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Monday, 22 October 2012

Malaysia: Bank Negara Malaysia (BNM) issues Shariah standards on Mudarabah

KUALA LUMPUR: Bank Negara Malaysia (BNM) has issued the Shariah standards on Mudarabah to all Islamic financial institutions under its purview.
BNM said on Monday the issuance of the Shariah standards on Mudarabah was an important milestone and was part of its continuous efforts to strengthen the Shariah and regulatory framework in Malaysia.
"The standards would serve as guidelines for the Islamic financial institutions in developing Islamic financial products and services based on Mudarabah," it said.
The central bank pointed out the Shariah standards on Mudarabah was to provide a standard on the features of mudarabah contracts applicable in Islamic financial transactions.
"The Shariah standards on Mudarabah also outlines the mandatory and the optional features applicable to the mudarabah contract in which the Islamic financial institution would be required to observe such requirements in developing Islamic financial products and services," said BNM.
(The Star Online / 22 Oct 2012)

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Malaysia: OSKIB aims to unlock value in Islamic finance segment

OSK Investment Bank Bhd’s (OSKIB) Islamic banking division is taking measures to unlock value in the Islamic finance realm, in tandem with its measures in addressing the challenges currently faced in the segment.
The World Bank has valued the global Islamic finance asset size at about US$1.3 trillion currently and expects it to reach US$1.6 trillion by year-end. In Malaysia, the Islamic banking segment represented 18 per cent of the overall banking sector’s RM1.78 trillion total assets as at end-2011.

OSKIB’s Islamic banking division director and head Yazit Yusuff recently told The Borneo Post that the measures included shifting of focus on business development into more Islamic capital market activities.
“The bank has identified various initiatives including the setting up of a full-fledged Islamic fund management company. There are also projects in the pipeline including establishing an Islamic stock broking window and introducing syariah-compliant equity derivative products.”

In addition, he mentioned “continuous sourcing for financing mandates especially on opportunities to participate in syndicated Islamic financing arrangements with other Islamic banks to finance capital market activities.”
With regards to collaboration and consolidation, he also noted the bank’s greater potential via “benefitting from a bigger and stronger balance sheet through the proposed merger initiative with RHB Investment Bank.”

“The new developments include establishing an Islamic stock broking window to offer a full range of syariah-compliant equity businesses from a selection of syariah-compliant stocks to provision of Islamic Share Margin Financing.”

In terms of new products, OSKIB had identified more new syariah-compliant products such as syariah-compliant equity derivative products including warrants, options and dual-currency investments as well as retail deposits in the form of syariah-compliant negotiable instruments of deposits.

The fund management business would be looking at market expansion in which syariah-compliant funds will be issued and marketed out of the regional offices like Singapore and Hong Kong, he said.

“Kuala Lumpur is the hub for our Islamic fund management activities and all products offered will take into account screening methodology used by other jurisdictions to ensure global acceptance.

“In the current changing market, there is a wide range of Islamic banking products offered by many financial institutions to meet the demands and needs of investors in the Islamic capital market.

“OSKIB is dedicated to expand its current Islamic based products into a full-fledged Islamic capital market offering through growing its capabilities in product structuring, asset management, project financing, stock broking and capital services that would be made available to current and future investors.

(Berneo Post Online / 22 Oct 2012)

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Does Islamic finance have a responsibility to reduce unemployment

There is a buzz about the prospects for Islamic finance in parts of the Middle East and North Africa region (MENA). News reports are suggesting that as a consequence of change in public policy, the market share of Islamic banking in Egypt will grow to “35 per cent in five years from 5 per cent now”. Much attention in Islamic finance circles is also falling on the relatively smaller markets, such as Oman and Morocco. Observers, such as researchers from Credit Suisse, are also pointing to Islamic finance as a potential source of spurring economic growth in the Arab Spring countries.
A question arising out of all this buzz is this: Will the rise of Islamic finance address the problem of high unemployment among the Arab youth?
The economic literature on MENA tends to see unemployment as the region’s greatest challenge. It is difficult to exaggerate its scale and socio-economic implications. According to Global Employment Trends 2011 by the International Labour Organisational youth unemployment in the MENA region is estimated to be 24.8 per cent compared to world average of 12.6 per cent.
It is frequently argued that job growth in MENA is best expected from high-growth small and medium sized enterprises (SMEs). According to research by the World Bank, these SMEs consider limited access to finance to be a significant constraint. The buzz about Islamic finance in building expectations that it could help tackle unemployment in MENA by doing things like financing the under-financed SMEs that will create jobs.
(Gulfnews.Com / 22 Oct 2012)

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