Morocco hopes regulation will aid second Islamic finance drive

Morocco is set to give Islamic finance a second try, counting on closer regulation and a clearer legislative framework to resolve problems which plagued its first attempt.

Banks in the country began introducing a range of Islamic finance products in 2007, calling them "alternative finance", but they drew little response from the majority Muslim population.

Both consumers and the banks themselves were unfamiliar with the products, while the lack of a detailed legal framework for Islamic finance also kept uncertainty and costs high.

This time, the environment is different. Morocco's parliament is considering a detailed bill that would regulate Islamic banks and issues of sukuk (Islamic bonds), and its passage - which could occur this year - is expected to prompt some Moroccan banks to establish dedicated sharia-compliant subsidiaries.

Meanwhile, Morocco's central bank plans to set up a central sharia board to oversee the sector. Sources aware of the plan told Reuters that seven scholars and financial experts had started training to become members of the board.

The political momentum behind Islamic finance has increased since a moderate Islamist-led government took power through elections in late 2011, and as the government struggles with a large budget deficit; sukuk issues could attract money from wealthy Islamic funds in the Gulf.

Said Amaghdir, chairman of the Moroccan Association for Participative Finance Professionals, an Islamic finance business association, said the tax treatment of sharia-compliant products would be crucial for the industry's development.

"We are fighting to get fair taxation for the participative products - that's how their prices would be closer to conventional ones," he said. "It is a matter of political will."

In its current form, the proposed legislation appears to address the tax issue well. It provides for the use of special purpose vehicles (SPVs), while transfers of real estate between sukuk originators and SPVs would not face double taxation, said Houda Chafil, managing director at Maghreb Securitization, a financial firm.

This is expected to favour the use of ijara sukuk based on sale and lease-back arrangements.

POTENTIAL

As several countries in the Middle East, including Oman and Libya, open up to Islamic finance, Morocco appears to be one of those with the most long-term potential; almost half of the population of about 33 million is believed to be outside the formal banking system.

A Thomson Reuters study of Morocco, released this month, estimated Islamic banks could account for between 3 and 5 percent of its total banking assets by 2018, or about $5.2-8.6 billion - still far below the proportion of roughly a quarter seen in the developed markets of the Gulf.

Moroccan banks have expressed cautious interest in the opportunities. AttijariWafa, Morocco's largest bank and the first to establish an Islamic unit, has said it will expand the unit after the bill passes.

Local lenders BCP, BMCE and BMCI , a subsidiary of BNP Paribas, may launch Islamic units of their own once the legislation is in place.

BCP, Morocco's second largest bank, aims to open an Islamic subsidiary alongside a partner with Islamic banking expertise, said Laidi El Wardi, BCP's general director for retail banking.

"First we want the new bank to create its own network, even though it will not be very large. I believe in the next four to five years, we will have at least 60 branches. For the second phase we will start using the conventional bank networks."

BMCE Bank, Morocco's third largest, is eyeing opportunities in sharia-compliant investment banking, takaful (Islamic insurance) and sukuk, BMCE officials said in the Reuters study.

Foreign banks look likely to play an important role in developing the market; Moroccan authorities may guide them towards partnering local banks rather than establishing fully owned Islamic subsidiaries, bankers believe.

Gulf banks from Kuwait, Bahrain and the United Arab Emirates have expressed interest in entering the market when the bill comes into force, said Lhassane Benhalima, the central bank's deputy head of banking supervision.

"We remain open-minded in our vision, and joint ventures between local banks and foreign investors are encouraged."

One banking industry source, speaking on condition of anonymity because of the sensitivity of the issue, said he expected the Moroccan central bank to approve the creation of only four to six Islamic banks, to avoid crowding in the sector.

"Most of the Moroccan banks interested in Islamic finance have already started talks with foreigners to make up joint ventures," the source said.

The ventures will face considerable obstacles, however, in particular a lack of consumer awareness of Islamic financial concepts, seen in consumer surveys conducted by BMCE.

"We think that it is normal to say that people want Islamic products, but we will need a lot of awareness because few of them know really what are the specificities and functioning of Islamic finance products," a BMCE source said.

INDEX

Moroccan officials are also looking to develop Islamic finance in areas outside banking. The Casablanca Stock Exchange is preparing to roll out a sharia-compliant index with around 35 companies, and will seek to list sukuk, said Karim Hajji, general director and chief executive of the exchange.

