Making Sense of Onion Economics in India: Can Islamic Finance Help? – by Mohammed Obaidullah

I was motivated to write this piece by the story of a poor farmer in India. The story of this 48-year old farmer Devidas Parvane from the Rasai village of Pune in Maharashtra state in India as reported in the mainstream media captures a classic unresolved problem of agricultural finance in India. The farmer brought 952 kg or about 1 ton of his onion produce to the wholesale market in Pune city. According to his estimates, this required a financial investment of Rs4000 (less than USD60) plus of course, his hard labor. What was the return after deducting all relevant expenses?[1] The farmer ended up receiving just Rs1..(Rupees one) from the entire lot. Disappointed and in tears, he asked the media to carry his message forward – if the government fails to remedy the situation, the only recourse for him would be to commit suicide.[2]

onionOnions are considered an indispensable ingredient of most Indian cooking and a major cash-crop for the Indian farmer.[3] The onion market is characterized by extreme fluctuations in supply due to dependence of onion production on uncertain weather conditions, leading to extreme volatilities in the onion prices. The value chain of the onion farming business constitutes the farmer who sells its produce at the whole-sale market. The whole-sale intermediary, in turn, sells to the retail sellers who then sells to the final customer. Among all the parties, the farmer and the final customer are believed to have the least bargaining power, and consequently, suffer the most due to price volatility.

The final consumer suffers during extreme price increases, but seeks to minimize the impact by adjusting the quantity consumed. However, it is hard to cut the consumption of an essential ingredient of cooking and therefore, demand for onions is relatively inelastic.

The farmer in contrast, faces a bleaker scenario. Theoretically speaking, the fortunes of the farmer, the wholesaler and the retailer are tied together. During price increases due to poor supply conditions all should gain, since demand is relatively inelastic. However, it appears that gains to the wholesaler and the retailer are disproportionately higher as compared to the farmer, since the former engage in hoarding and speculation, further pushing up the prices. Hoarding at the farmer’s end is generally ruled out without access to warehousing and storing facilities. Similarly, during price declines accompanying excess supply the farmer is unable to stock the produce due to lack of cold-storage facilities and is forced to offload the same to the wholesaler at abnormally low prices. While excess supply is not easily absorbed by inelastic demand, the fall in prices is entirely absorbed in the prices paid to the farmers pushing down their margins to below normal or even negative levels. The whole-saler and the retailer, in contrast, are able to maintain their margins and their respective sale prices. In brief, the farmer bears the down-side risk during price decline without benefiting from the upside return potential during a price increase. In contrast, the intermediaries – wholesale and retail – benefit from the upside, often contributing to the northward movement of prices through hoarding. At the same time they are able to shift the down-side risk to the farmer and hold on to their margins.

The above contention is evidenced by some investigative exercises undertaken by Indian journalists at the ground level. In recent times, the most pronounced decline in supply of onions leading to a sharp increase in their prices occurred in November 2010 when an unseasonal and excessive rainfall in onion-producing regions delayed the arrival of onions in markets, raising the price of onion from Rs35 (USD0.52) to Rs88 (USD1.30) per kg in just one week. The government as a response, took several measures, including banning of onion exports, lowering import taxes and getting in shipments of onions from neighboring countries, leading to prices retreating to Rs50 (USD0.85) levels. The sharp spike in the prices was attributed to errant rainfall, hoarding, official incompetence and price-ramping by traders. It was revealed that wholesalers, retailers and speculative traders in New Delhi charged a markup of over 135 percent, taking in profits of over Rs 1 million (US$15,000) a day.[4]

The situation in 2016 seems to be exactly opposite. A recent media report that traces the movement of onion prices along the entire value-chain of onion business – from the fields of farmers to the plates of consumers, has some interesting findings. In India three states, Maharashtra, Rajasthan and Madhya Pradesh top the list for production of onions. In Maharashtra the Nasik District is known for its onion production that is sold through 40 wholesale markets. Even when the price is perceived to be not-remunerative-enough, the farmers are forced to offload their produce in the markets as they are unable to stock the same due to absence of cold-storage facilities.

