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The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) will develop a package of standards covering Islamic endowments or awqaf. AAOIFI did not give a time frame for the completion of its awqaf standards, but said its board had discussed and approved specifications regarding the accounting standards. The plans are part of wider industry efforts to modernise awqaf, which receive donations to operate specific social projects, such as mosques, schools and welfare schemes. Most awqaf do not disclose full financial figures, although their underperformance is believed to be considerable. In India, awqaf are estimated to own 490,000 properties but their estimated annual income is just 1.63 billion rupees ($25.22 million.)
The Securities and Exchange Commission of #Pakistan (SECP) announced that it was relaxing regulations for Sukuk issuance in order to develop the Shariah-compliant market. The regulator said the SECP was amending the 2015 Issue of Sukuk Regulations to facilitate the issuers, reduce the cost of issue and ease the regulatory burden. The SECP has invited public opinion on the proposed amendments before their finalisation. The commission has also advised the PSX to come up with proposals for reducing the cost of market-maker for Sukuk issuance, rationalising the minimum size of public offer portion to reduce the cost of issue and organising a seminar with potential issuers to widen awareness. According to the SECP, the Sukuk market has been performing below potential in Pakistan. While the demand is substantial, supply remains short.
Zaman Bank is expected to enter Kazakhstan's Islamic banking services market in near future. The news was announced by Nurlan Abdrakhmanov, director of the financial market methodology department of Kazakh National Bank. He noted that among all the products of Islamic banking, murabaha is in the greatest demand in Kazakhstan.
The Iranian Ministry of Economy has published the details of letters of credit (L/Cs) that Iranian banks allocated over the past few years. The country’s international trade picked up considerable pace when the sanctions against Iran were lifted. According to the ministry’s report, Bank Melli Iran allocated 154 letters of credit worth $42.71 million over a four-year period (2013-16). During 2013-16, Bank Keshavarzi opened 19,253 L/Cs worth over $10.5 billion. It also played an important role in issuing 21 bank guarantees valued at $15 million. Bank Mellat also issued 32 export guarantees worth $15.4 million and four import guarantees worth $13.5 million. Export Development Bank of Iran opened 550 L/Cs and issued more than 1,750 bank guarantees during 2013-15 to emerge as one of the main forces in the Iranian economy.
The secretary general of the IFSB will retire next week, according to a statement. Jaseem Ahmed will step down middle of April after leading the IFSB 6 years.
The process for the selection of a new secretary general has begun. Zahid ur Rehman Khokher acting as interim secretary general.
The IFSB sees growing demand for fintech within the Malaysian Islamic financial services system, because customers are looking for alternatives.
IFSB secretary-general Jaseem Ahmed said „demand for fintech within Islamic finance had increased following the global financial crisis“ and further that “There are tremendous opportunities for fintech within Islamic finance. In the aftermath of the global financial crisis, there has been a loss of confidence, so people are looking for alternatives,”
Jaseem added that commercial banks are really taking up fintech to reach out and improve the attractiveness of their products at a lower cost and also said that he expected sukuk issuance to continue remaining strong in Malaysia.
The IFSB event, which ends tomorrow, comprises forums that bring together key stakeholders of the Islamic financial services industry.
GCC is expected to account for about 31% of sovereign bond issuances from emerging markets this year. The expected 2017 sovereign issues will be distributed among GCC, Eastern Europe Middle East Africa and Latin America, according to forecasts by Bank of America Merrill Lynch.
Issues from the GCC has been increasing rapidly mainly due to low oil prices, with some new issuers in 2016, and analysts expect the 2017 issuance to continue to be high. Among those, Kuwait inaugurated the external sovereign debt market with $8 billion (Dh29.3 billion) to finance a budget deficit resulting from low oil prices. Sovereign issuance for 2017 is forecast to be 6% higher compared to the previous year. In 2016, sovereigns issued $135 billion, mainly from Latin America, while corporates issued about $300 billion, mainly from Asia. Analysts expect gross sovereign external issuance to come in at $144bn in 2017.
