Islamic Finance Pakistan

Islamic Finance Industry Newsletter

Volume 4, Issue 1, January 2013

Editorial
2012 witnessed prominent international banks announcing closure or curtailment of their Islamic banking operations, which has led to speculation and has raised concerns about the sustainability of the Islamic finance market. But the other side of the canvas shows a completely different picture proving all the speculations and ill concerns completely wrong where new markets for the Islamic finance industry are emerging. Islamic finance had another great year of success, recently the Sultanate of Oman issued the first Islamic banking license to a full-fledge Islamic bank in the country with few other conventional windows in the process of receiving the license. Islamic banking opportunity for the country could be substantial. According to estimates, assets in Omans Islamic banks could rise to as much as US$6bn over the next few years. The curtailment of Islamic banking operations by the international conventional banks will further provide opportunity to the local Islamic banks to acquire the market left by these conventional banks and the emergence of the new markets along with ambitions of other middle eastern states to become hub for Islamic finance is a clear evidence that Islamic finance industry is far for being under any sort of negative pressure, the cause of curtailment of Islamic banking operations by these banks may be associated to the operational reason of the bank or other external pressures. This issue of IFP is out with a new and improved look where an interaction between Islamic finance professional, industrialists, businessmen, Shariah advisors, students and any other stakeholder can take place. Your comments and contributions will be highly regarded and sought after. Happy Reading!

Ayat of Month:
By the men whom no trade or sale makes neglectful of the remembrance of Allah, nor from establishing Salah and paying Zakah ; they are fearful of a day in which the hearts and the eyes will be overturned.

AlNoor: 37

Hadith of The Month:

Abu Harairah, may Allah be pleased with him, reported: The prophet (may peace be upon him) said: Iman (faith) has over seventy branches, and prudency is a branch of Iman. (Muslim)

Advisory Board
Mufti Irshad Ahmed Aijaz Mufti Najeeb Khan Anwar Ahmed Meenai Mohammad Aslam Mujeeb Baig Syed Shahjahan Salahuddin Faizan Memon Syed Abdul Rafay Ather

Editor-in-Chief
NusratUllah Khan

Associate Editors
Shakil Khan Muhammad Shahzad Hussain Arshad Hussain Zubairi Rima Farooq

IFP is an initiative of IFP Forum and Hidaya Islamic Business Support Services (IBSS)
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The True Face of Islamic Banking

By Mufti Ibrahim Essa
Interest is forbidden by Allah Almighty. And to involve oneself in interest bearing transactions is manifestation of declaring war against Allah and his messenger Muhammad (SAW). That is why it is essential that we should purge ourselves from any interest bearing transactions. It is beyond and doubt that the contemporary banking practices and system is based on not only interest based transactions but contract which are impermissible under Islamic Shariah. Further it is an undeniable fact that the current trade and individuals are closely linked with the conventional banking system to fulfill their requirements. This association is primarily based in two ways: individuals maintain their excess fund with the banks either in current or in saving accounts; and no profit is earned on current account whereas in saving account fixed profit is realized. Funds are borrowed for financing facility for trade, personal consumption of durable goods and housing finance and undertake to pay fixed interest on the financing facility. From the perspective of Islamic Shariah largely the transactions undertaken by the conventional banks are either prone to the defect of interest bearing or based on impermissible contracts such as uncertainty in transactions (Gharar), two transactions are combined in one contract referred as Islamic Banking. The Islamic Banks and their clients are neither abound nor feasible to disclose the documents of the transactions undertaken between them. That is why common people are not actually aware of the practical aspects and real transaction taking place between the bank and their clients, resulting in ambiguity and misinterpretations. Therefore, people normally discuss the affairs of the Islamic Banking without ascertaining the real facts. That is why it is essential that some of the prevalent products and operations of the Islamic Banks are explained so as to remove any misunderstanding. Besides this, in this article we will try to explain whether these transactions are executed with compliance to the parameters laid down under the Islamic Shariah. Discussed below are the practical aspects of Islamic Banking. The Islamic Bank receives deposit from their clients under two modes, i.e. Current Account and Saving Account. The Islamic Bank while receiving currency under current account is basically executing the Contract of Qardh, and whatever amount is taken the same amount is returned to the client without any increment or deduction. The Shariah prohibits any increment or deduction in Qardh so taken and classify this as interest (Riba). As evident the Islamic Banks conform to the prohibition given in the Islamic Shariah.

