Saturday, January 12, 2008

Ijara sukuk compliance, WOCCU paper

The Shari'ah board of AAOIFI will meet January 15th to review the Shari'ah-compliance of ijara sukuk following the announcement by Sheikh Taqi Usmani, the board's Chairman, that the repurchase agreements contained in up to 85 percent of all ijara sukuk issued in the GCC region. Some criticize the way in which the announcement was made first in the media before the Shari'ah board met to discuss the issue.

The World Council of Credit Unions (WOCCU) released a paper yesterday describing the use of Shari'ah-compliant products by 2 credit unions it has established in Afghanistan. The paper highlights the advantages presented by the credit union model. One advantage that is easily grasped is the role of depositors as owners. This allows the credit union to replace deposit account interest with profits determined by the profitability of the credit union. The full report in pdf form is available on the WOCCU website under Research Monographs.

Recently launched Dubai-based Noor Islamic Bank may have plans for expansion through acquisition into the U.K. market. Of Western countries, the U.K. has one of the better developed markets for Islamic finance, much of this due to an accommodating regulatory environment which takes a 'no obstacles, no special favors' approach to Islamic finance.

Despite having a Muslim population that is less than 1/12th of the total population, Sri Lanka has adopted significant regulatory flexibility to allow Islamic finance and a company which offers ijara products in addition to other leasing products, People's Leasing Company, will issue a sukuk to raise funds.

The UAE is seeing the growth of Johara, all women branches of Dubai Islamic Bank, headed by Rana Al Hindawi. Mrs. Al Hindawi describes how "for many years it was difficult getting people to accept that we needed a separate banking service. Women have different needs when it comes to money and finance and we want to reach out to all types of women, including professionals and housewives". The branches will focus on allowing "women to be able to handle their own finances and for them to learn how to get the most out of their earnings".

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