islamic finance financial institution

FINANCIAL INSTITUTION IN ISLAMIC FINANCE

• 1. ISLAMIC FINANCIAL SERVICES BOARD (IFSB)• 2. INTERNATIONAL ISLAMIC FINANCIAL MARKET (IIFM)• 3. INTERNATIONAL ISLAMIC LIQUIDITY MANAGEMENT (IILM)• 4. ACCOUNTING & AUDITING ORGANIZATION FOR ISLAMIC FINANCIAL INSTITUTIONS

(AAOIFI)• 5. INTERNATIONAL CENTER OF EDUCATION IN ISLAMIC FINANCE (INCEIF)• 6. INTERNATIONAL DEVELOPMENT BANK (IDB)• 7. ISLAMIC INTERNATIONAL RATING AGENCY (IIRA)

Group’s Members:• Nurul Zulaika Binti Zaini • Nurul Hanis Binti Hanizad• Khamisah Binti Nekmat

ISLAMIC FINANCIAL SERVICES BOARD

(IFSB)

• An international organization that issue guiding principles and standards within the banking, insurance and capital market sectors

DEFINITION

• Based in Kuala Lumpur.

• Established on 3rd November 2002.

• Start operation on 10th March 2003.

• It serves as an international standard setting body of regulatory and supervisory agency.

• As at April 20016, the 190 members of the IFSB comprise 66 regulatory and supervisory authorities, 8 international intergovernmental organization and 116 market players.

• Malaysia the host country of the IFSB.

• Has enacted a law known as the Islamic Financial Services Board Act 2002.

INTRODUCTION

• To promote the stability and resilience of the Islamic financial services industry.

• Seek to achieve its mission through the issuance and facilitating the implementation of global and prudential and supervisory standards and other initiatives that foster knowledge sharing and cooperation.

MISSION

• To promote the development of a prudent and transparent Islamic financial services industry

• To provide guidance on the effective supervision and regulation of institution offering Islamic financial product and to develop for the Islamic financial services industry

• To enhance and coordinate initiatives to develop instruments and procedures for efficient operations and risk management.

• To encourage cooperation amongst member countries in developing the Islamic financial services industry.

• To facilitate training and personnel development in skills in areas relevant to the effective regulation of the Islamic financial services industry and related markets.

OBJECTIVE

ORGANIZATIONAL STRUCTURE

Includes all members of the

IFSB.

• Drafts standards and guidelines and reports to the technical committee

• Advice the council on issues

• Consist of up to 15 persons appointed by the council.• Acts as policy

making body • Senior

executive of each full members of the organization.

• Permanent administrative body of IFSB.

• Headed by a secretary-general appointed by the council.

A committee estA committee

established to be responsible for

undertaking particular tasks.

responsible for the translation of the IFSB documents from English to

Arabic.

• Full membership

Available to the supervisory authority which responsible for the supervision of the banking industry, securities and / or insurance / takaful industry of each sovereign country that recognized Islamic financial services, whether by legislation or regulation or by established practice and international inter-governmental organization that has an explicit mandate for promoting Islamic finance.

• Ex: Security Commission of Malaysia

MEMBERSHIPS OF IFSB

• Associate Membership

Available to any Central Bank, monetary authority or financial supervisory or regulatory organization or international organization involved in setting or promoting standards for the stability and soundness of international and national monetary and financial system which does not qualify or does not seek to become IFSB full member.

• Ex: Bursa Malaysia Berhad, Labuan Financial Service authority, Malaysia deposit insurance corporation.

MEMBERSHIPS OF IFSB

• Observer Membership

It will available to any :

a. National regional or international professional or industry association

b. Institutions that offers Islamic financial services

c. Firms or organization that provide professional services, including accounting, legal, rating, research or training services to any aforementioned institutions in (a) and (b).

• Ex: AmIslamic Bank Berhad , Bank Islam Malaysia Berhad , Bank Kerjasama Rakyat Malaysia Berhad.

MEMBERSHIPS OF IFSB

• Received technical assistant (full and associate members only)

• Vote at the General assembly (full members only)

• Participate (by invitation in the development of the IFSB prudential standard in the working groups and closed door discussion)

• Participate in the IFSB awareness program (such as workshop, roundtables, seminars, and conference) on a priority basis and at special members’ rates.

