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Meethaq Sharia board endorses RO 150m capital for Islamic banking window.

The Shariah board of ‘Meethaq’ Islamic banking has approved RO 150 million capital assigned by BankMuscat for its Islamic banking window operations awaiting regulatory approval. The board from Shariah perspective endorsed the authenticity of capital allocation from BankMuscat shareholders’ fund for operations of independent Meethaq Islamic banking. Sheikh Dr Ali Qaradaghi, Chairman of Shariah board, explained that the capital allocation is in line with injunctions of al-Quran and as-Sunnah and the fact that various contemporary Shariah scholars have endorsed the usage of shareholders’ fund for Sharia compliant transactions.

Shaikh Dr Ali Qaradaghi, Chairman of Shariah board, Shaikh Essam Muhammad Ishaq, Sheikh Majid Al Kindi, board members, and Sulaiman Al Harthy, Group GM — Islamic Banking, addressed the media yesterday (Monday 30 April 2012) to highlight the strategy for the proposed ‘Meethaq’ Islamic banking operation.

Sheikh Dr Ali Qaradaghi said: “Meethaq, the pioneer of Islamic banking in Oman, will adopt the best practices in Islamic banking and finance worldwide and combine a robust model which will protect customers and complement the Islamic banking industry. Meethaq will reach out to customers with the promise of being true to their beliefs, offering all the advantages of banking by following the principles of Shariah law and its requirements.

Meethaq Sharia board endorses RO 150m capital for Islamic banking window

The Meethaq suite of banking products which combine traditional values with modernity are in the pipeline to give the choice of staying true to one’s values. Inspired by faith and a tradition of trust, Meethaq will help customers stay true to their values.”
Shaikh Essam Muhammad Ishaq said: “Meethaq will stand out for its independent Shariah Supervisory Board, separate capital, unique risk management tools, fund segregation, separate books of account, core banking system which supports Islamic banking operations, separate Islamic banking branches and proper profit distribution mechanism among investment account holders/depositors. The adoption of AAIOFI standards will boost and streamline the ‘Meethaq’ Islamic banking practices in terms of standardisation of products and services.”
Sulaiman al Harthy said: “Subject to approval, BankMuscat is all set to launch ‘Meethaq’ Islamic banking window operations in Oman. As the nation’s leading financial services provider, BankMuscat is well positioned to provide Islamic financial expertise to diverse segments and thereby promote the good of society as a whole. The Bank has in place a comprehensive strategy to effectively respond to the directive of His Majesty Sultan Qaboos on Islamic banking and thereby cater to the financial needs of people in accordance with the guidelines and regulatory framework to be prescribed by the Central Bank of Oman (CBO).”
BankMuscat recently announced the decision of its Board of Directors to assign RO 150 million capital for Meethaq Islamic banking window operations. The final allocation will be determined by business opportunities in the market and the Board has indicated that the assigned amount may increase if required. The capital allocation is subject to necessary regulatory approvals.
Shaikh Dr Ali Qaradaghi received PhD in the area of contracts and financial transactions from Al Azhar University in Cairo, Egypt in 1985. He is currently a Professor of Islamic financial contracts and heads the department of Islamic jurisprudence in the College of Sharia and Islamic Studies at the University of Qatar. Presently, he serves on the Sharia boards of many Islamic financial institutions in and outside Qatar, including Emirates Islamic Bank and Dubai Islamic Bank in the UAE, Investment House and Investors Bank in Bahrain and First Investment in Kuwait. He is founding member of many charitable organisations and international Islamic jurisprudence bodies. He is the author of many research articles on contemporary issues in Islamic finance and banking. He has already published eight books and six books are in various stages of publication on topics including Islamic jurisprudence and Islamic thought.


Turkey to overcome secular qualms with Islamic bond

Turkey’s government plans its first-ever issue of Islamic bonds this year, overcoming sensitivities about Islamic finance in the secular republic as it seeks to tap a rich pool of investors flush with oil money.

A sovereign sukuk issue from an economy regarded as one of the most progressive and successful in the Muslim world would signal intent on Turkey’s part to play a bigger role in Islamic finance. The size of the global sukuk market is estimated at more than $100 billion.

