Central Asia

What Does Responsible Finance Have To Do With What Is Happening in #Iran?

In Iran more than a dozen people have been killed and thousands have been arrested in demonstrations over the last few weeks. Massive numbers of Iranians say their savings have been lost because of the collapse of poorly regulated or fraudulent institutions. According to Suzanne Maloney of the Brookings Institution, banks are shutting down without any kind of notice. The Iranian President’s recent budget proposal decreases subsidies to the poor at a time when the spending power of Iranians is also declining. Not being able to meet day-to-day expenses, respond to emergencies or take advantage of opportunities are a significant source of stress. The client protection principles, Smart Certification and the tools developed by the Smart Campaign offer resources for stakeholders in any country. They can ensure responsible treatment of clients and thus long-term sustainability. Iran's case shows the importance of quality financial products as a part of broader financial, economic, and social development.

Share of Shariah-compliant assets steadily rising

Growing at a fast rate, Shariah-compliant assets now represent 34.6% of the total assets of the Non-Banking Financial Institute (NBFI) industry. According to the Securities and Exchange Commission of Pakistan (SECP), the number of Shariah-compliant mutual funds has reached 109 and Shariah-complaint funds have 41% of the assets. In Pakistan the Takaful industry comprises of five dedicated Takaful operators and 21 window Takaful operators. Takaful sector assets represent 2.7% of the total assets of the insurance industry. During the year, the SECP took a number of initiatives for regulation and development of Islamic finance across the sectors it regulates. Tax neutrality for Sukuk was achieved by amending the Income Tax Ordinance. A new concept of a Shariah-compliant company was introduced through the newly promulgated Companies Act, 2017. To facilitate issuance of Sukuk, relevant regulations were amended both for public offering and for private placement.

#Iran Seven-Year #Sukuk #Issuance at $3.7b

Seven years ago the Law of Developing Financial Instruments and Entities was passed in the parliament. Since then, more than $ 3.76 billion worth of Islamic sukuk have been issued in the Iranian capital market according to the chief executive of the Capital Market Central Asset Management Company.
"From the fiscal 2010-11 up to the end of the ninth month of the current fiscal year, 47 kinds of sukuk worth more than 157 trillion rials have been released in the capital market, 17 of which worth $ 311.7 million have come to maturity," Gholamreza Abutorabi was also quoted as saying by the official website of the company: "The amount of installments and the original amount of these matured bonds have been reimbursed".
According to the CEO, 30 kinds of active sukuk worth $ 3.5 billion are currently in use and are being traded, whereas two other kinds worth a total of $ 89.9 million belonging to two companies will come to maturity. From the beginning of the current fiscal year on March 20 until now, more than $ 407.6 million worth of installments pertaining to various kinds of sukuk have been received by intermediary financial companies.

Bank Islam issues bank cards corresponding with Sharia law

Bank Islam recently presented its first Sharia-compliant bank cards to the #Kazakhstan retail market. Customers will not be able to pay for goods and services that are prohibited under the Sharia law. Therefore, the cards cannot be used in night clubs, casinos, bookmakers, tobacco and liqueur shops. Card holders can pay for goods and services in Kazakhstan and abroad, receiving a cashback of 0.5-1% from each purchase. It also allows carrying out purchases through the internet, transfers from card to card, online payment of taxes and fines. Debit cards of the bank are issued in two categories, Master Card Gold and Master Card Platinum. In the beginning of next year, the bank plans to launch its first credit cards. Cards are currently available for residents of Astana, Almaty and Shymkent.

Experts for strategy to use #fintech in Islamic finance

Islamic banks have been urged to adopt a strategy to make effective use of financial technology. At a seminar held recently, Ahmed Ali Siddiqui, director of Centre for Excellence in Islamic Finance at IBA, said there has to be a strategy for Islamic finance in the digital world. According to fintech expert Ashar Nazim, Pakistan is doing well in Islamic finance, but the country's finance industry has to adapt to fintech. Market Link Executive Director Ishan Kanji said that using fintech will support the agricultural sector by providing easy access of loans and facilities to farmers. He stressed on the need to tap into the informal economy, which is twice the size of formal economy in Pakistan. At the seminar Hasan Bilgrami, CEO of BankIslami, shared the success story of BankIslami being the first bank in Pakistan to use biometric technology.

#Iranian Private Banks Secure #Qatar Foothold

Several major Iranian private lenders have recently established correspondent relations with Qatar National Bank (QNB). Kourosh Parvizian, CEO of Parsian Bank, said these banks opened accounts with QNB and are prepared to offer financial services to Iranian and Qatari businesses. QNB governor Sheikh Abdullah Saoud Al-Thani said Qatari lenders will make efforts to remove trade obstacles quickly. The Iranian delegation in Doha held a meeting with officials from QNB, Al Rayan Bank and Al Khaliji Bank. They discussed using local currencies in bilateral trade and taking speedy measures to ease trade between the two countries. Bank Melli Iran is also holding talks with one of the largest banks in Qatar for establishing correspondent ties.

