ifp june 2013

7/27/2019 IFP June 2013

1/20

Islamic FinancePakistanIslamic Finance IndustryNewsletter

Volume 4, Issue 5, June 2013

7/27/2019 IFP June 2013

2/20

2

EditorialIslamic banking on early basis had started its operations 1,400 hundred

years ago, where the basic mode of trading was in gold and silver.

However, as the time passes by, Islamic Banking has seen ups and downs

over the years but due to the current economic turmoil things have been

turning well around back to its origin. In comparison, interest based

banking system has not shown much prospective growth in order to meet

the current market demands, which has given birth to the on-going

financial crisis all around the world.

Many senior financial analysts consider Riba (interest) as the main root

cause of this crisis. The only option we have left lies in the hands of Islamic

financial structure which prohibits interest based transaction and rather

emphasizes on the real modes of transactions having an asset backing.

Many reforms and significant steps are being taken by the regulators for

the promotion and nourishment of Islamic financial system. Keeping in

view the latest market developments many organizations encompassing

particularly the financial sector, specifically in the Middle East have taken

step ahead in implementing the Islamic financial system which in return

has resulted in formation of pressure groups on governments to convert

their economic systems according to the teachings of Islam. Regulators are

expected to effectively play their role. We have seen from the recent trend

that a large number of people were getting trained in Islamic finance

through different workshops, trainings and seminars.

Moreover many reputable and world known universities such as Oxford,

Cambridge, Harvard, Columbia etc are conducting courses and degree

programs on Islamic Banking and Finance. From this what we can assume

that there will be more demand in the near future for Islamic finance

professionals as well as training programs.

Happy Reading!

Advisory Board

Mufti Irshad Ahmed Aijaz

Mufti Najeeb Khan

Anwar Ahmed Meenai

Mohammad Aslam

Mujeeb Baig

Faizan Memon

Syed Abdul Rafay Ather

Associate Editors

Shakil Khan

Muhammad Shahzad Hussain

Arshad Hussain Zubairi

Rima Farooq

Editor-in-Chief

Nusrat Ullah Khan

Ayat of Month:

Say (O Prophet to the infidels), Come, andI shall recite what your Lord has prohibited

for you: Do not associate anything with

Him (as His partner); and be good to

parents, and do not kill your children

because of poverty We will give

provision to you, and to them as well

and do not go near shameful acts, whether

they are open or secret; and do not kill a

person whom Allah has given sanctity,

except rightfully. This He has enjoined

upon you, so that you may understand.

[Al-Anaam: 151]

Hadith of Month:"The reward of deeds depends upon the

intentions and every person will get the

reward according to what he has intended.

So whoever emigrated for worldly benefits

or for a woman to marry, his emigration

was for what he emigrated for."

[Sahih al-Bukhari 1: Book 1, Hadith 1]

IFP is an initiative of IFP Forum and Hidaya Islamic Business Support Services Pvt. Limited (IBSS)

7/27/2019 IFP June 2013

3/20

3


News StoryDraft Shariah Governance Framework for Islamic

Banking Institutions (IBIs)In 2008, State Bank of Pakistan (SBP) had issued detailed set of instructions and guidelines for Shariah compliance vide

IBD Circular No. 2 of 2008. however, keeping in view the developments taken place in the Islamic banking industry over

the recent years, some of the instructions and guidelines have been revisited and a comprehensive Shariah Governance

Framework (the framework) has been developed. The primary objective of the framework is to strengthen the overall

Shariah compliance environment in the IBIs and explicitly define the roles and responsibilities of various organs of IBIs

including the Board of Directors, executive management, Shariah Committees, Shariah compliance department and

internal and external auditors towards Shariah compliance. Given below is a summary of the changes in the draft

Shariah governance framework for IBIs.

Ref. SBP draft Shariah governance

framework

Earlier/ previous

requirements by SBP

Rationale for new requirements (AAOIFI,

IFSB)

1. (i) The Board of Directors shall

ultimately be responsible and

accountable for ensuring full

conformity of IBIs operations with

Shariah principles. Like other risks

faced by an IBI, the Board needs

to be fully cognizant of Shariah

non-compliance risk and itspotential implications on the

reputation and business of the IBI.

(Role of Board of Directors)

No specific requirements The responsibility for the conduct of the

overall affairs of the IFI in accordance with

Shariah rests with the BOD. The SSB should

report on compliance based on its review.

