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Tuesday, 25 June 2013

Bahrain: Islamic finance lobby plans regional network

A Bahrain-based association which lobbies on behalf of Islamic finance says it plans to expand beyond the Gulf, so that it can shape rules and practices in new markets as they grow.
The General Council for Islamic Banks and Financial Institutions (CIBAFI), a non-profit organisation headquartered in Manama, has traditionally focused on neighbouring countries, which form a core market for the industry.
But Omar Hafiz, who took over last year as secretary-general of the body, said he was keen to enlarge its geographic scope while engaging national regulators more actively.
"We are trying to have a representative office in Tunisia, operating as a gateway to Africa, and also in Azerbaijan to reach central Asian countries," he told Reuters.
Founded in 1999 by the Jeddah-based Islamic Development Bank , CIBAFI has 114 member institutions, including Egypt's Faisal Islamic Bank, Kuwait Finance House and Bahrain-based Al Baraka Banking Group. Saudi-Arabia's National Commercial Bank joined last year.
The Saudi-born Hafiz, 62, said that for its long-term health, the industry should focus as much on improving the regulatory environment as increasing its size.
"It is not just a matter of licensing Islamic banks, but preparing a platform for success for Islamic banking," he said.
"We want to ensure competition between the conventional and Islamic banking industry is in its best shape, not inferior or second class, but on the same level."
Addressing a major weakness in Islamic finance, a lack of well-trained professionals, CIBAFI plans to expand its training and certification programmes, which are currently distributed through a network of over 30 agents in countries from Jordan to France.
"We hope to reach 50 agents by the end of 2014. Maybe our training centre can be a separate body - this is still in the development stage, it still needs two to three years to develop," Hafiz added.
The body also plans to hold forums in new markets for Islamic finance, including events in Morocco and Libya later this year.
One of CIBAFI's key messages is that Islamic windows - units of conventional banks which offer Islamic financial products and services - need to operate under clear rules to improve the perceptions of consumers.
"In some cases, conventional banks which offer Islamic windows or Islamic transactions are trying to pull the financial products towards their conventional ways of operation," Hafiz said, arguing this hindered consumers from distinguishing between conventional and Islamic products.
"It may be owned partially or totally by a conventional bank, but a full separation technically and legally should be shown to consumers."

This could improve the industry's appeal and eventually reduce the reliance on the Islamic window model in favour of full-fledged operations, Hafiz said.
(Reuters / 24 June 2013)

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IDB backs Morocco's first sukuk

Morocco has won backing from the Saudi-based Islamic Development Bank for its first sukuk as the North African country looks to attract Middle Eastern investors.

"The Islamic Development Bank has proposed us to buy our sukuk rather than offering us another loan," General Affairs minister Mohamed Najib Boulif said. "But the amount has not been set yet".

Morocco's moderate Islamist Justice and Development Party, which came to power in 2011 after protests prompted by the Arab Spring, has paved the way for Islamic finance by reforming its securitisation law to allow sukuk.

Earlier this year, the Morocco agreed a $2.4 billion package with the IDB, under which it will receive $600 million each year from 2013 to 2016. It also raised $750 million last month in a two-part reopening of its $1.5 billion bond.

The North African country is considering other financial reforms, such as that of the pension and tax systems, as it grapples with the fall out from the euro zone crisis and the Arab Spring protests.

It will also deregulate prices for some basic goods in the next two weeks, its first step towards reducing subsidies, the minister said in an interview last week. He stressed, however, that the timing has not been decided.

(Trade Arabia / 25 June 2013)

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