Pakistan

Hafeez for potential of Islamic finance to help developing states

Pakistan's Adviser on Finance and Revenue, Dr Abdul Hafeez Shaikh said the Covid-19 has engulfed the whole world, and the global GDP is going to contract by 3-4%. Hafeez said Islamic banking was growing at a fast pace in Pakistan and he emphasized the potential of Islamic finance to help developing countries cope with the global financial challenges. The adviser said the government established a corona relief fund and transferred cash to 16 million vulnerable families to provide them support in this difficult time.

Meezan bank completes issuance of Rs200 billion energy #sukuk

Meezan Bank concluded the issuance of Pakistan Energy Sukuk (PES) II worth approximately Rs 200 billion by state-owned Power Holding Limited (PHL). The Sukuk aims to help the Government in addressing the challenges for resolving circular debt in the country’s power sector. This is the second issuance of this series of sukuk, bringing the total size of the sukuk to approximately Rs400 billion. The sukuk issue was 1.7 times oversubscribed. The transaction is structured for ten years, with six monthly profit (rental) payments at a rate equivalent to 6 Month KIBOR -10 bps, as determined through the book building process.

Meezan Bank set to benefit from the government’s expansion of Islamic debt issuance

As Pakistan gears up to borrow as much as Rs750 billion in Islamic bonds from the country’s financial system, one bank is set to benefit more than all others: Meezan Bank. The forecast for the net interest margin for Meezan Bank is 5.43% in 2020 and 4.72% in 2021. The key cause of the bank’s growth is its rapid expansion of its branch network, coupled with the fact that its brand name and credibility in Islamic finance mean that the bank rarely ever struggles to attract deposits. Over the past two years, Meezan Bank has added 159 branches, which represents a 21% increase over that period.

Rules amended to facilitate Sukuk-II issuance

Pakistan's Power Division has amended the Energy Sukuk Rules aimed at facilitating issuance of Rs 200 Sukuk-II through Pakistan Stock Exchange (PSE). On May 6, 2020, the government approved a new mechanism/criterion for disbursement of payments to the power generators. The Power Division has to disburse Rs 300 billion (Rs 200 billion + Rs 100 billion) through CPPA-G to Power sector entities including the power generators in private and public sector for system operation during the summer season.

PSE delays Rs200bn #sukuk

The Pakistan Energy Sukuk-II (PES-II) has been delayed by 7-10 days. The Power Holding Limited (PHL) is issuing the second issue of the Energy Sukuk to address the liquidity constraints being faced by the country’s power sector. Sources said the delay occurred as the government had to notify certain rules and regulations which could be completed in a couple of days.

Islamic Development Bank to help #Pakistan fight coronavirus

The Islamic Development Bank (IsDB) Thursday offered financial support to Pakistan amid the lockdown due to coronavirus pandemic. In a video call, IsDB President Dr Bandar MH Hajjar assured Federal Minister for Economic Affairs Makhdoom Khusro Bakhtiar of the bank’s support for Pakistan. Hajjar informed that the IsDB Group has approved the $2.3 billion package for the IsDB member countries to mitigate the impact of the COVID-19 pandemic. Makhdoom Khusro Bakhtiar appreciated the special priority given to Pakistan. The minister also underlined the needs of the member countries and applauded Bank’s response.

Islamic Development Bank prepares $2.3b package for member countries

The Islamic Development Bank (IsDB) Group has approved a $2.3 billion package for its member countries to mitigate and recover from the impact of the Covid-19 pandemic. IsDB President Dr Bandar M H Hajjar said that this will be achieved through a holistic approach aimed to accommodate priorities beyond the immediate and emergency response. Dr Hajjar assured the bank’s full support for the people and the government of Pakistan to mitigate the negative impacts of Covid-19. Pakistan's Minister for Economic Affairs Makhdoom Khusro Bakhtiar informed that International Islamic Trade Finance Corporation (ITFC) has been directed to immediately finalise $500 million for import of oil and an amount of $150 million has been allocated to alleviate the pandemic impact.

