jump to navigation

Islamic scholars call for ‘more attention to morals than law’ June 28, 2007

Posted by islamicfinanceaffairs in Uncategorized.
add a comment

Gulf Times – Qatar’s top-selling English daily newspaper – Finance & Business

KUALA LUMPUR: Islamic scholars working
with banks to shape Islamic financial products should pay more
attention to the moral rather than the legal aspects of Islamic law,
scholars told the Third International Islamic Finance Forum yesterday.
and conventional banks are keen to develop and offer products in the
fast-growing market for Islamic financing but some Islamic experts have
criticised the banks and their advisors for not applying a stringent
enough interpretation of Shariah, or Islamic law, when assessing the
They have also said that some banks are “Shariah
shopping”, that is, selecting scholars most likely to approve
their product.
Most banks seek approval for Islamic products from
either national Shariah boards or from individual scholars attached to
banks to reassure investors that their choices conform to their faith.
example, Islam bans investment in products that pay interest,
considered usury, products where there is undue uncertainty, or where
one party is deemed to be taking undue advantage of another.
scholars interpret much of Qur’anic law in the same way, there is
still some difference in views, paving the way for disagreement over
the viability of certain products or practices.
Mohamed Akram
Laldin, chairman of the Shariah advisory committee of HSBC Amanah
Malaysia, said scholars look at three basic areas when assessing the
compliance of products: belief, legalilty and morality.
He said
products could fairly easily comply with Islamic law but it is more
difficult to ascertain whether they comply with the morals of Islam.
price of a product may not be controversial from a legal perspective
but if the product costs more than an equivalent conventional product,
it may not fulfil Islam’s moral obligations of fairness and
social equity, he said.
“(We) need the realisation that they
have the responsibility to fulfil the morals of Shariah,” said
Engku Rabiah Adawiah Engku Ali, head of the private law department at
the International Islamic University Malaysia.
Although there is a
plethora of Islamic scholars globally, the Islamic finance industry
tends to rely on fewer than 50 individuals, who often sit on multiple
advisory boards, to sign off on Islamic products and practices.
has slowed the introduction of new products and, some say, allowed a
limited number of scholarly views to dominate in Islamic finance.
is not a healthy situation for the (Islamic finance) industry or for
the field of Islamic law,” said Malik Muhammad Mahmud al-Awan,
chief academic officer of the International Center for Education in
Islamic Finance, noting there were currently around 1.5bn Muslims
worldwide with a wide range of views on Shariah.
He called on
financial institutions to engage younger Shariah scholars alongside
more established ones to expand the pool of available advisers and to
provide a broader array of viewpoints.
“It is the social
responsibility of banks to have people who are well known globally and
new scholars who can learn to avoid problems (of insufficient manpower)
in the future,” added HSBC Amanah’s Akram.
Whether there should be greater effort to harmonise interpretation of Shariah is a more controversial subject.
Kureshi, State Bank of Pakistan’s executive director for Islamic
finance development, told delegates that standardising the
“fatwas” – or approvals – given by scholars would lead to
harmonisation of Islamic financial product documentation.
have blamed the failure of the financial community to create a global
market for Islamic financial products on the lack of common
documentation. – Dow Jones Newswires


Summer of sukuk makes Gulf bankers cancel holidays June 28, 2007

Posted by islamicfinanceaffairs in Uncategorized.
add a comment

Summer of sukuk makes Gulf bankers cancel holidays

Gulf bankers arranging Islamic bond sales have had to cancel or postpone holidays to cope with a deluge of deals during the summer, traditionally a quiet time for business in a region winding down to cope with the heat.

Sales of Islamic bonds, or sukuk, have surged in the last year as more of the world’s 1.2 billion Muslims seek investment vehicles that comply with their beliefs.

“We thought summer was going to be very quiet. We applied for our vacation … all of us just cancelled. We are not going to go anywhere. There’s a huge number of sukuk coming,” Jaafar Badwan of Bahrain’s Unicorn Investment Bank said.