In the takaful sector, insurance companies are expected not to be allowed to open Islamic windows and instead will have to set up separate units, a move which could help differentiate the firms in an insurance market that is currently dominated by the largest four firms, the Thomson Reuters study said.

There is also a push to make the management of awqaf (Islamic endowments) more efficient, a process started in 2012 by the Ministry of Endowments and Islamic Affairs.

The country's awqaf own about 80,000 pieces of real estate across the country, but these tend to command low rental prices rather than competitive market rates, said Mohammed AlKawrari, awqaf president at the ministry.

"Moroccan awqaf are old awqaf; we have endowments that are twelve and a half centuries old. We have inherited the old awqaf in the historically rich old cities, such as Fez and Marrakesh," he said.

The ministry is studying the operations of real estate investment funds and the possibility of engaging private companies to help in the management of some of the properties.

However, AlKawrari conceded that the ministry faced a challenge: modernising awqaf and maximising their returns while avoiding a hike in rental prices, which could hurt low-income families occupying the properties. 

(Reuters / 08 April 2014)

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The basics of zakat in Malaysia

What is zakat in Islam?

Muslims around the world are required to make zakat or tithe payments. Whilst many of you are probably well-versed with Zakat; this is a basic guide for those who aren’t so sure about the zakat.

The purpose is to assist the less fortunate, as all of the collected payments will be distributed to different channels and handed to those who need it most. Under the Syariah Criminal Enactment Law of each state, Muslims in Malaysia could actually serve jail time or be forced to pay a hefty fine for skipping their zakat payment on purpose. Here’s a rundown on the basics of paying zakat in Malaysia.

Types of zakat

Zakat fitrah

There are two major types of zakat; zakat fitrah and zakat harta. Zakat fitrah is a small levy imposed on each Muslim and MUST be paid every year without fail, regardless of age, income, or wealth. Usually, Muslims settle their zakat fitrah during the Ramadhan (or fasting) month every year. The fee is nominal and costs less than RM10. But just how much is it in your state? It all depends on the price of rice grains (one pack is equivalent to 2.7kg)! Allow us to elucidate; in the olden days, zakat fitrah was not paid using money. Rather, people pay their using rice grains, and these were then distributed to the poor. Now, the cost of grains in each state varies from RM4.50 to RM8.00 (in 2013).

Zakat harta

The second type is zakat harta. Zakat harta is divided into several categories: Zakat on earning, zakat on business, zakat on savings, zakat on gold & silver, zakat on KWSP / EPF, zakat on farming, and zakat on livestock. The most relevant type of zakat harta for Malaysians would be the zakat on earnings, simply because if they have been employed for more than a year and rewarded an income that’s above the required amount, they are then obliged to perform their zakat on earnings.

Unlike zakat fitrah, zakat on earning is not mandatory to all. Just like our income tax, it is essential only after a person’s wealth has reached a certain amount. This amount is called nisab. In general, the nisab for zakat on earning is equivalent to the price of 85 grams of gold and differs according to the state.

As the name suggests, zakat on earning is calculated from a person’s earning (much like the income tax). Generally, all Muslims are mandated to give 2.5% of their income. So for example, if the ‘earnings’ (the wealth, income, and other items that are included in the calculation) for the year is RM20,000 (more than the nisab amount), 2.5% of that is the zakat amount (RM20,000 x 2.5% = RM500). The types of earnings included are such as a person’s salary, any freelance or professional services, and income from rental.

Had kifayah

Zakat has its own reliefs and rebates that allow the payer to deduct certain items from the calculation. This deduction is called Had Kifayah (the minimum limit of income adequacy for an individual or a family) and the amount for each item is determined by each state’s Islamic Religious Council. The types of expenses that will be deducted from the zakat calculations include self, wife, children, accommodation, education, transportation, medical, parents, and EPF (deducted from income because it has its own zakat treatment).

Zakat as a tax rebate

Zakat comes with one special perk, and that is the tax rebate. Zakat payment will help reduce the income tax tremendously as it falls under the tax rebate category, and in some cases, this rebate is sometimes enough to reduce the income tax to RM0. For clueless payers out there, a tax rebate is a reduction in your tax expense after you have calculated your tax for the year, and it differs from tax relief which reduces your chargeable income (donations and charity work falls under the tax relief category). So, for example:

Roslyna’s income tax in 2013 : RM650

Roslyna’s Zakat in 2013 : RM350

Because zakat is a Tax Rebate, Roslyna’s income tax in 2013 is RM650 – RM350 = RM300.