When the Islamic Bank receives funds under saving account, then the relationship and the contract e x e c u t e d between the bank and the client is of Mudarabat.
etc. The Scholars, of the Muslim Ummah have always been cognizant of the above mentioned necessity of the people to maintain relationship to fulfill their genuine requirements with the Banks. In this regard with great effort and determination of the Ulema and various other people the alternative to conventional banking is developed taking into account Islamic Shariah principles, which is

The True Face of Islamic Banking - Continued

When the Islamic Bank receives funds under saving account, then the relationship and the contract executed between the bank and the client is of Mudarabat. Mudarabat is an acceptable mode the valid contract under the Islamic Shariah. In this mode the capital is provided by the client and labor is done by the other party (Islamic Bank). The client/ supplier of funds is called Rab ul Maal and the Bank is referred as Mudarib. The funds are invested in businesses which are allowed by the Islamic Shariah and the parties share the profit on a predetermined ratio or on a agreed lump sum of the profit. Fundamental conditions to execute a correct Mudarabat contract are discussed below. The funds/capital is handed over to the Mudarib. The profit will be distributed as agreed on the basis of ratio of profit earned. Any predetermined amount of profit for either party cannot be set beforehand. Under the contract of Mudarabat if there is loss in the business where the funds are invested without the negligence or carelessness of the Mudarib (Bank) then the loss will be borne by the Rab ul Maal (Client/Depositor), and the Mudarib will borne the loss of labor. If there is loss in Mudarabah because of negligence or carelessness of the Mudarib the loss will be borne by the Mudarib. Actually in Islamic Banks the funds taken under saving account adheres to the above mentioned conditions, therefore, it is undertaken accordingly: The distribution of profit is made in accordance with the agreed profit ratio of the profit earned, not on the basis of fund or capital given, or in any fixed and predetermined amount. The saving account contract specifically specifies that if the loss occurs without the negligence of the Bank (Mudarib), then it will be borne by the depositor (Rab ul Maal), the

The funds are invested in businesses which are allowed by the Islamic Shariah and the parties share the profit o n a predetermined ratio or on a agreed lump sum of the profit.
Mudarib will bear the loss of his labor. The Bank (Mudarib) undertaken in the Mudarabat Contract that in case of the banks negligence it will bear the loss and compensate the client accordingly. Frequently the Islamic Bank in addition to the funds taken under saving account from the depositors invest its own fund in the Mudarabah. By virtue of his investment in the Mudarabat the Bank becomes partner of depositors and all the

aspects of partnership (Shirkah) as ordained under Shariah are rigorously adhered. In case of Asset based financing the Islamic Bank normally undertaken following types of Islamic Mode of Financing: Murabaha; Ijarah; and Diminishing Musharakah. Now we will examine each of the abovementioned products in some detail. Murabaha: Murabaha is a kind of sale where the seller discloses the cost and profit to the buyer. Islamic Shariah allows this kind of contract. Fundamentally it is a sale contract of goods and all essential of Islamic way of executing sale is required to be followed i.e. before selling the goods, the goods must be in possession of the seller, ownership of goods, and goods traded are not prohibited by the Shariah. Alhamd-o-Lillah the Islamic Banks execute the Murabaha sale taking into account all essential for valid sale given by the Shariah, and the practical form takes effect in the following manner: The Bank appoints client its agent so that the client can purchase goods on the behalf of the Bank, and the payment is made by the goods for the bank with the legal capacity of agent, takes possession of the goods and informs the Bank. The bank ensures that the client has purchased and taken possession of the goods. To ensure the bank send his representatives for inspection and confirmation. The representative of the bank collect purchase and delivery invoice as evidenced from the client. The goods when it is in possession of the client, the client act as an agent of the bank, the risk and reward is borne by the Bank, and if any loss is caused without the negligence of the client it is borne by the Bank. After ensuring that the client / agent is in possession of the goods, and relevant

The clients accept the offer from the bank, and execute the sale, resulting in transfer of o w n e rs hi p together with risk and reward to the client.

