Sharia banks are taking in stride Bank Indonesia’s plan to effect a new regulation on minimum down payments for housing and vehicle loans at their institutions, saying the central bank’s policy will not significantly impinge on their loan activities.
“The policy won’t dampen consumer demand for such loans,” OCBC NISP Bank’s sharia business unit head Koko Racmadi said in Jakarta recently. OCBC NISP adopts the musyarakah mutanaqisah (MMQ) financing scheme from Islamic finance products. MMQ is a type of housing loan in which sharia banks act as the owner of the house and gradually yield ownership to customers, who effectively act as its renter………………………………………..Full Article: Source

Dubai aims to become a top global centre for Islamic bonds by introducing more detailed standards that ensure issuance and trading obey not only the letter but also the spirit of Islamic rules, a securities market official said.
The emirate hopes the new standards will reduce disputes between scholars, issuers and investors over what types of debt structures are permissible and attract more business to its market………………………………………..Full Article: Source

The new Islamic Financial Services Act 2012 (IFSA) will statutorily enforce management of Shariah-non-compliance risk and requires Islamic financial institutions to ensure at all times that their aim, operation, business, affairs and activities are in compliance with Shariah.
“This is perhaps one of the distinctive features of the IFSA 2012,” said Prof Datuk Dr Rifaat Ahmed Abdel Karim, Chief Executive Officer of International Islamic Banking Liquidity Management Corporation………………………………………..Full Article: Source

The Supreme Court’s 1999 verdict on Riba (interest) was a historic and landmark development, not only for Pakistan, but for the whole world. While a review petition was pending since long, there seems to be little scope for any major alteration. The judgement was so sound, comprehensive and lucid in argument that it has very little room, if any, for review.
It has been kept pending for almost a decade and no date has been fixed for its hearing. The verdict needs to be implemented in letter and spirit to establish a comprehensive economic system based on Islamic teachings………………………………………..Full Article: Source

Kingdom Holding Co, the international investment firm of Saudi billionaire Prince Alwaleed bin Talal, has formed a syariah board of prominent scholars in order to raise more of its funding through Islamic finance.
The decision by one of the most prominent investment firms from the Gulf is likely to be seen as a boost to the Islamic finance industry, which obeys religious principles such as bans on interest payments and pure monetary speculation. “The syariah committee was established to study the gradual conversion of future sources for loans for the company to be sharia-compliant,” Kingdom said in a brief statement………………………………………..Full Article: Source

Oman’s new Islamic banking rules could encourage the development of a larger pool of sharia scholars and ultimately help to raise operating standards for them around the world, according to bankers and scholars.
Last month, the sultanate’s central bank released an extensive Islamic banking rulebook which included provisions for sharia scholars, such as fit-and-proper criteria and term limits on scholars’ appointment to sharia boards, which decide whether products and activities obey Islamic principles………………………………………..Full Article: Source

The development of Takaful regulation in the GCC varies significantly country by country, creating an uneven playing field, according to a new report from A.M. Best.
The levels of policyholder protection differ from one state to another, which has created opportunities for Takaful operators to pursue regulatory arbitrage, according to a new report from A.M. Best Co. This special report maps the provisions for Takaful regulation in the GCC and identifies the implications for policyholder protection and its impact on A.M. Best ratings………………………………………..Full Article: Source

The Department of Economic Development in Dubai (DED) is developing the Islamic-compliant standard to classify or categorise the registered businesses in Dubai, Mohammad Al Shael, CEO of Business Registration & Licensing Sector at DED, said.
“The department is developing an official standard for Islamic-complaint companies as part of the required infrastructure to make Dubai the world’s Islamic-complaint economic capital.” Earlier this month, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, launched a new initiative that would make Dubai a global capital for the Islamic economy………………………………………..Full Article: Source

