Nigeria: Experts Restate Great Future of Islamic Banking in the Country

BY : Abdulwasiu Hassan And Muideen Olaniyi

An Islamic finance expert Hadiza Garba Laka has said the non-interest banking (Islamic-banking) has great potential for the Nigerian economy.

Hadiza Garba Laka of Lotus Capital Limited, who was delivering a paper recently at a public lecture organized by the Jama’atul Ta’awunil Muslimeen in Abuja, pointed out that Islamic banking has witnessed real time growth in UK, USA and Malaysia.

Also speaking at the lecture, Malam Mohammad Lawal Shaibu, an expert on Islamic banking and investment, said the interest-free banking is not a preserve of Muslims, explaining that the banking system is operated by Christians abroad since it is all about business.

Dr. Tawfeeq AbdulAzeez of University of Abuja, who was represented by Abu Mazeedatul Khayr said Islam prohibits usury because the religion is a complete way of life.

Malam Mosur Olaide, representing the Director General of the National Space and Research Development Agency, (NASRDA) Dr Saidu.O. Mohammad maintained that if conducted honestly and given a chance, Islamic banking will bring high moral ethos into the Nigerian market.

source : allafrica

Islamic Agri Finance can uplift rural areas

LAHORE – In the wake of the current financial crisis coupled with the global food shortage the need for improving village economy through enhanced output has become a challenge for the planners and other stakeholders. The importance of livestock and allied sectors cannot be compromised for the Agricultural growth. Islamic Agricultural and Rural Finance can bring the genuine green revolution to an economy. As Islamic Finance has made a lot of progressive research in Agricultural finance bringing a number of pragmatic and useful choices which if implemented can bring revolutionary development to the economy.
This intention was declared by Muhammad Zubair Mughal Chief Executive Offier, AlHuda Centre of Islamic Banking and Economics(CIBE), while explaining the objectives of a specialized training workshop on Islamic Agricultural and Rural Finance being organized by AlHuda-CIBE on 28th & 29th November 2011 in Islamabad.
The workshop will be attended by officials from banks and financial institutions, agricultural research development and planning institutions having interest in Islamic Finance.
He further emphasized the role of Islamic finance in Agriculture and Rural sector, that it can not only bring new avenues for business for Islamic financial institutions by using innovative products but also the farmers and agro based businesses can benefit from shariah compliant financing to develop their economy and thereby eliminate the poverty and agricultural funding limitations. Especially the farmers with smaller units of land face difficulty, which can be solved by the planners through this mechanism.

source : nation pakistan

Islamic banking grows in Kenya

By Hussein Jiva, Written for UPI

Ahmed Bayusuf worked for nine years as a cab driver in Nairobi. After saving enough money, he invested in a coffee shop. Now, he’s the store manager at Books First.

Bayusuf has worked hard to manage his money well. He’s also a strict Muslim and, as such, doesn’t believe in making money if he hasn’t worked for it. For Bayusuf, that means an interest-earning bank account is off-limits, some interpretations of Muslim law state. That’s why he was thrilled when banks specializing in Muslim-approved accounts opened in Nairobi.

“Now, I don’t have to worry about accumulating riba,” Bayusuf said, using the word that, for Muslims, defines interest. “I also know that my money is being invested in compliance with the Islamic way.”

Islamic banking isn’t just appealing to Muslims, Bayusuf said. Even for people of other faiths, the system offers low-risk investments.

Conventional banking has for many years been the monopoly in the financial sector. Despite rapid technological advancements, options in banking have remained limited. That changed about five years ago, when Barclay’s Bank offered Nairobi’s first interest-free banking options, in accordance with Shariah, the law that governs Islam.

Since then, people in Kenya have shown a preference for Islamic banking, said Abubakr Athman, a business analyst with TalentRecruit Kenya Limited. The growth in the Islamic banking industry has been such that Athman says it could replace conventional banking in the future.

In 2007, Gulf African Bank and First Community Bank joined the scene with the first fully Shariah-compliant institutions in Kenya. Now, there are nine banks offering interest-free options. Other services that attract customers include free accounts with minimal opening fees, no ATM fees, no maintenance charges and flexible loan payments.

Fahd al-Guthmy, an official at Chase Bank’s city center branch attributes the success of Islamic banking to how easy it is for people to utilize the services. The industry has grown 15-20 percent each year over the past two decades, he said.

