application of islamic financial products - by yousuf ibnul hasan - icompetences ifc2012
DESCRIPTION
[EN]Islamic Finance has known a significant growth in recent years. In fact, while the global amount of Islamic Finance-related products and services was valued at $700 billion in 2008, it weighs more than 1.100 billion in 2011. Thanks to its specific characteristics: transparency of contracts, asset tangibility, cash availability, Islamic finance has managed to better cope with the financial crisis at the international levels. Now, many companies and individuals use Islamic finance to raise capital or to finance their projects. However, several challenges are also faced in the context of the uncertainties related to the reduction of emissions of Sukuk, volatility of real estate, toxic assets and other strategic and operational challenges. Either you have already initiated Islamic Finance related projects, or you've just started thoughts with this regard, The Islamic Finance International Conference organized and produced by iCompetences.com guarantees high quality networking opportunities, various moments of exchange, as well as learning and reflection with high level international experts from a dozen countries.[FR] La finance islamique connaît un développement important depuis plusieurs années. Alors qu’elle se chiffrait à 700 milliards de dollars sur le marché mondial en 2008, elle pèse plus de 1,100 milliards en 2011. Grâce à ses caractéristiques spécifiques, transparence des contrats, tangibilité́ des actifs, disponibilité́ des liquidités, la finance islamique a réussi de mieux faire face à la crise financière internationale. Désormais, nombreux sont les sociétés et les individus qui font appel à la finance islamique pour lever des capitaux ou financer leurs projets. Cependant, plusieurs défis sont autant à relever dans le contexte des incertitudes liées à la réduction du nombre d’émissions de Sukuk, volatilité́ du secteur immobilier, actifs toxiques ainsi que d’autres challenges d’ordre stratégique et opérationnel. Que vous ayez déjà initié des projets relatifs à la finance islamique ou que vous veniez juste d’entamer des réflexions à ce propos, la Conférence Internationale sur la Finance Islamique conçue et organisée par iCompetences.com vous garantit, à travers les interventions de nos conférenciers et les opportunités de networking, des moments d’échange, d’apprentissage, et de réflexion de très haut niveau avec des experts internationaux venant d’une vingtaine de pays.TRANSCRIPT
Application of Islamic Financial Products
Support to Socio Economic Encouraging Documented Economy
Maximizing the Financial Risk Developing International Trade Relations
All Characters are for Example due to Commercial Reasons
Islamic Finance International Conference IFC 2012 Organized by iCompetences 27TH & 28TH DECEMBER 2012
Marrakech- Morocco
Yousuf I Hasan IQRA University- Pakistan
Input & Output method of funds under Equity Participation
Sukuk For
Transaction under
Trade Financing For
Pakistan Origin Rice Procurement, Processing
& Export
Financing By using four methods
Sukuk into Modaraba Modaraba into Musharka
Musharka into
Morabaha & Ijarah In Single Transaction
Sukuk Issued By Muslim Bank Ltd Under Modaraba Base
Purchased by Four Banks FIRST STAGE CAPITAL BANK 1 BANK 2 BANK 3 BANK 4
AMOUNT US $ US$..........
280,000,000 45,000,000
65,000,000
70,000,000
100,000,000
Sukuk Price $
10,000.00 4500 6500 7000 10000
No of Sukuk &
28,000
Equity Ratio 16.07 23.21 25.00 35.71
SECOND STAGE
MODARABA
Modarib Muslim Bank Ltd &
Rab-al-Maal 4 Islamic Banks Sukuk Holders
Modaraba Terms
Capital 280,000,000
Profit Sharing Ratio on NP 20 - 80 Net Proft
Management Fee 2% On Gross Profit
THIRD STAGE
Muslim Bank Ltd Musharka with
Central Bank Profit Ratio 5: 95
MUSHARKA Central Bank Participated with US $ 5 mil
Muslim Bank Ltd
280,000,000 Central Bank Equity 5,000,000
Musharka Capital 285,000,000
IJARAH Warehousing & Processing Facility obtain by Central
Bank under Ijarah from Private Sector
Monthly Rent
125,000.0 Per Year 1,500,000.00
Space in Square Meters
15,000.00 Including
FACILITIES & SERVICES 1..Stock Room, 2..Rice Processing Unit,
Rates in US $ Per Square Meter 8.33
3..Packing Facility, 4..Office Area, 5..Rest House
Yearly Contract 12 Month
1,500,000
6..All RCC Construction 7..Secured from all Risk
Per Metric Tons **** $ 1.500
8..Power generation unit 1200 KVA, 9..Water Tank 100,000 gallons 10.Storage Capacity 1.7 Mil Tons
FORTH STAGE
Central Bank >>>>>>Rab-al-Maal Ratio 90% Rice Mill Corp >>>>>Morahib Ratio 10% Morahib Selling Expense 6% as Cost of Product
% MORABAHA Ratio 10 : 90 Morabaha
Central Bank Rab-al-Maal
Rice Mill Corp Morahib Capital
Capital Participation Financing 285,000,000
Arboon 10% 28,500,000 313,500,000
Fifth Stage Central Bank appointed 4 Local Bank to act as MUCCUDUM
These Commercial Banks authorize to pay on behalf of Rice Mill Corporation against Procurement of Rice for the local growers.
