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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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Islam allows organised tawarruq asset sales – scholar

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Points of Essence

  • Organized tawarruq is sought to be used as a financing and liquidity management tool despite differing views fromIslamic scholar due to its role in debt creation rather than real economic activity.  It is suggested that there has to be a balance between the two necessities to leverage on this potential Shariah principle in this thriving Islamic financial industry. Under the same development, Malaysian stock exchange plans to launch tawarruq based platform to execute commodity murabaha transactions. The Arabian Business has the details.

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on Thursday, 04 June 2009

The Islamic financing structure of organised tawarruq should be allowed, a top Malaysian religious scholar said on Thursday, weighing in on an issue that has divided the $1 trillion industry.

Tawarruq is widely used as a financing and liquidity management tool but sharia jurists differ on its permissibility.

Most scholars sanction its use although some prominent jurists from the Hanbali school of thought have said it is legal trickery similar to another controversial contract which has been likened to interest-based financing.

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Written by Suapi Shaffaii

June 4, 2009 at 4:10 pm

Posted in General Issue

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Islamic Banking System Must Become Strong Financial Model, Says Don

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Points of Essence:

  • Islamic finance should find its own niche model by not emulating the conventional banking concept. This will gain the trust which has apparently been shattered by the conventional financial system meltdown. The time has come for the Islamic financial system to dictate  the international financial landscape. But it must  unleash its full potential to win the confidence of the financial community. Bernama has the report.

KUALA LUMPUR, April 10 (Bernama) — The Islamic banking system must emerge as a strong financial model that need not rely on conventional banking, says University of New Orleans director Prof Dr M. Kabir Hassan.

He said many of the Islamic banks in the world did not understand thoroughly the Islamic banking concept.

“To make it a financial system supported by all communities, the authorities or bank managements must find the sources and new alternatives.
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Written by Suapi Shaffaii

April 12, 2009 at 1:42 am

Posted in General Issue

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Three-Tier Banking Needed To Strengthen Islamic Banking

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Points of Essence:

  • Islamic banking is urged to operate on a three tier system. First tier is to mirror the operation of conventional bank as a deposit taking institution. The second tier is to leverage on the Mudharabah mode company where banks will act as  fund providers. The third tier will be to act as a partner in Musyarakah type of transactions. The appropriate regulations will be modeled to accommodate the three tiers rather than one regulation fits all as of the conventional system. Bernama has the report.

KUALA LUMPUR, April 6 (Bernama) — A three-tier banking system is needed in Islamic banking to further strengthen the industry, an economist suggested.
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Written by Suapi Shaffaii

April 7, 2009 at 9:17 pm

Posted in Articles

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