Sorry for the lack of posting in the last week. I've had a cold that has put me on the sidelines.
What need does the ILMC fill?
The issue of asset-liability maturity mismatch has been a common one in Islamic finance, just as it is in conventional banking. However, in Islamic banking, the maturity mismatch has been accentuated by the lack of short-term, money market instruments that allow for managing excess liquidity and temporary liquidity needs. The solution until now has been interest-free deposits with central banks and bilateral commodity murabaha and wakala agreements where banks place excess liquidity with other banks in need of that liquidity. However, this setup is insufficient for the industry and the flaws of this method was demonstrated in the conventional banking industry in the latest crisis.
In the last crisis, the failure of Lehman Brothers led to a nearly complete freeze in commercial paper markets. Commercial paper is issued with maturities of less than 270 days (to get an exemption from some securities rules in the US). Commercial paper is issued by many corporations, but banks make up a large share of the total issuance. It is also a large portion of the investments held by money market funds. When Lehman collapsed, the purchasers of these securities pulled out of the market, fearing that another large CP issuer's collapse could impose significant losses on them. The market for CP did not return to vibrancy until the US government stepped in to support the market.
In Islamic finance, the current money market alternatives available resemble the commercial paper market (although being far less liquid than commercial paper). A bank with excess liquidity will find a counterparty with a short-term liquidity need and enter into a short-term commodity murabaha or wakala agreement. It will essentially loan its surplus funds to the other institution for a short period and generate a return on the surplus funds. However, these types of bilateral agreements leave the lending bank with exposure to credit risk that the counterparty will fail before it gets its money (with a return) back. In a liquidity crunch like the one following the failure of Lehman, Islamic banks (like the investors in conventional commercial paper) will be far less likely to lend out their surplus liquidity if they feel there is a chance it will be lost.
Because of the counterparty risk involved in these bilateral agreements, the Islamic finance industry is vulnerable to a crisis that could threaten the solvency of Islamic banks. If some banks with liquidity needs cannot find short-term financing through bilateral agreements, they may have to resort to asset sales, which will occur at fire sale prices, and the liquidity needs of the institution could turn into a solvency crisis. The fire sale of assets will deplete the bank's assets compared to its liabilities (which will remain mostly fixed) and for the balance sheet to 'balance', the difference will come out of the bank's capital.
There has not been much in the way of alternatives available to Islamic banks until recently (except on a country-by-country basis--with many countries having no Islamic short-term instruments issued by the government or central bank). The International Islamic Liquidity Management Corporation (ILMC), which was announced recently and will be launched on October 25 in Kuala Lumpur, Malaysia by the Islamic Financial Services Board members (mostly central banks and regulatory bodies).
What will come from the ILMC specifically is not yet clear, but it will be some form of short-term investment and the Malaysian central bank governor Zeti Akhtar Aziz says they will be "short term, and they will be, we expect, highly rated instruments". The fact that ILMC is being established by the central bank members of the IFSB will probably be the factor that makes them highly-rated. The high rating is important for the capital rules under Basel 2 (and soon Basel 3) for how banks classify their holdings of the securities. It is not clear exactly the degree of support the IFSB members will put behind the securities, but having central banks behind the issuer of these securities will also limit the degree to which a future liquidity crisis could lead to Islamic banks losing confidence in the ability of their counterparty (the ILMC) to make good on the obligation to redeem the short-term securities. I keenly await more details on the structure of the ILMC's products as well as details on the degree of explicit support from the IFSB members, but at this stage, it looks like the Islamic finance industry could take a big step forward with the establishment of the ILMC, which could start issuing bills regularly beginning "early next year".