The True Face of Islamic Banking - Continued

document is in the name of the bank. Then it offers the client to purchase the goods on spot or deferred payment basis. The cost and profit becomes the price at which it is sold to the client. The clients accept the offer from the bank, and execute the sale, resulting in transfer of ownership together with risk and reward to the client. The client fulfills his requirement from the goods and on the specified time makes the payment to the Bank. This is the way of Murabaha Sale, where the Islamic Bank first purchases the goods, and takes into account all the aspects of the Shariah and sells the goods with profit. If all the above mentioned conditions are adhered, to execute the Murabaha Sale then it is allowed by he Shariah and so is the profit derived therein by the bank. Ijarah: In Shariah, Ijarah is simply a contract of rent and allowed. Under this form of contract the Islamic Bank provides machinery, vehicle etc. to its client on rent. The Contract of Ijarah in Islamic Banks is practically executed in following manner: The bank provides the asset to the client under Ijarah Agreement (Rent Contract) against agreed rent. The Ijarah Agreement is a binding contract for the parties, wherein all the rules and conditions are given in the Ijarah contract. The Ijarah Contract does not specifies that after the completion of stipulated period and payment of rent the asset will be sold to the client, as to specify or place this condition in the Ijarah Contract is prohibited by the Shariah. The client provides a separate undertaking/promise to purchase the asset after completion of stipulated period and payment of the rent. It is a unilateral promise from the client. The Shariah binds the client to fulfill this promise. The specified period for which the asset is used, the agreed rent is paid to the bank. The bank is the owner of the asset, therefore, all expenses related to ownership is borne by the bank, e.g.

The client provides a s e p a r a t e undertaking/ promise to purchase the asset after completion of stipulated period and payment of the rent.
Takaful (Insurance) etc. During the period of Ijarah contract, the bank is the owner of the asset and all the risk and reward related to the ownership of asset is the responsibility of the bank, unless it is deemed to be caused due to the negligence of the client/user. Upon completion of the stipulated period of Ijarah contract the ownership of the asset is not automatically transferred to the client, rather after proper offer and acceptance between the bank and

the client the asset is sold to the client. In the sale contract of the asset all valid aspects of sale defined by Shariah is necessary to be complied. This is how the Islamic Banks execute the Ijarah Contract, taking into account all Shariah aspects for use and sale of the asset to the client. Diminishing Musharaka: The third prevalent asset based product is Diminishing Musharaka. Usually Diminishing Musharaka is used to acquire property. Conventional interest based banks provide loan to its customer for the acquisition of property and charge interest on the loan. Whereas in the Islamic Bank this prohibited interest form is not used. The Islamic Bank recognizes this legitimate need and provides this facility in following manner: The requisite property is purchased jointly by the bank and its client. Minimum investment made by the client is 20% and the remaining investment is made by the Bank. The property is jointly owned by the bank and the client and accordingly their respective investment in Shirkah is determined. The contract of Shirkah is absolute, in this transaction there is no condition which prohibits or void the contract. For instance condition for Ijarah etc. The bank and its client as per their ratio of ownership in the property bear the associated risk and reward and it is according to the precept of the Shariah. Since the property is the requirement of the client, therefore a separate rent agreement is executed between the bank and the client and the client pays the rent for the use of the property relating to the portion of the bank. Shariah guidelines are followed as required for Ijarah/Rent agreement. Any condition is strictly prohibited which makes the contract void. The client pays the rent and takes possession of the property for its own use. Simultaneously the client undertakes to purchase the portion of investment in the property of the bank on monthly basis.
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The contract of S hirkah is absolute, in this transaction there is no condition which prohibits or void the contract. For instance condition for Ijarah etc.

The True Face of Islamic Banking - Continued

Shariah does not prohibit a partner to purchase the portion of investment of another partner. The sale and purchase is executed as given by the Shariah. Therefore, written offer and acceptance between the partner takes place. Accordingly the portion purchased by the client after payment becomes his portion in the property. The associated risk and reward is shared between the bank and client as per their ratio of ownership in the property. This sale purchase of the portion continues till the time the client becomes the complete owner of the property. Through this way the client fulfills his genuine requirement and becomes owner of the property. The Islamic Banks have not adopted any illusionary practice rather all the aspects of Shariah are adhered in its entirety. Further, the State Bank of Pakistan has made it mandatory on the Islamic Bank that they should appoint a Shariah Scholar approved as per fit and proper criteria laid down by the State Bank of Pakistan. The Shariah scholar so appointed is referred as Shariah Advisor. The responsibilities of the Shariah Advisor in an Islamic Bank are: Each product and agreement is reviewed by the Shariah Advisor, and with his approval appropriate documentation complying to Shariah principles are used. The approved products execution is monitored by the Shariah Advisor. The Shariah Advisor reviews day to day dealing of the bank complying to laid down Shariah principles. The Shariah Advisor conducts the Post Audit of various products and transactions. The Shariah Advisor has a separate department, and under the department trained staff assist the Shariah Advisor to carryout his responsibilities. Further there is a Shariah Board consisting of three qualified Shariah scholars who are

