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Saturday, 18 August 2012

Zakatul Fitr (Sadaqat al-Fitr) made simple

As this sacred month draws to a close and Eid approaches we could do worse than to think about Sadaqatul-Fitr or Zakatul Fitr as it is sometimes called. Here are some points to understand and remember about the Fiqh of Sadaqatul-Fitr.

What is Sadaqatul-Fitr?

Sadaqatul-Fitr, also called Zakatul-Fitr, is a charitable duty associated with the month of Ramadan and in particular Eid al-Fitr. It is a duty on every Muslim who possesses wealth in excess of his basic needs at the time of Fajr on the day of Eid al-Fitr.
To pay Sadaqatul-Fitr one simply gives the required amount to a deserving recipient or a trusted third party to give on one’s behalf. It is preferred and more appropriate to give it directly to a poor person while on one’s way to the Eid prayer.

A duty

When we say Sadaqatul-Fitr is a duty, we mean it is wajib such that a Muslim who neglects to pay it despite being obligated to do so would be sinful.

Basic Needs

When we speak of basic needs we refer to a legal class or type of wealth. We should remember that wealth doesn’t just refer to money but any possession of value. “Basic needs” refers to any possessions of value that are needed for a normal life.
So wealth considered basic needs would include things like:
  • One’s house
  • One’s car
  • One’s clothing & furniture
The value of these things does not matter, they are considered basic needs as long as they are for one’s use.

Beyond Basic Needs

Yet if one has an excess of these possessions (such as if a family has two cars but only uses one and the other is a showpiece), then if the excess (such as the extra car) is valued more than the nisab of Zakat thenSadaqatul-Fitr would be wajib on the owner of the car.
A rare stamp collection or an art collection are other examples of wealth beyond one’s basic needs.
If the value of excess wealth is more than the nisab of Zakat (the value of approximately 87.48g of gold) and one owns this wealth at Fajr on Eid al-Fitr day then Sadaqatul-Fitr is wajib.

Who Do I Pay For?

Oneself and Small Children

One pays Sadaqatul-Fitr on behalf of oneself and each of one’s children who have not yet become legally adult (which occurs at puberty).
One is not required to pay Sadaqatul-Fitr for one’s spouse. Each spouse is responsible for their ownSadaqatul-Fitr. Yet if one spouse pays on behalf of another it is valid.
One is only obliged to pay on behalf of the children one has at the time of Fajr on the day of Eid al-Fitr.
If a child is born after fajr on the day of Eid then one is not obliged to pay on behalf of that child though there is no harm in doing so.

How Much Do I Pay?

Wheat or wheat flour may be given or barley, barley flour, dates, or raisins:
  • If wheat or wheat flour is given then one gives 2kg of the flour/grain.
  • If barley, barley flour, dates, or raisins is given then one gives 4kg of the flour/grain/fruit.

May I Give Money Instead?

Yes, one may give one’s sadaqa in money. One has the option to:
  • Give the monetary equivalent of 2kg of wheat or wheat flour or the monetary equivalent of 4kg of barley, barley flour, dates, or raisins.
  • or give the monetary equivalent of 4kg of any other grain.

Money or Food

As mentioned, one may give one’s sadaqa in money or the actual grain/food whichever is better for the poor.
In situations of famine or a shortage of the actual foodstuff then it is better to give the foodstuff but under normal circumstances money is better.

Who Do I Pay it To?

Sadaqa is for the Poor

Sadaqatul-Fitr may only be given to the poor. Unlike Zakat, it may be given to poor Muslims as well as poor non-Muslims.
A poor person is one who does not possess wealth in excess of his basic needs that exceeds the value of the nisab of Zakat (approximately 87.48g of gold).
Remember: Basic Needs
Basic needs includes things like:
  • One’s house
  • One’s car
  • One’s clothing & furniture
If apart from these types of things an individual does not possess wealth valued more than approximately 87.48g of gold then that individual is poor.
Because of the nature of basic needs, it should be noted that it is possible for someone to own a house, a car, furniture and clothing and still be poor.
One does not need to “investigate” to determine whether an individual is poor or not. If the individual seems to be poor (such as a beggar), or one is familiar with their financial circumstances and is reasonably sure that they are poor then one may give one’s sadaqa.

Give Willingly

When we give Sadaqatul-Fitr or any other charity it should be given willingly and happily and we should consider that the poor are helping us by accepting from our wealth. We should give with the objective of not being attached to possessions, seeking the pleasure of Allah, Most High, asking for His acceptance.