(AAOIFI Governance Standard 6, 5/1/3,

para 36)

As Shariah compliance is central in assuring

the integrity and credibility of IIFS, and is

one of the ultimate responsibilities of the

BOD, the Board needs to establish a

mechanism that can be mobilized swiftly

and efficiently, as and when required, to

obtain rulings from Shariah scholars and

monitor Shariah compliance.

(IFSB 3, point 47)

1. (ii) The Board should also be fully

aware of their fiduciaryresponsibility particularly towards

the savings depositors (Profit

Sharing Investment Accounts

PSIAs) who accept the risks that

are almost similar to those of the

shareholders but without having

any voting right and forums like

AGMs to express their concerns

on IBIs performance. The PSIAs

expect IBIs to not only exerciseprudence in deployment of their

No specific requirements. IIFS shall always be aware that with their

fiduciary responsibility to the IAH comesaccountability. They shall be prepared to

be accountable to the IAH in ensuring that

the investment accounts continue to be

managed within the parameters of the

given mandate. Before opening an

investment account with an IIFS, IAH shall

be adequately advised by the IIFS of their

contractual rights and risks in regard to

investment account products, including

primary investment and asset allocationstrategies and the method of calculating

7/27/2019 IFP June 2013

4/20

4



Banking Institutions (IBIs) Continued


framework

Earlier/ previous

requirements by SBP


IFSB)

Funds in different avenues but

also ensure Shariah conformity of

the returns to be earned and paid

to them. The Board is thus

expected to introduce necessary

mechanisms and risk management

systems to safeguard the interest

of the PSIAs as also to ensure

Shariah conformity of the returns

etc being paid to them.


the profit/loss made from their

investments.

(IFSB-3, point 26)

1. (v) The Board shall meet the SC at

least on quarterly basis to a have a

detailed briefing on the Shariahcompliance environment, the

issues / weaknesses, if any, and

recommendations to improve

Shariah compliance environment

and b) ensure timely and effective

enforcement of the SC

observations/ recommendations.


In order to provide the

opportunity to the Shariah

Advisor to present thereport to the BOD and

apprise the BOD about his

assessment on the overall

Shariah compliance levels

and environment in the

institution, the IBIs are

advised to invite their

respective Shariah advisor

for discussion on the

Shariah compliance reportin the BOD meetings in

which annual audited

accounts and Shariah

advisors report are

discussed and approved.

(Circular reference no. 1 of

2010).

The Shariah board should also plan and

arrange to meet with the BOD of the IIFS at

least twice a year (every six months) todiscuss issues of common interest.

(IFSB-10, Appendix 2, point 5)

2. (v) The management is also expected

to take initiatives on regular basis

No specific requirements. Exchange of knowledge and expertise

between members of the Shariah Board

7/27/2019 IFP June 2013

5/20

5





framework

Earlier/ previous

requirements by SBP


IFSB)

for orienting and sensitizing the

Board and the key executives

about the business utility and

importance of an enabling Shariah

compliance environment and the

key distinguishing features ofIslamic finance products.

(Role of Executive management)

and internal Shariah officers with the BOD,

senior management, and other staff on the

operational side of the IIFS would lead to

more effective communications across the

organization. Hence, members of the

Shariah board and internal Shariah officersshould be encouraged, from time to time,

to conduct training for the other organs of

governance to further develop the

compliance capabilities of the IIFS.

(IFSB-10, point 35)

The companies shall make appropriate

arrangements to carry out orientation

courses for their directors to acquaint

them with the code, applicable laws, their

duties and responsibilities to enable them

to effectively manage the affairs of the

companies for and on behalf of the

shareholders. It shall be mandatory for all

the directors to have certification under

any directors training program offered by

institutions.

(CCG 2012)

3. (i) Every IBI shall have a Shariah

Committee comprising at least

three Shariah Scholars appointed

as per the FPT criteria notified by

SBP.

(Shariah Committee)

Every Islamic Banking

Institution (IBI) shall be

required to appoint a

Shariah Advisor.

(SBP-IBD Circular No.2 of

2008, Annexure 1, A)

FS should consider its size and, with a view

to determining the impact of the number

of members upon effective decision

making, decide what size Shariah board is

most appropriate. IIFS should further tale

in to account the scope and nature of their

operations. As far as possible, an IIFS

should aim for a Shariah board with a

mixture of experience and competencies.