The Shariah-friendly banks offer special accounts for charity (a requirement of Shariah), and many offer sayyidah — “woman of honor” — accounts. The accounts are advertised as a means of empowering women through Shariah-compliant investment opportunities. Customers can also open special savings accounts for the hajj, the pilgrimage to Mecca, the Muslim holy city, that all able-bodied Muslims are expected to make at least once in their lifetimes.

Despite all the hype surrounding Muslim banking, the industry is still in its infancy. Misconceptions about the banking method abound. For example, bankers at Shariah-friendly branches must remind customers that there’s a difference between interest and profit. Islam forbids receiving a financial advantage without giving a counter value but it’s acceptable to have a financial gain as long as an effort is made.

Some Kenyans avoid the banks, assuming that they’re only for Muslims but the banks accept customers of any religion.

Muslim religious leaders have had disputes over details of how the banks operate.

Despite the challenges, analysts say the future of Islamic banking is bright.

“The industry has transformed the banking sector,” Athman said. “Many conventional banking customers have flocked into Islamic banking, clearly seeing the benefits on offer.”

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Sri Lanka, Malaysia partners to promote Islamic banking and bonds

Sri Lanka’s Wealth Lanka Management (Pvt) Ltd, an investment house, and Al Tayseer Advisory Services Sdn. Bhd a Malaysia based consultancy has linked up to provide Islamic banking and bond market instruments, officials said

The firm advices on Islamic banking and corporate finance and advisory services for specialist industries like steel, cement and cotton.
“We find Sri Lanka as an emerging market for Islamic finance with immense future growth potential,” Al Tayseer Advisors Services, chief executive and partner Fahd Hashim, told reporters in Colombo.

“Sri Lanka is the second fastest growing economy in Asia right now and growth is linked to public sector investment with imports of cement steel.”

Al Tayseer can help with setting up plants or acquiring them to supply commodities to Sri Lanka, Hashim said.

The firm was also working in Pakistan. Hashim said it was already advising a Pakistan based cement maker that is exporting to Sri Lanka. In addition to corporate finance the consultancy also advised in materials and energy efficiency and use of carbon credits.

Mangala Boyagoda, head of Wealth Lanka Management, a senior fixed income specialist in Sri Lanka said the new partnership could provide Shariah based bond market products to help create an interbank market in Islamic finance.

“You cannot develop Shariah banking without an interbank market,” Boyagoda said. “We are looking at the possibility of raising a Shariah government bond.”

Though several banks have Islamic finance units in the country, they have constraints in Treasury management due to lack of compliant products.

The partnership will also advice on setting up Islamic banking units or outsource such units for banks, finance companies and leasing firms, Hashim said.

source : lbo – Sri lanka

Islamic banking gets more customers from conventional market

The growth from the conversion of conventional banking customers into Islamic banking is higher than that from the unbanked market, said Standard Chartered Saadiq global head of Islamic banking (consumer banking) Wasim Saifi.

“So far the growth in Islamic banking has come from customers switching to Islamic banking from the conventional banking space.

Banks have not been able to find it profitable or feasible to penetrate deeply into the unbanked population,” he said on the sidelines of the Islamic Financial Intelligence Summit.

On concerns whether a bank that operated in both conventional and Islamic banking could properly separate those two businesses, Wasin said regulation was quite strict and banks as well as syariah boards would ensure that there was no common link of assets.

“We ring-fence the Islamic assets and liabilities so that they are separate from our conventional assets.”

source : the star malaysia

First Ever Islamic Inter Bank Rate (IIBR)

IIBR has been launched in collaboration with high profile Islamic bank, Islamic banking windows and independent stake holders of the industry with initiation of Thomson Reuters. The IIBR is sharia’a’ a alternative for LIBOR (London Inter Bank Offer Rate ), which was used by Islamic financial institutions.

Since the establishment of Islamic banking industry, Islamic banks had to use the conventional (LIBOR which is based on Interest), as a bench mark to calculate the cost of funding.

Full story about the methodology used, background, timing and contributor panel please refer:

World’s Largest Gathering of Islamic Finance Leaders to Address Next Phase of Global Growth

Manama, Nov. 20 (BNA) — The 18th Annual World Islamic Banking Conference opens on the 21st November with a series of pre-conference summits

Bahrain: 20 November 2011: Leading players, industry thought leaders and key regulators in the international Islamic banking and finance industry will take part in the 18th Annual World Islamic Banking Conference (WIBC 2011), which is set to commence on the 21st of November 2011 at the Gulf Hotel in the Kingdom of Bahrain.

