Islamic Banking

The Securities & Investment Institute (SII) has signed an agreement with the Institute of Islamic Banking and Insurance (IIBI) to promote the UK as the hub of Islamic finance.

The London-based IIBI is one of the world’s leading independent organisations dedicated to the development and implementation of Islamic finance, achieved through education, training, research and publications.

The SII and IIBI will share their expertise and advocate the services of each other. As part of the deal, the IIBI will encourage its members to study for the SII’s ground-breaking Islamic Finance Qualification (IFQ) as an entry level exam in the field. The SII will promote the IIBI’s Diploma and post graduate Diploma in Islamic finance as qualifications for further progression for students following achievement of the IFQ. IIBI and the SII may choose to also develop a long-term strategy to include market research and demand relating to specialist Islamic Finance modules such as Sukuk (Islamic bonds).

The SII managing director, Ruth Martin, said: “We are delighted to work with the IIBI to promote our common goals for the development of Islamic finance skills within the UK.”

Mohammad A. Qayyum, director general, IIBI, said: “We are looking forward very much to working closely with SII in strengthening the UK’s position as the leading centre for Islamic finance qualifications. The agreement with SII will undoubtedly afford greater scope of advancement of competent persons in the Islamic financial services industry.”

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With global finance on its knees, this summer’s business graduates face an even trickier jobs market than most. But there is one area of banking still experiencing boom time – Islamic finance – and universities have been quick to grasp its possibilities.

This September will see new courses and postgraduate 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 banking industry, expanding by between 15% and 20% a year. Assets held by institutions adhering to Islamic finance principles now amount to nearly 1 trillion dollars.

In the UK, interest in the sector also reflects the government’s commitment to promoting Britain as an Islamic finance centre. The UK already leads Europe in the number of Islamic finance training courses it offers, from entry to postgraduate level, and in 2006 saw the launch of the Islamic Finance Qualification, a joint initiative between a Lebanese business school and the Securities and Investment Institute.

London gateway

Last December, the Treasury published a paper setting out the government’s aim for London to be “Europe’s gateway to international Islamic finance”. This acknowledged that the industry was still young and therefore not yet experiencing skills shortages, but predicted that it soon would be. It stated: “The pool of potential applicants in the UK will have to keep up with the rapid growth of the market.”

Universities have responded enthusiastically. Newcastle University is offering an MSc in finance and law with Islamic finance from next academic year. Henley Business School at the University of Reading has been offering an MSc in investment banking and Islamic finance since last year, with students spending the second part of the year in Kuala Lumpur. The University of Bangor in Wales has also been running its Islamic finance MA and MSc for a year and is considering introducing a new MBA in the subject, while the first students to take an Islamic finance option as part of an executive MBA offered in Dubai by Cass Business School will graduate this summer. Durham, which has been offering postgraduate research degrees in Islamic finance for some time, is now introducing a taught MA and MSc (the MSc is more quantitative), to respond to demand. Elsewhere in Europe, Reims Management School is offering a new specialist course in Islamic banking and finance for students on its masters in management programme, taught in English.

Student demand is driving the subject as much as any urging from governments. According to Rodney Wilson, founder and director of the Islamic finance programme at Durham, it is coming mainly from south-east Asia, particularly Malaysia, and the Middle East, although there is plenty of interest from the UK as well.

Joanna Gray, professor of financial regulation at Newcastle Law School, says she is keen that their new degree course is not just seen as something for Muslims. “It’s for anyone interested in a fast-developing industry that in the UK has been quite busy in the past few years to accommodate forms of investment in finance that are sharia-compliant.”

Sharia principles

Islamic finance really dates from the mid-1970s, with attempts to make products available through conventional banking, such as loans and mortgages, compatible with sharia principles. Sharia law prohibits any transaction that involves paying interest or investing in certain economic sectors such as gambling or pornography. It demands that both the investor and recipient of the investment must share any risk, and transactions have to be underpinned by tangible assets.

In the years immediately after 9/11, anything involving money and Muslims was viewed with suspicion by many in the west because of fears about terrorism, and Islamic finance is still taking off faster in the UK and France than in the US. But in the current global financial climate the principles it is based on have struck a chord.

