In Russia a Memorandum of Understanding was signed between Islamic business and finance development Fund (IBFD) and TAWUN, a Shariah consulting company of Pakistan. The Pakistani delegation was led by S.M Muneer from the Trade Development Authority of Pakistan and Mehmood Arshad, the Founder of TAWUN. Arshad stated that the Russian market is very interesting for his organization and TAWUN has all the necessary experience and competence. They will support Russia to launch Shariah-compliant products and get additional funding from OIC countries.
India will get its first taste of sharia-compliant banking when the Islamic Development Bank launches operations in the state of Gujarat. No date has yet been announced, but already complaints have emerged within the ruling Hindu nationalist Bharatiya Janata Party. Prominent BJP politician Subramanian Swamy says Islamic banking goes against India’s principles of secularism. India's prime minister Narendra Modi visited Saudi Arabia in April and signed an extensive agreement with the bank. Under the agreement, the IDB will establish its first Indian branch in the Gujarat city of Ahmedabad and go on to open more branches in India in the future.
Azerbaijan and Islamic Corporation for the Development of the Private Sector (ICD) will discuss the opportunities of financing the country's agriculture. The topic will be discussed by ICD's general driector Khaled Al-Aboodiin during his visit in Baku on May 31. The agricultural projects will be financed through the new Food and Agribusiness Fund with an authorized capital of $600 million. The fund will mainly focus on the production optimization of the companies working in agriculture and a decrease in their logistics inefficiency.
The Islamic Development Bank (IDB) will take part in financing of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project. The estimated cost of the project will exceed $10 bn. The annual capacity of the gas pipeline will reach 33 bn cubic meters. It is planned that the total length of the TAPI pipeline will be 1,814 km. Some 214 km will pass through the territory of Turkmenistan, 774 km through Afghanistan, 826 km through Pakistan. The project is expected to be completed in late 2019.
Iran is working on a plan to establish a joint bank with Azerbaijan. Elman Rustamov, the chairman of Azerbaijan's Central Bank (CBA) is discussing the matter with Iran's Minister of Economic Affairs and Finance Ali Tayyebnia. The two neighbors are also discussing the opening of branches of the two countries’ banks in Baku and Tehran. The Iranian minister said the main obstacle on the way of banking cooperation is the existing sanctions against Iran's financial sector.
In Pakistan Islamic modes, financing and products have captured at least 15% of the overall financial market share in 2016. The interest is illustrated by the results attained by the UAE-based banks Alfalah and Bank Al Meezan. Bank Alfalah CEO Atif Bajwa reported a double-digit top line growth, Rs7.523 bn in CY-15, 33% growth from 2014. Meezan Bank reported a Rs2.67 bn profit for the first half of CY-2015. The bank has also introduced Meezan Asset Allocation Plan-1, Pakistan's largest asset management company.
Leader of Russia’s Chechen Republic, Ramzan Kadyrov, is courting investment from Saudi Arabia. Kadyrov received a Saudi delegation in St Petersburg over the weekend, during which he discussed increasing the partnership between Chechenya and Riyadh. In January Kadyrov announced he is looking to open an Islamic bank, in order to attract investors from the United Arab Emirates and the Gulf.
The German car manufacturer Audi has partnered with BankIslami Pakistan to introduce its brand in the Pakistani market. A Memorandum of Understanding (MoU) has been signed with Premier Systems, Audi’s general importer in Pakistan. BankIslami will provide tailor-made financing packages to Audi customers across the country through its flagship product of Islami Auto Ijarah. The MoU was signed by Muhammad Yasin Khan, CFO of Premier Systems and Yasser Abbas, Section Head Auto Ijarah, BankIslami.
Alif Capital has been approved by the National Bank of Tajikistan to provide banking services in both hard currency and somoni, the currency of Tajikistan. Alif Capital is marketed as the first regulated microfinance institution in Tajikistan that offers Sharia-compliant finance. Its loan terms vary from four to six months, with an average size of $4,000 as of 2015.
Summit Bank has received approval from Pakistan's central bank to conduct due diligence on Burj Bank. Burj Bank held 4.4 billion rupees ($42 mn) in paid up capital as of December, compared with the regulatory minimum of 10 billion rupees. Burj Bank said it had shortlisted three financial institutions to conduct due diligence on a non-exclusive basis. It also received an extension from the central bank to meet the mimimum capital requirement until June 30.
