8/8/2019 Islamic.banking-The Common Perception&Future Prospects by Karimi.k http://slidepdf.com/reader/full/islamicbanking-the-common-perceptionfuture-prospects-by-karimik 1/48 Al Huda Int·l Conference 2010 ISLAMIC BANKING: The C ommon P erception & The F uture Prospects A bdul J abbar K arimi HMB-Islamic Banking Division [email protected]Alhuda Conf. 8-9 June¶ 2010 1 Islamic Banking: The Common Perception & the Future Prospects by : A. J. Karimi
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8/8/2019 Islamic.banking-The Common Perception&Future Prospects by Karimi.k
T he Basic Knowledge of ShariahPrinciplesAccounting & Shariah Standards byAAOIFIPsychological Marketing / Withreference to Quran + SunnahT he mean to achieve the end must beright & Justified for a Muslim
Alhuda Conf. 8-9 June¶ 20105Islamic Banking: The Common Perception & theFuture Prospects by : A. J. Karimi
How to mak e t he custom e rs p e rc e ption in t he
d e sir e d dir e ction?
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Alhuda Conf. 8-9 June¶ 2010Islamic Banking: The Common Perception & theFuture Prospects by : A. J. Karimi9
S h aria h Risk: A Uniqu e IB Ch aract e ristic
Basic Knowledge of Islamic InvestmentFirm Belief + Assurance (Haqq ul Yaqeenor Ainul Yaqeen)Commitment at all levels
CONFIDE
NCE
OF DEP
OSI
TORS & SAVERS³ A bank licensed as an Islamic Bank may be running on a very
sound financial footing. However, if the depositors came toknow that the Bank has violated its Shari¶ah mandate, thedepositors will lose confidence and the finding will trigger
deposit withdrawal and probably collapse of the bank. Bycontagion effect this can lead to financial instabilitythreatening economic development.´
8/8/2019 Islamic.banking-The Common Perception&Future Prospects by Karimi.k
³ Islamic Banking is interest free Asset³ Islamic Banking is interest free AssetBacked banking governed by theBacked banking governed by the principles of Islamic Shariah´ principles of Islamic Shariah´
³³ The ends of the both banking systems are same but onlythe means to achieve these ends are different as onesystem is God given in contrast to its rival system whichis ma made .´.´
((KarimiKarimi , Abdul Jabbar , Abdul Jabbar-- µIslamic Banking :A necessary system , published inµIslamic Banking :A necessary system , published inthe Finance & Business Review , The News , the Finance & Business Review , The News , 18th Jun¶ 200118th Jun¶ 2001))
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Islamic products and s e rvic e s off e r e d by 300+Financial Institutions around t he world
Note: Figure indicates number of Islamic FIs in the country. Only some of the key FIs are shown for eachcountry
U nited States: 20- Al Manzil Financial Services- American Finance House- Failaka Investments- HSBC- Ameen Housing Cooperative
Germany: 3
- Bank Sepah- Commerz Bank- Deutsche BankSwitzerland: 6
U K: 26 (primarily branches of Gulf and glo
bal banks)- HSBC Amanah Finance- Al Baraka International Ltd- Takafol UK Ltd- The Halal Mutual InvestmentCompany-J Aron & Co Ltd (GoldmanSachs)-Britain Islamic Bank
Bahrain: 26- Bahrain Islamic Bank- Al Baraka- ABC Islamic Bank- CitiIslamic Investment Bank
According to µThe Banker¶s 2009 survey , the volume of the
Shariah Compliant Assets of the top 500 Islamic FinancialInstitutions grew by 28.6% rising to US$822b n from $639 in2008 at a time when the top 1000 World Banks¶ assets slumped to6.8% from 21.6% from the previous year.
The Shariah Compliant Assets are projected to grow to US$1 .60
trillion by 20 1 2.
Sukuk (Islamic Bond) Issuance expected to hit US$200 Billion by2010
The opportunities to tap the surplus funds of oil rich Muslimnations is strong as many non Muslim countries are trying to tap itincluding , Japan , UK , Singapore , France , Hong Kong US , Germany , Australia , Thailand , etc.
Global Scenario««.
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The United Kingdom has emerged as a leading centre for offeringIslamic Financial Services (IFS) as at present there are 22 banks in
UK offering Islamic Financial Services , out of which 05 are fullyShariah Compliant (4 wholesale & 1 retail bank).
Lloyds TSB Bank PLC (LYG ) , Britain's fourth-largest , recentlyintroduced Islamic mortgage products to cater to Britain's 2.5million Muslims.
France by indicating the adjustments in its legal and fiscalframework aims to the development of Islamic Finance to cater thefaith-based clientele in the country in addition to gain attention of Middle Eastern Investors holding abundant liquidity. (report byStandard & Poor , 2009)
German state became the first European government body to issuean Islamic bond last year -- a $121 million.
Global Scenario««.