(IFSB-10, Para 14)

7/27/2019 IFP June 2013

6/20

6





framework

Earlier/ previous

requirements by SBP


IFSB)

Every Islamic Financial Institution shall

have a Shariah Supervisory Board to be

appointed by the shareholders in their

AGM upon the recommendation of the

BOD.

(AAOIFI Governance Standard for IFI No.1,

Para 3)

3. (ii) IBIs in addition to the three

Shariah scholar members, may

also engage professionals like

lawyers, accountants, economists

to assist and advise the SC on

legal, financial and economic

matters. Such members however,

shall not have any voting rights in

deciding the Shariah related

matters.

(Shariah Committee)

No specific requirements. The Shariah supervisory board shall consist

of at least three members. The Shariah

supervisory board may seek the services of

consultants who have expertise in

business, economics, law, accounting and /

or others.

(AAOIFI Governance Standard 1, point 7)

3.

(iv)

The SC members shall be

appointed for a renewable term of

three years and shall have a

maximum of two terms starting

from the date of assumption of

charge as SC member and / or

Chairperson. The Shariah Scholars

working in IBIs as Shariah Advisors

at the time of issuance /

effectiveness of this framework

may be reappointed as SC

member or Chairperson as the

case may be and their term would

start from the date of

reappointment.

(Shariah Committee)

Shariah Advisor shall be

appointed for a renewable

term of three years.

(SBP-IBD Circular No. 2 of

2008, Annexure 1, A, pointv)

7/27/2019 IFP June 2013

7/20

7





framework

Earlier/ previous

requirements by SBP


IFSB)

3. (v) The SBP shall be informed about

the reappointment of the SC

members / Chairperson for the

second term at least three months

prior to the expiry of their term. In

case of any adverse feedbackabout the SC member /

Chairperson based on SBP

inspection reports and / or market

information, SBP may advise the

IBI to reconsider this decision.

(Shariah Committee)

No specific requirements.

3.

(vi)

Similarly the IBIs not offering the

second term to the SC members

shall inform the SBP about its

decision along with the rationale

at least 3 months before the

expiry of the term. The SBP may

revert back to IBI, in case it has

some observations on the

rationale.

(Shariah Committee)


3.

(vii)

Removal or termination of any SC

member before expiry of his / her

term shall be subject to prior

approval of SBP. For the purpose

the IBI shall submit the detailed

rationale along with the

documentary evidence, if any, in

support of its proposal for

removal of the SC members to SBP

for approval.

(Shariah Committee)

Termination of Shariah

Advisor or his removal

before the expiry of his

term shall be with the

approval of authority which

has approved his

appointment i.e. BoD in

case of local IBIs and

Management in case of

foreign IBIs.

The dismissal of a member of the Shariah

supervisory board shall require a

recommendation by the BOD and be

subject to the approval of the shareholders

in a general meeting.


7/27/2019 IFP June 2013

8/20

8





framework

Earlier/ previous

requirements by SBP


IFSB)


2008, Annexure 1, A, point

vi)

IBIs shall be required to

notify SBP of any

resignation or termination

of the Shariah Advisor

within 14 days of the date

of resignation or

termination. IBI shall also

state the reasons of such

termination and alternate

arrangements for interim

period.


2008, Annexure 1, A, point

vii)

3. A.

(v)

All the reports of internal Shariah

audit and Shariah compliance

reviews shall be presented to the

SC for prescribing appropriate

enforcement action. SC shall take

up the unresolved issues with the

management and if warranted

shall include the outstandingissues in their annual Shariah

report. Moreover, SC / head of

Shariah department shall discuss

all the significant and unresolved

issues with SBP inspection team

during on-site inspection.

(Role of Shariah Committee)

The report of the Internal

Shariah Audit shall be

placed before the SA for

advising the appropriate

corrective action and then

before the Audit Committee

of the IBI for consideration

and appropriate remedialaction as advised by the SA.


2008, Annexure 2, II.

Internal Shariah Audit,

point D)

Where appropriate, the internal Shariah

review / audit reports shall require or

recommend the management of the IIFS to

address and rectify any issues of Shariah

compliance.

