Central Asia

Hedge Fund’s Tehran Trip Shows World’s Ready for Iran Bonds

In the aftermath of Iran’s deal earlier this month with international powers to end sanctions, investors like Hans Humes are anticipating new bonds from Iran. As Iranian officials were in Vienna hammering out terms of the nuclear accord, Humes, a New York-based hedge fund manager, said he’d be a buyer when the nation starts selling debt to finance projects that weren’t viable under the sanctions. Before Iran can access overseas markets, the U.S. and European Union will need to lift a complex web of sanctions, which mainly include a ban on its lenders from dealing with Iran and Iranian banks’ access to the leading global financial-messaging system known as Swift.

UPDATE 2-With nuclear deal done, Iran sets out to reassure wary Gulf Arabs

Iran's foreign minister Mohammad Javad Zarif called on Sunday for a united front among Middle Eastern nations to fight militancy, in his first regional trip since Iran reached an agreement with world powers on the country's nuclear programme - an agreement that raised fears among its Gulf Arab neighbours. Most Gulf Arab states are worried that Iran's July 14 accord will hasten detente between Tehran and Washington, emboldening Tehran to increase backing for Middle Eastern allies at odds with Gulf Arab countries. Most Sunni Muslim-ruled Gulf Arab states have long accused Tehran of interference in Arab affairs, alleging financial or armed support for political movements.

Iran, Germany to establish joint banking committee

The German and Iranian governments have decided to establish a joint banking committee. Officials from Berlin and Tehran will come together in September for the first meeting of the committee. The decision came after Iran and the five permanent members of the U.N. together with Germany came to an understanding in the nuclear negotiations on July 14. Additionally, the U.N. Security Council unanimously accepted the draft resolution, which approves the nuclear agreement and stipulates the U.N. sanctions on Iran will be gradually lifted. $700 million of Iran's frozen assets abroad will be released every month after the sanctions are lifted. It is estimated that the total amount is around $150 billion.

Kyrgyz government approves projects on introduction of Islamic Sukuk

Kyrgyzstan hopes to use Islamic finance to attract foreign investment. The Kyrgyz government approved the project on introduction of Sukuk, State Secretary Abduhalik Shamshiyev said at the board meeting of the State Service for Financial Market Regulation and Supervision. International law firm Simmons & Simmons and the Kyrgyz Republic signed an agreement in May 2014 to provide consultancy services for the development of laws and regulations, supporting the introduction of Takaful and Sukuk in the Kyrgyz Republic. The consultancy services were funded under a technical assistance grant provided by the Islamic Development Bank (IDB).

Bankislami: Funds given to meet depositors’ demand, says SBP

The State Bank of Pakistan (SBP) and BankIslami have clarified a news story titled “SBP grants Rs20b to BankIslami”. The SBP said it is a normal practice for central banks to provide funds to banks whenever they are under liquidity stress or to meet unexpected deposit withdrawal requests. Liquidity support up to Rs15 billion was offered to BankIslami in anticipation of heavy withdrawal by the depositors of defunct KASB Bank after its amalgamation with the former. This facility, valid for 180 days, is fully secured by the sukuk held by BankIslami. BankIslami said the support it received from the SBP had been used to pay off the depositors of KASB Bank, which to date amounted to more than Rs22 billion.

Concessionary loan: SBP grants Rs20 billion to BankIslami

The State Bank of Pakistan has given a Rs20-billion concessionary loan, including Rs5 billion at an incredibly low rate of 0.01%, to BankIslami to meet capital requirements following the amalgamation of KASB Bank into it. It has highlighted transparency issues pertaining to the BankIslami and KASB Bank amalgamation, as the central bank did not extend the facility through competitive bidding.In protest against the move, a minority shareholder of KASB Bank has lodged a complaint with the National Accountability Bureau (NAB). The complainant, Shaheena Wajid Mirza, requested the anti-corruption watchdog to investigate the SBP governor and other officials of the central bank and Ministry of Finance for alleged corrupt practices and misuse of authority.

Islamic capital market: SECP plans Shari'ah compliance regulations

The Securities and Exchange Commission of Pakistan (SECP) is in the process of preparing shari'ah compliance regulations for the Islamic capital market. The SECP has chalked out a comprehensive plan for the development of the Islamic capital market in the country. Under the future plan, the SECP will introduce new products for Islamic capital market. The commission would also create awareness on the Islamic capital market. Besides, the SECP is planning to introduce shari'ah audit mechanism. The commission would also adopt new accounting standards on Islamic finance issued by Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The SECP will launch webpage of Islamic finance department for education, promotion and development of Islamic finance.

