Islamic Finance Market Hits $1.7 Trln – CBK Gov ‘Number Of Financial Institutions Exceed 600’

KUWAIT CITY, Dec 4, (KUNA): Volume of the global Islamic financial market has reached $1.7 trillion, revealed the Central Bank of Kuwait Governor, hoping the Shariaa-abiding services will grow further and turn much more competitive worldwide.

Islamic Finance Market Hits $1.7 Trln – CBK Gov ‘Number Of Financial Institutions Exceed 600’

Islamic Finance Market Hits $1.7 Trln – CBK Gov
‘Number Of Financial Institutions Exceed 600’

Volume of the financial Islamic services market, measured by assets’ volume, has exceeded $1.7 trillion, making a record jump from only $150 billion in middle of the 90s, said Dr Mohammad Al-Hashel, in a statement he addressed to the opening session of the World Islamic Banking Conference (WIBC 2013) that opened in Manama, Bahrain, on Tuesday.

Number of financial institutions has exceeded 600, operating in 75 states, said the CBK governor in his statement at the Manama-hosted conference, excerpts of which were released in a statement, issued by the CBK in Kuwait on Wednesday.

“Although such developments are encouraging, they remain short of what we aspire to with regard of the ambition to make more progress and growth in the Islamic financing industry and bolster this sector competitive status at the international level,” Dr Al-Hashel said. Dr Al-Hashel was a keynote speaker at the convention, themed “transformations to boost international Islamic financing competitiveness.” He was invited to the conference by his Bahraini counterpart, Rasheed Mohammed Al-Maraj, considering Kuwait as a pioneer in Islamic finance services.

In contrast to the positive figures reflecting growth of the Islamic financial markets, Dr Al-Hashel noted that Islamic funding has remained at the ebb, estimated at only one percent of the global financing. The number-one Kuwaiti banker presented several ideas to tackle the Islamic funding weakness, proposing special laws aimed at encouraging such services, boosting supervisory and regulatory systems, giving a role for academic and research institutions.

Underlining pivotal role of the Shariaa supervisory authorities, Dr Al-Hashel called on the financial institutions to innovate and develop new services. Funding should be available to all consumers, regardless of religious beliefs, and such an approach would make the Islamic financing services competitive vis a vis the classic financing systems.

Qatar aiming to adopt best global judicial practices

Qatar is pursuing to learn and adopt the world’s best judicial and legal practices as well as build capacity of its judges and lawyers to keep pace with the rapid development in all spheres, the country’s top legal expert said here yesterday.


Speaking at a media conference held at Grand Hyatt Hotel here yesterday on the sidelines of the event titled ‘Global Symposium on Judicial and Legal Education”, organized by Qatar International Court and Dispute Resolution Centre (QICDRC), president of the Centre for Judicial and Legal Studies, Dr Mubarak bin Nasser al-Hajri, who is also member of the Supreme Judicial Council, said, “We are listening to the experiences and best practices of international judges and academia and also discussing the need to train and build capacities of Qatari judges and lawyers.