Zakat payment can be seen as a way for Muslims to appreciate the wealth that’s bestowed upon them and to help those who are less fortunate.

Balkish Rosly is an Investigative Journalist of SaveMoney.my, an online consumer advice portal which aims to help Malaysians save money through smart (and most of the time painless) savings in their daily banking, technology, and lifestyle spending habits.

(Free Malaysia Today / 07 April 2014)

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Abu Dhabi Bank Taps Expats With Barclays Buyout

Abu Dhabi Islamic Bank PJSC (ADIB) is seeking to bring a boom in Shariah-compliant lending to an expatriate population that dominates the Arab-world’s second-biggest economy.

ADIB agreed to buy the conventional retail assets of Barclays Plc (BARC) in the United Arab Emirates for 650 million dirhams ($177 million), the Abu Dhabi-based lender said in a statement yesterday. Islamic banking assets in the country surged about 15 percent in 2013 compared with less than 10 percent for non-Shariah compliant lenders, according to Adnan Yousif, a board member with the Union of Arab Banks.

The deal is the second of its kind for ADIB, which bought a stake in Egypt’s National Bank of Development in 2007. The second-biggest Shariah-compliant bank in the U.A.E. will add 110,000 new customers in a nation where about 80 percent of the more than 8 million population are expatriates. Islamic banking assets worldwide are forecast to more than double to $2.7 trillion by 2017, according to PricewaterhouseCoopers LLP.

“Local retail is far safer, but after the shakeout of the crisis the expat population is more stable,” Emad Mostaque, a London-based strategist at Noah Capital Markets, said by e-mail yesterday. ADIB has been a corporate-focused bank so “having a larger retail footprint will be positive for balancing it’s loan book,” he said.

ADIB wants to expand into the expatriate market segment “without disrupting the existing customer base,” it said. The bank’s 2013 profit rose 21 percent to 1.45 billion dirhams, beating the median estimate of five analysts surveyed by Bloomberg, after total banking assets in the U.A.E. expanded 13 percent, according to central bank data. The data doesn’t distinguish Islamic from non-Shariah assets.‘Perfect Fit’

Shares in ADIB added 82 percent last year, the most since 2005, amid an equities rally in the U.A.E. Abu Dhabi’s benchmark index rose 63 percent. The deal to buy Barclays’s operations is “a perfect fit” as part of the bank’s strategy to expand into the expatriate market, it said. The acquisition is subject to central bank approval. Shares in the lender climbed 1 percent to 7.1 dirhams in Abu Dhabi today.

No Global Network

Barclays’s U.A.E. customers will notice a difference during the transition, according to Murad Ansari, a Riyadh-based analyst at EFG Hermes, even while they won’t experience any disruption.

“They’re moving from a bank that offered an international service to ADIB, which doesn’t have the same global network,” Ansari said by phone yesterday. Barclays has offices in more than 50 countries, while ADIB operates in five, according to the banks’ websites.

“So long as Islamic banks offer similar products to traditional ones, with good service, customers will come to you, even if they’re not Muslim,” the Union of Arab Banks’ Yousif, who is also chief executive officer of Albaraka Banking Group, said by phone yesterday. “There will be no complications when they make the assets Islamic. ADIB has done this before in Egypt and it went smoothly.Barclays joins Royal Bank of Scotland Group Plc, Britain’s biggest government-owned lender, and Lloyds Banking Group Plc in exiting consumer and commercial-banking business in the U.A.E. HSBC Holdings Plc (HSBA)bought Lloyds operations for $769 million in 2012, whileAbu Dhabi Commercial Bank PJSC (ADCB)acquired RBS retail banking assets in 2010.

(Bloomberg / 07 April 2014)

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Global sukuk issuances hit USD 11.2 bln in March - report

GlobaKUWAIT, April 6 (KUNA) -- The month of March has produced the most volume of sukuk issuances for the global sukuk market in 2014 with total sukuk issuances amounting to USD 11.2 billion, up 23 percent over the figure posted in February, according to a recent economic report.

There was a substantial decline in corporate sukuk issuances in March with only USD 1.45 billion worth of issuances (Feb: USD 2.54 billion; Jan: USD 1.72 billion). The decline in corporate sukuk issuances was contributed mainly by a noticeable absence of issuers from the Gulf Cooperation Council (GCC), showed the report by the Kuwait Finance House (KFH).

