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7/27/2019 IFP - Nov 2012
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Human resource development A challenge forIslamic banking industry
By Muhammad Saad Faruqui
Islamic finance industry is growing at an
unprecedented rate, so are thechallenges that are following the growth
at the similar pace. A magnitude of
tribulations came over the period, some
of which have been tackled, for some
new policies and regulations are being
developed, while some, have been
ignored.
Human capital plays a crucial role in the
long term success of any organization, it
makes or breaks an organization. Islamic
finance industry is represented by anumber of organizations which include
Islamic banks, Takaful companies,
Modarabas, mutual funds and Islamic
microfinance institutions and
sustainability of these means
sustainability of Islamic finance
industry.
One of the most ignored and neglected
challenge is development of human
capital. Regulators and standard setting
bodies have been developing stringent
regulations and comprehensive
standards for the betterment of the
industry but almost forgetting to
develop the man power that ultimately
will ensure the compliance of those
regulations and standards along with the
most important principles of Shariah.
Islamic finance products, due to their
ethics based nature are attracting
Muslims and non-Muslims alike and
thus, Islamic banking is expanding to
Muslim countries and non-Muslimcountries as a result of which more and
ISLAMIC FINANCE INDUSTRY NEWSLETTER
ISLAMIC FINANCE PAKISTAN
VOLUME 3 ISSUE 10 NOVEMBER2012
Ayat of the Month
We did offer the Trust to theheavens and the earth and the
mountains, but they refused to
bear its burden and were
afraid of it, and man picked it
up. Indeed he is unjust (to
himself), unaware (of the
end).
[Surah Al-ahzab: 72]
Inside this issue
A t p r e s e n t , i na c c o r d a n c e w i t h a
carefu l es t i mat i on,
around 40 Universities
all over the world are
p r o v i d i n g P o s t
Graduate, PhD and
B a c h e l o r l e v e l
programmes on Islamic
Banking and Finance.
These Universities are
p r o d u c i n g
approximately 5,000
professionals every year
while the demand of
the Islamic financial
professionals is 10 times
high. It is an immediaten e e d t o f u l f i l l t h e
demand and supply gap
of the Islamic finance
industry. This gap can
be filled by training of
the conventional staff
a n d b y c o n s t a n t l y
assessing the future
n e e d s .
Inside Story 1
Editors Message 2
Local andInternational NewsGet a glimpse of
what is happening in
the world of Islamic
finance
4
In the SpotlightFind our read of the
month
7
Ask USBy Mufti Ibrahim Essa
and Mufti Javed
8
Moves andPromotions
9
Upcoming GlobalEvents
9
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Editorial
Page 2 An initiative of IFP forum
Advisory Board
Mufti Irshad Ahmed Aijaz
Mufti Najeeb Khan
Anwar Ahmed Meenai
Mohammad Aslam
Mujeeb Baig
Syed Shahjahan Salahuddin
Faizan Memon
NusratUllah Khan
Muhammad Shahzad
Hussain
Arshad Hussain Zubairi
Ammar Khalid
Rima Farooq
Labbaik Allah Humma Labbaik. Hajj means "pilgrimage", One of the
largest pilgrimages in the world, a magnificent display of the solidarity of the
Islamic Ummah, a demonstration of unity, and submission to Allah,
eliminating racism, caste system and nationalism.
Hajj Mubarak! to our readers who have been blessed with the saadat of
performing Hajj this year.
Hajj demonstrates a unique concept of standardization and a theme of
equality; all men dressed in similar cloth, all praying to One Lord, all seeking
one destination, and denying false gods.
Economy plays a pivotal role in the stabilization, development, prosperity
and growth of a nation. Islamic economic system is gaining popularity at a
rapid pace, however the system is facing certain challenges as well, primarilythe lack of standardization.
As Islam has always taught a lesson of unity and standardization in every
walk of life, the most important of which are the way in which Muslims offer
prayers (Salah) the way the Pilgrimage (Hajj) is done; the Muslims should, as
Islamic finance professionals, pull a leaf of standardization and unity from
the holy teachings of Islam, strive to contribute towards standardization and
harmonization of principles and practices of Islamic finance, so that not only
can Muslims benefit from Shariah compliant investment and financing
opportunities but can also minimize doubts and confusions of all the
stakeholders.