UAE central bank's Islamic CDs
The news about short-term investments for Islamic banks does not end with the ILMC. The UAE central bank announced plans earlier this year for Islamic certificates of deposits (CDs) and new details are being reported on this front as well. Standard Chartered, which sits on the central bank's liquidity management committee, says the UAE central bank will use murabaha for its Islamic CDs. This is mixed news. It is certainly a positive for another country to offer short-term liquidity management tools for its Islamic banks for the reasons I outlined above. However, the use of murabaha for these does little to find a creative solution that does not entrench the industry in more commodity murabaha transactions.
The use of commodity murabaha transactions is common in Islamic finance and is accepted as legitimate by scholars (with some divergence from the OIC and the head of Shari'ah at the IFSB). In the end, it is a case of whether the perfect should be the enemy of the good. The benefits from the availability of short-term liquidity management tools surely outweighs concerns that commodity murabaha is 'too similar' to interest-based loans in the near term. However, the greatest skepticism about the Islamic finance industry is that its products do nothing but replicate conventional interest-based loans with different structures to receive approval.
As much as this criticism is valid--there are some products that do nothing but apply a 'Shari'ah wrapper' to conventional products--it overlooks the fundamental paradox in the prohibition of riba. To paraphrase, trade is like riba, but trade is permitted but riba is prohibited. I am certainly in no position to argue the theological points of the Qur'anic verse I paraphrased; that is, as they say, well above my pay grade (not to mention my qualifications). However, it is important from the level of consumer perception of the Islamic finance industry. At what point does a product which the scholars agree is Shari'ah-compliant become too close to an interest-based product for a consumer to accept it as preferable to an interest-based product.
I don't have an answer to the question and I don't think anyone in the industry does. However, it is a fundamental point for the industry's growth: if 'purity' in perception is the goal, products will likely be too unfamiliar to attract demand from enough people to be profitable (and the costs of those products will be too much higher to elicit much consumer demand). However, if (when) financial engineering is taken to its limit, the distinction between Shari'ah-compliant and conventional products becomes meaningless for enough consumers that the industry will have to compete almost entirely on price alone, which it will be hard pressed to do. Some middle ground is required and I think that some form of cost-benefit analysis can provide a guide and for the murabaha-based Islamic CDs, I think the benefits outweigh the costs and the product will benefit the industry.
Other Items
Reuters reports that according to the Assistant Secretary General of AAOIFI, a regional mandatory Shari'ah body is "years away". This is not surprising, but it is relatively new to have AAOIFI publicly acknowledge it.
I weighed in on my own views on the potential for Islamic finance to lead conventional finance by increasing the role of women in the industry (both conventional and Islamic finance industries are male-dominated). Rushdi Siddiqui adds his take on the issue.
Showing posts with label women in IF. Show all posts
Showing posts with label women in IF. Show all posts
Tuesday, October 12, 2010
Friday, October 01, 2010
GCC sukuk markets may grow in Q4, Shari'ah scholars and standards, women in Islamic finance
One of the many themes I have tried to articulate on this blog is the areas where Islamic finance can differentiate itself from conventional finance. An article in Maktoob Business points to one area that may be difficult for Islamic finance, but should not be impossible given the low bar set by conventional finance. This is the role of women in Islamic finance. Currently, there are few women in top roles in Islamic finance although there are several exceptions in Malaysia (with the head of one Islamic bank, the central bank and one Shari'ah scholar being women). As I mentioned, there is a relatively low bar set by conventional finance: the industry is one of the more male-dominated industries across the world. As the article mentions, Islamic finance has not yet seen as much participation by women in top roles, but there is no inherent reason why this cannot be the case. Should Islamic finance be successful n becoming more balanced in terms of gender participation, it would set an example for conventional finance, but also counter popular misconceptions about women and Islam more generally.
The move by Dubai Islamic Bank to up its stake in Tamweel to 57.33% has led to rumors that Emaar, the largest shareholder of Amlak Finance, will sell its stake in the other Islamic mortgage company in Dubai, which was expected to be merged with Tamweel.
