Assignment on:

Business Finance Decision

Submitted To:

Sir. Usman Saeed

Submitted By:

M. Farhan Bhatti

Class:

M.Com (lll)

Roll no.

TMCM 05093025

The University of Lahore.

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 PROGRAM AGENDA
th
4 International Conference & Exhibition on Islamic Banking and Takaful.

Welcome Note:
Mr. Hamad Rasool Bhullar
Director. Trainings & advisory
AlHuda CIBE - Pakistan

Inauguration & key Note Speech as Chief Guest:

Mr. Yaseen Anwar
Deputy Governor Banking
State Bank of Pakistan, Karachi.

Guest of Honor:
Mr. Parvez Said
Chief Executive officer
Dawood Islamic Bank Limited - Pakistan1

Vote of Thanks:
Mr. Muhammad Zubair Mughal
Chief Executive officer
AlHuda CIBE – Pakistan

Mr. Yaseen Anwar

Deputy Governor - Banking
State Bank of Pakistan, Karachi

Topic: Islamic Banking satisfying the customer

Mr. Nadeem M. Firoz (Ph.D)
Professor, Montclair State University,
USA.

Topic: Quantitative Analysis of Islamic Banking in Pakistan, Review and Progress

Prof. Dr. Khawaja Amjad Saeed
Principle, Hailey College of Banking and Finance,
The University of Punjab

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 ISLAMIC BANKING AND FINANCE
Definition:
Islamic Banking is interest free assets backed banking governed by the principles of Islamic
Shari’s, usually three parties to a transactions where one bank is involve:

1. The one who promise to buy(customer).

2. The bank.
3. The vendor (supplier to the bank).
‘Mobile has become industry itself hope Islamic finance also become an industry itself.’

Mr. Zubair Mughal said:

First conference in 2006 at Lahore in Awan-e –Iqbal. The second conference
held in 2008 unusual performs Karachi Pascoe’s KIBOR Karachi.

Mr. Parvez Said:

Islamic banks have many aspects. How to establish Islamic banking. Malyshia
is consider a big industrial country and Malyshia is very storng .State bank of
Pakistan achieve 6% of Islamic banking fund.

Mr. Alberto Di Gennaro,

A banking system that is based on the principles of Islamic law (also known Shariah) and
guided by Islamic economics. Two basic principles behind Islamic banking are the sharing of
profit and loss and, significantly, the prohibition of the. collection and payment of interest.
Collecting interest is not permitted under Islamic law.
Here's an example of how the Islamic banking system uses methods of profit/loss sharing to
facilitate financial transactions: for some types of loans, the borrower only needs to pay back the
amount owed to the lender, but the borrower can choose to pay the lender a small amount of
money to serve as a gratuity.
Since this system of banking is grounded in Islamic principles, all the undertakings of the
banks follow Islamic morals. Therefore, it could be said that financial transactions within Islamic
banking are a culturally distinct form of ethical investing (for example, investments involving
alcohol, gambling, pork, etc. are prohibited). The Dubai Islamic Bank has the distinction of
being the world's first full-fledged Islamic bank, formed in 1975 .

Topic: Islamic Financial Cooperatives to meet the Financial Needs of the Community
Mr. Mamode Raffick Nabee Mohomed
Founder/ Secretary,
Al Barakah Multi-purpose Co-operative Society Limited, Mauritius
Islam is a practical way of life .islam has its own way of life.
The comparative ideology
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Co-operative
Principle of co-operative
Credit union is a financial co-operative that may accept saving deposit , provide credit and other
financial service to its members,.
Co-operative is not for profit maximization and neither it is non-profit organization.
‘Islamic banking is not just for conservative or radical muslims.its mainstream business now that
why every bank wants a bigger price of it,
Without banking channel we cannot go out into the market.
Riba has to segments, the least serious being equivalent to a community adultery with his own
mother,.(Ref:Ibn-e-Majah).

