Central Asia

Iranian financial institutions host first GCC-focused Investor Roadshow in Muscat, Oman

Iran’s leading financial conglomerate and senior members of Iranian government bodies met over 150 international investors in Muscat, Oman today to discuss inward investment opportunities across a range of Iran’s sectors and industries. The roadshow was hosted by Sina Financial & Investing Holding Co, Iran’s leading financial holding company. The agenda focused on opportunities created by the re-opening of the Iranian economy to foreign participation, as well as an in-depth discussion of Iran’s capital markets. The roadshow concluded with a business-to-business networking between Iranian and international delegates.

Azerbaijan looks to new Islamic bank as sector rules progress

Azerbaijan could see the launch of its first standalone Islamic bank as early as next year as the government makes progress to introduce legislation to facilitate interest-free finance. Azerbaijan, alongside Kazakhstan and Tajikistan, are among several central Asian countries creating a more welcoming framework for sharia-compliant banking with the help of the Jeddah-based Islamic Development Bank. A working group of cabinet minsters and the IDB is making progress on the legislation, which would allow the proposed Islamic bank to launch next year, said Behnam Gurbanzada, chief executive of Islamic finance consultancy BEST Solutions.

CORRECTED-Azerbaijan looks to new Islamic bank as sector rules progress

Azerbaijan could see the launch of its first standalone Islamic bank as early as next year as the government makes progress to introduce legislation to facilitate interest-free finance, Behnam Gurbanzada, an advisor to the new venture said. Azerbaijan, alongside Kazakhstan and Tajikistan, are among several central Asian countries creating a more welcoming framework for sharia-compliant banking with the help of the Jeddah-based Islamic Development Bank. A working group of cabinet ministers and the IDB is making progress on the legislation, which would allow the proposed Islamic bank to launch next year, said the independent Islamic finance consultant. The proposed Islamic bank would be able to launch operations as soon as the legislation is passed, said Gurbanzada.

EU court rules Iranian banks assets should not been frozen

The European Court of Justice ruled on Thursday that the assets of Iran's Bank Mellat should not have been frozen from 2010, dismissing an appeal brought by the European Council. The Council, the grouping of the EU's 28 member states, froze the funds of a number of Iranian financial entities from 2010 to combat Iranian activities that could have led to it developing nuclear weapons. In Bank Mellat's case, the Council said that it engaged in conduct which supported and facilitated Iran's nuclear and ballistic missile programmes. The court ruled that the reasoning set out did not enable Bank Mellat to establish which banking services it provided to which entities, particularly as the persons whose accounts it managed were not identified.

Banking on Islam

Many prospective banking customers cannot easily discriminate between the convential and the Islamic banking system. Despite this lack of clarity, the number of Islamic banks and Islamic banking counters of conventional banks have increased by the day. The question to ask is as to how exactly are they operating here and what models are they adopting in the presence of a well-established interest based banking system. Around 99 per cent Islamic banking in Pakistan revolves around lending and buy-back model and not even one per cent is based on profit and loss sharing. A physical asset is involved in deals. The real challenge for Islamic banks is how to cater to the borrowing needs of the government that are huge.

Iran remains off limits to US banks

Iran remains essentially off limits to US banks, despite the lifting of some US sanctions. The Obama administration in mid-January eased several restrictions on doing business with Iran, including former “secondary” sanctions that had threatened to penalize companies outside the US for their business with Iran, as well as some restrictions on Americans seeking to make inroads in the oil-rich country. Nevertheless, most “primary” sanctions tied to accusations that Tehran supports terrorism remain in effect, blocking US businesses from joining a rush by non-US companies to cash in on Iran’s potential revival. It means that US banks have little access to the oil-rich country compared to their rivals in other countries.

US sends mixed message to Europe on Iran sanctions

Since reaching the nuclear agreement that lifted economic sanctions on Iran, President Barack Obama has pledged to continue to punish foreign companies that do business with the regime’s powerful Islamic Revolutionary Guards Corps. In theory, this will chill European investment in Iran because the IRGC, along with its front businesses, controls major portions of Iran’s economy in vital sectors such as oil, construction and banking. But despite recent reports of billions of dollars worth of new European investment in Iran, the US Treasury Department has seen no evidence that European companies are conducting transactions with the IRGC. Many sanctions experts question whether this is really possible.

