January 2010 Issue

Islamic Finance Looks Attractive to Shipping Industry

Emirates Business| January 06, 2010

Takaful starts in Italy

Islamic Finance news |January 06 ,2010

ITALY: The country’s biggest insurance firm, Assicurazioni Generali (Generali), plans to enter into a Takaful joint venture with Qatar Islamic Bank (QIB). The collaboration could create “a leading player for the Takaful business in the Middle East with the possibility of expanding operations across Europe and Asia,” said Generali chief executive Sergio Balbinot. The partnership would draw upon QIB’s experience in the Islamic banking sector as well as the knowledge and skills of Generali in insurance.........

Hong Kong: Shari’ah Funds – A Bermuda Perspective

Appleby| January 07, 2010

Prior to the global financial crisis, the Islamic banking, finance, insurance (takaful) and investment markets were riding a wave of unprecedented growth. Banking was growing 15-30 percent annually, with trading levels having increased from US$70 billion in 2005 to US$300 billion in 2008. The takaful industry was growing at an annual rate of 20 percent. The asset growth rate in the Islamic finance industry from 2005-2008 was 400 percent with the industry worth more than one trillion dollars in early 2008.The global financial crisis may have put an end to that rapid growth, but Islamic finance however may be moving toward providing a new mainstream alternative to western banking and investment products. This development is fuelled partly by the belief that Shari'ah compliant products may not be as vulnerable as conventional products. For instance, the residential sub-prime mortgage backed securities would not have been permissible under Shari'ah investment principles. An illustration of the movement of Islamic finance structures into the mainstream recently emerged in Sweden where a co-operative has formed a members' bank that has opted for the Islamic finance feature of not charging interest on loans. All bank activities occur outside the capital market – member savings are the sole source of finance for loans......

Islamic Finance Has Withstood Global Crisis Impact

Khaleej Times | December 30, 2009

Islamic finance has withstood the negative impact of the global financial crisis, proving its resilience, effectiveness and relevance to the global financial industry, said Farhan Al Bastaki, Executive Director for Islamic Finance at the Dubai International Financial Centre Authority. While the world has been searching for an alternative to the conventional banking system deeply impacted by the global financial crisis, few have realized that a more stable, asset-backed and efficient system already exists, he said at a meeting of Shariah Advisory Panel of the International Islamic Financial Market, or IIFM — a body comprising 47 Islamic finance institutions from across the world. IIFM is a link between regulatory bodies and financial institutions and is driven by its permanent members and the market. The meeting, aimed at obtaining guidance from scholars and to explain the benefits of its Tahawwut (hedging) Master Agreement, was hosted by the Dubai International Financial Centre. "The Islamic finance system is there, but its wider acceptability has to be created by spreading awareness as well as by providing depth to the market," said Al Bastaki. .......

Dubai Islamic Bank launches Al Islami Takaful Riayati

Zawya, Dubai |January 2, 2010

Dubai Islamic Bank (DIB) announced today the launch of Al Islami Takaful Riayati, a comprehensive accidental death and disability insurance plan offered at a very affordable annual premium. This innovative Sharia-compliant product is underwritten by SALAMA-Islamic Arab Insurance Company, and complements the bank's existing portfolio of diverse products and services. Al Islami Takaful Riayati offers peace of mind to individuals and families by providing significant benefits in the unfortunate event of accidental death or disability. With annual contributions payable at just AED 250 for an individual, and AED 400 for a plan holder plus spouse, this unique program is within everyone's reach. The coverage offered by Al Islami Takaful Riayati includes family takaful benefit of AED 100,000 in the event of accidental death, or permanent total or partial disability caused by an accident. Additionally, plan holders are eligible for weekly ......

Islamic Finance in New Year 2010

Islamic Finance News | January 06, 2010

Over the last 30 years, the modern Islamic finance industry has evolved into what is today seen as a counterpart to the conventional system. This point is substantiated by a glimpse at product structures and terminologies, whereby service fees are linked to LIBOR and Sukuk are referred to as Islamic ‘bonds.’ This is partially due to the influx of conventional bankers who have penetrated the industry and operate it under previous pretenses. Additionally, market demand and lack of consumer knowledge allow the industry to continually exist in parallel to the conventional. A familiar adage iterates: Out with the old and in with the new. As a new year opens, practitioners could apply this sentiment to 2010’s dealings. That is, refocusing on Islamic business and commerce, as opposed to ‘finance.’ This requires concentrating on the Islamic component of the industry, which calls for a financial system rooted in Islamic ideology and Islamic economics. Put simply, let us remember that the industry is supposed to be a product of Islam — not the conventional system....

The Jinn of Sukuk

OPALESQUE Islamic Finance Intelligence | December 17, 2009

Short Selling in Islamic Finance

OPALESQUE Islamic Finance Intelligence | December 17, 2009

Islamic Finance Theoreticians and Islamic Economists often get caught up in the doctrinaire. Rather than exploring the feasibility of an arrangement, they will find arguments against it based on legitimate (but to some extent overused) sources. In the case of short-selling, many would quote the truly famous hadith, where the Prophet (PBUH) was quoted to have said ‘Do not sell what is not with you.’ This hadith is the basis for much speculation about the inner meaning of Islamic Finance and has even been cited and misacted by Western Economists as a rationale for why Islamic Economic systems must be more stable than conventional. (see Kamali, Islamic Commercial Law: An Analysis of Futures and Options, chapter 10 for a deep discussion of this hadith). We can only point to the recent announcements of Dubai World as an example of the lack of stability of any system based on huge amounts of leverage, as well as an opportune time for discussing the mechanisms for a short-sale. Certainly, shorting DP World or Nakheel a few months back might have made perfect sense, given the questionable support of the Abu Dhabi government for the speculative excesses of its super-trendy neighbour..........

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