Mr. Parvez Said :

Chief Executive officer
Dawood Islamic Bank Limited – Pakistan 1
Islamic banking have many aspects.
State bank starting the industry .
• Sector / industry.
• Developed the expertise.
• Closure of stock exchange.
Player are difficulty play in todays industry.
Current issues are increase.
Conventional banking investing in treasury bills but why Islamic bank is not investing in that
bills.

Mr. Muhammad Zubair Mughal :

Chief Executive Officer
AlHuda CIBE – Pakistan
AlHuda: is the Islamic banking financing.
250 training workshops.
Islamic banking branches:
700 banks in last 7 years.

Mr. Salem Ullah said;

1st problem is lack of awareness of Islamic banking .How to create the awareness and
conveyance to people.Alhuda is playing very important role improving the Islamic banking.

SHARIA SUPERVISION

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Dr. Muhammad Qaseem:
A contract of Shariah compliance; if
1-Excluded by legally qualified requires
2-with thair consent which requires knowledge of the details
3-its out come is Halal etebar ul Mall
4-is not used as a legal device to allow Haram
5-there is no condition in the contract against its nature

Justice (R) Khalil ur Rehman:

Chairman Shariah Board – Munich ReTakaful – Malaysia
Chairman Shariah Board - Emirate Global Islamic Bank Limited - Pakistan
Our source of law is Quran Pak and sunhat .The base of Islamic system is not understandable by
the west stakeholders.

Shari’s Compliance:
Shari’s compliance means permissible in Shari’s. A financial contract is permissible unless there
is a Shari’s evidence prohibility
-what is Shari’s evidence?
General permission there is no nee you specific permission.
Different between Muamalat & Ibadat .
Shari’s compliance and Shari’s based any different ways.
A contract is Shari’s compliance if executed by legally qualified with their consent which
requires knowledge of the details
No involvement of risk o doubt.
Outcome is halal.
There is no condition in the contract against is nature.
Al kharaj bed dhaman, (title and possession)principle complied with:

• Shari’s compliance distinguishes from the conventional banks.

• Shari’s compliance issues on issues of corporate governance.
• Shari’s compliance basis of people choice.
• Compliance tools for growth and structure
• Shari’s compliance a safe against loss, risk.

Role or Shari’s advisors:

Shari’a advisor its level of involvement and authority.
Need for a blend of expective:
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knowledge of regulation , laws , banking .
Shari's compliance manual .
Shari's audit and its independence
Shari’a department process: structure, resources.

• Presentant of the issues of Shari’a advisors.

• Structure
• Documentation
• Processes, product
• Accounting, records, advertising material.

Islamic Shari’a objective :

The main alternation for establishment of IB is to safeguard the Muslims from entering into the
non Shari’a compliance transaction especially in their financial institution.
The absent of Shari’a.

Role of the bankers and customers:

• Proper communication between the management Shari’a advisors.
• Shari’a audit by the regulators.
• Training for all bankers Shari’a holders.
• Shari’a advisors fb and proper clients.
• Educating the customers:Shari’a meeting with customers to andentify the issues.
• Knowledge of the Shari’a rules and priciples training is a must.

TAKAFUL (ISLAMIC INSURANCE)

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“Takaful” is the brand name for the Islamic alternative to conventional
insurance.

Other Islamic / Takaful Legislations:

Other markets such as the Sudan and Iran have Islamic regulatory environments and became
naturally Takaful markets.

In the Gulf countries specific Takaful legislations are coming through in Bahrain and in Saudi
Arabia

Takaful Operators:
• The number of Takaful operators worldwide is now estimated at:
• 60 Takaful companies
• 3 Retakaful companies
• This number may reach 90 + if so-called Takaful windows are to be included.

Main points of Takaful Process:

• Contributions are based on the basis of taburru in Shariah, such as a contract is called
Aqd taburry.
• Contributions are credited to the waqf fund.
• The waqf fund pays the claims.
• Contributions are invested only in shares.
• In independent Shariah board supervisor business activities.

How can Takaful help you?

a) Corporate Takaful products.
b) Individual Takaful employees.
c) Family Takaful products.

