Date post: | 06-May-2015 |
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Outline of Presentation
Introduction and Brief Perspective of Islamic Finance Product Tree for Islamic Agricultural Finance Takaful Takaful Products for Islamic Agricultural Finance.
Presented by :
Zubair MughalAlHuda : Centre of Islamic Banking & Economics
Regional Head – Takaful Pakistan [email protected]@takaful.com.pk
Industry Progress in Pakistan
Currently there are 6 full fledged Islamic Banks, while
6 Full fledge Banks having 186 and 12 Conventional Banks have 103 SAIBBS
Total IB Branches = 289
Year 2001
•Meezan Bank•Al Baraka
•Meezan Bank•Al Baraka•MCB•Alfalah•SCB•Bank AlHabib•Habib AG Zur.•Metropolitan•Bank of Khyber•Soneri Bank
2002 2003
•Meezan Bank•Al Baraka•MCB
•Meezan Bank•Al Baraka•MCB•Alfalah
2 10
2006 - 07
•Meezan Bank (100) •Al Baraka (18) •MCB (8) •Alfalah(32) •SCB (8) •Bank AlHabib(4 ) •HMB(4) •Bank of Khyber(17) •Soneri Bank ( 4) •HBL(1) •Bank Islami(36) •DIB (17) •EGIBL (10) • Dawood(5) •NBP(3) •ABN AMRO (3) •Askari(14) •UBL (5)
2004 - 05
1843
Industry Progress in Pakistan
Industry Progress in Pakistan
Industry Progress in Pakistan
Takaful Companies in Pakistan
There are Four Takaful Companies now Operating in Pakistan
1. Takaful Pakistan Limited2. Pak Kuwait Takaful Company Limited.3. Pak Qatar General Takaful4. Pak Qatar Faimly Takaful.
Sukuk Development in Pakistan.
Motorway Sukuk - Wapda 1th & 2nd Sukuk Pakistan Shipyard Sukuk Pakistan Industrial Park Sukuk PIA Sukuk Sui soturen PASSCO Liberty Energy Sitara Chemicals PEL Amtex Textile HBFC Sukuk Arzo Textile Dawood Hercules etc
Islamic products and services offered by 300+ Financial Institutions around the world
.United States: 20- Al Manzil Financial Services- American Finance House- Failaka Investments- HSBC - Ameen Housing Cooperative
Germany:4- Bank Sepah- Commerz Bank- Deutsche BankSwitzerland: 6
UK: 26- HSBC Amanah Finance - Al Baraka International Ltd- Takafol UK Ltd- The Halal Mutual Investment Company- J Aron & Co Ltd (Goldman Sachs)
Bahrain: 26 - Bahrain Islamic Bank- Al Baraka- ABC Islamic Bank - CitiIslamic Investment Bank
Malaysia: 492 - Pure Islamic Banks (Bank Islam, Bank Muamalat)Rest - conventional banks
Saudi Arabia: 17- Al Rajhi - SAMBA- Saudi Hollandi - Riyadh Bank
UAE: 13- Dubai Islamic Bank- Abu Dhabi Islamic Bank- HSBC Amanah
Qatar: 4- Qatar Islamic Bank- Qatar International Islamic
Kuwait: 9- Kuwait Finance House
Iran: 8
Egypt: 12- Alwatany Bank of Egypt- Egyptian Saudi Finance
Indonesia: 4
Sudan: 9
Pakistan: 21India: 3Bangladesh:9
Turkey: 7- Faisal Finance Institution- Ihlas Finance House
Yemen: 5
International Overview
The size of Islamic Financial Industry has reached US$
300 Bln. and its growing annually @ 15% per anum.
71 countries have Islamic Banking Institutions
38 Muslim countries including Bahrain, UAE, Saudi
Arabia, Malaysia, Brunei and Pakistan
33 non-Muslim countries including USA, UK, Canada,
Switzerland, South Africa and Australia
International Overview
Leading foreign Banks have opened Islamic
Banking windows or subsidiaries such as:
• Standard Chartered Bank
• Citibank
• HSBC
• ABN AMRO
• UBS
International Overview
In Feb 1999, Dow Jones introduced the Dow
Jones Islamic Market Index (DJIM) of 600
companies world wide whose business
complies with Islamic Shariah laws
At present there are more than 105 Islamic
Funds operational through out the world with a
total fund base of over USD 3.50 billion
International Overview
Governments of Bahrain ,Malaysia and now
Pakistan have issued Islamic Bonds (Sukuk) in
order to facilitate Islamic Banks in managing
their liquidity.
