................................................................ 2 4. Legal Provision...................................................................................................................... 3 5. Effective Date & Compliance Deadline ............................................................................. 3 6. Approach................................................................................................................................ 4 PART 2: SHARIAH GOVERNANCE ARRANGEMENTS ................................................... 5 SECTION I: General Requirements of the Shariah Governance Framework ..............5 - 9 SECTION II: Oversight, Accountability & Responsibility............................................. 10 - 14 SECTION III: Independence............................................................................................ 15 - 16 SECTION IV: Competency .............................................................................................. 17 - 18 SECTION V: Confidentiality & Consistency.................................................................. 19 - 21 SECTION VI: Shariah Compliance & Research Functions ................................................ 22 (i) Shariah...
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...Introduction Shariah principles are the foundation for the practice of Islamic finance through the observance of the tenets, conditions and principles espoused by Shariah. Comprehensive compliance with Shariah principles would bring confidence to the general public and the financial markets on the credibility of Islamic finance operations. Bank Negara Malaysia (the Bank) places great importance in ensuring that the overall Islamic financial system operates in accordance with Shariah principles. This is to be achieved through the two-tier Shariah governance infrastructure comprising two (2) vital components, which are a centralised Shariah advisory body at the Bank and an internal Shariah Committee formed in each respective Islamic financial institution (IFI). The Shariah Advisory Council of Bank Negara Malaysia (SAC) is a body established under section 51 of the Central Bank of Malaysia Act 2009 that has positioned the SAC as the apex authority for the determination of Islamic law for the purposes of Islamic financial business. The mandates of the SAC, among others, are to ascertain the relevant Islamic law on any financial matter and issue a ruling upon reference made to it, as well as to advise the Bank and the IFI concerned on any Shariah issues relating to Islamic financial business operations, activities or transactions. SECTION I: General Requirements of the Shariah Governance Framework Principle 1: It is the duty and responsibility of an IFI to establish...
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...SECTION A: LIST OF SYARIAH COMPLIANCE COMPANY In Malaysia, Kuala Lumpur Stock Exchange Shari’ah Index (KLSESI) was introduced in 1997 by Securities Commission (SC). KLSESI was introducing to provide an avenue for Muslims investors to participate in equity investment in accordance to Shari’ah principle. This index comprised of firms listed on both the Main and the Second Board, and Masdeq at KLSE (Bursa Malaysia). KLSESI is the tool in Islamic capital market (ICM) plan where the activities carried out in that market are not conflict with the conscience of Muslims and religion of Muslim. Besides, the ICM represents an assertion of religious law in capital market transactions where the market should be freed from the involvement of prohibited activities by Islam. Under this index, it focuses on the core activity and level of interest income of company to determine whether a particular company is permissible or not in the index. Before companies listed on KLSE, they should make sure that their investments are permissible under Shari’ah law. The activities are considered impermissible if the operations are based on the interest; involve gambling, manufacture or sale haram products or contains elements of gharar. Furthermore, for companies that compromised both permissible and non-permissible elements, there are several additional criteria. The criteria are: a) The core activities of the companies must not contravene the principles of Shari’ah as outlined in the four criteria...
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...The reason for IFI or any regulatory body considering the ‘enjoining what is good and forbidding what is evil’ to be one of the basic principles of IFI Shariah Audit is due to ensures acceptance, validity and enforceability of contracts from Shariah point of view. Stating by Islamic Financial Services Board (IFSB), Shariah compliance actually is a central in assuring the integrity and credibility of the Institutions offering auditing. They state that Shariah non-compliance risk is the risk that arises from auditing failure to comply with the Shariah rules and principles determined by the relevant body in the jurisdiction in which the auditing operate. According to these standards, Shariah compliance is critical to audits’ operations and such compliance requirements must permeate throughout the organization and activities. As a majority of the auditors use Shariah-compliant auditing services as a matter of principle, the clients’ perception regarding audits’ compliance with Shariah rules and principles is of great importance to their sustainability. In this regard, Shariah compliance falls within a higher priority category in relation to other identified risks. They accordingly, require that auditing shall have in place adequate systems and controls, including Shariah Board, to ensure compliance with Shariah rules and principles. In other words, it could be said that IFI needs to be responsible for appointing people to carry out the responsibility of enjoining good, whenever...
