Islamic Finance Moves Toward Common Standards

By Oxford Analytica,

Regulation should help provide a basis for the industry's expansion.

Islamic finance is one of the fastest growing segments of international financial markets. Currently, total sharia-compliant assets amount to an estimated $1.125 trillion to 1.275 trillion, with an annual growth rate of 15-20%. The global credit crunch has not left it unscathed, and recent capital market growth has been hampered by conflicting interpretations of the sharia compliance of specific wholesale product structures (sukuk). Nevertheless, the outlook for the sector is positive.

AAOIFI. Efforts to standardize Islamic financial products should enhance the sector's prospects. The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) plays an important role in this regard:

--Originally subscribed by an alliance of domestic and international Islamic banks as well as the Islamic Development Bank, industry-sponsored AAOIFI has since extended its membership categories to include authorities that regulate and supervise Islamic financial institutions.

--It also offers observer member status to conventional financial institutions that operate Islamic 'windows' (special facilities offered by conventional banks to provide services to Muslims who wish to engage in Islamic banking).

Standards. AAOIFI’s Sharia Standards 2010 contains 41 standards, including 11 new stipulations pertaining to gharar (uncertainty) in financial transactions, arbitration, zakat (alms giving) and online financial transactions among others. Additionally, its Accounting, Auditing and Governance Standards 2010 contains 40 standards covering the areas of accounting, auditing, ethics and the governance of Islamic financial institutions.

National adoption. These standards are primarily targeted at individual Islamic financial institutions, but they have also been adopted at a national level:

--The AAOIFI's standards have been made mandatory for Islamic financial institutions in Bahrain, Dubai International Financial Centre, Jordan, Sudan, Syria and Qatar.

--Last month the State Bank of Pakistan announced that it had begun selectively to implement AAOIFI Sharia Standards and has advised Islamic banks to prepare for the phasing in of further standards in the near future.

--In other countries, including Indonesia, Lebanon, Malaysia, Saudi Arabia and the United Arab Emirates, AAOIFI standards have been incorporated into national guidelines and are adhered to by AAOIFI member institutions.

Standardization issues. The lack of standardization of Islamic financial products has been a major barrier to the cross-border sale of Islamic financial products. The AAOIFI and its sister standard-setting organization, the Kuala Lumpur-based Islamic Financial Services Board (IFSB)--primarily tasked with developing capital adequacy rules for Islamic financial institutions--have become key players in the construction of the emerging international framework that governs Islamic finance. The AAOIFI has over 200 members from 45 countries while the IFSB has 193 members operating in 39 jurisdictions.

More intrusive regulation. So far the compliance of member institutions with the standards can neither be enforced nor fully monitored, unless they are mandated at country level and then enforced by domestic regulators. Last month, the AAOIFI announced a timetable for taking a more intrusive approach to regulating Islamic financial products, including plans to create a watchdog committee--composed of sharia scholars and market practitioners--by the second half of 2010. However, increasingly different trajectories of Islamic banking and Islamic capital market development could in turn affect the further standardization of Islamic financial products.

Challenges. There are two major challenges to the further growth prospects and pace of development of the industry. Both could benefit from enhanced standardization and the AAOIFI's work more generally:

--Interpretation of Islamic law. Given the absence of a highest religious authority in majority Sunni Islam, assessing the Sharia quality of Islamic financial products depends on a number of representatives from different legal schools with sometimes widely varying interpretations.

--Scarcity of qualified sharia scholars. To address the shortage of scholars well versed in both sharia and finance, a number of programs have sprung up that offer degrees in Islamic finance.

Outlook.Overall, the outlook for Islamic finance remains positive. Recent efforts to develop common standards for Islamic financial institutions should help to provide a sound basis for the expansion of the industry. Learn more Understanding Islamic Finance (The Wiley Finance Series)

Source : Forbes.com

REDUCE VIOLENCE AGAINST WOMEN

Is there or no relevance to cases of violence and sexual abuse of dozens of women in Purbalingga recently, to fill the new Hijra year event then the Central Executive 'Aisyiyah hold seminars with the theme "Violence against Women and the efforts of Birds." This seminar not only attended by family 'Aisyiyah, but also by representatives of women's organizations and several individual participants.

The seminar would indeed very useful for all who attended and heard directly and did not immediately recall a case of violence against women in Indonesia, the longer it is not less but more precisely. Even the recent cases of violence against women has developed into a complex, not only regarding the number of cases will but also concerning the variation of the case itself. Is actual and concrete examples of violence and sexual harassment in Purbalingga involving dozens of people either perpetrators or victims.

Violence against women with a single perpetrator and victim of a double is very common, so did the actors double and a single victim. However, if violence against women with multiple perpetrators and victims are relatively rare. Especially if both perpetrator and victim each totaling tens o-war at a time. And in our country that really happen in reality, not just intuitive.

In the United States (U.S.), French, Italian, and in other developed countries also found cases of violence against women is still always just happen. In the U.S. there is even a "maniac" who could kill dozens of dating and then the woman at the same time. Even in France today there are many women who allegedly suffered a violent treatment of the opposite sex. Learn more Women

Source : Ki Supriyoko, jounal.amikom.ac.id

UAE money supply growth slows to 2.1% at April end

Money supply in the UAE grew 2.1 percent year on year at the end of April, down from a 3.3 percent rise in the previous month, central bank data showed on Wednesday.

M3, the broadest measure of money circulating in the economy and an indicator of future inflation, grew only 1.4 percent in February in the slowest pace since at least 2001 as banks grappled with Dubai's debt restructuring.

It rose to $256.2 billion at the end of April, from $254.5 billion at the end of March, the data showed.
Money circulating in the second largest Arab economy and the world's third largest oil producer had more than doubled in the two years to the end of 2008.

Bank credit grew 2.4 percent year on year to $278.2 billion in April, but edged down marginally from $278.24 billion in March, the data showed.

Provisioning levels for non performing loans rose 4.7 percent month on month to $9.8 billion to reach their highest level since at least December 2008, up from a 2.4 percent rise in March. Learn more United Arab Emirates Court of Cassation Judgements (Arab and Islamic Laws Series, 17)


Source : Reuters