“It will be like ringing a bell and attracting all the attention,” said Murat Cetinkaya, deputy chief executive for treasury at Kuveyt Turk, an Islamic bank that has been a trend-setter for corporate sukuk issues in Turkey.

“Other issuances will follow the sovereign and Turkey will be on the agenda in this market constantly…as a frequent issuer.”

Despite espousing Islamic values, Prime Minister Tayyip Erdogan’s government shied away from taking the plunge with a sukuk issue during its first decade in power, out of fear of giving ammunition to critics who accuse the ruling AK Party of seeking to roll back state secularism by stealth.

“For a few billion dollars of funding there could be negative results in domestic politics,” said a deputy chief executive at a leading Turkish bank, who declined to be named because of the political sensitivity of the subject.

In 2008, the Supreme Court came close to shutting down Erdogan’s AK Party after ruling it was a centre of Islamist activity. But since then, the government has won the upper hand over old foes in the military and judiciary.

Few Turks question the AK Party’s economic management, and having overseen a near tripling in per capita income, the party was re-elected for a third term in office last June.

Moreover, even borrowers outside the Islamic world have entered the sukuk market in the last few years, giving less reason for Turkey to hold back.

“Now the sukuk has become an instrument that even Germany and France are using,” the banker said. “And in domestic politics, Erdogan is much stronger.”

So there was hardly a murmur of dissent when Deputy Prime Minister Ali Babacan, who oversees the economy, announced last month that the government planned to issue a sovereign sukuk this year, using legislation already in place.

“Turkey could very easily issue a couple of billion dollars worth of sukuk. It will probably issue $500 million or $1 billion at first and see how it goes,” said Osman Akyuz, secretary general of the Participation Banks’ Association of Turkey.

“An issuance by the Treasury would provide depth to the instrument and it will be sold with confidence.”

Royal Bank of Scotland economist Timothy Ash, a Turkey watcher, was also upbeat. “The market is potentially big – guess the sovereign could easily raise several billion.”

Islamic finance bans the use of interest, so theoretically, investors in a sukuk acquire partial ownership of an asset and share in its returns rather than receiving a stream of coupon payments.

By any other name

Although the sukuk market is tiny compared to the trillions of dollars of conventional international bond issuance, sukuk have been a relatively stable source of funding during the global financial crisis because of their conservative Islamic investor base.

Because of secular sensitivities, Islamic banks are called “participation banks” in Turkey and sukuk are referred to as “participation certificates”.

The country has used Islamic finance methods since the late 1980s through private financial institutions that were recognized as participation banks in 2006. There are four participation banks now operating in Turkey: Albaraka Turk , Bank Asya, Kuveyt Turk and Turkiye Finans. Kuveyt Turk, a unit of Kuwait Finance House, issued the country’s first sukuk in 2010.

Last October, following legislative changes to accommodate sharia-compliant transactions, Kuveyt Turk issued another sukuk for $350 million, and the strong demand demonstrated Turkey’s potential to become a major fresh source of Islamic bonds for investors keen to diversify their portfolios.

Albaraka Turk, the Turkish unit of Bahrain’s Albaraka Banking Group, and Bank Asya have formulated plans for sukuk issues of as much as $500 million, but have so far held back because of weak market sentiment globally due to the European debt crisis.

Despite that, the Turkish economy’s buoyancy, which produced growth of over 8 percent last year, and high yields compared to other emerging markets have increased investor appetite for Turkish assets, including sovereign debt issues.

Possible prop for bridge project

Ratings agency Fitch said last month that plans by sovereign borrowers outside the Middle East and other largely Islamic regions to tap the sukuk market could meet pent-up demand from Islamic institutional investors and banks to diversify their bond holdings.

That is good news for Turkey as it needs backing for huge infrastructure projects, having run into difficulties due to an international financing crunch. The government was forced to cancel a tender in January for the North Marmara Motorway Project, which involves a highway looping north of Istanbul and includes construction of a third bridge across the Bosphorus strait dividing Turkey’s European and Asian sides.

In April, the government will launch a fresh tender, and some bankers see the sukuk market providing a possible solution to the financing problem.

“Turkey needs investments and the sovereign sukuk could be used for financing of some projects, especially the third Bosphorus Bridge and highway projects,” said Akyuz of the Participation Banks’ Association.

