The rapid development of Islamic financial institutions and markets have enabled the penetration of mainstream finance and gaining relevance to global economic and financial flows, the National Commercial Bank said in its Saudi Economic Review for the month of January 2015.
On the Islamic equity front, the S&P 500 Shariah index ended 2014 standing at a record 1801.9, thus surging by 11.2% on a YTD basis. The USD 3-month murabahah deposit rate, the equivalent of an interbank offered rate, stood unchanged at 0.65% in 2014 compared to the 3-month LIBOR which averaged 0.23% on USD deposits in the same year.
After an official visit to the Kingdom of Morocco by H.E. Shaikh Ebrhaim Bin Khalifa Al Khalifa, Chairman of the Board of Trustees, AAOIFI, and Dr. Hamed Hassan Merah, Secretary General, AAOIFI, from 11 to 14 January 2015, AAOIFI received the delegation of the Supreme Ulema Council of Morocco, on 25 January 2015 at its new offices in Seef District, Kingdom of Bahrain, where the two sides discussed potential areas of cooperation in all pertinent respects.
The Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has appointed a new secretary-general, as the standard-setting body looks to keep its influence in an increasingly challenging environment.
Saudi Arabian national Hamed Hassan Merah has been chosen for the post, AAOIFI said in a statement late on Monday, replacing Khaled Al Fakih, who left the organisation in May after two and a half years in charge.
Islamic finance and the forms of finance generally referred to as sustainable and responsible investing (SRI) are yet to actively collaborate with each other. One would think that to strengthen their position in a market dominated by conventional finance, Islamic finance and SRI would be sharing their successes and failures, coming together for joint ventures, and supporting each other on issues for which they have similar views. But such collaboration has not occurred. Building bridges between the two remains an opportunity that is waiting to be seized upon by the industry leaders from the two sides.
Muscat Securities Market (MSM) introduced the sample of its Sharia-compliant index. It issued a circular stating that the new sample will be effective from September 15th.
The Sharia index contains 32 joint stock company listed on MSM whose activities and financial conduct comply with the requirements of the Sharia depending on the standards of the Accounting and Auditing Organization for Islamic financial institutions (AAOIFI).
Pakistan's central bank has adopted a global standard for sukuk (Islamic bonds), which could help Pakistani issues attract investment by foreign institutions from the Gulf and elsewhere.
Issuers will have to comply with the "investment sukuk" guidelines of the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), or face penalties, the central bank said in a statement.
Nigeria has issued new guidelines to oversee the operation of its takaful (Islamic insurance) industry, favoring a centralised format that is gaining favour across the Islamic finance world.
Africa's top oil producer and second biggest economy is trying to establish itself as the African hub for Islamic finance, having approved rules for issuing sukuk in March.
A new report by the Islamic Finance Council UK (IFC), a not-for-profit promotional body and the Malaysia-based International Shari’ah Research Academy for Islamic Finance (ISRA), highlights the glaring gap in external Shari’ah audit practice.
Shari’ah audit practices continue to remain an opaque area with varied practices. Recent very public challenges on the Shari’ah authenticity of certain Sukuk structures, exemplify the need to readdress the Shari’ah assurance, governance and certification process. The report highlights a set of considerations directed to Shari’ah scholars, financial institutions, Shari’ah consultancy firms, standard setting bodies and regulators.
The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) announces the finishing of new seven shari'a standards, which shall be added to the existing 41 shari'a standards and the 40 accounting standards which have been announced previously.
Minhaj Advisory, in its turn, organizes an event for announcing these standards, the event titled: "Ceremony for New AAOIFI Shari'a Standards 42 - 48" which shall take place on May 23rd at Grand Hyatt Dubai, to discuss these standards with the Islamic Bank industry practitioners, and how to implement them in their applications.
Rapid growth of Islamic finance is increasing pressure for the industry to enter the accounting mainstream, by seeking guidance from the International Accounting Standards Board (IASB), the global body which sets the tone for book-keeping in conventional finance.
It would be a controversial move - by basing itself on religious principles, Islamic finance seeks to set itself apart from conventional finance. But some experts think the industry is becoming so big that it can no longer sit comfortably outside a trend towards harmonizing accounting rules across the world.