Who benefits from the economics of onion prices? The pricing of 1 kg of onion across the distribution channel as it moves from the fields of Maharashtra to plates of consumers in Delhi makes interesting analysis.[5]

  • Farmer sells at wholesale market in Nasik @ Rs 2.00
  • Nasik wholesale sells @ Rs 7.00 (margin of 250 percent)
  • Transportation cost from Nasik to Delhi: Rs 2.00 per kg
  • Landed cost of 1 kg onion at wholesale market in Delhi: Rs 9.00
  • Sale Price of 1 kg onion at wholesale market in Delhi to Retailers: Rs 16.00 (margin of 75-80 percent)
  • Sale Price of 1 kg onion at Retail to final customers in Delhi: Rs 20.00 (margin of 25 percent includes transportation plus profits)

It is clear from the above analysis that the farmer may indeed receive as low as ten percent of the price that the final consumer pays. The bulk of the price goes to intermediaries in various forms. Such irrational pricing that makes farming a losing proposition poses grave danger for food security in India as farmers are driven out of this profession. What has been the policy response so far to curb this menace?

Policy Response in India[6]

The policy response in India so far, has been the establishment of the Agricultural Produce Market Committees (APMC). The stated objective of APMCs is to ensure that farmers are not exploited by intermediaries (e.g. traditional money lenders in the villages) who compel farmers to sell their produce directly for an extremely low price. APMCs will ensure that all food produce should first be brought to a market yard and then sold through auction.

APMCs involve dividing the region/ state geographically and setting up of markets (mandis) at different locations. Governments in states, Maharashtra, Karnataka, Tamilnadu, Andhra Pradesh etc. have enacted legislation for formation of APMCs or Marketing Boards and for provision of operational rules. Most APMCs have a market place where traders and other marketing agents are provided stalls and shops to purchase agriculture produce from farmers. Farmers can sell their produce to agents or traders under the supervision of the APMC. The key features of APMCs are as follows:

  1. Farmers are required to sell their produce via auction at the mandi in their region as auctions are the best available methods for price discovery.
  2. Traders require a license to operate within a mandi as a measure of due diligence and transparency.
  3. Wholesale and retail traders (e.g. shopping mall owners) and food processing companies cannot buy produce directly from a farmer. This is to ensure that vulnerable farmers are not exploited by the traders.

In practice however, many ills remain in the system.

The auction system has been found to be vulnerable to manipulation by the traders and their agents. The licensee traders and commission agents have formed informal cartels at the mandis. There is either no auction, or even if auction is held, the cartel deliberately bids too low.

It is also believed that the exclusion of direct buyers (e.g. super markets) has made the system only less competitive. There seems to be a case in favor of permitting the direct buyers as competition among buyers should lead to better price realization by the farmers. This is the recommendation of the new model APMC Act provided by the government of India.

Due their strong bargaining position at the APMC, some traders and middlemen engage in many unhealthy practices:

  • Traders and middlemen engage in hoarding by making major investments in warehouses and storage facilities and artificially manipulate the prices.
  • Traders also need to make huge investment while seeking license to operate in the mandis; the licensing system brings all the accompanying evils.
  • Often traders delay payment to farmers for weeks or months even after receiving the produce.
  • If payment is made at the time of sale, then the trader at times, arbitrarily deducts some amount, on the excuse that he has not received payments from the other parties.
  • To avoid taxes, some traders do not give sale slips to farmers. As a result, it is difficult for the farmer to prove his income to get loans from banks.
  • Middlemen receive double commission (both from seller and buyer), thus making consumers pay for this spread.
  • Price discovery is more efficient for cereal, pulses and oilseeds, where the government announces Minimum support prices (MSP) in advance. This is not the case with most perishables fruits and vegetables including onions making farmers completely dependent on intermediaries for price discovery.
  • During peak production of seasonal crops, prices drop so drastically, the farmers can’t even cover the cash expenses of transportation to markets, leave alone the cost of production, as the example cited earlier highlights.