• Received complimentary printed copies of the IFSB publications ( such as standards, guideline, survey etc )

BENEFITS OF IFSB MEMBERS

INTERNATIONAL ISLAMIC FINANCIAL MARKET

Prepared by:Manzur Husaini Bin Zam Hasri

Muhammad Syafiq bin NorazmanMuhammad Khairuddin Bin Maulana Idris

Muhammad Ehsan Bin Azmi

BACKGROUNDHistory

IIFM was established in 2001 by the collective efforts of the central banks and monetary agencies of Bahrain, Brunei, Indonesia,

Malaysia, Sudan and the IDB as an infrastructure institution.

Its mandate is to take part in the

establishment, development, self –

regulation and promotion of the

Islamic capital and money market.

DefinitionIIFM is the global standardization

body for the Islamic Capital & Money

Market segment of the Islamic Finance

Industry.

Its primary focus lies in the

standardization of Islamic products,

documentation and related processes.

• Roles

1. Framework for Islamic hedging which could lead to product development.

2. Master agreement for Islamic Treasury

Murabahah contracts.3. Framework for Sukuk and

other Islamic instruments, secondary

market trading documentations and

products.4. Primary and secondary

market guidelines, best practices,

recommendation and standard documentation.

5. Infrastructure improvement including

systems and procedures.

IIFM MARKET STANDARDS

• 1.Master Agreement for Treasury Placement (MATP)• 2. Tahawwut (Hedging) Master Agreement (TMA)• 3. Inter-Bank Unrestricted Master Investment Wakalah Agreement (UMWA)• 4.Master Collateralized Murabahah Agreement (MCMA)• 5. Islamic Cross Currency Swap (ICCS)    • 6.Foreign Exchange Forward (FX Forward)• 7. Sukuk Standardization• 8. Risk Participation Agreement• 9. Credit Support Agreement (CSA)

ACTIVITIES AND PRINCIPAL

• Addressing the product and documentation standardization needs of the industry in the area of Capital & Money Market, Corporate Finance & Trade Finance

• Providing universal platform by bringing regulatory bodies, financial institutions, law firms, stock exchanges, industry associations, infrastructure service providers and other market participants on a common platform through the creation of project specific global working groups and committees

• Facilitate unification, Shari ‘ah harmonization and legal reforms in Islamic financial markets

• Specialized Events, Consultative Meetings and standardization specific workshops

• Sukuk Research & Report

• Shari'ah Board consisting of renowned scholars, hence, ensuring wider Shari'ah acceptance

MEMBERS OF IIFM

• Central bank of Sudan • Central bank of Bahrain

• Bank Indonesia• Labuan Financial services authority

• Authority monetary Brunei Darussalam• State bank of Pakistan

• Kuwait Finance House – Bahrain• Standard chartered Saadiq • Abu Dhabi Islamic Finance• Bank Islam Malaysia Berhad

Prepared By:

NOOR AISYAH BT SALLEH RASHID

NUR HIDAYAH BT ADNAN

WAN NUR SYAHIRAH BT WAN TAHARIM

INTRODUCTION

• The International Islamic Liquidity Management Corporation (IILM) is an international institution established by central banks, monetary authorities and multilateral organisations.• The IILM aims to enhance cross-border

investment flows, international linkages and financial stability by creating more liquid Shari’ah-compliant financial markets for institutions offering Islamic financial services (IIFS).

•Hosted by Malaysia and headquartered in Kuala Lumpur. • IILM enjoys a range of privileges and immunities detailed in the International Islamic Liquidity Management Corporation Act 2011, which was promulgated by the Parliament of Malaysia.

BACKGROUND

• The International Islamic Liquidity Management Corporation (IILM) is established on 25 October 2010.• The IILM has governance structure

contains key organs that designed for effective oversight, management and sharing of experience.

• The governance structure facilitates cooperation amongst members towards their shared strategic goals in establishing the IILM.• Current members of the IILM Governing

Board are the central banks of Indonesia, Kuwait, Malaysia, Mauritius, Nigeria, Qatar, Turkey, the United Arab Emirates and the Islamic Development Bank Group.

• The International Islamic Liquidity Management (IILM) is a collaborative effort by 13 central banks and multilateral organizations.

• For example, BNM, Central banks of Indonesia, Iran, the United Arab Emirates , The Islamic Development Bank and the Islamic Corporation for the Development of the Private Sector • An initiative that will facilitate greater investment

flows for the Islamic financial services industry. • The IILM will be part of their efforts to enhance

cross-border flows and facilitates the growing significance of the international dimension of Islamic finance.

