Noman Islamic Fin Misc

8/6/2019 Noman Islamic Fin Misc

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Islamic Finance

Compiled By:

Noman H ChowdhuryPGD-IF(IIBI,UK),MBA(IBA),BSc(BUET)


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Presentation Outline

List of sites referred to in this presentation

Why alternative/Islamic Finance

Prospect/Potential of islamic finance Demand of islamic finance graduates


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Why Alternative/islamic Finance-1

Islamic Financial Institutions (IFIs) have been lessaffected by the global recession, according to a surveycarried out by MTI Consulting.

-http://www.arabnews.com/?page=6&section=0&article=129198

Around 62 percent of the survey respondents citedthey had experienced little or no impact from therecent crisis which has ravaged banks and financial

institutions worldwide. The survey respondentsincluded CEOs and managing directors of Islamicfinance institutions from various countries in theMiddle East and South Asia.



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The collapse of leading Wall Street institutions,

notably Lehman Brothers, and the subsequent

global financial crisis and economic recession, are

encouraging economists world-wide to consideralternative financial solutions. - Prof. Rodney Wilson

-http://www.islamonline.net/servlet/Satellite?c=Article_C&pagename=Zone-English-Muslim_Affairs%2FMAELayout&cid=1230650190574


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In contrast to conventional banks, no Islamic bank

has failed and has needed government

recapitalization which ultimately becomes a burden

on hard pressed taxpayers.In Iran where all financial operations have been

shariah-based since the Law on Usury Free Banking

was introduced in 1983, banks have been relativelyinsulated from the financial crisis -Prof. Rodney Wilson-http://www.islamonline.net/servlet/Satellite?c=Article_C&pagename=Zone-English-

Muslim_Affairs%2FMAELayout&cid=1230650190574


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Thus, if profitability declines in an economic

downturn, depositors receive lower returns, but if

profits rise they enjoy higher returns.

This profit sharing reduces risk for the banks andmeans they are less likely to become insolvent.

-Prof. Rodney Wilson



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With irresponsible banking practices taking the

blame for bringing about the global economic

crisis, there has been a surge of interest in Islamic

finance.-http://edition.cnn.com/2009/BUSINESS/08/25/islamic.finance/index.html


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"Islamic economists believe that if the principles of

Islamic finance were followed the crisis wouldn't

have happened. We are seeing a lot of non-Muslim

countries, including the UK, France, Japan, Hong

Kong and Singapore encouraging Islamic finance,"

Professor Habib Ahmed(Durham University,UK)

"People think the Islamic system is based on faith,but it's based on justice" he said.http://edition.cnn.com/2009/BUSINESS/08/25/islamic.finance/index.html


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it is the ethics underpinning Islamic finance that

are attracting the interest of conventional finance

institutions keen to learn lessons from the banking

crisishttp://edition.cnn.com/2009/BUSINESS/08/25/islamic.finance/index.html


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This crisis of 2008 is unprecedented in its nature.Even the well-established and what is considered"too big to fail" financial institutions are being

badly affected by the crisis (Citibank, LehmanBrothers and AIG, just to name a few)

Despite slowing down, the top ten Islamic bankscontinued to show encouraging performance byrecording an average annual growth of around 30percent for 2008.

http://www.islamonline.net/servlet/Satellite?c=Article_C&cid=1234631361330&pagename=Zone-English-Muslim_Affairs%2FMAELayout


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The current crisis seems to highlight the weaknesses of the

conventional banking and finance philosophy on which the

global financial system is built upon.

The conventional system allows multiple debt creation on aparticular asset without a real underlying transaction

Quite the contrary, Islamic finance requires that financial

dealings must be backed by real assets and be in line with

the Islamic law, Shariah.http://www.islamonline.net/servlet/Satellite?c=Article_C&cid=1234631361330&pagen

ame=Zone-English-Muslim_Affairs%2FMAELayout


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The Islamic economics model in general, and

Islamic banking and finance in

particular, are viable options as the search for

more stable and safer global financial

infrastructure continues.http://www.islamonline.net/servlet/Satellite?c=Article_C&cid=1234631361330&page

name=Zone-English-Muslim_Affairs%2FMAELayout


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http://www.islamonline.net/servlet/Satellite?c=Article_C&pagename=Zone-

English-Muslim_Affairs%2FMAELayout&cid=1230650190574

Why Islamic Banking Is Successful? e of Financial Crisis

By Prof. Rodney Wilson

Rodney Wilson is director of postgraduate studies at DurhamUniversity. Formerly visiting professor at the Universities ofKuwait and Paris, the International University of Japan, and

the Qatar Foundations Qatar Faculty of Islamic Studies, heis a world expert on Islamic economics and finance, MiddleEastern political economy, and the political economy of oiland gas. He currently chairs the academic committee of theInstitute of Islamic Banking and Insurance in London and isacting as consultant to the Islamic Financial Services Board

with respect to its shariah governance guidelines.