“We do have our own indigenous training programmes in Qatar. However, this symposium is dedicated to learning from the advanced practices used in different parts of the world. As the sole centre for practicing lawyers and judges we have extended our hands to benefit from the world’s best practices.”
Tops judges, law experts and academia from United Kingdom, USA, Australia, Canada, France and hosts Qatar heard experiences on educating the judiciary and development ideas for Qatar at the one-day symposium.
Answering a question, Dr al-Hajri, said, “There are different approaches in different judicial systems of the world. However, we need to understand that regardless of the difference, the judicial system is one. If we have problems we can look at it in different ways to find a solution. The objective of this symposium is to focus on how to resolve disputes between parties and we are trying to learn from the world’s different judicial and legal systems how to solve the same problem. Ultimately, justice is same all over the world.”
Reiterating this point, QICCDRC deputy president Sir David Keene said, “We are not trying to produce an amalgamation of the different systems of the world, but to present a choice.
“However, there are certain common themes emerging. One of those, in so far as judicial training is concerned, is that judges should, in general terms, be in charge of and in control of the training of judges, so as to ensure that the judges are independent of the executive (the government).”
Speaking to QNA, QICDRC chief executive office Robert Musgrove said, “It is important to us that national Qatari and Arabic-speaking lawyers are able to appear in our courts. We have already had very successful appearances by Qatari lawyers in international courts, but we feel it is the responsibility of the court and this education programme to further develop the transitional skills to allow Qatari national lawyer to appear here and other English-speaking courts.”
Regarding developing local lawyers’ legal English-speaking capacity, “This programme is looking at the development of legal English to build those skills and also transitional skills that will help Qatari lawyers to move from the domestic civil code system into feeling comfortable in a court that is more of a common law background.”
This education programme that Sir David Keene talked about empowerment and this symposium is a market place in which all the best traditional training in the world, both from common law and civil code, are able to demonstrate what is best for Qatar, he said.
“The report (at the conclusion of the symposium) will provide a series of options to decision-makers like Dr Mubarak al-Hajri and will have a choice to choose from that market on what they think are the best products to build a successful strategy for educating Qatari judiciary and Qatari lawyers,” added Musgrove.
Training course on Islamic finance
The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), with the support of Mazaya Qatar Real Estate Development Company will hold the annual training course on Islamic finance for the first time in Qatar from March 11 to 14.
The AAOIFI is an Islamic non-for-profit international corporate body that prepares accounting, auditing, governance, ethics and Shariah standards for Islamic financial institutions and the industry.
The AAOIFI is independent, supported by more than 200 institutional members from some 45 countries including central banks, Islamic financial institutions, and other participants from the international Islamic banking and finance industry, worldwide.
The CSAA course programme is designed to equip candidates with the understanding and professional skills for Shariah compliance and the review process for the international Islamic banking and finance industry.
It provides knowledge on roles and functions of various Shariah compliance and review processes; the correlation between Shariah compliance and review processes, mechanisms to ensure compliance with various decrees and fatwas; a technical review of banking and financial operations to determine compliance; and establishing of foundations to gain stakeholders’ trust and confidence in institutions’ Shariah compliance.Mazaya Qatar will be the sole sponsor of the course.

Mazaya Qatar CEO Seraj al-Baker said, “As a Shariah compliant company, we are committed to these principles, and the support of Islamic finance and financial institutions in the region. We are proud to be the company which brings this important training course to Qatar for the first time, and hope it is the first of many”.

Economy: Morocco, first Muslim banks soon



Morocco might soon create its first Islamic banks. The issue is indeed one of Benkirane government’s priorities: the Parliamentary group of PJD, the moderate Islamic party having won November’s elections, has already finished writing the draft bill to be presented at the Chamber of Deputies, drafted by a team of Party’s experts led by the General Affair and Governance Minister Mohamed Najiib Boulif. On the financial instruments’ market, the so-called “Islamic” instruments were already partially available, but the institutes managing them had never expressed their interest in the creation of specialized banks. However, PJD’s victory changed many things, since the model has proved to resist the crisis and showed a large potential for growth. The draft bill begins with classification of the general principles underlying products currently traded by banks, grouping them into halal (allowed) and haram (forbidden) by Sharia and specifies that lending must not be the source of profit. Imposing interests is therefore prohibited and lending is not considered a form of trading anymore: “Funding agreement with banks imply participation of the bank itself in both profits and losses”. Actually, Islamic banks do not merely propose financial brokering services as in traditional banking regimes; they play an active role in wealth generation, transformation and trade processes. The draft bill proceeds to determine which financing models are allowed. In general, they are “contracts compliant to Sharia regarding the use of funds aimed at generating profits”.

The institutes allowed to work within this system are grouped in three categories: Islamic banks, financial institutions similar to Islamic banks and Islamic financial institutions.