It can be summarized that the Islamic Bank does not label them with only Islamic name, but the entire product and process of execution is complied with the Shariah Principles.
responsible to provide overall guidance to the Islamic Bank. It can be summarized that the Islamic Bank does not label them with only Islamic name, but the entire product and process of execution is complied with the Shariah Principles. The readers are aware that not only in Pakistan but in the entire Muslim world, Muslims are running large business related to trade, finance, and

manufacturing etc. Normally he endeavors in order to make his business conform to the Shariah is to solicit advice from the scholars to run the businesses accordingly. But during the execution and the process the Islamic Scholar is not there to oversee and provide guidance, where there is likelihood that his advice is not completely followed. On top of it the businesses usually take advice and opinion of all kind of related experts, like lawyers, tax consultant etc., whereas ordinarily the Shariah scholars who are expert in Shariah aspects their advice is not taken, neither the necessity is presumed. Despite this you have not seen any Fatwa from the Ulema on its prohibition. (Please bear in mind that despite this these businesses cannot be termed as impermissible according to Shariah rules and principle). On the other hand at each and every step the Islamic Banks solicit the guidance of the reputable and recognized Islamic scholars not only in specific matter but undertake transaction under their guidance and monitoring. Therefore, it cannot be presumed that Islamic Banks are doing the similar work as conventional banks are and have no difference. The readers are requested to again review their presumption and look into this matter in its true perspective. Lastly there seems to be no plausible reason whereby the reputed Islamic scholars who all through their life have been fighting against interest (Riba) and supremacy of Islamic Shariah will involve themselves in the same practice or patronize any such activity. May Allah bestow his blessing on all of us and make us understand and follow our true religion.-----Ameen The article was earlier published in 2009 in Dawn Newspaper. The writer of this article is currently serving as a Shariah Advisor of Orix Leasing Limited, EFU Life Assurance, First Alnoor Modaraba, First Pak Modaraba and Prudential Modaraba.

The readers are aware that not only in Pakistan but in the entire Muslim world, Muslims are running large business related to trade, finance, a n d manufacturing etc.

Global News
Dubai Islamic Bank announces its intention to take over 100% of Tamweel
The Board of Directors of Dubai Islamic Bank PJSC ( DIB ), in a board meeting on 03 January 2013, have discussed and approved an additional business matter item in regards to the bank's intention of acquiring 100 percent of Tamweel. DIB intends to make a tender offer to buy all the shares in the hands of Tamweel's other shareholders, who presently hold the balance 41.8% of the issued shares. DIB is the major shareholder in Tamweel PJSC, the UAE-based Islamic home finance provider, with a majority stake of 58.2%.

DFM invites experts to counsel on its "Standard for Issuing, Acquiring and Trading Sukuk"
Dubai Financial Market ( DFM ) launched the draft of its "Standard for Issuing, Acquiring, Trading Sukuk " on its we bsite , www.dfm.ae. The exchange invited various Islamic finance professionals to counsel and provide feedback on the first of its kind comprehensive standard. The consultation period will be concluded on February 28th 2013, ahead of a hearing session to be held early March 2013 and eventually issuing the standard later in the same month.

Capital Standards Rating (CSR) assigns BB- to First Takaful Insurance Co. (K.S.C.C.)
Capital Standards Rating Co. (CSR) has assigned Insurer's Financial Strength Rating (IFSR) 'BB-' and national rating of 'BBB-kw' to First Takaful Insurance Co. (K.S.C.C.). The outlook for the rating is Stable. This is a solicited, first time rating assigned by CSR to the company. The rating is based on the consolidated financial statements until December 2011. FTIC is one of the largest Takaful companies in Kuwait and was established in 2000.