The GCC issuers remained mostly absent from the sukuk market in March, except for short-term liquidity management sukuk issuances by the Central Bank of Bahrain, it added.

The sukuk volume in March saw heavy involvement of the sovereign and government related entities issuers in the primary market as collectively these two types of sukuks represented over 87 percent of total sukuks issued.
March 2014''''s volume fell 10.3 percent short of the USD 12.48 billion issuances in the same month last year. Among the notable issuers in the month of March include obligors from Singapore and Luxembourg, the report said.

The Sabana Real Estate and Investment Trust (Sabana REIT) of Singapore successfully issued 2014''''s first SGD-denominated sukuk with an SGD 85 million 4-year corporate sukuk priced on 12th March, the KFH report indicated.

(Kuwait News Aency / 06 April 2014)

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Pakistan: Islamic finance good alternative: SBP

KARACHI: The State Bank of Pakistan (SBP) believes that Islamic finance is a better alternative to the conventional banking and is one of the fastest growing segments of the global as well as domestic financial sector.

Speaking in an event to mark 10 successful years of ‘Raast Islamic Banking’ programme of Bank of Khyber on Saturday, Deputy Governor SBP Saeed Ahmad said, “Given its global outreach, growing recognition as a prudent and stable system and ability to provide financial solutions for all business needs, Islamic finance is all set to establish itself as a better alternative to the conventional financial system having capacity to ensure financial stability and inclusive economic growth,” he said.

He said that global financial crisis in 2008-09 made western financial experts to look for an alternative under which the international financial system could overcome the weaknesses of the conventional system based on fixed predetermined return in the form of interest.

The search was for a system which leads to equitable treatment of all stakeholders under all circumstances. A lot of attention was focused on solutions which are not far from the Islamic financing where system allows fairness of return, sharing of risk and reducing income inequalities, he said.

Pakistan, he said, was amongst the first few countries that undertook the ambitious aim of Islamising the banking system. Significant efforts towards this end were made during the 1980s.

However, it went through a rough ride until some 12 years ago when the SBP allowed three types of Islamic banking institutions i.e. full-fledged Islamic banks; Islamic banking subsidiaries of conventional banks; and Islamic banking branches (IBBs) of conventional banks. Moreover, conventional banks having Islamic banking branches were also allowed to have Islamic banking windows in their conventional branches.

“Islamic banking industry, starting from almost a scratch in 2001, has acquired over 10 per cent share in the country’s banks branch system with over 1,300 branches across the country. Based on deposits, IBI’s share has increased to 12pc,” Mr Ahmad said.

He said the industry is growing at an impressive rate of over 30pc annually for last five years and the prospects of further strengthening this growth momentum in the near future are very bright.

He told the audience that last year the SBP allowed 3 more conventional banks to initiate Islamic banking operations, whereas two conventional banks had recently announced conversion into full-fledged Islamic banks over the next two to three. “These highly positive market sentiments give me optimism that the industry would easily surpass the strategic plan target of 20pc by 2020,” he added.

“We are also exploring the possibility and feasibility of establishing a Centre of Excellence for Islamic Banking and Finance in Karachi, and I will be discussing this proposal in my meeting with the heads of business and economics schools.

(Dawn.Com / 06 April 2014)

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Sukuk Pipeline - Issue plans around the world

The Thomson Reuters Global Sukuk Index is at 112.04102 points, up from 112.02826 at the end of last month and 109.78969 at the end of last year. The Thomson Reuters Investment Grade Sukuk Index is at 109.26628 points, down from 109.26817 at end-March but up from 107.28036 at the end of 2013.

MALAYSIA - The Malaysian government will raise 2.6 billion ringgit ($797 million) via Islamic bonds on April 7 to finance new and existing housing loans held by government servants.

TUNISIA - The Tunisian government plans to issue sukuk worth "a few hundred million dollars" this year, central bank governor Chadli Ayari told Reuters in March.

HONG KONG - Hong Kong lawmakers passed a bill in March that would allow the AAA-rated government to raise around US$500 million via sukuk.

BUMI ARMADA - Malaysian oil field services firm Bumi Armada said in March it planned to raise up to 1.5 billion ringgit in Islamic bonds, after it received approval from the securities commission.

