IDBs Cross Country Experiences in Development of Islamic Finance 6 - - PowerPoint PPT Presentation
IDBs Cross Country Experiences in Development of Islamic Finance 6 th Meeting of the COMCEC Financial Cooperation Working Group 17-18 March 2016 Wasim A. Abdulwahab Islamic Financial Services Department 1 Islamic Financial Services
Islamic Financial Services Department
IDB’s Cross Country Experiences in Development of Islamic Finance
6th Meeting of the COMCEC Financial Cooperation Working Group 17-18 March 2016 Wasim A. Abdulwahab Islamic Financial Services Department
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Islamic Financial Services Department
Technical Assistance to Islamic Finance Industry
Financial Sector Development
US$8.8m
MDBs
Countries Technical Support Program Microfinance Development Program Strategic Partnerships
IFIs Bilaterals
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Islamic Financial Services Department
US$8.8m
Objective: To develop Islamic finance enabling environment (legal, regulatory & supervisory framework) and institutional capacity building in Islamic finance
Technical Support Program
Beneficiaries: central banks, capital market authorities, supervision agencies, public sector banks, ministries of finance, as well as Islamic Infrastructure Institutions.
What have the TA Projects achieved?
Tajikistan – Standalone Islamic banking law passed by the Parliament Djibouti – Preparing for issuing Islamic banking law Indonesia – Detailed Masterplan for developing Islamic finance architecture under implementation by the Govt. Kyrgyzstan – Converted EcoBank into an Islamic bank Afghanistan – Islamic banking operations introduced in Bank Milli Afghan Nigeria – Central Bank capacity building. Two Islamic banking licenses
IFSB – Standard on ‘Core Principles for Islamic finance regulation’
IIRA – Fiduciary Rating Methodology developed. Assisting in issuing sovereign ratings of IDB MCs Senegal – Provided regulatory policy advice leading to interest in Islamic finance from BCEAO Oman – Implementation Guidelines for Sukuk & Takaful
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Islamic Financial Services Department 35% 28% 14% 14% 8% 36% 27% 15% 13% 9% Regional SSA MENA CIT Asia
By Number
By $ Approval Amount of TAs
US$8.8m
key emerging Islamic finance markets: 21 countries targeted
Objective: To develop Islamic finance enabling environment (legal, regulatory & supervisory framework) and institutional capacity building in Islamic finance
Technical Support Program
Beneficiaries: central banks, capital market authorities, supervision agencies, public sector banks, ministries of finance, as well as Islamic Infrastructure Institutions.
TAs to Regional Bodies/IIIs/MDBs’ WGs CIBAFI IFSB IICRA IIFM IIRA GCC IDB-WB WG IDB-IMF LOU
Geographic diversity of projects
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Islamic Financial Services Department
US$8.8m
Objective: To develop Islamic finance enabling environment (legal, regulatory & supervisory framework) and institutional capacity building in Islamic finance
Technical Support Program
Beneficiaries: central banks, capital market authorities, supervision agencies, public sector banks, ministries of finance, as well as Islamic Infrastructure Institutions.
Who are the Beneficiaries?
Bank Al Magrib (Morocco) National Bank of Kyrgyz Republic Ministry of Economy
Bank of Uganda Central Bank
Central Bank
Libya Development Bank National Bank of Tajikistan National Bank of Kazakhstan Central Bank of Mauritania Gulf Cooperation Council (GCC) EcoIslamic Bank, Kyrgyz Republic Bank-e-Milli Afghan Gumhouria Bank, Libya BAPPENAS Indonesia Central Bank
Under Secretariat of Treasury, Turkey Central Bank
Maldives Monetary Authority Capital Market Authority Oman Banque Centrale des Etats de l'Afrique de l'Ouest (BCEAO) Ministry of Finance of Oman Bank of Mozambique
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Islamic Financial Services Department
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Islamic Financial Services Department
Countries tak ake different routes to im implementing Is Isla lamic fi finance en enabling en environment
developed (Basic, Intermediate or Advanced)?
various Islamic finance product from the population?
willing to pursue them?
