Central Asia

Islamic Finance Industry Development Challenge

The shift in global banking is not a trend, and the challenge for all of us is to bridge the gap in financial practice and seize the opportunities that lie ahead, bringing ethics back into finance.

Thomson Reuters and Abu Dhabi Islamic Bank (ADIB) are partnering to launch the world’s first Ethical Finance Innovation Challenge and Awards (EFICA). In the dawn of a new economic world, these awards are designed to inspire and recognise a fresh way of thinking by promoting some of the most dynamic, innovative ideas and solutions around integrity and growth.

Pushing for social investment in the Palestinian Territories

In May, John Kerry, the US secretary of state, announced a US$4 billion plan to kick-start Israel-Palestinian Territories peace talks. Sir Ronald Cohen has been arguing exactly that since 2003. He has direct experience of the suffering and dislocation conflict can cause in the Middle East because he and his family became penniless refugees from their home in Cairo after the Suez conflict. In Jordan, apart from Mr Kerry's initiative, there was another example of a strategy towards peace in a business framework with the "breaking the impasse" plan, aimed at getting Israeli and Arab business leaders in the region working together. Sir Ronald was involved in that from its inception. His plans have had significant beneficial outcomes in local projects to reduce prisoner recidivism, tackle homelessness and illiteracy. Most recently he was the chairman of Big Society Capital, the United Kingdom's first social investment bank.

Pakistan adopts AAOIFI standards for investment sukuk

Pakistan's central bank has adopted the "investment sukuk" guidelines of the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Issuers will have to comply with this global standard for sukuk, or face penalties. The action could help Pakistani issues attract investment by foreign institutions from the Gulf and elsewhere. Around the world, the industry commonly refers to AAOIFI standards but they are mostly used as guidelines rather than manadatory rules. Pakistan's regulators are rolling out new rules in an effort to increase Islamic banks' share of the total banking sector to 15 percent by 2017. In May, the country's securities commission established a sharia advisory board to oversee Islamic financial instruments, while last year it announced rules for sukuk, takaful (Islamic insurance) and Islamic deposits.

JCR-VIS Reaffirms Entity Rating of Burj Bank Limited

JCR-VIS Credit Rating Company has reaffirmed the entity ratings of Burj Bank at ‘A/A-1’. Outlook on the ratings is ‘Stable’. Ratings take into account the financial profile of Islamic Corporation for Development of the Private sector (ICD), one of the major shareholders of the bank. The recent approval by shareholders to increase the bank's paid up capital (free of losses) to Rs. 6b is likely to create room for growth in core business activities, which is constrained by the high level of Capital Adequacy Ratio required to be maintained by the State Bank of Pakistan. With a CAR of 22.5% at end-Dec’12 and net NPLs in relation to tier-1 capital also within manageable limits, the bank continues to depict sound risk absorption capacity. Burj has set up 25 new branches during FY12 to increase the total outreach to 75 branches by year-end. A further 25 branches are planned to be set up during the ongoing year.

Hult Prize Competition for Student teams worldwide to solve food crisis

Over the past three years, the Hult Prize has taken on some of the planet's toughest challenges. These have included Education, Energy, Housing, and Water. For the 2013 Prize, President Clinton has personally selected the challenge: the Global Food Crisis.

A detailed case study, narrated by President Bill Clinton, will be released to all selected participants in early January to set the framework for this year's challenge. Competitors will then be asked to develop social enterprises that answer the President's Challenge.

The global food crisis can be approached through multiple lenses, such as: distribution, manufacturing, production, technology and many others. Each, represents an opportunity for innovation. Nearly 1 Billion people in the World are Hungry, that is over 1 out of every 4 children. Ironically, our global economy produces enough food each year to feed everyone, however more than one-third of the food generated for human consumption continues to be lost or wasted.

Pakistani lender plans Mideast expansion

Pakistan-headquartered Bank of Khyber (BoK) plans to open branches in the Middle East, as part of an expansion drive to capture the fast growing investment opportunities and facilitate the expatriate Pakistanis belonging to Khyber Pakhtunkhwa and Federally Administered Tribal Areas (FATA). The lender would offer both Islamic and conventional banking services in the lucrative market of Middle East, according to the bank's acting managing director, Javed Hashmat. No further details were provided.

Emaan Islamic Banking officially launched

Emaan Islamic Banking, a division of Silkbank Limited, has been launched and is now available in 10 branches in 8 cities including Karachi, Lahore, Faisalabad and Islamabad. M. A. Mannan, Executive Director at Silkbank, said that currently, the Islamic Banking Division offers a complete suite of liability based products and services including Current Account, Savings Account, Term Deposit (01 Month to 05 Years), Online Banking, 24/7 Phone Banking, Internet Banking, Visa Debit Card, Utility Bills Payment Service and Corporate Banking solutions including Musharka, Murabaha, Diminishing Musharka and Import Murabaha. Silkbank plans to open more Emaan Islamic Banking branches throughout the country and offer more products, both in Retail and Consumer Banking in Pakistan.