Al Hilal Bank shares perspectives at world's largest gathering of Islamic financial leaders
Abu Dhabi -based Al Hilal Bank joined international discussions on the state and future of Islamic banking during the World Islamic Banking Conference (WIBC) held recently in Bahrain. More than 50 countries were represented and over 1,200 industry leaders and 65 strategic partners, sponsors and exhibitors in attendance to provide a global perspective on Islamic banking and finance.

IBFIM Bridging Entrepreneurship and Islamic Finance

IBFIM (Islamic Banking and Finance Institute Malaysia) signed a Memorandum of Agreement (MoA) with Binary University of Management and Entrepreneurship to collaborate in the development and offering of academic and training programmes, including the teaching and learning process.

The First French Sukuk issued

As France attempts to launch its nascent Islamic financial sector, its first Sukuk issues finally appeared last summer. Since the first declaration by the Minister of the Economy in 2008, fiscal adjustments concerning Islamic financial instruments have made slow but sure progress, but the development of Islamic products has been very gradual.

Mashreq Al Islami receives Best Islamic Fund Middle East award

The recently held Islamic Business & Finance Awards announced Mashreq Al Islami , the Islamic Banking Division of Mashreq as the winner of the Best Islamic Fund Award. Running for the seventh year, the Islamic Business and Finance Awards are recognized around the world as among the most distinguished Awards programs within the financial industry. Mashreq Al Islami Income Fund is the first Sukuk fund in the UAE to receive a silver grading by S&P Capital IQ.

Disclaimer:
The news included here is on the basis of information obtained from local and international print and electronic media sources. IFP and IBSS team does not accept any responsibility about their bona-fide.
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Global News
Abu Dhabi Islamic Bank enters Sudan
Abu Dhabi Islamic Bank (ADIB) , first UAE-based Islamic financial institution to receive a banking license from the Sudanese Central Bank and to start operations from Sudan. ADIB is also a stakeholder in Bank of Khartoum, Sudan's oldest bank, along with other Gulf lenders such as Dubai Islamic Bank and Sharjah Islamic Bank. The Abu Dhabi bank raised $1bn from a Shariah-compliant hybrid Islamic bond, or Sukuk, to boost its core capital in November.

First ever three-way Islamic bank merger done

Kuwait Finance House-Bahrain (KFH -Bahrain) announced the successful closing of the merger between three Bahrain-based Islamic banks, Elaf Bank, Capital Management House and Capivest, creating a strengthened financial institution with a total equity of approximately $340 million and total assets in excess of $400 million spanning the Middle East and North Africa, Europe and Asia. As Transaction and Lead Advisor, KFH-Bahrain, after having initiated discussions with the three banks in late 2011, worked closely with

them to create a robust merged entity that is able to better compete in the dynamic and growing global Islamic banking and investment industry. The expertise and services of the banks are highly complementary, laying the groundwork for a smooth integration process. Furthermore, with a larger capital base, the newly created institution will be better positioned to participate in larger investments and projects and to quickly and more effectively capitalize on a broader set of available opportunities both across the MENA region and globally.

Global Islamic Finance Awards at 2012 Asian Finance Forum

International Turnkey Systems (ITS) was recently anointed with a new global achievement by winning the Best Islamic Technology Provider and the Best Islamic Technology Product awards by Global Islamic Finance Awards (GIFA). ITS received these awards in recognition of its ETHIX suite of financial solutions at the high-profile Global Islamic Finance Awards (GIFA) ceremony that was held during the Asian Finance Forum (AFF), 2012.

Qatar Exchange and Al Rayan to launch Islamic index

Qatar Exchange and Al Rayan Investment will launch the QE Al Rayan Islamic index on 7 January. Index is based on QE listed stocks of minimum free float size and liquidity that are Shariah-compliant, according to Al Rayans Shariah Supervisory Board. The index is intended to support the creation of Shariah-compliant exchange traded fund by Al Rayan Investment and has been issued with a Fatwa by its Shariah Board.

Dar Al Shariah named 'Best Shariah Advisory Firm' for second consecutive year.
Dar Al Shariah Legal & Financial Consultancy (DAS), Dubai Islamic Bank 's (DIB) Shariah consultancy and advisory subsidiary, has been named the "Best Shariah Advisory Firm" for the second consecutive year at the Mediterranean Awards for Global Excellence in Islamic Finance. The award was presented to Sohail Zubairi, CEO of Dar Al Shariah, in Valetta, Malta, by Reuben Buttigieg, President of the Malta Institute of Management, which judges and grants the annual awards.