Iran Gov’t to Issue #Sukuk Worth $6b Next Year

The Irani government will issue 260 trillion rials ($6 billion) worth of sukuk in the next fiscal year, starting March 21, 2018. Proceeds will be used to fund the government's incomplete projects. Managing Director of Central Securities Depository, Gholamreza Aboutorabi, said the projected debt issuance was 30% higher compared to what was forecast for the current year.

Iranian Banks’ Incomes, Expenses Projected for 2018-19

The total projected income of eight Iranian state-owned banks has been put at 845.2 trillion rials ($20.09 billion) for the fiscal 2018-19. These banks include Bank Melli Iran, Bank Sepah, Bank Keshavarzi (AgriBank), Bank of Industry and Mine, Export Development Bank of Iran, Post Bank of Iran, Tose'e Ta'avon Bank (Cooperatives Development Bank) and Bank Maskan. The expenses of these banks have been predicted to match their incomes at 820.2 trillion rials ($19.49 billion). President Rouhani submitted the budget on Sunday for the next fiscal year that begins on March 21, 2018. The bill also cements the authority held by the Ministry of Economic Affairs and Finance to issue official guarantees. All projects belonging to the private sector, cooperatives and non-government public entities that meet the criteria will be able to employ foreign funds.

#SECP notifies #Shariah #Standards No 17, 18 and 23 of AAOIFI

The Securities and Exchange Commission of Pakistan (SECP) has notified for public consultation three Shariah Standards of Accounting and Auditing Organization for Islamic Financial Institutions. These are: Shariah Standard No 17 - Investment Sukuk, Shariah Standard No 18- Possession and Shariah Standard No 23 - Agency and the Act of an un-commissioned agent.
The SECP has been playing an active role in the Islamization of the economy. It endeavored to replicate the best international practices in the Islamic financial services. In order to ensure harmonization and standardization in the business practices of Islamic financial institutions, it has been gradually adopting Accounting and Shariah Standards issued by Accounting and Auditing Organization for Islamic Financial Institutions as a benchmark for Islamic financial services while keeping in view the local business context.

#Pakistan raises $2.5 bln from #sukuk, #Eurobond sales, sees solid demand

Pakistan gained $2.5 billion from selling two U.S. dollar-denominated sukuk and Eurobond issues in New York, according to senior official. These issues had attracted total offers of $8 billion in the process.
Pakistani authorities however decided to only sell $2.5 billion at, according to officials „affordable rates“. In an interview an delegate said: "We have raised $1 billion through five-year sukuk at rate of 5.625% and $1.5 billion from a 10-year Eurobond maturity at a rate of 6.875%," Federal Secretary Finance Shahid Mehmood said.
These two deals have been the largest in the country's history so far. The 10-year bond was the cheapest bond ever launched by Pakistan. Last year the country borrowed $1 billion in the global sukuk market at 5.5%. It also floated a 10-year, $500 million Eurobond at 8.25% in 2015.
The government appointed a consortium of Standard Chartered Bank, Industrial and Commercial Bank of China, Citibank, Deutsche Bank, Dubai Islamic Bank and Noor Bank as the lead managers for conducting sukuk transactions. Noor Bank thereby will manage the Middle East sukuk bond.

#Iran’s debt market emerges as key to economic future

The rising issuance of sukuk and Treasury bills in the past three years in Iran is seen as evidence of the success and allure of the Iranian debt market. Perhaps the most important factor contributing to the sales of bonds has been the lack of funds to private contractors and creditors. The Iranian government's budget for the public sector is allowed to issue a significant amount of debt securities. Although this helps state-run organizations sponsor infrastructure projects, it might bring about risk of default for future governments. An analysis of budget figures shows that the government is always forced to settle the past matured securities with the issuance of new ones. Government commitments are accumulated and rolled over to later years. The administration is due to pay its outstanding debt obligations, totaling $7 billion and can issue about $10 billion worth of sukuk.

Interview: Bank Melli #Iran Upbeat on Int’l #Expansion

According to Mohammad Reza Hosseinzadeh, CEO of Bank Melli Iran (BMI), the European Union has made its decision to work with Iran. The banker noted that BMI has managed to establish correspondent banking relations with 135 banks of 30 countries, half of them European. What is more, Bank Melli and its branches in Hamburg and Paris have connected to TARGET 2, the Eurozone's real-time transfer system. In terms of expansion, Hosseinzadeh said negotiations are well underway with one of the biggest banks of the Persian Gulf state for BMI to establish a branch there, but refused to name the bank. BMI is also on course to open a branch in Pakistan, most likely during the next fiscal year, starting March 21, 2018.