MICROCAPITAL BRIEF: Islamic Development Bank (ISDB), Government of Punjab Provide $195m for Microfinance Facility in Pakistan

The Islamic Development Bank (ISDB) will disburse a loan of PKR 14.6 billion (USD 146 million) with a 0.5 percent interest rate per year to the Punjab provincial government of Pakistan. The money will be used for a microfinance facility that will provide interest-free loans to small enterprises in the province, which is home to approximately 90 million people. The Punjab government plans to provide an additional grant of PKR 5 billion (USD 49.9 million) to support the facility. The project reportedly is modeled after the Akhuwat Scheme, it will offer loans of the same size, and like the Akhuwat Scheme, this new facility will not accept deposits. As of July 2013, Akhuwat reported to the US-based nonprofit Microfinance Information Exchange (MIX) a gross loan portfolio of USD 15.1 million, approximately 140,000 active borrowers and operations in 162 branches across Pakistan.

MICROFINANCE EVENT: Microfinance Summit Pakistan 2013, July 8-10, Islamabad, Pakistan

The event "Microfinance Summit Pakistan 2013" will be held in Islamabad, Pakistan on July 8-10, 2013. This event focuses on topics relating to financial inclusion, microfinance investment vehicles, branchless banking, microinsurance, market segmentation, distribution channels for reaching poor people, and microfinance regulation and policy in Pakistan. It will be co-hosted by the Pakistan Poverty Alleviation Fund (PPAF) and the Pakistan Microfinance Network (PMN). Although there is no cost to attend this event, registration is required. More information ist available on the event website http://www.mfs2013.com/.

Masses moot urged to promote Islamic financial system in Pakistan

Bankers, businessmen and economic experts urged masses to adopt Sharia-based banking and insurance in their need of daily lives and businesses. Speaking at the Second Islamic Financial Expo and Conference (IFEC) held at local hotel on Thursday, they enlightened participants about the potential of Islamic banking, hereafter underlining the need of awareness and penetration of Islamic banking and Takaful services across the country. Islamic banks are very active in introducing different products to the customers which not only meet their demands at commercial and domestic levels but also fulfill Sharia principles. However, there are loopholes in the Islamic banking industry which must be addressed mutually by banks, regulator and the government.

‘Leaked’ memo warns Iran could lose control over banking system

A memo of Iran's Supreme National Security Council marked as “secret”, was obtained and distributed by the Iranian opposition movement “Green Wave”. The memo said Iran’s financial institutions are on the verge of bankruptcy and the country could lose control over the banking system. Moreover, it stated the collapse of the banking system will lead to a steep rise in unemployment and inflation. The letter, addressed to the Central Bank of Iran (CBI), provided a bullet-point description of the economic crisis. It called for significant restrictions on the public's withdrawal of deposits from Banks. It also urged additional restrictions on taking foreign currency out of the country. The council also issued operational measures to combat the country's economic crisis. These measures include the deployment of security forces around banks, money-changing agencies, and ATM's and the drafting of an emergency plan to combat any potential storming of the banks by the public.

IDB: Young Professionals Program (YPP)

ABOUT YPP:

The Young Professionals Program (YPP) is the strategic talent pipeline for the professional career in the Islamic Development Bank (IDB) Group. The Program is designed for outstanding young graduates who can significantly help the IDB Group to carry out its mission and attain its objectives.

This Program enables each Young Professional (YP) to receive extensive exposure and experience of the IDB Group’s various activities through job rotations in different departments. Participants will initially spend two weeks Orientation stage in HRMD. Then, 27 months in Foundation stage which will be split into three rotations of 9 months each in IDB Group departments.

Participants will also benefit from a coaching/mentoring arrangement and a wide range of relevant training and developmental opportunities.

Upon successful program completion, the participant will gradually climb up the professional grades in the IDB Group

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Islamic banks leading house financing

According to World Bank, on an average, annual housing need in Pakistan is 1.1 million units which require an annual funding of around Rs3.3 trillion per year. While conventional banks/DFIs are stepping away from the housing finance, the share of Islamic banks and HBFC is surging. The gross house loans of Islamic banks grew year-on-year by 15 percent as of December 2012. Among Islamic banks, Meezan Bank, Burj Bank and BankIslami remained the major growth propellers. Islamic housing finance instruments are attractive to the consumers because of the co-ownership nature of the contract instead of borrowing and lending. Besides, with the purchase of share consistently, the rental amount is gradually reduced every month. Facilitating Islamic banks to extend loans coupled with the suggested development of secondary mortgage market is expected to buttress the housing finance in Pakistan.

