Counselling Sessions With Markfield Institute Of Higher Education in Islamic Finance

The Markfield Institute of Higher Education (MIHE), situated near the city of Leicester in the UK, is a pioneering institution in the field of Islamic education and research, offering a wide range of Postgraduate Certificates, Postgraduate Diplomas, Masters and PhD programmes validated and awarded by the University of Gloucestershire, according to a press release. The courses currently offered by MIHE include Islamic Banking and Finance, Islamic Education, Islamic Studies and Muslim Community Studies.

In 2009, MIHE signed two Memorandums of Understanding in Brunei – one with Bank Islam Brunei Darussalam (BIBD) for the provision of training in Islamic Banking and Finance for BIBD’s staff, as well as another with Universiti Islam Sultan Sharif Ali (UNISSA) for cooperation in the area of higher education.

MIHE is accredited by the British Accreditation Council and approved by the United Kingdom Border Agency as a Tier 4 student sponsor. Representatives from MIHE have been visiting Brunei very regularly since 2008 for the purpose of establishing cooperation with educational institutions in Brunei and for promoting the Postgraduate Courses available from them.

source : brudirect

Amana wins top global award for Islamic Finance in Sri Lanka

Amana Investments won the award for the category Best Islamic Bank in Sri Lanka in the 2009 Islamic Finance News Poll conducted by the Malaysian-based REDmoney Group, the company said. Though Amana Investments is not a bank (it has received provisional approval from the Central Bank), the award it has won in the category of the Best Islamic Bank by country confirms its clear leadership position in the field of Islamic Finance in Sri Lanka.

An Amana press release said the REDmoney Group publishes the leading and widely circulated Islamic Finance industry journal in the global finance sector that captures all the significant events and activities that take place in the field of Islamic financial services, including banking, insurance, stockbroking, fund management etc worldwide.

The Islamic Finance News Awards Polls are the most transparent, definitive and competitive awards in Islamic finance today and are based on a unique poll which is a true reflector of the global Islamic financial markets. Winners of the Islamic Finance News Poll received the prestigious awards at two special Awards Ceremonies, the first on February 25 in Kuala Lumpur, followed by another on March 8 in Dubai.

Commenting on the win, Mr. Faizal Salieh, Managing Director & CEO of Amana Investments, said, “We are honoured to be recognised internationally as the best Islamic Finance provider in Sri Lanka. This award acknowledges our present market leadership position and stature and the contribution we have made in the field of Islamic Finance in the country. It also puts Sri Lanka on the World map of Islamic finance and banking.” Amana Investments Ltd has pioneered Islamic Finance in the country since 1997.

source : sundaytime lk

Meezan ‘Best Islamic Bank’ in Pakistan

Meezan Bank, Pakistan’s first and largest Islamic bank, has been awarded ‘Best Islamic Bank in Pakistan’ for 2009 by Islamic Finance News of REDmoney group, Malaysia.
This award brings to light a highly successful and record-breaking year for Meezan Bank, Rs100b in deposits, Rs. 100b in trade finance (import & export) business, expanding its network to a total of 201 online branches in 54 cities across Pakistan and record profit-after-tax of over Rs1b.
The Bank offers a complete range of Islamic banking products and services including, free online banking for all Pak Rupee accounts at all its branches. The Bank’s retail banking network is supported by 24/7 banking services that include 150 ATMs, Internet Banking and a 24-hour Call Center. The Bank has recently launched its VISA Debit card that allows its customers to shop at more than 30m merchants worldwide and withdraw funds from their accounts from more than 1.4m ATM’s.

source : nation

Alternative dispute claims based on ethics: ideas and proposals of Islamic finance for the west in crisis


AUTHOR: Loretta Napoleoni & Claudia SEGRE

Translated by Fernando Esteves, reviewed by Alexandre Leite

must remember how, at the end of the 19th century, farmers and supporters of Islamic finance have expressed repeatedly, his dissatisfaction with the penetration of capitalism in Muslim countries.  Some fataawa were published with the intention to reinforce the fact that activities based on the interest of “banks of the colonizers, were at odds with the sharia.  However, the only banks operating in the Muslim world were Western institutions, and the Muslim people have used their services even though, under their view, this is unacceptable and an entity founded in activities prohibited by religious law in force, which permeates the tissue socioeconomic Muslim countries.