To add more, Islamic finance system is not just a religious formality to befollowed by Muslims, but if followed in its true spirit; this system has the
potential to eliminate all the problems created by the conventional interest
based system, the global financial crises in 2008 (which arose primarily due
to trading in derivatives, prohibited in Islamic finance system) and the recent
manipulation of LIBOR are the most recent examples of the distress created
by the conventional interest based financial system.
To recapitulate, if Islamic finance system replaces the current interest based
finance system, it would be for the benefits of mankind as a whole and not
only the Muslims, and to achieve the target, standardization and
harmonization of principles and practices of Islamic finance is the first step.
Happy Reading!
Let us know, if you know friends or colleagues who, in your view, may benefit from this newsletter. Send us their email
addresses at [email protected]
Editor-in-Chief
Associate Editors
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more conventional banks are entering
the Islamic banking market thereby
bringing in human resource from the
conventional background to the Islamic
banking industry.
However, the problem is not only
caused by the entrants in the Islamic
finance market from the conventional
background but also from the
untrained staff in the Islamic banking
industry or people having a
conventional mindset.
The staff working in the Islamic
banking market should equip
themselves with special attitude, skills
and knowledge base which can only be
developed through proper training and
grass root level education of Islamic
finance.
At grass root level a curriculum is
required to be developed and to be
introduced in our educational system at
college and university level which is
capable of imparting basic knowledge
of Islamic economic system to our
younger generation. This will help in
developing a mindset in favour of
Islamic economic system in general and
Islamic banking in particular.
However, professionals already working
in the sector, should be encouraged to
obtain basic and specialized training in
respect of Shariah rules and principlesgoverning the Islamic finance.
Universities all over the world are
producing approximately 5,000
professionals every year while the
demand of the Islamic finance
professionals is 10 times high, creating
an immediate need to fulfill the
demand and supply gap for the Islamic
finance industry.
Several approaches can be used in
order to produce the quality human
resource for Islamic banking industry.
The approaches and techniques can be:
University degree programs;
Specialized trainings andworkshops;
Distance learning programs;
Publications, webinars and other
media sources.
As stated earlier, different universities
and colleges are providing the
education facility in the field of Islamic
banking and finance. There is a need of
more institutes providing degrees in
this field with an aim of enabling the
candidate to deeply understand the
Islamic banking operating system and
the concepts of Islamic finance.
In addition to this, training is an
effective tool for human resource
development (HRD), as well as, for
achieving the goals of an organization.
Islamic banking is a Shariah-based
interest-free banking system. It has to
operate in a way that benefits society as
a whole. Its features and functional
procedures are quite distinctive thanthat of the traditional banking system.
To satisfy the objectives of the Islamic
banking and to face the challenges of
the next decade, the job of Islamic
banking is becoming more complicated
and more technical day-by-day. The
personnel of Islamic banks require
special attitude, skills and knowledge,
which can be developed through proper
training. It is obvious that a large
number of appropriately trained
employees would result in increasedoutput and reduced costs, further
resulting in maximum utilization of
human resources, which will ultimatelybenefit the entire nation.
Many institutions are providing
distance learning programs on Islamic
banking and finance as Muslims and so
the popularity of Islamic banking is
present across the globe.
It is expected that Islamic bankingsystem can be strengthened in better
ways by promoting Islamic banking
education and trainings.
Page 3
Continued Human resource development A challenge for Islamicbanking industry
An initiative of IFP forum
Universities all over the world
are producing approximately
5,000 professionals every year
while the demand of theIslamic finance professionals is
10 times high, creating an
immediate need to fulfill the
demand and supply gap from
the Islamic finance industry.
It is obvious that a large
number of appropriately
trained employees would result
in increased output and
reduced costs, further resulting
in maximum utilization of
human resources, which will
ultimately benefit the entire
nation.
