Panel discussion focuses on Challenges, Developments and future of Islamic Banking and Finance in Oman at the Oman Islamic Banking and Finance Conference 2012

A separate panel discussion covering the Challenges, Developments and future of Islamic Banking and Finance in Oman took place on, 5th  June 2012 at the Oman Islamic Banking and Finance Conference 2012. The panel discussion was moderated by Mr. Noaman Abdul Majid, Country Manager-Oman, Pak Investment Company. vies on the topic he said “Oman is in a   unique position to benefit from thexperiences of Sharing his other regional economies, so Oman should ensure  that whatever mistakes were made in deploying and developing the Islamic Finance framework are  not repeated again and should maintain a focus on Shariah compliance, as well as customer and client  orientation. It is also very important that the regulator, financial institutions and the private sector  put their heads together to develop Islamic Finance as a whole, to make sure that the proportion of Islamic Finance and the overall financial system is significant enough because if everybody works in isolation to each other, it’s not going to happen. So all the stakeholders should try to create a platform to communicate with each other, so that they understand each other well and the products and services are deployed accordingly.”

Panel discussion focuses on Challenges, Developments and future of Islamic Banking and Finance in Oman at the Oman Islamic Banking and Finance Conference 2012

The panel discussion saw panelists Mr. Hussein Soyan, Managing Director, Soyan Financial Consultancy Ltd; Dr. Abdel Gadir Warsama, BBK & Professor of Law, American University, Bahrain; Mr. Adnan Khan, Finance Manager, Gulf International Chemicals and Mr. Arsalan Ahmed Qureshi, AVP-Sr. Manager,Operational Risk-Risk Management Dept, Al Baraka Islamic Bank, highlight various issues related to the sector.

Speaking on the topic of the panel discussion Mr. Adnan Khan said “Banking will not work on its own, it needs infrastructure, communication and mutual understanding between different banks, it needs support of the private organizations because Islamic Banking needs to invest into Islamic Compliant companies and there are certain requirements for that. Unless those companies comply with those requirements, Islamic banking cannot invest into them. Other than that, the other main issue is that although Islamic Banking has been in existence for some time, we don’t have many qualified people in this field, which is one of the things we need here in Oman. These are some of the challenges which if worked upon can lead to a very successful Islamic system in Oman.”

Adding to Mr. Khan and Mr. Majid, Mr Abdel Gadir Warsama said “To start Islamic Banking first we need to have a law. This Islamic Law should highlight basic Islamic products that have to be followed by Islamic Banks and this law is made by the Sharia’h Boards. We must have a Central Shariah Board in the Central Bank to give guidance for Islamic Banks. Also in each bank we require to have a Sharia’h advisor to act as a liaison between the Bank and the Central Bank. There are so many now, we have to benefit from the experience of others, from where they have stopped, rather than start from the beginning. But at the same time we have to be very careful not to commit the same mistakes they made. Islamic Banking now is most rapid and is developing by 25 % every year, for sure in the very near future Islamic Bank will be equal to conventional banks. Here in Oman there is a base for Islamic Banking to grow and to help the economy to grow.”


Discussion on how to raise debt capital via Sukuk markets, taking place at Oman Islamic Banking and Finance Conference 2012

Sukuk or Islamic bonds enable organisations to raise capital in a Shariah compliant manner. The demand for sukuk was previously limited outside the GCC until few years ago and the year 2012 sees Oman as an emerging potential sukuk market among Thailand and the CIS countries. Since the concept of “Sukuk” is a fairly new phenomenon in Oman, Mr. Hussain Al-Yafai, Director, Debt Capital Markets MENA, Standard Chartered Bank, will provide us an in-depth view on raising debt capital via Sukuk markets, at the Oman Islamic Banking and Finance Conference 2012 taking place from 5th-6th June 2012 at the Grand Hyatt.

