Alizz Islamic Bank adds more winners for Hasalti scheme over Ramadhan

Source: Alizz Islamic Bank. Graphic for the Ramadhan Hasalti campaign.

As part of Alizz Islamic Bank's ongoing Sharing the Blessings of Ramadan campaign, the bank has increased the number of monthly winners in the Hasalti Children's Savings Account.

There are typically five cash prize draws a month; for Ramadhan, there will be 25 winners instead. The cash prizes are hiba (هيبة, gifts) from the shareholders' funds.

The Hasalti Children's Savings Account is based on the shari'ah principle of mudarabah, and the bank aims to educate children about the value of saving and planning ahead for the future in ways that are shari'ah-compliant. Accordingly, Alizz Islamic Bank invests the funds deposited in the Hasalti Children's Savings Account in shari'ah-compliant investment activities to create the best possible returns.

The minimum Hasalti deposit is OMR50 per month to make the account eligible for various benefits. The Hasalti Children's Savings Account is opened in the name of the child along with his/her guardian's name until the child reaches puberty, 18 years of age or 21 years of age for a child who has a legal guardian. Hasalti Children's Savings Account customers are eligible for a preferential rate on education financing when the account holder turns 18.

By maintaining a monthly balance of OMR50, all Hasalti Children's account holders are eligible to enter monthly draws, and get a chance to win cash prizes of OMR100 every month. The account holder receives a free Hasalti membership card when opening the account. The card provides access to special offers and discounts across Oman.

The principal account holder (guardian) receives free life takaful equal to twice the monthly balance available in the account, up to a maximum of OMR20,000.

Malaysia launches shari'ah-compliant crowdsourced investment platform, with ratings from RAM Holdings

Six Islamic banking institutions have launched the first bank-intermediated financial technology (fintech) platform in Malaysia. The Investment Account Platform (IAP) a strategic initiative of the Islamic finance industry to operationalise investment accounts, a new product offering by Islamic banking institutions. 

The platform has been developed by a wholly-owned subsidiary of Raeed Holdings, a consortium of six Islamic banking institutions: Affin Islamic, Bank Islam, Bank Muamalat, Maybank Islamic, Bank Rakyat and Bank Simpanan Nasional. In his speech, Datuk Zamani Abdul Ghani, Chairman of Raeed described the launch as an important milestone within the industry as it aims to broaden the traditional role of Islamic banking institutions, from traditional credit provider to include investment intermediary.

Similar to many fintech platforms such as crowdfunding and peer-to-peer lending platforms, IAP facilitates direct investment by investors into viable ventures of their choice. However, a key differentiating factor of IAP would be the roles undertaken by Islamic banking institutions. According to Mohamed Izam Mohamed Yusof, Chief Executive Officer of Raeed, what IAP brings to the table is the ‘trust’ factor provided by Islamic banking institutions’ experience and expertise, which is valuable in boosting investors’ confidence and enhancing financing opportunities for entrepreneurs. 

"I would say, the main challenge in developing IAP lies in streamlining various considerations including IT, banking operations, shari'ah, legal, products, recovery, risk management and compliance across the four founding banks, while ensuring that the business propositions of IAP remain competitive," he said.

"IAP is a centralised multi-bank platform that enables investors to directly finance ventures of their choice according to their risk-return preferences. The platform intends to enable different spectrums of businesses, including SMEs, corporates, new growth industries as well as entrepreneurs with good and viable projects, to gain access to financing in support of real economic growth. A unique feature of IAP lies in the intermediary roles undertaken by Islamic banking institutions, which put forth the element of trust and credibility that are valuable in boosting investors’ confidence and enhancing financing opportunities for entrepreneurs. This ultimately increases the likelihood of concluding tangible deals via IAP."

IAP was launched by Tan Sri Dr Zeti Akhtar Aziz, Governor of Bank Negara Malaysia. "Its robust risk management infrastructure, with a high degree of transparency and disclosure differentiates the IAP from other technology-based fund-raising platforms. Islamic banks in performing their intermediation role in the operationalisation of the investment accounts that are being offered on this platform, would rigorously undertake the credit assessment and screening of the listed ventures. The IAP would also require ratings on the listed ventures by rating agencies reinforced by the requirement for such ventures to comply to the disclosure standards thus enabling investors to make informed decisions. Integral to the platform is a mechanism for regular monitoring of the progress of the ventures, thus allowing for assessments to be undertaken by the sponsoring banks of any emerging risks associated with the ventures," she said. 

"The value proposition and benefits of the IAP are multi-fold. It has the potential to spur the generation of new economic strengths through the promotion of entrepreneurship and job creation while also promoting greater financial inclusion and thus enhanced prospects for balanced growth. The IAP enables investors to directly finance a broad range of economic activity of their choice, therefore diversifying their investment portfolio with exposures to various types of projects and industries that yield potential returns that are based on the performance of the underlying chosen ventures. For businesses, the IAP provides a new source of funding for activities, with more competitive financing terms in a range of financing structures. Ventures and entities of varying types, size and industries, including SMEs, listed firms and multinational companies can raise funds on this platform. Given its greater visibility, the IAP will also provide access to a broader range of individuals and institutional investors.