Qatar Islamic Bank has reportedly priced its five-year, $750 million sukuk at 262.5 basis points over midswaps. There has been little corporate sukuk issuance in the GCC outside of regular Bahraini Central Bank short-term issues and Saudi corporate issues. The resolution of the Dubai World debt agreement for $25 billion of debt has led to a revived pipeline that at $5.5 billion which now surpasses the pipeline in Asia of $2.1 billion. Particularly since the Dubai debt crisis, Asian issuers have been much more active in the primary market for sukuk as investors have viewed the GCC as being significantly more risky, even though most of the problems were contained to Dubai (and to a few Kuwaiti investment banks). However, the Dubai World situation is not resolved entirely and remains dynamic, which could quickly increase the risk aversion of investors towards the GCC.
The issue of ensuring proper governance with respect to Shari'ah scholars has become a widely discussed issue since ISRA proposed a global certification, which Reuters describes as having 'overwhelmed' the industry. The ISRA proposal and the issue of coordination of Shari'ah standards in general has received a cool reception from Megat Hiziani Hassan, a lawyer at Malaysian firm Zaid Ibrahim. In an opinion article in Maktoob Business, Dr. Rusni Hassan, a Shari'ah advisor to HSBC Amanah Malaysia, reminds the Islamic finance industry that Shari'ah scholars are best suited as 'guides', not 'police'. I agree in general--Shari'ah scholars should have a 'teaching' role to ensure that practitioners understand the rules around Shari'ah-compliance and the reasons for them. However, there is a role for Shari'ah scholars as 'police' as well that will prevent or at least mitigate the Shari'ah risk associated with future reversals in approval of controversial products' Shari'ah-compliance. In many ways, Shari'ah scholars are 'regulators' of the Islamic finance industry and without their setting firm boundaries, financial engineering can be taken too far in creating products that meet the letter but not the spirit of the rules governing the industry.
The move by Dubai Islamic Bank to up its stake in Tamweel to 57.33% has led to rumors that Emaar, the largest shareholder of Amlak Finance, will sell its stake in the other Islamic mortgage company in Dubai, which was expected to be merged with Tamweel.
Qatar Islamic Bank has reportedly priced its five-year, $750 million sukuk at 262.5 basis points over midswaps. There has been little corporate sukuk issuance in the GCC outside of regular Bahraini Central Bank short-term issues and Saudi corporate issues. The resolution of the Dubai World debt agreement for $25 billion of debt has led to a revived pipeline that at $5.5 billion which now surpasses the pipeline in Asia of $2.1 billion. Particularly since the Dubai debt crisis, Asian issuers have been much more active in the primary market for sukuk as investors have viewed the GCC as being significantly more risky, even though most of the problems were contained to Dubai (and to a few Kuwaiti investment banks). However, the Dubai World situation is not resolved entirely and remains dynamic, which could quickly increase the risk aversion of investors towards the GCC.
The issue of ensuring proper governance with respect to Shari'ah scholars has become a widely discussed issue since ISRA proposed a global certification, which Reuters describes as having 'overwhelmed' the industry. The ISRA proposal and the issue of coordination of Shari'ah standards in general has received a cool reception from Megat Hiziani Hassan, a lawyer at Malaysian firm Zaid Ibrahim. In an opinion article in Maktoob Business, Dr. Rusni Hassan, a Shari'ah advisor to HSBC Amanah Malaysia, reminds the Islamic finance industry that Shari'ah scholars are best suited as 'guides', not 'police'. I agree in general--Shari'ah scholars should have a 'teaching' role to ensure that practitioners understand the rules around Shari'ah-compliance and the reasons for them. However, there is a role for Shari'ah scholars as 'police' as well that will prevent or at least mitigate the Shari'ah risk associated with future reversals in approval of controversial products' Shari'ah-compliance. In many ways, Shari'ah scholars are 'regulators' of the Islamic finance industry and without their setting firm boundaries, financial engineering can be taken too far in creating products that meet the letter but not the spirit of the rules governing the industry.