Discussion on how to raise debt capital via Sukuk markets, taking place at Oman Islamic Banking and Finance Conference 2012

Sukuk differs from conventional bonds (debt-based instruments that pay interest), as they are asset based and represent ownership by Sukuk holders in the underlying assets, allowing them to share income from the same. Sukuk issuances enable companies to tap a new source of funding thereby allowing them to diversify from traditional capital markets funding. The primary advantages of a Sukuk issuance to a conventional issuance are access to a wider base of investors which taps Islamic liquidity and a lower cost of funding. From an international viewpoint, some of the challenges faced by the industry include the lack of liquidity in the secondary market, differing views amongst Sharia’h scholars on acceptability of certain Sukuk structures and differences in legal, tax and regulatory frameworks across various jurisdictions.

The benefits and challenges of Sukuk will be covered by Mr. Al Yafai in greater detail at the Conference among other key topics, including the facilitation of the sukuk market by Omani Authorities, international and regional trends in the issuance of Sukuk, differences between Sukuk and conventional bonds from a credit point of view, possibility of more conventional issuers tapping Islamic Liquidity etc.

Mr. Al-Yafai’s role at Debt Capital Markets MENA, Standard Chartered Bank includes originating and executing a number of high profile transactions in the region which includes structured debt financing (i.e.- Sukuks, ABS, equity linked, structured and subordinated debt). His mandate entails the complete process, from deal origination to final execution including pricing, structuring, distribution, documentation, credit ratings, listing and public offer. He has successfully led and has been a part of the team that arranged landmark transactions such as the Govt. of Ras Al Khaimah’s AED 1 billion & USD 400m Sukuk, USD 500m Sukuk, First Gulf Bank’s USD 650m and USD 500m Sukuk, Emirates Islamic Bank’s USD 500m Sukuk, Tamweel’s USD 300m Sukuk and ADCB’s USD 500m Sukuk.


Ajman Bank Named 'Best Islamic Bank'

Ajman Bank , the award-winning Islamic financial services institution committed to transforming the experience of Islamic banking, announced today that it has been named ‘Best Islamic Bank’ on the Arab Achievement Awards presented on the third Annual Arab Investment Summit held on 15th May in Abu Dhabi.

The Annual Arab Investment Summit offers an excellent networking platform for Arab Investors, Financiers, and Government Officials to discuss and expand local and cross-border trade and investment opportunities and build new business partnerships, with a special focus on strengthening relationships among Arab countries. The awards it presents honour companies that stand out in particular areas of expertise in banking, finance, and other major development sectors of the industry.

The accolade was presented to Amer Al Ameri, Ajman Bank’s General Manager – Business Development at the awards ceremony held during the Summit at Park Rotana Hotel in Abu Dhabi.

Mohamed Amiri, the Bank’s Acting Chief Executive Officer, commented: “Winning this award reflects the quality of the work we do and the dedication we have towards our customers. Commitment to Excellence remains Ajman Bank ‘s operating philosophy for being an Islamic Bank of the highest quality in every aspect of its business operations.”

Amer Al Ameri, Ajman Bank ‘s General Manager – Business Development, stated: “We are extremely pleased with this acknowledgement, which recognizes not only our achievements, but also reflects the expertise that our team of talented and passionate professionals brings to each customer, a key factor in our ability to deliver the highest quality Islamic banking products and services.”

Ajman Bank Named 'Best Islamic Bank'.

Ajman Bank had recently won several accolades including ‘Best Customer Loyalty Programme’ by the Banker Middle East, ‘Best Syndicated Deal’ by Islamic Finance News (IFN), ‘Best Branding’ by Islamic Banking and Finance, ‘Best Website Structure’ by the UAE Web Awards, ‘Best Home Finance Product 2011’ by the Banker Middle East, and “Best Small Bank” at the 2011 Bank Benchmark Index Awards, among others.

In a challenging financial environment, Ajman Bank maintained earnings momentum recording net profit growth of 75 per cent for the year ended 31 December 2011, and a breakthrough performance for the first quarter of the current year with a 154% increase in net profit recorded by the end of March 2012.

