Islamic Banking

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RM100b corporate bonds, #sukuk issuances to be expected

The Securities Commission Malaysia (SC) is expecting up to RM100 billion worth of corporate bonds and sukuk issuance this year. The regulator said the Covid-19 outbreak and the resultant disruption on businesses have affected fundraising activities. Thus any non-payment of profit arising from the current challenging operating landscape is very likely due to credit rather than Shariah issues and would therefore be dealt with from a credit perspective. SC deputy CEO Datuk Zainal Izlan Zainal Abidin said that Malaysia continues to maintain its leadership in the Islamic capital markets (ICMs). The SC noted that ICM represented 63.57% of Malaysia’s capital market, with market size of RM2.04 trillion as of December 2019, an 8.23% growth over 2018. The SC added that the Islamic fund management industry also witnessed new and innovative investment product offerings. These include Islamic exchange-traded funds based on gold, SRI Islamic funds, as well as social and green sukuk.

#Malaysia’s BIMB Investment launches Shariah-ESG robo-advisor

BIMB Investment launched a robo-intelligence investing platform focused on sustainable and Shariah-ESG assets. BEST Invest will give investors access to a suite of BIMB Investment’s Shariah-ESG unit trust funds across asset classes including global equities, Asia Pacific equities, sukuk, and money market. BIMB Investment became an official signatory of the United Nations-supported Principles for Responsible Investment (UNPRI) in July last year. At the time, the company’s CEO said it had integrated more than 250 ESG metrics in its investment process since 2015. The new robo-advisor will allow users to either start investing for themselves or enable the system to identify and select the best investment methods. Investments start at 10 ringgit with a zero sales charge.

Islamic finance to expand in 2020 as demand for Shariah-compliant products grows

According to Moody’s Investors Service, Islamic finance is poised to expand in 2020 and beyond, helped by growing use of Shariah-compliant products in the GCC region and Malaysia. Moody's vice president Nitish Bhojnagarwala expects sukuk issuance to remain stable at around $180 billion (Dh661bn) this year, and the takaful insurance market will see steady growth as insurance premiums pick up in newly-penetrated markets. However, downside risks are rising because of the coronavirus outbreak. Mergers between Islamic and conventional banks in the GCC will drive one-off increases in assets, as they did in 2019. Saudi Arabia will remain the world's largest Islamic banking market, while the sector will continue to expand rapidly in Malaysia.

BOFIA Act Should Be Reviewed To Enhance Islamic Banking In #Nigeria - Abdul -Wahab Saadudeen

According to Imam Abdul-Wahab Saadudeen, the Banking and Other Financial Institutions Act (BOFIA) should be reviewed to enhance Nigeria's Islamic banking industry. He believes the regulatory bodies must take into cognizance the principles of Islamic Finance to create an enabling environment for its growth in Nigeria. The Islamic scholar noted that over the years, the Islamic Banking legal framework has not been reviewed to reflect the developments taking place now. He made a strong call for a competent Sharia Advisory Board to ensure that Islamic Banks and Financial Institutions are not exposed to avoidable systemic risks. He also called for more clarity in Islamic Banking because it seeks to boost financial inclusion, achieve sustainable development and economic prosperity for all Nigerians.

New Islamic endowment trust seeks to be UK’s first waqf to combine commercial and social investments

A new charitable foundation is being set up in the UK that aims to become a £1 billion waqf fund combining commercial and social investments. Sultan Choudhury, Executive Chairperson of the new One Endowment Trust (OET) said that the vision of the trust is to present Islam in a positive way through contribution to UK civil society. OET’s first investment is a £1.75 million 21 residential apartments with planning for four more in Creative Lofts in the Yorshire town of Huddersfield. The returns generated from OET’s portfolio of assets will cover the Trust’s costs and also be reinvested in designated social projects with partners. OET expects to begin investing in social projects particularly in the area of social care in 2022.

#Nigeria: Islamic Finance - Opportunities, Challenges and Policy Direction

Despite its growing acceptability around the world, there are untapped opportunities that can be accessed through Islamic finance in Nigeria. When the Central Bank of Nigeria (CBN) granted approval to the defunct Habib Bank to operate an Islamic banking service window, the attempt did not register a significant success but it kickstarted Islamic banking in the country. The Securities and Exchange Commission has issued Rules on Islamic Fund Management and Sukuk Issuance. Similarly, the Nigerian Stock Exchange and Lotus Capital have developed an Islamic capital market Index. The National Pension Commission had in 2019 issued Regulation on Investment of Pension Fund Assets which recognised Government Sukuk as one of the accepted classes of assets for pension funds investment. In all, the Nigeria Islamic Finance Industry is fairly backed by regulations, sound supervisory structure and fragmented legal framework.

