In 2014, Al Rayan became the UK subsidiary of Masraf Al Rayan (MAR), a Qatar-based Islamic bank. Last year, MAR merged with Al Khaliji Commercial Bank, which created one of the largest Sharia-compliant banks in the region with over QAR182 billion ($50 billion) in total assets. As part of the merger, Al Rayan Bank said it would leverage the opportunities from the MAR merger and focus on commercial property and premier banking, according to the bank’s 2021 annual report.

However, branch closures and a pivot towards high-net worth customers has led to some stakeholders suggesting that Al Rayan is slowly withdrawing from the retail market. 

Ibrahim Khan, co-founder and CEO of IFG, a UK-based Islamic finance platform, believes that Al Rayan’s gradual exit from branch banking is part of a steady withdrawal of the bank from serving UK Sharia-sensitive retail customers and focusing more on commercial and corporate lending activity as well as serving more high-net worth clients from overseas. 

“For Muslims in the UK this is an unfortunate development as it reduces the sources for Islamic home finance - Al Rayan was the biggest player for many years,” he said. “There is still hope with multiple well-funded new entrants to the market in recent years such as Strideup, Wayhome and others, however it'll be a while before we get the number of Islamic mortgages issued every year back to the heyday of when Al Rayan was at its peak.”

The Al Rayan spokesperson reiterated the bank’s commitment to the retail banking market.

“Earlier this year, Al Rayan Bank announced that it would continue its transition to become a financial institution which is focused on premier banking and property, mainly residential investments, to deliver a viable, resilient, Sharia-compliant business,” said the Al Rayan spokesperson. “As part of our commitment, we continue to offer the very competitive loyalty rates for all of our retail, assets and liabilities customers.”

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Into this void steps Iraq Islamic Bank (IIB) and MSA Novo (MSA), with YAG Capital as senior advisor for this partnership, according to a press release. Now is time to lay the digital rails and platforms on which all future commerce, financial services, government administration, and healthcare delivery will reside.

Under these conditions, it is paramount to not just invest in startups but directly engage in building companies which merge the technical capabilities and global best practices aggregated by MSA with the local market knowledge and execution capabilities of IIB. This vehicle is historically the first endeavour of this nature established for Iraq and the largest pool of capital ever aggregated for investment into the technology ecosystem in the country. This initiative aims to not only create value for its investors and the shareholders of IIB but will also kickstart the innovation flywheel in the market. By funding, building, and mentoring the next generation of Iraqi business leaders, this endeavour seeks to lay the foundations for the country's long-term economic and social success.

The fund is already among the active investors in Iraq, having co-led the most extensive funding round in Iraqi tech startup history with the super app, Baly. Targeted investment sectors will be core logistics and payments infrastructure layers, consumer technology platforms and enterprise enablers.

Iraq’s Al Sanam Islamic Bank signs with ICSFS

Newly-established Al Sanam Islamic bank has selected ICS BANKS Islamic Banking software solution from ICS Financial Systems (ICSFS), the global software and services provider for banks and financial institutions, according to a press release. The signing ceremony took place at ICSFS’ centre of excellence, Amman, Jordan. Al Sanam Islamic Bank will provide comprehensive, Sharia-compliant financing products and services to the Iraqi market, with a robust focus on digital banking. The bank will be implementing ICS BANKS Islamic Core, Financing Facilities & Risk Groups, Remittances, Murabaha, Mudaraba, Musharaka, Ijara, Istisnaa, Profit Distribution, Al Qard Al Hassan, Time Deposit, Trade Finance, ICS BANKS Digital, and ERP solutions.

Nominations open for 2023 Islamic Development Bank prize for Impactful Achievement in Islamic economics

The Islamic Development Bank Institute (IsDBI) is inviting nominations for its prize for Impactful Achievement in Islamic Economics for the year 1444H (2023). Focusing on the Development Solutions Achievement category, this cycle of the Prize aims to recognize, reward, and encourage creative projects that successfully solve economic and financial challenges in the IsDB member countries, according to a press release.

Individuals and institutions can apply or nominate other individuals and institutions based on a project that has a positive and significant impact on people’s lives and has a substantial impact on economic development based on Islamic principles. The prize comes with a $100,000 award for the first-place winner, $70,000 for second place, and $30,000 for third place. The nominated projects should be initiated within the previous seven years and be replicable elsewhere.