 From the mid-50th to the mid-’70s, economists, scholars of the Shariah and the intellectuals, studied the possibility of abolishing the interest rate and the creation of a financial institution compatible with the Shariah, the second principle of credit banking, namely the prohibition of interest received as remuneration for such time decay.  Moreover, it was considered necessary that a new economic system that incorporates solutions obey some of the fundamental precepts of the Muslim faith as zakat, or obligatory to help the poor, reduced by any assets available, rather than finance pilgrimages to Mecca.

The first solutions proposed in the Islamic economics came into force in 50 years in Kuala Lumpur, Malaysia, and in lower Egypt.  The experience of Malaysia, organized by the fund management of the pilgrims from Malaysia, was supported by the government.  This, in turn, controlled the financial institutions to save funds and investments in accordance with Shariah.

The fundamental and most notably the operation of the Islamic bank is the refusal of any transaction involving interest, either as a pure, applied for credit, either as part of other operations.  It is necessary therefore to define alternative mechanisms to establish the rate of return on capital and investments, all in accordance with the precepts of Islam.  Islamic economics, unlike the conventional market economy, is supported by religious principles of Islam, and focused in order to keep Muslims in the Shariah, the body of law that directs their lives.  The Islamic activists, intellectuals, farmers and religious leaders have always maintained the legitimacy of the ban on interest, the profit of money lenders, and have always pointed to more and ghar, involving speculation and insider trading information.  The money in Islamic economics, should not be used as the product itself, to generate more money.

The fund management alternative and the shares are avoided by Islamic finance, since they give rise to artificial creation of money.  Money is always half or production facilities, and this principle applied in the sukuk.  The sukuk is always linked to real investment: pay for the construction of a road, for example, or a property, but never used with speculative intent.

This principle springs from the prohibition by the Shariah to the haram, which comprises the activities ethically wrong and forbidden by the Koran, as the production and distribution of arms, trade in tobacco, alcohol, pornography and gambling.  In the center of the search for an ethical manner that fits the sharia, was established a joint venture unprecedented.  This alliance led to a marriage between the wealthy and erudite scholars of Shariah, which began to work together to serve a new and stronger Islamic economics.  This unusual combination is a unique phenomenon in the modern economy, but has settled a new economic system.

 Among the most glaring differences between conventional economics and Islamic economics, is a joint effort at the community level, which expresses the concept of Umma, the Islamic community considered as a single entity that breathes, thinks and believes in unison.  Is the soul of Islam.

Individualism is not known in Islam as it is completely foreign to tribal culture.  Islam is rooted in traditional tribal values, as the strong feeling of being part of the community, the obligation to help friends in need and to accept the authority of religious leaders.  These are the values that the scholars of sharia are implemented in Islamic economics, principles which for centuries have allowed the Bedouin Arabs support a severe type of life, bound by the harsh desert environment.  If the Ummah is the heart, the associations are the heart of Islamic economics.

Our thought is that Islamic economics can contribute to establishing new rules for the world economy, since we are facing a crisis, overcome the first problem, it has become now a real crisis of confidence in the system as a whole.  The international banking system, it needs to effectively regulate ethics in business, tools for restoring confidence and help to rebuild the reputation of a model of capitalism that ultimately failed.

People want safe investments, so buy in bulk, government bonds.  But yields are falling rapidly and are reaching zero.  Western banks could borrow the guarantee scheme or sukuk issue money directly in the form of sukuk in order to help with incentives for economic growth.  The sukuk could be used, for example, the shredded automobile or finance the next Olympics in London.  After the crisis of 29, graduated from a surplus of liquidity that was stagnant and that should be put into circulation.  The sukuk would be the ideal vehicle for such purpose.  And the ethical principles of Islamic economics could reconnect the banks and their customers the true spirit of service that should characterize a banking service.

 Source : tlaxcala google trltd

Paradoxes of Islamic Finance

Ibrahim Warde

The Islamic financial institutions have the approximate weight of 230 billion dollars, or forty times more than in 1982 1.  The case of Citibank, which since 1996 has established its subsidiary in the Islamic emirate of Bahrain, most major western financial institutions is currently engaged in this activity, in the form of subsidiaries, “Islamic booths or products Financial resources to a Muslim clientele.  There is even a “Dow Jones Islamic market”, symbol of the integration of Islamic finance in the global economy.