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The regulatory framework for
Islamic banking has been finalised,
Hamoud bin Sangour al Zadjali,
Executive President of the Central
Bank of Oman (CBO), announced
on Monday October 8, 2012.
Addressing delegates during the
opening of the Oman Investment
Forum 2012, he added thatamendments to the banking law, a
prerequisite for the rollout of
Islamic banking services in the
Sultanate are currently in process.
Page 4 An initiative of IFP forum
Disclaimer:
The news included here is on the basis of information obtained from local and international print and electronic mediasources. IFP team does not accept any responsibility about their bona-fide.
Sukuk issuance in the GCC has peaked so far in 2012 at more than $19
billion following a lull in activity between 2009 and 2011. Not only has
Sukuk issuance in the first nine months of the year surpassed total issuance
for full-year 2011, it also exceeded conventional bond issuance for the first
time.
Oman Islamic bankingregulations set
Sukuk issuance beats conventional bonds in GCC
QFIB, Kuwait Energy signstrategic agreement
Qatar First Investment Bank ( QFIB)
and Kuwait Energy announced the
signing of a $150 million strategic
investment agreement. The deal isstructured in the form of a
convertible Murabaha which will be
utilized to support Kuwait Energy's
ongoing expansion and growth plans
and facilitate its continuous
emergence as a leading independent
player in the oil and gas exploration.
Oman's new Islamic banks will
struggle initially to compete with
established conventional banks
offering Shariah-compliant services
through the Islamic windows when
the country opens up its Islamic
banking market.
Oman's new Islamicbanks to face challengesfrom conventional banks
Iran has taken part in the 28th
session of the Standing Committee
for Economic and Commercial
Cooperation of the Organization of
the Islamic Cooperation
(COMCEC), that kicked off in
Istanbul.
The 28th session of COMCEC,
chaired by the Turkish president was
held in Istanbul from 8-11 October
2012. The session was attended by
delegations from the OIC member
states, representatives of the OIC
General Secretariat and its
2 8 t h m e e t i n g o f COMCEC opens inIstanbul
The size of Islamic banking market
in Qatar is worth $35bn. The sector
accounts for an estimated 19.3% of
the country's total banking assets.
The Institute of International
Finance (IIF) estimated in its latest
report that the assets of Islamic
banking industry in the GCC hasreached a total of $314bn by the end
of 2011, representing about 19% of
the total assets of the Gulf banks
that amounts to about two trillion
dollars.
Islamic banking marketin Qatar worth USD35bn
First Global exclusiveknowledge partner at
WIRBC
First Global has been awarded with
an 'Exclusive Knowledge Partner'
sponsorship for the World Islamic
Retail Banking Conference
(WIRBC) which was held on 9 -10October 2012 in Dubai.
More than 200 key players and
thought leaders in the regional
Takaful industry gathered in
Bahrain, for the Middle East
Takaful Forum (METF 2012). Heldunder the theme "Tackling the
Profitability Challenge: Fresh
thinking for Islamic & Co-operative
Insurance in the Middle East",
METF 2012 held under the official
patronage of the Central Bank of
Bahrain and supported by the
Bahrain Insurance Association,
provided a high-profile stage for
discussions on issues of erosion of
profitability faced by Middle East
Takaful operators.
institutions working in the field of
economy and trade.
Regional Takaful forumopens in Bahrain on 17October 2012
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Bank Dhofar has endorsed a move
to introduce Shariah-compliant
banking services through the launch
of an Islamic Banking window.
The approval came at an
Extraordinary General Meeting of
the bank's shareholders.
Page 5 An initiative of IFP forum
Disclaimer:
The news included here is on the basis of information obtained from local and international print and electronic mediasources. IFP team does not accept any responsibility about their bona-fide.
The Islamic Corporation for the Insurance of Investment and Export Credit(ICIEC), a member of the Islamic Development Bank Group, signed at
the Jeddah Chamber of Commerce and Industry (JCCI) headquarters, a
Memorandum of Understanding (MOU) with the National Commercial
Bank ( NCB ) in encouraging small and medium enterprises (SMEs) in Saudi
Arabia to export. The agreement also calls for cooperation among the
signatories to provide solutions to meet the funding problems of SMEs.