Not only could a sukuk be specifically designed for the project, according to Is Investment Strategist Ugur Kucuk, it would also pull in investors who want to avoid international capital market volatility.

“A sovereign sukuk issue which is indexed to revenues to one of the Bosphorus bridges, or to some highway revenues, could be both attractive for investors and for the Turkish Treasury doing its first issue,” said Kucuk.



Abu Dhabi Islamic Bank PJSC : ADIB Launches Education Finance Promotion Aligned to Customer Needs

ADIB Launches Education Finance Promotion Aligned to Customer Needs

Abu Dhabi, 21 February 2012 – Abu Dhabi Islamic Bank, a top-tier Islamic financial services institution, announced today a reduced profit rate for ADIB Education Finance in a promotion that lasts till 31st March 2012.

Customers can apply for ADIB Education Finance of up to AED 250,000. They can also benefit from a flexible repayment period of up to 48 months, no processing fees, free postponement options and a free Visa Covered Card.

Education finance is widely seen as a good finance and the best investment a person can make because a degree will usually result in a person earning more money. With this promotion, ADIB demonstrates its commitment to raising levels of knowledge and qualifications of the community. The promotion is part of the bank’s community oriented initiatives, such as ‘Smart Money’ financial education booklet.

The promotion is expected to encourage more students to pursue a university education as the bank goes beyond financing tuition fees. ADIB Education Finance takes care of a range of education expenses, including books, transportation, library fees and more.

The ADIB education finance promotion is aligned to government objectives as education is one of the key sectors identified by the Abu Dhabi 2030 Plan. The bank brings the education finance promotion at crucial times in the scholastic year and will facilitate the Plan’s aim to build UAE’s upcoming human capital. It comes at the right time as it provides students with finance customized to their immediate needs.

About ADIB:

Abu Dhabi Islamic Bank (ADIB) was established on 20th May 1997 as a Public Joint Stock Company following the Emiri Decree No. 9 of 1997. The Bank commenced commercial operations on 11th November 1998, and was formally inaugurated by His Highness Sheikh Abdullah Bin Zayed Al Nahyan on 18th April 1999.

ADIB’s vision is to be a top-tier, global Islamic financial services group and its mission is to provide Islamic financial solutions to the global community.

The Bank carries out all contracts, operations and transactions in accordance with Islamic Shari’a principles.

ADIB’s core values, reflected in all its activities are: Simple and Sensible; Transparent; Mutual Benefit; Hospitality and Tolerance; and Shari’a inspired. It brings to its customers banking as it should be.

ADIB – 2011 Awards

ADIB was named the “Best Overall Bank in the UAE in customer service” for 2011 by Ethos Consultancy

ADIB won the” Best Branch Award in the UAE” for 2011 by Ethos Consultancy

ADIB was named the “Best Islamic Bank in the UAE” for 2011  by Global Finance Magazine ADIB was named Best Islamic Bank for 2011 by Business Banking and Finance Magazine

ADIB won Best Corporate Bank  for 2011 by Business Banking and Finance Magazine ADIB was named “The Best Islamic Bank” in the Middle East region for the second year running at the Banker Middle East Industry Awards 2011.

ADIB was nominated as “Fastest Growing Bank in the UAE” by the awards jury at the Banker Middle East Industry Awards 2011.

ADIB won the Best Islamic Bank in the UAE by EMEA Finance magazine

ADIB won the Best Islamic Bank in the UAE by Islamic Finance News Magazine

ADIB won Syndicated loan of the year by Islamic Finance News Magazine

Parsoli shuts broking unit to cut costs, to shift to advisory business

MUMBAI: Caught in a web of legal wrangles and business losses, listed NBFC-cum-broking firm Parsoli Corporation, has decided to shut its core stock broking business.

The company will, from now on, confine to investment advisory, Zafar Sareshwala, managing director of Parsoli Corporation, told ET.

“It’s difficult to work in such rigid regulatory environment… Also, it’s not worth the while to do broking anymore. We’d earn more money if we just withdrew all our guarantee money, margins and security deposits and put them in bank fixed deposits,” said Sareshwala, managing director of Parsoli Corporation, which got listed on the BSE in 1995.