Today, any moral entity allowed to collect funds, manage and invest them according to the Islamic law might be labelled as Islamic bank. These institutes would be subject to Sharija, not to current laws regulating the credit institutions and similar bodies, except the provisions that are already compliant with the Sharia. This would not prevent Islamic financial institutes from entering today’s bank system: they would act under protection of Bank Al-Maghrib, the Moroccan Central Bank and by the National Council of Money and Savings, according to provisions of the Central bank, both as far as monitoring and prudential principles are concerned. The PJD project would also allow traditional banks to convert into Islamic banks, either totally or partially, creating branch offices, local cash desks or investment funds specialized in this kind of activity.

According to La Vie Eco, the total amount of funds currently circulating in the world’s Islamic finance is estimated at more than USD 1000 bln in 2011, that is, a growth by 50% over 2008 and by 21% over 2010. About one fourth of the world’s population is Muslim, so the system has significant potential for growth; experts estimate that Islamic finance might absorb between 40 and 50% of savings in this group.

BRUNEI – EDUCATION – Centre for Islamic Banking, Finance & Management launched – Her Royal Highness Princess Hajah Hafizah Sururul Bolkiah yesterday attended the official launching of the Centre for Islamic Banking, Finance and Management (CIBFM) and its first flagship, the Fiqh Mu’amalat Professional programme.

Held at the Indera Kayangan Ballroom of The Empire Hotel and Country Club, the launch opened with recitations of surah al-Fatihah and doa led by Pehin Orang Kaya Paduka Seri Raja Dato Paduka Seri Setia Ustaz Hj Awg Suhaili Hj Mohiddin. (source)

On hand to officiate the launch of the centre and the programme was Acting Minister of Finance II at the Prime Minister’s Office Dato Paduka Awg Hj Bahrin Abdullah.

In his opening remarks, Permanent Secretary (Policy) at the Ministry of Finance cum Chairman of the Board of Directors for the Centre for Islamic Banking, Finance and Management c, in his capacity as chairman of the event, highlighted the objective of the establishment, function and roles of CIBFM, as well as the unique features of the Fiqh Mu’amalat Professional programme.

He emphasised on the centre’s role towards providing continuous learning and development programmes through a balanced mix of Islamic and conventional focus including the required soft skills.

He also shared future plans of the centre, which expects to offer and conduct some 50 programmes targeted for about 800 participants this year.

The launch saw the attendance of members of the Syariah Financial Supervisory Board, senior government officials, CEOs, managing directors and representatives of financial institutions and the first batch of the flagship.

In conjunction with the launching, a seminar in the form of special presentations and penal discussions by both local and well-known Syariah scholars and speakers were also held.

Following the opening ceremony, a special presentation was presented on Syariah Advisors for Islamic Financial Institutions – ‘Expectations and Challenges’ by a leading shariah scholar in Islamic Finance, Dr Mohamed Ali Elgari.

This was then followed by panel discussions on ‘Effective Human Capital Development – Mitigating the Gap on Applied Syariah Knowledge and Finance’ and another special presentation on ‘Value Propositions of Syariah Board in Contemporary Islamic Financial Market.’

The presentation delivered by founder and chairman of Amanie Advisors (Kuala Lumpur, Dubai, Luxembourg and Cairo), Dr Mohd Daud Bakar, concluded the morning event.

Later in the afternoon the event saw a continuation of panel discussions on Development of Islamic Investment Products and Services – A Local and Global Perspective and ‘Syariah Compliance Review – An Art or Science?’

KPMG holds training on Islamic finance

MUSCAT — KPMG, a leading international firm offering audit, tax, and advisory services recently organised a training at Crowne Plaza Hotel, Muscat on Islamic finance products and their accounting treatment under IFRS.

This training was organised by KPMG for its clients and members of professional staff. The objective of the training was to educate participants about the characteristics of various Sharia compliant financial products and how to deal with their accounting issues under IFRS and under standards issued by association of auditing and accounting standards of Islamic financial institutions.

