...Islamic banking and finance in the UAE problems and prospects Islamic banking means the system that is based on the principles of Islamic law ( also known Shariah) and guided by Islamic economics. Two basic principles behind Islamic banking are the sharing of profit and loss and significantly the prohibition of the collection and payment of interest. Collecting interest is not permitted under Islamic law. Problems:- Most of the Islamic banks operate by-murabaha and by muazzal. Bai –salam,istisna, hire purchase leasing mode of investment i.e., islamic banks always prefer to run on mark up / guaranteed profit basis having shariah coverage for this reason some times the conventional economists and general people failed to understand the real difference between isalmic banking and conventional banking . ( mudaraba) and ( musharaka) are two modes of investment are ideal. But islamic banking are not going in this two modes the reasons for the above are as follows:- 1- There is systemic analysis and research and no real efforts to introduce above mentined two modes but the practitioners blame the following factors… - there is lack of committed enterpreneur. -there is lack of committed proffessional who can create new. – instruments ...
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...EQTA= Common Equity to Total Assets ratio EQL =Total equity to net loans ratio IMLGL =Impaired Loans to Gross Loans Empirical Results and Analysis Financial Analysis Results of financial analysis are presented in table 1 covering four core areas of profitability, liquidity, credit risk and solvency through simple sectoral averages for both streams of banking. Table 1: Financial Performance of Islamic Vs Conventional Banking |PPERFORMANCE MEASURES |CONVENTIONAL BANKS | | | | | |ISLAMIC BANKS |COMMENTS | |Profitability | | | |Conventional Banking is dominating in | | |profitability | | | | | | ...
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...of Islamic banks in Malaysia arise when Malaysia operates dual-banking system under one roof which comprises of Islamic banking and conventional banking. There are some that supports the issue such as in Malaysia, there is a separate Islamic legislation and banking regulations shown by Banking and Financial Institutions Act (BAFIA) 1989 and Islamic Banking Act (IBA) 1983. It proves that the operation of Islamic bank itself is different from the conventional banks. Plus, through the IBA, Islamic banking business in Malaysia can only be transacted with a licensed Islamic bank, indicates that Islamic banks in Malaysia cannot just simply operates Islamic banking. Ezry Fahmy, a researcher, also believes that Islamic banks in Malaysia are fully Shariah-compliant. Malaysia has been ranked by The Banker at no.3 in year 2007 for top 15 countries by Shariah-compliant assets. Meanwhile, there are some arguments which Islamic banks in Malaysia are not Islamic. Islamic banks are no difference at all as some conservative believes that it just a changing of names and documents. Islamic banks charge higher cost than conventional banks in fact they should help to finance the poor and reduce the poverty the rate. Thus, in my own view, Malaysia’s Islamic banks is really Islamic due to some reasons such as the approval of Shariah Advisory Council on the Islamic banks products, the standardization by Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and Islamic Finance...
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...Term Paper on What is investment and debt/trade financing modes followed by Islamic Banks in Bangladesh. Do they conform to shariah rules. If so, how and if not, why not. Give your own conclusion/concluding remarks / recommendation. Course code: Fin-5502 Subject: Submission of Term Paper Dear Sir, I am very much delighted that I am submitting herewith my term paper titled “what is investment and debt/trade financing modes followed by Islamic Banks in Bangladesh. Do they conform to shariah rules. If so, how and if not, why not ” under the reference of my term paper for partial fulfillment of MBA Program on the Comparative Banking. As of the requirement, I have closely studied the topic and tried my best to make this paper meaningful. I believe and hope that you will find this report informative and insightful. Your valued assessment of my assignment would help me in the enhancement of my skill, knowledge and efficiency. Any further clarification, if needed, regarding the paper will be instantly responded. Regards. ___________________ Saima Sultana Acknowledgement In preparing this report, I am beholden to the most venerable teacher Mr.x, Faculty, Department of Business Administration, IIUC for his guidance and supervision for furnishing this term paper. I am very much pleased on him for his continuous encourage to undertake the term paper, to collect, analyze data and finally editing, presentation of...