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...Mohd Sobri 62289214372 Nur Aizat binti Mun 62289214006 Norhafiza binti Alalguring 62289214119 Noor Rahimah binti Abdul Rauf 62289214281 TABLE OF CONTENTS NO | TOPIC | PAGES | 1.0 | Introduction | 3 | 2.0 | Bank Profile | 5 | 3.0 | Financial Analysis | 7 | 4.0 | Credit Risk | 14 | 5.0 | Liquidity Risk | 24 | 6.0 | Operational Risk | 27 | 7.0 | Market Risk | 30 | 8.0 | Shariah Risk | 34 | 9.0 | Capital Requirement | 36 | 10.0 | Conclusion | 39 | 11.0 | References | 39 | 1.0 INTRODUCTION CIMB Islamic was officially launched by Malaysia’s Bank Negara Governor Tan Sri Dato' Dr Zeti Akhtar Aziz in June 2003. Since then, CIMB Islamic has won numerous accolades for its innovative Shariah-compliant solutions. It providing the consumer market with an Islamic alternative for deposit accounts and financing. CIMB Islamic offers a range of deposit and investment products to help manage business cash flow and cash reserves more effectively such as Wadiah Current Account-I, Fixed Return Income Account-I, and Special Investment Account-I. The money will only be invested in Shariah-Compliant activities. In the context risk, risk refers to the probability of loss. Risk actually elucidates the probability that an actual return on an investment will be lower than the expected return. Bank will dealing with high risk leading to high return or vise versa that can be manage, but not eliminate. Global trends are leading to the rising importance of risk management in financial...
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...transactions are take place in the way that do not interfere with the principles of Islam such as religion of Islam and principles of Muslim. Thus, Islamic Capital Market is prohibited and free from the activities or elements which against the rules of Shariah principles such as prohibition of riba (usury), gahrar (ambiguity) and maisir (gambling). Moreover, Islamic Capital Market works parallel with the conventional capital market but Islamic capital market is compliance with the rulings of shariah. Most of the shariah compliant assets is carry out in Islamic Capital Market which provide opportunities to various investors who seek to invest in the shariah compliant investments. In fact, Islamic Capital Market help to enhance the economy growth of country. This market also do not deny for non-Muslims to take part in the market. Furthermore, Islamic Capital Market is financial market which can be classify into equity and debt capital market. This capital market facilitates the ability of channeling funds from the surplus to deficit among the borrowers which lacks of fund and investors which has excess of fund. Basically, government and business organizations raise fund through the capital market. The examples of equity market shariah compliant securities in Malaysia are Islamic unit trust, Islamic Real Estate Investment Trust (REIT) and Islamic Exchange Traded Fund (IETF).On the other hand, the examples of debt capital market in Malaysia is...
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...ANNUAL REPORT ANALYSIS - GROUP PROJECT Corporate Governance Analysis I | Group Members:i. NASSRAH NAZIRRAH BT ADENANii. NUR AMIRAH BT ZAKARIAiii. SITI NUR MARLIA BT MOHAMED GHAZALIiv. WAN AUNI NADIA BT ABU BAKAR SIDIK | Matrix No:2013245798201345120420138048862013294204 | II | Name of Company: | CIMB Group Holding Berhad | III | Year | 2012 | | No of pages | 1-270 | 1 | Vision or Mission:reflects (if any) If not available then just state “NOT AVAILABLE”Shareholder Theory Stakeholder Theory | Vision : To be the leading Asean CompanyMission : The company want to provide Universal Banking Services as a high-performance, institutionalized and integrated company located in Asean and key market beyong, and to champion the acceleration of Asean integration and the region’s links to the rest of the world. | 2 | Read chairman’s statement:Identify any strategies and when you read the statement just try to figure out whether the strategies or activities mentioned relates to either a shareholder or a stakeholder perspective & write your findings in the column provided. | RECORD PROFITIn 2012 is CIMB Group’s most profitability year yet, as creating value for our shareholder is a foundation of everything we do. I. We added or expanded operations in Sydney, Melbourne, Hong Kong, Taipei, Seoul, London and New York through the acquisition of some Asia Pasific units of the Royal Bank of Scotland II. We remain in discussion to purchase a majority stake in the Bank of Commerce in...
