Central Asia

#Iran's Sovereign #Fund Eying International Markets

The National Development Fund of Iran (NDFI) plans to make investments in international money and financial markets. According to the fund's director, Ahmad Doust-Hosseini, the fund is also ready to support foreign investors as well as Iranian exporters by extending loans. Doust-Hosseini said from the next Iranian year (March 21, 2017), 30% of revenues from the sale of oil, gas and their related products will be deposited with the NDFI. He added that the fund belongs to the private sector and non-government enterprises, so state-owned entities will not receive any loans. Ali Salehabadi, CEO of the Export Development Bank of Iran (EBDI), said his bank will allocate working capital to export projects in the form of foreign exchange and rial loans in partnership with NDFI.

Blow to #Islamic #Banking in #India

Before handing over his charge to present Reserve Bank of India (RBI) Governor Urjit Patel, former Governor Raghuram Rajan had proposed working with the Government to introduce Islamic Banking. Most recently, Union Finance Ministry said that Islamic banking was not relevant any more as the Government has already introduced several programmes for all citizens towards financial inclusion. Finance Minister Santosh Kumar Gangwar said various legal changes are needed if even limited products were to be introduced under Islamic banking. It is estimated that 180 million Muslims in India are unable to access Islamic banking because of non-availability of interest free banking. RBI in its report had said it would explore to introduce interest-free banking products in consultation with the government, but before the consultation could be held, the Government of India derailed this whole process.

Unlocking Islamic finance potential in #CPEC, beyond

The Centre for Excellence in Islamic Finance (CEIF) IBA held an International Forum on 'Unlocking Islamic Finance Potential in CPEC and Beyond'. The China-Pakistan Economic Corridor (CPEC) consists of $45 billion worth of domestic infrastructure projects planned by the government of Pakistan. The Forum analyzed the effects and impact of CPEC on the Islamic Finance industry in Pakistan. In his keynote address Irfan Siddiqui, President & CEO Meezan Bank, highlighted that CPEC is not just a need of China but also of Pakistan. From the government Chief Economist Nadeem Javaid stated that there are four main components of CPEC: Energy, Infrastructure Development, Economic Incentives and Industrial Cooperation. He said that CPEC will greatly lower the per unit cost of energy, incentives such as exemption from local duties and materials, whereas suspension of trade union activities will give opportunities to investors. Therefore, designing cost-effective, Shariah compliant finance options is the need of the hour.

Middle East: #Iran’s banks struggle with expectations

Banks in Iran have made progress since the signing of the nuclear deal, yet many obstacles to doing business internationally remain. The deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), was meant to free up Iran’s economy and banking sector by lifting the sanctions imposed on the country in exchange for curbs on Iran’s nuclear programme. Under the nuclear sanctions, the US fined several big banks for dealing with sanctioned countries. For that reason, many large international banks fear being fined again if they re-engage with the country, even though they are now allowed to do so under the terms of the JCPOA. So far, only small banks have been willing to re-engage with Iran.

CPEC likely to unleash potential of Islamic finance schemes

The planned China-Pakistan Economic Corridor, or CPEC, is expected to bring the full potential of Islamic finance in infrastructure funding into action. The CPEC will see €54bn in investments up to 2030 to create or expand highways, railways, ports, airports, power plants, solar parks and wind farms, pipelines and optical fibre lines. Pakistan’s Finance Minister Ishaq Dar has repeatedly emphasised that Pakistan wanted to make Shariah-compliant financing its first choice for infrastructure and long-term financing needs. In fact, the government plans to shift between 20% and 40% of its debt financing to Islamic sources from conventional ones, which is also the case for CPEC projects. Co-financing for the corridor comes from Chinese state loans, as well as from the Asian Development Bank and the new, China-backed Asian Infrastructure Investment Bank. The CPEC is predicted to create more than 700,000 direct jobs up to 2030 and add two to 2.5 percentage points to Pakistan’s annual economic growth.

#Iran Key to Islamic Banking Outreach

For Islamic banking, the opening up of Iran is a huge development, as Iranian banks make up the world’s largest financial system based on Islamic law. A large number of sukuk and other Islamic securities from Iran are expected over the next few years. Estimations are that there are over 150 Iranian companies considering Islamic sukuk sales. Iran also requires funds for its infrastructure development programs estimated at around $1 trillion over the next decade, according to a report published by Forbes. Islamic banks in the region are building their activities in key sectors of the economy. Retail banking has traditionally been the mainstay of Islamic banking in the region. Here, investment in digital and smartphone banking will be crucial in future.