The New Model Act

The new model APMC Act has many strengths as it seeks to address the major problems of the old Act. The key provisions are as under:

  • Permission to farmer to directly sell produce to whomever he wants, e.g. processors, exporters, graders, packers, without bringing the same to the mandi
  • Permission to private market yards, Direct Purchase Centers, farmers’ market for doing trade in agriculture produce thus, destroying the monopoly of mandis.
  • Public Private Partnership in the management and development of agricultural markets in the country for post-harvest handling, cold storage, pre-cooling facilities, pack houses etc.
  • Regulation and promotion of contract-farming arrangements in the country; creation of dispute resolution mechanism for contract farming.
  • Prohibition of commission agents in any transaction
  • Setting up of State Agricultural Produce Marketing Standards Bureau for grading, standardization and quality certification of agricultural produce
  • Increased responsibilities of APMC committee that include: ensuring complete transparency in pricing system and transactions taking place in market area; and payment for agricultural produce sold by farmers on the same day
  • Publication of data on arrivals and rates of agricultural produce brought into the market area for sale.
  • Promotion of public private partnership in management of mandis

Some other suggestions to improve matters include introduction of electronic auction platform; open membership and abolition of license system, and of taxes etc.

Case for Commodity Futures, Forwards

The concern for price discovery and insulating the poor farmers against sharp price falls have led to the search for alternatives including the establishment of futures exchanges. Though the key benefit of an organized futures exchange is believed to price discovery, available evidence for India is to the contrary. In an investigation into the futures markets in agricultural commodities in India, the statistical analysis of data on price discovery in a sample of four agricultural commodities traded in futures exchanges have indicated that price discovery does not occur in agricultural commodity futures market. The results showed that the futures and spot markets are not integrated. The exchange-specific problems like thin volume and low market depth, infrequent trading, lack of effective participation of trading members, non-awareness of futures market among farmers, no well-developed spot market in the vicinity of futures market, poor physical delivery, absence of a well-developed grading and standardization system and market imperfections have been found as the major deficiencies retarding the growth of an organized Futures Exchange.[7]

Another alternative is contract farming which is a forward agreement between farmers and buyers under which the buyer agrees to buy produce from farmer at a predetermined price; usually provides inputs (seeds, fertilizers, and pesticides), technology and production practices so that final produce meets his desired quality. The farmer agrees to grow and supply the produce to the buyer at predetermined quality, quantity and prices. Contract farming is prevalent in a few states including Andhra Pradesh, Himachal Pradesh, Madhya Pradesh, and Maharashtra while states like West Bengal have opposed it on the ground that the same may be exploitative.

Does Islamic Finance Provide a Solution?

Similar to contract farming, but more demanding in terms of transparency and definitiveness is the Islamic forward called Salam sale. In contrast to a conventional forward or contract farming, the entire sale price of the produce sold in advance is paid to the farmer by the buyer. The price per unit, quality specifications and all terms of sale are clearly determined in advance. The farmer gets the price in advance (and uses the same to finance pre-cultivation activities) and delivers the sold commodity after the harvest, and is thus insulated from price manipulations that may result in a free-fall subsequent to a bumper harvest.

Further in the true spirit of an Islamic economy, which is a sharing-based economy, Islamic economists recommend sharing and cooperation-based institutional structure for farmers, such as Farmers’ Cooperatives. This is in line with recommendations of various policy experts in agri-business field who have sought to curb the exploitation of the farmer and enhancing its bargaining power. This involves the setting up of producers’ cooperatives comprising the individual farmers as members. The member-farmers off-load their producer with the cooperative, which then enters the market with much stronger bargaining power and obtain better prices. The improved bargaining power may be further enhanced with access to warehousing and storage facilities. The producers’ cooperative may also provide other useful services, such as, financial services, value-addition services in the form of processing and packaging for better price-realization. The profits made by the cooperative – high or low – for the services rendered is ultimately shared among the member-farmers, thus, eliminating any possibility of exploitation by one party or another.

While conventional commercial banks are generally reluctant to deal with cooperatives, there have been good examples of Islamic banks playing proactive role in creating a network of local cooperative organizations and then placing funds with them under multiple arrangements, creating a win-win situation for all parties.[8]

Notes

[1] This is calculated as follows: Sale price of 952kg @ Rs1.60 or Rs1523.20 minus expenses (commission to intermediary: Rs 91.35 plus wage for putting the onions in sacks: Rs18.55 plus wage for handling the sacks of onions: Rs 59.00 plus duties for weighing onions: Rs.33.30 plus transportation by truck to APMC: Rs.1320) amounting to Rs.1522.20. This example is sourced from http://abpnews.abplive.in/business/onion-farmer-got-one-rupee-only-on-selling-1-ton-onion-381557/

[2] Farmer suicides are fast becoming a major societal problem rooted in the stark economic realities related to farming. For an economic analysis of farmer suicides in India, see this blog by Mohammed Alim at  https://agric.in/2012/07/15/has-the-government-of-india-done-enough-to-tackle-the-incidence-of-poverty-induced-farmer-suicides/

[3] India is the second largest onion producer in the world, after China. Forty-five percent of the onion produce in India comes from the states of Maharashtra and Karnataka.