"For Islamic banks, the IAP creates a differentiated product that presents a new source of income and funding profile. There is also the potential for institutions with specific mandates including government agencies to strategically collaborate with the IAP and Islamic banks to form public-private partnerships to facilitate the efficient channelling of grants or funding and to facilitate financing opportunities for identified strategic ventures."

Strengthening financial inclusion and internationalisation

IAP will also be positioned as a new medium to facilitate more public-private partnerships in financing strategic ventures within specific industries. Through collaborations with IAP, government agencies can efficiently identify viable ventures to channel their grants into, and create opportunities for the private sector to partially fund these ventures. This can increase the number of beneficiaries for these grants therefore optimising the government’s revenue in spurring productive economic growth

More Islamic banking institutions are expected to join the platform moving forward. In addition to cost-efficiency factors and enhanced ability to achieve critical mass amongst clients, the competitive edge of IAP for Islamic banking institutions lies in internationalisation. IAP has the potential to be expanded as an avenue to channel local and foreign shari'ah-compliant investments in financing projects denominated in various currencies, as well as to be intermediated by Islamic banking institutions from different countries.

RAM Holdings separately announced that it has entered into an agreement with IAP Integrated to provide independent credit ratings on ventures listed on the IAP. RAM will conduct credit assessment and assign a credit rating to each venture prior to its listing on the IAP. The credit ratings from RAM provide potential IA investors with an independent, third-party opinion on the credit risk of the underlying venture. 

“RAM’s role in IAP is to provide an independent view on the creditworthiness or likelihood of the venture in meeting full and timely payment of expected profit and repayment of principal. This would require us to take into account factors beyond the track record of the entrepreneurs concerned, including industry risks and the viability of the proposal itself,” said Datuk Seri Dr K. Govindan, Group Chief Executive Officer of RAM Holdings. “We will leverage on RAM’s extensive experience in rating bonds and sukuk to deliver our credit opinions on the ventures.”

“Given RAM’s over 25 years of track record in credit ratings across various industries and geographies, it is well-positioned to conduct independent assessment on ventures listed on the IAP,” said Mohamed Izam. "RAM’s rating methodology is also familiar to most investors, which is a plus point in supplementing their investment decision making process.” 

In her launch speech Tan Sri Dr Zeti noted that Islamic finance in Malaysia has evolved into a complete Islamic financial ecosystem that operates alongside the conventional financial system. "The industry has now not only achieved a market share beyond the target of 20% by the year 2010 as was envisioned in the Financial Sector Masterplan, but it has also met the increasing and differentiated demands of the economy through the range of financial product offerings in Islamic banking, takaful and Islamic capital market segments," she said. 

Dr Zeti said the new landscape is enabled by the Islamic Financial Services Act 2013 (IFSA) takes into account the specificities of Islamic finance while ensuring a robust governance of an end-to-end shari'ah-compliant regulatory framework, and enables Islamic banks to diversify through offering investment accounts as an alternative means of raising funds from the public. "This new categorisation of deposits under the new Act has now been fully observed since mid-2015 with the effective reclassification of deposits to either being Islamic deposits or investment accounts. Following this exercise, the proportion of investment accounts to total funding for Islamic banks has increased from 7% in August to 10% as at December 2015, indicating a positive response towards this new product offering," she said. 

Kuwait Finance House launches Al Rabeh salary account

Kuwait Finance House (KFH) has launched the Al-Rabeh salary account, which offers clients the opportunity to win two 2016 Range Rovers and 3 kg of gold every quarter. Al-Rabeh is also an investment savings account that gives clients annual dividends.

The account is offered for clients wishing to transfer their salaries and manage their personal accounts with the ability to save and invest. Al-Rabeh account is available for individuals in KD, and it requires salary transfers to enter the draw. KFH invests 100% of the sum available in the account according to mudarabah principles, where profits are calculated according to the minimum monthly balance invested.

Interested?

Clients can open this account at any of KFH 64 branches around Kuwait. The draws are held in January, April, July, and October, provided that three rounds of salaries have been deposited in the three months prior to the draw, and a minimum monthly balance of KD50 by the end of each month is maintained. Every additional KD 50 in the account entitles clients to additional chances in the draw.

BNM governor lays out success factors for investment accounts

The Islamic Financial Services Board (IFSB) has built a solid global reputation as a prudential standard-setting body for Islamic finance, said Bank Negara Malaysia Governor Tan Sri Dato' Sri Dr Zeti Akhtar Aziz in opening remarks at the IFSB's Meet the Members & Industry Engagement Session in Kuala Lumpur in late January. "The initiatives and milestones achieved by the IFSB have indeed paved the way for jurisdictions across the globe to build a solid foundation for the progressive growth of Islamic finance that is underpinned with stability," she said.

