Central Asia

Summit Bank introduces Islamic banking

Pakistani lender Summit Bank Limited has inaugurated its first Islamic banking branch in Karachi and announced that it will transform all operations into Shariah mode in next three years. Hussain Lawai, President and CEO Summit Bank, said the bank's investors have injected Rs 1 billion fresh equity for Shariah-based operations. The management has decided to make efforts for conversion of branches from conventional to Islamic mode, instead of opening new branches. As per the roadmap in the first phase Summit Bank Islamic branches will be set up in four major cities - Karachi, Lahore, Faisalabad and Islamabad - during this year, he added. The bank set a target of 30 percent growth for Shariah business and as per its estimates it will be over 20 percent during this year.

Meezan Bank in pole position to acquire HSBC Pakistan

Meezan Bank Limited was granted permission by the State Bank of Pakistan (SBP) to conduct due diligence of HSBC Pakistan’s operations. The management of Meezan Bank is reportedly in discussion with HSBC Bank Middle East Limited (HBME) for evaluating a possible transaction involving acquisition of the Pakistan operations of HBME. HSBC Pakistan was put on the block early 2012 and attracted interest from major banks. On June 30, 2012, the business to be sold had 10 branches and gross assets worth Rs60.06 billion (approximately $635 million). Interestingly, in November 2013, Vision Financial Holdings Limited had also shown interest in acquiring 49.11 percent or 492 million shares of Meezan Bank Limited. However, the two transactions are said to be completely unrelated.

Islamic banking represents 12 percent of industry: Deputy Governor SBP

Islamic banking industry in Pakistan has been growing at a fast pace ever since its re-launch in 2002 and now represents over 12 percent of overall banking industry with 19 Islamic banking institutions offering Islamic banking products and services through a network of over 1300 branches across the country. The State Bank pf Pakistan (SBP) has announced a five-year strategic plan for the Islamic Banking Industry (IBI) aimed to provide a roadmap to the industry for the next level of development. Moreover, SBP has decided to strictly monitor the performance of the Islamic Banking industry in order to ensure that they are operating according to Sharia. Besides, SBP is working on its major role to ensure the participation of every citizen in the financial system, through its Financial Inclusion Policy.

SBP wants inclusion of more people in Islamic Banking system

State Bank of Pakistan and other banks engaged in Islamic Banking have sought media support in mobilizing and inclusion of more people from all sections of the society in the source banking system, especially the agriculture, micro-finance and housing sectors.. In order to create awareness and better understanding among the media people, a two-day workshop on 'Islamic Banking' has been organised for them. The Director of SBP's Islamic Banking Department, Saleemullah, said the print and electronic media is the best tool for opinion making and mobilizing the people towards Islamic banking, Besides establishing riba-free economy, however, the corruption in the society must end. Otherwise, the poverty can not be eliminated.

Short-term Islamic bonds in six months

The Director of the Islamic Banking Department of the State Bank of Pakistan (SBP), Saleem Ullah, has said that the mechanism for short-term liquidity instruments for Islamic banks is being evolved and the launch of these bonds is expected in the next six months. Currently, Islamic banks can only invest in three-year government ijara sukuk. Earlier, experts on Islamic banking and finance agreed the Islamic banks can invest in government activities and projects much like conventional banks but there is a need to create an underlying asset. Another expert said that while the industry has been partially successful in eliminating riba from banking transactions, it needs to introduce diversified products for those segments of the society, which want Islamic investment and financing.

11th IFSB Summit, 19-22 May 2014, Mauritius

The theme for this 2014 Summit is New Markets and Frontiers for Islamic Finance: Innovation and the Regulatory Perimeter.

Please refer to http://www.ifsb.org/preess_full.php?id=240&submit=more for the announcement of the 11th IFSB Summit.

For any queries regarding the Summit, please contact the secretariat:

- Participants' registration

Ms. Yazmin Aziz at yazmin@ifsb.org

Mrs. Ida Shafinaz Ab. Malek at ida.shafinaz@ifsb.org

- Sponsorship and Media

Ms. Rosmawatie Abdul Halim at rosmawatie@ifsb.org

Anti-Terrorism Legislation and Impact in Cross Border Giving

INVITATION TO A RESEARCH INQUIRY
Anti-Terrorism Legislation and Impact in Cross Border Giving

The World Congress of Muslim Philanthropy’s Academy of Philanthropy is leading a research inquiry in collaboration with Cass Business School’s Centre for Charity Effectiveness. After London and Doha, the last of the three dialogues will take place in New York.

This concerns the barriers to giving for international development and relief that affect donors and recipients alike, in the light of continuing international agreements and practices enshrined in legislation. Our work is seeking to identify ways forward for international dialogues to best support and enhance accountable giving and its efficient flow between nations. The findings of the research will be reported to the WCMP’s biennial Global Donor’s Forum, to be held in Washington, DC from April 14-16, 2014.