About Ajman Bank: 

Ajman Bank is a young, agile Islamic commercial bank built on the values of integrity, trust and transparency. The bank provides a wide range of value-driven banking services in the UAE for individual, business and government clients, all in compliance with Shariah principles. Ajman Bank seeks out the market’s best products, people and technology in order to deliver what customers want, how they want it, delivering real value and recreating that human touch lost in modern banking.

Headquartered in Ajman and strongly supported by its government, Ajman Bank is the keystone of the emirate’s economic development strategy and is in a position to benefit from its growth and potential like no other. Ajman Bank is committed to becoming a sustainable organization in its truest sense, balancing care for the community and employees with the business of delivering value to its shareholders and customers.



Malaysia eyes 25 pct share in Islamic banking

Malaysia aims to capture 25 percent of the market share in the Islamic banking and finance sectors by 2012, according to an expert speaking in Istanbul.

“Islamic banking and finance has experienced substantial and unprecedented growth in recent years, growing at a rate of 10-15 percent annually,” Mehmet Asutay, the director of the Durham Centre for Islamic Economics and Finance at British-based Durham University, said Monday in his opening speech at the Durham Islamic Finance Autumn School 2011 in Istanbul.

Malaysia aims to capture a quarter of the market share in the Islamic banking and finance sector in terms of assets owned by 2012, while it is expected that Islamic finance will become the mainstream financing method in the Gulf region within the next decade, Asutay said.

More than 500 Islamic banking and finance, or IBF, institutions operate worldwide and are estimated to manage assets worth at least $1.2 trillion, compared to less than $10 billion in 1985, Asutay said. Amid the current financial crisis, which has engulfed the entire global economy, the IBF industry has shown relative resilience without undergoing major difficulties despite the fact that it is very much integrated with the global finance worldwide, according to him.

The Durham Centre for Islamic Economics and Finance has contributed to the field of Islamic economics, banking, finance and management through teaching and research over 25 years, Asutay said.

The Durham center is holding the Islamic Finance Autumn School 2011 between Monday and Thursday in Istanbul in cooperation with the Istanbul Foundation for Research and Education and the International Technological, Economic and Social Research Foundation. The gathering is supported by Istanbul Commerce University, the Participation Banks Associations for Turkey and the Alliance of Civilizations Institute of Fatih Sultan Mehmet University.

Mideast gears up for Islamic Finance 2.0

Although operating on a lower risk profile due to restrictions on hedge funds, short-selling and high yield products, Islamic banks still faced challenges last year in manufacturing, distribution and IT governance. However, recent developments have helped boost optimism that the Islamic finance boom in the last decade was not a one-off.

Although the Islamic finance industry amounted to $1tr globally in 2010, it has too often been measured in relation to volumes of Islamic bonds outstanding, the number of standalone banks worldwide, or the size of the Islamic funds industry. Indeed, one of the many fallouts of the global financial crisis is that investors have grown more cautious when analyzing the performance of this fast-growing industry.

Like the aviation sector, Islamic finance has always been complex and costly. Islamic financial solutions have to abide to the guidelines of Sharia law and must be monitored for life by auditors and the boards of Sharia scholars.

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Malaysia should be ready for challenges in Islamic finance

KUALA LUMPUR: Malaysia has all the ingredients to be a success story in Islamic finance but it will not come by itself, according to Prof Volker Nienhaus.

He advised the country to prepare itself for the second phase of competition with the new entrant of Islamic finance markets such as South Korea and Thailand.

“One has to identify and take it as a challenge and not to compete with the first phase of South Korean or Thai initiative but prepare for the second phase. Let them prepare the market but be prepared for the second phase,” Nienhaus told StarBiz in an interview. Nienhaus is a visiting scholar under the Securities Commission (SC)-Universiti Malaya (UM) Visiting Scholar Programme. Continue reading

Ulema announce Shariah standards for investment in stock market

Mumbai: Ulema and clerics have given their nod, with some conditions, to investment in stock market, saying share trading is closer to Shariah than the present banking and insurance system. The Islamic Investment and Finance Board (IIFB), which has Maulana Wali Rahmani and Maulana Khalid Saifullah Rahmani as Members among others, have come up with Shariah standards for investment in stock market.