• Membership of the IILM is open to :

1. Central banks,2. Monetary authorities,3. Financial regulatory authorities/

Government Ministries4. Agencies that have regulatory

oversight of finance /trade and commerce

5. Multilateral organisations.

OBJECTIVE

SHAREHOLDERS

BANK NEGARA MALAYSIA

CENTRAL BANK THE REPUBLIC OF

TURKEY

BANK INDONESIA

CENTRAL BANK OF UAE

ISLAMIC DEVELOPMENT BANK

CENTRAL BANK OF KUWAIT

IILM SUKUK

• On 6 April 2013, the IILM announced the launch of its inaugural short-term Sukuk Programme for aiming of enhancing the financial stability and the efficient functioning of Islamic financial markets,

• The IILM Sukuk Programme marks the first of many things, not only for Islamic finance but also in the conventional space as well.

FEATURES OF IILM SUKUK Tradable Shariah-compliant US Dollar denominated

short-term financial instruments issued at maturities of up to one year.

Money-market instruments backed by sovereign assets. Distributed and tradable globally via a multi-

jurisdictional primary dealer network. Have strong global support as they represent a unique

collaboration between several central banks and a multilateral development organisation with the aim of enhancing the financial stability and the efficient functioning of Islamic financial markets.

PRIMARY DEALERS

CONCLUSION

• Generally, International Islamic Liquidity Management Corporation (IILM) is designed as an initiative that will facilitate greater investment flows for the Islamic financial services industry in order to increase adequate shariah compliant money market instruments for liquidity management and the underdevelopment of Islamic money market.

AAOIFIACCOUNTING & AUDITING ORGANIZATION FOR ISLAMIC FINANCIAL INSTITUTIONS

HISTORY

• Established on 1 safar, 1410H @ 26 February 1990 in Algeries.

• Established with the agreement of the association that was signed by Islamic

Financial Institutions.

• Registered on 11 Ramadhan 1411H @ 27 March 1991 in the state of Bahrain.

• Was a non-profit corporation.

• Supported by number of institutions members.

FUNCTION

• Prepares accounting, auditing, governance, ethics, Shariah standards for Islamic Financial institutions and the industry.

• Responsible for the issuance of the finance standards, developing the new standards and improving the existing standards.

EXAMPLE

• The relevant authorities in Austria, Indonesia, Malaysia, Pakistan, Kingdom of Saudi Arabia and South Africa have issued guidelines that are based on AAOIFI’s Standards and pronouncements

• AAOIFU offers the following professional qualification programs:

Certified Islamic Professional Accountants (CIPA) Certified Shariah Adviser and Auditor (CSAA)

OBJECTIVE

• To develop accountancy and auditing thoughts relevant to Islamic Financial Institutions.

• To disseminate accounting and auditing thought relevant to Islamic Financial Institutions and its applications through training, seminar, publication of periodical newsletters.

• To prepare, promulgate and interpret accounting and auditing standards for Islamic Financial Institutions.

• To review and amend accounting and auditing standards for Islam Financial Institutions.

MISSION & VISION

MISSION

• Standardization and harmonization of international Islamic finance practices and financial reporting in accordance to syariah.VISION

• To guide Islamic financial markets operations and financial reporting on syariah principle and rules.

• To provide Islamic financial markets with a standards that can support growth of the industry.

GROUP MEMBERS :

NADZATUL ATHIRAH BINTI ZAMBRI (2015154401)NUR SYAMIMI BINTI AZAMAN (2015135477)SYAMIERA BINTI ISMAIL (2015140921)

I

CN

EIF

International

Education

Centre

Islamic

Finance

DEFINITIONINCEIF – the Global University of Islamic Finance

Set up in 2005 by Bank Negara Malaysia (the Central Bank of Malaysia). It is one of many initiatives undertaken by Malaysia to develop and nurture talents and experts under the MIFC (Malaysia International Islamic Finance Centre).

INCEIF offers three postgraduate programmes in Islamic finance, namely Masters in Islamic Finance Practice (MIFP), Master of Science in Islamic Finance (MSc) and PhD in Islamic Finance.

Lorong Universiti A, Universiti Malaya, 59100 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur

• Set up by Bank Negara Malaysia

• To develop human capital for the global Islamic finance industry

2005 • The Ministry of Higher Education Malaysia accorded INCEIF with the university status

August 2007The first Chancellor for INCEIF -Former Bank Negara Malaysia Governor Tan Sri Dato' Sri Dr. Zeti Akhtar AzizChairman of INCEIF's Board of Directors

First batch of graduates -programme Chartered Islamic Finance Professional (CIFP).

February 2009

HISTORY

To maintain close relevance to the Islamic finance industry

To build on and to enhance quality

To develop a global reach from a strong base in Malaysia, whose brand of Islamic finance has already made its mark on the global scene

OBJECTIVE

ACADEMIC PROGRAMMES

• a postgraduate qualification aimed at producing professionals with knowledge, analytical tools and perspectives in Islamic finance.