Direct payment to disregarding old and orthodox method that p0roved exploitation to poor growers since last 100 years by Land Lords, Middlemen and |Grain Market Players
Growers were given choice to take cash against delivery of stock or open bank account to avail the security of their funds Payment was made at the bank counter of the any four banks
Morahib Equity 10% added with Rab-al-Maal for Procurement of Stock under spot buying
Morabaha Capital
313,500,000 Local Banks Appointed as Muccudum for
Pledge, Payments & Proceeds Total Quantity of Rice
Procured in 1,000,000 Metric Tons
Local Bank 1 $
Local Bank 2 $
Local Bank 3 $
Local Bank 4 $
Amount Disburse to each Agent Bank to pay the
purchase price 78,375,000
78,375,000
78,375,000
78,375,000
Purchase price PMT Rates PMT
242.00
Rental Storage US $ 1.5 Million
1.50 Rice Procurement & Bank Handling Fee
Value added
23.00 Metric Tons
250,000 Metric Tons 250,000
Metric Tons 250,000
Metric Tons 250,000
Transportation
18.00 Bank Fee
5% Bank Fee
5% Bank Fee
5% Bank Fee
5%
Insurance
2.00 US $
1,000,000. US $
1,000,000 US $
1,000,000 US $
1,000,000 Port Charge 3.00
Brokerage
3.50
Bank Commission
4.00 Operational Expenses
8.00
Selling Expenses
6.00
Cost Price PMT
311.00
Total Purchase Price
311,000,00
0
Stock Exported by Rice Mill Corporation Bank Muslim approach to Sukuk Partner who were assigned to market the orders in their respect area of operation.
Sukuk Partner mobilize the import of Rice and place the order to Rice Milling Corp. under Letter of Credit and earn Commission and Handling Fee on Import.
Export Proceeds arrive in Central Bank and all documentation handle by Commercial Bank the Agents
Total Purchase price 311,000,000
Export Expenses in total Stock purchase and Export
2,500,000
Shipping Expenses for 1 Million tons and Warehouse Rent
Export Value 313,500,000
PMT Stock Value 313.50
Sales Price PMT US $ 390.00
Total Sale Report 390,000,000
Gross Profit 76,500,000 Net Profit Less Arboon 28,500,000 48,000,000
Profit Share Central Bank >>>>>>Rab-al-Maal Ratio 90% Rice Mill Corp >>>>>Morahib Ratio 10%
MORABAHA Ratio 10 : 90 Morabaha Central Bank Rice Mill Corp Capital
Capital Participation 285,000,000 28,500,000 313,500,000
Profit Earned 43,200,000 4,800,000 48,000,000
Profit on Capital %
13.7799 1.5311 15.3110
Morahib Sales Fee 6% 6,000,000 Morahib Profit Income 4,800,000 Morahib Total Income 10,800,002
Return on Investment 37.895
Profit Muslim Bank Ltd Musharka with Central Bank Profit Ratio 5: 95
MUSHARKA
Capital in US
$ Net Central Bank Muslim Bank
Muslim Bank Ltd
280,000,000 Profit Profit Profit
Central Bank
5,000,000 43,200,000 10.00 90.00
Profit on Capital
285,000,000
4,320,000
38,880,000
Profit Sukuk in Modaraba Financing with
Muslim Bank Ltd MODARABA Modarib Muslim Bank Ltd & Modaraba Terms
Capital 280,000,000
Profit Sharing Ratio on NP 20 - 80 Management Fee 2%
On Gross Profit
Muslim Bank Ltd GROSS MANAGEMENT NET MODARIB Rab-al-Maal
PROFIT FEE PROFIT Profit Profit
Profitability
38,880,000 777,600
38,102,400
7,620,480
30,481,920
Sukuk Issuance by 4 Banks FIRST STAGE CAPITAL BANK 1 BANK 2 BANK 3 BANK 4 AMOUNT US $
US$.......... 280,000,000 45,000,000
65,000,000
70,000,000
100,000,000
Sukuk Price
10,000.00 4500 6500 7000 10000
No of Sukuk &
28,000
Equity Ratio 16.07 23.21 25.00 35.71 1st Year Sukuk Profit
US $.......... 30,481,920
4,898,880
7,076,160
7,620,480
10,886,400
Return % Capital
10.886%
Return on investment 10.8864% 1.7496 2.5272 2.7216 3.8880
Per Sukuk
Profit Profit in % Profit
Amount
1088.640 10.88640 30,481,920