LEARN INSURANCE

Poverty Alleviation has become a world phenomenon which has led to invent various methods to mitigate it. Mutual funding model, sometimes scholarly views of Dr. Yunus and technology/mobile banking are adopted to cut it down. Therefore latest research has proved that Islamic microfinance has all the substitutions to cut down the worldwide poverty. The subject matter is focused upon in “International Conference on Islamic Microfinance” that’s going to be the largest event in the history of Islamic microfinance - is planned on June 13, 2011 in Islamabad. Varied models of Islamic microfinance, Shariah issues, Zuqat, Dard-e-Husna and Waqf model to decrease poverty, usage of technology and the implementation of Islamic microfinance in flood hit areas will be the hot topics to discuss in this mega event.

It is to be noted that almost One Billion Seventy Crore (1.7 billion) people are hand to mouth and living lives below the poverty line. Amongst them 44% are residing in Muslim countries and this factor highlights the need of Islamic microfinance in an effective way. Recent surveys and research reports of USAID, CGAP, World Bank, IFC and Frankford Finance School report Islamic microfinance the best substitution for the poverty alleviation. Currently more than 300 Islamic microfinance organizations in Indonesia, Kenya, Afghanistan, Bangladesh, Sri Lanka, Yemen, Egypt, Sudan, Tanzania, Mauritius, South Africa, Malaysia and Pakistan are working to alleviate the poverty. It is a pleasing aspect that this number is rapidly increasing not only in Muslim countries but also in non Muslim countries. To unite all these organizations in one platform, an “Islamic Microfinance Network” has also been formed. The important aspect of this conference is that microfinance model of “Akhuwat Microfinance Pakistan” will be presented as a model which has released more than one Billion PKR funds to the poors.

While discussing the importance of the conference, Mr. Zubair Mughal, Chief Executive officer, AlHuda Centre of Islamic Banking and Economics Pakistan, the organizer of the conference said that Pakistan has a prominent place in the field of Islamic microfinance sector and Pakistan is representing Islamic microfinance as a leader of the industry and to organize this conference also manifests the same cause. He further added that this event will further promote this sector in the world. He said that there will be a separate session for the contribution of Islamic microfinance for the relief work in flood hit areas#
Reference: http://www.alhudacibe.com/IMFC-2011/

KARACHI - With the highly encouraging response world-wide in Islamic Banking, Faysal Bank has the history to be one of distinguished institutions having Sharia compliant banking and it has received tremendous response from the investors, depositors and businessmen taking interest in the specially designed “window on Islamic Banking” of the bank.

In an interview with Naved A. Khan, President and Chief Executive Officer of Faysal Bank with The Daily Mail, he explained the strategic growth and development of Islamic banking with Faysal Bank Ltd in Pakistan. Now the Faysal Bank with acquisition of RBS (Royal Bank of Scotland) its operations and financial strength has further improved.

Faysal Bank Limited and its key stake holders have history in Islamic Finance that leads to committed entry in Islamic Banking in Pakistan with its brand Faysal Barkat Islamic Banking. Barkat Islamic Banking will be one of the key areas of focused growth in the next 5 years for Faysal Bank Limited. We are fully engaged and committed in development of Islamic Banking in Pakistan with a dedicated division having its own product group and distribution set-up equipped with well trained human capital, supervised by Shariah Advisor and supported by Shariah Consultant to ensure Shariah Compliant business in line with vision and directives of State Bank of Pakistan.

Naved A. Khan, President of Faysal Bank said, Islamic Banking Business (IBB) has proven its potential globally as well as in Pakistan. There are huge growth opportunities in Pakistan. Over the past decade, Islamic banking has grown at double digit rate resulting in 6% share in the total banking industry. The following are the key drivers of growth:

Large Islamic Population: Pakistan comprises of over 95% Muslim population; hence the significance of having a foothold in such a huge target audience cannot be ignored. The large Muslim population and the strong faith towards religion will keep on fuelling Islamic banking growth in double digits. We could expect Islamic Banking business in Pakistan to capture 25 -30% market share in this decade.