Global Islamic assets are expected to reach $1.8 trillion by 2013, according to Ernst and Youngs report.
It has been reported that Ernst & Young's World Islamic Banking Competitiveness Report 2013, global Islamic banking assets held by commercial banks are set to cross $1.8 trillion in 2013, up from the $1.3 trillion of assets held in 2011.This forecast is significantly higher than some of the earlier industry estimates. Globally, the Islamic banking industry continues to record robust growth, with the top 20 Islamic banks registering a growth of 16% in the last three years and Saudi Arabia emerging as the largest market for Islamic assets.

Disclaimer:
The news included here is on the basis of information obtained from local and international print and electronic media sources. IFP and IBSS team does not accept any responsibility about their bona-fide.
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Local News
Seminars conducted by Meezan Bank on Islamic Banking
Meezan Bank limited has recently conducted a series of Public Awareness seminars on Islamic Banking in Okara, Sahiwal, Gujrat, Kamoki, Lahore and Raiwind. Meezan Bank has been conducting similar seminars on regular basis for several years now. The purpose of these seminars is to spread the word of Islamic Banking to the masses at all levels and to convey them the benefits of Riba-Free Banking.

Meezan Bank disburses the first ever Islamic Agricultural Finance

Meezan Bank has become the first Islamic bank in Pakistan to provide Shariah-compliant Agricultural financing by extending a Shariahcompliant financing facility in the agriculturally rich Central region of Pakistan. Under the financing arrangement, Meezan Bank will sell DAP, urea, pesticides and seeds to its clients on a Murabaha basis. The Bank is planning to expand the scope of this facility to other geographical areas and has developed a comprehensive Agricultural Financing Policy and detailed procedural manuals for this initiative.

BankIslami network

expands

branch

BankIslami Pakistan Limited has completed its expansion target of 212 branches, as the total number has increased to 141 in 66 cities of the country, according to a statement issued on Thursday. The bank opened 39 branches and sub-branches last year. BankIslami has also received permission from the State Bank of Pakistan (SBP) to add further 60 branches and sub-branches in 2013, adding that this expansion will see the network expand to 200 branches / sub-branches, covering more than 100 cities. The second phase of expansion is expected to take the network to 300 branches in the next three years.

Promoting Islamic finance

Meezan Bank conducts trainings on Islamic Banking products for Amana Bank, Sri Lanka
Meezan Bank conducted a comprehensive 3 day training on Islamic Banking products for the management team of Amana Bank, Sri Lanka. The training session held at the Amana Bank head office in Colombo, covered 24 products for financing, liability, treasury, trade finance as well as other Shariahcompliant products. Training was part of an agreement signed earlier in 2011, between the two Banks under which Meezan Bank is providing Technical and Shariah Advisory Services to Amana Bank - Sri Lanka.

Pakistan will be among the beneficiaries of a technical assistance grant of Asian Development Bank to help implement prudential standards developed by the Islamic Finances Services Board (IFSB) to grow access to Islamic finance. In response to requests for assistance from the governments of Afghanistan, Bangladesh, Indonesia, and Pakistan, the technical assistance grant of $750,000 will be used, amongst others, to develop an e-module platform to build capacities of officials in those countries on prudential standards developed by IFSB.

Disclaimer:
The news included here is on the basis of information obtained from local and international print and electronic media sources. IFP and IBSS team does not accept any responsibility about their bona-fide.
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Book in the Spotlight