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...Title: Social Reporting by Islamic Banks Authors: Bassam Maali, Peter Casson and Christopher Napier Introduction: Over the last 25 years the need for accounting practices in an Islamic perspective has risen, this is because western financial and social reporting frameworks may not be suitable for Islamic enterprises as it goes against Sharia Law (Islamic law) therefore Islamic banks have emerged. Islamic banks provide the normal services of a bank except those practices which are against lawful practices (halal) of sharia such as interest and those involving speculation, Depositors enter into Mudaraba and Musharka contracts where interest is replaced through profit/loss sharing scheme. The credibility of an Islamic bank is assessed by the Sharia Supervisory Boards (In house religious advisers) who provide audits and issue a report to the stakeholders on whether the organization has adhered to Islamic principles. Some of the Islamic banks adopt the recommendations of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), Discussion Emphasis on Social Reporting Since establishments of Islamic banks, social welfare has been given priority, most banks set this as one of their main objectives. Unlike western society in Islam, Religion clearly provides the rights and obligations of individuals and organizations with respect to others and is not subject to change. Given below are some factors which has been considered as points that should...
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...4.1 Investment Process of FSIBL: Generally a bank takes several steps to deliver its proposed investment to the client. The process takes deep analysis because it invests deposit fund not its own fund. If the bank fails to meet the depositors demand, then it must collapse. So each bank specially Islamic bank should take strong concentration on investment proposal. However, First Security Islami Bank Limited (FSIBL) makes its investment decision through successfully passing the following crucial steps: 4.1.1 Induction of new client: * Only potential and genuine clients having Al-Wadiah Current Account with proper introduction and with satisfactory transaction for a reasonable period (generally six month) should be induced as a investment clients. * Past performance of the client with other Bank/ Branches of the Bank to be looked into. * Satisfy about reputation of the client in the business community. General eligibility criteria for selecting a client as follows: * Bangladeshi Nationality, physical capable and age limit from 18 to 60 years. * Proprietorship/ Partnership/ Private Limited Company. * Valid licenses like Trade Licenses, VAT registration, TIN etc. * Source and capacity of repayment backed by positive cash flow. * Definite market and prospect of future expansion. * Adequate infrastructure facility and manpower with required skill and experience. * Clean CIB report. * The client must have clear idea about the business and...
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...Shahjalal Islami Bank Limited: (SJIBL) is a modern commercial bank governed by the principles of Islamic Shariah, which is committed to implement and materialize the economic and financial principles of Islam in the banking sector. Shahjalal Islami Bank Limited (SJIBL) commenced its commercial operation in accordance with principle of Islamic Shariah on the 10th May 2001 under the Bank Companies Act, 1991. During last eleven years SJIBL has diversified its service coverage by opening new branches at different strategically important locations across the country offering various service products both investment & deposit. Islamic Banking, in essence, is not only INTEREST-FREE banking business, it carries deal wise business product thereby generating real income and thus boosting GDP of the economy. Board of Directors enjoys high credential in the business arena of the country, Management Team is strong and supportive equipped with excellent professional knowledge under leadership of a veteran Banker Mr. Md. Abdur Rahman Sarker. Corporate Information: * Name of the Company : Shahjalal Islamic Bank Limited * Legal Form : A public limited company incorporated in Bangladesh on 1st April 2001 under the companies Act 1994 and listed in Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited. * Commencement of Business: 10th May 2001 * Head Office: Uday Sanz, Plot No. SE (A) 2/B Gulshan South Avenue, Gulshan - 1, Dhaka-1212 Board of Directors: ...
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...BRAND IMAGE OF ISLAMIC BANKS SUBMITTED BY TARIQ JALEES LT.COL(RETD) RAZA KAMAL ASSISTANT PROFESSOR DIRECTOR ACADEMICS COLLEGE OF MANAGEMENT SCIENCE PAF-KARACHI INSTITUTE OF ECONOMIC AND TECHNOLOGY KORANGI CREEK , KARACHI-75190 WWW.PAFKIET.EDU.PK UAN 111-723-733 TELEPHONE 5091114-7 FAX 92215091118 RESIDENCE ADDRESS OF TARIQ JALEES 87-Q, BLOCK-2, PECHS, KARACHI, RESIDENCE TELEPHONE 9221-4556308 MOBILE 0300-82007019 EMAL TARIQUEJ2004@YAHOO.COM TARIQJ@PAFKIET.EDU.PK 1 BRAND IMAGE OF ISLAMIC BANKS 1.0.0 Introduction What is Islamic banking? What is brand Image? Both the topics independently have been researched, discussed and deliberated so many times that the readers generally don’t fancy reading them. However, there is not a single research to best of our knowledge wherein researchers may have combined both the diversified topics. Lack of research on “brand image of Islamic bank” was one of the major motivator for undertaking this research. Thus the objective of this paper was to measure the brand image of Islamic banks, and develop the profile of the customers of Islamic banks. 1.1.0 Literature Survey In order to develop the conceptual background, the literature review has been structured as follows: 1.1.2 A brief over view on Islamic banking and literature on consumer behavior, characteristics and perception towards Shariah banks A brief overview of branding imaging concept An Overview Islamic Banking There are about 270 Islamic banks around the world (including subsidiaries...
