August 2009 Issue

Banking Regulation Act of India, does not oppose Islamic Banking

Two Circles, India | July 26, 2009

“Unless there are amendments in the Banking Regulation Act of India, 1949, Islamic Banking system can be introduced in India,” said Abdul Hasib, former Director, Reserve Bank of India. The Islamic Banking system will be helpful for underprivileged and marginalized people, he said. He was addressing a seminar on Global Financial Crisis and Islamic Economic System organized by Jamaat-e-Islami Hind in Mumbai on Saturday. Advocating for introduction of Islami Banking in the country Abdul Hasib said: the high profile Raghuram Rajan Committee on Financial Sector reforms in India has advocated the introduction of Islamic banking in India. He also differentiated between Islamic financial system and interest free banking and said that many other countries have started Interest Free banking. While the world is facing the severest Financial Crisis in the new century there is an exception to it. Islamic banking and financial system has largely been unaffected and more so proved to be resilient because it’s transparent, ethical and based on sharing and caring, observed Abdur Raqeeb, convenor, National Committee on Islamic Banking. While France, Japan, UK and other countries have opened the door for this Multi Billion dollar business, India should not distance itself, he urged..

Shariah Gold Hedge Fund Outperforms Price, Index

Wall Street Journal | July 23, 2009

U.S. based Tocqueville Asset Management LP's Shariah-compliant gold hedge fund is outperforming both the metal's price and its Philadelphia index year-to-date, delivering a similar performance to its other gold investments. That performance should continue, portfolio manager John Hathaway told Dow Jones Newswires, because he forecasts gold to trade into the quadruple digits and stay there. DSAM Kauthar Gold Fund, managed by Tocqueville Asset Management, is one of four hedge funds offered by Dubai Shariah Asset Management, a joint venture between Dubai Commodity Asset Management, a wholly owned division of the Dubai Multi Commodities Centre Authority, and Connecticut-based Shariah Capital.

Malaysia Well Positioned To Provide Islamic Banking Services In Europe

Bernama Malaysia | July 11, 2009

Malaysia, recognised internationally for its vast experience in Islamic finance, is well positioned to provide services and facilities related to Islamic banking in Europe. "This is a potential area that we have yet to develop with Europe. We need to move away from the thinking that Islamic banking must only be in the Middle East or among Arab, muslim countries," said Malaysia's ambassador to Brussels, Datuk Hussein Hanif. "It goes beyond that.Following the recent financial crisis, developed countries are acknowledging Islamic banking". Malaysian banks, like Maybank and CIMB, already have representatives in London, he said, adding that these banks can collaborate with those in Europe to expand services in Islamic banking.

Islamic banking less exposed to meltdown

Bangladesh News | July 17, 2009

Islamic banking is less exposed to risks like the global financial crisis as it is not based on predictions but on profit or loss sharing, a visiting top Sharjah Islamic Bank official says. By definition, it cannot guarantee any interest or fixed rate of return on deposits like the conventional banking system. But basically, it is not away from the concept of return (interest ) to your clients. The system is not based on predictions which gives it the advantage to less external shocks like the recent financial meltdown. The total GDP of the world is around $ 30 trillion where as the total credit market is $ 64 rillion. This gap is prediction. Islamic banking is gaining popularity across the world as the global financial turmoil seems to have had limited impact on it.

Islamic finance escapes worst of crisis

FT.com | July 7, 2009

The Islamic finance industry has been relatively, although not completely, immune to the effects of US subprime problems, the ensuing credit crisis and global economic downturn. “I have not found any Islamic bank that has lost money by exposure to toxic assets – because they were forbidden,” says Humayon Dar, chief executive of BMB Islamic, one of the biggest managers of alternative investments for Muslims. Indonesia easily raised $650m (£397m, €459m) recently with the first global dollar-denominated sukuk Islamic sovereign bond of the year. The issue was oversubscribed, and set an encouraging example for Bahrain’s expected $1.5bn-$2bn of sukuk this month.

Islamic finance needs to diversify

AME Info | July 26, 2009

Estimates of the size of the industry seem to peak around $1,000bn although more conservative estimates indicate that the overall size of the industry is nearer $750bn. Equally, the rate of growth of the industry is put at somewhere between 10% and 20% each year thereby making it one of the fastest growing areas of finance. Even in mid-2009 industry experts are still bandying these same figures around when it is clear that the industry as a whole suffered the same kind of shrinkage as the rest of the financial world.

London Calling - Islamic Finance in the GCC

Global Arab Network | Monday, 13 July 2009

Gulf Cooperation Council countries that were once viewed as potential rival banking and investment hubs have each developed individual strengths. They are now carving out specialised niches in the regional and global economy. Looking at the Gulf's financial centres, we must recognise that as an international centre for listings and trading Dubai is now well established. By contrast, the authorities in Qatar feel that areas like insurance and asset management might provide them with particularly favourable opportunities. At the same time, London wants to continue to attract Middle East banks, both conventional and Islamic. The City of London is particularly anxious to attract the region's sovereign wealth funds to open offices here, to manage investment portfolios and take advantage of UK asset management expertise.

Islamic way of micro credit the best way to help the poor

TwoCirlces.Net, India | Tuesday, 22 July 2009

A leading practitioner of Micro Financing in India has strongly advocated the Interest free micro credit or equity financing as the best and the most appropriate method for the country’s poor in enabling them to stand on their own feet. Vijay Mahajan, chairman, Basix, a micro finance company, said that his company was soon coming out with a pilot project based on the interest free or equity finance. You call it Islamic finance or Shariah compliant finance, it is equity finance in which the investor and the entrepreneur share both the profit and the loss, good fortune and misfortune. Mirco equity fianance is the right way to do it. Islamic finance is more equitable for the poor. Interest free finance does not mean only charity. It makes sound business sense. After all, what is venture capital? It is nothing but the equity finance at a large scale and the same has to be brought into the micro finance. It is more equitable specially for the poor people.

Citibank plans four more branches

Star Online Malaysia | July 31, 2009

Citibank Bhd will set up four new conventional branches early next year and submit a formal application for the setting up of an Islamic subsidiary as part of its strategy to widen its presence here. “We’re planning for four branches. We have seven now and are looking forward to getting the Islamic banking licence – that’s the next step for us here,” Citi chief executive officer Vikram Pandit said. Citibank chief executive officer Sanjeev Nanavati said a formal application for the Islamic banking licence would be made “soon”. “The application for the Islamic banking subsidiary underlines Citi’s support of Malaysia’s development into an international centre for Islamic finance,” Pandit said yesterday at a media briefing to announce Citibank’s commitment to growing its banking footprint here.

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