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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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...About Al Baraka | | Al Baraka Islamic Bank B.S.C. (c) - Bahrain (AIB - Bahrain) established 1984 in Bahrain and up the years has pioneered the development of Islamic banking and finance. The Bank is registered with the Bahrain Ministry of Industry &, Commerce CR no. 14400 and is licensed by Central Bank of Bahrain (CBB) as an Islamic Retail Bank, with an authorized capital of US$ 600 Million, of which US$ 122 Million has been issued and fully paid.AIB - Bahrain is one of the Banking Units of Al Baraka Banking Group's (ABG). ABG is a Bahraini Joint Stock Company listed on Bahrain and Dubai stock exchanges and one of the well-known leading international Islamic banks. It has been rated by Standard & Poor's as BBB- with a short-term rating of A-3. ABG offers retail, corporate and investment banking and treasury services strictly in accordance with the principles of the Sharia'a. The authorized capital of ABG is US$1.5 billion, while the total equity amounts to about US$ 1.8 billion. The Group has a wide geographical presence in the form of subsidiary banking Units in 14 countries, which in turn provide their services through more than 400 branches. These banking Units are Jordan Islamic Bank/ Jordan, Al Baraka Islamic Bank - Bahrain, Al Baraka Bank Limited/ Pakistan, Banque Al Baraka D'Algerie/ Algeria, Al Baraka Bank Sudan/ Sudan, Al Baraka Bank Ltd/ South Africa, Al Baraka Bank Lebanon/ Lebanon, Al Baraka Bank Tunisia/ Tunisia, Al Baraka Bank Egypt/ Egypt, Al Baraka...
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...also underway to convert the entire financial systems in accordance to Islamic laws (Shariah). At the other side, separate Islamic banks are allowed to operate in parallel to conventional interest based banks. Malaysia opted for the alternative gradual way of developing and implementing Islamic banking system. 1.1 Origin of Islamic Banking in Malaysia The roots of Islamic Banking in Malaysia should go back to 1963 when the government established Tabung Haji or Pilgrims Management and Fund Board. The organisatio was established to invest the savings of the local Muslims in interest free places, who want to carry out pilgrim (Haji). Tabung Haji utilizes Mudarabah (profit and loss sharing), Musharikah (joint venture) and Ijara (leasing) modes of financing for investment under the guidance of National Fatawah Committee of Malaysia. The first call for separate Islamic bank was made in 1980, in a seminar held in the National University of Malaysia. The members who attend had passed a decision requesting the government to create a special law to setup an Islamic bank in the country. Thereafter, the government had set up a National Steering Committee in 1981 to study legal, religious and operational aspects of organized an Islamic bank. The committee established the blue print of a modern Islamic banking system in 1983, which later enabled the government to establish an Islamic bank and to issue non-interest bearing investment certificates. 1.2 Initiative Taken in Malaysia The...
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...Arabian Journal of Business and Management Review Vol. 1, No.4; November 2011 THE SURVIVAL OF ISLAMIC BANKING VIS-À-VIS NON-INTEREST BANKING IN NIGERIA, AN OVERVIEW DR. AKINYEMI BALOGUN,* Head of Department, Accounting and Banking &Finance/Business Administration, Achievers University, Owo, Ondo State, Nigeria ABSTRACT This Paper Examines and gives an Overview of the Survival of Islamic Banking visà-vis Non-Interest Banking In the Nigerian Economy, its background and Origin, a review on non-interest banking system in Nigeria compared with other countries, arguments from different analyst on Non-interest banking System, the implication of statutory auditor, the implication, the role of auditor, the laws and guidelines guiding non-interest banking in Nigeria, differences between Islamic banking system and conventional banking System, its benefit, timing, profit sharing and problem. KEYWORDS: Non-interest Banking, Islamic Banking, Statutory Auditors, Guidelines, Conventional Banks, Nigerian Economy, Overview, Benefits and profit sharing. *Dr. Akinyemi Balogun is a multi professional, a financial expert, a manager of repute, a chartered banker and associate chartered institute of marketing, fellow national institute of marketing, associate chattered institute of management. Dr. Akinyemi Balogun is the head of department of Business Administration, college of social and management sciences (COSMAS), in Achievers University, Owo. The views expressed in the paper are purely...