His Acceptance

We ask Allah, Most High, to accept from us all that we have put forward in this noble month and to make us among those drawn closer to Him, Most High.
(Village Muslim.Com / 14 August 2012)

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Kuwait's NIG to repay $475 mln sukuk on time, drops delay request

* $475 mln sukuk to be repaid on Aug 16 - statement
* Drops extension request after getting 92 pct sukukholders nod
* Says to finance repayment with sharia-compliant loan
* Shares rise 5.4 pct on Kuwait bourse (Adds detail, background)
DUBAI, Aug 14 (Reuters) - Kuwait's National Industries Group Holding (NIG) will repay its $475 million Islamic bond, or sukuk, when it matures on August 16, it said on Tuesday, dropping earlier plans to get a four-year extension from creditors.
NIG, an investment firm controlled by one of the country's biggest merchant families, asked creditors in July to extend 70 percent of the sukuk maturity to 2016 in exchange for a much higher interest rate.
While about 92 percent of certificate holders had approved the extension, the request has been cancelled because NIG has raised enough finance to fully repay the sukuk, the firm said in a statement to the Dubai bourse.
NIG shares rose 5.4 percent as at 0820 GMT on the Kuwait bourse following the announcement.
The company had said previously it was in the process of securing a 100 million dinar ($354.4 million) three-year syndicated sharia-compliant loan being arranged by local lender Warba Bank.
NIG had around 85 million dinars of cash on its balance sheet at the end of March, according to Moody's in a May report labelling the Warba Bank facility credit positive.
Last month, NIG said it would repay 30 percent of the $475 million total on the August 16 due date but under a revised structure, which sukukholders had until August 9 to agree to, NIG would repay 25 percent of the principal amount at the end of each of the four years the sukuk was extended for.
The profit rate would have also been amended from a floating rate of three-month Libor plus 105 basis points to a fixed rate of 450 basis points - much higher than the 151.59 bps paid out at the last coupon payment in May.
The Kharafi family, which owns NIG, controls one of the biggest family conglomerates in Kuwait with interests in real estate, retail and financial services. It is also thought to control, through various entities, around a quarter of telecom operator Zain.
Like a number of Kuwaiti investment firms, NIG was hard hit by the 2008 financial crisis. These firms borrowed cheap short-term cash in the boom years to fund an asset-buying spree, both locally and overseas, but found they couldn't refinance the debt once borrowing costs rose. Offloading assets at deflated values has also proven difficult in a stagnant market.
Several Kuwaiti investment firms have faced debt problems, including Investment Dar, co-owner of luxury carmaker Aston Martin, International Investment Group and International Leasing and Investment Co.
Global Investment House, in the midst of its second restructuring in three years, said on Sunday it would seek shareholders approval for a debt-for-equity swap which will see creditors own 70 percent of the company.
(Reuter / 14 August 2012)

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Malaysia: Affin Holdings eyes stake in Bank Muamalat Malaysia

ANALYSTS have mixed views on Affin Holdings Bhd's surprise plan to buy a stake in Bank Muamalat Malaysia Bhd, one of the country's two standalone Islamic banks.

While they note that the move could strengthen Affin's foothold in the Islamic banking sector, they also don't see much synergies being derived.

Details remain scant as negotiations with Bank Muamalat's two shareholders - DRB-HICOM Bhd and Khazanah Nasional Bhd - are at an early stage.

Two days ago, Bank Negara Malaysia (BNM) gave all parties involved its permission to start the acquisition talks, which must be completed by year-end.

Talks are expected to gain momentum after the Hari Raya festive period.

Assuming a full acquisition, Affin's total assets will widen by 36 per cent to RM77 billion while its gross loan base will increase by 30 per cent. 

However, this is not expected to change the group's market ranking. Affin is the second smallest of eight banking groups in the country in terms of assets and loans.

"We see the potential acquisition of Bank Muamalat as an expansion in size and an overlap in Islamic consumer financing. Affin's strength is in Islamic consumer financing, particularly in residential property loans and hire purchase. 

"With Bank Muamalat's relatively smaller loan size, we believe that revenue synergies will be limited. Bank Muamalat in the past had high gross impaired loan ratios," banking analyst Kelvin Ong of MIDF Research said in a report yesterday.

The ratio has improved to 4.7 per cent as of March this year from a high of 8.7 per cent in December 2008, but the acquisition may result in a rise in collective assessment charge, he noted.

Ong kept his "buy" call on Affin's stock, which rose by 7 sen, or 2 per cent, yesterday to RM3.55, suggesting a potential 15.5 per cent upside from his target price of RM4.10. 
Some one million shares changed hands, triple the previous day's volume.

Bank Muamalat's strength lies in consumer financing and while it is also involved in commercial, corporate and investment banking, growth in these areas remain unexciting.

Its revenue is domestically driven and the bulk of its loans comes from residential property - they comprise about a quarter of its smallish loan base of RM9.4 billion as at end-March - and hire purchase.