As part of the introduction Khalid Ansari, partner, KPMG Oman mentioned that the training is part of KPMG’s endeavour to equip its professional staff and clients with the best of professional knowledge so that they are prepared in advance to deal with the developments that are taking place in the field of Islamic Finance.

The training was conducted by Mohammed Tariq, partner responsible for Islamic finance in the Lower Gulf practice of KPMG and he was supported by a Senior Manager, Samiuddin Siddiqui of Islamic Finance unit based at the KPMG unit in UAE.

The full day training course included topics on ‘introduction to Islamic banking and business model’, ‘challenges faced by the Islamic banking’, nature and salient features of Sharia compliant products like ‘Murabaha’, ‘Modaraba,’ ‘Musharika’, ‘Wakala’, ‘Tawarruq’ and ‘Sukuk’. There was a separate session dedicated to Sharia compliant insurance product ‘Takaful’.

Shakaib Mahmood, Director responsible for Islamic finance at KPMG, Oman stated that as the regulatory authorities are now getting closer to issuance of regulations and framework for the Islamic financial industry, the clients and professionals need to make advance preparations to be fully ready to deal with Islamic finance products in Oman.

Overall, I think the training was well received by the clients and staff of KPMG, said Shakaib Mahmood, and I look forward to an increasing number of participation from our clients in our forthcoming Islamic finance seminars and training sessions.

After the formal presentation there were plenty of opportunities for questions and answers. A number of participants shared their own experiences and perspectives.

KPMG is a global network of professional firms providing audit, tax and advisory services. We operate in 146 countries and have 138,000 people working in member firms around the world.

In the Lower Gulf, comprising Oman and UAE, KPMG employs more than 700 professionals and operates from five offices in Muscat, Dubai, Abu Dhabi, Sharjah and Jebel Ali.

Benchmark a major step for Islamic finance

Last month, the world’s first Islamic interbank benchmark rate (IIBR) was launched. It was the result of a collaborative approach taken by many Islamic financial institutions, industry associations and Sharia scholars over the course of 24 months to address a decades-old industry challenge:

how to decouple Islamic finance from a conventional western pricing benchmark (Libor) when an “Islamic” alternative was not available. The objective was to support and preserve Islamic finance authenticity.

The IIBR is an interbank benchmark that offers a reliable and realistic standard to better measure the cost of funding for Islamic financial institutions. As contributed pricing for Sharia-compliant funding, it represents the DNA of an Islamic banking industry that is today focused on commercial banking over investment banking.

IIBR brought together more than 20 Islamic finance institutions to create a proprietary Islamic pricing benchmark. It is a major indication to the world that Islamic finance has come of age and can be seen as a sustainable and rapidly developing feature of global financial markets.

The benchmark is designed to be used to price a number of Islamic instruments including common overnight to short-term treasury investment and financing instruments such as murabaha, wakala and mudaraba, retail financing instruments such as property and car finance, and sukuk and other Sharia-compliant fixed-income instruments. It can also be used for the pricing and benchmarking of corporate finance and investment assets.

We expect the benchmark to grow organically as industry use and acceptance increase. As the industry gets used to the idea of its own proprietary benchmark and its scope becomes more global, we expect to see banks use the rate to price their interbank liquidity placements.

As that gains traction, banks will start to use it for their corporate and retail banking facilities. The rate has reached its full potential when we see investment banks providing syndicated Islamic financing (loans) and debt (sukuk) issuance using the rate.

Since the launch of IIBR, it has received much attention around the world for the positive step that it is.

Understandably though, the significance of IIBR and what it means for the Islamic finance industry, indeed the very position of Sharia-finance in Islam and the wider world, means that it provokes strong opinion and debate.

And we must address the critics if we are to achieve the full potential of this initiative. After all, these commentators are important additional stakeholders.

All collaborations start with open minds and transparent dialogue, and so here I hope to address some of the key points raised.

What is the difference between IIBR and Libor – the London interbank offered rate? Put simply, IIBR measures expected profit while conventional benchmarks such as Libor measure interest rates.