Takaful Premium
I. Takaful is one of the fastest growing segments in insurance (at around 20% pa. on
average)

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 II. World Takaful contributions are conservatively estimated at around US$ 3billions, of
which:
– 60% General Takaful
– 40% Family Takaful

Topic: Family Takaful

Tariq Saeed Chaudhry.
Group manager corporate sales
Pak Qatar Family Takaful Limited.

1. Sales purchase contract

2. Premium belong to the company.
3. Insurance .

Takaful Geographical Spread:

• South& East Asia : 56%

• Middle East : 36%
• Africa: 7%
• Europe, USA & Others: 1%

General Vs Family Takaful:

a) In the Far east region Family Takaful was and still is the driver of the segment in terms of
contributions and growth;
b) Whereas General Takaful leads the way in the Middle east markets.

c) This trend is slowly changing with the advent of new highly capitalised Takaful players
in the GCC determined to develop Family Takaful products

Main Markets:
Malaysia
Indonesia
Iran
GCC countries
Other Arab countries
Other Asia Pacific

ISLAMIC FINANCE
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Global Scenario:
• 1100 institutions are offering Islamic Financial Products/Services
• Growth Rate @ 28% since 2006
• According to ‘The Banker’s 2009 survey, the volume of the Shariah Compliant Assets of
the top 500 Islamic Financial Institutions grew by 28.6% rising to US$822bn from $639
in 2008 at a time when the top 1000 World Banks’ assets slumped to 6.8% from 21.6%
from the previous year.
• The Shariah Compliant Assets are projected to grow to US$1.60 trillion by 2012.
• Sukuk (Islamic Bond) Issuance expected to hit US$200 Billion by 2010
• The United Kingdom has emerged as a leading centre for offering Islamic Financial
Services (IFS) as at present there are 22 banks in UK offering Islamic Financial Services,
out of which 05 are fully Shariah Compliant (4 wholesale & 1 retail bank).

• Lloyds TSB Bank PLC (LYG), Britain's fourth-largest, recently introduced Islamic
mortgage products to cater to Britain's 2.5 million Muslims.
• France by indicating the adjustments in its legal and fiscal framework aims to the
development of Islamic Finance to cater the faith-based clientele in the country in
addition to gain attention of Middle Eastern Investors holding abundant liquidity. (report
by Standard & Poor, 2009)
• German state became the first European government body to issue an Islamic bond last
year -- a $121 million.
• The opportunities to tap the surplus funds of oil rich Muslim nations is strong as many
non Muslim countries are trying to tap it including, Japan, UK, Singapore, France, Hong
Kong US, Germany, Australia, Thailand, etc.
• These institutions are playing a key role in setting up and standardizing Shariah ,
Financial and Accounting standards for Islamic Financial Institutions.
• Major business schools such as Oxford, Harvard, Rice and Durham has started post
graduate programs in Islamic Finance
• Harvard University has developed a major database by the name of Harvard Islamic
Financial Information Program HIFIP) for Islamic Banking.

What is Islamic Banking?

“Islamic Banking is interest free Asset Backed banking governed by the principles of Islamic
Shariah”
“The ends of the both banking systems are same but only the means to achieve these ends are
different as one system is God given in contrast to its rival system which is ma made.”

Islamic Banking In Pakistan:

An Overview
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The 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.
• Assets = about PKR 411 bn + (Industry Share constitute 6.10%)
• Deposits = about PKR 330bn + (Industry Share constitute 6.40%)
• Financing and Investment = about PKR 230 bn +(Industry Share constitute 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% as compared to the assets of
overall industry by 8.8%. (SBP Bulletin)

The Position of Banking And Finance Within Islam

ISLAM

AQIDAH SHARIA AKHLAQ

faith & belief practices & activities morality & ethics

IBADAT MUAMALAT
man-to-Allah worship man-to-man activities

POLITICAL ECONOMIC SOCIAL

ACTIVITIES ACTIVITIES ACTIVITIES

OTHER ECONOMIC BANKING & FINANCIAL

ACTIVITIES ACTIVITIES

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