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Islamic Banking In Pakistan: An OverviewThe Islamic banking market in Pakistan continued to expand during
the last year as well and the assets growth has registered 59% p.a.growth since 2005 as stated by Deputy Governor SBP.A sse t s = about PKR 370 bn + (Industry Share constitute 5.60%)D ep o si t s = about PKR 280bn + (Industry Share constitute 5.90%)
F inancing and I nves t men t = about PKR 230 bn +(Industry Shareconstitute 4.30%)
Projected growth for the next 5 years of Islamic Banking is 15%to 20% per annum.
The Islamic Banking Market share would reach 12% by 2012 as per strategy plan of SBP
In 2008 the assets of Islamic Banking increased by 34% ascompared to the assets of overall industry by 8.8%. (SBP Bulletin)
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1 . A FE W SAYI NG S BY KEY PLAYERS F O R ISLAMI C BA N KI NG«««
"There is a segment within the current market that wouldswitch to Islamic if the quality and benefits offered were asgood as conventional financial products, " says R ayFerguson, CEO of Standard Chartered Bank U AE inDubai.
³A conservative approach to risk and a close link betweenthe financial sector and real assets has helped shield thesector from the worst of the credit crisis,´ said. BrianCaplen , An editor of a London-based magazine
"Islamic banking isn't just for conservative or radicalMuslims. It's mainstream business now, "That's why everybank wants a bigger piece of it. "says R oss Mohamad Din , director of HSBC Amanah
Malaysia
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³O you who believe, Fear Allah and give up what remains of ³O you who believe, Fear Allah and give up what remains of your demand for Interest, if you are indeed a believer. If you doyour demand for Interest, if you are indeed a believer. If you donot, then you are warned of the declaration of war from Allahnot, then you are warned of the declaration of war from Allahand His Messenger; But if you turn back you shall have your and His Messenger; But if you turn back you shall have your principal: Deal not unjustly and you shall not be dealt withprincipal: Deal not unjustly and you shall not be dealt withunjustly.´unjustly.´
Al Baqarah 278 Al Baqarah 278 - - 279 (Fourth Revelation)279 (Fourth Revelation)
Motivating Factor- F e ar
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From Hazrat Abu Hurayrah (RA):From Hazrat Abu Hurayrah (RA):The Prophet, peace be on him, said:The Prophet, peace be on him, said:
"Riba has seventy segments, the least"Riba has seventy segments, the leastserious being equivalent to a manserious being equivalent to a mancommitting adultery with his owncommitting adultery with his ownmother. " mother. "
(Ibn Majah)(Ibn Majah)
Motivating Factor- F e ar
What Hadith says about Riba?
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15 million Muslims residing in non-Islamic countries inEurope, mostly in France, Germany and in UK. Andmembers of this community were not getting benefitfrom the conventional banking
Sizable proportion who will only avail financial servicesif assurance of Shariah Approval is given
The Oil Rich Middle East, which has a huge potentialfor investing in a Shariah approved financial system
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To address the challenges facing the IB industry including«
Diversification & Innovation in financial structures whileadhering the Shariah credentials+
Standardization of products in the country and then acrossthe globe+
Enhance understanding and capacities of IB Riskmanagement +
An acceptable solution of liquidity placements..+
HR Training by having education of Islamic Finance at alllevels«Ref: For More Info. Read my article, ́ CHALLENGES FACING ISLAMIC BANKS¶ Published inDAWN on 04th December ¶2006 ( http://www.dawn.com/2006/12/04/ebr12.htm ), onhttp://www.nzibo.com/governance.html ), (www.gcu.edu.pk/library/NI_Dec06.htm - 219 k) andwww.bankseta.org.za/downloads/IEDP_UK_2007_%20Islamic_Finance_Research_Report.pdf
For having desired Future prospects«
8/8/2019 Islamic.banking-The Common Perception&Future Prospects by Karimi.k
The Main Motivating Factor and Driver of The Main Motivating Factor and Driver of Islamic Banking «..Islamic Banking «..
InIn anticipationanticipation of of ROIAROIA andand inin anan efforteffort toto abideabide byby thethe prohibitionprohibition of of Riba,Riba,aa surprisinglysurprisingly increasingincreasing number number of of MuslimMuslim depositdeposit holdersholders allall acrossacross thetheworld,world, havehave nonnon--interestinterest bearingbearing accountsaccounts andand theythey refrainrefrain fromfrom InterestInterestBasedBased BankingBanking. .
ThisThis willwill alsoalso gogo truetrue for for Af ghanistan asas wellwell««««.. ..
TheThe rewardsrewards inin thisthis lifelife andand especiallyespecially inin thethe lifelife hereafter hereafter areare thethe mainmainmotivatingmotivating factorsfactors for for themthem. .
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Future Prospects by : A. J. Karimi
³ R O I A ´
C oncluding Point
8/8/2019 Islamic.banking-The Common Perception&Future Prospects by Karimi.k