Under the memorandum, ICIEC will provide insurance services for 90
percent of the credit facilities provided by banks for SMEs.
Bank Dhofar EGM nodfor Islamic banking
window
ICIEC, NCB sign deal to support Saudi SMEs
Deal signed to establishIDB's gateway office inTurkey
On the margins of the 28th meeting
of the Standing Committee for
Economic and Commercial
Co-operation of the Organization of
Islamic Cooperation (COMCEC) in
Istanbul, the Islamic Development
Bank Group (IDB Group) and
Turkey signed a host country
agreement to establish IDB's gateway
office in Turkey.
EIB, Dubai Bankintegrations in full swing
Emirates Islamic Bank (EIB) , the
Islamic banking arm of Emirates
NBD Group, highlighted its
ongoing integration of Dubai bank 's
branches and operations, leading to
the creation of stronger, more
resilient proposition for customers,including access to a significantly
expanded network of branches,
ATMs and CDMs. The migration
process is being led by a unified
management team and joint
executive committee, both of which
were established earlier.
The World Bank and Islamic
Development Bank have signed a
Memorandum of Understanding
(MoU) to set out a framework for
collaboration between the two
parties and lend support to global,
regional and country efforts in the
development of Islamic finance.
World Bank and IDBsign Islamic finance deal
A Swiss and a Saudi Arabian wealth
manager have jointly launched an
Islamic investment brand, Safa
Investment Services. It aims to
deliver global growth while investing
solely in assets that are compliant
with Muslim religious law.
Customers in Saudi Arabia canaccess the service through the Saudi
partner, while Swiss partner, Islamic
Wealth & Asset Management, will
offer the same services from Geneva.
Saudi Arabia is likely to be fertile
ground for Shariah compliant
products as it is the homeland of the
Muslim religion.
Islamic brand launched inGeneva and Riyadh
The Middle East North Africa
(MENA) regional insurance and
Takaful market is expected to rise
just under 5 percent this year,
despite tough economic conditions
across the region, ratings agency
A.M. Best said in a report. Non-life
insurance accounts for 80 percent of
the premiums while life sectorremains untapped in many
countries.
MENA insurance sectorstill 'immature'
Abu Dhabi Islamic Bank (ADIB),
made the case for the viability of
Islamic finance as an ethical and
sustainable business model in the
global financial landscape. At theinaugural episode of 'Faith in
Finance', a new six-part series
launched by Bloomberg TV and
sponsored by ADIB, Tirad Al
Mahmoud, CEO of ADIB depicted
a positive outlook for Shariah
compliant banking as a viable,
resilient and ethical business model.
ADIB puts Islamicfinance on the globalethical business agenda
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Page 6 An initiative of IFP forum
Disclaimer:
The news included here is on the basis of information obtained from local and international print and electronic mediasources. IFP team does not accept any responsibility about their bona-fide.
Pakistan Microfinance Network
(PMN) launched the Pakistan
Microfinance Review 2011 for the
m i c r o f i n a n c e i n d u s t r y .
The Pakistan Poverty Alleviation
Fund (PPAF), UKAID and the Citi
Group supported the initiative.
The year 2011 was declared as awa te r she d pe r i o d for th e
microfinance sector in Pakistan as
the industry achieved sustainability
d e s p i t e a c h a l l e n g i n g
macroeconomic environment, rains
and floods in Sindh, security
situation and persistent energy crises
in the country.
PMN launches PakistanMicrofinance Review2011
The Board of Directors of Meezan
Bank, in its meeting held in Dubai,
on October 11, 2012 approved the
financial statements of the Bank for
the nine months ended September
Meezan Banks Profit-after-tax grows by 16%
Turkey is on track to becoming the
next hub for Islamic banking and
finance. Given the Ottoman legacy,
the last seat of the Islamic vice
regency, the government of Turkey
was only required to show its
commitment to Islamic finance
before other players in the industry
were going to join in building a
vibrant Islamic banking and finance
industry.