(IFSB-10, point 3 (C))

The head of the Internal Shariah reviewshall discuss conclusions and

recommendations with appropriate level of

management before issuing final written

report. On completion of the internal

Shariah review, at least a quarterly written

report shall be prepared which must be

signed by the head of internal Shariah

review, addressed to the BoD and copied

to the Shariah Supervisory Board and

management.


7/27/2019 IFP June 2013

9/20

9





framework

Earlier/ previous

requirements by SBP


IFSB)

3. B.

(i)

One of the members of SC shall be

appointed as chairperson and in

his absence the other members of

SC shall elect alternate chairman

to preside over the meeting.

(Terms of Reference Shariah

Committee)

No specific requirements. The Shariah Supervisory board shall

appoint from among its members or any

other person a supervisor(s) to help it in

performing its duties.


One of the members of the Shariah board

shall be elected as its Chairman. The

Chairmanship should preferably be on a

rotation basis, such as whenever there is a

reappointment of the Shariah board.

(IFSB-10, Appendix2, point 3)

3. B.

(ii)

The quorum of SC meeting shall

be at least two Shariah scholar

members. For the approval of any

proposal, concurrence of majority

of Shariah scholars shall be

necessary.


Committee)

No specific requirements. The Shariah board should determine a

quorum for its meeting as appropriate,

based on the total number of members

sitting on its panel. For example, a Shariah

board comprising five members may set its

quorum as three.


3. B.

(iv)

Shariah Committee shall meet at

least on monthly basis. Each

member of SC shall attend at least

two third (2/3rd) of the meetings

during a calendar year.


Committee)

No specific requirements. The Shariah board shall meet regularly to

carry out periodic reviews to monitor

Shariah compliance of the operations of

the IIFS generally.

However, as and when necessary, the

Shariah board can hold a meeting if the IIFS

urgently requires its advice and opinion on

Shariah-related matters.


3. C.

(i)

As the SC members have Shariah

advisory / supervisory role in IBI, it

is preferable that they should not

be the employees of the IBI.

No specific requirements. Shariah supervisory board members should

not be employee of the same IFI.

(AAOIFI Governance Standard 5, para 7)

7/27/2019 IFP June 2013

10/20

10





framework

Earlier/ previous

requirements by SBP


IFSB)

(Independence of Shariah

Committee)

A member of the Shariah board being

under full-time employment by the IIFS or

any of its related companies for the current

or during the last financial year.

(IFSB-10, Point 42 (i))

3. C.

(iv)

SBP prudential regulation G-2 shall

also be applicable on the

members of SC.

(Independence of Shariah

Committee)


3. D.

Anne

xure

A

The SC shall, based on the work of

internal / external Shariah audit

and Shariah compliance review,

prepare a report on IBIs Shariah

compliance environment and

conditions as per the format given

in Annexure A of this document.

The report shall be signed by all

the member of SC. The report

shall be discussed in the Board

meeting and published in the IBIs

annual report.

(Report of Shariah Committee)

Based on review conducted

in terms of aforementioned

para B(2), the Shariah

Advisor shall prepare a

report, which shall be

published in the IBIs annual

report.


2008, Annexure 1, C)

4. Every IBI shall have a Shariah

compliance department (Shariah

Department) headed by a suitable

person meeting the FPT criteria of

SBP for key executives and

recommended by the Shariah

committee of the IBI.

(Shariah Compliance

Department)

A system of compliance

having special emphasis on

Shariah aspects with

relevant provisions of

existing laws, rules,

regulations, policies and

procedures related to

Islamic Banking need to be

embedded in the IBIs

processes in such a manner

that monitoring and

7/27/2019 IFP June 2013

11/20

11





framework

Earlier/ previous

requirements by SBP


IFSB)

reviewing of issues related

to Shariah compliance

forms part of internal

control structure.


2008, Annexure 2, I)

4.

(vii)

The department shall prepare a

comprehensive procedure manual

including checklists and SOP to

assist its staff in discharging their

duties.

The department shall ensure that

IBIs website displays all the

fatawa (including modifications

thereof) issued by SC, briefintroduction of SC members,

disclosures required by IBD of SBP,

key features of all the products

offered, FAQs and the contact

details of the department.

The department shall liaison with

Islamic Banking Department of

SBP on Shariah compliance related

issues.

(Shariah Compliance

Department)

No specific requirements. It is recommended that the Islamic

Financial Institution publishes the fatawa,

rulings and guidelines issued by its Shariah

supervisory board during the year.