[4] Varma, Subodh (23 December 2010). “The great onion robbery: 135% mark-up from mandi to retail”The Times of India. Retrieved 3 January 2011.

[5] Source: http://abpnews.abplive.in/india-news/ground-investigation-on-onion-rates-362524/

[6] This section draws heavily on http://mrunal.org/2013/08/food-processing-nuisance-of-apmc-acts-commission-agents-marketing-of-agricultural-produce-issues-and-constrains-for-gs-mains.html

[7] R. Salvadi Easwarana and P. Ramasundaramb “Whether Commodity Futures Market in Agriculture is Efficient in Price Discovery ? — An Econometric Analysis”, Agricultural Economics Research Review Vol. 21 (Conference Number) 2008 pp 337-344

[8] A good example is the Bank Muamalat Indonesia that created a network of Islamic financial cooperatives called Baitul Maal wa Tamweels (BMTs) and then placed funds with them for onward financing to members under alternative Shariah-compliant arrangements.

Instilling Islamic values into economic system to strengthen nation

The Islamisation of the economic system, if adopted and practised in its true form, will strengthen the economy, particularly income distribution and poverty alleviation which have proved elusive under the present western economic model, according to former governor of the State Bank of Pakistan (SBP), Dr Ishrat Hussain.

“This will, in fact, eliminate sources of instability, violence and tendency towards extremism arising from a sense of deprivation in this region,” he said.

He expressed these views while delivering a speech on ‘Islam and the future of economics’ at a conference on Islamic Economics and Finance, organised by the Institute of Business Administration (IBA) at the SBP on Saturday.

He said that the introduction of Islamic banking has promoted financial inclusion by bringing in those who have so far remained outside the conventional banking system, and has thus strengthened the financial sector.

“We need to explore the unique features of Islamic finance for the larger good of the society, particularly in the context of economic growth and poverty alleviation,” he said.

Islamic finance can be a powerful tool for inclusive growth and amelioration of the conditions of poor in Muslim countries, he said.

Leading Islamic finance experts and Shariah advisers, who spoke at the conference, said that the phenomenal growth in the Islamic financial sector worldwide is a testimony of its potential, and the Islamic economic system could be a role model for world economies.

They said that currently there are over 500 Islamic financial institutions with a total size of $1.2 trillion, over 250 Shariah-compliant mutual funds having $300 billion worth of funds, over 133 Takaful companies with $8.8 billion in contribution and some 207 international Islamic Sukuks issued till 2007 with a 73 per cent growth in comparison to 2006.

The speakers said that Islamic finance and economics is a reality which is being recognised by the International Monetary Fund, World Bank and Basel committee. They said Shariah and accounting standards for Islamic financial institutions have already been laid down and more than 60 countries have Islamic banking institutions.

The speakers informed the audience that Islamic banking is growing rapidly in Pakistan with 649 branches of dedicated Islamic banks and Islamic banking sections of conventional banks.

Their asset base is approximately Rs366 billion while their deposit base is around Rs283 billion with a growth rate of around 55 per cent since inception and the share of Islamic banks in the overall banking system of Pakistan stands at 5.9 per cent, they added.s

source : The Express Tribune 

‘Islamic Banking is the Answer’ for Nigeria’s economy

Islamic banking is the answer to Nigeria’s economy because it “promotes infrastructural development which Nigeria critically needs,” says Mrs. Hajara Adeola, the managing director and chief executive officer of Lotus Capital Limited.She said the establishment of Islamic financing in Nigeria is rife following the plan by the CBN to discontinue universal banking for specialised banks.