 This phenomenon may seem paradoxical, because some consider Islam incompatible with the “new world order” that has been established with the end of the Cold War 2.  As explained at the time of financial globalization, the institutions that refuse to “usury” can integrate with a system totally based on profit and techniques modernized with the resurgence of political Islam to reach their golden moment at the very moment that political Islam enters downhill 3?

The Islamization of banks

The modernization of Islamic finance was outlined in the 70’s, between the advance of pan-Islamism and the oil boom.  The Six Day War (June 1967) pointed out, in effect, the beginning of the decline of the Nasserite, pan-Arab and secular, and paved the way for regional hegemony of Saudi Arabia under the banner of pan-Islam.  The creation in 1970, the Organization of Islamic Conference (OIC) met the Muslim countries and put the precepts of Islam’s economic agenda.  Islamic institutes of economic research proliferated.

 In 1974, at the summit in Lahore, the OIC decided in the wake of the quadrupling of oil prices, creating the Islamic Development Bank.  This institution, based in Jeddah, has established the parameters of a system of mutual help, based on Islamic principles.  In 1975, he founded the first private Islamic bank, Dubai Islamic Bank.  An international association of Islamic banks was created to establish and defend common interests.  In 1979, Pakistan became the first country to enact the Islamization of the whole banking sector, as has been accompanied, in 1983, the Sudan and Iran

A financial system associative

Fell to Muslim jurists to adapt a pre-capitalist tradition to the needs of contemporary society.  For if it showed favorable to trade (profession practiced by the Prophet Muhammad), religion condemned the profits generated solely by finance.  The Koran teaches, for example, that despite their similarities, the profits generated by trade are fundamentally different from those generated by loans (2:275).  Islam forbids riba particularly.  This word, usually translated as usury, literally means “increase”.  His interpretation, but always lent itself to controversy: for some, riba refers to all forms of “fixed interest”, for others the word means only the profit motive.  Although some religious authorities, including the current Sheikh of Al Azhar in Egypt, have declared some form of legitimate interest, many ulema continue to adopt a restrictive interpretation.

Without challenging the principle of payment of borrowed money, the Islamic tradition is opposed to the aspect of “fixed and pre-determined” interest with regard to equity and implies the potential for exploitation in relation to the debtor.  Islam tends to advocate the equitable distribution of risks and benefits 4.  In the early days of Islam, the form of financing used most frequently was on linking the creditor and the debtor: a successful financed an operation carried out by someone, sharing equally the profits and losses.  This financial transaction associative – that inspired the system of partnership, by proxy, the French – follows a logic similar to venture capital, popularized by the “new economy”.

Sharing profits and losses

Theorists believed that Islamic finance system more adapted to the economic needs of the Islamic world and to the moral demands of religion.  In fact, as the bank focuses on the traditional holders of capital or property capable of being mortgaged, the financial system gives chance associative dynamic entrepreneurs – who are not millionaires.  This system also allows those who, for religious reasons, so far preferred savings, an integration of production cycle.  Islam added, also, a charitable dimension to finance: thanks to the management of “charity funds” 5 as well as their donations, the banks had to fight against poverty and exclusion.

This new financial system was based on two principles of association finances – the mudaraba (partnership) and Musharaka (association).  Other Instruments “neutral,” such as Murabaha (where the bank has the role of intermediary business, buying goods needed for their customers and reselling them at a profit) would have a transitional role: allowing banks to generate funds until it was widespread participating financial system.  The remuneration of deposits, was also based on the principle of sharing profits and losses: the savings accounts were paid (or not) according to the income of the establishment, the “investment accounts” to finance specific applications, were paid on the result achieved by these applications.

Transformative change in Islam

However, the financial partnership has proved a disappointment, neither the financial infrastructure, nor the attitudes were ready for it.  The experience of the failures caused many institutions to disregard the initial ambitions.  In the absence of profitable investment in their countries of origin, applied a significant portion of their funds in the West.  His predilection for “real estate” (real estate market of raw materials) exposed a large number of banks to losses.  Instruments “neutral”, which should have only a transitional role, is perpetuated.

In many ways, Islamic banks only differ from their conventional counterparts by a language designed to conceal the existence of profit.  They had their face the disaster of Islamic investment companies in Egypt in 1988 6 as well as a number of scandals.  Many thought at the time that the Islamic finance were just a fleeting episode associated with the oil boom.