Besides broking, Parsoli specialised in Shariah-based investment advisory business. Over 39% of Parsoli shares are held by the Sareshwala family, as on June 2011. Germany’s Baader Wertpapierhandersbank, Gulf Investment Services and Oman Commercial Services top the list of non-promoter shareholders – with 24.8%, 19.2% and 4.9%, respectively, – in Parsoli Corporation. Retail investors hold over 7%. The company suffered a loss of 88 lakh in Q2 on a turnover of 36 lakh.

“There’s nothing left in broking anymore… Turnover has been a big problem for most brokers; No one is making money doing broking these days as commissions have gone below floor-levels. Shutting our broking vertical is more of a business decision,” Sareshwala said.

Parsoli intends to cut costs by shutting its broking business. It will continue to function as an Islamic investment advisory business. The decision was taken in consultation with major shareholders of the company, Sareshwala said.

“We’ll be saving huge costs by shutting our broking business. We’ve got mandates to advise a few Islamic banks on investments in Indian companies. We’ve shut broking to be away from any regulatory system,” Sareshwala said.

But besides a dismal market, the company’s latest decision may be attributed to its brush with the capital market regulator, Sebi. In 2008, Sebi auditors unearthed instances of fraudulent transfer of shares and price manipulation. In June 2010, it restrained Parsoli from dealing in shares and acting as a broker.

The charge against the broking firm was that Parsoli promoters had transferred 9.61 lakh shares held by them to unrelated persons. This corporate action and the resultant change in shareholding pattern were not disclosed to the BSE. Another charge against Parsoli, according to Sebi judgment, is its failure to report an earlier dividend announcement.

“This transfer of shares happened in 2005; but the Sebi booked us first in 2008. In fact, there was no investor complaint against us with regards to the transfer of shares. We had paid investors the damage (money) when we spotted the mistake in transfer of shares,” Sareshwala said.

Parsoli Corporation and main promoters Zafar and Uves Sareshwala appealed to SAT for a reprieve against the Sebi order. The tribunal, however, upheld the Sebi order and ruled against Parsoli. The promoters went on to challenge Sebi in the Supreme Court but dropped the case mid-way.

“There was no point in pursuing the case any further. It’s not worth to spend so much money on legal recourse. If we had won, we’d still be doing broking which, in any case, is not ringing in any money. What’s the point in fighting for a lost cause?” he said.

Parsoli has not decided if it wants to give investors an exit route. The company’s shares touched a peak of 259 per share in January 2008, when banking and NBFC shares were the flavour. The exchange suspended trading in Parsoli shares in July 2010, when the stock was trading at 18 and the company’s m-cap was 50.5 crore.

“We’re cutting our losses as of now… We’ll be profitable in two years’ time. We’ll put our capital to better use from now on,” Sareshwala said.

Competitors and other practitioners of Islamic finance are not surprised at the turn of events at Parsoli. The group was doing too many things rashly, said one of them. “Parsoli lost a lot of clients because of portfolio losses in 2008 and 2009.

They were trying to do a lot many things too fast,” said the head of another investment firm specialising in Islamic finance.

Zirva Business Solutions begins operations in Kerala

At a time when the proposal for an Islamic banking entity is doing the rounds in Kerala, a single-window Shariah-oriented business and investment consultancy provider has launched its operations in the State.

Zirva Business Solutions, based in Malappuram district, focuses on three distinct verticals of business, investment and educational services.

In the area of business vertical, the company offers financial, legal, marketing and sales, human resources and IT services, all in an integrated single-window format.

Mr P.A. Shameel Sajjad, Chief Executive Officer, said that the investment services of the company covered stocks, commodities, portfolio management, mutual funds, insurance products and realty. But, all the activities will be in Shariah-compliant domain and, at the same time, promising financial benefits.


He explained that investments in stocks would be made based on certain parameters. For one, companies that are into non-Shariah compliant businesses, such as alcohol and gambling, will be screened out.

At the financial level, companies are screened on factors such as debt, liquid assets and the percentage interest income accruing to it. India had the largest number of Shariah-compliant stocks in the world, he said.

The third vertical is into Islamic finance and banking education. Under the Certified Islamic Financial Advisor course offered by the company, the candidate will receive a certificate both from the National Institute of Securities Markets of SEBI and the Zirva Institute of Management Sciences.