#China-#Pakistan corridor set to unleash potential of Islamic finance schemes

The planned China-Pakistan Economic Corridor, or CPEC, is expected to bring the full potential of Islamic finance in infrastructure funding into action. The CPEC will see €54bn in investments up to 2030 to create or expand highways, railways, ports, airports, power plants, solar parks and wind farms, pipelines and optical fibre lines. Pakistan’s Finance Minister Ishaq Dar has repeatedly emphasised that Pakistan wanted to make Shariah-compliant financing its first choice for infrastructure and long-term financing needs. In fact, the government plans to shift between 20% and 40% of its debt financing to Islamic sources from conventional ones, which is also the case for CPEC projects. Co-financing for the corridor comes from Chinese state loans, as well as from the Asian Development Bank and the new, China-backed Asian Infrastructure Investment Bank. The CPEC is predicted to create more than 700,000 direct jobs up to 2030 and add two to 2.5 percentage points to Pakistan’s annual economic growth.

#Iran's #Life #Insurance #Sector on #Growth #Track

Iranian insurance firms generated 21.7 trillion rials ($525.9 million at market exchange rate) from selling life policies during the eight months to November 20, marking a 37.19% growth compared with the same period of last year. Central Insurance of Iran’s database also shows that life insurance accounted for 12.15% of insurers’ total premium income during the period. The share was recorded at 10.66% during the same period of last year and 11.98% in the month ending October 21.

Insurers paid 7.4 trillion rials ($179.3 million) to 240,000 life policyholders as indemnity. The payout ratio of the category stood at 34.2% for the eight months to November 21.
According to Sanhab data, insurance firms collectively earned 179 trillion rials ($4.33 billion) from selling 34 million insurance policies in all categories during the eight-month period. A year-on-year comparison of data indicates a 20.4% growth in premium income and 9.8% increase in the total number of sold policies. The total paid claims amounted to 101 trillion rials ($2.44 billion) during the period, marking a 25.6% growth YOY.

#Debate #continues in #India about #Islamic #finance

It seemed as if the path had been cleared for the introduction of Islamic finance in India after the country’s central bank made a proposal to launch Islamic banking windows at conventional banks. With two crucial effects awaiting: Firstly, greater financial inclusion of unbanked Indians, not necessarily only around 170mn Muslims, but also those interested in ethical banking, and, secondly, an increased influx of investments from Muslim regions, namely the Gulf, into India.
However, the proposal got rebuffed in December by the Indian finance ministry which, in a surprising declaration, argued that Islamic banking was “not relevant” any more in achieving the objectives of financial inclusion as the government had already introduced other programmes for all citizens towards that end.

India’ Minister of State for Finance Santosh Kumar Gangwar also said that a number of legal changes would become necessary even if limited Islamic finance products were to be introduced, which would result in “numerous legal hurdles.”

#Innovation in #Islamic #finance

Although Malaysia is a leader in Islamic finance research, very few of the research papers published have translated into feasible innovations, until recently. To help push the sector forward and bring the research and ideas to fruition, International Centre for Education in Islamic Finance, with the support of Bank Negara Malaysia, the Association of Islamic Banking Institutions Malaysia and the Malaysian Takaful Association, recently held the Islamic Finance InnoFest 2016. For this festival, INCEIF accepted idea submissions from all over the world, including Japan, Australia and Pakistan, to promote inclusiveness.

“We believe that to really push for innovation, we cannot be stuck in a silo. That is why it is not limited to only Malaysians,” says Associate Professor Dr Baharom Abdul Hamid, director at INCEIF’s Centre of Research and Publication and InnoFest chairman.

#Sukuk #loan mix for #Felda’s #Indonesian #Eagle High stake buy

The Federal Land Development Authority is set to raise funds for its 37% stake acquisition in PT Eagle High Plantations Tbk via a mix of loans and sukuk issuance.
Sources familiar with the matter said that 50% of the acquisition figure of RM 2.26 bil would be financed through a loan with a major European banking group. The remaining funds will be raised through a sukuk issuance.
“The sukuk issuance could be announced as early as late January. The debt will be serviced by the cashflow generated by Felda Investment Corp’s (FIC) assets,” said a source. It is probable that the sukuk would come with an explicit government guarantee, given that Felda is a government-backed agency. This is because most institutional funds – which are the likeliest parties to subscribe to the sukuk – can only purchase high-rated bonds as part of their investment mandate. A guarantee would ensure that the bonds are rated at or close to the top investment grade.

#Meezan #Bank to identify #future #Islamic #finance #opportunities in CPEC

Meezan Bank, Pakistan’s first and largest Islamic bank has recently signed an MoU with Al-Sadiq Consulting Ltd, China’s first Islamic Finance consulting Company to explore opportunities for Islamic finance in China-Pakistan Economic Corridor (CPEC). The agreement focuses on the ever-increasing economic participation between Pakistan and China and the opportunities that may be derived from improved Islamic banking channels between the two countries.
The MoU was signed by Mr. Irfan Siddiqui, President & CEO – Meezan Bank and Mr. Ibrahim Ding, Managing Director and Senior Partner – Al-Sadiq Consulting at Meezan Bank’s Head Office, Karachi. A
Meezan Bank has also expressed interest in providing financial, advisory and Shariah-related services to such and similar projects and transactions in collaboration with Al-Sadiq Consultancy. Mr. Irfan Siddiqui, President & CEO – Meezan Bank welcomed the enthusiasm of the Chinese experts/delegate and said, “We are extremely confident that our new partnership with Al-Sadiq Consulting Ltd, China’s first Islamic finance consultancy company will successfully be able to drive more advantages for Islamic finance in the near future.