Issuance of these bonds has also paved the
way for Shariah compliant Government
borrowings
International Overview
Institutions like Accounting and Auditing Organization
for Islamic Financial Institutions (AAOIFI) and Islamic
Finance Services Board (IFSB) have been formed.
These institutions are playing a key role in setting up
and standardizing Shariah , Financial and Accounting
standards for Islamic Financial Institutions.
Due to these collective efforts Islamic banking is now
recognized by IMF, World Bank and Basel Committee.
PRODUCT TREE
Modes of Islamic Agricultural Finance
Trade Based Modes
Partnership Based Modes
Rental Based Modes
MusharakaMudarabaMuzarah
MurabahaMusawamaSalamIstisna
IjarahDiminishing Musharaka
Takaful( Islamic Insurance )
Introduction
“Takaful” is the Sharia Compliant brand
name for the Islamic alternative to conventional insurance. Its based on the principle of Ta’awan or mutual assistance. It provides mutual protection and joint risk sharing in the event of a loss by one of its member
Why Insurance ?
Is Some thing wrong with Concept ?
Risk Aversion Assuring others Risk sharing
From the Holly Quran
The need for insurance is shown in the following verse of The Quran.
“ Those of you who die and leave widows should bequeath for their widows a year’s maintenance and residence” (2.240)
From the Hadiths By Anas-bin-Malik, One day Prophet
Muhammad(PBUH) notced a bedouin leaving his Camel without tying it. He asked the bedouin, “Why don’t you tie down your camel”? The Bedouin answered, “ I put my trust in Allah (SWT)”. The Prophet (PBUH) then said,” Tie your camel first, then put your trust in Allah(SWT)” <Tirmidhi>
What wrong with practice ?
The contract between the insurer & the insured is technically wrong from the sharia perspective because of
Gharar (Uncertainty)) Gambling (Qamar & Maisir) Interest (Riba)
Riba in Insurance
Direct RibaExcess on one side in case of exchange
between the amount of premium.
Indirect RibaThe interest earned on interest based
investments
Gharar
Lexically it means uncertainty and technically it means the uncertainty of the counteract or the subject matter.
InvestmentIncome
Operational Cost of Takaful
/ ReTakaful
Claims &Reserves Surplus
(Balance)
P A R T I C I P A N T S’ T A K A F U L F U N D (P.T.F.)
Mudarib’s Share of PTF’s Investment IncomeWakalah
Fee
Management Expense of
the Company
Profit/Loss
S H A R E H O L D E R S’ F U N D (S.H.F.)
Participant
WAQF
Takaful Operator
Share Holder
Operating Model in Pakistan
Investment by the Company
.
Takaful Products for Islamic Agricultural Finance
Trade Based Modes
Partnership Based Modes
Rental Based Modes
MusharakaMudaraba
MurabahaMusawamaSalamIstisnab
IjarahDiminishing Musharaka
Other Products
Livestock'sCrop TakfulCredit Takaful
Takaful Pioneers
Later in 1984, Malaysia played a pioneering role in setting the first Legal framework specific to Takaful (Takaful Act).
This was instrumental in the successful launching of the Takaful movement in Malaysia and in other countries of South East Asia.
Takaful Operators The number of Takaful operators worldwide is
now estimated at: 128 Takaful companies 8 Retakaful companies In 41 Countries. Average growth rate higher than
conventional insurance companies (around 25%).
Non–Muslims increasingly opting for Takaful products for commercial benefits.
Takaful Geographical Spread
South& East Asia : 56% Middle East : 36% Africa: 7% Europe, USA & Others: 1%
Thank You.