Turkey Pakistan alliancefor Islamic banking
The interest-free Islamic banking has
recorded a robust growth in the
country in the last few years and can
further expand tremendously with
the help of effective legislation and
Islamic banking recordsrobust growth in country
A seminar relevant to the World
Poverty Day had been arranged in
Lahore - Pakistan to discuss the
global issues of poverty and its
solutions. The seminar was
organised by Al-Huda Centre of
Islamic Banking and Economics(AHCIBE) in which huge number of
p e o p l e p a r t i c i p a t e d f r o m
Microfinance, Islamic Microfinance
and Banking sector. While
addressing to the seminar, Chief
Executive officer of AHCIBE,
Zubair Mughal said that poverty is
not only the problem of Pakistan
but a global issue.
Islamic microfinancegood alternative foralleviation of poverty
Pakistan's regulator has issued new draft rules for the issuance of Sukuk or
Islamic bonds, as part of a range of initiatives to boost the Islamic banking
sector in the country. Under the rules, Sukuk will have to be structured to
comply with standards of the Bahrain-based Accounting and Auditing
Organization for Islamic finance institutions, as well as, those set by the local
regulator.
The draft rules also include requirements for disclosure of information about
the issuers and to appoint Islamic scholars who vet the Sukuk structures.
Pakistan drafts new rules for issuing Sukuk
30, 2012. The meeting was presided
by H. E. Sheikh Ebrahim Bin
Khalifa Al-Khalifa, Chairman of the
Board. The Vice Chairman of the
Board Mr. Abdullateef A. Al-Asfour
also attended the meeting.
Speakers at a seminar said that StateBank of Pakistan (SBP) should
develop a new policy instrument to
take care of the financial needs of
the small businesses. They said that
phenomenal growth of 20-25
percent was witnessed in the world
Islamic Banking system. These views
were expressed by them in the
second NIMC jointly organised by
the SBP, University of Veterinary
and Animal Sciences (UVAS) and
Farz Foundation.
Second National IslamicMicrofinance Conference(NIMC) held
introduction of more products. Dr
Hasan, the member of International
Business Forum, Turkey- said that
the market share of Islamic banking
has grown tremendously in the
overall banking industry. Total assets
of Islamic banking are 7.8 per cent
of the total banking industry while
deposits have 8.4 per cent share in
the total banking sector in the
country.
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The third volume of the complete
set is titled khreed-o-farokht ke
j a d e d t a r e e q e a u r u n k e
ahkaam (Modern ways of buyingand selling and their rulings). This
volume is compiled with Shariah
stance on the assessment of
contemporary trading of financial
instruments and their rulings,
accordingly. Moreover, this volume
also debates on the Shariah stance
about the paper currency and its
application with respect to Shariah
principles.
After discussing some financial
instruments the book goes on with
different kinds of buying and selling
contracts that are widely exercised in
our local markets, as well as, those in
the international markets. For
instance Pagri is a typical indo-pak
sale cum tenancy contract, every
article initially clarifies contracts
nature and then posts a proper
comprehensive discussion on the
Page 7An initiative of IFP forum
Book in the Spotlight
Islam aur Jadeed Maashi Masail
(Third Volume)By Justice Mufti Muhammad Taqi Usmani
Reviewed by
Mufti Haseeb Ahmed
Published by: Idara-e-Islamiat,
Lahore
Available at: Kutub Khana
Mazhari, Karachi
Price: Rs. 2,200 /- (full set)
About the Author
Mufti Muhammad Taqi Usmani is one of the leading Islamic scholars living today. He is an expert in the fields
of Islamic Jurisprudence, Economics, Hadith and Tasawwuf. Born in Deoband in 1362H(1943 CE), he
graduated par excellence form Dars e Nizami at Darul Uloom, Karachi, Pakistan. Then he specialized in Islamic
Jurisprudence under the guidance of his eminent father, Mufti Muhammad Shafi, the late Grand Mufti of
Pakistan. Since then, he has been teaching hadith and Fiqh at the Darul-Uloom, Karachi. He also holds a
degree in law and was a Judge at the Sharia Appellate Bench of the Supreme Court of Pakistan. He has been
writing on various Islamic topics and is author of more than 60 books and numerous articles. Presently he is the
Vice-president of Darul-Uloom, Karachi, Pakistan, where he teaches Sahih Bukhari, Fiqh and Islamic
economics.