#MICROCAPITAL BRIEF: #IDBank #Dragon #Capital to Develop Sharia-compliant #Investment “Silk-way Growth Fund” for SMEs in #Kazakhstan

The Islamic Corporation for the Development of the Private Sector (ICD), a development finance institution of the Saudi Arabia-based Islamic Development Bank (IDB), and Dragon Capital Partners, the venture capital and private equity arm of Ukraine-based Dragon Capital Group, recently announced the intention to develop the Silk-way Growth Fund, a Sharia-compliant investment fund benefitting “high growth” small and medium-sized enterprises (SMEs) involved in manufacturing in Kazakhstan. The fund is slated to address the “financing gap created due to difficulty of accessing capital at sustainable market rates and the banking sub-sector’s lack of confidence in SME entrepreneurs.” According to ICD, SMEs make up 96 percent of all businesses in Kazakhstan and 25 percent of the country’s GDP.
ICD will act as fund advisor to Silk-way as part of its SME Platform, an initiative aimed at building Sharia-compliant investment management capacities in ICD’s 52 member countries, and it will consider investing capital in the fund as plans for the fund are finalized.

#CBB #plans to #shut #down #Future #Bank

The Central Bank of Bahrain (CBB) has announced plans to close down Future Bank, a joint venture between two Iranian lenders – Bank Saderat and Bank Melli – and Bahrain’s Ahli United Bank, said a report. The CBB said it intends to submit a petition to the competent court for compulsory liquidation of the Bahrain-based retail bank, reported the Gulf Daily News, our sister publication.

#Pakistani #girl #sold off to #pay #debts

The girl called Jeevti was just 14 when she taken from her family in the night to be married off to a man who says her family owed him $1,000. Her mother, Ameri Kashi Kohli, is sure that her daughter paid the price for a never-ending debt. Ameri says she and her husband borrowed roughly $500 when they first began to work on the land, but she throws up her hands and says the debt was repaid.
It's a familiar story here in southern Pakistan: Small loans balloon into impossible debts, bills multiply, payments are never deducted. In this world, women like Ameri and her young daughter are treated as property: taken as payment for a debt, to settle disputes, or as revenge if a landowner wants to punish his worker. Sometimes parents, burdened by an unforgiving debt, even offer their daughters as payment. The women are like trophies to the men. They choose the prettiest, the young and pliable. Sometimes they take them as second wives to look after their homes. Sometimes they use them as prostitutes to earn money. Sometimes they take them simply because they can.

#Iran to chair Islamic finance body IFSB in 2017

Iran's central bank will take chairmanship of the Islamic Financial Services Board (IFSB) for the year 2017. Shut out of the global system by sanctions, Iranian banks are eager to resume business with foreign lenders with deals ranging from funding infrastructure to insuring foreign trade. The IFSB Council said late on Wednesday it had appointed Iran's central bank governor Valiollah Seif as chairman, with Bangladesh Bank governor Fazle Kabir as deputy chairman. Iran's entire banking system follows Islamic principles, there are 34 Islamic banks that held total assets of 14,451 trillion rials ($448 billion) as of March. This represents around a third of total Islamic banking assets globally, although Iran's version of Islamic finance can differ with what is observed in other Muslim-majority countries.

#Bahran's Bank Alkhair sells its stake in #Pakistan's Burj Bank

Bahrain-based Bank Alkhair has obtained approval from the State Bank of Pakistan to sell its stake in Pakistan’s Burj Bank to Al Baraka Pakistan Limited (ABPL). This transaction follows the announcement on 5 September 2016 about the merger of Pakistan’s Burj Bank and ABPL, creating an institution with assets totaling more than $1.1 billion. Ayman Sejiny, Group CEO of Bank Alkhair said the bank was pleased to sell its stake in Pakistan’s Burj Bank to Al Baraka Pakistan Limited. Bank Alkhair has completed several landmark transactions since its inception, including the establishment of t’azur, a regional Takaful company and the acquisition of Bahrain Financing Company, the oldest foreign exchange and remittance houses in the GCC.

Mutual #funds and Islamic funds have huge potential in #Pakistan: Saqib Saleem

In this interview CEO of MCB-Arif Habib Savings and Investments (MCBAH) Saqib Saleem gives advice to new individual investors who want to save a portion of their money. He recommends increasing purchasing power over a period of time and seeking reliable investment advice. For this reason, MCBAH has 14 types of mutual funds, two voluntary pension schemes and different investments plans in its product portfolio. The mutual funds industry in Pakistan is still in its infancy stage standing at mere 1.6% of GDP. Saleem believes that an increase in awareness and introduction of innovative products to reach out to general public will provide an impetus to growth. As the Pakistani economy is entering the growth phase, he expects young investors to enter the market and increase their investment profile.

#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.

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