Tuesday, September 29, 2009
Investment Dar, zakat fund, SRI and Islamic finance, IBB sees wider loss, France not ready for Islamic banks
The Investment Dar is making progress with its creditors having reached a Standstill Agreement, which will postpone the claims by its creditors as part of its restructuring plan. There is not yet final resolution of the $100 million sukuk which the Investment Dar defaulted on, but the Standstill Agreement is a step on the way to a possible resolution.
A zakat fund managed by BMB Islamic is nearing launch. However, the fund has generated some controversy from Shari'ah scholars who argue that zakat is meant to be distributed to the needy and not invested.
A publication bringing together the contributions of 19 lawyers will explain the legal and Shari'ah aspects of Islamic finance will be published by Chancellor Publications. It was edited by Humayon Dar and Umar Moghul.
The BBC has an article on Islamic finance, one which describes the growth of Islamic finance, particularly in the U.K. following 9/11 when investing in the U.S. became more difficult and was perceived as having additional riskiness.
There is an interesting article from Gulf News about the differences between ethical investing and Islamic investing. While there are similarities in many of the screens used by Islamic and socially responsible investment funds, there are differences that may make some Shari'ah-compliant investments not pass other ethical screens, primarily those around environmental issues because Islamic indices have an overweighting in energy companies which often are not the most green.
Dr. Abbas Mirakhor warns that Islamic finance can face systemic failure and reputation risks because it is not well enough regulated internationally and in some countries. He was speaking at the Malaysian Securities Commission and said that the Malaysian system had the most advanced regulatory system for Islamic financial industry that could serve as a model. He also spoke about the potential for a food and commodity crisis. At an Islamic Financial Services Board seminar, Dr. Zeti Akhtar Aziz, the Bank Negara Malaysia governor said that the Islamic financial industry has been resilient and continues to grow and innovate with new products. However, there remain gaps in the legal framework, Shari'ah standardization and and Islamic financial products face different risks from conventional products. A prominent scholar Mohamed Akram Laldin says that Shari'ah scholars should be held accountable for "clear mistakes in their decisions".
The Islamic Bank of Britain saw its loss widen as the economic conditions and the low benchmark interest rates hurt the profitability of their increased deposits. The bank says it may need to scale back its growth unless it raises additional capital in order to continue its compliance with prudential capital requirements.
The head of France's central bank, Christian Noyer, says that the country is not yet ready to issue an Islamic banking license yet because of concerns over safety and soundness. The French Central Bank, which does not control monetary policy following the foundation of the European Central Bank, has been approached by several institutions looking to establish Islamic banks in the country, but does not yet have the same level of knowledge and familiarity with Islamic banking as the U.K. regulator, the Financial Services Authority.
The lising of sukuk from Petronas and Cagamas could signal the continuing growth in the sukuk markets following the credit crisis. In the wake of the credit crisis as the effects spread globally throughout the financial markets and economies, the issue of new sukuk nearly completely dried up compared to 2007 when a record amount of sukuk were issued.
Other News
A zakat fund managed by BMB Islamic is nearing launch. However, the fund has generated some controversy from Shari'ah scholars who argue that zakat is meant to be distributed to the needy and not invested.
A publication bringing together the contributions of 19 lawyers will explain the legal and Shari'ah aspects of Islamic finance will be published by Chancellor Publications. It was edited by Humayon Dar and Umar Moghul.
The BBC has an article on Islamic finance, one which describes the growth of Islamic finance, particularly in the U.K. following 9/11 when investing in the U.S. became more difficult and was perceived as having additional riskiness.
There is an interesting article from Gulf News about the differences between ethical investing and Islamic investing. While there are similarities in many of the screens used by Islamic and socially responsible investment funds, there are differences that may make some Shari'ah-compliant investments not pass other ethical screens, primarily those around environmental issues because Islamic indices have an overweighting in energy companies which often are not the most green.