First Rs200bn #sukuk issue launched via stock market

Pakistan's state-owned Power Holding announced the 10-year Sharia-compliant sukuk up to Rs200 billion through the Pakistan Stock Exchange. The amount generated from the Pakistan Energy Sukuk-II will also be used for the settlement of partial circular debt related to the power sector. For the first time, ordinary investors have been allowed to participate in buying a government security. The value of each sukuk unit is placed at Rs5,000. The minimum bid size would be 20 units or Rs100,000. In another development, the SECP has relaxed the time for maturity requirement of government Ijara Sukuk for Sharia-complaint money market sub funds of Pension Fund. The SECP has allowed the Sharia-compliant pension funds to invest in government sukuk from three to five years.

Govt to raise Rs225bln through Ijara #Sukuk auction in three months

The State Bank of Pakistan (SBP) has issued the auction calendar for issuance of Rs225 billion sovereign Sukuk based on Ijarah. Pre-auction target is set at Rs75 billion for April, while similar amounts are set for May and June 2020. The latest issuance is the part of Rs700 billion worth Ijara Sukuk. The federal cabinet approved the launching of this bond early this month. The bond would help mobilise excessive funds available with Islamic banks and help the government to diversify its debt. Last week, the World Bank said the economic output was expected to contract sharply in Q4FY20, bringing overall FY20 growth to negative 1.3%.

#Sukuk auction announced to finance budget deficit

The State Bank of Pakistan (SBP) announced the auction for three-year Ijara Sukuk to raise some Rs 225 billion for the federal government. Recently, the federal cabinet approved the issuance of a five-year Ijara Sukuk to generate some Rs700 billion to meet the rising financial requirements for combating COVID-19. Three tenders will be conducted for the sale of the Rs 225 billion sukuk. The first auction will be held on April 16, 2020 for Rs 75 billion, the second on May 16 for Rs 75 billion and the third is scheduled for June 18, 2020 for Rs 75 billion. Pakistan has been issuing Sukuk since 2008 to provide liquidity to the domestic Islamic industry; however, demand for such instruments far surpasses their supply.

Jack Ma Foundation, Alibaba Foundation donation arrives

The first batch of the much-needed medical supplies donated by the Jack Ma Foundation and the Alibaba Foundation has arrived in Pakistan. The shipment is part of the donation of medical supplies to 10 Asian countries announced on March 21. Collectively, the nations will receive a total of 1.8 million masks; kits for testing 210,000 people, 36,000 pieces of protective clothing, as well as essential medical equipment such as ventilators and forehead thermometers. Pakistan's Disaster Management Authority will transport and distribute the supplies throughout the country. The remainder of the donation is expected to reach Pakistan soon.

Meezan Bank Shariah Board endorsed guidelines for digital mobile account

Meezan Bank's Shariah Board endorsed new guidelines related to digital accounts, supply chain financing and a housing finance facility. The Shariah Supervisory Board showed its overall satisfaction on the Shariah-compliance environment and operations of the Bank. Guidelines for the digital Meezan Asaan Mobile Account based on Mudarabah were approved during the board meeting. From now on a customer can open his digital mobile account at Meezan Bank without the hassle of visiting any physical branch. The customer will be entitled to receive halal profit based on actual returns of Shariah-compliant financings on monthly basis. Furthermore, the customer can use this account to deposit and withdraw funds digitally or from any Meezan Bank branch all over Pakistan.

Experts say the odds are against gold dinar

Prime Minister Dr Mahathir Mohamad brought an idea of a gold dinar as an international reserve currency for Muslim countries in preference to the US dollar as the dollar was sometimes unstable. Nazari Ismail, a professor of economics at Universiti Malaya thinks, that the idea is not reliable, as countries as Saudi Arabia, Qatar, Pakistan and Indonesia would be not interested in the prime ministers proposal.

#Pakistan, the Lives and Livelihoods Fund Partners and Islamic Development Bank re-affirm commitment to support the polio programme

A high-level delegation of the Islamic Development Bank (IsDB) and Lives and Livelihoods Fund (LLF) re-affirmed their commitment to support Pakistan in their fight against polio. The LLF has prioritized the eradication of polio and contributed over US$ 100 million to the Pakistan Polio Eradication Programme. During the visit, the LLF and IsDB team visited the outskirts of Islamabad Capital Territory and participated in the nationwide vaccination campaign which started on December 16, 2019. During this campaign 39.5 million children under the age of five were vaccinated. The LLF is the largest development initiative of its kind and donor partners include the Abu Dhabi Fund for Development, the Bill and Melinda Gates Foundation, the Islamic Solidarity Fund for Development, the King Salman Humanitarian Aid and Relief Center and Qatar Fund for Development.