Spiritual Attraction: Besides the economic factors, the emergence of Islamic finance is related to revival of Islam and desire of Muslims to live all aspects of their lives in accordance with the teachings of Islamic law or Shariah.

Government & Regulatory Support: Government and SBP have been supportive of the development of a strong Islamic financial sector alongside conventional banking system.

Increase in the distribution outlets of existing Islamic financial institutions and the entrance of conventional banks in this business is clear indication that Islamic Banking will keep on growing in line with SBP 2012 vision.

Faysal Bank has launched its Islamic banking in September 2009 with first branch in Karachi under the brand of Barkat Islamic Banking.

Total number of dedicated Islamic banking branches is 13 covering 6 cities across Pakistan. Acquisition of RBS has complemented growth of Islamic banking business at FBL. Within a short span of one year Barkat Islamic banking has captured a sizeable number of customers by offering major Islamic banking products and services. Faysal Bank has always been customer centric and has provided products and solutions which are tailor made to address its target market. Our focus and challenge has always been to exceed the expectations of our existing and potential customers consistently. Barkat Islamic Banking will continue this with further growth in distribution and product lines.

Conventional banking is in business for over 3 centuries. They have clear edge over systems, infrastructure, experienced human resource and vintage. Simultaneously, key challenges that Islamic Banking faces like Shariah interpretations, scarcity of Shariah experts, greater time required in product development and execution, short-term liquidity & risk management typical of an evolving industry.

However, Islamic banking institutions in Pakistan as well as in other parts of the world have introduced new and advanced Islamic products and structures which are at par with conventional banking business; whilst full fill the financial solutions of its customers. Sukuks on Ijarah and Diminishing Musharakah financial models are being used to replace TFCs and bonds and are receiving very good response from the market. Government of Pakistan has introduced billions of rupees of Sukkuks in recent months that have been oversubscribed.

Courtesy By: pakistan daily Mail

The U.K., Europe’s largest market for Shariah-compliant financial products and services, canceled what would have been the first sale of sovereign Islamic bonds by a Western federal government as issues fell 15 percent in 2010.

“The U.K. government has decided not to issue sovereign sukuk because it is judged not to provide value for money,” a spokesman for the U.K. Treasury in London, said in an e-mailed response to questions Jan. 13. “It will keep the situation under review.” The Treasury has been mulling the sale of Islamic bonds denominated in pounds since at least April 2007.

Growth in Europe’s Islamic financial hub has been hampered by slowing economic expansion and the government’s attempt to plug a budget deficit, according to Moody’s Investors Service. The German state of Saxony-Anhalt became the first European borrower to sell bonds adhering to Islamic law in August 2004 with 100 million euros ($134 million) of five-year sukuk, according to data compiled by Bloomberg.

“This will discourage other governments from selling sukuk,” John A. Sandwick, a Geneva-based Islamic wealth and asset management consultant who advises companies and governments in Asia, Europe and the Middle East, said in a telephone interview Jan. 13. “If the U.K. says that sukuk aren’t value for money, it’s likely other governments may reassess their positions, and the number of sovereign issuers new to Islamic finance may drop.”

‘Costs Outweigh’

Global sales of Shariah-compliant bonds, which are based on the exchange of asset flows rather than interest, dropped to $17.1 billion last year. Issuance reached a record $31 billion in 2007. Kazakhstan, the former Soviet republic that last sold international debt in 2000, delayed plans to offer sovereign Islamic bonds because the government doesn’t need the funds, Deputy Prime Minister Aset Issekeshev said at a conference in Abu Dhabi yesterday. Luxembourg may sell sukuk, central bank Governor Yves Mersch said in Bahrain in May.