Bankers’ estimates for global sukuk sales this year range from $27 billion to $50 billion, up from $10.2 billion last year, according to ratings agency Moody’s.

Sukuk comply with Islam’s ban on lending on interest and the trading of debt, and are backed by physical assets.

Gulf petrodollars have been driving growth as oil prices tripled in the last five years, catching the attention of many non-Muslim investors.

uuworld.org : unitarian universalist heads islamic investing group June 26, 2007

Posted by islamicfinanceaffairs in Uncategorized.
add a comment

uuworld.org : unitarian universalist heads islamic investing group

At 26, lifelong Unitarian Universalist Blake Goud is already unlearning what he was taught in college. His career in Islamic finance is teaching him that the Western economic ideas he learned are not the only models of how to invest and spur financial growth.

Goud is executive director of the Institute of Halal Investing, a nonprofit think tank based in Portland, Ore., that promotes the understanding of Islamic finance among Muslims and non-Muslims alike. It also provides information about the global Islamic finance industry, and how individuals and institutions can invest in it.

“Islamic finance was counter to my economics training, but very familiar to my background as a Unitarian Universalist and my interests in ethical finance,” said Goud, who spoke by telephone from his Oregon office. “Ethical investing is at the heart of Islamic finance.”

Islamic finance poised to seize Gulf projects market June 25, 2007

Posted by islamicfinanceaffairs in Uncategorized.
add a comment

Islamic finance poised to seize Gulf projects market

Islamic finance could soon wrest control of the $50 billion Gulf Arab project finance market, aided by government inducements and investors looking for alternatives to conventional funding, industry officials said.

Conventional financing now dominates the Gulf Arab market which accounted for almost $1 in every $3 raised for project financing last year, according to HSBC Holding .

But banks such as HSBC and Deutsche Bank are expanding their Islamic finance operations and Gulf Arab investors are setting up new Islamic banks to cope with the expected surge in demand for Islamic project finance.

Emirates Islamic Bank launches Shari’a compliant Alternative Strategies Fund | Emirates Islamic Bank (EIB) June 24, 2007

Posted by islamicfinanceaffairs in Uncategorized.
add a comment

Emirates Islamic Bank launches Shari’a compliant Alternative Strategies Fund | Emirates Islamic Bank (EIB)

Emirates Islamic Bank launch new Islamic fund to its already expanding Shari’a compliant fund offering – the Islamic Alternative Strategies Fund (‘Fund’).

Sukuks key to meeting $1.5tr infrastructure needs of ME, Asia – Khaleej Times Online June 23, 2007

Posted by islamicfinanceaffairs in Uncategorized.
add a comment

Khaleej Times Online – Sukuks key to meeting $1.5tr infrastructure needs of ME, Asia

In the Middle East and in Asia, two of the fastest growing regions in the global economy — which will be spending $500 billion and $1 trillion respectively on infrastructure over the next five years — Islamic capital market, in particular the sukuk market, will serve as an important avenue to meet these funding requirements.

The Governor of Bank Negara Malaysia, Dr Zeti Akhtar Aziz, stressing that the bond market is key to meeting these funding needs for both the public and private sectors, said the challenge is to put in place an intermediation system that will channel the surplus savings in both these regions into productive investments.

In his keynote speech at the Sukuk Summit 2007 in London, themed “Demystifying Islamic Market Products,” Dr Zeti said in the current environment, the demand for sukuks significantly exceeded the supply. “Today, the global sukuk market, denominated in international currencies, is estimated to be $18 billion. If domestic sukuk issuance is included, it has now exceeded $50 billion.”

GE sees rapid Mid East growth, eyes Islamic finance | Reuters June 22, 2007

Posted by islamicfinanceaffairs in Uncategorized.
add a comment

GE sees rapid Mid East growth, eyes Islamic finance | Reuters

General Electric Co (GE.N: Quote, Profile, Research) expects rapid growth in the Middle East in the coming years, thanks to soaring sales of aircraft engines and power generation equipment and a possible entry into the Islamic finance business, a senior executive said on Wednesday.

