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Silk Bank to grow in Islamic banking

#Pakistan's Silk Bank plans to expand its Islamic banking business amid growing demand for Shariah-compliant financial products in the country. The State Bank of Pakistan has given approval to the bank for opening of 20 Islamic and 15 conventional branches this year. Silk Bank CEO Shaukat Tarin said the bank was going to reduce the size of corporate banking, but increase consumer and SME segments. The bank’s consumer banking portfolio continued to grow, while its non-performing loans fell by Rs10 billion in January-June 2017. The bank also made its commitment to revive the mortgage business in the current low interest rate environment. Shuja Alvi, head of investment at Silk Bank, said the bank continued to make heavy investments. Since acquisition, the sponsors have invested Rs430 billion in the bank through multiple funding.

#Iran, #Venezuela launch joint development bank

Iran and Venezuela inaugurated a joint bank to finance their development projects. The opening ceremony took place in Tehran during a visit by Venezuelan President Hugo Chavez. The Tehran based Iran-Venezuela Joint Bank has an initial capital base of 200 million dollars, with each nation providing half of the funds. The Export Development Bank of Iran, which is under sanctions from the US Treasury, was tasked with creating the joint bank. The joint bank will work within Iran’s banking regulations and its activities will be overseen by the Islamic republic’s Central Bank. The board of directors comprises four Iranians and four Venezuelans. A joint investment fund will also be launched in Venezuela.

Unicorn invests further Rs1bn in Dawood Islamic Bank

Dawood Islamic Bank Limited (DIBL) has received Rs1 billion (US$12.9 million) investment from Bahrain-based Unicorn Investment Bank Limited. Unicorn already had a 22.2% equity stake in DIBL prior to the current investment. Unicorn Managing Director Aamir Khan said that the decision to invest in Dawood Islamic Bank is based on excellent opportunities that are available in the Islamic banking sector of Pakistan. DIBL Chairman Rafique Dawood said the investment by Unicorn would further boost the bank's ability to provide support to trade and industry through its various Riba-free banking products. DIBL has a network of 21 branches spread over the major cities of Pakistan including Karachi, Lahore, Islamabad, Faisalabad, Multan, Sialkot, Iqbalabad and Joharabad.

The rise of the #Sukuk

The financial crisis of 2008-09 shifted the world's focus towards greater accountability, enhancement in transparency, improvement in governance and a strict limit on leveraging. This has persuaded the world to look towards Islamic finance as a viable financial alternate. The asset-backed nature of Islamic financial transactions, in addition to the prohibition on speculative activities make it a more stable system than its conventional counterpart. Sukuk is being used by many developing countries as a tool of fiscal policy for economic development. Projects like roads, railways, airports and hospitals etc, are particularly appropriate for Sukuk financing. The Pakistani government has issued total 18 domestic Sukuk and three international Sukuk. The financing of infrastructure developmental projects can be achieved through issuance of Sukuk.

#Sukuk company granted #tax exemption

In #Pakistan the Federal Board of Revenue (FBR) allowed exemption from withholding tax on purchase of immovable property by the Second Pakistan International Sukuk Company. The company has already enjoyed several exemption and concessions, exemption from levy of various advance taxes, profit on debt and tax on income from property. This further exemption was granted to strengthen the Islamic debt market by attracting investors by grant of tax concessions.

#Sukuk issuance to lure foreign investment

The re-entry of #Pakistan into the international Islamic bond market after a gap of two years with the issuance of one billion dollars Sukuk will help the country bolster its external account position. According to analyst Saad Hashemy at Topline Securities, Pakistan's ability to raise funds from the global financial markets at the historic low rates shows investors' optimism about the economic prospects. The government raised $1.0 billion through the issuance of five-year dollar-denominated Sukuk at the historic low rate of 5.5%. The investors across the world showed interest in parking around $2.4 billion in the bonds. Pakistan’s credit rating has remained stable or improved during the last few years. International credit rating agencies Moody’s, Fitch and Standard & Poor’s (S&P) rated Pakistan as B3 (stable), B (stable) and B (positive), respectively in their last ratings.