The IIBR question for contributors explicitly refers to the cost of raising Sharia-compliant funding and is therefore based on returns generated by Islamic assets.

The IIBR rates represent the aggregate risk profile of Islamic financial institutions, by way of their assets on the balance sheet, and the geographies in which they operate. This is important for two reasons.


On an economic level, now more than ever, conditions in Europe or the US do not necessarily reflect the conditions in the Middle East funding market, although there will inevitably be a connection as global financial markets are always intertwined.

How is IIBR representative and reflective of global Islamic finance treasury funding costs?

This is only a beginning. At present, we have a strong base in GCC countries, we have three major Malaysian banks and are in conversations with others, and we have started conversations with banks in Turkey, Pakistan and other jurisdictions.

How will IIBR address cross-border funding costs?

The precondition for cross-border funding is establishing local rates, and we are starting a dialogue with more countries with established Islamic banking industries. The more important point is that a transparent process or methodology is in place for price contributions, and its integrity is overseen by our benchmark committee with rules that will punish banks, including expulsion, that violate the agreement they have signed.

Why are only murabaha contribution rates used?

Murabaha is the predominant form of funding for Islamic banks. However, the IIBR is instrument-neutral as decided by the Islamic benchmark committee, and in the future, when other instruments such as wakala or mudaraba become more widespread, a higher proportion of contributions could be derived from other rates.

Is IIBR only for Islamic financial institutions?

IIBR, like Islamic finance, is for all people and institutions for all times. As an accurate and transparent measure of market activity, it is suitable for a variety of uses in the modern financial markets of the world. With IIBR, conventional banks will now have more confidence in their counterparty Islamic banks because their rates will be benchmarked and publicly available.

KIB opens new branch at Fintas

KUWAIT: Kuwait International Bank (KIB) opened its latest branch at Fintas in the presence of Sheikh Dr Ibrahim Duaij Al-Sabah and Sheikh Mohammad Al-Jarrah Al-Sabah, Chairman of Al-Dawli. Sheikh Mohammad Al-Jarrah Al-Sabah commented:

“We are very proud to be opening our seventeen new branch in Fintas. Our strategy continues to be to seek to expand our branch network across Kuwait, so that we may provide greater convenience to our customers, as well as allowing us to expand our potential “Al-Dawli” customer base.

Customer interests are a top priority for KIB and Al-Dawli aims to provide high quality and creative banking products to customers to help them cope with the demands and needs of modern living.” Sheikh Mohammad added:

“This new branch at Fintas has been fully equipped with integrated systems and helpful and well trained employees who are dedicated to providing business and retail customers with the very best services, all of which are fully compliant with Sharia banking requirements.

He concluded: “Our location at the centre of the Ahmadi Governorate will also provide both greater convenience for customers in the area, and be attractive to new customers who are seeking the unique range of quality banking products that Al-Dawli can offer”.

The new branch at Fintas will provide fully Sharia-compliant banking services for retail and business customers from today. The branch is KIB’s seventeen branch to open in Kuwait.

KIB, as one of Kuwait’s leading Islamic financial institutions, is committed to providing service and product excellence. In this context, KIB has developed a range of standards and service measuring tools which helps it to successfully deliver innovative customer services and satisfaction.

Group launches first Islamic interbank benchmark

Nov 22 (Reuters) – A consortium of Islamic banks and financial industry associations launched the industry’s first Islamic interbank rate on Tuesday, providing a sharia-compliant alternative to traditional interest-based benchmarks.

The Islamic Interbank Benchmark Rate (IIBR), based on rates contributed by 16 Islamic banks and Islamic sections of conventional banks, is the average expected return on sharia-compliant, short-term interbank funding.

Its creators hope IIBR will be used as a basis for pricing a wide range of Islamic financial instruments, including sukuk (Islamic bonds), corporate financing and common Islamic treasury agreements. Tenors for IIBR will range from overnight to one year.

“The establishment of the IIBR marks an important milestone in the maturation of Islamic money markets by providing an international reference rate for interbank transactions,” said Nasser Saidi, chairman of the committee which sets the rules for the new system.