GE International’s chief executive, Ferdinando Beccalli-Falco, said he expected sales to have grown 250 percent by 2010 to $10 billion in the Arab Middle East.

Gulf News: Islamic finance gaining ground in Middle East June 22, 2007

Posted by islamicfinanceaffairs in Uncategorized.
add a comment

Gulfnews: Islamic finance gaining ground

At least 50 per cent of all new project financing in the Middle East features some element of Islamic funding, according to MEED Projects.

And $30 billion of sukuks are expected to be issued by the end of this year, adds leading law firm DLA Piper.

“DLA Piper believes that Islamic finance will continue to grow in importance and will become an established financing means to raise funds from diverse sources and along the principles of Islamic partnership and co-sharing of risk and reward,” said Oliver Agha, global head of Islamic Finance at DLA Piper.

‘Barriers remain’ in expansion of Islamic finance – GAAPWeb June 22, 2007

Posted by islamicfinanceaffairs in Uncategorized.
add a comment

‘Barriers remain’ in expansion of Islamic finance – GAAPWeb

There are still some barriers to the expansion of the Islamic finance industry, a new survey from the Big 4 firm KPMG has found.

lack of qualified Islamic bankers, weaknesses in transparency and
financial reporting and the ongoing matter of regulatory capital are
all obstacles to the growth of the sector, the KPMG report, titled
Growth and Diversification in Islamic Finance, stated.

The survey contains case studies of HSBC Amanah and Unicorn Investment Bank.

Furneaux, financial services partner with KPMG in the UK, explains:
“Respondents were aware that they would have to be more creative in
product innovation in areas such as derivatives, swaps and options, but
recognised that the market is currently at the bottom of a steep
learning curve.”

It will be important to involve Islamic
scholars to help determine the level of “sophistication” of the
products, added Mr Furneaux.

Respondents to KPMG’s survey said that the market must solidify and define itself.

Islamic law prohibits the collection and payment of interest.

New Model for Future of Islamic Banking Planned June 21, 2007

Posted by islamicfinanceaffairs in Uncategorized.
add a comment

New Model for Future of Islamic Banking Planned

Saleh Kamel, president of Dallah Albaraka Group and chairman of the
General Council of Islamic Banks and Financial Institutions (GCIBFI),
has called for a streamlining of the Shariah Council system to help
deal with the different interpretations of Shariah compliance across
the Islamic world.

In an exclusive interview with Oliver
Cornock, country editor for Oxford Business Group (OBG), which was
released yesterday — the authoritative UK-based publishing,
research and consultancy services company —  Saleh expressed
his concern that some institutions tended to simply rebrand
conventional financial tools without understanding the meaning of true
Shariah compliance.

“The challenge is whether the owners,
directors and employees truly understand what Islamic banking means. At
GCIBFI we are working with key partners to implement a new model
whereby fatwas would be issued by a single entity,” Saleh said.

“I hope that this would assist in helping to define the concepts
and problems of the differing interpretation of Shariah
compliance,” he said. The plan is that the GCIBFI, Islamic
Development Bank and ISFB want to have a central Shariah council for
issuing fatwas, in addition to a Shariah council for each bank, for
further control.

Saleh outlined his vision for addressing such
factors with intentions for an Islamic mega bank involved with all
aspects of the sector on a global scale.

represents 130 banks in 40 countries and we are developing a new model
to enable us to work with all of them in every Islamic country,”
its chairman said.

“The Dallah Albaraka Group will be
looking to invest between $100 million and $200 million in the
management portion of this new model.”

The president of
Dallah Albaraka Group explained the broader concepts of Islamic economy
and the emphasis it places on developing society.

yet we have not adequately emphasized the development of our countries
and the earth — this is one of the most important tenets of the
Islamic economy. At the Dallah Albaraka Group, we aim to work in any
sector that doesn’t harm humans or the earth and we also look to
how many jobs can be created through our projects.”