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Dubai Islamic Bank Pakistan (DIBP) has launched the country’s first Islamic priority banking solution, offering customers ’a gateway to an exquisite banking experience’
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A statement from the bank said DIBP’s specially designed priority lounges will provide its customers with a hassle-free banking experience with its dedicated relationship managers. Dubai Islamic Bank Pakistan is offering both a Priority and Platinum Banking solution.
Dubai Lounge Priority Banking caters to the affluent segment, offering a variety of privileges including fee based waivers, VISA Gold Card, access to VIP airport lounges in Pakistan and a higher cash withdrawal limit.
Dubai Lounge Platinum Banking aims to be a symbol of exclusivity and unmatched benefits, providing high net worth customers with a varity of premium services including Pakistan’s First Islamic Platinum Debit Card. A complimentary Priority Pass service for Platinum customers offers access to over 600 VIP airport lounges globally.
Islamic finance in the Middle East: Progress despite confusion and lack of information
Estimates vary of the size and growth rates of assets held internationally under Islamic finance, but suggest that Islamic finance is a rapidly growing industry. While it represents a small proportion of the global finance market (estimated at 1%- 5% of global share), the Islamic finance industry has experienced double-digit rates of growth annually in recent years (estimated at 10%- 20% annual growth). Industry experts estimate that assets held under Islamic finance management doubled between 2007 and 2010 to reach around $1 trillion. Read the rest of this entry »
A professional researcher on India-centric socio economic and political databases Shafeeq Rahman while stating that the core system of the interest-free banking, widely termed as the Islamic Banking System, is developed by economists of the Indian subcontinent expressed surprise over the fact that the region has gained nothing from it.
“The conceptual framework of Islamic banking is mainly developed by the Islamic economists of the Indian subcontinent; in particular, the complete non-interest banking module was developed for the first time in 1969 by Nejatullah Siddiqi though the business of Islamic banking flourished in West Asian countries, Iran, Malaysia and Indonesia”, Shafeeque Rahman wrote in a recent article published in Tehelka.
Mohammad Nejatullah Siddiqui is a leading Indian Islamic scholar, whose specialisation is Islamic Economics. Author of numerous books and a recipient of the King Faisal Award for Islamic Studies, he has taught at the Aligarh Muslim University (AMU) and the King Abdul Aziz University, Jeddah. He was a Fellow at the University of California, Los Angeles and Vesting Scholar at the Islamic Development Bank (IDB) Jeddah.
Stating that Islamic Banking is now fast spreading its wings to other parts of the world, Shafeeque Rahman wrote, “The client network is now expanding beyond the conventional Muslim countries to European and other non-Muslim territories. In UK, it is estimated that $18.4 billion business was done by the end of 2008. According to newest Global Islamic Finance Report 2011, the Islamic finance industry is valued at $1.14 trillion and is growing at a rate of 10 per cent. It was worth a mere $150 billion in the mid-1990s.”
“Apart from Islamic banks, mainstream banks and financial institutions are opening Islamic product windows to woo Muslim consumers. For instance, HSBC has HSBC Amanah for its Islamic financial services. The governments of Iran, Pakistan and Indonesia have officially adapted to Islamic policies to run their banking and finance structure. And due to its cosmopolitan society, Malaysia follows the parallel Islamic system alongside conventional banking”, he wrote.
Shafeeque Rahman further wrote, “Banking without interest is a long term demand from Indian Muslims that has not been fulfilled so far due to the existing statutory and regulatory framework of Indian banking, which does not allow such an alternate system. Besides interest, a key point of contradiction is that conventional banks in India facilitate only intermediary services while banks have to be involved in trading and business activities in the Islamic banking system. Indian Muslims have seen several unsuccessful experiments in the unorganised sector and through the registration of NBFCS and cooperatives but the lack of government regulatory supervision has led to the failure of major interest-free banking initiatives.”
“The non-availability of an interest-free banking option has distanced many Muslims from banking products and services. The Reserve Bank of India (RBI) data report for March 2010 indicates that banking participation in Muslim- concentrated districts is below the national average. They lack in banking access, infrastructure availability and low credit-deposit (CD) ratio”, he wrote.
Islamic Banking believed to be an interest-free, participatory and ethical banking system, has been an emerging global paradigm of the banking system since the last quarter of the twentieth century. The essential feature of Islamic banking is the prohibition of taking and giving of interest in all form of banking and financial transaction. In place of an assured return on loan amount by the interest rate in the conventional banking system, the Islamic form of financing advocates the profit-loss sharing module. Taking a risk is the only provision that entitles one to profit, if there is no risk of loss then there is no assurance of profit to the depositor or the financer.