IIFB members met in Mumbai recently and discussed in details the share trading and investment in stock market in the light of Shariah. The meeting was attended by Maulana Wali Rahmani, Sajjada Nasheen, Khanqah Munger, Maulana Khalid Saifullah Rahmani, General Secretary, Islamic Fiqh Academy, Mufti Fuzailur Rahman Usmani, Mufti Shoaibullah Khan, Mufti Mohd Yahya Qasmi, Mufti Anwarul Haq Qasmi and Maulana Obaidullah Neyaz Qasmi.

Giving details about the Shariah standards formulated by the Ulema and members of IIFB, Imtiaz Merchant, Founder of Pragmatic Wealth Management Pvt. Ltd., told media in Mumbai on 18th Jan. 2011 that the Ulema while admitting there are some unpleasant aspects of stock market in the eye of Shariah, they concluded it is closer to Shariah than banking and insurance industry.

IIFB, according to Imtiaz Merchant, felt purchase and sale of shares is the modern form of Shirkat which is allowed by Shariah, so compared to banking system and insurance system, share trading is closer to Shariah. With some conditions, therefore, investment in stock market can be done, though it can’t be said that even following the conditions, share trading will be completely Shariah compliant. But compared to other forms of investment, this is better and has less evils, said Merchant adding that as Muslims are not in position to run their own economic system, this can be adopted. Continue reading

Islamic banking not profit driven but ethics, morals-entrenched – Expert

03 May 2010

KUALA LUMPUR — “The Islamic banking and finance model is not one based on profitability alone but one in which ethics and morals play a key and defining part, Executive Chairman of Asian Finance Bank Mohamed Azhari Kamil berkata told KUNA on Monday.

“The Islamic value system as a whole is at the heart of all our products and services,” he said, “and this goes hand in hand with and aids efforts to establish trust and belief in the Islamic banking model.” The expert noted that “the basic principles of good relations with clients and entrenching the overall spirituality of the Islamic way of life was somewhat neglected in the Islamic banking field in favor of technical and structural aspects of the workings of the system.

“We should be more interested to see individuals succeed that to see a financial institution make profits,” he said.

“Putting both components at work (technical and ethics-related aspects) would provide the international community with the feasible alternative for the traditional banking system it is seeking as the pressure of the global financial crisis persists.” “We can not deny the importance of the traditional system, with its great expertise and proven efficiency in many areas … But the Islamic system has the added advantage of a solid ethical basis,” the expert remarked. “As a budding market, the Islamic system still needs to focus on entrenching its code of ethics and mode of action before leaning more heavily towards actual innovation in products and services,” he also stressed.

The expert also addressed the issue of manpower and expertise. He said it is vital to train and create manpower which includes scientists, researchers, academicians, as well as traders and bankers to bolster the Islamic banking system globally and to promote it.

While the system has the ability to create and offer new products and services, it could not continue to do so without creating this base of people to work the field, he pointed out. “Without planning and maintaining quality of survive, through capable planning, the system would not survive on the long-run,” Kamil said.

Asian Finance Bank is based in Kuala Lumpur and has a wide network covering the Gulf and Middle East regions. It has considerable expertise in training staff and launching actual projects in partnership between the Middle East and the Southeast Asia region. The bank is currently eying expansion in Indonesia, the Philippines, and Brunei.