The application or nomination is a two-step process that can be initiated by visiting the IsDB Prize Portal website. The first step is the registration of the nominator/applicant, which is open until 11 December 2022. The second step is for the nominator/applicant to upload the nomination form details and any relevant files before 20 December 2022.

The prize winner and runners-up will be honored at a ceremony during the 2023 IsDB Group Annual Meetings on a date to be announced in due course.

Bank Negara Malaysia to announced 6th Royal Award for Islamic Finance in October

Bank Negara Malaysia (BNM) and the Securities Commission Malaysia (SC) are pleased to announce that the Royal Award for Islamic Finance 2022 will be conferred at a ceremony on 4 October 2022 in Kuala Lumpur, according to a press release.

The Royal Award recognises visionary individuals whose outstanding achievements and innovative ideas contribute significantly to the growth of Islamic finance, the global economy, and  social progress of communities around the world. A global call for nominations was made in December 2021, following which 49 submissions were received for 37 nominees from 14 countries. These nominees include renowned Islamic finance practitioners, Shariah scholars, and academicians.

This year’s winner will be the sixth recipient of the prestigious Royal Award, which was  inaugurated in 2010 as a biennial award1 in support of Malaysia as the global standard of a comprehensive and sophisticated Islamic finance marketplace.

The Royal Award winner is selected by an independent seven-member international jury headed by former Deputy Prime Minister Tun Musa Hitam. The jury comprises eminent Shariah scholars, academicians, and finance practitioners. The assessment process is based on a set of defined selection criteria, encompassing contributions towards driving policy development, developing and growing the Islamic finance market, advocating for Islamic finance, pioneering innovation, expanding the frontiers of knowledge, and exercising exceptional leadership and influence.

In addition to the Royal Award, two new award categories have been introduced this year - the Emerging Leader Prize and Impact Challenge Prize which will be presented in a separate ceremony.

The Emerging Leader Prize recognises young international talent who have made outstanding contributions in advancing innovative ideas in the field of Islamic finance. For this award, the Secretariat has received a total of 18 submissions for 14 nominees from 8 countries. The prize winner is determined by an international panel of Selection Committee, comprising esteemed academicians and industry practitioners.

Meanwhile, the Impact Challenge Prize recognises digital and innovative solutions based on Islamic finance principles or Islamic finance enablers, that seek to improve the economic and social resilience of financially impacted communities globally. This prize is a collaboration with the World Bank Group Inclusive Growth and Sustainable Finance Hub in Malaysia and the Malaysia Digital Economy Corporation. The prize winner(s) are evaluated based on four criteria - innovation, impact, commercial viability and scalability.

The organisers have received 50 applications from 14 countries for the Impact Challenge Prize. Those who met the criteria were shortlisted to join an Accelerator Programme. At the end of the Programme, they presented their innovative solutions to a panel of judges, comprising senior representatives from BNM and SC, Islamic Development Bank, World Bank Group and the venture capital industry. The Emerging Leader and Impact Challenge Prizes will be presented at the Global Islamic Finance Forum (GIFF) on 5 October 2022 in Kuala Lumpur.

Book released on Islamic Development Bank Institute's evolution and first president

The Islamic Development Bank Institute (IsDBI) has released a book which reviews the history and exceptional achievements of the IsDB from a nascent idea till the retirement of its first President, Dr. Ahmad Mohammad Ali, in 2016, according to a press release.

The new book is the English language translation of the original book first published in Arabic language in 2020. It deals with the various stages and key milestones the IsDB went through in the context of global and regional changes. It also highlights the first IsDB President’s initiatives, approaches, and ideas that he drew on in his interaction with the realities of countries and communities whose aspirations for growth, progress, and prosperity are depicted in the essence of the Bank’s mission.

The book includes success stories that illustrate valuable lessons as well as testimonies of personalities who dealt with the Bank, believed in its mission, knew Dr. Ahmad Ali well and highly appreciated him. The book was written at the behest of the former IsDB President, Dr. Bandar M.H. Hajjar, in compliance with a decision of the Board of Executive Directors.

Written in a simple yet very structured style, the book will be useful for diverse groups of readers, including researchers, development specialists, those interested in Islamic banking, and analysts of institutional and administrative practices and experiences. The authors are two retired senior IsDB staff members, El Mansour Ben Feten and Dr. Marwan Seifeddine, who worked previously as advisors to the first president and as department directors. They deployed the tireless effort and the diligence required in authoring a work of this nature by ensuring meticulousness and accuracy under the supervision of Dr. Ali and with the support and assistance of a team of IsDB Group officials.