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Prospect/potential of Islamic Finance-1

Islamic finance makes up only small part of the

world finance industry currently, and is estimated

to be worth around $700 billion globally. However

the industry has been growing at 20-30 percent

annually since 2000 and is set for continued strong

growth despite the global slowdown. Industry

experts and financial institutions predict Islamicassets will reach a whopping $1.6 trillion by 2012



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There are already five wholly Islamic banks in

London, and the first Islamic bank will open in

France in 2009. According to the conservative

estimates of the Banker in October 2008, Islamicfinancial assets globally exceed $500 billion, a

figure that could easily double over the coming

decade.-Prof. Rodney Wilson



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None of these institutions has been affected by the

global financial crisis, and their resilience bodes

well for the future.

Islamic Bank of Britain has been operating as aretail bank for over four years, and has attracted

over 40,000 customers. HSBC Amanah, the Islamic

finance subsidiary of HSBC, has been operating forten years in London.

-Prof. Rodney Wilson

http://www.islamonline.net/servlet/Satellite?c=Article_C&pagename=Zone-

English-Muslim_Affairs%2FMAELayout&cid=1230650190574


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Meanwhile, the industry has ballooned to more

than $1,000bn, stretching their capacity to examine

every product and instrument

-FINANCIAL TIMES TUESDAY DECEMBER 82009

Islamic finance has been growing by 15 to 20

percent per year for some time and there is a lot of

interest at the moment. People are looking foralternatives after the economic crisis.

http://edition.cnn.com/2009/BUSINESS/08/25/islamic.finance/index.html


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While conventional banks consolidate and retrenchworkers, Islamic banks particularly in the Gulf

Coopeartion Council countries continue to expand

and recruit new workers.http://www.islamonline.net/servlet/Satellite?c=Article_C&cid=1234631361330&pagename=Zo

ne-English-Muslim_Affairs%2FMAELayout


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While conventional banks worldwide are nursinglosses of more than $400 billion from the credit

crisis, Islamic banks are virtually unscathed.

Surprisingly, Islamic banks, such as Al-Rajhi Bank of

Saudi Arabia, Kuwait Finance House, Dubai Islamic

Bank and Maybank Islamic, grow steadily during

the crisis.

http://www.islamonline.net/servlet/Satellite?c=Article_C&cid=1234631361330&pagename=Zo

ne-English-Muslim_Affairs%2FMAELayout


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http://ibfmalaysia.blogspot.com/2009/11/top-500-islamic-financial-institutions.html

Islamic banking assets continued double-digitgrowth this year, even as conventional bank growth

stagnated, according to The Banker's "Top 500

Islamic Financial Institutions" survey, published in

association with HSBC Amanah.

Assets rose by 28.6%, to $822bn from $639bn in

2008. This is in striking contrast to The Banker's

2009 "Top 1000 World Bank Rankings" released inJuly, which showed annual asset growth of just

6.8% at conventional banks.



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David Dew, Deputy CEO of HSBC Amanah, said:

"It is important that the Islamic Finance industry

continues to analyse its growth critically if it is tobecome a truly credible alternative to conventional

banking in a significant number of markets.



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Grais & Pellegrini (2006) reported that the globalIslamic financial services industry consisted of 284institutions offering Islamic financial services (IIFS)

operating in 38 countries, both Muslim and non-Muslim.

Sol (2007) identified that there were more than300 Islamic financial institutions spread over 51

countries, plus well over 250 mutual funds thatcomply with Islamic principles.



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The major contributors to asset growth for Islamic

funds: Gulf Cooperation Council (GCC) countries

(US$262.7bil);

Asia (US$67.1bil); Australia/Europe/the United States (US$35.3bil);

and non-GCC Middle East countries, Middle Eastand North Africa (US$248.3bil).


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GLOBAL ISLAMIC BANKINGASSETS


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MARKET SHARE


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SUKUK GLOBAL ISSUANCE


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Demand of Islamic Finance Graduates-1

The top five scholars make up almost a third

of all the 956 sharia board positions, a recent

report by Funds@Work says, and the top

three each sit on more than 60 boards each FINANCIAL TIMES TUESDAY DECEMBER 8 2009


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Now, a slew of academic courses arespringing up to meet the demand of those

wanting to break into an expanding market

"There is a huge demand for Islamic finance

courses now, so large that it's difficult to cope

with," Professor Habib Ahmed,Durham

University, England, told CNNhttp://edition.cnn.com/2009/BUSINESS/08/25/islamic.finance/index.html


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With students coming from Asia and the MiddleEast to get the qualifications that will help them

take advantage of the Islamic finance boom,

Ahmed says it is difficult for universities to findqualified teaching staff. "Most people with PhDs in

Islamic finance are working in the industry, making

a lot of money," he told CNN. http://edition.cnn.com/2009/BUSINESS/08/25/islamic.finance/index.html


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This September will see new courses andpostgraduate qualifications in Islamic finance

springing up throughout the UK and elsewhere in

Europe, reflecting the fact that it has become one of

the fastest-growing sectors of the global bankingindustry.

http://www.guardian.co.uk/education/2009/jul/28/business-

schools-islamic-finance


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Khalid El Sheik applied for Bangor's Islamic financeMA because, having taken a first degree in computer

science in Sudan before switching to a career in

marketing, he saw it as a chance to mark himself outfrom other students and to have a head start in an

area that was likely to offer plenty of future

employment opportunities. His fellow students at

the university, including one from China, had thesame idea, he says.

http://www.guardian.co.uk/education/2009/jul/28/business-

schools-islamic-finance


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Noman Islamic Fin Misc