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...Challenges on Shariah-compliance & Accounting Implications Monsif MOUMNI Introduction The growth and popularity of the use of Islamic finance has been exceptional since the central bank of Bahrain issued the first sovereign sukuk in 2001. In fact, the size of the global Islamic finance market exceeds US$2 trillion. Although the sukuk market is still small compared to the conventional bond market, sukuk are considered as the most successful financial product among the Islamic financial institutions and also considered as one of the fastest industries in its growth in international financial landscape. Sukuk generally refers to Shariah-compliant bonds; the spread in a striking pace of sukuk in GCC1 and Muslim-majority countries in Asia has made from it a very important way for fund raising. Recently sukuk have also been attracting attention in non-Islamic countries in Europe, Asia, and Africa; for example in 2014, sovereign sukuk were issued by the United Kingdom, Hong Kong, Luxembourg, and South Africa (Lackmann, 2015). The main objective of this paper is to provide a panoramic picture describing the key elements characterizing sukuk from different perspectives combined. In this review we will first try to present the general context of sukuk i.e. the definition, types, and the basic structure of sukuk, and also to make a contrast of conventional bonds with sukuk to outline the main differences, and next we will discuss about controversy and Shariah concerns with...
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...1. Introduction 1.1 Background Bangladesh is the third largest Muslim country in the world with around 135 million populations of which 90 percent are Muslim. The people of this country are deeply committed to Islamic way of life as enshrined in the Holy Qur'an and the Sunnah. Naturally, it remains a deep cry in their hearts to fashion and design their economic lives in accordance with the percepts of Islam. The establishment of Islami Bank Bangladesh Limited on March 13, 1983, as the first of its kind in Southeast Asia, was the true reflection of this inner urge of its people. It was both a hope and a challenge to the Islam loving people of the country in general and the pioneers of the Islamic banking movement to make it a success. In the beginning there was some doubt in the minds of many people about the viability as well as the sustainability of the Islamic banking system. But the history of two decades of Islamic banking operation in Bangladesh not only removed this doubt from the minds of the people but also showed how a new banking concept based on Islamic values could so rapidly establish itself as the most modern, dynamic, and popular bank of the country. Within this short span of time the workforce of Islamic banks in Bangladesh in general and Islami Bank Bangladesh Limited, in particular, by their strong commitment and tireless effort have been able to prove the superiority of Islamic banking over conventional banking in every department of banking operations...
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...INTERNSHIP REPORT ON Marketing practices and policies of Al-Arafah Islami Bank Ltd. Rawnak Jamal Adnan. ID: 07882795 Department of Marketing, Jagannath University . To, Mr.Md.Mahathy Hassan Jewel Lecturer Department of Marketing Jagannath University, Dhaka Letter of Transmittal 15th October, 2012 Supervisor Mr.Md.Mahathy Hassan Jewel Lecturer Department of Marketing Jagannath University, Bangladesh. Subject: Submission of the internship working report. Dear Sir, With great pleasure I have prepared this Internship Report on Al-Arafah Islami Bank Ltd. Hopefully this report will provide you a good insight about the marketing practice in bank’s activities. It was a wonderful experience working on this report. I would, therefore, thank you for giving me the opportunity to undertake the preparation of this report. I am grateful for your kind co-operation and immense support. To prepare this report I have tried my best to accumulate relevant information from all available sources. Thanking you once again. Rawnak Jamal Adnan ID No: 07882795 Session: 2007-2008(2ND batch) BBA, Department of Marketing AL-ARAFAH ISLAMI BANK LIMITED Banani Branch, 16 Kamal Ataturk Avenue, Dhaka. Phone: 9822250...
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...Introduction Corporate governance refers to the method by which a corporation is directed, administered or controlled. It includes the laws and customs affecting that direction, as well as the goals for which it is governed. Corporate governance mechanisms and controls are designed to reduce the inefficiencies that arise from moral hazard and adverse selection. Corporate governance is also viewed as a process of monitoring performance by applying appropriate counter-measures and dealing with concepts such as transparency, integrity and accountability. Corporate governance requires corporations to exercise immense accountability to shareholders and the public, and also monitors the management of organisations in running their businesses. Corporate governance is normally divided into two categories, that is, self and statutory. Self-regulation involves aspects of corporate governance that are difficult to legislate. The issues in this category involve the human element, ie the independence of the board of directors, the relationship with the management and appraisal of the director’s performance. Statutory regulation, on the other hand, is the framework of corporate governance that can be explained in legal terms. The legislative and regulatory rules include: 1. Duties, obligations, rights and liabilities of directors, controlling shareholders and company officers. 2. Disclosure and transparency. Today, good corporate governance is considered vital as it promotes morality...
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