This document provides an overview of Islamic banking and takaful (Islamic insurance) globally and in various countries. It discusses the key principles, products and modes of Islamic banking including mudarabah, musharakah, murabaha, ijarah, and sukuk. For takaful, it explains the origins and alternatives to conventional insurance, such as the mudarabah, wakalah and waqf models. It also outlines the major markets for Islamic banking and takaful, including Malaysia, GCC countries, Pakistan and the challenges and future growth prospects of the industry.
THE PROSPECT OF ISLAMIC FINANCE IN THE PHILIPPINESNcmf Halal
February 9, 2015, Lecture on The Prospect of Islamic Finance in the Philippines by NCMF Commissioner MEHOL K. SADAIN held at NCMF Social Hall, Central Office.
THE PROSPECT OF ISLAMIC FINANCE IN THE PHILIPPINESNcmf Halal
February 9, 2015, Lecture on The Prospect of Islamic Finance in the Philippines by NCMF Commissioner MEHOL K. SADAIN held at NCMF Social Hall, Central Office.
Islamic Capital Market is a long term market transactions are carried out in ways that does not conflict with the conscience of Muslims and Islam religion. It follows the religious law or Shariah compliance that is free from any activities prohibited by Islam such as usury (riba), coercion, ambiguity (gharar), and gambing (maysir). The Shariah Advisory Council (SAC) was established in May 1996 as advisor of the Comission on Shariah matters especially in Islamic Capital Market.
The Malaysia Islamic Capital Market has experienced phenomenal growth and raised the bar globally for product innovation and financial intermediation. Islamic financial system is running with conventional system has seen a continuous development in the Gulf cooperation council (GCC) countries. While it has also get success to attract financial centers of world big countries such as UK, USA, France, China, Italy, Korea, Singapore and Japan. Furthermore, this market comprises the Islamic equity sector and fixed income. Various Islamic Capital Market products are available especially for Muslims who only seek into invest and transact in it such as Islamic Unit Trust, Sukuk, Shariah Indices and warrants.
The common nature of taxation was mentioned and Islamic finance has to follow it no matter what. However, in being supportive to newly introduced financial system, Islamic finance has been given some initiatives to be compatible as well as on its way to strengthen the Malaysia’s economic on which perhaps aiming to be the central hub of Islamic finance.
Islamic Banking (IB)Definition:Islamic banking can be defined as: a form of modern banking based on Islamic legal concepts using risk- sharing as its main method excluding financing based on fixed pre- determined return.
Islamic Capital Market is a long term market transactions are carried out in ways that does not conflict with the conscience of Muslims and Islam religion. It follows the religious law or Shariah compliance that is free from any activities prohibited by Islam such as usury (riba), coercion, ambiguity (gharar), and gambing (maysir). The Shariah Advisory Council (SAC) was established in May 1996 as advisor of the Comission on Shariah matters especially in Islamic Capital Market.
The Malaysia Islamic Capital Market has experienced phenomenal growth and raised the bar globally for product innovation and financial intermediation. Islamic financial system is running with conventional system has seen a continuous development in the Gulf cooperation council (GCC) countries. While it has also get success to attract financial centers of world big countries such as UK, USA, France, China, Italy, Korea, Singapore and Japan. Furthermore, this market comprises the Islamic equity sector and fixed income. Various Islamic Capital Market products are available especially for Muslims who only seek into invest and transact in it such as Islamic Unit Trust, Sukuk, Shariah Indices and warrants.
The common nature of taxation was mentioned and Islamic finance has to follow it no matter what. However, in being supportive to newly introduced financial system, Islamic finance has been given some initiatives to be compatible as well as on its way to strengthen the Malaysia’s economic on which perhaps aiming to be the central hub of Islamic finance.
Islamic Banking (IB)Definition:Islamic banking can be defined as: a form of modern banking based on Islamic legal concepts using risk- sharing as its main method excluding financing based on fixed pre- determined return.
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This presentation gives basic orientation of Takaful to non insurance professionals and public at large. It was delivered to Pakistan Professional Forum Qatar
This is an analysis of the case study "Saudi British Bank: HSBC’s Saudi Arabian Experience" by me & Seema Singh, as students of SDMIMD as a part of their International Marketing course. This has insights on how HSBC adapted to Saudi's needs while trying to remain relevant in an Islamic Banking scenario.
Islamic Micro Finance is needed to empower Africans, There are different instruments for different level of poverty. There are four classes of the poor.
1. The active poor
2. The poor Destitute
3. The poor and
4. The poorest of the poor
Similar to Islamic finance (Revolution in the Making) 2014 (20)
The use of public office for private gain, or in other words, use of official position, rank or status by an office bearer for his own personal benefit.
