Pakistan

Islamic Bank May Support Green Sukuk for Renewables Projects

The Islamic Development Bank indicated that it may issue green sukuk bonds compliant with religious law and increase lending for climate-related projects with an announcement at the United Nations global warming conference in Paris at the end of the year.
“Estimates for the 2030 agenda indicate that we need to move from billions to trillions of dollars of support annually for sustainable development,” Savas Alpay, chief economist of the IDB, said in a phone interview. “Traditional sources of development finance will not be enough. We must also look at non-traditional sources. We will be using Islamic finance to bring new resources to the table.”
Khazanah Nasional Bhd, Malaysia’s state-owned sovereign wealth fund, issued green sukuk last November after introducing guidelines for socially responsible debt in August 2014. It was the second entity after the London-based International Financial Facility for Immunization announce plans to sell ethical-based sukuk.
Green Sukuk

Cobalt targets Sharia-compliant demand

The Islamic countries of South-East Asia represent a rich potential area of growth for insurers, especially those able to offer Sharia-compliant products, Richard Bishop, chief executive officer of Cobalt Underwriting, told SIRC Today. Bishop said that counties such as Indonesia, Malaysia and Pakistan offered a plentiful source of potential business for insurers, especially those familiar with and able to offer Sharia-compliant insurance.
Cobalt Insurance Holdings and its two specialist operations, Cobalt Underwriting Services and Cobalt Advisory Services, were formed in 2012 with the objective of establishing London as a leading global centre for Sharia-compliant insurance capacity.
“When we started we principally focused our efforts on the Middle East as a market,” Bishop said. “We do business in the UK, or inward investment into the UK via Islamic investors, but we wanted to make our product available in the Islamic markets, and the closest Islamic market to the UK is the Middle East. It’s worked quite well for us as a starter market.”

BMA Funds signs trust deed for Islamic income scheme

BMA Asset Management Company Limited (BMA Funds), a non banking finance company, formally signed the trust deed for its forthcoming Islamic income scheme, BMA Minhaj Islamic Income Fund at CDC Pakistan. The event brought together the representatives from CDC, trustee of the BMA Minhaj Islamic Income fund, and the senior management of BMA Asset Management Company Limited.

Following the same trend of leadership, BMA Minhaj Islamic Income Fund will offer a unique one of its kind scheme for investors who wish to benefit from the equity market and at the same time seek capital appreciation that adheres to shariah principles. It primarily aims to generate superior risk adjusted returns to earn a stable halal income over medium to long term by investing in fixed income instruments present in Pakistan debt market.

Investment scandal: Two more accused in Modaraba scam held

The country’s top anti-graft body arrested two more accused of cheating public and depriving them of their hard-earned money in the multi-billion rupee Modaraba scam. The National Accountability Bureau (NAB) Rawalpindi circle on Saturday arrested Mufti Muhammad Idrees and Abdul Malik Bajouri, directors of Fayazi Gujranwala Industries. The accused deprived various gullible individuals of Rs8.2 billion by wooing them into investing in the scheme for attractive profits. The NAB has so far arrested 34 accused, including Mufti Muhammad Ehsanul Haq, CEO of the Fayazi Gujranwala Industries and recovered Rs1.73 billion from them.

Pakistan: Is Mobile Money a Viable Alternative to Banking?

The 2014 Financial Inclusion Insights (FII) survey estimates that 93% of Pakistani adults are financially excluded as only 7% of the respondents reported to having a bank account, while registered accounts with other financial institutions were negligibly low. A more promising statistic is that of mobile phone ownership, as the FII survey finds that 54% of Pakistani adults own a mobile phone. This high proliferation of mobile phones is considered by many to be an opportunity for the financially excluded to attain financial inclusion through Mobile banking. However, various products such as loans, insurance, and interest on savings are not offered by mobile money companies yet.

Pakistan funds idled by sukuk shortage complain of exodus of investor

Shariah-compliant funds in Pakistan say the government’s plan to end a year-long hiatus in local sukuk sales is too little, too late to plug a shortage of assets that has put off their investors. The finance ministry will sell rupee-denominated sukuk once 233.8bn rupees ($2.2bn) of notes mature on November 21. That would be the first offering since it raised 49.5bn rupees in June last year. While Pakistan issued global bonds twice in the past 12 months, it has neglected local investors. A sovereign credit-rating upgrade in June, record foreign-exchange reserves and a narrowing current-account deficit make it an opportune moment to return to the Islamic debt market, after its conventional dollar bond sale in September drew bids for twice the $500mn offered.

