ifp - nov 2012

7/27/2019 IFP - Nov 2012

1/9

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

7/27/2019 IFP - Nov 2012

2/9

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

7/27/2019 IFP - Nov 2012

3/9

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.

7/27/2019 IFP - Nov 2012

4/9

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.


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

7/27/2019 IFP - Nov 2012

5/9

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.


Disclaimer:


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

7/27/2019 IFP - Nov 2012

6/9


Disclaimer:


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.

7/27/2019 IFP - Nov 2012

7/9

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.

7/27/2019 IFP - Nov 2012

8/9


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.

7/27/2019 IFP - Nov 2012

9/9


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.

ifp - nov 2012

Documents