While the takaful industry has been developing rapidly in the countries of the Gulf Cooperation Council, the development of takaful regulation varies significantly country by country, according to a new special report featured in BestWeek Asia-Pacific. As a result, the levels of policyholder protection differ from one state to another, which has created opportunities for takaful operators to pursue regulatory arbitrage.
Indeed, there is significant debate as to the right level of regulation. Market participants in some of the more demanding regimes consider the regulations to be stifling their companies. A.M. Best believes the solution is not less regulation but more consistent application of regulation throughout the region, which has the potential to provide sufficient policyholder protection, and thus safeguard the long-term viability of the takaful industry. (Press Release)

Dubai, recovering from a 2008-10 corporate debt crisis and property market collapse, is eager to lure more foreign capital. In one initiative announced early this month, the emirate said it would revise regulations to become a regional center for Islamic finance and other Islamic businesses.
The UAE has for years been working on legislation that would in some cases let the cabinet approve 100 percent foreign ownership in firms outside free zones………………………………………..Full Article: Source

The compatibility of contemporary insolvency legislation in the context of Islamic financial institutions and Islamic capital markets instruments is an important subject which regulators, courts and other stakeholders must address sooner rather than later to ensure the sustainable and continuous growth of the industry.
This issue deserves more serious consideration from the legislatures and regulators as lack of an appropriate and legal and regulatory regime on insolvency in respect of Islamic financial institutions would certainly affect insolvency proceedings and the remedies sought or granted pursuant to such proceedings………………………………………..Full Article: Source

Further bank mergers in Bahrain could be on the way this year with Gulf Finance House (GFH) confirming it is studying options to merge its affiliate, Khaleeji Commercial Bank (KHCB), with other Bahraini banks. GFH, which has undergone a number of debt restructurings since 2009, currently owns 47 per cent of KHCB, which would be worth around $61.8 million at current market value.
“GFH is currently studying a number of options to merge Khaleeji Commercial Bank with other banks in Bahrain to create a bigger and stronger bank,” GFH said in a statement on the Bahrain Bourse website………………………………………..Full Article: Source

Egypt’s government is using an ingenious stratagem to try to push a bill authorising issues of sovereign sukuk past Islamic scholars, but even if it passes, the bill may not shield authorities from controversy that could slow issuance.
The cabinet last week approved a draft law that would allow the government to issue Islamic bonds; the bill will now be presented for review to the upper house of parliament and religious scholars at Cairo’s prestigious Al-Azhar university. The government is keen to issue sukuk internationally to help finance the country’s budget and external deficits, and finance minister Al-Mursi Al-Sayed Hegazy said this week that sukuk could eventually raise $10 billion for the state………………………………………..Full Article: Source

The State Bank of Pakistan (SBP) has decided to introduce changes in the “Statement of Financial Position” and the relevant notes to streamline and standardise disclosures of Islamic banks and Islamic banking branches.
According to these changes, the head “financing” used by Islamic banks in their balance sheet and the related note should be renamed as “Islamic financing and related assets”. All financings, advances (against Murabaha etc.), inventories and any other related item(s) pertaining to Islamic modes of financing, presently being reported under “Other Assets” or any other head, shall become part of the “Islamic Financing and Related Assets”………………………………………..Full Article: Source

McDonald’s and one of its franchise owners agreed to pay $700,000 to members of the Muslim community to settle allegations a Detroit-area restaurant falsely advertised its food as being prepared according to Islamic dietary law.
McDonald’s and Finley’s Management Co. agreed Friday to the tentative settlement, with that money to be shared by Dearborn Heights resident Ahmed Ahmed, a Detroit health clinic, the Arab American National Museum in Dearborn and lawyers………………………………………..Full Article: Source

The QFC Regulatory Authority has released rules covering corporate governance, anti-money laundering and combating the financing of terrorism and Islamic finance windows.
These final rules follow the conclusion of an industry consultation process, which started in September 2012. The rules support the Regulatory Authority’s commitment to keep its rules aligned with international regulatory standards for insurance and banking supervision respectively………………………………………..Full Article: Source

Egypt has approved a draft law to allow sovereign Islamic bonds, the country’s finance minister said on Wednesday, as the government searches for new ways to finance an unsustainable budget deficit.
The Islamist-led administration had amended the original draft of the law following criticism from religious scholars. The legislation still needs to be approved by the upper house of parliament, where Egypt’s ruling Islamists hold a clear majority………………………………………..Full Article: Source