Donors, nonprofit and development sector representatives, and financial institution executives are welcomed to participate in the dialogue and share their experiences and offer suggestions.

Tuesday, March 4, 2014 - 10.00 am to 4.00 pm
Organization of Islamic Cooperation (OIC) Observer Mission to the UN

Islamic Development Bank allocates 3-billion-dollar loan to Iran

Islamic Development Bank’s top officials have traveled to Tehran to sign the contract with the Iranian officials for the first part of the 3 billion-dollar loan they had agreed before. The first part of the loan will be paid to a few cities in the Southern Iranian province of Fars for implementing sewage projects. But there are other areas for which the 3-billion-dollar loan will be used. So far, the IDB has allocated loans to Iran in railway, water sources, environment, automotive and other sectors. With almost ten percent of the shares, Iran is the third major shareholder of the bank. The ratification of Iran's parliament to increase the countrie's share in IDB is pending.

Islamic Development Bank to allocate 144 million euros for wastewater projects in Iran

The Islamic Development Bank (IDB) will allocate a 144 million euro loan for wastewater projects in the Iranian southern Fars province. For that purpose, the IDB and the Fars province's Water and Wastewater Company have signed a memorandum of understanding on the issue. The company will implement wastewater projects in the Darab, Fasa, Sepidan, Abadeh, Neiriz and Firouzabad cities of the province using the IDB`s loan. The IDB has already allocated some 800 million euros of loans in total for Iran's water and wastewater projects, in Mashhad city, Qom and Kashan, and Tehran among others. The IDB has paid more than 3 billion euros to Iran for implementing its projects so far, of which 70 percent were spent on dam building and water and wastewater projects of the energy ministry.

Micro-insurance, takaful business rules notified

The Securities and Exchange Commission of Pakistan (SECP) has notified the Securities and Exchange Commission (micro-insurance) Rules, 2014, which will also regulate the micro-takaful business in the country. According to the rules, the word micro-insurance may be used interchangeably with the word micro-takaful; life micro-insurance with family micro-takaful; non-life micro-insurance with general micro-takaful; premium with contribution and insurer with operator. The commission has limited the sums insured under different concepts of micro-insurance. The SECP has also issued Code of Consumer Protection applicable on all insurers / operators in the business of micro-insurance / takaful. Moreover, the commission issued the Code of Conduct for Micro-insurance Agents applicable on all micro-insurance / takaful agents and their specified persons.

Meezan Bank launches Meezan Kafalah

Pakistani Meezan Bank has launched Meezan Kafalah, a Shariah-compliant alternative to Bancassurance, in collaboration with takaful firm Pak Qatar Family Takaful Limited (PQFTL). Meezan Kafalah is a savings product through which customers can save money for their future plans. In addition, the customers also get Free Takaful coverage through PQFTL that in the case of the customer’s death during the savings period, the Takaful Partner will provide the funds needed for completing the savings. This new product, thus, offers a combination of saving, investment and protection. A differentiating feature of Meezan Kafalah is the accumulation of 100% cash value from day one of the investment with flexibility and ease of exit from the plan without any penalty or charges.

State Bank of Pakistan steps up Islamic banking push

The central bank of Pakistan is stepping up its push to develop Islamic banking, encouraging lenders to expand their operations in the world's second most populous Muslim nation. As of September, Islamic banks held 926 billion rupees ($8.8 billion) of assets or 9.5 percent of the total, up from 8.1 percent a year earlier. The central bank aims to double the industry's branch network and reach a 15 percent share of the banking system in the next five years. To achieve that, the central bank named a new deputy governor to focus on Islamic banking and enlisted renowned scholar Muhammad Taqi Usmani to its sharia board. Moreover, the central bank's media campaign is expected to intensify in coming months and such educational efforts could attract previously unbanked clients to the sector.

Gassner's picture

How to achieve a soft landing of a deleveraging, while growing economy?

For many years we see in the media experts believing in inflation and even hyper inflation. However, in the same time we face proponents warning against deflation. So far we all noticed.

Only a about a week ago I read an article by Myret Zaki clarifying that unfortunately inflation and deflation co-exists.

Myret Zaki's thesis is that we face inflation on financial markets, and deflation in the real economy (in French):

http://www.bilan.ch/myret-zaki/redaction-bilan/inflation-et-deflation-co...

In my view there is a general major shift in the price matrix and I still try to figure the magnitude and implications thereof. It is a bit irritating as at University we learned about neutrality of money:

http://en.wikipedia.org/wiki/Neutrality_of_money

This means any extra supply will increase prices equally, 5 % more money, all prices going up 5 %. Pretty plausible at first hand. However, it seems it does not work in reality any more (or never did).