5.

(iii)

The charter and audit manual

(including Shariah audit rating

methodology and checklists /

work programs) of the ISAU shall

be reviewed by the SC and

approved by the Board. However,

the charter and audit manual ofISAU may be a distinct part of IBIs

No specific requirements. The internal Shariah review is an integral

part of the organs of governance of the IFI

and operates under the policies

established by the IFI. It shall have a

statement of purpose, authority and

responsibility (charter). The charter shall

be prepared by management and shall beconsistent with Islamic Shariah rules and

7/27/2019 IFP June 2013

12/20

12





framework

Earlier/ previous

requirements by SBP


IFSB)

overall internal audit manual.

(Internal Shariah Audit)

principals. The charter shall be approved

by the SSB of the IFI and issued by the

BOD. The charter shall be regularly

reviewed.

(AAOIFI Governance Standard No.3, point

3 internal Shariah review)

5.

(iv)

ISAU shall prepare a separate

Shariah audit plan which, after

review by the SC, shall be

approved by the Board Audit

Committee. However, this plan

may be presented to BAC along

with IBIs overall audit plan.



5. (v) Similarly, ISAU shall prepare

Shariah audit report of each

audited branch / function

separately. The format of the

reports shall be developed by

ISAU in consultation with the

Shariah Committee.


No specific requirements. The internal Shariah reviewers shall plan

each internal Shariah review assignment.

Planning documentation shall include, but

not limited to, obtaining background

information about the activities to be

reviewed, such as locations, products /

services, branches, divisions, etc.

(AAOIFI Governance Standard No.3, point18)

6. In order to have an independent

assessment of Shariah compliance

environment and end to end

control mechanism to ensure

Shariah conformity of IBIs

operation, the IBIs shall get their

Shariah governance and

compliance framework audited byexternal audit firms having

Draft guidelines were issued

but never finalized. It was

included in last strategic

plan as well.

For external Shariah compliance reviews,

the Audit committee shall ensure as far as

possible that the external auditors are

capable of conducting, and do conduct, ex

post Shariah compliance reviews within

their terms of reference.

(IFSB-3, Para 51)

7/27/2019 IFP June 2013

13/20

13





framework

Earlier/ previous

requirements by SBP


IFSB)

capacity to conduct the Shariah

audit of IBIs.

(External Shariah Audit)

The head of the internal Shariah review

shall ensure that the internal and external

Shariah review efforts are properly

coordinated to ensure adequate Shariah

review coverage and to avoid duplicate

efforts.

(AAOIFI Governance Standard for IFI No.3,

Point 24)

8. (ii) Further, the members of the

Shariah Committee shall be

exposed to the training sessions

related to legal and regulatory

framework and commercial

banking.

(Competence of the organs)

No specific requirements. The level of knowledge expected from a

member serving on a Shariah board may

vary according to the level of responsibility

and the type of regulated activity to be

carried out by the IIFS. However, a member

of the Shariah board is generally expected

to be able to display an understanding of:

(i) the Shariah rules and principles that

apply to the IIFSs proposed activities;

(ii) the general legal and regulatory

framework that may apply to the functions

that it would perform; and

(iii) the broad impact of introducing

financial products to the market and the

public generally based on the Maqasid al-

Shariah.

(IFSB-10, Appendix-4, point 2)

7/27/2019 IFP June 2013

14/20

14

Libya Bank lending paralyzed

amid interest ban

Zeti gives advice on Islamic

financial innovations

Innovations in Islamic financial

solutions will need to take into

account the higher regulatory

e x p e c t a t i o n s f o r m o r e

transparency, as well as the

effective management of risks and

capital, said Bank Negara Governor

Tan Sri Dr Zeti Akhtar Aziz.

She also noted that while Islamic

finance had benefited from a welldeveloped, more competitive and

well-regulated eco-system, it

needed to build on and reinforce

the solid foundations that have

been achieved in this decade.

Noor Islamic Bank launches Noor

Trade Initiative to service SME

sector

Noor Islamic Bank is targeting AED

5 billion of lending to small and

medium enterprises (SMEs) over

the next five years with the launch

of Noor Trade, a Shariah compliant

banking service specifically tailored

to SMEs, which contribute

significantly to the UAEs trade

flows.