Cost of corruption exceeds by far the damage caused by any other single crime
Trade globalizationInternational finance has become so interdependent and so interwoven with trade and industry that ... political and military power can in reality do nothing.... These little recognized facts, mainly the outcome of purely modern conditions (rapidity of communication creating a greater complexity and delicacy of the credit system), have rendered the problems of modern international politics profoundly and essentially different from the ancient."
Macroeconomic from a global economy viewAdel Abouhana
We study macroeconomic developments: growth, unemployment, consumption, investment, inflation, trade balances, exchange rates, etc.
Macroeconomics is an international discipline as most economies are not closed but open to trade in goods, services, labor, capital, technology, information (globalization).
Most countries are small open economies; some (U.S.) are large open economies. The world economy is interdependent and interconnected thanks to globalization
Adel Abouhana, ASA
A look at Qatar's Transformation, The Real Estate Perspective ...
GCC states on global stage;
Opportunity for emerging countries to enter new markets and geographies...
BONKMILLON Unleashes Its Bonkers Potential on Solana.pdfcoingabbar
Introducing BONKMILLON - The Most Bonkers Meme Coin Yet
Let's be real for a second – the world of meme coins can feel like a bit of a circus at times. Every other day, there's a new token promising to take you "to the moon" or offering some groundbreaking utility that'll change the game forever. But how many of them actually deliver on that hype?
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Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
1. Elemental Economics - Introduction to mining.pdfNeal Brewster
After this first you should: Understand the nature of mining; have an awareness of the industry’s boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industries’ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
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Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
STREETONOMICS: Exploring the Uncharted Territories of Informal Markets throug...sameer shah
Delve into the world of STREETONOMICS, where a team of 7 enthusiasts embarks on a journey to understand unorganized markets. By engaging with a coffee street vendor and crafting questionnaires, this project uncovers valuable insights into consumer behavior and market dynamics in informal settings."
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Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
2. Islamic products and services offered by 400+
Financial Institutions around the world
.
Germany:4
UAE: 13
- Bank Sepah
- Dubai Islamic Bank
- Commerz
Bahrain: 26 Abu Dhabi Islamic Bank9
Kuwait:
United States: 20
Bank
- HSBC Amanah
- Bahrain Islamic Bank
- Kuwait Finance
- Deutsche
- Al Manzil Financial
- Al Baraka
House
UK: 26
Qatar: 4
Bank
Services
- ABC Islamic Bank
- HSBC Amanah
- Qatar Islamic Bank
- American Finance House
Switzerlan
- CitiIslamic Investment
Finance
- Qatar International
- Failaka Investments
Bank
d: 6
- Al Baraka
Islamic
- HSBC
Iran: 8
International Ltd
Pakistan:
- Ameen Housing
- Takafol UK Ltd
21
Cooperative
- The Halal Mutual
India: 3
Turkey: 7
Investment Company
Bangladesh
- Faisal Finance
Egypt: 12
- J Aron & Co Ltd
:9
Institution
- Alwatany Bank of Egypt
(Goldman Sachs)
Malaysia: 49
- Ihlas Finance
- Egyptian Saudi Finance
2 - Pure Islamic Banks
Arabia: 17
Sudan: 9 SaudiHouse
(Bank Islam, Bank
- Al Rajhi
Muamalat)
- SAMBA
Rest - conventional
- Saudi Hollandi
Indonesia: 4
banks
- Riyadh Bank
Yemen: 5
ASA
3. International Overview
• The size of Islamic Financial Industry has reached US$ 800 Bln. and its
growing annually @ 15% per Anum.
• 71 countries have Islamic Banking Institutions
• 37 Muslim countries including Qatar, Kuwait, Bahrain, UAE, Saudi Arabia,
Malaysia, Brunei and Pakistan
• 34 non-Muslim countries including USA, UK, Canada, Switzerland, South
Africa and Australia
ASA
4. International Overview
Leading foreign Banks have opened Islamic Banking
windows or subsidiaries such as:
• Standard Chartered Bank
• Citibank
• HSBC
• ABN AMRO
• UBS
ASA
5. International Overview
• In Feb 1999, Dow Jones introduced the Dow Jones Islamic
Market Index (DJIM) of 600 companies world wide whose
business complies with Islamic Shariah laws
• At present there are more than 105 Islamic Funds operational
through out the world with a total fund base of over USD 8.50
billion
ASA
6. International Overview
• Governments of many Islamic countries have issued Islamic
Bonds (Sukuk) in order to facilitate Islamic Banks in managing
their liquidity.
• Issuance of these bonds has also paved the way for Shariah
compliant Government borrowings
ASA
7. International Overview
• Institutions like Accounting and Auditing Organization for Islamic Financial
Institutions (AAOIFI) and Islamic Finance Services Board (IFSB) have been
formed.