"Sharia fintech": Startups race to tap #Indonesia growth by aligning with Islam

Winning over conservative Muslims is both a challenge and multi-billion dollar opportunity for fintech firms in Indonesia. Questions about compliance with Islamic law are a significant hurdle for the adoption of digital payments and other fintech services. Indonesia's top Muslim clerical body has issued an edict deeming virtual money acceptable, as long it met specific conditions. To showcase the compliance of their services with Islam, fintech firms are organising forums with Islamic scholars and sponsoring religious festivals. GoPay has partnered with the Indonesian Mosque Council to enable digital donations, including zakat, or compulsory alms giving, in its 800,000 mosques. Some of the startups say they are finding their appeal extends beyond Muslims. One of them is peer-to-peer lender Alami, which has disbursed over $7.5 million in sharia-compliant financing to small and medium enterprises since May.

Saudi's Fawaz Abudulaziz Alhokair secures $800mln Islamic finance

Saudi-listed retail group Fawaz Abdulaziz Alhokair Company has signed a Murabaha facility and a revolving credit facility agreement with a syndicate of Saudi banks. The $800 million debt facility is composed of two tranches, including a $650 million Murabaha to be fully utilized in refinancing existing debt, and a $150 million revolving standby credit facility to finance the business’ operational and expansion needs. The Murabaha matures in 7 years, while the revolving credit facility’s tenure is 3 years. The banks participating in the loan agreement are: Al Rajhi Banking and Investment Corporation, the National Commercial Bank, Samba Financial Group, Arab National Bank, Mashreqbank, Abu Dhabi Islamic Bank.

StanChart betting big on Shariah-based banking

Standard Chartered is bullish about the fortunes of its Islamic banking business in Bangladesh, Saadiq. The global lender introduced Islamic banking in Bangladesh 15 years ago and has been a trendsetter since. It was the first to introduce Islamic credit card in Bangladesh in 2007 and arrange Sukuk transaction in 2019. The bank has introduced a product, Saadiq Hajj Savers, to provide its customers a one-stop solution for Hajj and Umrah. This account will enable customers to deposit a fixed amount every month and earn profit on their monthly average balance at an attractive rate. Saadiq has another savings product in the works: the Saadiq Graduate account targeting fresh university leavers.

ShariaPortfolio rolls out portfolio management services in #Canada

ShariaPortfolio has introduced portfolio management services in Canada. The firm recently launched offices in Vancouver as well as Toronto. Plans are on to expand the employee strength of ShariaPortfolio Canada in additional provinces eventually. ShariaPortfolio imbibes halal ethical standards in its investment selection, taking a long-term perspective to wealth management. The firm has been operating in the US since 2003. It oversees $115m in assets for clients across 26 states. Besides, it delivers institutional level services to support collaborations with traditional financial services providers looking to incorporate Islamic portfolio management.

Indonesian Islamic P2P lender Ammana Fintek Syariah eyes international expansion starting with #Malaysia

Indonesian Islamic peer-to-peer lender Ammana Fintek Syariah is keen on entering international markets and is starting its expansion with neighbouring Malaysia. Ammana is also eyeing Brunei and Dubai as part of its international expansion. The Shariah-compliant fintech is in the process of applying to become a member of the international Islamic finance standards body the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Ammana Fintek Syariah was established in July 2017 and disbursed 17.6 billion rupiah ($1.29 million) in financing in 2019.

BSP to jumpstart Islamic banking in PH

The central bank of the Phillipines has issued regulations to kickstart the implementation of Islamic banking in the country. Special emphasis is on bringing banking services to the underserved areas of Muslim Mindanao.
The Bangko Sentral ng Pilipinas (BSP) adopted the regulations with supplementary requirements relevant to Islamic banking operations and Shari’ah compliance. The law was signed into law on August 22, 2019 and became effective on September 15, 2019. It provides the BSP with the legal authority to issue a broader set of rules and regulations on Islamic banking.

Turkish Islamic banking set for fast growth after slow start

According to Moody's Investors Service, Turkey's Islamic banking assets are set to double within 10 years from a low level as government initiatives drive growth in the sector. Turkey's Islamic finance sector currently is smaller than other large Muslim countries. The main reason is the relatively small number of Islamic banks and their limited distribution networks within Turkey. Islamic banks are called participation banks in Turkey and are regulated by the Banking Regulation and Supervision Agency (BRSA). They are required by law to become a member of the Participation Banks Association of Turkey (PBAT). Between 2014 and 2015 the Turkish government established two new state-owned participation banks and a new one in 2019. Turkey's ambition is to establish Istanbul as a global financial center. It aims to raise the share of financial services in Turkish GDP to 6% by 2023 from 3% at the end of 2018.

