The adoption of Shari a Standard Number 59 regarding the Sale of Debt (
Standard 59) by the Accounting and Auditing Organisation for Islamic Financial Institutions (
AAOIFI) and, in turn, in the United Arab Emirates (UAE) by the UAE Central Bank is causing some consternation for those involved in Islamic finance transactions structured as commodity murabahas (
Murabahas) with variable profit rates (the equivalent of a variable interest rate in a conventional financing). Below, we summarise the issue and outline a couple of potential alternative approaches in the hope of facilitating progress towards a settled market position.
Traditional Murabaha structures
Structuring financings on an Islamic basis remains a key component of ensuring there is sufficient liquidity available to market participants in the UAE and the wider region, especially those seeking to obtain financing on a Shari a-compliant basis. Murabahas (sometimes referred to as cost-plus financings) have been a popular
Hakan Ozyon is struggling to remember the name of Sheikh Mufti Muhammad Taqi Usmani, the economist who chairs the Dubai-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).
“Sorry, I’m fasting at the moment and haven’t had any coffee,” he says.
Ten more days remain until Ramadan ends and Muslims can celebrate eating and drinking between dawn and dusk again. “You know how people get drunk on beer? We get drunk on sweets,” he jokes.
Ozyon, the chief executive at Melbourne-based Hejaz financial services, has more to look forward to than sugar. After the success of his firm’s Islamic investing services over the past few years, Hejaz has set up its own AFSL and is looking to roll out a financial planning offering to the Australia’s growing Muslim community.
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Sharia: When Muslim principles meet ESG
Tanya Ashreena reports.
When Schroders announced the launch of its Islamic Global Equity Fund in December, it said the fund would include a diversified investment strategy that combined Sharia law compliance with multi-factor investing and ESG principles.
The fund’s launch was in line with the Schroder Global Investor Study published in 2019, which found that many investors in the Islamic world are putting an increased emphasis on sustainability while deciding how to allocate their portfolios – and that there is an opportunity for the Sharia investment industry to capitalise on this.
The past couple of years have seen many Islamic funds integrating ESG.
Masraf Al Rayan gets shareholder’s nod to raise sukuk size to $4bn
02 Mar 2021 - 8:56
Officials during an Ordinary General Assembly of Masraf Al Rayan.
The Peninsula
Doha: The Ordinary General Assembly of Masraf Al Rayan has approved distribution cash dividend of QR0.170 per share, representing 17 percent of the paid-up capital for the fiscal year ended on December 31, 2020. The General Assembly agreed to increase the size of Masraf Al Rayan Sukuk issuance program from its current size of $2bn to a maximum size of $4bn.
Masraf Al Rayan held yesterday its Ordinary General Assembly meeting virtually which was presided over by Chairman & Managing Director of Masraf Al Rayan, H E Ali bin Ahmed Al Kuwari.