• These institutions are playing a key role in setting up and standardizing
Shariah , Financial and Accounting standards for Islamic Financial
Institutions.
• Due to these collective efforts Islamic banking is now recognized by IMF,
World Bank and Basel Committee.
ASA
9. Important Elements of Islamic Economics
•
•
•
•
•
•
•
Bai ( Sale & Purchase )
Ijarah ( Islamic Leasing )
Basic Mode of Financing ( Musharkah & Modarabah)
Takaful ( Islamic Insurance )
Sukuk ( Islamic Bonds )
Qard
Zakat & Ushar
ASA
10. PRODUCT TREE
Islamic Modes
Partnership Based
Modes
Musharaka
Mudaraba
Trade Based
Modes
Murabaha
Musawama
Salam
Istisna
ASA
Rental Based
Modes
Ijarah
Diminishing
Musharaka
11. Musharakah
• Characteristics
– All parties share in the capital
– All parties share profits as well as losses
– Profits are distributed as per agreed ratio
– Loss is borne by the parties as per capital ratio
– Every partner is agent of other
ASA
13. Mudarabah
• One partner (Rab al Mal) contributes capital and the
other (Mudarib) contributes his skills or services to
the venture
• Venture may for a fixed period or purpose
• Both share profit in pre-agreed ratio
• Loss is borne by Rab al Mal only, Mudarib loses his
services
ASA
16. Basic Rules of Bai
• Existence of Product/Commodity
• Ownership of Product/Commodity
• Possession of Product/Commodity
• Unconditional basis
• Product have value/Price.
ASA
17. Basic Rules of Bai
• Bai on Such product which is permissible in Islam.
• Product Must be Identify, clear with all demanding Qualities.
• Not based on any incident, struggle etc
• Price must be clearly identified.
ASA
19. Basic Kinds of Bai
•
•
•
•
Bai Eenna
Bai Touliya
Bai Wadhia
Bai Tawaruq
ASA
20. Type of Bai according to Quality
•
•
•
•
•
•
•
Bai Salah
Bai Fasid
Bai Batil
Bai Maqoof
Bai Majool
Bai Muqayaddah
Bai Mu’ajal
ASA
21. Introduction
“Takaful” is the Sharia Compliant brand name for
the Islamic alternative to conventional
insurance. Its based on the principle of Ta’awan
or mutual assistance. It provides mutual
protection and joint risk sharing in the event of
a loss by one of its member
ASA
22. Origins of Takaful
In the event of death caused by someone from
another tribe, the member of the offender’s
tribe would share the “ blood money”
(Feediah) to provide for the family of the
victim.
ASA
23. Why Insurance ?
Is Some thing wrong with Concept ?
• Risk Aversion
• Assuring others
• Risk sharing
ASA
24. From the Holly Quran
• The need for insurance is shown in the
following verse of The Quran.
“ Those of you who die and leave widows should
bequeath for their widows a year’s
maintenance and residence” (2.240)
ASA
25. From the Hadiths
• By Anas-bin-Malik, One day Prophet
Muhammad(PBUH) notced a bedouin leaving his
Camel without tying it. He asked the bedouin, “Why
don’t you tie down your camel”? The Bedouin
answered, “ I put my trust in Allah (SWT)”. The
Prophet (PBUH) then said,” Tie your camel first, then
put your trust in Allah(SWT)” <Tirmidhi>
ASA
26. What wrong with practice ?
The contract between the insurer & the insured
is technically wrong from the sharia
perspective because of
• Gharar (Uncertainty))
• Gambling (Qamar & Maisir)
• Interest (Riba)
ASA
27. Riba in Insurance
• Direct Riba
Excess on one side in case of exchange between the
amount of premium.
• Indirect Riba
The interest earned on interest based investments
ASA
28. Gharar
• Lexically it means uncertainty and technically
it means the uncertainty of the counteract or
the subject matter.
ASA
29. Different Models of Takaful
• Pure Mudarabah Model : The participants and
operator enter into modarabah Contract.
• Wakalah Model : An Agency Agreement is made
between participants and Operators on the basis of
Wakalah ( Agency agreements)
• Wakalah Based on Waqf Model : The participant's
donate the fund and operator charge an agency fee.
ASA
30. Wakala-Waqf Model
SHARE
Share
Holder
Wakalah
Fee
H O L D E R S’
F U N D (S.H.F.)
Mudarib’s
Share of PTF’s
Investment
Income
Investmen
t
Income
Management
Expense of
the
Company
Profit/Loss
Takaful
Operator
Investment by
the Company
WAQF
Participant
Operational
Cost of Takaful
/ ReTakaful
Investment
Income
Claims &
Reserves
Surplus
(Balance)
P A R T I C I P A N T S’ T A K A F U L F U N D
(P.T.F.)