MAYBANK - Maybank Islamic, the largest Islamic bank in southeast Asia, will set up a 10 billion ringgit subordinated sukuk programme, ratings agency RAM ratings said in March.

SAUDI INVESTMENT BANK - Saudi Investment Bank has picked the investment bankingarm of Riyad Bank to arrange a subordinated Islamic bond issue, banking sources said; one said the transaction could take place before Ramadan.

GULF FINANCE HOUSE - Bahrain-based Gulf Finance House plans to issue convertible sukuk worth up to $500 million to restructure liabilities, develop projects and fund possible acquisitions, subject to shareholder and regulatory approval, it said in March; no time frame was given.

LUXEMBOURG - A proposed bill in Luxembourg would allow securitisation of three properties for a sovereign sukuk issue worth 200 million euros ($275 million).

IJM CORP - Malaysia's IJM Corp is finalising plans to issue a benchmark sukuk in April; one of the final steps will be the establishment of a 3 billion ringgit sukuk programme, bankers said in March.

BANK MUSCAT - Bank Muscat received shareholder approval in March for Meethaq, its Islamic subsidiary, to set up its first sukuk programme worth 500 million rials ($1.3 billion), allowing domestic and international issues. Shareholders also approved the establishment of a 1 billion Saudi riyal ($267 million) domestic sukuk programme for the bank's Saudi branch.

OMAN - Omani central bank executive president Hamood Sangour al-Zadjali said in March that the government would probably make its first sovereign sukuk issue at the end of this year.

ALHOKAIR - Saudi Arabian retailer Fawaz Abdulaziz Alhokair aims to sell its debut Islamic bond in the next 12 months, a company official said in March.

FIRST GULF BANK - Abu Dhabi's First Gulf Bank, the third-largest bank by assets in the United Arab Emirates, plans to raise up to 3.5 billion ringgit with Islamic bonds in Malaysia, RAM Ratings said in March.

ISLAMIC DEVELOPMENT BANK - The Jeddah-based Islamic Development Bank aims to issue its first short-term sukuk this year, a senior executive said in February.

PUBLIC BANK - The sharia-compliant arm of Public Bank, Malaysia's third largest lender, submitted a proposal to the central bank in February for a 5 billion ringgit Basel III-compliant Islamic bond programme.

SOUTH AFRICA - The South African Treasury said in February that it was confident of issuing its first sukuk in the coming few months.

RHB ISLAMIC - RHB Islamic, the Islamic arm of Malaysia's No. 4 lender, said it had received regulatory approval for a Basel III-compliant sukuk worth 1 billion ringgit.

DANAINFRA- Malaysia's DanaInfra Nasional, created by the finance ministry to raise funds for the country's largest infrastructure project, may issue and list on the stock exchange this year as many as two Islamic bonds worth 100 million ringgit each, an official with the bourse said.

TURKIYE FINANS - Turkiye Finans Katilim Bankasi in February received approval from Turkey's Capital Markets Board to establish a 3 billion ringgit sukuk programme in Malaysia.

KILER REIT - Turkish real estate investment trust Kiler GYO plans to issue a five-year sukuk worth at least $100 million in the second half of this year, parent company Kiler Holding's chief financial Officer Kaan Aytogu said in February.

BRITAIN - The finance ministry said in January it had appointed HSBC and law firm Linklaters as advisors to assist in its planned debut issuance of sukuk; Prime Minister David Cameron said last year that the government was working on a plan to issue around 200 million pounds ($330 million).

SENEGAL - The country's 2014 issuance programme includes its first $200 million sovereign sukuk planned for April, officials said in January.

ACWA - Last December, Saudi Arabia-based water and power project developer ACWA Power said it had raised a 1.77 billion riyal Islamic loan from four local banks to help finance investments including acquisitions and act as a bridge to a sukuk issue in 2014.

ADB - The Asian Development Bank said in December that it was considering an Islamic bond issue as early as in 2014.

SABIC - Saudi Basic Industries Corp (SABIC), the world's biggest petrochemicals group, said in May 2013 it planned to issue sukuk late in 2013 or in 2014 to fund coming projects; it was too early to give the size, a company official said.

(Reuters / 06 April 2014)

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Malaysia IFSA to diversify Islamic investment products -bankers

A provision under Malaysia's Islamic Financial Services Act 2013 (IFSA) will prompt Islamic banks to diversify the investment products which they offer to customers, bank executives said.