Following a public consultation process, Hong Kong has commenced the legislative process for the introduction of tax changes to permit the issuance of Sukuk.
The proposed legislation was published in a Legislative Council Brief on December 28, 2012, which seeks to establish a level playing field for the taxation of conventional bonds and Sukuk (referred to as “alternative bond schemes” or “ABS” in the legislation) and details tax exemptions for qualifying structures………………………………………..Full Article: Source

A recent draft law that would allow Egypt’s finance ministry and state-run administrative bodies to issue Islamic bonds (sukuk) that are in compliance with Islamic sharia has stirred controversy.
Opposition figures have criticised the move, and Al-Azhar University, Egypt’s Sunni religious authority, has also contested it. Proponents, however, argue that it has the potential to save Egypt’s faltering economy. Islamic bonds are a financial tool in the form of deeds that represent the value of a public asset owned by the state or a private entity………………………………………..Full Article: Source

Egyptian officials are revising a draft law that would allow the government to issue sukuk (Islamic bonds), after criticism by religious scholars, finance minister Al-Mursi Al-Sayed Hegazy said on Tuesday.
“Proposed amendments to the Islamic instruments bill that were mentioned by the Islamic Research Academy have been taken into account,” he told Reuters after meeting with top officials of Egypt’s prestigious Al-Azhar university at its headquarters………………………………………..Full Article: Source

Dubai’s Ruler has ordered the transfer of all legal action in the Dubai International Financial Centre courts involving Amlak Finance, an Islamic mortgage firm undergoing a government-led debt restructuring, to a special judicial committee outside Dubai’s normal legal system.
A decree issued on December 16 by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, says all Dubai courts including those in the DIFC, the emirate’s main financial hub, “shall be prohibited from the consideration and settlement of any application or claim related to Amlak Finance,” according to a translation seen by Dow Jones………………………………………..Full Article: Source

After its foray into investment banking services, Ahlibank is expanding its service offering with new licenses obtained from the Capital Market Authority (CMA). The new activities are: Portfolio Management, Fund Management, Issue Management and Issuer of Structured Instruments.
The above activities will be in addition to the existing licenses to provide Brokerage and Investment advisory services. Thanking CMA for its approval, the chief executive officer, Abdulaziz al Balushi, said, “On our fifth anniversary, we are happy to launch our full-suite investment banking services offering………………………………………..Full Article: Source

BankMuscat SAOG (BKMB), Oman’s biggest bank by assets, received a license to offer services complying with Shariah as it seeks to benefit from the industry’s growth prospects. The bank will open seven so-called Islamic windows this year operating under the brand “Meethaq Islamic Banking,” according to a regulatory filing.
The move comes after the Persian Gulf country approved licenses for two Islamic banks last year. Islamic banking assets in Oman may account for a 10th of the total within a year of the lenders starting services, Hilal Al Barwani, vice president of banking supervision at the central bank, said in October. National Bank of Oman SAOG said in June its shareholders approved starting Islamic banking………………………………………..Full Article: Source

Fitch Ratings says strong demand will ensure that sukuk issuance will grow in 2013, mainly in originator-backed (also called asset-based) sukuk structures.
The sukuk market is growing rapidly. 2012 global sukuk issuances are expected to hit USD121b according to Thomson Reuters. This follows a strong year in 2011 where issuance was USD84.4bn, a 62% increase on 2010, according to Zawya Sukuk Monitor………………………………………..Full Article: Source

The draft law on sukuk (Islamic bonds) will likely be approved by all the necessary institutions, including the Finance Ministry, the Investment Ministry and Al-Azhar, newly appointed Finance Minister Al-Morsy Hegazy said.
“The first three chapters of the draft law would be approved in a few days,” Hegazy said. The ministry had prepared an earlier draft law on the issue, which was rejected by the Islamic Research Academy of Al-Azhar. Later, the Shura Council Economic Committee proposed an updated draft law on sukuk………………………………………..Full Article: Source