Dr. Abbas Mirakhor warns that Islamic finance can face systemic failure and reputation risks because it is not well enough regulated internationally and in some countries. He was speaking at the Malaysian Securities Commission and said that the Malaysian system had the most advanced regulatory system for Islamic financial industry that could serve as a model. He also spoke about the potential for a food and commodity crisis. At an Islamic Financial Services Board seminar, Dr. Zeti Akhtar Aziz, the Bank Negara Malaysia governor said that the Islamic financial industry has been resilient and continues to grow and innovate with new products. However, there remain gaps in the legal framework, Shari'ah standardization and and Islamic financial products face different risks from conventional products. A prominent scholar Mohamed Akram Laldin says that Shari'ah scholars should be held accountable for "clear mistakes in their decisions".
The Islamic Bank of Britain saw its loss widen as the economic conditions and the low benchmark interest rates hurt the profitability of their increased deposits. The bank says it may need to scale back its growth unless it raises additional capital in order to continue its compliance with prudential capital requirements.
The head of France's central bank, Christian Noyer, says that the country is not yet ready to issue an Islamic banking license yet because of concerns over safety and soundness. The French Central Bank, which does not control monetary policy following the foundation of the European Central Bank, has been approached by several institutions looking to establish Islamic banks in the country, but does not yet have the same level of knowledge and familiarity with Islamic banking as the U.K. regulator, the Financial Services Authority.
The lising of sukuk from Petronas and Cagamas could signal the continuing growth in the sukuk markets following the credit crisis. In the wake of the credit crisis as the effects spread globally throughout the financial markets and economies, the issue of new sukuk nearly completely dried up compared to 2007 when a record amount of sukuk were issued.
Other News
- Jamelah Kamaluddin becomes the first woman to head an Islamic bank with her appointment last year as the managing director of RHB Islamic Bank.
- South Korea is offering tax incentives to promote the use of sukuk and has changed regulations to ensure that the profits for sukuk holders receives the same tax exemptions as interest payments on conventional bonds.
- Kuwait Energy received a $50 million murabaha financing from the World Bank Group's International Finance Corporation.
- An article discusses Islamic ETFs, including the recently launched, U.S.-based Javelin ETF, which has not turned interest in it yet into significant trading volume. The ETF market in the U.S. will be broadened with the launch of 2 new funds from ShariahShares, managed by California-based Florentz Investment Management.
- Bloomberg will focus on Islamic finance in its expansion in the GCC.
- The Muslim Community Cooperative Australia launched another fund, an Income Fund, following its launch of a Mortgage Income Fund.
- Bank Negara Malaysia, the Malaysian central bank, has signed an agreement with the Hong Kong Monetary Authority to cooperate on financial issues particularly Islamic finance.
- The National Bank of Kuwait launched its third Kuwaiti Dinar-denominated Ijara Fund.
- Malaysian firm Sime Darby will issue RM4.5 billion ($1.3 billion) in medium-term Shari'ah-compliant notes
- The report I wrote for Yasaar Media is briefly described in a press release available from AMEinfo.
- Ernst & Young is organizing a conference on Islamic finance in the Channel Islands. Islamic retail banking executives and Shari'ah scholars will meet for a conference in Dubai on October 12 to discuss the future of the industry.
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".
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".
Monday, July 02, 2007
Islamic banking, durra and IFC investment in Islamic finance
The International Centre for Education in Islamic Finance (INCEIF) held a conference in Yemen about the challenges facing Islamic banks. Another conference in Bahrain discussed the growing prominence of Islamic banking. In Kenya, the lack of a Shari'ah-compliant interbank money market raises questions about the viability of Islamic banks in the market, particularly the recently opened First Community Bank.
Women in the UAE's Islamic finance industry are pushing for a greater number of female senior executives.