Insurance and Shari’a – Pakistan
By:Humayon Dar
With the widespread availability of financing after the liberalisation of financial sector, insurance is fast becoming a necessity in Pakistan. Car financing, for example, by banks and other forms of lending by banks and other financial institutions require the borrowers to buy insurance on the items purchased through financing. While shari’a compliant financing is now widely available from the fully-fledged Islamic banks like Meezan, Dubai Islamic, Bank Islami and others and from conventional banks like Muslim Commercial Bank, Bank Al Falah etc, the same cannot be said for shari’a compliant insurance, which is still at an initial stage of development. Although there are five takaful companies operating in Pakistan, their market share in the insurance market remains insignificant.
Islamic banking has emerged as one of the most rapidly expanding sectors of the global financial industry, with expectations that it will play a growing role in the years to come.
Banks and financial institutions that comply with Islamic law (sharia) showed impressive resilience during the financial crisis that hit the world economy at the end of 2008, knocking out dozens of conventional banks, particularly in the United States.
NEW YORK: Harvard University has decided to remove courses taught by Janata Party president Subramanian Swamy at its annual summer school session, terming his views as ” reprehensible” in a controversial piece he wrote on Islamic terrorism in India.
At a meeting of Harvard’s Faculty of Arts and Sciences, faculty members voted with an “overwhelming majority” to remove two economics courses – ‘Quantitative Methods in Economics and Business’ and ‘Economic Development in India and East Asia’ – that Swamy teaches at the three-month Harvard Summer School session.
http://articles.timesofindia.indiatimes.com/2011-12-08/india/30489553_1_subramanian-swamy-courses-harvard-s-faculty
Kuwait Finance House-Bahrain CEO and MD Abdul Hakim Al-Khayyat said that Islamic banking has numerous advantages and capabilities that allow it to play a pivotal role in solving many economic problems in the GCC. Al-Khayyat added that Islamic banking is not operating at full swing yet, either as a result of lack of legislations or opportunities.
He stressed that having a highly ethical Islamic financing system and the efficient collaboration among local and international institutions will contribute to the prosperity and development of the society and economy. He went on to say that Islamic banking services have paved the way for the future, and have become one of the most important alternatives that many economies worldwide seek. He noted that Islamic financing is based on real long-term guarantees, since it relies on assets.
Moreover, he mentioned that governments need to issue more Sukuk, in order to provide short-term liquidity instruments. However, since legislations that organise the issuance of Sukuk in some countries are lacking, this significant instrument has been rendered obsolete, which erodes the efforts of Islamic banks to help markets overcome their crises.
Furthermore, he explained that Islamic banks can play an efficient role in solving the housing problem through its role in construction projects and real estate development, not to mention several instruments that finance that sector, such as Murabaha, Ijara, and others.
He remarked that KFH-Bahrain shoulders several major real estate projects, such as Durrat Al-Bahrain residential and entertainment project that costs $3 billion. The project occupies 20 square kilometers, and is expected to be as big as Manama City once it is complete. In addition, there is Al-Waha industrial project that establishes industrial compounds; thus increasing national income through attracting foreign investments. Diyar Al-Muharraq is another giant project that consists of residential and commercial units for people middle class and rich people.
http://www.cpifinancial.net/v2/News.aspx?v=1&aid=10296&sec=Islamic%20…
Canada bankruptcy may hurt Islamic finance in North America.
By Shaheen Pasha and Cameron French
DUBAI/TORONTO (Reuters) – The insolvency of an Islamic mortgage lender in Canada may hinder the growth of sharia-compliant finance in North America, where the industry has struggled to gain traction in the absence of a supportive regulatory framework.
UM Financial Inc was ordered into receivership in October, leaving about $32 million worth of mortgages in the hands of Toronto’s legal system. Accounting and business advisory firm Grant Thornton was appointed receiver by the Ontario Superior Court of Justice.
The case has exposed uncertainty over the legal treatment of sharia-compliant mortgages in default, and questions over the transparency and oversight of smaller Islamic lenders. Industry experts said this could make investors in Canada and the United States more wary of considering Islamic finance in future.
“The failure of an Islamic financial institution should not immediately be construed as a failure of sharia-based financing,” said Sheikh Muddassir Siddiqui, sharia scholar and partner at SNR Denton in Dubai.
But he added that the insolvency could give Islamic finance a bad name if the Canadian legal system determined that Islamic mortgage holders were not the ultimate owners of property for which they had been paying.
Since Islam forbids the use of interest, sharia-compliant mortgages rely on a “diminishing musharaka” contract to help Muslims finance homebuying. A lender and a homebuyer share the costs of purchasing a home; the homeowner then pays rent to the lender while purchasing the lender’s share of the house in installments. When the value of the house is eventually paid off, full title is transferred to the homeowner.
