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.
Islamic banking is growing fast in predominantly Muslim Pakistan, thanks to the growing popularity of its Sharia compliant structure and a helping hand from the government of Prime Minister Nawaz Sharif. According to the State Bank of Pakistan most of Pakistan's conventional banks have now opened Sharia-compliant branches and many are working on full conversion to Islamic banking, which is growing at an annual rate double that of the country's Western-style banking sector. Pakistan's 250 million people are served by 22 local and foreign banks, five of which are Islamic. With a few exceptions almost all local and foreign conventional banks also offer Islamic financing services.
Iran’s central bank governor Valiollah Seif demanded the Obama administration take more steps to facilitate his country’s banking transactions world-wide and warned the landmark nuclear agreement reached last year could be at risk if the U.S. doesn’t act. The White House in response to Seif’s comments replied that the U.S. is abiding by the nuclear agreement. Iranian banks have been unable to process international money transfers and finance trade freely in the months since the deal went into effect in January. Iran also has faced obstacles in repatriating tens of billions of dollars of its oil revenues.
Iran’s government plans to shift part of its borrowing from local corporate investors to the capital markets, a move that could stimulate trading in debt securities and help the economy recover from years of economic sanctions. The government is laying plans to offer a range of debt instruments in the markets, where they could be bought by institutional and individual investors, rather than placing debt directly with banks and Corps.
At present, Iran’s banking sector provides around 95% of all financing, with only a tiny portion sourced from the debt capital markets. Several efforts are under way, like the approval to use ijara sukuk..
Aimed at raising awareness of and promoting Islamic finance in the country, Bank Alfalah has organised the launch of a book titled ‘Shariah Minds in Islamic Finance’ by the scholar Dr Mohammadd Daud Bakar. The book presents insights into the life of an international scholar, discusses stakeholders’ expectations and defines the ultimate role scholars should play in shaping the industry’s future. Dr Bakar currently serves as Chairman of the Shariah Advisory Council at the Central Bank of Malaysia, the Securities Commission of Malaysia, Labuan Financial Services Authority and the International Islamic Liquidity Management Corporation (IILM). He is also a Shariah board member of various financial institutions.
Honda Atlas Cars (Pakistan) Limited and BankIslami Pakistan Limited have joined hands to offer their customers with valuable Honda products coupled with Shariah compliant Auto financing solutions. Yasser Abbas, Section Auto Ijarah BankIslami and Nadeem Azam, General Manager Sales & Marketing Honda signed the agreement. Maqsood Rehmani Vice President, M. Afzal Senior Manager Sales & Marketing and Shahzad Wahla Deputy Manager Sales & Marketing from HACPL and Syed Jibran Ali Unit Head Auto Ijarah, Hafiz Shabir HSM Central Region and Rizwan Haider TL Retail Central from BankIslami were also present on the occasion.
Maple Leaf Cement Factory Limited (MLCFL) Monday paid Rs 8 billion Sukuk loan much earlier than scheduled. The company has been able to pay off much earlier than scheduled, its entire Sukuk loan of Rs 8 billion in the third quarter of the current financial year, said Muhammad Ashraf, MLCFL's company secretary, in a stock filing Monday. The payment, he said, was made against the agreed repayment schedule till December 2018. Improved profitability, better cash flow, cost curtailment initiatives and efficient financial discipline made it possible to repay the debt in advance.
Imams and other religious leaders are an under-used means of pushing action to combat climate change, experts and religious scholars say. Religious leaders have the moral standing to call on people and businesses to consider the environmental impact of their activities and take a bigger role in reducing their own carbon footprints and finding ways to cope with the growing impacts of climate change, experts said at a multi-faith meeting in Islamabad. But first, they need training to both understand and communicate the issues accurately in a country hard-hit by climate-related drought, flooding, crop losses and other problems.
The latest region seen as having big potential for Islamic finance is the Commonwealth of Independent States (CIS), comprising eight countries plus Russia that until 1991 were part of the Soviet Union. Being home for a large Muslim population, especially in Central Asian CIS member states, the area is emerging as a new frontier region for Islamic finance as banking penetration is relatively low and demand for financing is strongly growing. In all these countries, growth is strongly dependent on production and export of commodities, not just oil and gas, but also coal, iron and precious metals, among others. This brings with it the need for huge infrastructure investments for the production cycles of those commodities, and also for processing and transportation.
The Iranian Ministry of Finance issued IRR 5 trillion of four-year lease-based Sukuk on 16 March. The bonds were sold through Iran Fara Bourse, Tehran’s over-the-counter market. The issue marks the first use by the Government of Iran of such bonds. Previously, in September 2015, another first had been notched up with the issuance of some $295 million in Islamic Treasury Bills on Iran Fara Bourse. Meanwhile, in banking, the State Bank of Pakistan called a special meeting of all banks/ financial institutions on 14 March 2016 to discuss progress made by the Pakistani banking sector for facilitating trade transactions with Iran. Later in March it was reported that Bank Melli Iran had expressed interest in opening a branch in Pakistan while Pakistan’s Habib Bank may open a branch in Iran.