The sovereign sukuk law is intended to organise the financing of the government, state budget, national projects and public institutions. It was released by the government but opposed by Al-Azhar and Islamic parties.
The cabinet has referred the draft sukuk law to the newly-appointed Finance Minister Al-Morsy Hegazy to be reviewed in coordination with the ministries of investment and justice, the grand mufti of Al-Azhar, the Shura Council, the Islamic studies congregation and Dar Al-Iftaa………………………………………..Full Article: Source

The CBN Governor Mallam Sanusi Lamido Sanusi on January 10, 2013 inaugurated the Financial Regulation Advisory Council of Experts (FRACE) at the CBN Head Office in Abuja.
The Governor in his remarks said that the establishment of the FRACE was part of the provisions of the CBN Guidelines for the regulation and supervision of institutions offering non-interest financial services based on compliance to the principles of Islamic commercial jurisprudence………………………………………..Full Article: Source

The tax amendment by Hong Kong will definitely allow a more facilitative platform for Islamic finance to thrive there, and therefore increase its competitiveness in the global financial market, according to CIMB Islamic Bank Bhd chief executive officer Badlisyah Abdul Ghani.
Badlisyah, who spoke on Bloomberg Television’s “On the Move” yesterday, said the only competitive disadvantage that Hong Kong currently had as compared to financial markets in other part of the world is the lack of Islamic finance offerings of value proposition………………………………………..Full Article: Source

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After weeks of discussion and preparation of a new sukuk, or Islamic bonds law, the Islamic Research Academy of Al-Azhar (IRA) has refused the Ministry of Finance’s draft law on sukuk during its meeting last week. The decision was later supported by the Shura Council’s Economic Committee, which has also refused the law.
The ministry’s rejected bill only included sovereign sukuks, issued by governments. Meanwhile, there is another draft law prepared by the Egyptian Financial Supervisory Authority that regulates sukuk offered by private companies and banks………………………………………..Full Article: Source

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Dubai, the second-biggest member of the United Arab Emirates, plans to create an Islamic finance council to regulate Shariah-compliant equity and fixed-income products to boost the industry’s role in the economy.
Dubai, which derives about 11 percent of economic output from financial services, wants to make Islamic finance a “core industry,” Sami Al Qamzi, director general of the Dubai Department of Economic Development, said……………………………………….Full Article: Source

No sooner had the Egyptian constitution been adopted, than it was made clear that modifying it was possible. That is probably why even before the constitutional referendum began, President Mohamed Mursi decided to have the opposition and experts prepare a list of the articles that they believed were defective and needed revision by the legislature, then put to another referendum.
Islamic bonds are to be issued by the Egyptian Finance Ministry, which according to Article 4 of the constitution needs to consult al-Azhar University, which in turn would consult Article 2, which states that the principles of Islamic law are the main source of legislation………………………………………..Full Article: Source

The Capital Market Authority (CMA), which is now seeking feedback on its draft sukuk regulation, said that a joint stock company or a special purpose vehicle (SPV) can float Islamic debt instrument or sukuk.
The draft regulation made it clear that the SPV will not be subject to taxation. “This has alleviated a major misconception in the market,” said Khalid Yousaf, Director-Islamic Finance Advisory Services, KPMG in Oman………………………………………..Full Article: Source

Eversendai Corp Bhd’s proposed issuance of Islamic commercial papers and/or Islamic medium-term notes (sukuk musharakah) under a sukuk musharakah programme of up to RM500mil in nominal value has been approved by the Securities Commission.
In a filing with Bursa Malaysia, Eversendai said the tenure of the sukuk programme would be for seven years from the date of the first issue………………………………………..Full Article: Source

Shariah-compliant banks, according to the LCR document, face a religious prohibition on holding certain types of assets, such as interest-bearing debt securities.
Even in jurisdictions that have a sufficient supply of HQLA, an insurmountable impediment to the ability of Shariah-compliant banks to meet the LCR requirement may still exist………………………………………..Full Article: Source