Islam Aur Jadeed Maashi Masail (Fifth Edition) By Mufti Muhammad Taqi Usmani Publisher: Idara-e-Islamiat, Lahore
This fifth volume of Islam aur Jadeed Maashi Masaail is titled Islami Benkari aur Daur Hazir Mein Iski Amli Shakal. As it is clear from its title that this volume is compiled with articles specifically relating to Islamic Banking and its implication in the current era. This volume consist articles discussing the underlying Islamic modes in detail with investigatory research for different kinds of transactions, although this compilation will not cover all the modes rather only the most common and basic ones. The volume starts with a remarkable article about to what extent does the Shariah accepts capitalism, this discussion is followed by the writers opinion for need and importance of the asset backed financing in contrast to the debt based financing. The articles are compiled in a sequence where the most true and fair mode accepted under the Shariah governance modes comes first which are Musharaka and Mudaraba. The writer not only explains what Musharaka and Mudaraba is, but also portrays how these modes can be utilized in Islamic Banking with their impact on the economy as true financing modes under the principles of Shariah. Then some of the most widely used modes of financing namely Ijarah, Murabaha, Salam and Istisna are brought to limelight, with their implication while using them as modes for financing and bringing under consideration their pros and cons. The fourth quarter of the volume covers some of other services which a banking institution usually delivers. This discussion primarily focuses on their Shariah aspects and what measures are necessary to provide these services while maintaining them as Shariah compliant products.

About the Author

Mufti Muhammad Taqi Usmani is one of the leading Islamic scholars living today. He is an expert in the fields of Islamic Jurisprudence, Economics, Hadith and Tasawwuf. Born in Deoband in 1362H (1943 CE), he graduated par excellence from Dars-e-Nizami at Darul Uloom, Karachi, Pakistan. Then he specialized in Islamic Jurisprudence under the guidance of his eminent father, Mufti Muhammad Shafi, the late Grand Mufti of Pakistan. Since then, he has been teaching hadith and Fiqh at the Darul-Uloom, Karachi. He also holds a degree in law and was a Judge at the Shariah Appellate Bench of the Supreme Court of Pakistan. He has been writing on various Islamic topics and is author of more than 60 books and numerous articles. Presently he is the Vice-president of Darul-Uloom, Karachi, Pakistan, where he teaches Sahih Bukhari, Fiqh and Islamic economics.

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Preview: Journal Of Islamic Business And Finance

The Journal of Riphah Centre of Islamic Business Riphah International University, Islamabad
Riphah International University (RIU), charted by the Government of Pakistan in 2002, was established to impart research oriented professional education with the focus inculcation of Islamic ethical values. RIU has now eight faculties offering under graduate, post graduate, and doctoral programs in their fields of Health and medical sciences, pharmaceuticals sciences, engineering, computing, Management, sciences, Islamic business and finance and public policy. Renowned educationist and scholar Prof. Dr. Anis Ahmed is the vice chancellor of RIU. Riphah university is placed in W category which is the highest category ranked by HEC. Riphah Center of Islamic Business (RCIB) is carrying out programs in Islamic Banking and Finance for MBA and MS leading to PhD degrees. So far, six batches have been inducted and the University is getting encouraging experiences and result with regard to teaching business / finance principles to the graduates of Deeni Madaris and other business and commerce graduates.

About the Journal

The Journal of Islamic Business and Management (JIBM) published by Riphah center of Islamic business is a step forward to provide a platform for research and publication on Islamic Business and Management. JIMB is a biannual journal with a mission to publish quality research material in all areas of Business and Management sciences. It presents the practice oriented quality research paving the way for a paradigm shift bringing to the world Islam's response to global financial crises and economic malpractice. Current issue contains different topics related to Islamic Finance in the form of articles along with report and findings of ICIB-2012 containing papers and presentations by different scholars, researchers and experts. Few of the topics along with the presenter of ICIB-2012 are stated below: Justice (R) Khalil-ur-Rehman: Implications of policy shift from Islamization of entire economy to the parallel functioning of conventional and Islamic system. Zamir Iqbal: Financial inclusion in Islamic finance prospective Mughees Shaukat: Regime uncertainty; interest rate based debt financing system. Ismail OZSOY: Comparison of bank interest in Murabaha profit M. Zaid Malik: Creation of Money and credit and the problem with interest in present Day economics. M. Munir Ahmed: Islamic Banking and the concept of narrow banking for resolving the crises. Sajjad Zaheer: The transmission of Monetary Policy through conventional and Islamic banks. Imran Ashraf Usmani: Strengthening Shariah Compliance mechanisms and controls for Islamic Banking. M. Tahir Mansoori: Maqasid-e-Shariah: A Paradigm for Ijtehad till Modern Islamic Finance Omar Mustafa Ansari: Shariah governance and internal Shariah compliance in Islamic banks an auditors perspective. Mufti Ismatullah: Takaful as an Aqd-e-Gharar Muawadah; how it is different from Insurance. Atiquzzafar Khan: Family Takaful issues and Challenges Abdelkader Chachi: Awqaf as a Key to socio economic development in Muslim societies Iqbal Hashmi: Compliance of the code of governance in limited liability companies: manipulations and the way forward. Riaz Riazuddin: Construction and seasonal adjustment of Islamic Hijri Calendar monthly time series: an application to consumer price index in Pakistan.
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Ask Us
Questions / Answers
Question: In a contract of sale, who will be liable of expenses of delivery of the subject matter, contract price and documentary expenses? Answer: The expenses of delivering the sold commodity is the responsibility of the seller. As for the expenses of delivering the price, if any, it is the responsibility of the buyer, unless there is a stipulation or customary practice to the contrary, in which case it is binding to follow such stipulation or practice. Similarly the documentary expenses such as conveyance, witnessing, preparation of instruments that record a sale and the formalities of registration are borne as stipulated by the parties to the contract if there is no such stipulation on their part, customary practice is relied upon. Question: Islamic financial institutions are usually required to perform study for measuring the creditworthiness of the client before providing any financing facility. Such credit studies are subject to some expenses. Is there any Shariah complication, if such expanses are taken from the client? Answer: Islamic financial institutions are permitted to take commission for the credit study it prepares internally or through an external party, so as to know the credit worthiness of the client and his ability to honor his commitments within the period agreed upon. Entitlement of the institution to such commission is due to fact that the client has benefited from the study regardless of whether the study has led to acceptance or rejection of his request. The study shall become the property of the client who has the right to take it.