The Jaiz International Bank has not been able to take off due to the N25billion compulsory capitalisation benchmark for banks. She said it is possible to have Islamic banking with the CBN relaxing the capitalisation base for banks. She said banks categorisation will: “bring banks nearer to the people and offering specialised service. Not all banks are international banks everywhere in the world” she said. Adeola spoke yesterday at the five-day training workshop on Islamic finance and investment products put together by Chartered Institute of Bankers of Nigeria (CIBN) and Lotus Capital Limited.

source : allafrica

Linar Yakupov: “Islamic finance is a medicine for economy”

Linar Yakupov: “Islamic finance is a medicine for economy”

In recent months IFC linova declared about two projects in the sphere of Islamic finance at once – the initiation of Tatarstan International Investment Company (TIIC) based on Shari’a principles and Halal Industrial Park (HIP). As it turned out for “Where is money”, but this is not all directions for company’s activity, except that the projects are underway yet. The details about the company’s activity were reported by Linar Yakupov, CEO of IFC “Linova”, to Elena Ivanova, the journalist of business weekly where is the money?

-Mr. Yakupov, spoke about the investment company, its establishment and future activities.

– To begin with I would like to say that relationship between the Republic of Tatarstan and Islamic Development Bank (IDB) has started more than two years ago after the meeting of
M. Shaimiev, the president of Tatarstan Republic, and Dr. Ahmad Muhammad Ali, CEO of IDB. In its turn IFC “Linova” has started the cooperation with IDB in 2006 and prepared draft memorandum of mutual understanding between the Republic of Tatarstan and IDB, which was signed by both sides in 2007. After Cabinet-level negotiations the cooperative activity has started to obtain practical relevance. Initially, the main procedures and regulations were spelled out, experts of IFC Linova analysed how to take account of Shari’ah principles in finance and economic activity, how to act up to these principles. Then during two years several projects of islamic finance’s promotion in Russia were developed. Then in 2008 IFC Linova and Islamic Corporation for the Development of the Private Sector signed a pact of FS development (feasibility study) of the Islamic investment company’s initiation in Tatarstan Republic. Current mode of investment operations in Russia didn’t allow to attract funds of muslim investors. The development and the initiative of Islamic investment company’s establishing allowed to provide guidelines for successful development. Half a year before at the first International Summit of Islamic Business and Finance in Kazan the protocol about the initiation of joint Islamic investment company was signed by Mr. Roustam Minnikhanov, the prime-minister of the Republic of Tatarstan and by Mr. Khaled M. Al-Abudi, Managing Director and CEO of the Islamic Corporation for the Development of the Private Sector. It derived the name of Tatarstan International Investment Company (TIIC). Currently required quantity of investors from IDB member countries have confirmed their participation in this campaign. That’s very good, considering the fact that nowadays the market holds hand. Stock flotation of TIIC with the beating the target proves that the investors are interested in our region, so our objective is to observe all technical parameters and mutual interest. We are certain that the project’s development will influence on investment attractiveness not only in Tatarstan, but also in Russia.

On which principles will be based the activity of TIIC?

-TIIC will stick with the principles of investment banking. It means that it will initiate new projects through the establishing of new companies and investors’ engaging, both russian and foreign. The nominal capital is $3 million. This is a small sum of money, but it’s enough for the first time. It will increase as necessary.

Which projects are seen in TIIC? Are there approved projects?

-Within the framework of FS we prepared the list of primary projects for investment. There are infrastructure project, for instance, the participation in buiding of toll road in Tatarstan Republic, agricultural projects, developing projects of Islamic finance mechanisms, such as the leasing company, the investment fund etc. The projects have seen yet, the primary investments are sized up and the extent of risk is determined.

According to which criterion you selected these projects?

-Firstly, according to Shari’ah principles – TIIC doesn’t participate in business connecting with gaming, alcohol and pork production etc. Yet another important moment, to which I would like to draw attention is the fact that TIIC will maximally distance itself from the oil patch. Generally, the investment company will be the additional lokomotive for the diversification of our economy – not only in Tatarstan but in other regions of Russia. 60% of investment will be for our Republic, the remaining is planned to be invested in projects of other regions of Russia.

Who did initiate the project of Halal Industrial Park?

-Lately the idea of halal parks’ initiation extensively evolves in muslim countries. Malaysian experience motivated IFC Linova to create the structure, which could set the pattern for interested businessmen involved in halal industry. The halal industrial parks are expected to be highly sought in the countryside and also in areas of Muslims’ compact settlement satisfying the requirements of food complying with halal standard.