SBP aims to achieve 50pc financial inclusion by 2020: deputy governor

The State Bank of #Pakistan (SBP) is pursuing a three-pronged strategy to achieve the goal of 50% financial inclusion by the year 2020. According to Saeed Ahmed, deputy governor of the central bank, twenty million households need microfinance in Pakistan. The forum, organised by Shamrock Conferences International was held to strive for the expansion of financial services. Dr Mohammad Amjad Saqib, chairman of Akhuwat Foundation, delivered the keynote address and stressed the importance of microfinance. Speakers agreed that the microfinance specialists must create a sustainable model by offering competitive microfinance products, reducing costs and expanding their outreach.

Govt gears efforts to test international appetite for Shariah-compliant papers

The Pakistani government plans to tap international investors’ appetite by offering sukuk worth as much as $750 million for sale. The finance ministry said the structure of the sukuk will be flexible and the issue will have a maturity of at least five years. According to former finance minister Salman Shah the completion of the IMF (International Monetary Fund) programme and reclassification of Pakistan Stock Exchange to MSCI emerging market index would send a positive signal to the investors. Analysts said improved macroeconomic indicators and China-Pakistan Economic Corridor related activities are attracting positive credit ratings.

Al Baraka Bank completes due diligence of Burj Bank

Al Baraka Bank has finished due diligence for the proposed merger of Burj Bank. Abid Qamar, chief spokesman at the State Bank of Pakistan (SBP), said Al Baraka was given permission for due diligence of Burj Bank and they have completed the process. Summit Bank and Bank of Khyber were also interested in Burj Bank, but they did not carry out any due diligence process. The deal is expected to be completed within next three months, but the complete integration of both entities would take six to eight months. The potential deal would be a part of the significant efforts, currently being made by the SBP, to fix the problem of the small banks that fell below the minimum capital adequacy ratio requirement and minimum paid-up capital requirement.

Islamic Advisory Group supports final push for polio eradication

The Islamic Advisory Group (IAG) for Polio Eradication has adopted a new work plan to end polio in Pakistan and Afghanistan. The announcement came at the third annual IAG meeting held at the Islamic Development Bank’s headquarters in Jeddah. In a statement issued by the meeting, the IAG affirms the religious obligation of parents to vaccinate their children to keep them healthy. According to IAG deputy Dr. Abbas Shouman, the misperceptions usually arise due to fatwas issued by non-specialists who leave children exposed to handicap or death. IDB president Dr. Ahmad Mohamed Ali urged the partner institutions of the IAG to coordinate with WHO to transfer their experience in polio to other emergency and epidemic situations, particularly in Africa.

SECP passes orders against takaful company

The Securities and Exchange Commission of Pakistan (SECP) has passed orders against a takaful company for not complying with the provisions of the Insurance Ordinance, 2000 and the Companies Ordinance, 1984. Further, SECP’s insurance division has also passed an order against a life insurance company under section 130(2) of the Insurance Ordinance, 2000. The SECP has also issued 13 warning letters and four show-cause notices to various insurance and takaful companies for contravening various provisions of corporate laws, insurance laws and related accounting standards and regulations. To maintain transparency and provide equal opportunities to all insurance surveyors, Pakistan Insurance Institute has been mandated to examine and check the competency of surveyors, on the basis of which the SECP will issue a licence.

Global Islamic Microfinance Forum on Dec 8

The Global Islamic Microfinance Forum on Islamic microfinance will be held in the UAE on December 8, in which delegates from more than 30 countries will participate. The forum's purpose is to introduce Islamic microfinance on the global canvas as an effective tool for poverty alleviation and social development. It also aims to develop Islamic microfinance internationally and to have a dialogue with the international donor and development agencies and corporate entities for sustainable development.

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