Académique Documents
Professionnel Documents
Culture Documents
France
2009 - The amendment of Article 2011 of the French
Civil Code relating to the formation of trusts was
interpreted as an important step towards permitting the
issuance of sukuk out of France
2010 - Revision of specific tax regulations covering
Sukuk, ijarah, istisna and murabaha with a view to
removing discrepancies
Source: KFH Research
Luxembourg
2010 - The Luxembourg Tax Authority published a circular to clarify
the tax treatment of murabahah and sukuk transactions, to ensure that
they benefit from the same tax treatment as conventional products
2011 - Luxembourgs CSSF published a note that clarified that no
specific legislation was required for Shariah compliant investment
funds, since Luxembourgs current law contains no obstacles to it.
Germany
2012 - German banking regulator hosted an Islamic finance conference
Hong Kong
2014- Hong Kong has raised $1bn in its debut Islamic bond issue.
SouthAfrica
2014- $500m sale was more than four times subscribed, with an order book
of $2.2bn according to the SA Treasury
Russia
2016- Opened first Islamic Bank, The Partnership Banking Center in
March 2016.
World Bank Group President Jim Yong Kim today opened the Global Center for Islamic Finance,
together with Turkish Deputy Prime Minister Ali Babacan.
Roadmap
I.
MARKET TRENDS
II.
III.
IV.
I. Market Trends
Note: The growth rates in this chart for each country are calculated on data stated in local currency terms. There are some missing data points for
Saudi Arabia and Turkey. Growth rates are non-annualised and captured for two quarters between end-2014 and 1H2015.
Source: PSIFI, IFSB.
Thomson Reuters Barwa Sukuk Perceptions & Forecast 2016. Industry at Crossroads
Demand for sukuk has been surpassing the level of sukuk issuances worldwide.
Core Components
Economic
and Social
Justice
Ethical and
Responsible
Finance
Risk Sharing
Finance
Risk
Sharing
Because interest is prohibited, pure debt security is eliminated from the system
and therefore suppliers of funds become investors, rather than creditors. The
provider of financial capital and the entrepreneur share business risks in return for
shares of the profits and losses.
The system introduces a materiality aspect that links financing directly with the
underlying asset so that the financing activity is linked to the real sector activity.
There is strong linkage between the performance of the asset and the return on the
capital used to finance it.
No investments in:
Function
Description
Amana
Custody
Trust. Placing something valuable in trust with someone for custody or safekeeping.
Bay al-Istisna
Bay-muajjal
Order to build
Deferred Payment
Bay al-Salam
Forward Contract
Ijarah
Leasing
Mudarabah
Trustee finance
contract
Murabahah
A cost-plus-sale
contract
Musharakah
Qard-al-hassan
Sukuk
Equity
partnership.
Benevolent Loan
Islamic Bond
Takaful
Wikala
Insurance
Agency
Partnerships
(mudarabah and
musharakah)
Liabilities
Demand Deposits
Investments by
Depositors
Securities
Investments
Fees
Capital
Assets
Liabilities
Trade Financing
(Salaam, Morabahah)
Demand Deposits
(Amanah/ Waad)
Leasing / Rentals
(Ijarah / Istisna)
Profit/Loss Sharing
Investments
( Mudarabah)
Equity Investments
( Musharakah)
Fee for Services
Investment Accounts
(Mudarabah)
Capital
Equity
Reserves
Specific
Laws
Same laws of
conventional
banks
Supervision
of IFIs
Specific rules
Dual Approach
Source: Song, Inwon and Carel Oosthuizen 2014, Islamic Banking Regulation and Supervision Survey Results and Challenges,
IMF Working Paper No. 14/220 (Washington: International Monetary Fund).
Source: Song, Inwon and Carel Oosthuizen 2014, Islamic Banking Regulation and Supervision Survey Results and Challenges,
IMF Working Paper No. 14/220 (Washington: International Monetary Fund).