Mr. Sajjad said that the future road map of Zirva included the setting up of an asset management company, which would roll out Shariah-compliant investment products. Another plan is to establish a venture capital arm that will fund Shariah-compliant projects.

The company would also be looking at establishing strong distribution network in the rural areas of Kerala and other states, he said.

Can Islamic finance maintain its pace of growth

October 12, 2011

The $1 trillion global Islamic finance market still has a bright future, barring any sharp turns in the world’s economic crisis, with the Arab Spring pushing investors into Asia.

Barring a sharp global downturn, Islamic financial asset growth will likely maintain its current growth clip over the next 5-10 years as new markets emerge, an industry body said on Wednesday.

The $1 trillion sector has bright growth prospects in Asia, the Middle East and Africa driven by increasing populations, natural resources and policies that encourage expansion, the Islamic Financial Services Board (IFSB) said.

Islamic finance has been growing at 15-20 percent a year, according to industry estimates, although most activity has been from the traditional markets of the Middle East and Malaysia, following after a brief burst of global interest three years ago.

“15 percent is a very fast rate of growth but it is off a relatively small base and it’s sustainable for a longer period than you might initially think,” IFSB secretary-general Jaseem Ahmed said in an interview.

The Kuala Lumpur-based IFSB, one of two Islamic finance standards-setting bodies, issues guidelines on the banking, capital markets and insurance sectors.

The Sharia-compliant banking sector’s growth has largely been driven by a boom in petrodollar earnings and by increased demand for ethical investments.


But over the past year, unrest in the Middle East and several high-profile sukuk defaults have weighed on the Islamic finance industry. Also, many bankers expect the weak global economic outlook to be a further drag on the sector.

Unlike the 2008 global credit crisis — which sparked wide interest in Islamic finance as countries sought access to alternative sources of funding — the current downturn is expected to hit the industry as slowing economic growth hurts bank lending.

Ahmed said growth in new markets would be driven by consumer demand and interest by small and mid-sized firms to tap the pool of Sharia funding.

Bankers have said that Turkey and Kazakhstan are potential new markets for Islamic finance, helping to offset maturing growth in Southeast Asia and the Middle East.

“The crisis in Europe and the slowdown of the U.S. are something of concern but overall I’m cautiously optimistic about that and very optimistic about emerging markets and about Islamic finance over the long-haul,” Ahmed said. (By Liau Y-Sing Editing by Richard Borsuk)

Qatar Islamic Second-Quarter Net Rises 27%, Beats Estimates

Qatar Islamic Bank (QIBK) SAQ, the Persian Gulf country’s biggest Shariah-compliant lender, posted a 27 percent jump in second-quarter profit, topping analysts’ estimates, as income from investments increased.

Net income rose to 382 million riyals ($105 million) from 301 million riyals a year earlier, the bank said in an e-mailed statement today. The average of five analysts’ estimates was 361 million riyals, according to data compiled by Bloomberg.

First-half investment income rose to 311 million riyals from 48 million riyals a year earlier, according to the statement. Net financing income fell to 863 million riyals from 906 million riyals and fee income dropped to 125 million riyals from 186 million riyals.

“At first glance this is a mixed set of results, with good profitability, but without strong conviction, and with little in the way of loan growth,” Raj Madha, a Dubai-based analyst at Rasmala Investment Bank Ltd., said in an e-mail today. “I wouldn’t extrapolate this set of results into the future unless we get further details.” Continue reading

Islamic firm offers to build bridge in Sabarimala

The Shariah-based financial institution, Al Barakah Financial Services, started by the previous government, will set up a Bailey bridge in the famous Hindu pilgrimage centre of Sabarimala.

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The Bailey bridge is a portable, prefabricated truss bridge, which is used to connect banks in an emergency. But it’s sturdy and the pace of assembly does not undermine its stability.

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Elaf Bank wins license for Malaysia branch

Bahrain-based Elaf Bank, a leading Islamic bank, has been granted a license by the Ministry of Finance Malaysia to open a branch office in Malaysia.

Elaf Bank was presented with the license during a formal ceremony held at Bank Negara Malaysia today (June 15).

The bank plans to start its branch office operations in Kuala Lumpur immediately now that it has fulfilled the formalities required for obtaining the license, a statement said. Continue reading