What does the Halal industrial park represent?

Halal industrial parl is formed in Baltasinski district of Tatarstan. According to the intention, HIP will build up the background, where the practical interests of agricultural producers (such as the farming, the backyard. the private entrepreneurs etc) meet the interests of the market which waits quality and unexpensive products. HIP will help to the small and the medium business in the achievement of desired goals due to the well-established infrastructure and Hosted Service. We have to reckon with the major problems at the processing and the realization of products. In the Halal Industrial Park the facilities for successful completion of the cycle are provided in order to solve this problem – from the farmer to the consumer. HIP will unite the whole circulation of production flow: from the small and medium-sized businesses’ employers, engaging in manufacturing, to the consumer. Linova-Trade, the special company promoting the production of HIP, has been setted up yet. It will start the activity from the next year.

Which are the terms of being in HIP except for the production of halal products?

Shari’ah standards of ethics (for example, giving up of alcohol drinking, blackguardism) will be introduced in park. The residents ought to remember that their products will be certified. Certainly, the activity of resident must have the economic feasibility. Naturally, we cannot run the risk. We will extensively monitor each project for business plan’s suitability and will help for its promotion. We have the whole strategy concerning the development of halal industry.

What does it involve?

-Within the framework of Kazan summit in 2010 the holding of the international halal exposition has been planned yet. We negotiate with the Ministry of Industry and Trade of Tatarstan Republic on issues relating to this question. We also suggest to hold Halal Industrial Forum, where the producers, the certification authorities and regulatory organization can communicate and share of experience. There is the initiative to unify the halal standards across Russian Federation. Unfortunately, halal committees can’t remain at odds, so, as a consequence, till here there are no exact standards of halal certification. For this purpose there is possible the initiation of the Association of Halal Committees, certifying the halal production according to the common standard. This is the next step yet.

Do you consider that the terms for the development of islamic business have matured in Russia yet?

-Resting on the international experience, I can make a point that today a great deal of islamic finance products’ consumers are not muslims – they are followers of other religions. Simply put, the islamic finance is the product for all people. It’s the sample for the business dealing, but merely different one, than western one. It can be used by all desiring people. Moreover, following the results of investigation about 60% of muslims don’t use traditional bank services overall because of the religious principles. These are people, who appear to be outside the orbit of economical development of the country. And if Islamic finance institutes are started up, the opportunities to set up business will be offered for them. Therefore, we will be able to use the latent financial and manpower reserves of the country.
It also shows that traditional banks should’t be afraid of churn to the Islamic banks because Islamic bank is meant to those who in general avoid the interplay with the traditional western financial model. At this point it is possible to speak about the segmentation of the market – the Islamic bank has its own niche. Actually by reference to international practice, in Malaysia, where the Islamic banking is headmost, it occupies only 15% from the whole market, other ones are traditional devices.
Moreover, exactly the slant to the speculative instruments in the traditional finance sphere led to the grave crisis. On that score Islamic finance and banking, or ethical banks, how they started to be called nowadays, don’t allow to produce speculation and are turned out to be a sort of  anti-crisis instrument. We don’t say that Islamic finances are the panacea, but they could be the revitalizing factor for the whole economy. If this objective implements, we will be very pleased.

souce : ibf.ru (english)

Islamic Finance and the Japanese Economy

In Islamic Finance, in a nutshell the Merchant of Venice (to be bank and consumer finance in Japan normally) the act of taking an interest as they are not allowed banks to take risks with how a borrower must He could have been. And to reflect on the world’s financial globalization is to review the direction of Islamic finance in Japan has been to point out that the deviations from the trend.

Livedoor’s problems and hedge funds will be lent, the interest rate of zero (although this may be the ultimate Islamic finance), as the antithesis to Islamic unhappy that Japan’s financial institutions, financial administration for the financial, and consumer Finance had been shown. If the financial experts, What a thing to do may be rejected in the Maeru Words.

Although Japan and the United States was involved in globalization rather, they read the sentence, I thought it should also more closely in contact with Islamic culture. On a blog site that it had been up the full column, leave the quotes from it.