By Abdullah Bouges

© KUNA (Kuwait News Agency) 2010,%20morals-entrenched

Islamic Finance to Reduce Fiscal Deficit in India

At a time when economic recovery needs more stimuli by the Government of India (GoI), there is also an urgent need to safeguard the economy from the debt trap because the GDP growth rate fell to 6.7% in 2008-09 from 9% in 2007-08; the debt servicing reached 58.83% of the total expenditure for the year 2008-09. It means maximum receipts are now spent for debt servicing which accounted for 15.87% of the Gross Domestic Product (GDP), while the debt receipts were 9.78% of the GDP in 2008-09. Even the interest payments were 21.39% of the total expenditures by GoI and 5.77% of the GDP in 2008-09. Notably the revenue deficit in 2008-09 is already 30% due to high debt serving ratio to total revenue expenditure.

In an attempt to find the actual reasons behind the high fiscal deficit, it is observed that the increased debt receipts by GoI to finance revenue expenditures (especially high debt servicing); increased subsidies on food, fuel and fertilizer; and rural development through schemes like NREGS, farmer’s loan waiving scheme and Sarva Shiksha Abhiyan are the three most important factors of high fiscal deficit. Since there is a need for more stimuli to counter recession in the economy, it is expected that the plan expenditures may further increase whereas due to recession, the revenue receipts may decline. This decrease in revenue receipts and increase in plan expenditure may increase the fiscal deficit to an unwanted high level. Working upon different options to reduce the fiscal deficit, it is found that Islamic finance can reduce the fiscal deficit even if revenue receipts decline and plan expenditures increase.

Islamic financial products have a great role to play in reducing the fiscal deficit in emerging economies by replacing the debt based investments for infrastructure with funds mobilized through equity based Government Securities for infrastructure projects. Let’s see how Islamic finance may help us reduce our present fiscal deficit.


Notably the total revenue expenditure is 142.92% of total revenue receipts reflecting 30.03% revenue deficits. The major cause of this high revenue deficit is high debt service ratio to total revenue expenditures. For a developing economy like India, in the proposed plan we project increasing capital expenditures, but in the revised estimates of 2008-09 budget, the revenue expenditure is 89% and the capital expenditure is just 11% of total expenditure; all due to high debt servicing ratio (66%) to total revenue expenditure. Notably the interest payment alone is 24% of total revenue expenditures. So, with capital expenditure being as low as just 11% of total expenditure and debt serving being as high as 59% of total expenditure, how can we go about planning to foster inclusive growth?

Debt Finances crossed the Planned Estimates:

The debt based finances for investments under 11th five year plan document was proposed to be 48.42% of total receipts for 2008-09, whereas the revised budget estimates reveal that the debt receipts were 96.38% of total capital receipts in 2008-09. This reflects our inability to mobilize targeted amount of non debt receipts, causing high fiscal deficit due to interest payments over borrowed debt receipts.


According to 11th plan documents, projected investments in 2008-09 should be of Rs. 321,579 crores while total plan capital expenditure in the revised budget observed just Rs. 41,301 crores. So the plan capital expenditure is just 12.84% of targeted investment in 2008-09. This shows our inefficiency to make budget development pro inclusive growth and to foster growth. So, it is better that GoI reduce debt borrowings which ultimately increases revenue deficits; and shift the focus on infrastructure investments to stimulate the economy at a time when GDP growth rates and employment growth rates are falling.

Actual Debt Receipts are 210% of the planned Estimates:

Since the revised estimates on debt receipts (Rs. 326,515 Crores) is already 210% of estimated requirements of debts (Rs. 1,55,704 Crores) by year 2008-09 as projected in 11th five year plan documents, the GoI should seriously think about this increased debt receipts. The funds utilized for debt servicing (Rs. 530,010 Crores) are already 162% of debt receipts to finance fiscal deficit (Rs. 3.26.515 Crores), the GoI should revisit its budgeting. How good is it to increase the debt receipts at a time when Indian industries are looking for more affordable credits from banks to meet the challenges after the global meltdown?


In year 2008-09 the deficit budget cost an amount of Rs. 192,694 crores to GoI which was paid as interest over the debt receipts borrowed to finance the deficit budget. This may be called as loss to GoI because had there been equity based receipts against debt receipts, GoI would have saved this amount.

Financing Fiscal Deficit through subsidized bank loans is not good

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