Islamic banks will have until June next year to segregate Islamic deposits from investment accounts and explain the difference to customers. Deposits guarantee customers their principal, while investment accounts do not.

"The differentiation will allow the institutions to develop a wider range of products, for both classifications, to meet the diverse needs," the Association of Islamic Banking Institutions Malaysia (AIBIM) said in a statement on Tuesday.

Banks will incur some costs in educating staff and customers on the distinction.

"Call centers and people on the front line must be ready to answer queries," AIBIM president and Bank Muamalat Malaysia chief executive Redza Shah Abdul Wahid told reporters. AIBIM, which has 24 member banks, has been tasked with overseeing the transition under IFSA.

"At the end of the day, it's a major exercise undertaken by the industry to be able to transition efficiently," said AIBIM council member and CIMB Islamic Bank chief executive Badlisyah Abdul Ghani.

A clearer distinction between deposits and investment accounts will allow banks to become more creative in designing the accounts; for example, they may offer more products that use liquid assets such as sukuk, equities and commodities as the underlying investment.

"We will sell this product only to sophisticated investors, not just the man on the street," said Badlisyah.

(Reuters / 25 March 2014)

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Charity vs. interest

People who follow the orders and way of arrangements of the Holy Quran are well aware of the fact that most of the times the Quran joins together two different and opposite things, presenting a far-reaching effect and suitability between different verses.

Discussing with comparison the heaven with hell, Muslims with Kuffar, monotheism with polytheism, darkness with divine light, guidance and directives with deviation from the right path is a unique order of Holy Quran. Those who study the Quran and other religious books witness these facts in the Holy book and also in their real life. The combination of these different and opposite things gives an eloquent description of facts. Moreover, the warnings do not create hopelessness, and promises of reward do not create inaction and false hopes.

In Surah-e-Baqra of the Quran discusses both Sadaqa (charity) and Riba (interest) one after the other under the same order of Quran. The first verses deal with the importance and supremacy of Sadqa. Immediately after are mentioned the collective and individual losses caused by Riba, vicious reasoning of usurers, their mental and psychological state and the announcement of war against them by Allah and His Messenger. It is clearly defined that Allah decreases the wealth of one who takes interest and increases the wealth of one who gives Sadaqah. One who receives interest thinks that interest increases his wealth while Sadqa decreases.

Many people who see only the apparent state of interest-takers are caught in their trap but they dont know that Allah Almighty says that wealth is increased by Sadqa and decreased by interest. This reality is far away from the approach of interest-takers because their wisdom. When ones wisdom is crippled then how can he understand these realities? It may be noted here that there are two types of wisdom or insight: One that only sees the quick result of something. Two, that sees the end and ultimate result of something. We are discussing here the second type of wisdom which is not enjoyed by those who have a for rupees and dollars. Wherever the Holy Quran addresses the people of wisdom, it actually means the people having the second type of wisdom.

Decrease in the interest and increase in Sadqaat happen in various ways:

1) The bank balance and lockers of the interest-takers is full of wealth but as soon as he meets the end of life, he sees that his account for the life hereafter is empty. There is no good deed in his account but there is a pile of sins. On the other hand, those who believed in Sadaqah and Khairaat and followed the divine orders during their life would see that Allah has changed their little amount Sadaqah into huge volume of good deeds in their account. They earned millions of good deeds against what they gave in shape of Sadaqa and Khairaat. This increase and decrease would be visible on the Last Day.

2) The interest-taker has a lot of money and wealth but without any blessing. Such wealth gives him no peace of mind and comfort in the life, but brings about restlessness, sleepless nights, disobedient wife, stubborn children, mismanagement in the house and a number of incurable physical, mental and psychological problems. Since such a person is Allahs detested person, other human beings also hate him in his life.

On the contrary, those who give away part of their earnings as Sadqaat and Khairaat enjoy Allahs blessings and love from other human being. It is claimed and believed that those who extend Sadqaat and Khairaat are never found poor and they never experience hard time in their life. Giving in the way of Allah gives unending luxury and wealth. Such a person is dear to Allah and human being as well. Hundreds of thousands of poor people pray for his well-being and long life.