"Judging from the loan book, Bank Muamalat appears to be a complementary fit for Affin, given its focus on household lending. But there does not appear to be much benefit from the funding aspect, given that Bank Muamalat's CASA (current account, savings account) ratio is quite close to Affin's," RHB Research analyst David Chong noted.

Affin's plan to buy a stake in Bank Muamalat came as a surprise to some analysts, given that it had long indicated its intention to expand regionally rather than domestically.

As early as June, it had said it was still keen on pursuing an earlier plan to buy a controlling interest in Indonesia's PT Bank Ina Perdana, but was awaiting Indonesian authorities' long-awaited new rules on shareholding limits.

Indonesia has since said single ownership in its banks will be restricted to 40 per cent, which may have put paid to Affin's Indonesian ambitions.
Still, Bank Muamalat may be attractive for Affin, given both banks' ambitions to venture into Islamic banking in China.

Bank Muamalat had last month formed a strategic collaboration with China's Bank of Shi Zui Shan in the hopes that it will have a part in the Chinese lender's plans to set up the country's first Islamic bank in the Ningxia province - where some 30 million Muslims are concentrated - in two years.

For now, it has taken on the costs for training some of the Chinese lender's staff in Islamic banking.

"We believe that Bank Muamalat's upcoming venture into China is complementary to Affin's strategic business direction, given that Affin has recently announced that it is collaborating with Bank of East Asia Ltd (BEA), to set up Islamic banking operations in China in the latter part of this year," said Alliance Research banking analyst Cheah King Yoong, who kept a "strong buy" call on Affin with a target price of RM4.42.

BEA holds a 23.5 per cent stake in Affin.

Still, pricing will be the key as to whether a sale to Affin will go through.
Tan Sri Syed Mokhtar Al-Bukhary's DRB-HICOM, which owns 70 per cent of Bank Muamalat, had twice before attempted to pare its stake - to Bank Islam Malaysia Bhd last year and to Bahrain-based Islamic lender Al Baraka before that - but was unsuccessful. 

BNM in 2008 allowed DRB-HICOM to buy the 70 per cent stake in Bank Muamalat on condition that it would eventually sell it down to 40 per cent.

Some analysts reckon that if Affin's offer is attractive enough, DRB-HICOM may give up its entire stake as the conglomerate seeks to pare down its debt.

Affin may also end up owning the smaller lender in its entirety as Khazanah, which holds the remaining 30 per cent stake, is on a mission to divest all non-core investments.
MIDF Research is not expecting Bank Muamalat to come cheap.
"Although Bank Muamalat is not listed, we do not expect it to come cheap. We believe that the PBV ratio for the acquisition will be around 1.5 times," Ong said.

Alliance's Cheah noted that one stumbling block to a deal being done could be the low return-on-equity (ROE) of Bank Muamalat, which stood at just six per cent for the financial year ended March 2012, as compared to Affin's ROE of 9.4 per cent in its last financial year.

Meanwhile, Affin late yesterday reported a 27.7 per cent rise in net profit to RM306.9 million for the first half of the year on the back of higher lending and fee-based income.

Its chairman Tan Sri Mohd Zahidi Zainuddin said in a statement that he expects the group to maintain its earnings momentum in the second half.

Bloomberg data shows that of the eight analysts who track Affin, five have "buy" calls on the stock, two are "neutral" and one with "sell". 

Affin's shares have climbed 15.2 per cent so far this year, outdoing the benchmark index's 7.8 per cent gain.

(Business Times / 18 August 2012)

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President of uganda to decide on introducing Islamic banking in Uganda

The decision on introducing Islamic banking in Uganda will be arrived at the end of next month, President Yoweri Museveni has promised the Muslim community.
Islamic banking also called participant banking is defined as banking activity that is consistent with the principles of the Islamic law (Sharia) and its practical application through the development of Islamic economics.
Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees for money loans.
Investing in businesses that provide goods or services considered contrary to Islamic principles is also regarded as sinful and prohibited.
The promise to have concluded the decision on Islamic banking here followed a request by the Mufti Sheik Shaban Mubajje to the President to help the Muslims operate the system.
This was at a dinner the President hosted for the Muslims at the State House, Entebbe on Monday.
This was to congratulate the Muslims on successful completion of the fasting period expected to end this Friday or Saturday.
Mubajje said the Muslims were not getting loans because paying interest is not accepted in Islam. "We need Islamic banking in Uganda. These banks are operated in Kenya and Rwanda," Mubajje said.
Museveni said he will consult with Mubajje and other people who know it.
He said the little he has heard about the system indicates that it is similar to the Ankole culture of lending cows where one gives another a cow and only expects a cow back years later.
He said this means that the person who borrowed the cow has cows and the owner of the cow also has a cow back after some years.
"I will ask the Sheik to come and teach me. By end of September, we shall have concluded this," Museveni said.
In his Eid-El-Fitri message, Tumusiime Mutebile, the Bank of Uganda boss, said they had proposed amendments to the Financial Institutions Act, 2004, to permit the licensing of, and transacting by financial institutions in Islamic banking in Uganda.
(All Africa / 15 August 2012)