ASA
31. Shariah Compliance
• Shariah compliance is an essential element in
Takaful .
• It is ensured through a Shariah Supervisory/
Advisory Board at the level of each Takaful
company.
• The role of the Shariah Board is vital in
meeting the specific demand of a public who
would not insure otherwise.
ASA
32. General Takaful Types
• General Takaful – offers all kinds of non-life
risk coverage. It is normally divided into
following classes:
– Property Takaful
– Marine Takaful
– Motor Takaful
– Miscellaneous Takaful
ASA
33. Types of Family Takaful
• Term Life Takaful
• Whole Life Takaful
• Endowment Takaful
• Universal Takaful
• Marriage Plan
• Education Plan
ASA
34. BANCATAKAFUL
• Background
• Range of Products
• Savings
→
Personal
Accident,
Homeowners’
Comprehensive,
Credit
Cards, etc.
• Financing, Individuals → Car Ijarah,
Housing Musharika, Mortgage Takaful.
• Financing, SMEs → Trade Credit Takaful,
Business, Office, Equipment, Assets.
• E-Commerce
ASA
35. BANCATAKAFUL (…Cont’d.)
Advantages of BancaTakaful:
• Facilitation Desk / Equipment.
• Fast Turnaround Time.
• One-Stop shop for Clients.
• Concept of Islamic Financial Supermarket.
• Value Added Services.
• Law of Large Numbers.
»Lower Contribution Rates.
»Attraction for Depositors.
ASA
36. ReTakaful
• Currently few ReTakaful companies worldwide offering a
relatively small capacity:
–
–
–
–
–
–
–
–
Sudan (1979) National Reinsurance.
Sudan (1983) Sheikhan Takaful Company.
Bahamas (1983) Saudi Islamic Takaful and ReTakaful Company.
Bahrain/Saudi Arabia (1985) Islamic Insurance and
Reinsurance Company.
Tunisia (1985) B.E.S.T. Re
Malaysia (1997) ASEAN ReTakaful International.
Dubai (2005) TakafulRe by ARIG.
Lloyds of London to have a ReTakaful Syndicate in 2007.
ASA
37. Takaful Pioneers
• Takaful started some 27 years ago in the
Middle East with the launching of two
companies:
– The Islamic Arab Insurance Co. (IAIC) in the UAE
and
– The Islamic Insurance Co. of Sudan
• But it took some time for the movement to
take shape.
ASA
38. Takaful Pioneers
• Later in 1984, Malaysia played a pioneering
role in setting the first Legal framework
specific to Takaful (Takaful Act).
• This was instrumental in the successful
launching of the Takaful movement in
Malaysia and in other countries of South East
Asia.
ASA
39. Takaful Operators
• The number of Takaful operators worldwide is now estimated
at:
• 108 Takaful companies
• 6 Retakaful companies
• In 35 Countries.
• Average growth rate higher than conventional
insurance companies (around 25%).
• Non–Muslims increasingly opting for Takaful products for
commercial benefits.
ASA
40. Takaful Premium
• Takaful is one of the fastest growing segments
in insurance (at around 20% pa. on average)
• World Takaful contributions are conservatively
estimated at around US$ 3billions, of which:
– 60% General Takaful
– 40% Family Takaful
ASA
42. TAKAFUL - TARGET MARKET
• People who do not insure due to
religious reasons.
• People who insure and are insensitive to
religious reasons.
• People who currently do not insure at all.
ASA
45. Challenges
• Business Model Dilemma
• Could create an uneven / unfair business
environment to operate
• Need to reach a consensus internationally on a
common and standard Takaful business model
• Poor Insurance penetration in the Muslim
countries (<1% of GDP).
ASA
46. Takaful Best Practices
• Regional Takaful institutions and organisations need
to come together internationally in order to promote
and standardise best practices within the industry:
–
–
–
–
Islamic Financial Services Board (IFSB)
ASEAN Takaful Group (ATG)
International Takaful Association (ITA)
Accounting and Auditing Organization of Islamic Financial
institutions (AAOIFI)
ASA
47. Growth Outlook
• World Muslim population is estimated at 1.5
billions, of which around 97% are based in
Asia and Africa.
• A two-digit growth in the range of 15% to 20%
can be reasonably sustained for at least the
next 10 years in the existing markets (Far and
Middle East).
ASA
48. Takaful Prospects in Pakistan
• 97% Muslim population.
• Demand for insurance increasing with increase in per capita
income.
• Personal lines insurance business (leasing, health, Medicare)
growing at a higher rate than other conventional classes.
• Islamic banking on sound footing with support of the Govt.
ASA