IBD assistance sought to improve trade in Muslim economies

Pakistan sought financial and technical assistance from Islamic Development Bank (IDB) to establish an export-import bank to improve trade among Muslim economies. International Islamic Trade Finance Corporation (ITFC) is an autonomous body under the Islamic Development Bank that aims to promote trade to improve the economic condition of the people of Muslim countries. Minister for Economic Affairs Hammad Azhar said ITFC has provided financing facility to Pakistan to cover its oil and liquefied natural gas imports over a period of three years. Furthermore, he asked ITFC to develop training tools in Islamic banking as Islamic banking is very popular in the country.

Islamic financing-a misperceived concept

Nearly 17 years after its entry into Pakistan’s financial space, Islamic financing has grown considerably. Its acceptance has cleared up the initial mist, scepticism and suspicion associated with the concept. The effort to introduce Islamic banking started in early 2002 with the granting of licence to the Meezan Bank. The growth has resulted in five full-fledged Islamic banks namely Meezan Bank, Al-Baraka Bank Pakistan Limited, Dubai Islamic Bank, Bank Islami Pakistan and MCB Islamic Bank. Many conventional banks are also operating Islamic banking branches. However, there is still a low level of awareness about opportunity and economic benefits. Pakistan's present government has decided to initiate a comprehensive plan for the promotion of Islamic banking in the country.

Government to seek nod from IMF to issue Rs 200 billion #sukuk

Pakistan's government seeks the International Monetary Fund's (IMF's) nod for issuance of fresh Sukuks worth Rs 200 billion. IMF's Review Mission is expected to reach Islamabad on November 28, 2019 to evaluate implementation on targets agreed by the Government of Pakistan for $ 6 billion facility. Minister for Power and Petroleum, Omar Ayub Khan last month stated that expensive power sector loans are being replaced with Sukuk which will lessen the financial impact on the economy. Pakistan's circular debt is about Rs 1.6 trillion and the new sukuk is meant to reduce the stock of this historic circular debt. The issue of sovereign guarantee for fresh Sukuks of Rs 200 billion has been raised with the State Bank of Pakistan. Meezan Bank, Faysal Bank, Bank Islami Pakistan, Dubai Islamic Bank Pakistan, MCD Islamic Bank and Al Baraka Bank Pakistan are the mandated lead arrangers.

PTI govt decides to promote Islamic banking in #Pakistan

The federal government of Pakistan has decided to initiate a comprehensive plan for the promotion of Islamic banking in the country. The National Assembly Standing Committee on Finance chaired by Asad Umar announced that the State Bank of Pakistan was in the process of formulating a seven-year plan and a comprehensive framework in this regard will be introduced within two months. The SBP officials gave a briefing to the committee about the Eradication of Riba Act, 2019. The chairman advised the standing committee on finance to expedite the work on the bill and constituted a sub-committee, headed by MNA Raza Nasrullah.

Steady uptrend for Islamic finance in Pakistan: SBP

The Islamic banking and finance sector in Pakistan continues to be on an upward trajectory, with assets, deposits and the number of branches of Islamic banks all showing solid growth. According to the latest Islamic Banking Bulletin issued by the State Bank of Pakistan on September 13, assets of Pakistan’s Islamic banking industry stood at Rs2,992bn ($19.8bn) by June-end, 2019, a growth of 20.6% as compared to June-end, 2018.

State Bank issues updated Islamic financing facility

The State Bank of #Pakistan issued an updated Islamic financing facility for the renewable energy projects. The financing under Islamic Financing Facility for Renewable Energy (IFRE) is now available to the customers under three categories. Under the first category, the prospective sponsors are setting up power projects with a capacity ranging from more than 1MW and up to 50MW for their own use, or sell electricity to the national grid or combination of both. The State Bank of Pakistan will make Mudarabah investment in general pool of Participating Islamic Financial Institutions (PIFIs) under IFRE. IFRE shall be effective immediately and financing shall be available for projects up-to June 30, 2022.

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