Pakistan's central bank has updated guidance on sharia governance for Islamic finance institutions. The goal is to expand the scope of external audits to help mitigate conflicts of interest and increase transparency. Those religious scholars who are members of an Islamic bank's sharia board are now barred from serving in any external audit firm. From now on, external sharia audits will have to cover pool-management practices and technology systems. This includes the way Islamic banks calculate distribution of profit and loss to depositors, the tracking of assets, and the allocation of income and expenses. The move is designed to separate the verification of profit and loss distribution between the banks and the external auditors, in contrast to the joint verification that was allowed under earlier guidance.
The Islamic Corporation for the Development of the Private Sector (ICD) and TUV SUD signed a memorandum of understanding (MoU) to foster their joint operations in the countries of Central Asia. ICD's CEO Khaled Al-Aboodi and the managing director of TUV SUD Central Asia, Anar Ahmadov, signed the MoU on behalf of the two corporations in Astana, Kazakhstan. The aim of the MoU is to facilitate cooperation in promoting private sector participation and inform about business opportunities in countries of Central Asia. This partnership will enable the two institutions to work closely on market studies related to the transit and logistic sector in the common member countries.
ZPay, a payment application for foreign tourists in Iran, has won Bank Pasargad Iran’s award for best fintech innovation at the First Fintech Festival. ZPay enables foreigners to shop in Iran while keeping their money outside the country. Iran is doing much to improve its fintech standing. Earlier this month, it was reported that Iran had launched a FinTech Association to push for further development. And yet, while the capital Tehran is home to a growing number of local fintech startups, Iran still has a long way to go before it can be considered a fintech hub.
On Feb. 26 the Iranian government got the parliament approval to sell a total of 10 trillion rials ($308 million) worth of excess properties owned by its ministries. The raised money is expected to help shore up the troubled Post Bank of Iran and the Cooperative Development Bank. According to economic newspaper Donya-e Eqtesad, toxic assets account for 40-45% of total banking assets in the country. Nearly 15% of these assets consist of immovable assets such as land and buildings. The rest consists of nonperforming loans and government debt. The sale of at least 33% of the surplus assets could have taken place in the fiscal year running to March 20, but banks eventually decided to find a legal way to postpone the sale process. Real estate expert Farhad Beizaei accused banks of wasting time so that they can sell properties at higher prices next year.
According to Bangladesh Bank's former deputy governor Khondkar Ibrahim Khaled, Islami Bank Bangladesh speaks about Islamic banking, but it does not act in that way. In his view, the private bank is not following Islamic banking rules of keeping customers as partners of profit or loss. He also alleges that remittances are dropping due to 'dishonest' mobile banking abroad. The statements were made at a seminar in Dhaka where several professors of Bangladesh Institute of Bank Management (BIBM) were present. Khaled said that remittances were dropping because money is being sent through illegal channels in the name of bKash. He advised the Bangladesh Bank to open a new wing to research mobile banking in order to stop transactions outside banking channels. In a research paper published at the seminar, it was said that a large section of the customers of Bangladesh's banks did not have clear ideas about the sector.
BankIslami Pakistan and fintech startup CompareOn Pakistan have signed a strategic alliance that will further enhance BankIslami’s reach. CompareOn Pakistan provides the online comparison platform Karlocompare.com.pk, which delivers product information and enables customers to apply without the need of visiting or calling BankIslami branches. The agreement was signed by Sumair Farooqui, CEO of CompareOn Pakistan and Yasser Abbas, Head of Islami Auto Finance. Speaking on the occasion, Sumair Farooqui said CompareOn Pakistan intends to serve the growing customer base of Auto Financing Industry and contribute to enhancing awareness around BankIslami’s products.