Islamic Development Bank Group wants to invest to Kazakhstan

The Islamic Development Bank Group (IDB) announced its intention to invest into four new EXPO-2017-oriented projects in Kazakhstan in 2014 through the Islamic Corporation for the Development of the Private Sector (ICD). ICD, Baiterek Holding and LGK Holdings signed a memorandum to create the Central Asian Fund of Renewable Energy with the initial capital of $50 million. Moreover, ICD is going to cooperate with the Investment Fund of Kazakhstan in the development of float-glass production in southern Kazakhstan, a project worth$200 million. Besides, ICD will provide $10 million for procurement of manufacturing lines and raw materials during the first year of a new Aluminum Extrusion Plant's operations. ICD has also achieved an agreement with OLZHA Holding to cooperate in the construction of a grain terminal and elevator western Kazakhstan. The construction is expected to begin this summer.

Iran’s Bank Mellat to claim $820m from Britain

Iran's Bank Mellat seeks to file a claim of at least 500 million pounds (USD 820 million) in compensation against the British government for loss of business caused by illegal sanctions on Tehran over its nuclear energy program. It is the first time that an Iranian lawsuit over sanctions has reached the stage of claiming compensation. On June 19, 2013, Britain’s Supreme Court overturned a ruling against Bank Mellat over its alleged links to Tehran's nuclear energy program. The European Union General Court decided in January to quash sanctions imposed against Bank Mellat in July 2010.

Roundtable conference :Dar for further Islamisation of banking, finance

Federal Finance Minister of Pakistan Ishaq Dar Wednesday urged to further push the process of Islamisation of banking and finance in the country at the roundtable conference on ‘Potential of Islamic banking in Pakistan’. He said that a committee had already been constituted on the subject with a fairly broad mandate assigned for the realisation of its cherished goal. The committee which would suggest a road map and timeframe for progression of various phases of Islamic banking in the country by December 31, 2014, has initially set the following key areas of investigations: removal of all difficulties being faced by the existing Islamic financial institutions in the operations vis-à-vis conventional institutions and design of new products that may enable government to conduct its resource mobilisation operations through Shariah compliant methods.

The fall and rise of Islamic Finance

In Pakistan, Mudaraba companies and Mudarabas (Non-Banking Islamic financial institutions (NBIFIs)) attracted the major business groups of the country since the early 80s. The Mudaraba sector recorded rapid growth until 1996, when the fall back of NBIFIs began and the country witnessed a large number of closures and mergers during the next fifteen years. This left many of doubts and questions as to the future, viability and adoptability of Islamic finance. The causes of failure can be categorized into seven M's: management, money, major defaults manipulation, mismatch, moral hazards and monitoring. However, most of the national NBIFIs managed to survive and generate lucrative profits for their investors, which shows that it was not failure of the Islamic financial system rather a failure of the management.

Iran to assemble group for arresting ex-head of Bank Melli Iran

A special group of police officers will be assembled and sent to Canada for searching and arresting the former head of Bank Melli Iran, Mahmoud Reza Khavari. Since Canadian officials haven't found Khavari yet, Iranian police are asking for one week in order to search for him in Canada. The fraud case originally started in 2007 and involved the use of fraudulent documents to obtain credit for an investment company. Khavari, as the head of Bank Melli Iran, was reportedly involved in the fraud case. However, Khavari escaped to Canada. Iran requested Interpol to announce an international search for him. In June of 2012, Fars news agency reported that Interpol placed Khavari on its Red Notice Wanted list.

Unwinding sanctions against Iran will be ‘tough and complex’

Under an interim deal between world powers and Iran last month, the Islamic republic agreed to freeze part of its nuclear programme in return for modest relief from sanctions. The unwinding of sanctions in the Iranian context will prove quite challenging and difficult in part because as the sanctions have grown over time, they’ve been layered with elements of sanctions building on themselves. The issue of sanctions with Iran have not just been about nuclear issues but also about human rights, support to president Bashar Al Assad in Syria, support to Hizbollah, support to Iraqi militias. Under the interim sanctions deal, the Obama administration has estimated that the sanctions relief will be worth US$6 billion to $7bn. Banking and oil sanctions will remain in place while negotiators attempt to reach a permanent deal over the next six months.

Pak-Qatar Family Takaful

Pak-Qatar Family Takaful Limited is a progressive and a technology-driven Shari'ah Compliant company providing Takaful solutions in Pakistan. Beginning operations in 2007, the company has an independent Shari'ah Advisory Board chaired by Mufti Muhammad Taqi Usmani which certifies all products and operations for Shari'ah compliance. The company is rated A (having Stable Outlook) by JCR-VIS Credit Rating Co Ltd. The paid-up capital of Pak-Qatar Family is in excess of Rs 700 million. Pak-Qatar General Takaful Limited is chaired by Sheikh Ali bin Abdullah al-Thani and sponsored by several financial institutions form the State of Qatar. The company is present in all major cities of Pakistan, and is on track to further expanding its branch network.

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