“There is an extent to which, to a westerner, Islamic finance products look very similar to ethical finance products,” says Stefan Szymanski, professor of economics at Cass. “There is a demand for morally upright investment vehicles, and Islamic finance is the Islamic version of that.”

Philip Molyneux, head of the business school at Bangor, suggests that even if western banks do not want to introduce specific Islamic finance products – and an increasing number do – they still want to know how it is that many Islamic institutions escaped the worst effects of the credit crunch.

He has been surprised that demand for the MA and MSc has come not just from recent graduates and bankers wanting to improve their career prospects, but also from sharia scholars, who play a key role in Islamic finance. Any new financial product must be passed by them as sharia-compliant, so many financial institutions must now have scholars standing by ready to give their verdict. These scholars often disagree, and can even change their minds, but this offers plenty of scope for the kind of intellectual arguments that universities relish, not to mention graduate jobs.

On the whole, most of the new Islamic finance courses steer well clear of religious issues in favour of legal and financial questions because these are what most interest students. Khalid El Sheik applied for Bangor’s Islamic finance MA because, having taken a first degree in computer science in Sudan before switching to a career in marketing, he felt his CV needed a business boost. He saw it as a chance to mark himself out from other students and to have a headstart in an area that was likely to offer plenty of future employment opportunities. “I had read about Islamic banking and how it was going to increase in future, and how most of the banking sector is now looking to it,” he says. His fellow students at the university, including one from China, had the same idea, he says.

Szymanski agrees that it is the idea of the moment in many universities, and while Cass is still waiting to see how the market develops before introducing any similar courses, it is certainly considering the possibility.

“You just have to measure how many billions of dollars Islamic finance already handles in a year,” he says. “If that grows over the years, it will become a universal part of every business school.”

By: Harriet Swain - Guardian.co.uk

The Institute of Bankers of Sri Lanka (IBSL) has launched the first Diploma Course in Islamic Banking with the assistance of the country’s pioneering institution in Islamic Financial Services, Amana Investments Limited. The Amana resource pool has facilitated the course by designing the Diploma structure, including its contents, practical knowledge and training. The IBSL has included the Diploma in Islamic Banking (DIB) as one of its core Diplomas for the year 2009, and has selected Amana Investments as its Strategic Partner to provide the resource personnel for this course.

The course structure is based on research conducted by M.Z.M. Sheroz, Amana’s Training Officer, on the GAP analysis, the training need analysis and projection of core competencies for the finance sector in 2009.

The course includes a 92 hour comprehensive study spread over 6 months, covering areas such as origins of Islamic Finance, Sources of Sharia Law, Islamic Economic Theory and Applied Economics, Islamic Financial Products and their respective documentation, Principles of Sharia Accounting, Risk Management, as well as Islamic Takaful (Insurance) and Capital Markets. The DIB programme has already begun with its first batch of students. It has generated an overwhelming response of over 60 students, including employees of conventional banks. The course director and lecturer for the programme is Mr. Fairoze Burah, head of HR and Administration at Amana Investments. He is supported by Mr. Moulavi Siraj, Sharia Supervisor at Amana and other senior managers of the Amana Group. Other local Islamic Finance professionals are also invited as guest lecturers during the program. Mr. Burah is a qualified HR practitioner and training specialist, having over 20 years of experience in his field. He holds a Master of Business Administration (MBA) degree specialising in Human Resources Management from the Postgraduate Institute of Management, University of Sri Jayewardenepura, and conducts regular skills development training programmes. Mr. Moulavi Siraj has a BA in Islamic Finance from the International Peace University, Capetown, South Africa and also a Diploma in Comparative Religions from the Islamic Propagation Centre International, Durban. Mr. Siraj is proficient in all aspects of Sharia and has previous teaching experience at the Asian Institute of Management.

Explaining why Amana joined hands with IBSL, Burah said “IBSL is one of the best regarded institutions when it comes to banking studies, and most students find the institute very accessible. The Diploma itself is affordably priced. We want the youth to embrace and benefit from Islamic Finance as it has the potential of being a US$ 4 trillion industry”. He added, “the course learning is evaluated by individual assignments, group projects and presentations, student journals as well as periodic examinations up to the final exam.”