IIBR addresses a source of tension within the Islamic finance industry, which is estimated to have reached $1 trillion in assets: Islam forbids the use of interest in any transaction, but the industry has long used the London Interbank Offered Rate (LIBOR), a system of interest rates, as a benchmark in the absence of sharia-compliant alternatives.

The new system is based on the rate of return on capital used by Islamic banks, representing the average profit rate at which bids are made for sharia-compliant interbank transactions, such as murabaha and wakala deals, between top Islamic financial institutions.

Murabaha is a cost-plus-profit structure used for funding, while wakala involves the use of an agency agreement in which one firm accepts funds from another to invest on its behalf in a sharia-compliant manner.

Some bankers believe the launch of IIBR shows Islamic finance, which has existed in modern form for several decades, is finally maturing to a level at which it can compete broadly with conventional finance at a time when turmoil in global financial markets has raised questions about risks in the conventional system.

Because Islamic finance bans pure monetary speculation that is not based on an underlying asset, its proponents present it as a less risky, more stable alternative to conventional finance.

But it still faces big obstacles to widespread adoption, including a lack of tools that commercial banks and central banks can use to adjust liquidity. Disputes between scholars on acceptable practices, and a lack of trained staff and investor familiarity with instruments, also hinder Islamic finance.

IIBR was launched by Thomson Reuters Corp , which publishes this news service, in cooperation with the Islamic Development Bank, Islamic regulatory body Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the Association of Islamic Banking Institutions Malaysia, the Bahrain Association of Banks, the Hawkamah Institute for Corporate Governance, the Statistical Economic and Social Research Center for Islamic Countries, and 19 Islamic banks, most of them based in the Gulf.

French Islamic finance in focus at key forum

MANAMA: The 18th annual World Islamic Banking Conference (WIBC 2011) will feature a key session on “Islamic Finance New Developments in France – Growth and Opportunities”.

The forum will be held from November 21 to 23 at the Gulf Hotel.The session, hosted by Invest in France Agency, will feature critical discussions on the development of Islamic finance in France.

It will also analyse and evaluate the tax and legal framework in France and will also assess real case feedback for structuring Islamic ethical compliant equities and funds.

“Islamic finance benefits from strong support in France,” said Invest in France Agency chairman and chief executive David Appia.

“In building an appropriate and friendly environment, French authorities have contributed to make France an open country to Islamic finance.

“France has made a series of legal and tax adjustments into its financial system to integrate transactions and concepts that comply with Sharia principles, ensuring their tax neutrality with respect to conventional finance,” he said.

“The regulatory body, the French Financial Market Authority, has defined a working framework for managing Sharia-compliant funds, some of which are already being distributed in France.

“Islamic investors can benefit from a leading easy-to-access finance industry through the Paris Stock Exchange.

“Paris Europlace, the Paris financial markets organisation, has signed an agreement with the Accounting and Auditing Organisation for Islamic Financial Institutions, which enacts legal, financial and accounting standards for Islamic finance in France.

“France promises a successful future for Islamic finance,” he said.

“In a market conducive to development and with the ambition to build long-term relationships between France and the Middle East, Invest in France Agency is convinced of the importance of taking part in WIBC 2011, an opportunity of sharing experiences and paving the way to a sustainable growth,” he added.

World Islamic Banking Conference

Manama, Nov 4 (ONA) — The Kingdom of Bahrain will host on November 21st the 18th Annual World Islamic Banking Conference 2011 under the title of “Competing for Global Growth” and lasts for three days.

The World Islamic Banking Conference, Which will be held this year, reflects the impact of the geographic expansion of the Islamic finance and the increased presence of the Islamic financial institutions that provide great opportunities for the global trade and investment flows which come in line with the Islamic provisions.

The conference will focus on stressing the strategies for management of globalization challenges and enhancing the joint cooperation to ensure providing powerful International capabilities for the banking services and Islamic finance sector.