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...from all the members who contributed and who are contributing to this project, was vital for the success of the project. We are grateful for their constant support and help. ABSTRACT: This research is conducted just to explore that what are the issues and challenges as also what opportunities are there for the Islamic banks in Pakistan. As Pakistan is a Muslim country and the main population is of Muslims, there is a great importance of Islamic banking in this country and people are getting aware of this financial system. But the main challenge here that is faced by the Islamic banking is that Pakistan govt. is supporting conventional banking more. For this research interviews were taken from the employees and the customers of Islamic banks. These interviews are about the basics of the Islamic banking, about the awareness of Muslim society, the opportunities for the development and growth and the challenges that are faced by the Islamic banks in Pakistan. This research shows that as the Muslims in Pakistan want halal banking and are switching towards Islamic banks as they want to live their lives according to Islam, so there are opportunities for the Islamic financial system in Pakistan. In order to make this financial system successful the banking authorities should...
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... 1.1. Background of Study Based on Law No. 10 of 1998 bank as an intermediary’s institution has an important role between parties who have the funds with the parties who need the funds. Bank compiles the fund from the surplus unit and distributes the fund to the deficit unit in order to improve the standard living of people. In running the business, the bank divided into Conventional Bank and Islamic Bank that run their business in the Syariah principle. Conventional bank gains their profit form the interest rate that received from borrowers and the low interest paid to the depositor (Santos 2000). While Islamic bank actually plays the same role as the conventional bank but it cannot to receive a pre-determined interest from borrowers and also do not pay a pre-determined interest to the depositors. The fee-based banking services are almost same with the conventional bank as long the Islamic bank does not receive and pay the predetermined interest. Interest is prohibited in Islamic bank but it replaced with the profit sharing concept (Arif 2006)....
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...Course Name: Commercial Bank Management Course Code: FIN 425 Submission page - Submitted To – Fahim Muntaha Course instructor, school of business ASA University Bangladesh (ASAUB) - Submitted By – KAMRUL HASAN CHOWDHURY ID No: 081-12-0414 S.M.IBRAHIM ID No: 081-12-0396 ISHRAT NAHAR ESHA ID No: 081-12-0408 MD.MAHAMUD SULTAN ID No: 081-12-418 ROKSANAQ HUQ TABARI ID No: 081-12-424 Section: FIN-3C 3rd Batch, (Summer Semester, 2011) Date of Submission: 14th August, 2011 - Letter of Transmittal- Date: 14th August, 20011 To Fahim Muntaha Course instructor School of Business ASA University Bangladesh (ASAUB) Dear Sir, Here is a report that we have prepared for our, FIN-425: Commercial Bank Management. The topic of the report is the “Reserve and Liquidity Management of Islami Bank Bangladesh Ltd.”. It was an interesting & outstanding research for us & we learned a lot about the reserve and liquidity policy provided by IBBL. We would like to thank you for allowing us to work on this topic and for your constant guidance and support. We want to declare that, we took help from Internet website of the particular bank & advices from Cash Manager of IBBL. There might be fault in this report, please kindly consider us if there is any kind of mistake. I therefore, hope that you would kindly grant our report. Thanking you, Name | Signature | Kamrul hasan joy | | S .m. Ibrahim | | Mahamud sultan | | Eshrat nahar Esha | | ...