Islamic Financial Services Department
Developing n ecosystem for Islamic finance by incorporating,
Islamic financial activity within a country or a group of countries’ financial system
Preparation Assessment Gap Analysis Agree target framework model Obtain political support Establish working groups Identify other available support groups Evaluate & implement change Monitor & review
What is is an an Enabling Environment f for Isl Islamic Finance
Islamic Financial Services Department
Steps Required for Enabli ling Environment for Is Isla lamic Fin inance
Awareness building Organize stakeholder groups Understand the necessary enabling environment Preliminary studies & gap analysis Roadmap & Time table
Islamic Financial Services Department
Components of f an an Isl Islamic Finance Enabling Environment
Legal Regulations Shariah Taxation Accounting Liquidity Management
Islamic Banking Islamic Capital Market Takaful Ijarah
Islamic Financial Services Department
Components of f an an Isl Islamic Finance Enabling Environment
Legal Regulations Shariah Taxation Accounting Liquidity Management
Islamic Banking Islamic Capital Market Takaful Ijarah
Islamic Financial Services Department
Components of f an an Isl Islamic Finance Enabling Environment
Legal Regulations Shariah Taxation Accounting Liquidity Management
Islamic Banking Islamic Capital Market Takaful Ijarah
Islamic Financial Services Department
Ensuring robust Islamic financial transactions, products and services can be undertaken in a vibrant Islamic financial market place requires three major elements to be working in harmony: Legal enforceability Commercial Viability Sharia'a compliancy
Islamic Financial Services Department Recipients: (i) Maldives Monetary Authority and (ii) Capital Market Development Authority Amount: US$ 150,000 TA Agreement Signed:2012 Status: Completed
The TA Project
To set up legal, regulatory and supervisory framework for Islamic financial institutions in Maldives and to assist the country to launch Islamic capital market instruments starting with Sukuk
Objective
regulatory and supervisory framework for developing Islamic finance sector
framework
CMDA & MMA
Scope
The Islamic Development Bank GroupThe TA helped in developing
environment & the Sukuk market in Maldives and enhanced awareness about Sukuk
Impact
in September 2013 Consultant prepared detailed report on the necessary modifications needed in the legal, regulatory and supervisory framework for Islamic financial institutions Project dissemination workshops were conducted for the concerned stakeholders including staff of MMA and CDMA
Together we build a better futureSukuk Market Development Capacity Building Financial Sector
TA to Maldives Capital Market Development Authority to Develop Sukuk Market & Maldives Monetary Authority to Develop Regulatory Framework for Islamic Banking
Islamic Financial Services Department
Recipient: Capital Market Authority Amount: US$ 150,000 TA Agreement Signed:2014 Status: Completed
The TA Project
To provide consultancy services to the CMA to assist in the implementation of the newly developed Sukuk and Takaful regulations
Objective
Review and assist the CMA in implementing the newly developed regulations for Sukuk and Takaful
Scope
The Islamic Development Bank GroupTA helped in implementing the regulations related to Sukuk and Takaful and enhanced the understanding
staff
Impact
Expert hired for 12 months to implement Sukuk and Takaful regulations by way of developing policies, procedures, guidelines for the CMA.
Together we build a better futureRegulations Implementation Capacity Building
TA to Oman Capital Market Authority to Develop Islamic Capital Market & Takaful
Oman issued its first sovereign Sukuk amounting to OMR 200 million (US$ 520 million) in October 2015. The Ijara Sukuk tenor is 5 years.
Sukuk Issuance
Islamic Financial Services Department
Recipient: Bank-e-Milli Afghan (BMA) Amount: USD 130,000 TA Agreement Signed:2012 Status: Completed
The TA Project
Support BMA’s Islamic banking operations which will contribute to IDB’s strategic objective of developing and promoting Islamic financial sector in IDB member countries
Objective
finance product programs and related policies & procedures
capacity building training to BMA staff
Scope
The Islamic Development Bank GroupTA helped in full-scale relaunch of Islamic banking services comprising sophisticated product suite, developed policies and trained staff. BMA is now better equipped to serve client needs through innovative product solutions
Impact
Auto Finance (Murabaha), Home Appliance Finance (Murabaha), Real Estate Finance (Murabaha), Trade Finance LC (Murabaha), Construction Finance (Istisna & Parallel Istisna), Working Capital Financing (Musharaka)
Together we build a better futureRegulations Implementation Capacity Building
TA to Oman Bank-e-Milli Afghan to Develop a Suite of Islamic Banking Products for Clients
Current accounts, Savings accounts, Term investment accounts
Liability Products
Credit procedures, Financing policy, Operations policy, Profit distribution mechanism
Policy Documents
Islamic Financial Services Department 17