“The Rise of Islamic Finance”

Islamic finance has been active in soaring oil prices. Middle East oil producing countries oil revenue in 2005 to 300 million expected ÄÞ 1000 reached the “oil money” is not being. Islamic banks to manage funds in accordance with the teachings of the Koran in one of wherever.  Koran is “interest” has been banned. Has denied the acts confirmed to take an interest only loan the money to be more accurate. Only those who will bear the risk business .Has devoured my time away and take a mortgage interest is immoral, but the idea.

Islamic Finance and straightforward if you want to deny the Merchant of Venice.

But to deny the interest rate banks not hold. Trial and error without taking the money to put up interest rates there has been examined from the mid-20 century.

And joint venture banks and the borrowers to collect a premium to the principal and split the profits if successful. Take a lease fee or to buy the bank materials. How to take the risk of a variety of businesses and banks, however, suffer a loss if it fails. It also features a responsible lender.

There were strict requirements to suppliers. Alcohol, gambling, pork and funding will not touch the commandment. Avoid any companies that interest income is more than half of the profits. Money games that do not provide the money.

Honesty, fairness, mutual assistance based on Islam. Islamic banks “Shariah Committee” in an organization called the examination whether the funds are used according to Islamic law. Earnings management to put more emphasis on ethics, corporate social contributions (CSR) and corporate compliance (compliance) is similar to trends.

Trend is spreading to Asia. Malaysia has become a popular former Prime Minister Mahathir era of Islamic finance. It sparked outrage in the Asian currency crisis was triggered by speculative hedge funds said. Thailand has encouraged the revitalization of the regional Islamic financial Prime Minister Thaksin Shinawatra.

The U.S. and European financial institutions, including Citibank and Bank Paribas,

Eagerness to become Islamic finance, including funding and expertise to make a branch subsidiary. Oil prices overlap there.

Bahrain and Dubai to the main street of the “Islamic banks” signs are everywhere.

Now about 200 banks in 40 countries and over 300 million more than 1000 ÄÞ running the fund, Called. Buried under the modern financial system of Western rationalism, and the City of London. NY swept the world from Wall Street. In principle compete with supremacist underlying earnings

Is a byproduct money loser’s game winner.

Islamic finance seems like Western-style finance has emerged as a counterbalance.

In an attempt to show alternatives to proprietary financial globalization without ethics is

Shows that the world situation today. However, Japanese banks are not moving at all in this area.

KFH Launches World’s First Islamic Economics Research Team

Kuwait Finance House Group today launched its Research arm internationally here, an initiative which is a manifestation of the strong ties and economic integration between the Middle East and Malaysia apart from the thriving Islamic Finance market in Malaysia. The initiative has been launched at a time when global economics play a decisive role in the way a market performs and when accessibility to accurate market information is crucial, Kuwait Finance House (KFH) said in a statement issued in conjunction with the launch. KFH is the first Islamic Bank in the world to establish an in-house research team while KFH Research is the first global Islamic research team to be housed in Malaysia. The team comprises industry experts devoted to generating and sharing knowledge on Islamic finance and capital markets within the Middle East. It said that the Islamic financial system, its financial institutions, markets and infrastructure, have demonstrated the system’s viability and robustness via its exponential growth within the global financial framework. This progression has brought about significant benefits for the local and the global economy as it has strengthened ties between countries and regions via its efforts to mobilise funds across borders and channelling them to productive investments, the statement said. KFH Chief Economist & Head of Research Baljeet Grewel said in her presentation that KFH’S research will provide insightful and objective research designed to enable clients to make informed investment decisions. It will be the core of the value proposition offered to clients. Meanwhile, managing director Kuwait Finance House (Malaysia) Bhd K Salman Younis, said that the research arm aimed to provide cutting edge research material to help clients make their investment decisions. “Our commitment is that wherever the KFH Group is present, we would like to contribute towards the development of Islamic banking in the region. As an Islamic financial institution, it is our social responsibility to promote Islamic finance not only in the Middle East but also globally. Our research capabilities allow us to build on this and foster the closer integration of Islamic markets,” he added. Bank Negara Malaysia (BNM) deputy governor Datuk Mohd Razif Abdul Kadir officiated the launch on behalf of governor Tan Sri Dr Zeti Akhtar Aziz. KFH is a market leader in Islamic banking in Kuwait and is engaged in providing Islamic banking services including consumer banking, real estate financing, lease financing, and trade finance. —

Source  BERNAMA