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...MP A R Munich Personal RePEc Archive Impact of Interest Rates on Islamic and Conventional Banks: The Case of Turkey Erge¸ Etem Hakan and Arslan Bengul Gulumser c ¨ ¨¨ January 2011 Online at http://mpra.ub.uni-muenchen.de/29848/ MPRA Paper No. 29848, posted 4. April 2011 06:17 UTC Impact of Interest Rates on Islamic and Conventional Banks: The Case of Turkey Etem Hakan Ergeça* and Bengül Gülümser Arslanb Abstract Identifying the impact of the interest rates upon Islamic banks is key to understand the contribution of such institutions to the financial stability, designing monetary policies and devising a proper risk management applicable to these institutions. This article analyzes and investigates the impact of interest rate shock upon the deposits and loans held by the conventional and Islamic banks with particular reference to the period between December 2005 and July 2009 based on Vector Error Correction (VEC) methodology. It is theoretically expected that the Islamic banks, relying on interest-free banking, shall not be affected by the interest rates; however, in concurrence with the previous studies, the article finds that the Islamic banks in Turkey are visibly influenced by interest rates. JEL classification: G21; E52 Keywords: Interest-free banking, monetary policy I. Introduction Islamic banks1 are defined as financial institutions that rely on the principle of Profit and Loss Sharing (PLS) with the entrepreneurial partners in their relevant banking...
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...really open the door for the banks run in accordance with Islamic rules and regulation. First Islami Bank started the banking system that runs according to Islamic rules and regulations. Then some other Islamic banks also started business. Currently some banks even the foreign bank like H.S.B.C and Standard Chartered bank open their Islamic banking section. Theses banks are doing these because most of the people of our country are sensitive to their religion. Banks want to do business by utilizing their sentiment. Different factor can lead the customer towards Islamic banking like interest is prohibited in Islam. Another factor can be people want to deposit their money in those banks that do not give loan to those businesses that is not permitted in Islam. Banks having the provision of giving interest free loan to the needy people of the society which is called ‘Quard E Hasan’ in Islam can also lead the customer to those banks. Many religious programs telecasted in different channels become very popular in our country that may also influence the customers to switch. So in this study we will identify some factor that may responsible for customer switchover to Islamic banks and try to discover whether these factors really responsible for the customer switchover. 1.2 Problem statement: Now a day’s many non Islamic banks are opening Islamic banking section. It is an observed phenomenon that the banks are doing that because there is a huge market for Islamic banking in Bangladesh because...
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...Stability of Islamic and Conventional Banks During the Financial Crisis 1. Ratio Analysis The performance and the stability of banks can be quantified and measured through the analysis of their financial ratios. We can have several hundreds of ratios at our disposal. However, we will use only those that are common, and of some meaning for the analysis of the banks. Also, it is important to note that we should use only major and comparable ratios in order to fully understand the financial position of these banks as compared to all those ratios that may include some vagueness in the research. Mainly five categories of these financial ratios are used to eliminate the vagueness created by redundant use of the financial heads and items from the financial statements. Hence, the five categories are: (CFA 2009, p498): - Profitability Ratios - Activity Ratios - Liquidity Ratios - Solvency Ratios - Valuation Ratios However, for the banking industry, which is our main concern, we will use only the first four categories, making an exception of the Valuation category. The financial stability department of the State Bank of Pakistan, which is the central bank of this major economy in the Muslim world, and actively involved in the promotion of Islamic Banking, suggests that the financial ratios fairly reflect the stability, health and the performance of the banks. Hence, these ratios can be used for our purpose. 2. Z-score Instead of just doing the Financial Ratios Analysis...
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...Future of Islamic Banking For the past years, most Islamic banks have double-digit growth rates, surpassing their conventional rivals. There is ample room for growth for the Islamic Banking as they form part of merely 30% of total market share, even in the countries like UAE, Saudi Arabia, Kuwait and Malaysia. However, there are still several potential markets with large Muslim populations that remained largely untapped, such as India or even China. Subsequent to rapid growth, Islamic banks are facing a comparatively slowing growth rates recently in most markets, even in countries like the Saudi Arabia and the UAE, and can soon meet the general market rate. Moreover, there are still some Islamic banks that are facing declining profit margins and many other challenges. CHALLENGES IN ISLAMIC BANKING 1. Competition Even if Islamic banks are growing in number, there are established conventional banks which continue to launch Islamic windows. This is considerably making the task hard for Islamic banks. 2. Standardization and regulation Different interpretations of the acceptability of various products from Sharia compliant institutions make standardization difficult depending on one understanding of the Sharia principles. For e.g. one Islamic bank can reject the same Islamic financial instrument that another is willing to accept. 3. Size Many Islamic banks are still comparatively small to domestic or even international conventional banks, hence losing considerable...
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