3) Though, there is always a possibility or fear of profit and loss in any business, there has never been an incident that could prove that a person who had his bread buttered on both sides yesterday, nose-dived and lost everything. However, it is evident that those who borrowed/lent money with un-Islamic conditions, lost their wealth forever and become beggars. Capital earned through interest appears to be increasing but there is no blessing of Allah in it. Hazrat Muammar (radhi Allahu anhu) says: Our ancestors used to say that interest-taker does not see forty years of his interest business and experiences losses.

Actually Sadaqa and Riba are two opposite systems. There is no similarity in these systems as far as morality and Shariah are concerned. Sadaqah is a show of kindness, purity and cooperation while interest is a show of selfishness, corruption and miserliness.There is never a thought of taking back the thing given in Sadqa while under interest-based system, one always thinks of taking back the money along with additional charge.

A person who are in the practice of giving Sadqah and Khairaat feels for others and in most cases he gives away his own morsel to the other person. But an interest-taker waits for such a situation that someone would face hard time and he would take benefit of it. Countries, which extend loans to the developing or poor countries facing difficult time due to war or famine, never miss the opportunity of taking benefit of the plight of the poor countries. They extend loans with heavy charge of interest.

Such people are worse than animals. Such countries are never desirous of pulling the poor or under-developed countries out of financial crisis but they want to turn the poor into poorer in order to increase their capital. Such countries make policies that bring every citizen, man, woman, elderly person and child under the burden of heavy debt. Regret to mention, we are witnessing such a situation in our beloved country. Under the Islamic system of finance the borrower is given time to repay the loan and the lender never puts pressure on the borrower, so long as he is not in a position to repay the loan. Islam directs to write off the loan if the debtor is not in a position to repay, as long as his financial state is not changed.

According to Abu Harira (radhiallahu taala anhu), Muhammad (sallallahu alaihe wasallam) said that a Muslim who helps removes any other Muslims problem, Allah Almighty would remove any of his problem on the Last Day.

Those who take/give interest would never understand such Ayaat and Hadiths because their hearts are sealed and they only see the of illegally earned wealth. They always wait for the bad time so that they could take benefit of peoples difficulties.

Today when almost the entire world is raising voice against the interest-based system of economy, it is the duty of our rulers and governments to come forward and help the oppressed come out of the curse of interest. The day the Muslims would implement the Riba-free system, they would get rid of hefty foreign debts which are a product of the interest system.

(Muslim Village.Com / 31 March 2014)

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Oman: Meethaq signs ‘Bancatakaful’ pact with Al Madina Takaful

MUSCAT — Meethaq, the pioneer of Islamic banking in Oman from Bank Muscat, and Al Madina Takaful, Oman’s first takaful company, signed an agreement to provide insurance products (Bancatakaful) for Meethaq customers. The agreement facilitating a bouquet of Shari’a compliant services was signed by Sulaiman Al Harthy, Group General Manager — Islamic Banking, and Saleh bin Nasser Al Riyami, Director of Al Madina Takaful. The signing ceremony at the bank’s head office was attended by senior Meethaq officials, Gautam Datta, CEO, and Usama Al Barwani, Deputy CEO of Al Madina Takaful.

Sulaiman Al Harthy said: “Meethaq is proud to be associated with Al Madina Takaful to provide Shari’a based insurance protection to customers. We will work together to offer unique Islamic insurance products. Meethaq strives to fulfil the needs of customers with innovative products and remains committed to offering a world-class Islamic banking experience.”

Meethaq offers a full suite of Islamic banking products. The Shari’a compliant products and services include savings account, current account, home finance, auto finance, credit card, mobile banking etc.

Saleh al Riyami said: “This is an important milestone for us and we look forward to this association with Meethaq to provide customers with the best in class Shari’a compliant products and services.” Al Madina Takaful is one of Oman’s largest insurance companies and the first takaful provider in Oman.

The company offers Shari’a compliant products and services for retail and business segments, including home takaful, project takaful, family takaful, personal takaful, medical takaful, motor takaful, marine takaful and fire takaful.

(Oman Daily Observer / 31 March 2014)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Primary issuance of GCC bonds, sukuk total $98 bn in 2013

The aggregate primary issuance of bonds and sukuk in the GCC totalled $97.7 billion in 2013, a 14.5 per cent increase from the total amount raised in 2012, the Kuwait Financial Centre (Markaz) announced in a report.

The month of March predominated in terms of issuance frequency with 44 issuances, Markaz said. However, October witnessed the highest value as $13.5 billion worth of instruments were issued, representing 13.8 per cent of the total amount issued, through 29 issuances.

