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Saturday, 29 June 2013

Friday sermon: Remember zakat as Ramadan nears

As the holy month of giving approaches, Muslims should be mindful of paying zakat, the third pillar of Islam, today's sermon says.

"It is a month of mercy and a good time for Muslims to spend and give out alms, most importantly zakat," the sermon tells worshippers.

All able Muslims are required to pay zakat, a type of alms based on the amount of wealth a person accumulates in a full lunar year.

Highlighting its importance, the Quran often associates zakat with prayer and zakat is also seen as offering salvation from hellfire.

"So I have warned you of a fire which is blazing. None will enter to burn therein except the most wretched one who had denied and turned away. But the righteous one will avoid it - he who gives from his wealth to purify himself," says a verse from the Quran.

"Zakat is therefore meant to purify the heart of the wealthy from stinginess and the heart of the poor from envy and hatred."

Ethics are involved in giving zakat. It must not be given with arrogance, or to show off. The ultimate goal of givers must be to please Allah. Zakat must also be paid from legitimately earned sources.

"Last but not least, it should preferably go first to relatives and other ties of kinship. In so doing the giver will be doubly rewarded," notes the sermon.

Specific sections of society are considered worthy of zakat. The Quran explains: "Zakat expenditures are only for the poor and for the needy and for those employed to collect zakat, and for bringing hearts together for Islam, and for freeing captives or slaves, and for those in debt, and for the cause of Allah, and for the stranded traveller - an obligation imposed by Allah. And Allah is knowing and wise."

The sermon continues: "In this context, our wise leadership has set up the Zakat Fund, with the mission of raising zakat money and distributing it to the eligible segments of society fairly and in accordance with religious rules."

(The National / 27 June 2013)

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Oman: New developments in Islamic financial services

A new index for Oman’s stock exchange is expected to provide a boost to the Sultanate’s nascent Islamic financial services sector and lead the way for additional sharia-compliant products.
In early June, the Muscat Securities Market (MSM) announced that it was close to launching a new index, one for listed companies that operate according to the principles of sharia, as set down by the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions.
To be known as the MSM Sharia Index, the benchmark will contain 31 listings. Industrial firms will be the best represented, with 18 companies, followed by 10 from the services sector and three from the financial industry.
This is the inverse of the MSM30, the exchange’s primary index, which is heavily weighted towards banks. The low number of financial firm listings in the new index can, to some degree, be explained by Oman’s late entry into the sharia-compliant finance field, with authorisation for Islamic banking coming only in 2011.
One of the smaller Gulf exchanges, the MSM has a market capitalisation of around $30bn (compared to a GDP of about $72bn), with 165 companies trading on its boards.
To ensure that the companies listed on the MSM Sharia Index continue to comply with Islamic business principles, quarterly reviews of their activities will be conducted, a process aimed at both maintaining standards and promoting confidence in the products being offered to investors.
The index is the latest development in Oman’s Islamic financial services market, which has been in existence since Sultan Qaboos bin Qaboos Al Said issued an enabling royal decree in May 2011. Since then, two new institutions – Bank Nizwa and Al Izz International Bank – have acquired banking licences, while established conventional lenders have opened Islamic windows.
In 2012 both Nizwa and Al Izz floated initial public offerings (IPOs), in line with the central bank requirement that they list at least 40% of their shares. The IPOs were strongly oversubscribed, suggesting an appetite for Islamic products on the MSM.
Sharia-compliant banks are expected to draw in new customers rather win market share from their conventional counterparts. As Hamood bin Sangour bin Hashim Al Zadjali, executive president of the Central Bank of Oman (CBO), told OBG in 2012, “The CBO ... believes that the advent of Islamic banking in Oman will complement existing conventional banking, augment financial inclusion and promote growth in the economy for years to come.”
According to Pradeep Asrani, managing director of investment services firm Gulf Baader Capital Markets, Islamic banks will capture a market share of up to 5% within two years, which in turn could promote further expansion into sharia-compliant investment funds and brokerages, as well as sukuks (Islamic bonds).
More generally, the availability of Islamic banking and other financial services is expected to act as a spur to the market and to the economy as a whole. In 2012, Ahmed bin Saleh Al Marhoon, the MSM’s director-general, told OBG that the introduction of Islamic banking would inject more liquidity into local capital markets as individuals seeking sharia-compliant investment options would no longer have to look abroad. The new MSM Sharia Index will provide one more reason for these investors to place their funds locally.
(Oxford Business Group / 28 June 2013)

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