IMF praises SBP for financial sector’s stability

The International Monetary Fund (IMF) has welcomed the progress made by the State Bank of Pakistan (SBP) with respect to the capitalisation of the banking sector. In the eighth review of Pakistan’s economic performance under a 36-month loan programme of about $6.6 billion, the IMF said the SBP should continue its efforts to bring a number of small banks into compliance with statutory requirements. After the recapitalisation through a rights issue in the only capital adequacy ratio (CAR)-non-compliant bank in July, it noted with satisfaction that all Pakistani banks have now become CAR-compliant. However, five small banks are still operating below the Rs10 billion minimum paid-up capital requirement (MCR).

PQGTL and NBFI sign MoU to promote Islamic finance system

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Mian Muhammad Adrees appreciated the joint collaboration between Pak-Qatar General Takaful Limited (PQGTL) and non-bank financial institutions (NBFI) & Modaraba Association of Pakistan (MAP) while speaking at the memorandum of understanding (MoU) signing ceremony. He said that it is a milestone of collaboration for promotion of the Islamic financial system. The ceremony was jointly arranged by NBFI&MAP and PQGTL for providing takaful coverage to the members of the association on the basis of Islamic modes.

Govt mulls buying Ijara Sukuk on deferred payment

The government is mulling to purchase near maturing Ijara Sukuk worth Rs233.81 billion from the Islamic banks on one year deferred payment term to squeeze surplus liquidity. It is expected to buy Rs233.81 billion Shariah-compliant paper, maturing on 21 November, as no investment option is available for Islamic banks to park their surplus funds of around Rs80-90 billion. The government will buy Ijara Sukuk having issues of GIS9, GIS10, GIS11, GIS12, and GIS13 using Islamic financial concept of Bai-muajjal via open market operation for one year. The Islamic banking institutions are flush with excess cash in the absence of no fresh Sukuk in the market.

Afridi for Islamic financial laws in businesses

Pak-China Joint Chamber of Commerce and Industry (PCJCCI) has called for making the businesses and commercial activities in accordance with Islamic financial laws. The PCJCCI President Shah Faisal Afridi said all stakeholders should understand the limitations at this stage and work towards its advancement to develop an economic system truly reflective of the sacred principles of Islam. According to Global Islamic Finance Report, Pakistan ranked at number nine in the world in terms of development of Islamic financial services industry in the country, and second largest Islamic market (population-wise) after Indonesia, and could become the most important player in Islamic banking and finance, if it attained 20 percent market share.

MCB sets up Islamic banking subsidiary

The State Bank of Pakistan (SBP) has issued ‘Certificate of commencement of banking business’ to MCB Islamic Bank Limited, a wholly-owned subsidiary of MCB Bank. As of June 30, Islamic banking business of MCB was operating with a network of 34 branches having an asset base of Rs21.015 billion. The MCB’s Islamic banking business posted a net profit of Rs408.228 million for the half-year ended June 30, 2015. To augment the existing growth momentum, SBP has prepared the “Strategic Plan for the Islamic Banking Industry of Pakistan 2014–2018”. The plan focuses on initiatives necessary to raise awareness and knowledge about Islamic banking.

Interpreting the Financial Inclusion Numbers in Pakistan

Financial inclusion in Pakistan has improved slowly but steadily since 2008 according to most sources. This observation is based upon one topline indicator - percentage of the adult population that is financially included - which is calculated by three different institutions in Pakistan. Depending on what data set you look at, the topline financial inclusion figure for Pakistan in 2014-2015 can be 7% (Financial Inclusion Insights 2014), 13% (Global Findex 2014) or 23% (Access to Finance 2015). Different definitions cause the topline number to vary. The inclusion indexes however do not answer why some remain outside the formal financial sector.

Pakistan’s Islamic insurance industry landscape set for makeover

Thanks to a regulatory action last year, the landscape of the country’s Islamic insurance industry is set to change forever with the entry of conventional insurance giants in the Takaful market. Jubilee Life Insurance and EFU Life Assurance, which control over Rs115 billion in total assets between them, have just launched Takaful products. The first set of rules governing the Islamic insurance industry did not allow conventional insurance companies to enter the Takaful market unless they set up stand-alone subsidiaries with separate paid-up share capital. However, the Securities and Exchange Commission of Pakistan (SECP) replaced Takaful Rules 2005 with Takaful Rules 2012 three years ago, which allowed conventional insurance companies to set up Islamic ‘windows’.

