Posts Tagged ‘Islamic Banking’

ISLAMIC BANKING: VTB mulls Russian debut on sukuk market – Reuters

March 19, 2009

ISLAMIC BANKING: VTB mulls Russian debut on sukuk market – Reuters

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THE ‘BRAHMINS’ IN UPA FINANCE MINISTRY AND RBI ARE DRAGGING THEIR FEET OVER ISLAMIC BANKING AND FINANCE, SOLELY ON COMMUNAL GROUNDS. 

 

THEY ARBITARILY DENY THE OPPORTUNITIES OF SHARIA BANKING TO 150 MILLION INDIAN MUSLIM CITIZENS OF INDIA WITHOUT PROVIDING THEM ANY ALTERNATIVE FINANACIAL AVENUES FOR THEIR ISLAMIC FINANCIAL NEEDS. IN AS MUCH AS INDIAN CONSTITUTION FULLY GUARANTEES RELGIOUS FREEDOM, INDIAN GOVERMENT HAS UNCONSTITUTIONALLY WITHHELD ANY MOVE ON INTEREST FREE BANKING, ESPECIALLY TO CATER TO THE RELIGIOUS DUTIES ENJOINED ON MUSLIMS BY THEIR RELIGION. THIS IS A VERY SERIOUS AND ONGOING DENIAL OF INDIAN MUSLIMS’ RELIGIOUS FREEDOM RIGHTS.

 

IT SHOULD BE AN EYE-OPENER TO THESE COMMUNAL ‘BRAHMINS’ THAT EVEN RUSSIA HAS TAKEN STEPS TO OPEN NEGOTIATIONS WITH ISLAMIC BANKS WITH A VIEW TO INTRODUCE SHARIA PRODUCTS. 

Ghulam Muhammed, Mumbai

 

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSLI53843420090318

 

VTB mulls Russian debut on sukuk market

Wed Mar 18, 2009 10:00am EDT 

MOSCOW, March 18 (Reuters) – Russia’s second largest bank VTB (VTBR.MM) may become the country’s first issuer of sukuk or Islamic bonds and is considering a deal worth several million dollars, VTB’s investment banking head said on Wednesday.

Russian companies need to be more creative about raising capital as usual sources of funding have dried up in the global credit crunch and around $100 billion of foreign corporate debt payments are due this year. “We are looking at the possibility of entering this market (Islamic finance) — both for us and for our clients,” VTB Capital head Yuri Solovyov told journalists, adding that an issue from VTB could be worth several million dollars.

He declined to name which other Russian companies had expressed interest in such financing.

Globally, $14.9 billion worth of sukuk were issued last year, less than half 2007’s issuance, according to Standard & Poor’s.

To comply with Islam’s ban on interest, sukuk are structured as profit-sharing or rental agreements, and returns are derived from underlying physical assets such as commodities or real estate. Investment, pork, alcohol, gambling and pornography is banned.

To date there have been no Russian issuers of sukuk.

VTB Capital and Liquidity Management House, a subsidiary of Kuwait Finance House (KFIN.KW), on Wednesday signed a protocol of intention aimed at cooperating in the development of Islamic finance in Russia and other former Soviet countries. (Reporting by Oksana Kobzeva, writing by Toni Vorobyova; Editing by David Cowell)

 

© Thomson Reuters 2009 All rights reserved


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US studying features of Islamic banking – Md. Rasooldin – Arab News

October 28, 2008

http://www.arabnews.com/?page=6&section=0&article=115802&d=26&m=10&y=2008


The Middle East’s Leading English Language Daily   —  


Sunday 26 October 2008 (27 Shawwal 1429)

US studying features of Islamic banking

Md. Rasooldeen | Arab News
 

INTEREST: Robert M. Kimmitt, US deputy secretary of the Treasury, right, and US Ambassador Ford M. Fraker at the press conference held at the US Embassy in Riyadh on Saturday. (AN photo by Mohammed Rasooldeen)
 

RIYADH: The US government is currently studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisis, Robert M. Kimmitt, US deputy secretary of the Treasury, said at a press conference held at the US Embassy here yesterday.

Kimmitt, who is on an official visit to the Kingdom, also held discussions with Finance Minister Ibrahim Al-Assaf. Today, he is scheduled to meet Saudi Arabian Monetary Agency (SAMA) Gov. Hamad Al-Sayari, Saudi Arabian General Investment Authority (SAGIA) Gov. Amr Al-Dabbagh, Prince Alwaleed bin Talal, chairman of the Kingdom Holding Company, and Saudi investors and bankers. He said that the agenda for the G-20 summit to be held in Washington on Nov. 15, has to be carefully prepared since important topics are to be discussed in just one day. “I am not sure that Islamic banking will also be itemized in the agenda, but it is a subject that is often dwelt in the public and private sectors,” he noted. He said that experts in the US Treasury Department are currently learning the important features of Islamic banking.

However, he added that his country is focusing on activities of various governments and central banks in tackling the economic issues. He pointed out that the member countries in the G-20 also includes Islamic countries such as Indonesia and Turkey, besides the Kingdom which has been a member for the past 10 years. Representatives from these countries could present their experiences of Islamic banking in the light of the prevailing situation.

He hoped the G-20 summit will provide an effective platform for the member countries to exchange their views on the current economic problem and lay out a plan for the countries to draw out their respective national plans to ease the situation.

Commenting on his meeting with Al-Assaf, Kimmitt said the items that could be included in the agenda were also discussed. “The geographical representation from member countries would provide a broader view of the crisis and would also benefit the non-member countries through their experiments,” he added.

