April 2009 Issue    

Growing Interest in Islamic Finance

International Relations and Security Experts, Switzerland, April 08, 2009

Islamic finance, an approach to economic activity that incorporates Shariah religious law, is gaining momentum as an alternative to the western capitalist economic model as the global recession continues. The Western capitalist model is on the defensive as leaders, entrepreneurs, and economists chafe against growing protectionism and erect regulations. Champions of Islamic finance cite its resilience in the current economic climate, but what are the implications of it as a global system?

Sukuk (Islamic Bonds) to be launched in Sri Lanka

Daily Times, Sril Lanka, April 07, 2009

First Barakah Investments Limited (Sri Lanka) is expecting Central Bank approval to operate as a registered finance company shortly. The company is confident that it could surpass the required share capital through Middle East funding and is planning to add eminent scholars and business magnates for positions in the Board. The company also expects to apply for banking licenses within two years time. Barakah Investments will introduce ‘SUKUK’ an alternative way of bonds in Islamic finance to the market. The Government of Sri Lanka also expects to raise funds through SUKUK. Most of the governments are involved in this business ........

Malaysian Bank gets $ 15 Million Murabaha Funding

Reuters, Kuala Lumpur, April 08, 2009

Malaysian Islamic lender Asian Finance Bank said on Wednesday it has given 55 million ringgit ($15.32 million) in murabaha financing to state-owned Export-Import Bank of Malaysia. The 7-year deal will be used to partly finance the purchase of a building for Exim Bank's headquarters in the capital, Kuala Lumpur, Asian Finance said. Qatar Islamic Bank QISB.QA has a 70 percent share in Asian Finance. RUSD Investment Bank Inc of Saudi Arabia has 20 percent and Financial Assets Bahrain WLL has 10 percent .....

Islamic Finance is the Best Option To Bring Global Economy On Track

National News, Malaysian, March 23, 2009

MIslamic financial system is the best option to bring back the global economy to the right track, says Prof Datuk Dr Sudin Haron, chairman of the Russian Centre For Islamic Economic and Finance international advisory panel. "As a result of the global economic crisis, people don't believe in the conventional system anymore. People believe that as a result of speculation, manipulation and interest rates, the global financial crisis happened.
"Islamic banking does not believe in these things. We prohibit manipulation and speculation. Interest rate is totally condemned by Syariah (Islamic principles). "So, now people start looking what is the best alternative to substitute the conventional system," Sudin, a scholar with vast experience in banking and finance, management and business management, told Bernama in an interview.

California’s Shariah-Compliant Newspaper

Frontpage Magazine, United States, April 01, 2009

“If everybody was Shariah-compliant, there would be no recession.”

That is the pull quote and nut graph for a remarkable page-one, above-the-fold story in the Sacramento Bee on Monday, March 30, headlined “Islam’s financial laws can protect followers,” in the print version. On the website of the Bee, the only daily in California’s capital, the headline reads “Islamic laws of finance a cushion in hard times.”
“The recession gripping the nation has taken less of a toll on American Muslims who follow age-old Islamic laws against paying – or charging – interest,” says the lead of the story, by Stephen Magagnini. “They've also been shielded by socially responsible retirement plans because Shariah– Islamic law – forbids investments in banks and mortgages as well as tobacco, alcohol, gambling, pornography or weapons.”

Islamic bank launches Sharia'a mortgage in Scottish expansion

Business, Scotland, April 03, 2009

BRITAIN'S only Islamic retail bank is to make its first foray north of the Border, with the introduction of a Sharia'a-compliant mortgage product. The Islamic Bank of Britain (IBB), which is based in Birmingham, announced at yesterday's International Islamic Finance Conference in Edinburgh that it is to launch its "Home Purchase Plan" in Scotland.It is understood the launch is just the beginning of a wider push into Scotland – which is likely to include the opening of a physical branch and back office operations as well as the introduction of online retail banking for Scottish customers. The mortgage is open to people of all faiths, but in compliance with Sharia'a law, it will not use any interest-bearing instruments like bonds or derivatives to finance homes. It instead uses its own cash or deposits from customers to fund loans.

Islamic Banks Influence To Grow From Crisis

Wall Street Journal, New York, March 19, 2009

Islamic banks will emerge from the global financial crisis more influential, spurred by demand from Muslims in the Middle East and Asia, according to the chief executive of Gulf-backed Asian Finance Bank, or AFB. In an interview with Zawya Dow Jones, Datuk Kamil called for the creation of an Islamic central bank "to regulate understandings of Sharia principles and cautiously monitor investments and compliance."
International lenders with businesses based on conventional banking have come under increasing criticism for creating the credit bubble that has added to the global financial woes. "I see Asian economies recuperating quickly," said Kamil, adding that "the wait-and-see attitude is no longer practical" and calling for a new, independent rating system for the stability of financial institutions.

Islamic Finance assets to reach $1,600 bln

Opalesque, London, April 07, 2009

A new report issued today by Oliver Wyman, an international management consulting firm, predicts that Islamic finance is set for continued strong growth, despite short term market volatility. The next chapter in Islamic finance: Higher rewards but higher risks estimates that by 2012 Islamic assets will reach $1,600bn with revenues of $120bn and that Islamic wholesale banking - the biggest...

Why Islamic countries are less affected by the financial crisis?

eCommerce General, London-NewYork-Moscow, March 19, 2009

Islamic banks are generally doing better in today’s uncertain economic times than their Western colleagues. So our financial institutions have a lot to adopt from Islamic economic system. The Koran states detailed regulations and prohibitions concerning the economic system. First of all, Muslims don’t deal with "riba" – a word interpreted as interest on loans, credit cards or savings accounts.
Muslims believe that interest-based transactions are not fair because they give a guaranteed return to the creditor without any guarantees for the borrower. One of the main principles of Islamic banking is the sharing of financial risk and sharing responsibility for profit and loss.

Islamic finance must resolve inner tensions

Financial Times, London, April 08, 2009

A small idea is developing into a big hope in the Middle East. It is that the answer to the global financial crisis lies in Islamic finance. Proponents of the $800bn industry argue that the prohibition on dealing in interest has saved Islamic institutions, preventing them from investing in all the dubious structures that have brought down high-flying international institutions. On the surface, the story of Islamic banking as a haven in a world torn by financial mayhem is an attractive tale. But is it more than what one analyst describes as “good marketing”?

Qatar Islamic Bank to Start Europe-Based Sukuk Fund

Bloomberg, March 30, 2009

BQatar Islamic Bank SAQ, the Gulf state’s biggest lender complying with Muslim banking rules, is seeking to raise $200 million for a Europe-based fund that will invest in Islamic bonds, known as sukuk. “There has been a growing amount of interest in Islamic finance and sukuk as a direct result of the problems of the conventional banking system,” said Mark Watts, head of asset management at European Finance House. “When capital markets start to free up, we expect sukuk issuance to take off with a vengeance.”
Islamic financial institutions have been more resilient to the global financial crisis than their conventional counterparts because direct investment in subprime assets and their derivatives is banned under Shariah law, according to a report by Moody’s Investors Service last month. The Islamic banking industry will grow as much 15 percent this year after expanding an average 25 percent a year since 2006, Moody’s said.

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