UBL launches Al-Ameen Islamic active allocation plan

UBL Fund Managers Limited (UBL Funds) announced the launch of the Al-Ameen Islamic Active Allocation Plan–IV, under the Al-Ameen Islamic Financial Planning Fund. This Plan is now open for subscription. The plan actively allocates investments between Islamic equity and Islamic income/money market classes with an aim to achieve potentially high returns. It has a term of two years and is ideal for investors who wish to benefit from the equity market and desire active management of their investment portfolios. Mir Muhammad Ali, Chief Executive UBL Funds, said that the Al-Ameen Islamic Active Allocation Plan series has been well received by investors with initial investments of Al-Ameen Islamic Active Allocation Plans I, II and III totaling more than Rs. 6.3bn.

In Kyrgyz Republic, Smaller Businesses Seek Islamic Finance: IFC Study

IFC, a member of the World Bank Group, has released a study that finds overwhelming demand for Islamic finance among smaller business in the Kyrgyz Republic. The report revealed that 80 percent of micro, small, and medium enterprises (MSMEs) are interested in Shariah-compliant financing, a market that could be worth up to $456 million for lenders. Despite that potential, the study "Islamic Banking and Finance: Opportunities across MSMEs in the Kyrgyz Republic" found that Islamic finance was not widely available because of a lack of awareness and the high cost of structuring transactions. Yet Kyrgyz officials are working to overcome these challenges.

35,000 people defrauded in name of Islamic finance

A fraud of around Rs 30 billion in Islamic investment system of Mudarba and Musharaka has been committed by the Elixir Group of Companies, reveals an investigation by National Accountability Bureau. The fraud, which has victimised over 35,000 people across the country, was committed by a group of so-called Islamic scholars through a large number of mosque imams, seminary managers, madrassa students, their families, relatives and acquaintances. The scam planners are all settled abroad and most of them have dual nationalities, according to a NAB officer who is close to the investigation process.

Iran to India: Reactivate bank accounts with Indian banks, allow Iranian banks to open branches

Freed of international sanctions, Iran has asked India to reactivate its accounts with Indian banks and allow Iranian banks to open offices here. Keen to quickly normalise banking and commercial relations with the world, Tehran also wants UCO BankBSE -3.50 % to open a representative office in Iran. Tehran has already opened an account with IDBI Bank. Central Bank of Iran's vice governor Gholamali Kamyab has conveyed to Indian authorities that Bank Pasargad and Parsian Bank were keen to open representative offices in India while Saman Bank was interested in opening a subsidiary, they said. State Bank of India (SBI) has accounts of 11 Iranian banks including Central Bank of Iran (CBI).

Iran set to reshape global Islamic finance industry

Iran currently accounts for more than 40% of the world’s total Islamic banking assets, or around $482bn. Iran could easily cross the $1tn-asset mark by 2018 given the urgency for cash-strapped Iranian public and private companies to raise liquidity after years of isolation from the international finance industry. Analysts expect that a large number of sukuk and other Islamic financing vehicles will hit the world market soon. Adding to private companies, the country requires funds for its infrastructure development programmes earmarked for the next decade worth an estimated $1tn. However, analysts point out that the road back into the global finance system for Iran could be bumpy as the long isolation withheld Iranian banks from implementing globally accepted reporting and compliance standards, and restoring ties of its formerly stand-alone banking system to global financial institutions could prove regulatory and technically difficult.

Tajikistan keen on Islamic banking; seeks investment from Qatar

Tajikistan is keen to benefit from Islamic banking and utilise the experiences of Islamic banks in his country, Minister of Economic Development and Trade Nematullo Hikmatullozoda has said. Hikmatullozoda, who visited QIIB headquarters yesterday expressed the hope that Tajikistan would be able to attract Islamic banks to his country, where his ministry is making efforts to convince investors about the attractive investment opportunities available. In particular, Tajikistan is keen on expanding and further cementing the relationship with Qatar’s financial and business sectors.

SBP introducing fixed rental rate Ijara Sukuk

The State Bank of Pakistan (SBP) has introduced three-year Fixed Rental Rate Government of Pakistan (GOP) Ijara Sukuk (FRR-GIS). Presently, Variable Rental Rate GOP Ijara Sukuk (VRR-GIS) is being auctioned and its rental rate is being fixed every three months on the basis of Market Treasury Bills' cut-off yield. However, on the request of Islamic Banking Industry, SBP has decided to launch Fixed Rental Rate GOP Ijara Sukuk for market development. The rental rate decided in the auction will be applicable to the entire tenor of FRR-GIS and will be paid to FRR-GIS holders on semi-annual basis. Minimum bid size will be Rs 100,000 and in multiples thereof. Rental rate (% p.a.) has to be specified up to a maximum of two decimals points.