The U.K. Treasury ordered a study in April 2007 into the possibility of issuing Islamic bonds. The government introduced tax concessions for the debt in its annual budget in 2007 and authorities extended tax breaks to Islamic mortgages in 2003. The Treasury last July reiterated the previous government’s 2008 position that a sovereign sukuk sale, which would provide a benchmark for issuance, didn’t offer “value for money.”

“The government recognizes the benefits of the product for the Islamic banking sector, but believes that the costs outweigh the benefits relative to the issuance of gilts,” the Treasury spokesman said.

Cheaper Borrowing

Britain is currently borrowing at a rate that is lower than the London interbank offered rate, or Libor, according to Bloomberg asset swap calculation. If investors swap the fixed- rate offered by 10-year gilts into a floating rate, the security yields 2.9 basis points below Libor, the data show.

The yield on Dubai’s 6.396 percent sukuk maturing in November 2014 dropped 2 basis points to 6.16 percent on Jan. 14, according to Bloomberg data. The extra yield investors demand to hold Dubai’s government debt rather than Malaysia’s narrowed eight basis points, or 0.08 percentage point, to 330 this month, the data show.

“The U.K.’s initial drive to issue sukuk was more politically and socially driven versus economic given the significant Muslim minorities in the country,” Khalid Howladar, a Dubai-based senior credit officer at Moody’s, said in an e- mailed response to questions Jan. 12. “Given recent stresses on the economy and government finances, such motives are now secondary to the need to raise funds efficiently.”

About 2.9 million people in the U.K. are Muslim, the Washington-based Pew Research Center’s Forum on Religion & Public Life said in a report this month. It has a total population of 62.3 million, according to 2010 estimates from the U.S. Census Bureau on Dec. 28.

Slowing Growth

U.K. economic growth slowed more than initially estimated in the third quarter. Gross domestic product rose 0.7 percent from the previous three months, the Office for National Statistics said Dec. 22 in London. That compares with an initial estimate of 0.8 percent and second-quarter growth of 1.1 percent. The Bank of England on Jan. 13 maintained emergency stimulus for the economy.

“The U.K. government is in retrenchment mode and is not looking to expand the sphere of its activities,” Frances Hudson, who helps oversee about $220 billion as head of global thematic strategy at Standard Life Investments in Edinburgh, said in an e-mailed response on Jan. 13.

Corporate Sales

European companies may still turn to the Middle East. The region has more than 400,000 millionaires, Cap Gemini SA and Bank of America Corp.’s Merrill Lynch unit said in a world wealth report last June. Their combined wealth grew 5.1 percent in 2009 to $1.5 trillion, the report said.

The Bank of London and The Middle East Plc, a Shariah- compliant bank, is in discussions with two U.K.-based companies to sell as much as 200 million pounds of Islamic bonds in the next six months, Nigel Denison, director and head of markets at the London-based bank, said in an interview in Manama, Bahrain Nov. 24.

“It’s disappointing that they’re not looking at it more actively because we feel it would provide value for money,” Denison said in a telephone interview from London Jan. 14. “The fact that it’s still under review is encouraging.”

Global Shariah-compliant bonds returned 12.8 percent last year, the HSBC/NASDAQ Dubai US Dollar Sukuk Index shows. Debt in emerging markets gained 12.2 percent, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.

Gatehouse Bank Plc, a London-based Islamic investment bank, will help two companies sell as much as 200 million pounds of sukuk in the first quarter of this year, Chief Executive Officer Richard Thomas said in Manama Nov. 23. International Innovative Technologies Ltd., a clean energy company in Gateshead, sold a $10 million, four-year convertible sukuk in July, the country’s first corporate Islamic bond.

“A lot of dithering, dithering, dithering, then nothing,” Sandwick said. “The sukuk market would’ve been deeply enriched and rewarded with a U.K .sovereign or a government municipal issuance. It’s a sad day for everyone.”


Courtesy by: Bloomberg