Dr Ishrat Hussain, Chairman Center of Excellence for Islamic Finance emphasized that Islamic Finance should not be restricted to a faith based segment and the banking sector has to increase investment in agriculture, SME and Islamic Microfinance. He stated that the share of Islamic Banks is 13pc growing at the rate of 28%, however, there are still regulatory and legal challenges which need to be addressed to make a real shift in lending profiles.
Dubai Islamic Bank’s Group Chief Executive Officer Dr. Adnan Chilwan, on his first visit to Pakistan, outlined the detailed growth strategy for the franchise in the country. This newly defined strategy repositions the Bank’s medium term plans alongside the transformational growth the Group has achieved as part of their 2014-2016 strategic agenda. The event also marked and celebrated the successful 10 years of the Bank’s operations in the country.
Shariah-compliant financing is emerging as a viable alternative to conventional banking in order to fund infrastructure deals, which could help promote use of longer-term transactions in Islamic finance. This month Pakistani banks arranged Rs100 billion ($955 million) worth of 10-year Islamic bonds (sukuk) for a hydropower plant, the largest infrastructure deal to use Islamic financing in the country. Finance Minister Ishaq Dar said Pakistan wanted to make Shariah-compliant financing its first choice for infrastructure and long-term financing needs.
Pakistan has great potential of starting its own sustainable, digital turnaround. The country is embracing digital technology as a powerful tool which is not just limited to simple communication anymore rather it has become a life-changing catalyst. According to Alliedcrowd statistics, Pakistan currently ranks 22 among developing countries on the crowdfunding market with annual estimated business of $5.4M. The prospects for crowdfunding are quite positive in Pakistan as small businesses and young entrepreneurship is gaining popularity in the country.
The lifting of sanctions has not only enhanced Iran's economy but has also provided an opportunity for Shari'ah-compliant investment with diversification opportunities. Iran's Islamic banking assets are $482 billion, according to Dubai Government data from 2014. Islamic finance in Iran can benefit from the sheer volume of the post-sanction investments and such projects are reportedly high. This will in turn support the market growth and create growth opportunities for the banking system in Iran.
The Islamic finance industry is still searching for a stance on to what extent conventional international law should be accepted in arbitration cases. Conservative scholars argue that non-Muslim courts should not be written into contracts as a reference for arbitrations. Islamic scholar Sheikh Saleh Abdulla al-Haidan said contracts, in which both parties agree that British law should be reference for the contract and therefore any arbitrations, violates Islamic law. According to the scholars contract parties should include arbitration centres compliant with sharia law as reference in contracts.
Maybank Islamic, Asia Pacific's largest sharia bank, is not currently seeking a strategic partner, its acting chief said after earlier talk that it would merge with the country's second Islamic bank. Acting CEO Ibrahim Hassan said Maybank Islamic is only interested in partnerships for specific business products such as the joint issue of credit cards. Malaysian financial group BIMB Holdings also denied that it was in talks to merge its sharia banking subsidiary Bank Islam with Maybank Islamic.
According to Fitch Ratings the total new Sukuk issuance (with a maturity of more than 18 months) in the Gulf Cooperation Council, Malaysia, Indonesia, Turkey, Singapore and Pakistan was around US$11.1 billion (RM42.9 billion) in the first quarter of 2016. Fitch said that Sukuk issuance was up 22% from Q4’15 and 21% from a year earlier, while non-Sukuk bond issuance of US$17.1 billion was down 23% quarter-on-quarter and 45% year-on-year. Sukuk represented 39.3% of total bond and Sukuk issuance in these countries during the quarter – the highest proportion in the past eight years.
Two billion people worldwide still lack access to formal and regulated financial services. In 2015, the World Bank Group with private and public sector partners committed to promoting financial inclusion and achieving Universal Financial Access by 2020. According to the Pakistan Microfinance Network
the estimated potential market size for microfinance is 20.5 million in Pakistan, yet the current Microfinance outreach is close to 3.7 million active borrowers, showing there is a long way to go.
Al Meezan Investments CEO Mohammad Shoaib announced the launch of the Meezan Asset Allocation Fund (MAAF), an open-end Shariah compliant asset allocation scheme. MAAF has an initial offering from April 18- 20, 2016 with no load and would be open for subscripion subsequently. MAAF aims to earn a potentially high return through asset allocation between Shariah compliant equity, fixed income and money market instruments. MAAF has an initial offering from April 18- 20, 2016 with no load and would be open for subscripion subsequently.