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Thursday, 6 March 2014

Bahrain’s minister lauds Islamic banking growth in Pakistan


KARACHI: Shaikh Ebrahim Bin Khalifa Al-Khalifa, Bahrain’s Minister for Housing and Chairman Board of Directors Meezan Bank Ltd, has said that Pakistan has huge potential for project based financing in sectors including energy, health, food, pharmaceutical, housing for which Islamic banking industry has more suitable solutions. 

During a meeting of the senior officials of the State Bank of Pakistan the other day, Shaikh Ebrahim, who is also Chairman Board of Trustees Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), appreciated Pakistan’s pioneer position in Islamic banking and paid tribute to Mufti Taqi Usmani for his great contribution.

Shaikh Ebrahim held a meeting with Deputy Governor SBP Saeed Ahmad during which the deputy governor welcomed his Royal Highness. Shaikh Ebrahim while acknowledging the significant growth of Islamic banking in the country appreciated the role of SBP for establishing a conducive regulatory environment for the industry.

He emphasized that the Islamic banking industry needs to play a critical role in enhancing the financial penetration level in the country. He opined that continued research will lead the move from current Shariah compliant products to fully Shariah based products. While focusing on the fundamentals of Islamic banking, he was of the view that the Shariah complaint financial system should make the flow of money to all those sectors critical for the broad based growth of the economy. He stated that the local market of Pakistan has huge potential for project based financing in sectors including energy, health, food, pharmaceutical, housing for which Islamic banking industry has more suitable solutions. 

Deputy governor SBP appreciated the vision of his Royal Highness. He briefed the guest about various projects and schemes currently being under taken having great potential for local and foreign investors. He reassured SBP’s support for Islamic finance initiatives. The deputy governor SBP repeated the resolve of the present Government of Pakistan and the commitment of SBP in promoting Islamic finance in the country. He discussed SBP’s 5-year strategic plan for Islamic banking industry.

Saeed Ahmad said that SBP is considering options to provide a comprehensive facility for Islamic banks to channel their liquidity through Shariah compliant modes. After availability of this facility, Islamic banks will be restricted to channel their surplus funds to conventional banks, failing which regulatory penalty will be imposed. He emphasized that Islamic banks should increase their outreach to SMEs, agriculture and low cost housing sectors.

Deputy Governor also appreciated the work of AAOIFI and Shaikh Ebrahim Bin Khalifa Al-Khalifa’s instrumental efforts and his contribution for the promotion of Islamic banking and related accounting and technical matters. 



(Daily Times / 05 March 2014)
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Kenya plans framework for Islamic finance

NAIROBI — Kenya’s financial regulator has proposed a separate regulatory framework for Islamic financial institutions as part of a broad 10-year strategy designed to boost capital markets in east Africa’s biggest economy.
A draft of the strategy was circulated earlier this year and the plan is now in its final stages of preparation. It aims to promote more sophisticated financial services in Kenya such as asset management, venture capital, private placements and Islamic finance.
"It will be launched in coming weeks," a spokesman for Kenya’s Capital Markets Authority (CMA) told Reuters.
Sharia-compliant structures are seen as important to support funding of Kenya’s infrastructure projects, with the CMA dubbing Islamic finance a "priority". Most estimates put the number of Muslims in Kenya at only about 15% of the population of 40-million. But Islamic finance, which is also being developed by several other sub-Saharan countries in Africa such as Nigeria, could help Kenya attract investment from cash-rich Islamic funds in the Gulf and southeast Asia.
Islamic finance, which follows religious principles such as bans on interest and gambling, is offered by two full-fledged Islamic lenders in Kenya — Gulf African Bank and First Community Bank (FCB) — as well as the Islamic windows of several conventional banks. They will be joined this year by the country’s first retakaful (Islamic reinsurance) firm, as Kenya Reinsurance Corporation ventures into the sector, the CMA said in its draft plan. Takaful Insurance of Africa, the first full-fledged takaful company in the country, was launched in 2011.
The CMA has also approved Genghis Capital to operate an Islamic collective investment scheme, joining FCB Capital; the regulator has introduced rules allowing the creation of sharia-compliant real estate investment trusts.
In the short term, the CMA plans to create a regulatory framework of its own for Islamic capital markets, focusing on corporate governance, information disclosure, a policyholder compensation fund and responsible pricing.
In the long term, however, the CMA would engage the central bank and the national Treasury to develop a separate policy, legislative and regulatory framework for Islamic finance.
This would include creating and giving legal recognition to a single national sharia advisory board to set rules and policies for the entire industry — a centralised approach which mirrors regulation in countries such as Malaysia and Oman. The plan would also create an industry lobby group and work with standard-setting bodies such as the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions and the Malaysia-based Islamic Financial Services Board.
The CMA would seek help in developing Islamic finance from industry hubs in Malaysia and London. It has existing agreements with Malaysia’s regulator and a working relationship with the London Stock Exchange.
Last month, the central bank-owned Kenya School of Monetary Studies started offering courses related to Islamic finance. The central bank has been working with its Malaysian counterpart in an effort to offer sharia-compliant instruments such as Treasury bills.
(Business Day BDLive / 05 March 2014)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

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