The Board of Executive Directors of the Islamic Development Bank (IsDB) has announced that it has approved USD 1.12 billion in financing for development projects in various sectors in 9 member countries along with USD 1.79 million in grants for various other projects including special assistance grants to Muslim communities in 3 non-member countries, during its 347th session held on the 10th of September 2022. Why it Matters?  The Board reviewed and approved projects in important industries including food security, health, transportation, energy, urban development, education, water,...

The adoption of the Accounting and Auditing Organization for Islamic Financial Institutions’ (AAOIFI) Shariah standards by the Central Bank of the United Arab Emirates (UAE) has led to changes in international Sukuk documentation linked to the Bank. The changes have witnessed some standardisation, yet the likelihood of more modifications in the near future remains uncertain and varied degrees of adaptability have been shown by investors, while the utility of the new documentation is yet to be put to test, according to Fitch Ratings. Why it Matters?  The standards&...

The Saudi Real Estate Refinance Company (SRC), the Public Investment Fund’s (PIF) fully owned entity, has announced its intention to issue local currency Sukuk worth SAR 3 billion (USD 798.34 million), according to its Chief Executive Officer (CEO), Fabrice Susini, on the 6th of September 2022. Why it Matters? High oil prices, good Gross Domestic Product (GDP) growth, employment growth, and government subsidies are macroeconomic factors that underpin the Saudi Arabia market, but mortgage loan growth could decrease even more depending on the size of interest rate r...

The Islamic Development Bank Institute (IsDBI), the knowledge subsidiary of the Islamic Development Bank Group (IsDB Group), has announced the completion of the development phase of its Islamic Finance Country Assessment Framework (IF-CAF), as per a press release issued on the 5th of September 2022. Why it Matters? The IF-CAF is a diagnostic assessment tool that examines a country's existing laws, regulations, supervision, taxation, governance, financial inclusion, and financial sector digitalisation, among other elements, to provide an early indication of its...

The government of Indonesia has raised IDR 9 trillion (USD 604.72 million) in its recent Sukuk auction, meeting its indicative target, on the 6th of September 2022, according to the country's Ministry of Finance. Why it Matters? The total amount of offers received for the Sukuk stood at IDR 24.14 trillion (USD 1.6 billion), which was less than the IDR 28.54 trillion (USD 1.9 billion) of bids obtained in the prior Sukuk auction on the 23rd of August 2022. The weighted average yields of the bulk of the offered notes were also lower than those of comparable notes sold in the pr...

World Wide Fund for Nature Singapore's (WWF-Singapore) sustainable banking assessment report has found progress among Association of Southeast Asian Nations (ASEAN) banks on sustainability. In particular, there has been progress in setting the broad direction and starting on implementation. Much less progress has been made to date on impact through client engagement, portfolio decarbonisation targets, and disclosures. The best way to make progress on underlying data gaps is to focus on tools to incrementally improve accuracy, rather than waiting too long for precision. ASEAN banks have made...

Global Sukuk issuance is predicted to increase at a 6.8% compound annual growth rate in the next five years and is projected to reach USD 257 billion by 2027, despite the decline in 2022 caused by a global monetary tightening cycle, according to a new Refinitiv report.  Why it Matters? Despite strong activity in the Sukuk market early in 2022 due to the high demand from foreign investors, international Sukuk issuance’s momentum began to decline in the January–June period. Among the factors contributing to this slowdown is lower government borrowing needs in...

Deposits into Islamic banks in Bangladesh totalled BDT 4.12 trillion (USD 43 billion) at the end of June 2022, witnessing a 12% increase from 3.68 trillion (USD 38 billion) in the same period in 2021, as per the quarterly report by Bangladesh Bank, the country’s Central Bank. Why it Matters? Ten fully functional Islamic banks are now active in the banking sector. Islamic financial services are also offered through the 45 Islamic banking branches of nine conventional commercial banks and 480 Islamic banking windows of thirteen conventional commercial banks. Despite...

Pakistan-based Faysal Bank Limited (Faysal Bank) has announced that it will ring-fence its remaining conventional loan portfolio and transition into a full-fledged Islamic lender by the end of 2022, according to a statement by the bank's Chief Financial Officer, Syed Majid Ali, on the 30th of August 2022.  Why it Matters? Currently, Pakistan has five Islamic banks and 17 conventional banks with Islamic banking branches. Five years ago, Faysal Bank made the decision to change the entirety of its operations from conventional to Sharia-compliant. It used the "asset-led conversi...

The Financial Regulatory Authority (FRA) of Egypt has granted its first licence to a financial institution to finance micro firms in the non-banking financial sector through the Wakala investment structure, according to the authority’s Chairperson Mohamed Farid on the 30th of August 2022. Why it Matters? The new licence, issued to the Egyptian Microfinance Company, Maksab, gives the existing financing instruments on the local market a fresh perspective in terms of modernising the Wakala investment structure. The issuance is part of ongoing efforts to maximise the nonbank financi...