European banks hesitate on Iran, wary of US fines

Western companies have been rushing into Iran for a part of post-sanctions business action but European banks, still reeling from punitive US fines over links to the country, are waiting on the sidelines until they feel it is safe to do business with Tehran. France has already hailed a new era after welcoming Iranian President Hassan Rouhani, who sealed a host of post-sanctions deals last week. But when it comes to high finance, there is hesitation, at least on the part of European banks. The hefty fines levied on these financial institutions during the sanctions has made them particularly wary. European banks are not only confronted with potential sanctions risks, but also other exposure points under international banking regulations and practices.

Emaan Islamic Banking, Islamic Banking Division of Silkbank, Comes on Strong

Silkbank introduced Emaan Islamic Banking through conversion of its seven conventional banking branches into dedicated Islamic Banking branches. In early 2013, three new branches were added to the Islamic Banking network. Emaan Islamic Banking offers a suite of deposit products as well as a range of asset products. The Islamic Banking Division has an alliance with Pak Qatar Family Takaful to provide Takaful & Saving Plans. With the implementation of the SBP Shari’ah Governance Framework and induction of a renowned Shariah scholar, the Islamic Banking Division endeavours to develop Islamic Banking products in Pakistan and serve as a catalyst in Islamic Banking growth in the region. The Bank plans to add 60 new branches in 2016 to the existing network and another 102 branches in the next two years.

JSCL restricted from buying Dubai Bank’s stakes in BankIslami

The State Bank of Pakistan (SBP) rejected request of Jehangir Siddiqui and Company Limited (JSCL) to review its decision to disallow Dubai Bank to sell out its shares to its sponsor shareholders of BankIslami. JSCL approached the central bank in September 2015 to submit an application to the central bank with suggestions in order to getting additional shares in BankIslami. However, the central bank retained its decision and disallowed the management of BankIslami to sell its stakes of Dubai Bank to JSCL in pursuant to Founding Shareholding Agreement under which sponsor shareholders are not allowed to increase its shareholding. Earlier in August 2015, a consortium led by Ali Hussain of JSCL and Alkaram Group offered Dubai Bank to purchase its 144.200 million in the BankIslami.

Iranian bank Pasargad willing to invest in Europe

Many Iranian banks have created a roadmap to open up to the world. Bank Pasargad, the second-largest finance company of Iran with billions of dollars of blocked assets in many countries worldwide, is one of them. According to Mostafa Beheshtirooy, a member of the executive board at Bank Pasargad, the bank has started conducting research into Turkey, Germany, Spain and China, adding that business could be done via a local partner or a take-over of a bank. Beheshtirooy said that, despite the negative impacts of the rising dollar and falling oil prices, the bank's total assets will reach $70 billion; in stark contrast to the current $19 billion it holds.

Bahrain moves to close Iran's Future Bank

Bahrain's central bank said on Tuesday it is taking steps to close down Iranian-owned Future Bank, which is based in the Gulf state. Bahrain's central bank has not elaborated on its reasons for the action. Future Bank, based in Manama, is a commercial bank which was founded as a joint venture between two Iranian banks - Bank Saderat and Bank Melli - and Bahrain's Ahli United Bank. The bank's assets stood at 569.4 million dinars ($1.51 billion) at the end of September 2015. On Monday, Ebtisam al-Arrayed, head of regulatory policy at the central bank, said that the regulator had yet to make a decision about Future Bank after placing it under its administration last year, along with Iran Insurance Co - the Bahrain branch of an Iranian insurer.

Salam: Both a Greeting & Innovative Agricultural Financing Option

For over 6 million Pakistani smallholders with 10 acres of land or less, financing options are very limited and prevent them from building assets over time. Thus, farmers tend to do what has been done for centuries: use Artees, middlemen who have long responded to their agricultural and personal financial needs. Artees directly provide farmers with seeds and fertilizers, and collect the equivalent amount in crops at harvest time. According to some estimats, Artees finance at least 50% of smallholders in Pakistan. Since 2009, farmers in Punjab have had another financing option called Salam, which seeks to give them a bigger role in the decision-making. It is offered by Wasil Foundation.

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