The International Finance Corporation (IFC), the private sector arm of the World Bank, will invest in Islamic mezzanine notes issued by Tamweel. The issue will be the first Shari'ah-compliant multitranche mortgage-backed security in the UAE. IFC hopes its investment will help "develop long-term capital markets in the GCC and expand availability of Islamic finance products" according to Lee Meddin, the IFC Deputy Treasurer and Global Head of Structured Finance.
The Waqf Fund established by the Central Bank of Bahrain in 2006 will have a special fund to support Islamic finance education & training.
Gulf Finance House GDR priced at $2.5 per share.
Women in the UAE's Islamic finance industry are pushing for a greater number of female senior executives.
The International Finance Corporation (IFC), the private sector arm of the World Bank, will invest in Islamic mezzanine notes issued by Tamweel. The issue will be the first Shari'ah-compliant multitranche mortgage-backed security in the UAE. IFC hopes its investment will help "develop long-term capital markets in the GCC and expand availability of Islamic finance products" according to Lee Meddin, the IFC Deputy Treasurer and Global Head of Structured Finance.
The Waqf Fund established by the Central Bank of Bahrain in 2006 will have a special fund to support Islamic finance education & training.
Gulf Finance House GDR priced at $2.5 per share.
Tuesday, May 15, 2007
KFH Malaysia new Islamic economic research office, SIB promote women in Islamic banking
Kuwait Finance House Group launched an Islamic banking research office yesterday. The research office will be based in Malaysia and called 'Islamic Banking Economics and Investment Research'. Salman Younis, the managing director of KFH (Malaysia) Bhd describes their goals for the office, "We aim to provide cutting-edge research material which capitalises on economic and Islamic financial research and provides clients with an added value to their investment decisions".
Sharjah Islamic Bank in the UAE wants to increase the number of female employees, particularly those in higher up positions. The manager of Sheikha Jawaher bint Mohammed Al Qasimi, who supported the program, was quoted, "With the growing demand for Islamic finance in the world, and the growing number of women working in the field, this organisation is the next natural stage in a world which demands quality and excellence regardless of sex or background,"
The governor of the Malaysian central bank, Bank Negara Malaysia, Dr. Zeti Akhtar Aziz said there needs to be greater focus on arriving upon a 'common vision' for Islamic financial services.
Sharjah Islamic Bank in the UAE wants to increase the number of female employees, particularly those in higher up positions. The manager of Sheikha Jawaher bint Mohammed Al Qasimi, who supported the program, was quoted, "With the growing demand for Islamic finance in the world, and the growing number of women working in the field, this organisation is the next natural stage in a world which demands quality and excellence regardless of sex or background,"
The governor of the Malaysian central bank, Bank Negara Malaysia, Dr. Zeti Akhtar Aziz said there needs to be greater focus on arriving upon a 'common vision' for Islamic financial services.
Monday, April 02, 2007
Islamic banking to the poor, women in Islamic finance and Luxemborg vies to be a western hub for IF
Islamic banking underserves the poor
An article that came out this weekend addressed an interesting point. Do Islamic banks address only a few wealthy Muslims or can they do more to reach poorer Muslims. My personal belief is that the Islamic finance has not yet developed a model for serving poorer Muslims, but that the success of the Grameen Bank at reaching the poor has caught the attention of the industry and halal microfinance will develop over the next few years. Here at the IHI, we are working on a halal microfinance program and there is an Islamic microfinance conference occuring on April 14th at Harvard University's Islamic finance project to try and bridge the gap between the Islamic finance industry and the microfinancing industry. I think this is an area with significant potential which will be a valuable asset for the Islamic banking portfolio. One of the other areas in which Islamic banking should look to expand is providing additional services for middle class Muslims, particularly those in the West.