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From Ahmad Farizal Abdul Hajat

COLOMBO, Nov 28 (Bernama) — Sri Lanka is now well positioned to become a producer and supplier in Islamic banking and financial professionals with the newly established Faculty of Islamic Banking and Finance, International Centre for Education in Islamic Finance (INCEIF)’s chief executive officer Agil Natt said today.

He said the faculty was the first in the country and established as an affiliate between INCEIF and Sri Lanka-based Ceylinco Sussex Business School (CBS) to offer the Certified Islamic Finance Professional (CIFP) qualifications.

This, according to Agil, will develop the human capital needs for the Islamic financial services industry in Sri Lanka as well as those of neighbouring countries.

"The idea of establishing this faculty is to meet the needs of human capital, qualified in Islamic banking and finance, for the rapidly expanding global Islamic financial services industry," he said.

"Together with CBS, INCEIF hopes to drives the industry in Sri Lanka and help build up a meaningful pool of Islamic professionals, bankers and takaful operators with sound grounding of Syariah and corporate finance," he told Bernama after the signing of an agreement between INCEIF and CBS here.

INCEIF was represented by its chairman Dr Rozali Mohamed Ali and Agil while representing CBS were its chairman Dr Lalith Kotelawala and deputy chairman K.A.S. Jayatissa.

Bank Negara Malaysia’s deputy governor Datuk Mohd Razif Abdul Kadir and the Malaysian High Commissioner to Sri Lanka, Nazirah Hussain, witnessed the signing.

The agreement marked the appointment of CBS as the education provider and marketing agent for INCEIF in Sri Lanka.

The new faculty will be the latest addition of CBS, which is currently involved in producing professionals in the finance, accountancy, marketing, management and information technology fields.

Sri Lanka, with about 77 percent of its population Buddhists and Muslims constituting 8.5 percent, is one of the few non-Islamic countries to have legislations for Islamic banking.

The revised Banking Act No. 30 of 1988, amended in 2005, allows both commercial banks and specialised banks to operate on a Syariah-compliant basis.

Sri Lanka has 22 commercial banks, comprising two large state-owned banks — Bank of Ceylon and Peoples Bank — together with nine private banks and 11 foreign banks.

Their total assets as at end of July 2005 was US$11.76 billion. The two-state banks accounted for about 48 percent of the total assets while the foreign banks accounted for 14 percent.

The takaful concept in insurance is now experiencing increasing market acceptance in Sri Lanka.

The country has 13 licensed insurance companies, including a takaful operator named Amana Takaful.

According to a spokesperson for Sri Lanka’s insurance business, two of the country’s largest insurance operators have plans to offer takaful products to the market.

INCEIF was established by Bank Negara Malaysia in December 2005 to contribute towards the global development of human capital that is required to support the future growth and development of the global Islamic financial industry.

With the aim of producing high-calibre practitioners and professionals in Islamic finance as well as specialists and researchers, INCEIF has become a platform for training in this area.

– BERNAMA

With the increasing demand for Islamic banking in the country, there is a need for trained bank staff with the right qualifications to undertake Islamic banking based on Shariah principles and methodologies, said Dr Ishrat Husain, governor, State Bank of Pakistan (SBP), here on Monday.

The governor, while inaugurating the First Islamic Banking Certificate Course at the National Institute of Banking & Finance (NIBAF), Karachi Campus, said the State Bank was implementing in letter and spirit the decision of the Supreme Court regarding the Riba-free banking in the country.

He said that they would provide a level playing field for the conventional and Islamic banking in the country. Islamic banking would run parallel to the conventional banking and it is upto the people of Pakistan to choose which type of banking they would adopt, he said and added: “We need to encourage growth of genuine Islamic banking in the country.”

Dr Ishrat Husain said the State Bank had taken a number of steps for the promotion of Islamic banking in Pakistan, which included the issuance of licences to Islamic banks, Islamic banking branches and setting up of subsidiaries by commercial banks for Islamic banking

He said the State Bank had issued the Essentials and Model Agreements of Islamic Modes of Financing as recommended by the Commission for Transformation of Financial System and approved by the Shariah Board of the SBP in order to ensure observance of Shariah principles by the institutions conducting Islamic banking in Pakistan.

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