Standard Chartered Saadiq has announced to enhance its offering for clients looking for Shariah-compliant banking products and services. The enhanced Saadiq product suite includes Home Finance with fixed pricing for up to three years so the clients can benefit from prevailing low market rates and the Saadiq World Miles Credit Card. In order to address the needs of its business banking clients, Saadiq has also launched a new product: Saadiq Business Term Finance, a Shariah compliant solution for clients to manage their business expenditures by availing financing against their existing property.
UN study paper on the humanitarian financing gap.
"The world today spends around US$ 25 billion to provide life-saving assistance to 125 million people devastated by wars and natural disasters. While this amount is twelve times greater than fifteen years ago, never before has generosity been so insufficient. Over the last years conflicts and natural disasters have led to fast-growing numbers of people in need and a funding gap for humanitarian action of an estimated US$ 15 billion. This is a lot of money, but not out of reach for a world producing US$ 78 trillion of annual GDP.
The United States is not standing in the way of foreign banks doing business with Iran, a senior U.S. official said, but his comments appeared unlikely to satisfy frustrated businessmen and Iranian officials. Most international sanctions against Iran's economy were lifted in January after Tehran implemented a deal with world powers to curb its nuclear programme. But Washington kept some sanctions that were originally imposed over missile proliferation and alleged support of terrorism. The fear of being caught up in those remaining sanctions has deterred most foreign banks from restoring links with Iran, angering the Iranian government.
In order to promote the SBP initiative for SME sector and for Agri Financing, a Memorandum of Understanding (MoU) was signed between Al Baraka Bank (Pakistan) Limited & Al-Ghazi Tractors Limited, for the facilitation of ‘Tractor Financing’ at Al Baraka House, Karachi. This MoU will allow the farmers and agriculturists to avail Shariah compliant financing options for rural financing including financing of tractors and other credit facilities, with quicker processing and flexible payment options. Al Baraka Bank (Pakistan) Limited (ABPL) is a part of Al Baraka Banking Group, Bahrain, and has a network of 150 branches spread over 94 cities & Towns across Pakistan.
In order to foster the growth of Islamic mutual fund industry, the Securities and Exchange Commission of Pakistan (SECP) has revised the investment parameters for Shariah Compliant open end collective investment schemes. The Commission allowed the Islamic mutual funds to include the Government of Pakistan Ijarah Sukuk not exceeding 90 days remaining maturity in cash and near cash instruments requirement. Shariah Compliant open end collective investments schemes has not seen the issuance of short term Islamic Government papers like T-Bills, therefore, Government Ijarah Sukuk having remaining maturity of 90 days or less is the only viable and available avenue for investment in cash and near cash equivalent.
Bahrain-based Ithmaar Bank has announced that its retail banking subsidiary in Pakistan, Faysal Bank Limited, has registered a record profit for 2015. Faysal Bank registered a profit, after tax, of US$ 41mn (PKR 4.2bn) during 2015, a 70 percent increase over the profit reported for 2014. During the year, the bank's operating income increased by 95 percent, growing from US$ 35mn (PKR 3.5bn) in 2014 to US$ 67mn (PKR 6.9bn) in 2015. Total assets increased by 11 percent to US$ 4bn (PKR 430bn) as of 31 December 2015, compared to US$ 3.7bn (PKR 388bn) as at 31 December 2014. Faysal Bank also announced a cash dividend of PKR 1 per share (10 percent of share par value) for 2015.
Iranian banks have opened more than 480 million euros of credit through Iran-Europe Commercial Bank (IECB). An amount of 108 million euros of the total €480 million belongs to Bank of Industry and Mine while the rest are owned by other banks in the country including Mellat and Tejarat banks. The Central Bank of Iran (CBI) has announced that the Society for Worldwide Interbank Financial Telecommunication (SWIFT) is up and running and there exist no barriers to opening LCs via SWIFT. Registered in Hamburg, Germany, the IECB officially welcomed international banking relations with Iran.
Resetting Priorities - Redefining Roles
Five years ago, the Global Donors Forum was convened in Dubai to take on a challenging task: to define the roadmap for Muslim giving into the next decade. As a growing network of philanthropists, grantmaking foundations and socially responsible corporations, the Forum lead a consultative dialogue among the thought leaders from which, it was hoped, a new social compact could emerge.
Half a decade on, with the world having changed dramatically as events in the Middle East would attest, the Global Donors Forum 2016, has a new set of issues to focus upon. Foremost among these is the need to rigorously analyse the past decade in order to ascertain how best to formulate strategies to counter emerging challenges. The GDF 2016 will, therefore, attempt to set new priorities as it looks to redefine the role of philanthropy, with a focus on the Muslim world in a radically changed global landscape.
Thousands of Pakistani households are turning to microfinance institutions which provide loans based on Islamic law, or Sharia. The available video looks at micro financing solutions in Pakistan provided by Achuwat which provides interest free loans. Religious lending is expected to grow in the coming years, and this video looks at case studies of a school teacher and tailor. The majority of clients of micro financing solutions are women.