Shariah Governance in Islamic Banking Industry: A Critical ReviewIslamic banking, Murabaha, PLS, Shariah

Bangladesh-based City Bank has partnered with the International Islamic Trade Finance Corporation (ITFC), the trade solutions arm of the Islamic Development Bank (IsDB) Group, to execute a cross-border Letter of Credit (LC) transaction under a Shariah-based financing arrangement using blockchain technology. Local media reported that City Bank was the first Bangladeshi bank to execute this type of transaction.  According to local media reports, the ITFC financed the LC under the Murabahah Trade Finance line with City Bank, which was issued on behalf of...

United Arab Emirates lender First Abu Dhabi Bank has sold USD 500 million worth of Sukuk on the 7th of January 2021, according to media reports.  The five-year Sukuk issuance offers investors a profit rate equivalent to 90 basis points over mid-swaps, according to a document issued by one of the banks leading the deal. The Sukuk was initially marketed with a price guidance of 100-105 basis points over mid-swaps, with the issuance expected to be completed on the same day of issuance, according to media reports.  Dubai Islamic Bank, Emirates NBD Capital, Fi...

RHB i-Global Sustainable Disruptors Fund is the new and first sustainable and responsible investment fund launched by RHB Islamic International Asset Management (RHBIIAM), as stated on the 7th of January 2021.  The fund permits investments from customers in any country or region, including emerging markets, with the objective of providing investors with capital appreciation over the medium-to long-term. RHBIIAM targets assets under management of MYR 100 million for the fund within six months from the date of launch.  Farid Kamarudin, Chief Executive Officer of...

Masraf Al Rayan (Al Rayan) and Al Khaliji Commercial Bank (Al Khaliji) have entered into a merger agreement, as announced on the 7th of January 2021. Effected by a statutory merger, the proposed deal will see Al Khaliji’s assets and liabilities being fully absorbed into Al Rayan, with Al Rayan standing as the remaining legal entity. The newly merged business will continue in operations under Shariah guidelines. The merger agreement is conditional upon obtaining the necessary regulatory approvals, as well as the passing of requisite resolu...

The Arab Monetary Fund (AMF) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) have signed a Memorandum of Understanding (MoU) to boost international cooperation to strengthen the development of the Islamic financial service industry in the Arab region, according to local media reports.  Based on a statement issued by the AMF on the 6th of January 2021, the MoU will enable the two organisations to jointly undertake technical activities relating to Shariah, accounting and governance standards, as well as promote awareness of issu...

The Government of Pakistan raised over PKR 760 billion from the domestic Sukuk market in 2020, with Islamic banks having sufficient liquidity to fill in the fiscal gap, according to local media reports.The Government raised PKR 561 billion via the issuance of both variable and fixed rental Sukuk Ijarah in 2020. This included five fresh issuances of fixed-rate Sukuk Ijarah, four re-openings of existing variable-rate Sukuk, as well as three re-openings of fixed-rate Sukuk issuances in 2020. Meanwhile, PKR 200 billion was raised through the issuance of Pa...

In its January 2021 Global Economic Prospectus, the World Bank estimates the Middle East and North African region to recover and grow 2.1% year-on-year (YoY) in 2021, compared to a 5.0% contraction estimated for 2020. The report states that this forecast reflects the 'lasting damage from the pandemic and low oil prices'.According to the World Bank, oil exporters within the region are set to recover to 1.8% YoY Ied by normalising oil demand, scheduled easing of OPEC + oil production cuts, policy support. The antic...

In a book aptly titled “This Time Is Different”, Rogoff and Reinhart, two prominent economists, show that every single financial crisis over the last 800 years has had a single root cause, excessive debt. It appears that what begins as borrowing for the funding of development infrastructure can, as it builds, lead to a spiralling of debt and financial crisis. There is a circular and reciprocal relationship between debt, leverage, vulnerability, and financial distress. This applies to all borrowers, governments, corporations, or other entities. Collectively known as the leverage eff...

RAM Rating Services (RAM) has reaffirmed the rating of Bumitama Agri’s (Bumitama or the Group) MYR 2 billion Islamic Medium-Term Notes Sukuk Musharakah (2014/2029) at AA3/Stable.  Bumitama is a producer of palm oil and palm kernel, with an oil palm plantation in Indonesia and is listed on the Singapore Exchange. The reaffirmation is based on the Group’s performance in the first half of 2020 (1H 2020), which was within RAM’s expectations. According to RAM, Bumitama’s credit metrics will be maintained at levels correspon...