In support of its Noor Tradestrategy, Noor has opened its first

dedicated trade branch in Almas

Tower, home of the Dubai Multi

Commodities Centre (DMCC), in

Jumeirah Lake Towers (JLT).

CBB Sukuk Al-Ijarah

oversubscribed

The Central Bank of Bahrain (CBB)announces that the monthly issue

of Sukuk Al-Ijarah, has been

subscribed by 220%. Subscriptions

worth BD 43.9 million were

received for the BD 20 million issue,

which carries a maturity of 182

days.

The expected return on the issue,

which begins on 16 May 2013 and

matures on 14 November 2013, is

0.85% equivalent to 0.85% for theprevious issue on 18th April 2013.

Thomson Reuters launches

Islamic finance indicator

Thomson Reuters launched anIslamic Finance Development

Indicator in collaboration with the

Islamic Corporation for the

Development of the Private Sector

(ICD), the private sector

development arm of the Islamic

Development Bank (IDB).

The indicator is a numerical

measure representing the overall

health and growth of the Islamic

finance industry worldwide.

Turkey seeks to benefit from

Islamic banking sector

With the international economiccrisis continuing to bite, the Turkish

government has announced it will

be seeking to tap into the USD 1

trillion Islamic financial industry.

Although Turkey is a secular state,

it is overwhelmingly Muslim. Under

the decade-long rule of the

country's Islamist rooted AK Party,

Muslim-compliant businesses have

flourished.

Disclaimer:The news included here is on the basis of information obtained from local and international print and

electronic media sources. IFP and Hidaya IBSS team does not accept any responsibility about their bona-fide.

Euphoria over a law passed this

year that would make Libya the

third Middle Eastern country after

Iran and Sudan to ban non-Shariah

compliant banking by 2015 has

turned into frustration and

confusion. Parliament and the

Central Bank have distanced

themselves from the decision of

commercial lenders to stop offering

loans immediately.

The law didnt stipulate when the

transition would start, according to

Omar Hamaidan, a spokesman for

the legislature.

Global News

Positive outlook for Islamic securities

In spite of the recent credit crunch and the volatility of global market, prospects for growth in Islamic securities

markets are likely to be positive. This positive trend can be attributed to the rapid expansion and increasing

sophistication of the GCC financial markets, as well as the geographical spread of Islamic securities, products and

services which recorded outstanding growth in Europe, Asia Pacific, North Africa as well as Central Asian countries,

according to Central Bank of Bahrain (CBB).

7/27/2019 IFP June 2013

15/20

15

Muslim immigration fueling

Islamic Banking in Canada

Singapore to host 4th World

Islamic Banking Conference

Boosting International Linkages and

Cross-Border Opportunities, WIBC

Asia 2013, hosted with the official

support of the Monetary Authority

of Singapore, will set the stage for

high-level discussions focusing on

strengthening international

connectivity and capturing cross-

border opportunities that will drive

further growth in the Islamic

finance industry in Asia.

The summit seeks to bolster

stronger economic linkages with

other key centers for Islamic

finance.

Islamic banking not confined to

Muslim communities: IDB chief

The global credit squeeze and

recession have made many

countries turn to the Islamic

Development Bank more than ever

to seek help in their development

projects.

Islamic banking is a fast-growing

global industry. This is due to the

integration with the real activity. It

is to be noted that Islamic bankingis not confined to Muslim

communities. Many social sectors

participate in it", the president said

in an interview.

Policy delays push Up Indonesia

yield to record

Indonesias 10-year borrowing costsfor dollar Sukuk rose to a record as

the government depends more on

global markets to help fund a

budget deficit worsened by delays

in cutting fuel subsidies.

The yield on the 3.3 percent notes

due November 2022 climbed 37

basis points in May to 3.68 percent,

the highest level since the debt was

sold in November last year,

according to data compiled byBloomberg.

9th World Islamic Funds and

Financial Markets Conference

(WIFFMC 2013) opens

The 9th Annual World Islamic Fundsand Financial Markets Conference

(WIFFMC 2013) witnessed a high-

profile opening on 25th May at the

Gulf Hotel in the Kingdom of

Bahrain. Confirming its position as

the worlds largest and most

influential annual gathering of

Islamic investment leaders, WIFFMC

2013 convened the leading players,

industry thought leaders and key

regulators in the international

Islamic funds and investmentsindustry for discussions .