Primary education: IDB to construct 300 schools in AJK

The Islamic Development Bank (IDB) will construct 300 schools across Azad Jammu and Kashmir (AJK) to promote primary education in far-flung areas. IDB Programmed Head Shafat Hussain told a meeting of the AJK Planning and Development Department here on Sunday that besides constructing schools in remote areas, teachers of these institutes will also be provided special training. Hussain told the meeting that the project aimed to provide better education facilities to deserving children in far-flung and distant areas. AJK Director Education Syeda Geelani, Director Research Najeebur Rehman and other officials attended the meeting.

JSCL to increase its stake in BankIslami

Jahangir Siddiqui and Company is going to increase its stake in BankIslami Pakistan by at least 7.4% in coming weeks. According to a note sent out to members of the Karachi Stock Exchange (KSE) on Tuesday, the board of Jahangir Siddiqui and Company has decided to make a long-term equity investment of Rs749.3 million in BankIslami by purchasing 74.9 million shares from Dubai Bank PJSC at Rs10 per share. The shareholding of Jahangir Siddiqui and Company in BankIslami was 21.2% as on June 30. The total stake of the financial conglomerate in the Islamic lender will stand at 28.7% in case the company’s shareholders approve the equity investment decision taken by the board.

ICCI calls on Islamic banks to focus on SMEs development

The Islamabad Chamber of Commerce and Industry in collaboration with FPCCI Standing Committee on Islamic Banking and Takaful organised a seminar on Islamic banking. Speaking at the occasion, Islamabad Chamber of Commerce and Industry President Muzzamil Hussain Sabri said that there should be full-fledged Islamic banks on micro finance to support SMEs as currently no Islamic bank was focusing on SMEs with better products. He stressed that the branches of Islamic banks should be enhanced in the country to provide more consumer outreach as the insufficient branch network and lack of awareness in general masses were the major hurdle in the growth of Islamic banking.

KPCCI to constitute Islamic banking body

Khyber Pakhtunkhwa Chamber of Commerce and Industry (KPCCI) have announced to constitute an Islamic banking standing committee. The announcement was made by KPCCI president, Faud Ishaq while speaking at a seminar on 'Islamic banking and Takaful'. Faud Ishaq said the proposed committee will play vital role for provision interest-free banking facilities to business community as per Islamic code and sharia. He urged the Central bank to take measures for promotion of Islamic banking in Khyber Pakhtunkhwa. KPCCI chief expressed satisfaction over 30 to 40 per cent growth in Islamic Banking by State Bank of Pakistan during last six years across the country.

Al-Karam Group-led consortium bids for 14 percent BankIslami stakes

A local consortium led by Al-Karam Group has offered to buy the 144.20 million shares of BankIslami Pakistan Limited (BIPL), which the bank's majority shareholder, Dubai Bank PJSC, tends to sell. The potential acquirer of BIPL's shares came in the limelight after Wednesday's stock filing of Jahangir Siddiqui and Company Limited (JSCL) in which the company disclosed that Dubai Bank PJSC had offered it, along with another shareholder of BankIslami, the saleable 14.3 percent stakes of BIPL. The Dubai Bank was bound, under the Founding Shareholders' Agreement it had signed with JICL and other stakeholders, to first ask, through issuing first refusal, the existing stakeholders if they wanted to increase their shareholdings in the bank.

SBP to set up centers of excellence in Islamic finance at 3 institutions

The State Bank of Pakistan (SBP) held a signing ceremony for Financial Innovation Challenge Fund (FICF) on promoting excellence in Islamic finance in Pakistan under its financial inclusion programme funded by the UK’s Department for International Development (DFID). The signing ceremony marks the beginning of the implementation phase of the FICF innovative Islamic finance education and research projects in partnership with higher education institutions which was earlier launched by Finance Minister Ishaq Dar on January 9, 2015. At the ceremony, three projects were signed with Institute of Business Administration (IBA), Lahore University of Management Sciences (LUMS) and Institute of Management Sciences (IM Sciences).

Dubai Bank to divest holding in BankIslami

Dubai Bank PJSC wants to sell its shareholding in BankIslami Pakistan, a stock filing said on Wednesday. Another shareholder, Jahangir Siddiqui and Company, reported that it has received a letter from the UAE-based bank, saying it wants to sell 144.2 million shares in BankIslami Pakistan. The stake that Dubai Bank PJSC wants to sell constitutes 14.3% of the total issued shares of BankIslami Pakistan. Dubai Bank is offering its stake to Jahangir Siddiqui and Company and another (unnamed) shareholder of BankIslami Pakistan under its shareholders’ agreement that mandates a right of first refusal on a proportionate basis.

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