Iranian Banks, #Fintechs Shine in #Iran Transaction #Exhibition

Banks, fintechs, financial solution vendors and startups were present in full force at the Third Iran Transaction Exhibition (ITE). The exhibition was inaugurated by Mohammad Morad Bayat, chief executive of FABA, a government-owned center for promotion of electronic banking. He said that 56 startup companies have taken part in this year’s event and that fintechs are not banks' enemies, as the future will be one of cooperation between the two. The Iranian Parliament also had a representative in the exhibition, who said the government has assigned a whole chapter specifically to electronic banking. Various payment systems, banking solutions, real-estate financial services and insurance facilitators were showcased at the exhibition.

TASIS appointed as Shariah Advisor for Tata Group Shariah Mutual #Funds

Taqwaa Advisory and Shariah Investment Solutions (TASIS) has been appointed as Shariah Advisor for Tata Group Shariah Mutual Funds. They include Tata Ethical Fund (TEF), which is a domestic fund and Tata Indian Shariah Equity Fund (TISEF), which is an offshore fund. TASIS claimed that TEF was the only Shariah compliant fund in which charitable trusts are allowed to invest without attracting tax. Under the current agreement, TASIS is supposed to ensure that the investment and operations of TEF and TISEF are Shariah compliant. In India there is low awareness about investment in securities. The availability of options such as TEF would help this section of the society to become part of the mainstream financial system and hence contribute to the goal of financial inclusion.

NAB to investigate #merger of KASB bank into BankIslami

#Pakistan's National Accountability Bureau (NAB) initiated an inquiry into the alleged misuse of authority by SBP officials at the amalgamation of KASB Bank into BankIslami. According to the State Bank of Pakistan (SBP), a smear campaign was run in the media against them. SBP added that the onesided views presented in the media led to misjudgment about the authority of SBP as a guardian of the financial sector. All stakeholders of the defunct KASB Bank were well aware of the poor financial conditions of the bank. The State Bank gave ample time to the sponsors of KASB Bank to inject further capital into the bank. Besides capital shortfall, the bank and its sponsors engaged in fraudulent practices and were siphoning off more than Rs 3 billion from the bank. SBP stated that none of its officials misused authority nor were involved in any kind of corrupt practices.

An #Iranian Bank Has Invested over 26 million Dollars on #Startups

Iranian banks have decided to get more engaged with the country’s startup scene. According to Alireza Daliri, Deputy Director of Iran’s Vice-Presidency for Science and Technology, Bank Melli Iran has invested around over 26 million dollars in the country’s startup market. Daliri added that the Vice-Presidency had offered the banks to either establish their own accelerators or invest on large successful and on-going projects. Eventually, the banks decided to go with the latter. Daliri added that the Vice-Presidency has started negotiations with a number of Iranian banks such as Saderat, Sepah, Export Development Bank, Tourism Bank, Post Bank and Refah, but it is difficult to persuade them. Iran’s startup scene has witnessed exponential growth in the recent years. The number of knowledge-based firms in the country has increased from 52 in March 2014 to 2732 until October 2016, but lack of funding is still a major issue.

SECP introduces draft of Sharia Advisors #Regulations 2017

To enhance the credibility of Islamic financial services sector, the Securities and Exchange Commission of Pakistan (SECP) introduced a draft of Sharia Advisors Regulations 2017. The new regulations are expected to professionalise Shariah advisory services. Companies would only be able to engage the advisors who would be on the SECP’s panel of Shariah advisors. To join this panel, advisors need to meet proper criteria and abide by a code of conduct that emphasises independence and objectivity. The draft of Shariah Advisors Regulations 2017 is available on the SECP’s website and is now open to the public for consultation.

Silk Bank to grow in Islamic banking

#Pakistan's Silk Bank plans to expand its Islamic banking business amid growing demand for Shariah-compliant financial products in the country. The State Bank of Pakistan has given approval to the bank for opening of 20 Islamic and 15 conventional branches this year. Silk Bank CEO Shaukat Tarin said the bank was going to reduce the size of corporate banking, but increase consumer and SME segments. The bank’s consumer banking portfolio continued to grow, while its non-performing loans fell by Rs10 billion in January-June 2017. The bank also made its commitment to revive the mortgage business in the current low interest rate environment. Shuja Alvi, head of investment at Silk Bank, said the bank continued to make heavy investments. Since acquisition, the sponsors have invested Rs430 billion in the bank through multiple funding.

Deposits of Islamic banks grow 10pc

The State Bank of #Pakistan (SBP) issued the Islamic Banking Bulletin for April-June. It reveals that deposits of the Islamic banking industry increased by Rs156 billion or 10% quarter-on-quarter to Rs1,720bn. Deposits of the overall banking industry grew 6.5% over the same period. The share of Islamic banks’ deposits in overall banking industry’s deposits increased to 13.7% at the end of June from 13.2% a quarter ago. This growth helped Islamic banks improve their asset base. The share of Islamic banks’ assets in overall banking assets was 11.6pc at the end of June. Investments also improved thanks to sukuk worth Rs71bn that the government issued in June. Net investments of the Islamic banking industry increased Rs48bn or 9.9% in April-June to Rs537bn. SME financing increased to 3.2% and the share of agricultural financing stood at 0.4% at the end of June.

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