The final draft of a sukuk law has been sent to the finance ministry before it will be examined by parliament according to the head of the Egyptian Financial Supervisory Authority (EFSA) Ashraf ElSharkawy.
ElSharkawy said social dialogue with political parties and economic associations was the aim of the government and not the EFSA, which is an independent entity and can be approached by political entities but not vice versa, state-owned MENA reported Monday………………………………………..Full Article: Source

The Shura Council has not officially received yet the bill on Islamic Sukuk (bonds) from the government and would draft one if a delay was made in the government’s presentation, said chairman of the council’s financial committee Mohamed el-Fiqqi. On Saturday 6/1/2012, the Finance Ministry refuted accusations by two Islamist Parties on its draft law on issuing Sukuk.
The ministry denied that the bill has loopholes that allow people to acquire state-owned property for Sukuk without confining this to usufructs as alleged by the Muslim Brotherhood”s Freedom and Justice Party and Salafist Al-Nour Party………………………………………..Full Article: Source

Dubai Financial Market (DFM) has launched the draft of its ‘Standard for Issuing, Acquiring, Trading Sukuk’ on its website. The exchange invited various Islamic finance professionals to counsel and feedback on the first of its kind comprehensive standard.
The consultation period will be concluded on February 28, 2013, ahead of a hearing session to be held early March and eventually issuing the standard later in the same month………………………………………..Full Article: Source

Proposals to issue sukuk and other Islamic financial instruments in the Omani banking sectorare now in the public consultation stage, according to a statement released by the Capital Market Authority (CMA). The CMA has recently completed a set of regulatory draft provisions to be considered by the government, licensed companies, law firms, audit firms, academics, professional parties and the public following the announcement last year by the Omani government to introduce Islamic finance.
The draft proposals come at a time of increasing investor demand for these products as banks seek to manage their liquidity. Oman is currently the only country in the Gulf Cooperation Council (GCC) yet to introduce Islamic finance………………………………………..Full Article: Source

Dubai Financial Market (DFM) said it has launched the draft of its “Standard for issuing, acquiring, trading sukuk” on its website and has called upon Islamic Finance experts to send feedback on the first of its kind comprehensive standard.
The Standard thoroughly explains various types of sukuk such as; sukuk of ownership of tangible assets, of usufructs, of lease of services, Mudaraba, Musharaka and Salam sukuk, in addition to the general Shari’a principles that govern issuance, owning and trading sukuk and identifying the forbidden financial instruments including; bonds, stocks of companies whose primary activity is prohibited and financial derivatives………………………………………..Full Article: Source

The Financial Services Authority (OJK), which effectively began working this year, has been urged to establish a special committee for sharia finances to supervise and monitor sharia financial services.
The committee should be established this year. The Sharia Finance Committee is infallible, said Islam Economist Association chairman Agustianto, contacted by Tempo on Thursday, January 3. Agus said the special committee is required not only for supervision but also for the development of the sharia finance industry. The industry is estimated to have strong future potential given that more than 90 percent of Indonesians are Muslims………………………………………..Full Article: Source

Soon after completing an Islamic finance program in Afghanistan, the World Council of Credit Unions has begun exploring opportunities to develop credit unions in a new country: Libya.
The World Council said President/CEO Brian Branch, along with Steven Stapp, president/CEO for the $822.5 million San Francisco Federal Credit Union, and Lara Thomas and Allaeddin Ghadyi of the human rights organization The MILLA Project, traveled to Libya in December………………………………………..Full Article: Source

Egypt’s core Islamic institution contests a bill on Islamic bonds, saying it is not compliant with Sharia law that prohibits usury. Members of the Islamic Research Academy, one of Al-Azhar’s affliated institutes, say they reject a bill on Islamic bonds (sukuk) recently approved by Egypt’s Cabinet.
The institute declared that it rejects the bill because “it is not compliant with Sharia rules and threatens the state sovereignty.”……………………………………….Full Article: Source