Pre-tax: Islamic banking industry’s profit surges to Rs4.8b

The combined pre-tax profit of the Islamic banking industry surged to Rs4.8 billion in the first quarter of 2015, which depicts 48% growth on a year-on-year basis. The rise in the profitability of the Islamic banking industry in January-March was mainly on the back of earnings growth of 95% recorded by Islamic banking divisions (IBDs) of conventional banks. In contrast, the combined profitability of Islamic banks increased 17.6% in January-March on an annual basis. Assets of the Islamic banking industry grew by 28.2% in January-March on an annual basis to Rs1.3 trillion. Similarly, its deposits stood at Rs1.1 trillion at the end of March after recording a growth of 28.7% over the preceding 12 months.

Kazakhstan introduces changes to obligatory insurance and Islamic finance laws

The Republic of Kazakhstan’s modifications and additions into some acts of the insurance and Islamic financing law came into force on May 9, 2015. The purpose of the law is to introduce a system of obligatory insurance for employees and to create favorable conditions for the appropriate functioning of Islamic banks. The main directions of the law are: legal support of Islamic insurance issues; improvement of legislation on issues regarding the functioning of Islamic banks; ensuring stable functioning of the organisation, which guarantees insurance payments; and solving problems regarding employees obligatory insurance when accidents occur.

Iran and the Islamic Finance Crown

The Iranian banking industry remains completely regulated by sharia law and is by far the world’s largest center of Islamic banking. Yet its experience is unique within the global Islamic community, as it is inspired by Shia jurisprudence, which often diverges from mainstream Sunni jurisprudence. Sunni scholars have repeatedly questioned the “rightfulness” of Iranian banks. However, with Iran now seemingly closer than ever to an agreement with the West over its controversial nuclear development program, local financial institutions are poised to regain access to international markets and place their sharia-compliant products among emerging market enthusiasts. Yet instead of adding new momentum to the growing Islamic finance industry, Iran’s financial comeback risks opening a new chapter in the century-old clash of principles between Sunni and Shia Islam.

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Cryptocurrencies and Islamic finance?

Bitcoin (https://bitcoin.org) started to make the idea of a cryptocurrency popular. What is missing so far is an intense discussion among Sharia scholars.

What makes Bitcoin unique is, that it is a) created by a computer program b) that it is created and verified by a decentralised process, the so-called 'Blockchain' technology (https://en.wikipedia.org/wiki/Block_chain_(database)), which is solving a practical problem for the first time: To enable trust and accounting without a central ledger, such as a central bank. c) that it faciliates payments quick, efficient and discreet - while the latter leads to accusation of misuse, e.g. for gaming, drugs, terror finance etc.

How it can be seen from an Islamic perspective is not widely discussed, despite it deserves the attention. What we find in search engines are some discussions and also an initiative, which calls itself a bank (https://bitcointalk.org/index.php?topic=21732.0).

Pakistan approves sharia advisory board for Islamic finance

Securities and Exchange Commission of Pakistan (SECP) has approved a four-member sharia advisory board to oversee Islamic financial products in the country, as the regulator looks to address credibility concerns. The board, which comprises three religious scholars and a technical member, would advise SECP on a range of issues including the operation, auditing and reporting of Islamic mutual funds, pensions and insurance operators. Besides, in February, the SECP published long-awaited rules for the issuance of sukuk as part of efforts to strengthen governance and broaden their appeal to investors. Oman's central bank set up a sharia supervisory board last October, with Bahrain and the United Arab Emirates also developing a similar country-level approach to the industry.

First Islamic property fund of subcontinent: over Rs 22.23 billion Dolmen City REIT launched

The first Rs 22.237 billion Islamic rental property fund of the subcontinent was launched at Karachi Stock Exchange (KSE) Monday. The two-day book building process for the country's first Rental Real Estate Investment Trust (REIT), Dolmen City REIT (DCR), was initiated by Sindh Finance Minister Murad Ali Shah here at KSE trading hall. The initial public offering (IPO) envisages a total of 555.92 million units, 75 percent or 416.94 million shares would be offered to institutions and high net worth individuals (HNWIs) through book building on June 8-9. The balance 138.98 million or 25 percent units would go to retail subscribers on June 12.