In fact, they would still meet growing very large because in that time many changes have transformed the international financial world and of Islam on the one hand, technological change and deregulation (financial globalization, financial products etc.). On the other hand, changes political, economic, and social changes, on the other hand (the impact of the Iranian revolution, the Gulf War, the end of the Soviet Union and emergence of new Islamic states, fluctuations in the oil market, rise of the “Asian tigers”, the emergence of a bourgeoisie Muslim religious etc..).

 Different religious interpretations

 But it was at the expense of modernization of its principles and practices that Islamic finance could know your real boost.  If the first ijtihad (interpretation effort) was characterized by legalism and the scholastic aspect, the second struggled to find the spirit or ‘moral economy’ of Islam, taking into account the principles that have long allowed their adaptation to more different cultures’ urf (acceptance of local customs), darura (need) and maslaha (general interest).

The Islamic financial networks, which used to be monolithic and dominated by the Gulf, reflect, now, the diversity of the Muslim world.  Even the countries that “more Islamic” completely their economic systems have differences originating from geopolitical circumstances, or economic, and different religious interpretations.  Instruments which currently spend a significant growth are frequently those who, in the 70’s were illegal (insurance, or takaful), or use still limited (the fund).  Therefore, in addition to growth in the financial world of sicav ethical or socially responsible funds are invested in companies or sectors, whose character has been proven legitimate 7, draining, now, the savings of Muslims.  Islamic financial institutions operating in over seventy-five countries.

A world of “Bankers without banks”

The integration of Islamic finance in the global economy is rich in paradoxes.  The fact that the finances of the 90 generate the bulk of their profits from fees and charges on services (rather than, as before, from the spread between lending and deposit) has overcome the theological debates regarding the riba.  On the other hand, the wave of financial innovation that followed the deregulation made possible the sale of any type of product Islamic.  A financial obligation, for example, could be broken, allowing each of its components – the “main” and “profit” – to be sold separately.

Moreover, the decline of traditional commercial bank, along with the development of investment banking firms and venture capital, justified the legitimacy of the idea of participating financial system.  Rather, the approach between industry and finance, as well as the merger of financial institutions, re-create the conditions for a world of “Bankers without banks, which prevailed during the golden age of Islam.

source : lemonade

Islamic banks way ahead of conventional banks

The asset-base of the Islamic banks increased by 13.3 per cent in Oct-Dec 2009 compared to 7 per cent growth in total assets, posted by conventional banking system during the same period under review.
According to the SBP latest report, Islamic banking operations remain profitable and steady in Dec-09 quarter. Growth in assets of Islamic banking continued to surpass the growth of assets in conventional banking by expanding the share of Islamic Banking Institutions (IBIs) in the industry as a whole.
Report stated despite decline in the rate of infected portfolio during Dec-09, increasing Non-Performing Finance (NPFs) remains the key challenge facing IBIs since the first quarter of CY09.
The NPFs to financing ratio decreased by 20 bps to 6.3 per cent amid healthy growth in financing. Category-wise analysis shows continuous increase in NPFs in loss category which now constitutes almost half of the NPFs.
However, increase in NPFs has resulted in marginal change in provision largely due to enhancement of FSV benefit on classified loans. Resultantly, net NPFs to financing ratio increased and provision coverage ratio declined. Increasing net NPFs also deteriorated the capital impairment ratio by 1.5 percentage points during Oct-Dec 2009. Sector wise analysis depicts that textile, others and individuals have the major share in financing. However, infection ratio is quite high for the sectors of automobile & transportation equipment and textile. As per the report revelations, the balance sheet composition of Islamic banks remains stable during the quarter.
Nevertheless, in line with the historical quarterly trend, most components saw improvement during Dec-09. On the asset side, significant increase took place in financing and investments.

source : nation

Islamic finance market recovering

The Islamic finance market seems to be recovering from the global economic crisis that hit it last year, despite continuing challenges that face the financial sector around the world, said Sabaek Leasing and Investment Company on Sunday.

In a report, Sabaek said that total assets of the top 500 Islamic banks rose to USD 822 billion in 2009, compared to USD 639 billion in 2006, at a growth rate of 28.6 percent.

It also said that the Islamic ‘Sukuk’ market continued to grow last year, despite difficulties, saying that between 2003 and 2007 Sukuk issuance increase 47 percent, adding that 2009 was considered a year of growth comeback for the Sukuk industry compared to 2008.