The G-20 summit, said Kimmitt, was proposed by Europeans which was readily accepted by President George W. Bush, who is seeking a common response to the global crisis.

Spelling out the purpose of his visit to Saudi Arabia, Kimmitt said that he has been associating with the Kingdom for more than two decades, but this is a significant visit since he was coming to the Kingdom at a time when there is a threat to the global financial market. “It’s an opportunity for me to present the US perspective … and hear from the Saudi leadership on the current situation in the Kingdom and in the region,” he said, adding that even at a time of crisis, US wants to stress its commitment to tell the countries in the region of the US open investment policies.

Pointing out that a good number of American investors are coming to the Kingdom, Kimmitt said the US government expects reciprocation in the same manner. The deputy secretary is slated to visit the United Arab Emirates, Qatar, Kuwait and Iraq where he would meet the leadership and investors on similar lines.

A LETTER TO THE CHAIRMAN OF COMMITTEE FOR FINANCIAL SECTOR REFORMS, PLANNING COMMISSION OF INDIA

June 11, 2008

A LETTER TO THE CHAIRMAN OF COMMITTEE FOR FINANCIAL SECTOR REFORMS, PLANNING COMMISSION OF INDIA

 

 

 

TO:

 

THE CHAIRMAN AND COMMITTEE MEMBERS

 

COMMITTEE FOR FINANCIAL SECTOR REFORMS

 

PLANNING COMMISSION

 

GOVERNMENT OF INDIA

 

NEW DELHI

 

 

RE: FINANCIAL SECTOR REFORMS

 

 

 

PROPOSAL FOR JOINT VENTURES IN ISLAMIC BANKING IN COLLABORATION WITH INTERNATIONAL ISLAMIC BANKS AND/OR INTERNATIONAL BANKS WITH ISLAMIC BANKING OPERATIONAL EXPERTISE

 

 

Financial Sector Reforms are needed, as per Mr. Raghuram G. Rajan’s introductory remarks, to bring into banking fold, all those who are still out of the ambit of Indian banking, either as small and unsecured borrowers that form the bulk of the lower strata of our economy, or to mobilize funds from some sectors, who find current banking service lacking the structural flexibility to meet their special requirements.

 

In this later category, Indian Muslims, whose aggregate population percentage is around 15 percent of the total population of India, form, by far the bigger chunk that have escaped the services provided by Indian banking industry, be that the nationalized banks, cooperative sectors or other para-banking sectors.

 

Many an attempts by social minded people had failed, with huge losses in community funds, in the last sixty years of India’s independent history, mainly because of the rigid and unbending attitude of the bureaucrats and technocrats that unfortunately characterized the pre-liberalisation phase of the economy.

 

Now, over the years, while India was cut off from sweeping developments in the international banking and investment arena in several financial sectors due to its closed economy, new vistas that were opened and honed to form a highly successful and stable Islamic banking system too was out of bounds for Indians at large and Indian Muslims in particular.

 

Credit must therefore be given to the new spirit of liberalization and a strong commitment to redress any anomalies in banking’s structural rigidities, so that the largely neglected sector of Indian economy should be brought in to thrive with the rest.

 

Islamic Banking world over has become a respectable industry that massively and positively contributes to world economy. India should be ready to tap all resources available to expedite measures to cut out the long gestation period that may hamper early and sure-footed introduction of Islamic Banking into India, by opening the doors to established foreign Islamic Banks in the same manner that it has opened the doors to all manner of foreign investment and expertise, be that of technical or financial nature.

 

I propose that a programme should be thrashed out in consultation with a group or consortium of foreign Islamic banks, to see that special products and services that are the hallmark of Islamic banking, should be expeditiously and safely introduced in India, primarily with a view to cater to the specialized needs of Indian Muslims. Since the word ‘Islamic Banking’ is now a generic name, it should not be seen as something non-secular and against the ethos of Indian constitution. Islamic Banking’s pros and cons should be judged on merits. On the other hand the very brand name of ISLAMIC BANKING is enough to get tremendous response from Muslim depositors, investors, traders and prospective borrowers — even without any expensive marketing effort. The market is already there to be readily tapped.

 

In an open economy like the Arabian Gulf countries, newly established nationalized banks invariably hired the services of reputed international banks, to run their back office operations. The management contracts signed by local banks were merely to ensure that their local lack of expertise in banking and investments may not result in banking failures from the very outset.

 

While in the gulf, my two projects, forming two joint-ventures with Habib Bank Zurich (lasting 25 years) and Canara Bank (lasting 8 years), though of limited nature, where management contracts were given to the outside banks to bring in their own expert staff and take over the full management of the organisations, has encouraged me to visualise such joint-ventures between banks in India and other nations, who can offer their full technical and management expertise to Indian banks, or non-banking financial organisations with joint investments of local and foreign percentages. All manner of combination and permutations can be considered with open mind. Only a right frame of mind to experiment and venture into uncharted fields, with full caution and deliberations, of course, would bring in swift changes in Indian banking and investment sectors. We will not waste valuable time, energies and resources, while trying to reinvent the wheel.

 

I wish you all the best wishes and Godspeed in the committee’s robust search for ways and means to care and nourish all sectors of national economy so that future growth of India may not fall prey to unsavory developments; given the ever-present danger of huge pockets of poverty bedeviling the planners of the nations.

 

Regards

 

GHULAM MUHAMMED SIDDIQUI