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Islamic Banking: If Muslims Ran Wall Street, America Could Have Avoided the 2008 Economic Crisis

With the coming Muslim festival of Eid, this is perhaps a good week to see what lessons Islam can teach us about business.
Most of what we read about Islam in business is about finance and morals. However, did you know that many parts of the Qur’an are actually written in the metaphor of business? This is supported by the Hadiths made up of lessons taken from the life of the Messenger Muhammad. Yes, Islam is the only religion that directly guides us about how we should conduct our business.
Islam recognizes that humankind is both capable of reaching great spiritual heights and disintegrating into total immorality. Consequently, humans in a moral society need a guide to assist them in being less materialistic and more spiritual. The absence of spirituality within us will most likely lead a business into immoral activities such as stealing, lying, fraud, and deceit, etc. Without this moral bedrock within society, others will see that the only way to get ahead is by following others with these bad practices. Islam urges individuals to strive their utmost to earn large monetary rewards and spiritual profits, while at the same time being inspired to be successful and honest people. Islam encourages people to strive for success and it is certainly the responsibility of the individual to do so. However, involvement in business should also carry with it benevolent intentions for others while seeking success for oneself.
Now how do we do this? Islam also prescribes many ways to be successful. First, the concept ofTawhid is both the essence of the individual and the society he or she lives in. Tawhid implies both the mission and morality of humankind in both social and spiritual contexts, where our responsibilities fall into two categories, fard’ain which is an individual’s obligation to perform his or her religious duties and fard kifayah, which is an obligation for man to serve the entire community, through services to each other, necessary for the community to live safely and comfortably. Thus, we all have an obligation to serve and benefit the community. Business is the principal method of improving the economy and community through ethical organizations.
The building blocks of Tawhid, and therefore any business, are the concepts of al-iman (belief), al-ilm (knowledge), and al-amal (pious acts and efforts). One needs faith in themselves and Allah(SWT) to succeed, and our success depends upon our knowledge and wisdom, and the effort and acts we perform as the consequence of our faith and knowledge. This means courage, tact, and wisdom in the strategies we employ.
Islamic teachings therefore espouse that our firm should value R&D and seek to empower people to be creative and innovative. Many methods, such as exercising a sense of mutual assistance (al-ta’awun), fairness (amanah), equity (adab), and collaboration (shura) within the firm, are mentioned in great detail. The concepts of Halal and Toyyibaan specify what materials, products and processes are allowed. This governs goodness, nutrition, and sustainability. Islamic enterprises should be sustainable enterprises. These concepts in most cases closely align with industry practices of HACCP, GMP, and Fair-trade, where incidentally Halal, ethical, and Fair-trade products are now the fastest growing markets in the world with approximately 35-40% growth per annum.
In Islam, the individual’s vision, mission, and objectives in business is to achieve both success in this world and the hereafter. This is al-falah. Islam puts very little restriction upon the scale of worldly success, except specifying it must be reasonable, provides the comforts of worldly life, with consideration to the poor and suffering, and within the balance of worldly and spiritual life. Man's success must also serve the legitimate needs of the ummah. This is in great contrast to the singular objective of profit maximization in contemporary business thinking. 
Man has a free choice in what he chooses. Opposition and straying from his true nature (fitrah)will bring discord to the individual, where negative attributes will distort his true nature, which could lead him into doing evil deeds. The individual has his al-iman and al-ilm to keep him from this path of self destruction (al-fasad), which would manifest itself through nepotism, favoritism, envy, greed, corruption, injustice, and ignorance. This in Islam is the influence of satan, manifested in many different ways to man to lure him away from God’s chosen path for him. Man becomes unfocused through ignorance and lack of knowledge.
Achieving al-falah means that man has lived up to God’s trust placed upon him, through performing his ibadah, while obeying all the laws of the syar’iah, the basic law of Allah. This is where man has overcome his weaknesses in the service of Allahthrough righteous deeds (amal), in his obligation of fard kifayah. Man has reached the state of amanah, fulfilling the trust God has put in him. 
Over the last few decades, ‘Western’ management ideas and ethics have moved closer to Islamic principles and ethics. Commercially, the Islamic model is increasing in importance today. There is a growing awareness among Muslims about their duties and responsibilities to adhere to theTawhid. As Muslim consumers require more Islamic goods and services, Islamic compliant supply chain development is a major growth industry in itself, and is becoming a feature within conventional supply chains internationally. Therefore, any person who recognizes the lessons that Islam can provide in business has the opportunity to develop a firm that can be truly competitive within the international arena.
(Polycymic / 18 August 2012)

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