The Shura Council’s financial and economic affairs committee has endorsed the Islamic Research Academy’s rejection of the Finance Ministry’s proposal for Islamic bonds.
Al-Azhar’s body had rejected the bill during an urgent meeting late Tuesday held by Al-Azhar Grand Sheikh Ahmed al-Tayyeb, on the grounds that it “violates Islamic Sharia and endangers the state’s sovereignty.” Academy member and former Grand Mufti Nasr Farid Wasel told Al-Masry Al-Youm that the bill would allow foreigners to own Islamic bonds and shares in local factories and businesses………………………………………..Full Article: Source

The Capital Market Authority (CMA) completed the initial draft of the regulatory bylaw of the Islamic Sukuk. CMA started getting feedbacks from the respective stakeholders at the public sector, the companies operating in stocks, audit office, legal consultancy firms, experts, academics and public on the provision of the draft regulations, which were drafted by CMA after His Majesty Sultan Qaboos issued his Royal Directives, which allow the introduction of Islamic banking at the Omani banking sector.
The regulatory bylaw was issued after CMA had studied the legislative, audit and procedural areas related to financial tools that are in line with the Islamic sharia rules………………………………………..Full Article: Source

The Capital Market Authority (CMA) has completed the initial draft of the regulatory bylaw of the Islamic Sukuk. CMA started getting feedbacks from the respective stakeholders at the public sector, companies operating in stocks, audit office, legal consultancy firms, experts, academics and public on the provision of the draft regulations, which were drafted by CMA after His Majesty Sultan Qaboos Bin Said issued his Royal Directives, which allow the introduction of Islamic banking in the Omani banking sector.
The regulatory bylaw was issued after CMA had studied the legislative, audit and procedural areas related to financial tools that are in line with the sharia rules………………………………………..Full Article: Source

The Inland Revenue & Stamp Duty Legislation (Alternative Bond Schemes) (Amendment) Bill 2012 was gazetted today and will be tabled at the Legislative Council on January 9. The bill amends the Inland Revenue Ordinance and the Stamp Duty Ordinance to provide a taxation framework for some common types of Islamic bonds (sukuk) on par with that for conventional bonds.
“The bill will remove an impediment perceived by the market to developing a sukuk market in Hong Kong. Given our role as a leading international financial centre, Hong Kong has the advantage of matching the needs of fund raisers and the investment demand of investors among China, the Middle East and other parts of the world interested in Islamic financial products,” Secretary for Financial Services & the Treasury Prof KC Chan said………………………………………..Full Article: Source

In a move to help curb consumer financing growth, the Finance Ministry has set stricter down payment requirements on Islamic financing for automotive purchases.
The new regulation, which will apply to all non-bank Islamic financing institutions, requires a down payment of 20 percent for two-wheeled vehicle purchases and a 25 percent down payment for four-wheeled vehicles. The purchase of commercial four-wheeled vehicles — such as trucks or buses — requires a 20 percent down payment………………………………………..Full Article: Source

India’s tiny Islamic finance industry is hoping to expand by developing products that would work around the country’s ban on sharia-compliant banking. But political and legal obstacles mean progress is likely to be slow.
An estimated 177 million Muslims in India, the largest Muslim minority population in the world, are unable to use Islamic banks because laws covering the sector require banking to be based on interest, which is forbidden in Islam………………………………………..Full Article: Source

Egypt’s cabinet on Wednesday approved a draft law on the issuance of Islamic bonds by the finance ministry and state-run administrative bodies, the State Information Service has reported.
The draft law will be referred to parliament before it officially passes into law. Islamic bonds are similar to ordinary government treasury bills and foreign currency denominated bonds but are in compliance with Islamic sharia law. New sectors, such as individual and investment funds, will now be able to lend money to the government through this financial tool (sukuk)………………………………………..Full Article: Source

The sultanate last year became the last country in the GCC to introduce Islamic finance. Oman’s central bank took a strict approach to regulating Islamic banking in rules for the sector which it released on Wednesday, setting higher standards for the industry than many other countries.
The sultanate announced last year that it would introduce Islamic finance, becoming the last country in the six-nation Gulf Cooperation Council to do so. Business activity is expected to start early next year………………………………………..Full Article: Source