Key Stakeholders
Islamic Development Bank Group (IDB, ICD, IRTI, ICIEC, ITFC)
Approved Standards
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Risk Management
Capital Adequacy
Corporate Governance
Transparency and Market Discipline
Supervisory Review Process
Governance for Collective Investment Schemes
Special Issues in Capital Adequacy
Guiding Principles on Governance for Islamic Insurance (Takaful) Operations
Conduct of Business for Institutions offering Islamic Financial Services
Guiding Principles on Shariah Governance System
Standard on Solvency Requirements for Takaful Undertakings
Guiding Principles on Liquidity Risk Management
Guiding Principles on Stress Testing
Standard On Risk Management for Takaful Undertakings
Revised Capital Adequacy Standard
Revised Guidance on Key Elements In The Supervisory Review Process of Institutions Offering Islamic
Financial Services
17. Core Principles for Islamic Finance Regulation (Banking Segment)
2. Guidance Note in Connection with the Risk Management and Capital Adequacy Standards:
Commodity Murabahah Transactions
3. Guidance Note on the Practice of Smoothing the Profits Payout to Investment Account Holders
4. Guidance Note in Connection with the IFSB Capital Adequacy Standard: The Determination of
Alpha in the Capital Adequacy Ratio
5. Guidance Note on the Recognition of Ratings by External Credit Assessment Institutions
(ECAIS) on Takaful and Re-Takaful Undertakings
6. Development of Islamic Money Markets (Technical Note)
Issued Standards
Accounting Standards
Auditing Standards
Ethics Standards
Governance Standards
Shariah Standards
Guiding Notes
Guidance Note on First time Adoption of AAOIFI Accounting Standards by an Islamic Financial
Institution
AUDITING STANDARDS
A S 1- Objective and Principles of Auditing
A S 2- The Auditors Report
A S 3- Terms of Audit Engagement
A S 4- Testing for Compliance with Sharia Rules and Principles by
an External Auditor
A S 5- The Auditors Responsibility to Consider Fraud and Error in an
Audit of Financial Statements
GOVERNANCE STANDARDS
G S 1-Sharia Supervisory Board: Appointment, Composition, Report
G S 2- Sharia Review
G S 3- Internal Sharia Review
G S 4- Audit & Governance Committee for Islamic Financial
Institutions
G S 5- Independence of Sharia Supervisory Board
G S 6- Statement on Governance Principles and Disclosure for
Islamic Financial Institutions
G S 7- Corporate Social Responsibility Conduct and Disclosure for
Islamic Financial Institutions
ETHICS
Code of Ethics for Accountants of Islamic Financial Institutions
Code of Ethics for the Employees of Islamic Financial Institutions
Key differences:
Legal framework to define the nature of Islamic banks and their specific
operating rules
Licensing
Corporate governance
Risk management
Bankers
Examiners and experts in the regulators
Liquidity management
Capital requirements
o
Alpha factor
BCBS vs IFSB standards
Importance of disclosure
o
o
o
Risk preferences
Performance criteria (PER, IRR)
More incentives for depositors to monitor the bank
Malaysian Initiative:
Islamic Financial Services Act (IFSA) 2013
Three key features
I.
II.
III.
Strengthened;
o
Safety Nets
Issues and Challenges
o
Safety Nets
Issues and Challenges
o
2.
3.
4.
Guidance Note in Connection with the IFSB Capital Adequacy Standard: The
Licencing Criteria
Full-fledged institutions
Islamic Windows
Regulatory treatment
Governance
Capital Adequacy
Risk Absorbency features
IFSB Approach
Retained unamended: CPIFR 1
Retained unamended: CPIFR 2
Retained unamended: CPIFR 3
Amended: CPIFR 4
Retained unamended: CPIFR 5
Retained unamended: CPIFR 6
Amended: CPIFR 7
Retained unamended: CPIFR 8
Amended: CPIFR 9
Amended: CPIFR 10
Amended: CPIFR 11
Amended: CPIFR 12
Amended: CPIFR 13
Amended: CPIFR 15
Amended: CPIFR 17
Amended: CPIFR 18
Amended: CPIFR 19
Amended: CPIFR 20
Amended: CPIFR 21
Amended: CPIFR 22
Retained unamended: CPIFR 23
Amended: CPIFR 25
N/A But CP23 replaced with CPIFR 26
Amended: CPIFR 27
Amended: CPIFR 28
Amended: CPIFR 29
Retained unamended: CPIFR 30
Amended: CPIFR 31
Retained unamended: CPIFR 33
New: CPIFR 14
New: CPIFR 16
New: CPIFR 24
New: CPIFR 26
20
40
60
80
100
120
140
160
180
176
Malaysia
84
Bahrain
78
66
Saudi Arabia
Oman
51
Pakistan
51
Kuwait
43
Qatar
38
Indonesia
Sudan
Source: State of the Global Islamic Economy Report 2015/16, Thomson Reuters
200
35
33
* CRITERIA
1. Financial (Size of Islamic Finance Assets and Number of Islamic Finance Institutions)
2. Governance (e.g. Regulation for Islamic Finance and Disclosure Index Score)
3. Awareness (Number of Related News Articles, Islamic Finance Education Institutions, Research papers, and events)
4. Social (Value of Zakat and Charity and CSR Disclosure Index Score)
nal
ds in
Shariah
Standards
Accounting
Standards
Shariah
Standards
Bahrain
Bahrain
Indonesia
Accounting
Standards
onesia
In
Oman
Jordan
Pakistan
Oman
Sudan
Qatar
Syria
Qatar Financial
Centre
Islamic
Development
Bank
Sudan
Syria
Islamic
Development
Bank
Source: AAOIFI website
d
Malaysia
Pakistan
Indicator Value
100
100
100
100
100
83
67
67
67
67
67
67
GOVERNANCE INDICATORS
TOP 10 COUNTRIES
1- BAHRAIN
2- MALAYSIA
3- KUWAIT
93
90
67
4- PAKISTAN
5- OMAN
6- INDONESIA
7- SUDAN
8- UNITED ARAB
EMIRATES
9- QATAR
10- MALDIVES
66
62
58
54
54
52
48
Key Challenges
Thank You
Disclaimers
2012 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC
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