Central Banks Local Issuances (CBLI): A total of $51.5billion was raised by the GCC central banks of Kuwait, Bahrain, Qatar, and Oman during 2013, with the Central Bank of Kuwait raising the highest amount: $25.4 billion, representing 49.3 per cent of the total CBLI amount through 66 issuances. The Central Bank of Qatar raised a total of $16.20 billion, a considerable increase of 172.55 per cent from $5.94 billion raised in 2012.

Central Bank Local Issuances are debt securities issued by GCC central banks in local currencies and maturities of less than 1 year, to regulate the levels of domestic liquidity.

A total of $46.1 billion was raised by Sovereign and Corporate bond and sukuk issuances in 2013, an increase of 2.3 per cent from the total value raised in 2012. The GCC bonds market is composed of sovereign and corporate bonds and sukuk issuances denominated in local and foreign currencies.

Geographical Allocation: Issuances by UAE entities raised the largest amount in 2013 representing 41.4per cent of the total amount, or $18.8 billion, and were the most active in terms of issuance frequency with 111 issuances representing 67.8per cent of the total number of issuances. Saudi Arabian entities raised the second highest amount during 2013, $17.2 billion while Qatari entities raised $6.7 billion. From Kuwait, United Real Estate Company was the sole corporate issuer which issued a 5 year bond with fixed and floating tranches, raising a total of KWD60 million ($210 million).

Sovereign Vs Corporate: During 2013, corporate issuances dominated the majority of the amount raised, with $42.9 billion or 93.0per cent of the total amount raised. Sovereign issuances raised $3.3 billion representing 7.0per cent of the total amount through 4 issuances compared to $6.7 billion raised in 2012 through 8 issuances. Three of the four sovereign issuances were from UAE while the fourth one was from Bahrain.

Conventional Vs Sukuk: Conventional issuances raised $23.7 billion, or 51.4per cent of the total amount raised in GCC bonds and sukuk market during 2013.This was an increase of 2.5per cent as compared to 2012. Conventional issuances slightly surpassed the value raised by sukuk which totalled $22.3 billion in 2013.

Sector Allocation: The Financial Services entities accounted for the largest amount raised during the year, with $19.8 billion representing 42.9 per cent of the total amount raised, through 122 issuances. The Government sector accounted for the second largest amount with $7.3 billion through five new issues.

Maturity Profile: Bonds with tenures of five-years raised the highest amount, $13.3 billion, through 30 issuances, representing 28.8per cent of the total amount raised. There were three new GCC issuances with 30-year maturity, raising a total of $2.0 billion. 2013 also witnessed the issuance of five perpetual issues which raised a total of $3.1 billion.

Issue Size Profile: GCC bonds and sukuk issuances during 2013 had issue sizes ranging from $2.0 million to $4.0 billion. Bonds and sukuk with issue sizes equal to or greater than $1 billion, raised the highest amount at $19.8 billion with 15 issuances, representing 43.1per cent of the total amount of issuances. Saudi Arabia’s General Authority of Civil Aviation Sukuk was the largest issuance in 2013, raising a total of SAR15.2 billion ($4.1 billion).

Currency Profile: The GCC bond and sukuk market in 2013 was dominated by the US Dollar denominated issuances: a total of $31.1billion was raised, representing 67.4 per cent of the total amount. Saudi Riyal-denominated issuances followed with $10.6 billion, followed by EURO denominated issues which raised $1.2 billion.

Rating: During 2013, a total of 61 issuances, or 36.9per cent of the total Sovereign and Corporate issuances, were rated by either one or more of the following rating agencies: Moody’s, Standard & Poor’s, Fitch, and Capital Intelligence.

Listing: During 2013, 73 bonds and sukuk, representing 44.2 per cent of all the bonds and sukuk issued and a total of $39.9 billion, were listed on exchanges. The number of regional bonds and sukuk listed on international exchanges were 61 issues with a total value of $28.3 billion versus 12issuances listed on regional exchanges with a total value of $11.6 billion.

As of December 31, 2013, the total amount outstanding of corporate and sovereign bonds issued by GCC entities was $241.8 billion. Corporate issuances make up the majority of the total amount outstanding with $177.4 billion, or 73.4 per cent of the total amount. Sovereign issuances amount to $64.39 billion or 26.6 per cent of the total amount.

(Oman Daily Observer / 31 March 2014)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com