#Turkey's Islamic banking assets expected to double in 10 years - Moody's

According to Moody's Investors Service, Turkey's Islamic banking assets are expected to double in the following 10 years as a result of government initiatives and new regulation that push the sector's expansion. With just over 5.8% of banking assets at the end of September, Turkey's Islamic finance sector is currently smaller than other large Muslim countries. Evolving regulation and supervision, as well as plans to equalise tax treatment for equivalent financial activities of commercial and Islamic finance institutions are expected to boost the sector. Turkey established three new state-owned Islamic banks from 2015 to 2019. Furthermore, the state-funded $2.6 billion (2.36 billion euro) International Financial Centre in Istanbul (IIFC) is scheduled to open in 2023.

Lack of awareness behind low demand for Sharia-compliant mortgages

Specialist Sharia Islamic mortgages are available with certain lenders but take-up is currently low. According to Lilla Dilliway, mortgage and protection adviser at BlueWing Financials, the low demand is because applicable borrowers are unaware that a Sharia-compliant mortgage is a possibility, especially in the UK. When compared, a Sharia mortgage’s part rent, part capital repayment aspect means that borrowers may find it difficult to meet the affordability criteria and/or have eligibility issues based on their credit history. Sharia-compliant mortgages are often also more expensive due to the higher administration costs of the lender. Dilliway suggests that if Sharia-compliant mortgages were advertised and promoted in the same way as mainstream mortgages, an increase in take-up might be seen.

Interest-Free Banking in #Sweden: How much is it Islamic? – Dr. Akmal S. Hyder

This study goes into the depth of a European bank which entirely practices interest-free banking for its saving and lending operations. The study shows that there are some similarities between JAK and Islamic banks but differences are many. One difference lies in the service offerings as JAK only deal with savings and lending and does not get involved in profit-loss sharing which is central to Islamic banking. Islamic banks can learn from JAK how to educate their customers so that business gets clear to them. By comparing with Islamic banking, the European bank management can have the idea how far they do Islamic banking and what is unique with their bank. The European bank management has to deal with new challenges how much they can grow of being a non-profit organization in the long run.

AAOIFI partners with Turkish Islamic banks to promote Islamic finance

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has signed an MOU with the Participation Banks Association of Turkey (TKBB) to collaborate in the promotion of Islamic finance in Turkey. AAOIFI and TKBB agreed to work in areas of common interest, such as the meaningful exchange of information and conducting joint capacity-building programmes. Osman Akyüz, the Secretary General of TKBB, said that they would also focus on increased representation of Turkish experts in AAOIFI’s boards and committees. AAOIFI Secretary-General Omar Mustafa Ansari emphasized the role of TKBB for the growth of Islamic finance in Turkey and assured the full support of their initiatives and activities.

S&P projects $170bn #sukuk issuance in 2020; #Qatar key player in 2019

According to S&P Global Ratings, global sukuk issuance increased by 25.6% in 2019 compared with 2018. Foreign currency issuance also increased by almost 20.8% during the year, explained primarily by activity in Turkey, and also issuance by Qatari banks and Malaysian corporates. S&P anticipates a total sukuk issuance of $160bn-$170bn this year, including $40bn-$45bn of foreign currency issuance. This represents about 5% growth on the $162bn seen in 2019. S&P believes that the green sukuk market will continue to expand, aided by opportunities related to energy mix diversification in the GCC/Malaysia and investor diversification.

Source: 

https://thepeninsulaqatar.com/article/13/01/2020/S-P-projects-$170bn-sukuk-issuance-in-2020-Qatar-key-player-in-2019

Foreign banks invited to open Islamic branches in the #Philippines

With the approval of a new Islamic banking law in the Philippines doors are now open for domestic and foreign banks to open an Islamic banking window or to establish a subsidiary Islamic bank in the country. The law states that it is the responsibility of an Islamic bank, or window, to ensure its compliance with Shariah principles. Like in other Muslim nations without a central regulatory Shariah board, Islamic banks in the Philippines will have to constitute their own Shariah advisory council. Under the law, Islamic banks in the Philippines can offer current accounts, savings accounts, investment accounts and foreign currency deposits, among other financial products. They can also issue Shariah-compliant funding instruments, including sukuk, upon approval by the central bank’s monetary board.

#Philippines central bank approves preliminary Islamic banking regulations

Bangko Sentral Ng Pilipinas has approved preliminary regulations for Islamic banks and Islamic banking units. The preliminary policy initiatives of the central bank came after the Islamic banking law was signed by President Duterte on August 22 and became effective on September 15. The preliminary regulations are to jumpstart the implementation of the law. Banks must establish their own Shariah advisory boards to ensure Shariah compliance for their institutions. The Philippines has been accelerating the growth of its Islamic economy sectors in the last couple of years to attract foreign investments and to provide its approximately 10 million domestic Muslim population with an Islamic banking option.

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