Al Baraka unveils Islamic finance

product

Al Baraka Islamic Bank has launcheda new financing product in the local

market to fund the services under

the umbrella of Taqseet finance.

This is in addition to other facilities

provided by the product Taqseet to

finance purchasing of cars, boats,

other goods and real estate.

The new product is based on the

Shariah principle of Ijarah to

finance various services where the

bank will lease the client aparticular service.

Disclaimer:The news included here is on the basis of information obtained from local and international print and

electronic media sources. IFP and Hidaya IBSS team does not accept any responsibility about their bona-fide.

Amid the headlines in recent weeks

of a group of Muslim extremists

plotting a terrorist attack in

Canada, a look at some of the

mundane ways in which Canadas

growing Muslim communities are

having an impact can be a

refreshing reminder that the bad

apples are few and far between,

and that the majority of Muslim-

Canadians are ordinary individualswho strive to lead productive lives

and contribute positively to their

country.

Global News

National Bank of Bahrain and SIO Asset Management complete purchase of Bahrain Islamic Bank shares

National Bank of Bahrain (NBB) and SIO Asset Management Company (SIOAM) have announced that they have

completed the purchase of The Investment Dar KSC's (TID) and associated companies shareholding of 51.6 percent

in Bahrain Islamic Bank. The shares were purchased by NBB and SIOAM at 72 fils per share; after obtaining the

required regulatory approvals for the transaction and for the final documentation between the various parties, said

a press release.

7/27/2019 IFP June 2013

16/20

16

The Bank of Khyber opens its

31st Islamic banking branch in

Swat

The Provincial Minister for Finance,

Engr. Hamayun Khan inaugurated

the 31st Islamic banking branch of

the Bank of Khyber at the Bank

Square, Mingora, Swat thus

reaching a total of 63 branches

across the province.

Besides several officials, Mustafa

Kamal, Managing Director BoK, DCO

Swat, Commissioner and IDG,Malakand Division also honored the

occasion with their presence.

After the inauguration, The

Provincial Minister also visited the

new branch and put his signature

on the accounts papers.

MCB FSL appointed as trustee for

upcoming ABL Islamic Stock Fund

agreement signed

In a ceremony held at the head

office of ABL Asset Management

Company Ltd, a Trust Deed was

signed between ABL Asset

Management Company Limited

(ABL AMC) and MCB Financial

Service (MCB FSL), whereby ABL

AMC appointed MCB FSL as trustee

for their upcoming ABL Islamic

Stock Fund.

Farid A. Khan, CEO ABL AMC, and

Khawaja Anwar Hussain, CEO MCB

FSL, signed the agreement.

Dr. Muhammad Imran Ashraf

Usmani, renowned Shariah scholar

and Shariah Advisor of Meezan

Bank addressed Meezan Banks

employees and senior faculty

members of University of Central

Punjab (UCP) at UCP Auditorium,

Lahore on 5th May.

Dr. Imran Usmani is a highly

respected figure in the Islamicbanking circles and has served as

Advisor / member of Shariah Boards

of numerous leading local and

international institutions.

Eligibility of GoP Ijarah Sukuk in

Musharaka Pool

State Bank of Pakistan (SBP) has

notified that now un-encumbered

Government of Pakistan (GoP) Ijarah

Sukuk may be included in the

Musharaka Pool (MP), created under

Islamic Export Refinance Scheme

(IERS).

SBP communiqu said that all IBIs

shall report Sukuk in MP under the

sector heading of GoP Ijarah Sukuk

while reporting Revised Appendix 1

and the same should be verified /certified as over and above the SLR

eligible limit by the IBIs Internal Audit

Head / Compliance Head.

IBIs shall maintain record of Sukuk

issue included and the amount of that

issue will be incorporated in the MP.

The banks are advised to refer to

SBPs Islamic Export Refinance

Scheme and other instructions issued

from time to time. Other instructionson the subject remain unchanged, the

circular said.

Local News

Dr. Imran Usmani addresses

Meezan Banks Lahore staff at

University of Central Punjab

Disclaimer:The news included here is on the basis of information obtained from local and international print and electronic

media sources. IFP and Hidaya IBSS team does not accept any responsibility about their bona-fide.