The three day event which ends on the 23rd of November is convened under the patronage of HRH Prince Khalifa Bin Salman Al Khalifa, the Prime Minister of the Kingdom of Bahrain and held under the support of the Central Bank of Bahrain.

Speaking to the media ahead of the event, David McLean Managing Director of the World Islamic Banking Conference said that “in recent years Islamic finance has further transitioned into a dynamic, fast growing and highly competitive market servicing an increasingly international community.
This expanding globalization of Islamic finance has now gained significant momentum as manifested by increasing cross-border investment and deal flows that are Shari’ah compliant, greater participation in international Islamic financial markets, and the increased presence of Islamic financial institutions in new jurisdictions.
Held under the theme “Competing for Global Growth”, the 18th Annual World Islamic Banking Conference (WIBC 2011) will set the stage for discussions that will seek to boost the scale of Islamic finance activities across international markets.”

He also that said “this year we have delegates attending from more than 50 countries providing the discussions at WIBC with a truly international perspective.”

WIBC 2011 will begin on the 21st of November 2011 with a series of pre-conference summits. The pragmatically focused pre-conference executive briefing sessions, led by experienced and respected industry experts, will place a range of complex themes in a practical framework, enabling a deeper understanding of the critical issues facing the Islamic finance industry.

The main WIBC 2011 conference, which begins on the 22nd of November 2011, will be inaugurated by H.E. Rasheed Mohammed Al Maraj, Governor of the Central Bank of Bahrain. The inaugural session which focuses on strengthening the regulatory frameworks to accelerate the international development of Islamic finance will also feature H.E. Khaled Mohammed Al-Aboodi, Chief Executive Office & General Manager, The Islamic Corporation for the Development of the Private Sector, the private sector arm of the Islamic Development Bank Group (IDB), Saudi Arabia.
The inaugural plenary session will be followed by the high profile Industry Leaders’ Power Debate led by internationally respected CEOs and decision-makers from the key players in the industry.
Moderated by Ashar Nazim, Senior Director, MENA Leader for Islamic Finance, Ernst & Young, this dynamic session will analyze how the leading players are positioning themselves to capitalize on the new growth opportunities presented by the increasing internationalization of Islamic banking and finance.
The Power Debate session will feature Tirad Mahmoud, Chief Executive Officer, ADIB; Toby O’Connor, Chief Executive Officer, The Islamic Bank of Asia; Syed Abdull Aziz Jailani Bin Syed Kechik, Chief Executive Officer, OCBC Al-Amin Bank Berhad; Asad A Ahmed, Chief Executive Officer, Gulf African Bank; Abdulrazzak Mohammed Elkhraijy, Executive Vice President and Head of the Islamic Banking Development Group, The National Commercial Bank – Saudi Arabia; and Dr. Salah Addeen A Qadar Saeed, General Manager – Credit & Risk Management, Bahrain Islamic Bank.

WIBC 2011 will also feature a special keynote address on “Competing for Global Growth: Preparing for the Asian Century” by Prof. Kishore Mahbubani, the Dean and Professor in the Practice of Public Policy at the Lee Kuan Yew School of Public Policy (LKY School) at the National University of Singapore on the 23rd of November 2011. Jaseem Ahmed, Secretary-General of Islamic Financial Services Board (IFSB) will be the opening keynote speaker on the final day of the event.

Commenting on the Central Bank of Bahrain’s support for the event, Khalid Hamad Abdul-Rahman Hamad, Executive Director – Banking Supervision, Central Bank of Bahrain noted that “Bahrain has a long and proud history in supporting the progress of Islamic finance. The Kingdom continues to play a pioneering role in the advancement of industry standards, best practices and in developing a strong regulatory structure. We look forward to welcoming back the global stage of the 18th Annual World Islamic Banking Conference to the Kingdom of Bahrain and to continuing its tradition of supporting growth and innovation in the international Islamic finance industry. The past few years were so challenging for Islamic finance but at the same time the future raises several business development potentials and opportunities which we are all looking forward to explore during the 18th Annual World Islamic Banking Conference,” he said.