Dr Zeti also observed that the IFSB has made significant advancements in taking forward the recommendations made in the Islamic Finance and Global Financial Stability Report 2010 towards achieving financial stability in the national and the international Islamic financial system. "The effective implementation of the standards issued by the IFSB is key towards promoting the soundness and stability of Islamic financial institution. To enhance this prospect, the IFSB has strengthened its role in facilitating greater jurisdictional preparedness in the adoption of these standards through the provision of technical assistance to its members," she said.

"Malaysia is one of the jurisdictions that has adopted and operationalised the prudential standards and the guiding principles that have been issued for the industry. The implementation of these standards and guiding principles support the regulatory framework that we now have in place in our Islamic financial system."

Dr Zeti said that Islamic banks in Malaysia now have the potential to be better able to pursue their role as investment intermediaries through the offering of investment accounts in addition to the entrenched deposit products. The legal recognition of investment accounts in the Islamic Financial Services Act 2013 (IFSA) differentiates between deposit accounts and investment accounts while offering a new investment avenue, one that is being channelled to finance entrepreneurship, she pointed out.

Dr Zeti highlighted the Investment Account Platform (IAP) that is currently being developed for its growing popularity. The IAP will provide a centralised multi-bank platform as a new financing option for entrepreneurs with viable projects as well as an opportunity for the investing public to finance these projects, she noted.

"It is encouraging that to date, eight Islamic banks are offering investment accounts to their customers. More are expected to follow when the value proposition of such investment accounts, with its unique features and the different target market become better understood. The industry-led communication by the Association of Islamic Banking Institutions Malaysia will contribute towards increasing the awareness of customers on the concept and on the key features of investment account. The latest establishment of a consortium developed by four Islamic banks to develop and operate the IAP which is to be launched next month is also another initiative to advance this new offering," she revealed.

Dr Zeti also listed some of the prerequisites for a successful introduction to the investment account. "In the development of the investment account, it will be essential for Islamic banks, investors and entrepreneurs to embrace the different approaches in the management of the risk and return relationships that are embedded in the variations of the shari'ah contracts used in such investment accounts. These relationships need to be well understood by the parties involved and which are aligned with clear contractual and operational requirements.

"The IFSB has an important role in not only providing guidance but also in initiating the convergence of the different practices between IFSB members with regard to the treatment of the investment account - also referred to as profit sharing investment account (PSIA) - in the IFSB standards. More in-depth work can also be explored by the IFSB on the prudential requirements for the investment account to further ensure a conducive environment for such risk-sharing offerings," she said.

The global Islamic financial system is now operating at a time when the international economic and financial environment has become immensely more challenging. New risks that are more complex, with more profound systemic implications are emanating with the increasing forces of financial liberalisation, globalisation, technological advancement, intensified competition, financial innovation and the internationalisation of Islamic finance. Cumulatively, these developments necessitate greater prudential regulation and supervisory oversight to ensure a resilient and sustainable financial system.

Dr Zeti said the role of the IFSB remains instrumental to the industry, especially internationally, and called for members to continue their support for the IFSB. "Greater concerted efforts by members to consistently adopt and implement the prudential standards issued by the IFSB will not only contribute towards preserving financial stability but it will also enhance regulatory harmonisation across jurisdictions," she said.

"Malaysia, as the host of the IFSB will continue to be committed to support its development and its potential as a prudential standard-setting body in the international financial system."

Interested?

Read the full speech

Al Hilal Bank hands out Eidiya pre-Eid to young Seghaar account holders

Al Hilal Bank, an Islamic bank in the UAE, has given out Eidiya, an Eid gift of money, to young Seghaar account holders. Families were invited to stop at Al Hilal Bank during banking hours on October 1 and 2 so that children could receive Eidiya.

Al Hilal Bank’s initiative is in the Eid Al Adha spirit of faith, happiness and tenderness for the community, the bank said, and is also part of the bank’s year-long promotions and incentives for Seghaar customers. 

“Al Hilal Bank is committed to rewarding the loyalty of its young clients through unique programmes that we try to tie up with local celebrations whenever we can. This way, we ingrain in them an appreciation for both money and culture – two key elements top their future success. We hope the little ones will have great fun with their Eidiya as they mark this year’s Eid Al Adha with their families,” said Mohamed Jamil Berro, Group CEO, Al Hilal Bank.

Al Hilal Bank is fully-owned by the Abu Dhabi Investment Council, the investment arm of the Government of Abu Dhabi. It manages 22 local branches and 120 ATMs across the UAE as well as three overseas branches in Kazakhstan.