IIFF discusses role for women in Islamic finance
The International Islamic Finance Forum which opened today in Dubai addressed the role for women in Islamic finance. Addressing the forum was HE Sheikha Lubna Al-Qasimi the UAE Minister of Economy and Chief Executive of Tejari, a Middle Eastern business-to-business online marketplace. The article describes how "It is important for women to take their place in IF not only to broaden the appeal, but also to alleviate a potential bottleneck in the growth of IF due to a general shortage of suitable professionals." While there are cultural barriers to increasing the role of women in Islamic finance, the industry has a need for female professionals to continue growing rapidly and to provide service in banks like the Saudi women-only branches.
Luxembourg jumps into competition as western hub of Islamic finance
The Luxembourg Stock Exchange entered the competition to become the western hub for the Islamic finance industry by reducing the regulatory burden for issuing sukuk. The new regulations will treat sukuk in a similar way they are treated in the U.K. A lawyer working in the industry describes that "It's not exactly the same and it's still considered best to be asset-backed, but they will not apply the same disclosure rules to securities, so you won't have to provide the same detail on the underlying assets."
Other news
The Bahrain Chapter of the Institute of Chartered Accountants of India will hold a seminar on Islamic finance this week.
A forthcoming five year plan will reveal plans by Gulf Finance House to expand into Asia
Dow Jones will begin two new indexes as part of its Islamic Market Indexes tracking Shari'ah compliant stocks on the Dubai Financial Market. The indexes are the Dow Jones DFM Index and the Dow Jones DFM Titans 10 Index.
After reports that EPF wanted two English banks to be strategic partners, Rashid Hussain Bhd, the banking group for which the partners were sought denies knowing of the partners.
An article that came out this weekend addressed an interesting point. Do Islamic banks address only a few wealthy Muslims or can they do more to reach poorer Muslims. My personal belief is that the Islamic finance has not yet developed a model for serving poorer Muslims, but that the success of the Grameen Bank at reaching the poor has caught the attention of the industry and halal microfinance will develop over the next few years. Here at the IHI, we are working on a halal microfinance program and there is an Islamic microfinance conference occuring on April 14th at Harvard University's Islamic finance project to try and bridge the gap between the Islamic finance industry and the microfinancing industry. I think this is an area with significant potential which will be a valuable asset for the Islamic banking portfolio. One of the other areas in which Islamic banking should look to expand is providing additional services for middle class Muslims, particularly those in the West.
IIFF discusses role for women in Islamic finance
The International Islamic Finance Forum which opened today in Dubai addressed the role for women in Islamic finance. Addressing the forum was HE Sheikha Lubna Al-Qasimi the UAE Minister of Economy and Chief Executive of Tejari, a Middle Eastern business-to-business online marketplace. The article describes how "It is important for women to take their place in IF not only to broaden the appeal, but also to alleviate a potential bottleneck in the growth of IF due to a general shortage of suitable professionals." While there are cultural barriers to increasing the role of women in Islamic finance, the industry has a need for female professionals to continue growing rapidly and to provide service in banks like the Saudi women-only branches.
Luxembourg jumps into competition as western hub of Islamic finance
The Luxembourg Stock Exchange entered the competition to become the western hub for the Islamic finance industry by reducing the regulatory burden for issuing sukuk. The new regulations will treat sukuk in a similar way they are treated in the U.K. A lawyer working in the industry describes that "It's not exactly the same and it's still considered best to be asset-backed, but they will not apply the same disclosure rules to securities, so you won't have to provide the same detail on the underlying assets."
Other news
The Bahrain Chapter of the Institute of Chartered Accountants of India will hold a seminar on Islamic finance this week.
A forthcoming five year plan will reveal plans by Gulf Finance House to expand into Asia
Dow Jones will begin two new indexes as part of its Islamic Market Indexes tracking Shari'ah compliant stocks on the Dubai Financial Market. The indexes are the Dow Jones DFM Index and the Dow Jones DFM Titans 10 Index.
After reports that EPF wanted two English banks to be strategic partners, Rashid Hussain Bhd, the banking group for which the partners were sought denies knowing of the partners.
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