But it is unclear who ultimately owns the home in the case of a bankruptcy by the lender, if legal title remains with the lender. This raises concern that mortgage holders could lose their homes if creditors come after the lender’s assets.
In UM Financial Inc’s case, homeowners are in limbo while the receiver investigates the insolvency. Some clients say they are reluctant to continue their normal payments to a non-sharia compliant entity, which raises the risk of them losing their homes for non-payment.
CUSTOMERS IN LIMBO
Omar Rahman, a 28-year-old recent college graduate, said the mortgage on his family’s home in the suburbs of Toronto was nearly paid in full. But the insolvency means the mortgage could be transferred to a non-Muslim lender, violating the family’s conservative religious ideology, he said.
“The contract between us and UM Financial was sharia-compliant,” Rahman said. “There are no guarantees that it won’t be sold to a company that is not sharia-compliant, and that’s a scary thought for us. We have actually stopped making any payments until everything gets resolved.”
Another Toronto-based client of UM Financial Inc, who asked not to be named, said the experience had made him think twice about the use of Islamic finance.
“I thought that by working with a sharia-compliant lender and paying a premium over what I would have paid with a traditional mortgage, I was doing the right thing as a Muslim,” he said.
“I almost think it would have been better to go the traditional route. At least there would be some accountability.”
Such dissatisfaction is bad news for the development of Islamic finance in Canada, home to about 1.3 million Muslims. UM Financial Inc was one of the most established sharia-compliant mortgage providers in the country.
“I think this situation will cause reputational damage to the industry, similar in some ways to the situation in Egypt years ago when Egyptians lost millions of dollars in a corruption scandal involving a sharia-compliant institution,” said Nabil Issa, partner at law firm King & Spalding in Dubai.
“That was a majority Muslim country and (the scandal) had repercussions on the growth of Islamic finance that are still being felt today.”
Thousands of Egyptians were hurt in the 1980s by money management companies that touted Islamic investments at returns above prevailing interest rates and did not deliver on their promises. Egyptians were left with a distrust of the industry, which is one reason that the country has lagged Gulf Arab states in promoting Islamic finance.
In Canada and the United States, Islamic finance has largely been confined to mortgages because of a lack of regulatory standards in place to accommodate full-scale Islamic banking and issuance of sukuk, or Islamic bonds.
FINANCE
Walid Hejazi, professor at the University of Toronto’s Rotman School of Management, said Islamic finance in Canada was hampered by the fact that big established banks were not involved in the industry. Smaller players therefore had difficulty seeking finance.
UM Financial obtained financing from Canada’s Central 1 Credit Union, which called for repayment in November 2010. Central 1 then applied in March this year for the appointment of a receiver.
According to a suit filed against Central 1 Credit by UM Financial Inc, Central 1 Credit told the Islamic lender it “wished to discontinue its involvement in the Islamic finance business by the first quarter of 2012″.
It turned down offers by other lenders to buy the sharia-compliant portfolio and prevent the receivership, Norman Ayoub, who was a board member of UM Financial Inc at the time, said in an emailed statement.
“To my knowledge at the time no mortgage was in default, nor was there a payment of the loan to Central in arrears,” he said.
A spokesman for Central 1 declined to comment, referring the matter to the receiver. Representatives of Grant Thornton declined to comment.
Contacted by Reuters, UM Financial Inc’s chief executive Omar Kalair declined to comment, citing pending court proceedings. But his attorney, Harvin Pitch of Teplitsky Colson, said in an emailed statement that Grant Thornton had not concluded that anyone in the company had broken Canadian law; it also said Kalair “has been cooperating with the receiver on all requests where allowed by law”.
Harvin added that “the solution to the receivership is obviously a sale of the portfolio to a new lender who can service the clients hopefully in a sharia-compliant manner”.
Grant Thornton has placed advertisements seeking buyers in Canadian newspapers.
UM Financial Group, an affiliate of UM Financial Inc, said it was in final talks with a Gulf-based Islamic bank for the two institutions jointly to enter the Canadian market as a finance company, potentially acquiring UM Financial Inc’s portfolio. UM Financial Group did not elaborate on the identity of the Gulf institution.
SNR Denton’s Siddiqui said the industry was hoping for a quick resolution, either through the courts or through the acquisition of the portfolio by a sharia-compliant lender.
“If no one comes to help it to meet its financial obligations, innocent customers may go through the agony of worrying about the possibility of losing their homes through no fault of their own. It will be a setback for the industry.”
(Editing by Andrew Torchia and Will Waterman)