The Board of Directors of Meezan

Bank approved the financial

statements of the Bank for the

quarter ended March 31, 2013 in

its meeting held at Dubai on April

30, 2013. H. E. Sheikh Ebrahim Bin

Khalifa Al-Khalifa, Chairman of the

Board presided the meeting that

was also attended by Mr.

Abdullateef A. Al-Asfour, (Vice

Chairman) and other Directors.

Meezan Bank recorded 9 percent

growth in its Profit-after-tax which

increased to Rs. 982 million

compared to Rs. 903 million

earned in the corresponding

period of 2012.

Meezan Bank records good

growth in first quarter 2013

7/27/2019 IFP June 2013

17/20

17

Bookin the Spotlight

The basic theme of this book is to analyze the Islamic business structure and the way the finance is being managed in

Islamic way. Through a comprehensive note we can simply analyze that Islamic finance is an emerging market not only

in banking industry but in the whole financial industry.

The book also comprises on the Islamic financial governance system which are being elaborated by the Islamic Fiqh

Council and AAOIFI. Moreover, it has further elaborated that how Islamic Financial Institutions abide by the laws of

Islamic Finance Shariah Board (IFSB).

Since Islamic finance has its own rules, regulations and procedures to construct business model this book explains in

detail how this model works which also further helps in deducing the profits and losses in the business. Many known

universities and business schools have so far reached on a conclusion that Islamic financial system has a different and

a dynamic mode of financing and earning profits. The book mainly analyzes the following:

Interest based debt financing system;

Good corporate governance report in Indonesia;

Impact of Islamic work ethics and job satisfaction on job involvement and turnover intentions; andA critique on the paper on Quran and Hadith.

The book has basically different parts where different editorials, Archives and book review are being stated which are

written by famous scholars and writers based on the Islamic finance principles.

Editorial:

Regime Uncertainty Abbas Mirakhor and Mughees Shaukat

A Critique of Islamic Finance Dodik Siswantoro

Impact of Islamic work ethics Khurram Khan and Muhammad

Abbas

Quran, Hadith and Riba Connotation Dr. Muhammad Omar

Farooq

Archive:

Riba , Interest and Hadith Mohammad Omar Farooq

A Comprehensive Glossary of Shariah related terms in Islamic

Commercial Law Muhammad Ayub

Journal of Islamic Business and Management

Riphah Centre of Islamic BusinessPublished by Riphah International University, Islamabad

Volume: 02

Issue: 02

December 2012

7/27/2019 IFP June 2013

18/20

18

Ask Us

Question

Is there any Shariah implication in Ijarah contract if lessor asks lessee of providing guarantee or security for covering any

loss related to Ijarah transaction?

Answer

The lessor bears the risk associated with the leased property and the lessee holds it on a trust basis. Hence, it is not

permissible for the lessor to stipulate in the lease contract that the lessee provide a guarantee or pledge of security,

etc., so that he may use it to recover the amount of the lease rental if the leased property is damaged, unless such a

stipulation is restricted to cases of misconduct, negligence or breach of contract. Therefore, the lessor is liable for the

consequences of any damage to the leased property that is not caused by the misconduct or negligence of the lessee,

and is responsible for any related insurance expenses. The lessor also bears the expense of any major maintenance work

required to keep the leased property in the condition necessary to provide the contractual benefits under the lease.

Question

Is it permissible in Shariah to stipulate a defined maximum time limit for an agency? What are Shariah instructions in

this regard?

Answer

Basically, agency has no time limit beyond which the contract becomes no longer valid, because the agent can be

terminated at any time. The two parties, however, may agree on a certain period after which the agency becomes

invalid without a request from any of them to revoke the contract. The effect of specification of a time limit for agency is

confined to restrain the agent from commencing new operations subsequently. Unless the contract stipulates

otherwise, the agent may commence new operations during the contract period even if the effects of such operations

will succeed the period of the contract.

Questions / Answers

Feed Back Corner

Please provide us with your feedback on the following

email addresses

[email protected]

7/27/2019 IFP June 2013

19/20

19

7/27/2019 IFP June 2013

20/20

News Story:

Rima Farooq

Ask Us:

Mufti Ibrahim Essa andMufti Javed Ahmed

Book in the Spotlight:

Journal of Islamic Business

and Management

News:

Local and Global news

Let us know, if you know friends or colleagues who, in your

view, may benefit from this newsletter. Send us their emailaddresses at

[email protected]

ifp june 2013

Documents