Shariah ruling. This discussion
includes different opinions of
scholars from around the globe
and justifying his own
stance in the light of Shariah
principles.
This volume ends with the
discussion regarding many
non-Shariah compliant contracts
not specifically trade but various
kinds of insurances as well. Inthese articles the writer enlighten
the readers with Shariah
implication in permitting such
contracts in their conventional
form and sometimes also depicts
their affect on our economic
system. So the author keeping in
mind the initial intention behind
these contracts proposed alternates
to these contracts (where available
and applicable) in line with the
divine principles defined by theGod almighty for wellbeing of his
creation.
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Page 8 An initiative of IFP forum
Ask UsBy Mufti Ibrahim Essa and Mufti Javed Ahmed
Question
Is it permissible to trade in shares of
such a company where the asset of
that company only comprises of cash
and has no illiquid assets?
Answer
It is not permissible to undertake
trading in the shares of a corporation,
when the assets of the corporation are
cash exclusively, whether this is
during the period of subscription, or
after that, prior to thecommencement of the business of the
company or at the time of
liquidation, except at their nominal
value and with the condition of
delivery of possession.
Question
What are the Shariah guidelines
regarding Wakala (agency), if the
agent conducts deals with himself of
with his relatives?
Answer
When an agent conducts deals with
his ascendant or descendant
relatives, who are neither under his
guardianship, nor are the agents
spouse, the deal is permissible unless
it encompasses injustice orfavoritism. In case of deals that
involve relatives who are under the
guardianship of the agent, or deals
that involve the agent's spouse, the
agent should obtain the consent of
the principal. An agent should not
conduct deals with his own self or
with his son/daughter who is still
under his guardianship.
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Page 9 An initiative of IFP forum
Upcoming Global Events and Moves and Promotions
Upcoming Global Events
The World Islamic Banking Conference (2012)
The 19th annual world Islamic banking conference will be held on 9, 10 and 11 December, 2012 at Gulf Hotel,
Kingdom of Bahrain. For 19 years, it is the largest annual gathering of international Islamic finance leaders.
To know more about the progress of the event, visit the World Islamic Banking Conference official website at:
http://worldislamicbanking.megaevents.net/
AAOIFIWorld Bank Annual Conference on Islamic Banking and Finance
AAOIFI world bank annual conference on Islamic banking and finance will be held on 3 and 4 December, 2012
at The Diplomat Radisson Hotel, Manama, Kingdom of Bahrain under the auspices of Central Bank of
Bahrain. It will be followed by Accounting standards workshop on 5 December 2012.
To know more about the agenda of the event, visit the AAOIFI official website at:
http://www.aaoifi.com/aaoifi/NewsEvents/Upcomingconferences/tabid/84/language/en-US/Default.aspx
Moves and Promotions
Rizwan Ata - New Head of Islamic banking division of Allied Bank Limited
Mr. Rizwan Atta has joined Allied Bank as the Head of Islamic banking division (HIBD). His last assignment
was as Head of commercial banking of Meezan bank limited.
Tahir Bhatti - Head special asset management at Al Baraka bank
Mr. Tahir Bhatti has joined Al-Baraka bank (Pakistan) Ltd. as Head special assets management. He was
previously working as VP and Regional manager corporate SAMG south at Faysal bank limited.
Abid Ajmal - Head of Credit Administration at Al Baraka bank
Mr. Abid Ajmal had joined Al-Baraka Bank Limited as Head of Credit Administration. His last assignment
was at Al-Falah bank.
Mufti Syed Sabir Husain
Mufti Syed Sabir Husain is promoted as Deputy Shariah advisor of Burj bank limited.