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Upcoming Events
International Islamic Finance Conference 2013 Abu Dhabi, April 14-16, 2013
The aim of the conference is to investigate current political and socio-economic developments through leading thinkers in their field, the likely effects of those developments on the performance and future position of Islamic financial institutions, the regulatory set-ups, and popularity of Islamic products offered to the public, governments and businesses. In association with Emerald Group Publishing, the organizers will now work with all those involved in the programme to build on this platform for the exchange of invaluable research and ideas.

KL Conference on Islamic Finance 2013, 19-20 March, 2013

An international gathering of practitioners, scholars and experts to discuss and share their knowledge, expertise and experience on the principles, instruments and issues related to Islamic finance, to be held at the worlds leading Islamic financial centre, Kuala Lumpur. Key focus / Topics: Product development and Implementation of Islamic financial products. Ensuring Shariah compliance in Islamic financial instruments. Sukuk: development, issues and challenges. Islamic gold account: a golden opportunity. Islamic mutual funds (unit trusts): factors to consider in making an investment. The rise of Islamic wealth management in Islamic finance industry. Islamic financial planning: success in both worlds. Takaful: innovation and solutions. Enterprise risk management for Islamic banks. Enterprise risk management for Takaful operators. Accounting and auditing. Human capital development in Islamic finance industry. Legal issues and challenges in Islamic finance. Dispute settlement in Islamic finance: issue and solutions. Islamic ethics in financial services industry. Corporate governance for Islamic finance industry.

Meezan bank recently completed a seminar on Islamic banking

It had been reported by Meezan Bank limited that they have recently conducted a series of public awareness seminars on Islamic Banking in different cities of Pakistan. Meezan Bank has been conducting similar seminars on a regular basis for several years now. The purpose of these seminars is to convey the message of Islamic Banking to the masses at all levels and to create awareness about the prohibition of Riba. Apart from this, staff members of Meezan Bank also arranged lectures on "Introduction to Islamic Finance" at COMSATS Lahore and Sahiwal, which were well attended and appreciated by the faculty and students of these Institutes.

IFN EVENTS DAIRY (IFN ROAD SHOWS) Islamic Finance news Road show continue to educate and update the developing Islamic financial markets by organizing key Islamic finance events with the focus heavily on education and development.
Bangladesh 5th February 2013 Singapore 22nd March 2013 Morocco 29th March 2013 Australia 7th May 2013 Japan 12th June 2013 Hong Kong 25th June 2013 Pakistan 27th August 2013 Sri Lanka 29th August 2013 Turkey 3rd September 2013 Egypt 5th September 2013

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Article: Mufti Ibrahim Essa Ask Us: Mufti Ibrahim Essa and Mufti Javed Ahmed Book in the Spotlight: Islam Aur Jadeed Maashi Masail (Edition 5) News: Local and Global news

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