Sabaek noted that Standard and Poor’s reported that in 2009, Sukuk issuance amounted to USD 23.3 billion, compared to USD 15.5 billion in 2008, recording a growth of 34 percent. This makes 2009 the second largest Sukuk issuance year, coming after 2007 when issuance amounted to USD 34.3 billion.

With this, the Islamic Sukuk market has exceeded USD 110 billion, and if the rest of the Islamic finance tools are factored in, the Islamic finance market will exceed the USD one trillion barriers, it said.

Sabaek said, however, that the Sukuk market remained small when looking at the value of conventional debts around the world at the end of last year, which stood at USD 25.4 trillion.

In terms of geographic distribution, it said that Malaysia accounted for more than half the Sukuk issued in 2009, at 54.1 percent, namely because the country had a deep-rooted Islamic banking system that was supported by the government.

As for the share of Gulf state, it said it dropped last year, especially in the case of the UAE, noting that governments and banks still held on to the greater percentage of the Gulf Sukuk market. The Central Bank of Bahrain is considered the most active in this field.

source : kuna

Nigeria: Experts to Brainstorm on Islamic Finance

Investors, analysts, bankers and other financial operators will be exposed to the benefits of Islamic banking in a workshop staged by the Chartered Institute of Bankers of Nigeria and Lotus Capital Limited.

The workshop on Islamic finance and investment products put together by CIBN and Lotus Capital, according to a statement, is scheduled for 22 – 26, March, 2010, at Colonades, Ikoyi, Lagos, at 9.00 am.

It said, participants will have the rear opportunity of not only discussing and appreciating such critical issues and Sub-topics in Islamic Banking as “The Road Ahead: Realizing the Potential of Islamic Finance and Investment”; “Islamic Finance Contracts”; Successful Shari’ah Complaint Product Structuring”; “Islamic Finance: An Alternative Approach to Project Finance and Infrastructure Development” and “Creating Interest Free Bonds” but also hear directly from seasoned Islamic banking experts from Nigeria and abroad.

Top on the list of the high profile discussants include: Professor Dr. Monzer Kahf, of Qatar faculty of Islamic Studies, a Professional Lecturer, Trainer, Consultant and advisor of international repute in Islamic banking and Investment and Mrs. Hajara Adeola, Managing Director, Lotus Capital Limited, a convertible Bond Research Analyst of BNP Paribas, London and an accomplished Consultant at Andersen (now Accenture).

It is expected that at the end of the workshop, participants would be able to reasonably “understand the new global wave of Islamic finance and investment banking”, “learn the Islamic finance instruments and structured products and their relationships with Conventional financing instruments” “understand Islamic Finance contracts”, “Provide with an in-depth understanding of the growing Islamic investment funds, their structure and growth” and “Know how to structure Islamic insurance/Takaful products”.

source : allafrica

Takaful firms search for suitable long term assets

The Islamic insurance industry, or takaful, is struggling to find suitable long term investment opportunities, executives at the Reuters Islamic Banking and Finance Summit said.

The takaful – or sharia compliant – insurance industry has grown at double or three digit growth rates so far as the Gulf Arab region is underpenetrated with insurance products in general, and has also attracted business from conventional peers.

But issues like the absence of long term sukuk, or Islamic bonds, to compliment some of the products are hampering the process of asset deployment.

Speaking at the summit in Bahrain, Abdul Rahman Tolefat, chief executive, Allianz Takaful, said: “As an insurer, if I want to offer annuity products I need to have long term assets to match my liabilities which are still not available.”

Tolefat said the firm was in talks with a regional financial institution, urging them to issue a bond earmarked for the industry.

Islamic insurance works like mutual insurance, but there is a clear segregation of the assets owned by members and those owned by the insurer.

Unlike conventional insurance, investments made using the pool of funds have to adhere to sharia law and shun sectors such as alcohol and gambling.

Islamic insurers also keep away from investments in risky assets and prefer fixed income products for parking their funds.

Global takaful premiums total about $2 billion to $3 billion and are expected to reach more than $7 billion by 2015, industry figures show.

While medium term sukuk are available in the market, takaful firms in this space have to compete with big banks who absorb a major chunk of issues, leaving little for takaful firms.

Tolefat said: “The credit rating of corporates who issue sukuk is just not there. I prefer an issue which has an ‘A’ rating and above. Even if they provide low yields, we don’t mind.”

 source : INN