In violation of earlier claim: BankIslami appoints new officials at KASB Securities

The management of BankIslami has appointed Shahid Ali Khan as the new CEO of KASB Securities, the subsidiary of KASB Bank. Khan replaces outgoing CEO, Irfan Nadeem Sayeed. The management, which had earlier pledged not to force officials of KASB Bank to quit, is now placing its officials on key positions in sheer contradiction of the claim it made at the time of merger of KASB Bank with BankIslami. In the emergent meeting of the board of directors recently, BankIslami management appointed new leadership for KASB Bank’s subsidiary, including new CEO and a board of director, M Nasurur Rahman, in the place of Tahir Iqbal.

LHC issues notices to govt, SBP on merger of KASB, BankIslami

The Lahore High Court (LHC) on Thursday issued notices to the Ministry of Finance, State Bank of Pakistan (SBP), the Securities and Exchange Commission of Pakistan (SECP) and others on the petition of a shareholder against amalgamation of KASB Bank with BankIslami. The petitioner, First Capital Equities Limited, who owned approximately 94,000,000 shares worth approximately Rs 210 million in the KASB Bank, moved the court against SBP’s moratorium and amalgamation of the bank with BankIslami. The petitioner maintained that its fully paid-up shares in the bank were unlawfully cancelled and extinguished due to the merger without its consent and opportunity of hearing.

Islamic Development Bank affiliate to support Tajik bank’s conversion to sharia compliance

Bonki Rushdi Tojikiston (BRT), based in Tajikistan, has signed an advisory services agreement with the Islamic Corporation for the Development of the Private Sector (ICD) to process and support its conversion into Shariah-compliant operations. The agreement is designed to develop an advisory process to effectively deliver full conversion by also identifying challenges and addressing impediments. The ICD will dedicate seven key teams across the full conversion process in areas of project management, Shariah compliance, treasury, accounting, human resources, information technology, marketing and legal framework. BRT is hoping to become the leading Shariah-compliant platform in Tajikistan.

MCBAH appoints Shariah Supervisory Board

MCB Arif Habib Savings and Investments Limited ("MCBAH") has announced that it has appointed a Shariah Supervisory Board under the Chairmanship of former Justice Mufti Muhammad Taqi Usmani for their existing as well as future Shaiah Compliant Mutual Funds, Voluntary Pension Schemes (VPS), Administrative Plans and Shariah Compliant Investment Advisory Mandates. Other members of the Shariah Supervisory Board are Dr Muhammad Zubair Usmani and Dr Ejaz Ahmed Samdani. Apart from advising MCBAH on Shariah matters, the Shariah Board will give expert guidance in introducing and implementing new investment models and products based on international Shariah research.

BankIslami starts hiring program for former KASB staff

BankIslami Pakistan Limited formally started an Internal Hiring program for former KASB employees to help them assimilate better in the amalgamated entity. While interacting with former KASB employees at the launching ceremony of the Internal Hiring initiative, Mr. Hasan A Bilgrami, CEO BankIslami, reiterated that the Bank shall ensure maximum job security and adjust the staff in internal placements by training them in Islamic Banking as well as other job related skill set.

ADIF to establish Kazakhstan as Islamic financial hub of Central Asia

The Association for Development of Islamic Finance (ADIF) announced the signing of memorandum on cooperation with Shariyah Review Bureau (SRB). ADIF solely supported by National Bank of Republic of Kazakhstan (NBRK), is responsible for promoting, enhancing and maintaining the Islamic financial sector and cooperation with investors from GCC and South East Asia. The agreement was signed at the 12th IFSB Summit which took place in Almaty, Kazakhstan. Speaking at the Summit, Chairman of the Presidium, Zaratkazy Nurpiisov said, given the magnitude of Muslim population, enormous oil reserves, rich minerals and metal explorations the country has considerable advantages for Islamic finance.

Upcoming IFSB Summit buoyed by encouraging new developments

As Islamic finance regulators and thought leaders converge on the commercial capital of Kazakhstan, Almaty, for the 12th Annual Summit of the Islamic Financial Services Board (IFSB), the world of Islamic finance is buoyed by a series of encouraging developments in the weeks leading up to the Summit. The Summit is scheduled to be held on 20-21 May 2015. The transformational impact of the Islamic finance industry can only be truly enhanced inter alia if the requisite infrastructure is in place. As such, issues relating to ‘Core Principles for Islamic Finance: Integrating with the Global Regulatory Framework,’ the Summit theme, is pertinent and follows the adoption last month by the IFSB of a new Standard on Core Principles for Islamic Finance Regulation (CPIFR)(Banking Segment) (IFSB-17).

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