Building a Culture of Corporate Governance in Kyrgyzstan

In Kyrgyzstan, state-owned companies play a significant role in the economy, especially in the banking, mining, and transportation sectors. Cronyism and corruption within these companies presents a major obstacle to Kyrgyzstan’s market- economic transition. The existing dynamic only reinforces a patronage system—the antithesis to democracy—resulting in poor economic performance and public service delivery. To reduce such overt political influence in corporate management and increase board independence, CIPE and its local partner, the Corporate Governance School (CGS), are educating board members from state-owned enterprises about the principles of corporate governance. During 56 hours of lectures, discussions and case studies, participants learn the fundamentals of corporate governance, including the function and responsibilities of boards of directors.

10 months on, SHC restriction on implementation of Takaful rules remains

It’s been almost 10 months since the Sindh High Court restrained the Securities and Exchange Commission of Pakistan (SECP) from implementing Takaful Rules 2012 that allowed conventional insurance companies to sell Takaful products through separate windows. The court has yet to give its final verdict on a petition of five Takaful operators in which they contended that the provision allowing conventional insurance companies to start selling Takaful products is against Shariah law. If the court clears Takaful Rules 2012, up to 20 conventional insurance companies (life and non-life) are likely to introduce Takaful windows. The paid-up capital requirement for a conventional life insurance company under existing rules is Rs500 million and Rs300 million for a conventional non-life insurance company. The paid-up capital requirements for general and family Takaful companies are not different from their conventional insurance counterparts.

ICD and Zaman Bank in strategic alliance

The Islamic Corporation for the Development of the Private Sector (ICD) moves in the Islamic banking sector of Kazakhstan with a mandate of converting a regional Bank into an Islamic bank with expected investment of up to 35 percent of the subscribed and paid up capital of the bank. Accordingly, it will become second Islamic bank in the country. Earlier, ICD , together with a diverse group of International and local investors including owners of Zaman Group established the first Islamic Leasing (Ijara) Company in Kazakhstan with authorized capital of $ 36 million. In addition, ICD extended $ 20 million for the real estate development project and committed $ 40 million lines of financing facility for the SME sector in the country.

Islamic Finance: Investing in Tajikistan

The Dushanbe Business Forum 2013, which took place in Tajikistan, showcased the country as a promising investment destination and focused on the best practices of Islamic banking and leasing. The event aimed to strengthen the economic ties between the Tajikistan and OIC countries by attracting investment into Tajikistan. According to Shayne Heffernan, Tajikistan is one of the most promising emerging markets. As for its outcome, the Dushanbe Business Forum 2013 created linkages and business relations between Tajikistan and the private sector community in OIC and CIS countries, gave opportunity for local participants to discuss business collaboration with potential shareholders and addressed the prospects of developing and introducing Islamic banking and financial tools.

SBP issues guidelines for Islamic bonds

The State Bank of Pakistan (SBP) has issued a circular to all Islamic banking institutions about the Islamic Export Refinance Scheme (IERS) and eligibility of Ijara Sukuk, Islamic bonds to be included in the Musharaka pool. Every Islamic bank is obligated to create a Musharaka pool consisting of financing blue chip companies on Islamic modes. The Musharaka pool is supposed to have a minimum of ten companies with diversified lines of businesses to avoid concentration in sectors. The circular listed the conditions that will make the Government of Pakistan Ijara Sukuk eligible to be included in the pool, created under the IERS. The Islamic banking institutions are also required to maintain records of Sukuk issues and the amount it allocated to its respective Musharaka pool.

Eligibility of GoP Ijara Sukuk in Musharaka Pool

State Bank of Pakistan (SBP) has notified that now un-encumbered Government of Pakistan Ijara Sukuk may be included in the Musharaka Pool (MP), created under the Islamic Export Refinance Scheme (IERS). This inclusion will be subject to the several conditions. All Islamic Banking Institutions (IBIs) shall report Sukuk in MP under the sector heading of GoP Ijara Sukuk. IBIs shall maintain record of Sukuk issue included and the amount of that issue will be incorporated in the MP. The banks are advised to refer to SBP’s Islamic Export Refinance Scheme and other instructions issued from time to time. Other instructions on the subject remain unchanged,

ICIEC supports investments and exports in its member countries by more than USD 3 Billion in 2012

The Board of Governors of the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), member of Islamic Development Bank (IDB) Group, approved in its 20th Annual Meeting the Annual Report and the Financial Results for 1433H (2012). Last year, the Corporation has continued to enhance the support it provides for exports from and investments into our Member Countries. Despite the existing challenges, the Corporation's Business Insured numbers remained strong at USD 3.07 billion, which is comparable to the business insured numbers achieved last year. ICIEC Chief Operating Officer Khemais El-Gazzeh said, especially the Political Risk Insurance (PRI) program stood out, having increased by 167% to reach a record high of USD 825 million.

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