CIMB-Principal Islamic Asset Management Sdn. and Atlanta-based law firm King & Spalding LLP.

Further regulation may just add another “layer of bureaucracy,” Jawad A. Ali, global deputy head of the Islamic finance practice at King & Spalding, said in an interview in Kuala Lumpur on Oct. 26. “I believe it would slow down the development of Islamic finance and render it uncompetitive.”

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Written by Suapi Shaffaii

October 29, 2010 at 3:04 pm

Facts about International Islamic Liquidity Management Corp (IILM)

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27 October 2010
 
What?
  • The International Islamic Liquidity Management Corp (IILM) is a collaborative effort by 11 central banks or monetary agencies, as well as two multilateral organisations to assist institutions offering Islamic financial services in addressing their liquidity management. The initiative will also facilitate greater investment flows for the Islamic financial services industry. The IILM will also be part of their efforts to enhance cross-border flows and also as part of an initiative to facilitate the growing significance of the international dimension of Islamic finance and its increased role in the international financial system
  • The IILM is expected to be operational within the first half of next year and be based at Petronas’s Twin Tower, Kuala Lumpur.
  • 

Who?

  • Shareholders – The regulators collaborating with Bank Negara Malaysia for the setup of IILM would be the shareholders of the initiative, as well as sit on its board whom each would contribute US$5 million (RM15.5 million) as their capital for IILM.
  • Signatories- 13 signatories for the setup of IILM such as BNM, the central banks of Indonesia, Iran, Luxembourg and the United Arab Emirates, and multilateral organisations such as The Islamic Development Bank and the Islamic Corporation for the Development of the Private Sector

How?

  •  The IILM will issue short-term papers in international reserve currencies, such as the US dollar and the euro
  • The initial ones will be in major currencies because it is to facilitate cross-border liquidity management

Written by Suapi Shaffaii

October 28, 2010 at 11:26 am

Bank Negara: issuance of two mega Islamic bank licences & establishment of International Islamic Liquidity Management Corp (IILM)

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Points of Essence:
  • Two foreign  banks had been shortlisted for the Central Bank of Malaysia’s newest mega Islamic banking licences
  • Newly established International Islamic Liquidity Management Corp (IILM) looks set to issue short term Islamic papers by first half of next year.
KUALA LUMPUR: Bank Negara will announce one mega Islamic bank by this year under its plan to issue up to two mega Islamic banking licences.

“We will announce one mega Islamic bank,” governor Tan Sri Dr Zeti Akhtar Aziz said yesterday on the sidelines of the Global Islamic Finance Forum 2010.

It was previously reported that Malaysia had shortlisted two foreign banks to be licensed as mega Islamic banks with a minimum capital of US$1bil each under the Government’s financial sector liberalisation measures announced last year.

On the country’s economy, she said Malaysia would remain firmly on its recovery growth path this year given the strong domestic economy.

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Written by Suapi Shaffaii

October 27, 2010 at 11:05 pm

Posted in Islamic Financial Institutions

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Sharia finance body, Maldives lender to set up bank

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Points of Essence:

  • Islamic Banking & Finance Institute of Malaysia and the Government of Maldives sets up the first Islamic bank in Maldives
  • Maldives Islamic Bank will be established in the next 6 months would be the impetus for the creating of the a conducive regulatory framework  for Islamic banking industry in Maldives

KUALA LUMPUR Oct 26 (Reuters) – A Malaysian Islamic finance industry body and the Maldives Islamic Bank signed a deal on Tuesday to set up Maldives’ first sharia lender. Maldives Islamic Bank hoped to set up the bank within six months, its managing director Harith Harun said in a statement. A subsidiary of the Islamic Development Bank holds a 70 percent state in the Maldives bank while the government of Maldives owns the rest. The deal with the Islamic Banking and Finance Institute Malaysia, which is owned by the Malaysian central bank and several sharia banks, would enable a study of Maldives’ regulatory framework to create an environment that would foster the industry’s growth, the statement said.  (Reporting by Liau Y-Sing; Editing by Razak Ahmad)

Source: Reuters

Written by Suapi Shaffaii

October 26, 2010 at 11:29 pm

Global Islamic Finance Forum (GIFF)

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This is to announce that the second Global Islamic Finance Forum (GIFF) is being held in Kuala Lumpur, Malaysia. The event which is themed “Islamic Finance: Opportunities for Tomorrow”, will run from today until 28 October 2010.To the uninitiated, GIFF 2010 is a key international event in the calendar of Islamic finance following the success of the inaugural GIFF in March 2007. Check out the GIFF’s website for details.

Written by Suapi Shaffaii

October 25, 2010 at 11:34 pm

Posted in Islamic Financial Institutions

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