The Reserve Bank of India (RBI) has said it cannot disclose the Finance Ministry's response about the introduction of Sharia banking in India. The RBI had earlier proposed opening of Islamic window in conventional banks for gradual introduction of Sharia- compliant or interest-free banking in the country. RBI was asked to give the copy of the letter sent to it by the ministry on the recommendation of its Inter Departmental Group (IDG) regarding Islamic banking.
The central bank had sought response from the Department of Financial Services (DFS) under the finance minister whether their letter can be disclosed under the Right to Information (RTI) Act. As advised by the DFS, the disclosure of information would cause a breach of privilege of Parliament or the state legislature.
The International Monetary Fund (IMF) has released its guidelines for the Islamic finance sector. The guidelines noted the need to develop a policy framework in the countries where Islamic banking has become systemically important. While accounting for a small share of global financial assets, Islamic banking has established a presence in more than 60 countries and has become systemically important in 14 jurisdictions.
Although Pakistan finished the IMF loan programme last year, there are still numerous reforms that need to be undertaken. In recent years, the State Bank of Pakistan (SBP) has made efforts for the promotion of Islamic banking, but no real effort has been made by the private sector and the government. The growth of Islamic banking poses new challenges and risks for regulatory and supervisory authorities. The IMF has proposed support for developing and providing policy advice on Islamic banking-related issues in the context of fund surveillance, programme design, and capacity development activities.
Governor of the Central Bank of Iran (CBI) Valiollah Seif said the country plans to establish a bank in Azerbaijan with 100% Iranian ownership. The plan involves turning a branch of Bank Melli Iran in Azerbaijan into an independent Azerbaijani bank. Seif added that all the shares of the new bank will be owned by Bank Melli Iran and that the details would be discussed next week during the visit of the Azerbaijani delegation to Tehran. Seif emphasized that certain plans were on agenda for Iran and Azerbaijan to use their national currencies in mutual transactions. Currently 32 banks operate in Azerbaijan and 36 banks operate in Iran.
Pakistan's government-operated National Savings Scheme (NSS) is evaluating whether to offer Islamic banking services. This plan will help depositors put their cash into Islamic Shariah-compliant Ijara sukuk. As soon as that happens, millions of new accounts are expected to be opened, bringing a huge population of medium and small savers into the banking stream. Millions of others who are currently operating accounts in conventional banks may also be snatched away by the NSS. Investments in all types of the NSS go directly to the government of Pakistan, which uses this cash inflow to fill the budgetary gap and to fund its development projects. NSS deposits by people totalled Rs233 billion in 2015-16 and Rs337 billion in 2014-15. In the event of introduction of Ijara sukuk, some of these deposits are likely to be switched to this Islamic mode.
#India will soon have Islamic Banking facilities. The Saudi Arabia-based Islamic Development Bank will start its operations from Gujarat soon. During Prime Minister Narendra Modi's visit to UAE in April last year, the Indian Exim Bank had signed a memorandum of understanding with IDB for a $100 million line of credit to facilitate exports to IDB's member countries. The Reserve Bank of India had proposed opening of an Islamic window in conventional banks for introduction of Sharia-compliant or interest free banking in the country. The proposal was taken up to ensure financial inclusion for those sections of society which remain excluded due to religious reasons.
The National Development Fund of Iran (NDFI) plans to make investments in international money and financial markets. According to the fund's director, Ahmad Doust-Hosseini, the fund is also ready to support foreign investors as well as Iranian exporters by extending loans. Doust-Hosseini said from the next Iranian year (March 21, 2017), 30% of revenues from the sale of oil, gas and their related products will be deposited with the NDFI. He added that the fund belongs to the private sector and non-government enterprises, so state-owned entities will not receive any loans. Ali Salehabadi, CEO of the Export Development Bank of Iran (EBDI), said his bank will allocate working capital to export projects in the form of foreign exchange and rial loans in partnership with NDFI.