A similar view was expressed by Shaikh Mohamed Bin Essa Al-Khalifa, Chief Executive of the Bahrain Economic Development Board who said that “Bahrain continues to be widely recognised as a global leader in Islamic Finance, and is also home to a number of central bodies which set the standards for the industry across the globe. Guiding over thirty countries on conducting business by Islamic principles has provided many investors with the confidence they need despite the turbulent market conditions in recent years. We have built a solid foundation for Islamic banking in the Kingdom; presently there are more than twenty five Islamic banks and the monthly issues of the Sukuk Al-Salam Islamic securities are regularly over-subscribed.”

He also said that “given our heritage in Islamic Banking, and our commitment to a strong future for the sector, we are proud to continue to host and support the 18th Annual World Islamic Banking Conference.”

As a part of the world comes to WIBC initiative, a leading panel of international experts will converge at the Country Focus Roundtable to address how well-positioned Islamic banks can explore international opportunities in the most dynamically evolving high-growth markets for Islamic finance. The Country Focus Roundtable along with the WIBC Country Pavilions will explore exciting opportunities in key jurisdictions including France, the United Kingdom, Singapore, Bahrain, Bermuda, Luxembourg and Labuan.

HMA Iain Lindsay OBE, British Ambassador to Bahrain, who will be inaugurating the UK roundtable at WIBC 2011, noted that “with a proven track record as a leading international financial centre and a long history of building strong regulatory infrastructure, the United Kingdom is keen to further establish its links and partnerships with the international Islamic finance industry. Given the UK’s strong financial and trade links with the Gulf and South East Asia, which are the major centres for Islamic finance, there are tremendous opportunities for cross-border investment flows that are Shari’ah-compliant. The progress made by UK firms in the Islamic finance industry is notable and the UK Pavilion at the World Islamic Banking Conference 2011 will be an opportune platform to showcase the Islamic finance capabilities of the UK and further build our relationships with the leading international players.”

WIBC 2011 will feature more than 60 leading industry partners and exhibitors showcasing their latest innovations at the World Islamic Banking Exhibition organised along the sidelines of the conference. The exhibition will be officially inaugurated on the 22nd of November.

The eagerly anticipated 2011/12 edition of the World Islamic Banking Competitiveness Report, developed in collaboration with Ernst & Young, will also be launched on-site at the 18th Annual World Islamic Banking Conference in an exclusive session on the 22nd of November 2011.

source : Bahrain News Agency

Halal industry should work with Islamic finance

KUALA LUMPUR: Despite the halal industry’s rapid growth, it is missing out on opportunities to tap into Islamic finance, panel members said.

“There is a disconnect between the halal industry and Islamic financing, which is ironic since we’re working within the same religion, but are not talking to each other,” said Thomson Reuters head of Islamic finance (Asia) Rafiza Ghazali at a discussion on “Halal Economy” during the Islamic Financial Intelligence Summit.

She said in a study conducted by Reuters on 250 companies involved in halal production and with a combined market capitalisation of US$132bil, it found that only 50% of them passed the Aofi test, which meant that they are not syariah-complaint.

The Aofi test was a screening criteria used by Reuters to determine the syariah compliancy of stocks, she said.

“Why is it that they (companies in halal production) make sure their products can be consumed by Muslims, yet Muslims cannot invest in them?” Rafiza asked.

Fellow panelist, AmIslamic Funds Management Malaysia director Datin Maznah Mahbob, said: “There are so many opportunities for those companies to issue sukuk, short-term papers, and longer-term Islamic debt instruments of various tenures for fund managers to invest in.

“As a fund management firm, we invest in both sukuk and equities. If they structure their funding requirements in a syariah-compliant way, we can invest in them as they will be in my syariah-complaint universe.”

In a separate panel discussing the potential of Islamic funds, Aberdeen Islamic Asset Management CEO Abdul Jalil Rasheed cautioned against the popular belief that Islamic funds can outperform conventional funds at every turn.

“We don’t go out there saying it will outperform. I’ll be honest, we will guarantee a period of underperformance; that’s just how the market is. If you are outperforming consistently, you’re lying. Something’s wrong,” he said.

“No Islamic fund can claim they have a five to ten year track record. It will take some time to build critical mass and before we can tell clients that this fund can stand on its own merit against conventional funds.”

source : the star online

Kerala must tap Islamic funds for infrastructure development, say experts


Kerala could become a role model of tapping Islamic finance market to raise badly needed funds for infrastructure development, according to experts.

