3-5th July 2018 — Astana, Kazakhstan

3-5th July 2018

04/06/2018, 18:10

ISLAMIC FINANCE AT THE AIFC: OPPORTUNITIES AND ADVANTAGES

According to the International Association of Islamic Business (IAIB), Islamic banking assets exceed more than $ 2 trillion, and incomes on them is about 12.6% per year. At the same time, the share of Islamic banking is growing, this tool is already used by 42 million people in different countries

How Islamic bank differs from any other bank?

Islamic banking works only with projects that comply with the norms of Sharia. Thus, the gambling business, the production of pork or alcoholic beverages are "overboard" for Islamic financing.

In addition, for Islamic banks there are a number of strict conditions:

- a ban on interest-bearing transactions, this applies to both loans and exchange transactions;

- a ban on transactions with conditions of uncertainty;

- the division of the risk of profit and loss between the bank and the customer on transactions;

- mandatory identification of the assets underlying the transaction. Conducting financial transactions based on real assets or transactions with these assets.

Important: no Islamic bank works for free. "Unfortunately, the level of awareness of the population of the RK on Islamic financing is low. There is a stable stereotype that Islamic banks work without interest - for free. We have to explain that an Islamic bank is a commercial bank that makes a profit. Absence of interest implies a restriction on the calculation of remuneration. And the profitability of the bank is formed in other ways", - said the regional director of "Al-Hilal Bank" Zhaksylyk Zhumanov.

The world market of Islamic finance is of great interest to Kazakhstan. The creation of the direction of Islamic finance in the Astana International Financial Center  is connected with this. As the Minister for Investment and Development of the Republic of Kazakhstan Mr. Kasymbek noted, AIFC will become a regional hub for Islamic finance. First of all, this means that on the Exchange of the Centre, in addition to placement of bonds of the Ministry of Finance, it is planned to place sovereign Islamic bonds (sukuk).

AIFC has established the International Expert Council for Islamic Finance (MESIF), which has the best international experts: the former president of the International University of Islamic Finance (INCEIF) Daoud Vikari Abdullah, Professor Rifaat Ahmed Abdel-Karim, ex-Secretary General of the Council for Islamic Financial services (IFSB) and others.

The tasks of MESIF are the examination of regulatory documents in the field of Islamic finance, assistance in attracting investors and leading Islamic financial institutions to the platform of the AIFC, as well as providing advice on the development strategy and promotion of AIFC as the center of Islamic finance.

"In creating the AIFC, we see great benefits for ourselves. We came to the fact that we can compete equally with traditional commercial banks. In Kazakhstan we offered a limited type of products. Services for individuals - deposits, cards - we began to develop at the end of last year. Now an Islamic mortgage is being developed," Zhaksylyk Zhumanov said.

An important event for the development of Islamic finance in Kazakhstan will be the Astana Islamic Economy Forum, which will be held in the framework of the ASTANA FINANCE DAYS conference.

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