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Thursday, 5 July 2012

India: RBI should look at Islamic banking afresh: Khurshid

The Law Minister, Mr Salman Khurshid, said on Thursday that he had written to the Planning Commission and the Reserve Bank of India (RBI) on the issue of Islamic banking.

He said he was quite hopeful that the RBI would look at the issue afresh and soon come up with its views after deciding on the technical issues.

Mr Khurshid said it was difficult to fit in Islamic banking with the existing regulations, as the very concept of debt and equity was very different in Islamic banking.

Non-banking financial institutions are prevalent now and are accepted, but some ambiguities have to be addressed before they can take up Islamic finance, he said.


“Sooner or later, the RBI will come up with a final view. Let me say at this point of time that Islamic banking is an interesting idea, compelling idea, if you look at what France, Germany and UK the are doing. It’s an attractive idea if you look at the sovereign wealth funds of the Gulf region and the fact that we need much more money to finance our infrastructure needs,” he said.

On whether it was doable or feasible in the Indian scheme of things, he said only experts and the RBI had to say. He was speaking to newspersons on the sidelines of an event organised by World Islamic Economic Forum (WIEF) Foundation here. For the first time ever, the international advisory panel of WIEF Foundation met in India.

This meeting discussed the agenda and action plans for the forthcoming 8{+t}{+h} World Islamic Economic Forum slated to be held at Johor Bahru Malaysia on December 4-6, said Mr Ahmad Fuzi Abdul Razak, Secretary-General of WIEF Foundation.

Mr Razak had on Tuesday met the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, to discuss WIEF Foundation and its initiatives.

The issue of Islamic banking also came up for discussion at the meeting, Mr Razak said, indicating that Indian policymakers may look at a policy decision on allowing Islamic banking in India.

(Business Times 04 July 2012)

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StanChart makes KL hub for Islamic banking

Standard Chartered Bank is making Kuala Lumpur its global business hub for Islamic consumer banking. 

This is part of a strategy to grow its Islamic banking business in Malaysia and across its global footprint. 

In this regard, Standard Chartered's Global Head of Islamic Banking and a new team of experts, will be based at its head office in the capital by year-end to further drive business momentum in the country. 

It will also continue working with other new markets to build and strengthen its Islamic banking proposition under the Standard Chartered Saadiq brand. 

In a statement today, Standard Chartered said the new hub underscores the strategic importance of the Malaysian market for the bank's overall strategy and ambitions for the Saadiq franchise. 

"Malaysia has established itself as a leading international Islamic financial centre. 

"With Kuala Lumpur as our global hub for Islamic consumer banking, we look forward to capitalising on Malaysia's long-standing experience and expertise in Islamic Banking, and further contribute to the scale of Islamic finance activities in the country," said Standard Chartered Saadiq chairman, Shayne 

The new global hub will managed by Wasim Saifi as the new chief executive officer of Standard Chartered Saadiq Bhd, in addition to his role as Global Head, Islamic Consumer Banking. 

Standard Chartered Bank was the first international bank in Malaysia to offer Islamic banking products in 1993. 

In 2008, Standard Chartered Saadiq Bhd was established as a full-fledged Islamic banking subsidiary, and has launched several first-to-market Islamic products.

(Business Times / 05 July 2012)

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Malaysia: Danainfra issues RM8b sukuk for MRT’s SBK Blue Line

KUALA LUMPUR (July 4, 2012): The government is issuing an RM8 billion sukuk financing programme to partly finance the Mass Rapid Transit (MRT) project which is developed and managed by Mass Rapid Transit Corp Sdn Bhd (MRT Corp).
The sukuk will be issued via Danainfra Nasional Bhd, a wholly-owned subsidiary of Minister of Finance Inc. Danainfra is a special funding vehicle for the government to source for funds to finance its infrastructure projects, with the MRT project being the first.
Yesterday, Danainfra signed the agreement for the Islamic commercial papers and medium term notes programme with four banks.
Minister of Finance II Datuk Seri Ahmad Husni Hanadzlah, who witnessed the signing, said: "It is expected that around RM30 billion worth of funds will have to be sourced to finance the completion of the Sungai Buloh-Kajang line, also known as the SBK Blue Line, which is the first line to be constructed under the MRT project.
"It is hoped that with more good quality sukuk being issued to the market, this may create further depth and drive further activity and liquidity through higher volumes being traded on a day-to-day basis."
The RM8 billion is the first tranche of financing for the MRT project's SBK Blue Line. The entire MRT project is scheduled to be operational by July 2017 and to date, 33 out of 85 work packages have been awarded to the value of RM15.5 billion.
The maiden issuance will be the Islamic medium term notes of up to RM2.4 billion which is targeted for July 20, with book-building expected to be held on July 9 or 10.
To date, Danainfra has provided total financing of up to RM1 billion for the MRT project.
Danainfra principal officer Fazlur Rahman Ebrahim said of the RM2.4 billion, RM1 billion will be for bridging loans and the rest to finance the project.
He said the subsequent issuance is expected in October, to the value of RM5.6 billion and the total RM8 billion will be fully exhausted by June 30 next year.
All the tender packages are expected to be awarded by year-end and the actual cost of the entire project will be determined in the first quarter of 2013.
Husni said a way to increase investor base is by tapping the retail market and introducing longer-dated bonds.
"The retail bonds will allow members of the public to invest in bonds or sukuk in lower denominations of RM1,000 and above. The longer-dated bonds will have tenors beyond the normal tenor of 10, 12 and 15 years currently available in the market.
"We would like to see bonds or sukuk with tenor of maturity of 25 years and above. The introduction of retail bonds or sukuk and longer-dated bonds will further spur the Malaysian capital markets and the country's economy as a whole,

(The Sun Daily / o4 July 2012)

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