Mr H. Abdur Raqeeb, Convener, National Committee on Islamic Banking at the New Delhi-based Indian Centre for Islamic Finance (ICIF), made a strong pitch for these funds at the Infrastructure Conference-2011 that began here on Wednesday.


Speaking to Business Line, the State Minister for Public Works, Mr V. K. Ibrahim Kunju, and the Secretary, PWD, Mr Manoj Joshi, said the State Government wholeheartedly welcomed Islamic funding agencies in the space of infrastructure development.

Infrastructure development is as Shariah-compliant a cause as they come, Mr Joshi said.

There is nothing that prevents these funds being channelised into the State’s developmental scheme of things, he added.

The PWD Minister concurred, but observed that the State’s own efforts to set up an Islamic financing institution were still in a ‘fluid stage.”


The Minister for Industries, Urban Development and IT, Mr P. K. Kunhalikkutty, too, underscored the importance of tapping the Islamic finance model at a time when traditional sources of funds are becoming either increasingly inaccessible or cost-prohibitive.

Meanwhile, Mr Raqeeb quoted a Kerala High Court observation that no specific prohibition was contained in any statute that made it impermissible to carry out Islamic banking in the country.

Simple regulatory changes could transform India into a regional hub for Shariah-compliant finance and clear the way for a much-needed wave of investment into its infrastructure, he added quoting international experts and consultants.


“When London, Tokyo, Hong Kong, Singapore and Paris have become Islamic banking hubs why can Kerala not become one and lead the country to become a developed economy in the near future?,” he wondered.

Islamic banking focuses on transparency, cooperative ventures, shared risk and ethical investing attracts a wide range of both Muslims and non-Muslims alike.

In Malaysian Islamic banks, more than 40 per cent of investors and 60 per cent of borrowers are non-Muslims, mostly Chinese.

One in five applicants for some of the Islamic products is a non-Muslim in the Islamic Bank of Britain.


Asset-backed Islamic bonds, known as ‘Sukuks,’ provide funds for long-term investment.

This tool is used in a number of developing and developed countries. India too should seek to make use of these resources, Mr Raqeeb said.

The fact is, Islamic finance can do wonders. Post 9/11, petro-dollars have been actively eyeing for a safe investment destination.

And this is the opportunity that India should avail of, given that it is not just a safe but vibrant investment destination.


An estimated $1.5 billion in funds is sloshing around West Asia as of now. The region will have $8 trillion to invest by year 2020.

Ms Muliani Indrawati, Managing Director, World Bank, has confirmed that the World Bank Group has ‘formally recognised Islamic finance and has designated it a priority area in their financial sector programme.’

The World Bank has always closely cooperated with the Islamic financial services sector. This demonstrates its commitment to help strengthen the institutional development of the industry.

source : Business line : The Hindu

Deutsche Bank predicts Islamic finance boom

Analysts at Deutsche Bank, led by Ryan Ayache, have predicted in a report that global Islamic banking assets could reach $1.8 trillion by the end of 2016 – up 90% on the $939bn of assets in 2010.

The analysts argued that Islamic banks would benefit from the regulatory burden on banks in developed markets, such as Europe and the US, which will curtail bank lending. They also argued that there is growing awareness and acceptance of Islamic finance and sharia-compliant products.

Sharia-compliant bonds – known as sukuk – currently make up about 1% of global debt issuance, according to Dubai-based Ryan Ayache, who was the lead author on the Deutsche Bank report.

There has been an uptick in sharia-compliant bond issuance this year, according to Dealogic. The total value of Islamic debt issued globally in 2011 is close to breaking a post-2007 financial crisis high, with $17.3bn via 73 transactions having been priced for the year to November 14.

In 2009, just over $18bn worth of Islamic bonds were issued globally through 72 deals, while deals worth a total of $27.2bn via 100 transactions were priced in 2007.

There has been scepticism to sukuks in the past, as they are a new asset class, but the report argued that international standards, supervision and accounting methods are being brought to Islamic banks – meaning the level of harmonisation between Islamic and conventional banking regulation is eroding barriers to entry and enabling more participants into the field.

The report said: “The awareness and availability of Islamic banking is greater today than ever before.”

It added: “Companies such as GE have already tested the Sukuk market , and the existing ownership of global blue chips by certain sovereign wealth funds may create a viable pipeline for future issuances in the short and near term.”

source : efinancial news