Chartered Islamic Financial

Professional (CIFP)

• a postgraduate programme aimed at producing industry practitioners with global insight and holistic knowledge in Islamic Finance.

The Masters in Islamic Finance Practice (MIFP)

• a programme addressing key areas of Islamic economics, finance and Shariah from both the theoretical and applied aspects.

The MSc in Islamic Finance

• an industry-driven programme concerning Islamic and conventional finance.

Doctor of Philosophy in

Islamic Finance

PARTNERSHIPS

• DOMESTIC

• University of Tun Abdul Razak• University Sultan Zainal Abidin (UNISZA)• BNP Paribas• BSN Prudential• OCBC Al Amin• IFSB• Hay Group

• INTERNATIONAL

• University of Reading (UK)• University of East London (UK)• Islamic Development Bank (IDB) (Saudi Arabia)• Kuwait Finance Research Ltd (Kuwait)• Capital Market Licensing & Training Agency (Turkey)• Capital Market Board of Turkey (Turkey• Istanbul Sehir University (Turkey)• World Bank (USA)• University International of Rabat (Morocco)• College of Banking and Financial Services (Oman)• CESAG (Senegal)• Kenya School of Monetary Studies (Kenya)• Capital Markets Licensing and Training Agency• College of Banking and Financial Studies• Drake University

CHANCELLOR & PRO-CHANCELLOR

BOARD OF DIRECTORS

ISLAMIC DEVELOPMENT BANK

NUR AKMA SYAHIDA BINTI AHMAD EE 2015115915NURUL FATEN SYAHIRAH BINTI ISMAIL 2015144425NORAINSHAH BINTI A RAMAN 2015149109 NUR HIDAYAH BINTI RAMLI 2015131609

INTRODUCTION• The Islamic Development Bank is an

international financial institution established in pursuance of the Declaration of Intent issued by The Conference of Finance Ministers of Muslim countries held in Jeddah in Dhul Q’adah 1393H, corresponding to December 1973.• The Inaugural Meeting of the Board of

Governors took place in Rajab 1395H, corresponding to July 1975, and the Bank was formally opened on 15 Syawal 1395H corresponding to 20 October 1975.• IDB has 56 of members countries around the

world including Malaysia.

VISION

To be the leader in fostering socio-economic development

in member countries and Muslim communities in non-

member countries in conformity with Shariah

MISSION

The IDB Group is committed to alleviating poverty; promoting human development; science and technology;

Islamic economics; banking and finance; and enhancing cooperation

amongst member countries, in collaboration with our development

partners.

MEMBER COUNTRIES:

-Somalia-Bangladesh-Albania-United Arab Emirates-Turkmenistan-Afghanistan-Egypt-Kazakhstan-Cameroon-Chad

-Azerbaijan-Algeria-Bahrain-Kuwait-Qatar-Palestine-Niger-Mozambique-Pakistan-Morocco• Cote dIvoire• -Sierra Leone• -Benin

-Guinea-Jordan-Gambia-Indonesia-Gabon-Tajikistan-Yemen-Uganda-Turkey-Togo-Syria-Suriname-Sudan- Saudi Arabia- Oman- Nigeria- Malaysia- Libya- Guinea Bissau

Morocco-Mauritania-Mali-Maldives-Lebanon-Kyrgyz-Iraq-Iran-Comoros- SenegalBurkina Faso-Uzbekistan-Tunisia-Djibouti-Brunei-

OBJECTIVE

Promotion of Islamic financial

industry and institutions

Promotion of cooperation

among member countries

Poverty alleviation

CORE VALUESP-PerformancePerformance excellence in all activities and in dealing with its client and partners.

R-ResponsivenessResponding to clients needs with focused and forward-looking approach based on review of performance, reflection on improvement and resolve to offer the best.

I-IntegrityDemonstrating a high level of sincerity, honesty and fairness.

D-DedicationDedication in serving clients with dignity and determination supported by creativity and initiative.

E- EmpowermentEmpowerment of staffs and concerned entities with responsibility, authority and teamwork.

FUNCTION

To participate in equity capital and grant loans for productive projects and enterprises

Provide financial assistance to member countries (economic and social development)

Establish and operate special funds for specific purposes

Accept deposits and mobilize financial resources

Assist in promotion of foreign trade

SERVICES PROVIDED:

Investigation

Reporting fraud and Corruption

Consultation and Training

Offers financial products to support members countries

PREPARED BY :NOOR ZULAIHA BT. ZAMBRINURANNISAA BT. TAJUDDIN

NOR NABILAH BT. AZEMIKBM2424B

IIRA

CORPORATE PROFILE

Provide capital markets and the banking sector in predominantly Islamic countries with a rating spectrum that encompasses the full array of capital instruments and specialty Islamic financial products, and to enhance the level of analytical expertise in those markets.

Goal:Recognizes and incorporates the unique features of Islamic finance in a way that broadens the quality perspective.

IIRA has received formal recognition from Central Bank of Bahrain as an External Credit Assessment Institution (ECAI).

IIRA is also on the list of approved rating agencies of Islamic Development Bank.

IIRA has started their operations in July 2005 to facilitate development of the regional and national financial markets by delineating relative investment or credit risk, providing an assessment of the risk profile of entities and instruments.

They have been sponsored by multilateral development institutions, leading banks, other financial institutions and rating agencies.

They have structured in a way to preserve its independence – has a Board of Directors and a completely independent Rating Committee.

Vision• To foster growth in Islamic capital markets as

a rating agency that stands for trust, transparency, fairness and independence.

Core Values• Committed to promote the core Islamic values

of transparency, integrity, quality and independence.

Ability of an entity to meets international obligations in foreign currency.

International scale rating

Express ability of an entity to meet its domestic obligation in its local currency.

National scale rating

FIDUCIARY RATING SYSTEM (FRS)

• Fulfilling a need for a rating methodology which can capture the unique dimensions of Islamic Financial Institution(IFI).

• IIRA takes initiative together with JCR-VIS Credit Rating Company of Pakistan and Malaysian Rating Corporation to develop the FRS.

• Consist of two broad pillars : a) Credit Rating-focus on ability and willingness of an institution

to meet its contractual obligations in a timely manner. b) Fiduciary Scores-accommodate the unique features of IFIs and

jurisdictional differences in Shari’a standards. Key concepts presented are adaptable to all types of IFIs. The aggregate Fiduciary Score is derived from three elements, which are :- Corporate and Shari’a Governance(including transparency and disclosure)- Compliance with Shari’a Principles- Asset Manager Quality

MULTILATERAL FINANCE

INSTITUTIONS

RATING AGENCIES

BANKS,INSURANCE COMPANIES &

OTHERS

SHAREHOLDERS

MULTILATERAL FINANCE

INSTITUTIONS

Islamic Development

Bank (IDB) , Saudi Arabia

Islamic Corporation for

the Development of the Private Sector, Saudi

Arabia

RATING AGENCIES

Capital Intelligence Ltd., Cyprus

Malaysian Rating

Corporation Berhad

(MARC)

JCR-VIS Credit Rating Co. Ltd.,

Pakistan

1. Kuveyt Turk KatilimBankasi, Turkey2. Bahrain Islamic Bank B.S.C, Bahrain3. Arcapita Bank B.S.C., Bahrain4. Abu Dhabi Islamic Bank, United Arab Emirates5. Syarikat Takaful Malaysia, Berhad, Malaysia6. First Investment Company K.S.C., Kuwait7. Pakistan Kuwait Investment Company (Pvt.) Ltd., Pakistan8. Arab Islamic Bank, Palestine9. Dubai Islamic Bank, United Arab Emirates10. Bosna Bank International, Bosnia11. Al-Baraka Banking Group, Bahrain12. Jordan Islamic Bank, Jordan13. Bank Islam Malaysia Berhad, Malaysia14. Dubai Bank15. The International Leasing & Investment Company (ILIC)16. A. K. Bakri & Sons Holding17. Saba Islamic Bank

BANKS, INSURANCE COMPANIES

AND OTHERS

Issuer/Client • Signs agreement for an initial rating.• Submits preliminary information materials.

IIRA • Conducts a preliminary study.• Submits a detailed questionnaire to the issuer/client.

Issuer/Client • Provides detailed information in response to detailed questionnaire

IIRA • Conducts pre due diligence meeting analysis.• Conducts due diligence meetings.• Conducts post due diligence analysis.• Brief for Committee meetings is prepared.

Rating Committee • Decides the preliminary/initial rating.

IIRA • Notifies issuer of the preliminary/initial rating.

Issuer/Client • May appeal based on any new facts or information.

Rating Committee • Deliberates on appeals by issuer/client and gives decision.

IIRA • Notifies the decision of the Rating Committee to the issuer/client.

Issuer/Client • Consents to release of the rating to the public.

IIRA • Releases the rating to media.

IIRA RATING PROCESS

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