UAE-based B2B marketplace Produze raises $2.6 million to digitalise agricultural value chain

UAE-based Produze, a platform for bringing agricultural producers and international retailers together, raised $2.6 million in seed financing led by Accel (first investors in Facebook, Spotify, Flipkart) with participation from All In Capital, and founder/CEOs of Ninjacart, Sammunati, Fashinza, Drip Capital, CityMall, Stellapps, DhanHQ and other investors, according to a press release.

Produze is a first of its kind platform that enables retailers to procure directly from source country agri producers delivered to their stores, enabling quality guarantee, competitive pricing, complete fulfillment and just-in-time delivery. The startup digitises procurement operations through a wide network of source producers, digitized exporting operations, importing operations and last mile logistics.

“Cross border supply chain for agri produce today is fragmented with several intermediaries and poorly managed processes, which creates inconsistency in quality, inefficient prices and wastage - leading to loss in value for the retailers and distributors.” said Ben Mathew, C0-founder & CEO, Produze. “At Produze, we’re enabling seamless commerce between the retailers and agri producers to return this wasted value back to them.”

Produze will serve multiple agri produce categories in multiple countries in Middle East, North America and Europe, serving a $143 billion market. The platform is now inviting applications for retailers and distributors on produze.com

“The Middle East has been a big strategic focus for Produze; UAE for instance is a dynamic and globalised market relying significantly on imports for food needs of an expanding population, where citizens and residents seek premium and uncompromised food quality at competitive prices. Produze is committed to bringing the benefits of technology and source producers access to enable retailers to get consistent quality, better prices and complete just-in-time fulfillment,” said Ben.

Produze was founded in 2022 by Ben Mathew, Gaurav Agrawal, Rakesh Sasidharan and Emil Soman. Ben and Gaurav were a part of the leadership team at Ninjacart, India’s largest agritech startup, enabling new distribution models, customer growth, profitability and investments. Rakesh and Ben had previously founded a B2C marketplace startup for home cooked food. Emil, who is the CTO, is a YCombinator alum and was the co-founder at Dockup.

Egyptian e-commerce platform Sharwa raises $2 million in pre-seed financing

Egyptian social commerce platform Sharwa has closed a pre-seed funding round for $2 million. The round was co-led by Nuwa Capital and Hambro Perks Oryx Fund and joined by several strategic angel investors, according to a press release. The pre-seed investment will be spent on the continued development of the technology platform and expanding the team.

Inflation has put a strain on households globally, where customers are looking for access to more affordable products. Sharwa aims to help customers do just that, starting with Egypt. Sharwa’s platform allows customers to get the best prices for their daily purchases on household essentials like groceries, appliances and homecare. Customers can club their baskets into a group order and place them through Sharwa using WhatsApp or directly on its app, unlocking wholesale prices from manufacturers for next-day delivery. In order to provide service in remote areas, Sharwa works with local community leaders, who have been Super Users of the service, to collect orders in their area.

As a result, Indonesia will host the 6th Annual Islamic Finance Conference as a G20 side event in Jakarta on 9 September. Two months later, Bank Indonesia (the country’s central bank), the Saudi Arabian Monetary Authority (another central bank), and the Saudi Arabia-based Islamic Development Bank (IsDB) are scheduled to hold a seminar on Islamic finance and digitisation on the Indonesian resort island of Bali, in another G20 side event.

A greater role for Islamic finance could be a catalyst for social and economic to achieve the UN sustainable development goals (SDGs), Indonesia's finance ministry told Salaam Gateway in a written statement. One of the important ways it can be done is through standardisation of best practices, it said, noting: “As the holder of the G20 presidency this year, Indonesia has an opportunity to promote greater growth in Islamic economics and finance, including the halal industry.”

“The attainment of SDGs is closely related to Sharia-based finance, including sustainable finance and digital financial inclusion. The Indonesian government has implemented several programmes that are in line with SDGs commitments and Sharia economic development, such as the issuance of green retail sukuk and ultra-micro financing for underserved communities such as women and micro-enterprises,” it added.

Such globally coordinated policies as shepherded by the G20 are important, given the turnover of the global Islamic finance industry is projected to reach $3.7 trillion by 2024, said Muhammad Al Jasser, IsDB president.

“We believe that Islamic social funding can stimulate economic activity and promote social welfare, financial inclusion, and shared prosperity by utilizing the traditional instruments such as zakat, sadaqah, waqf and microfinance through modern tools such as blockchain, fintech, and artificial intelligence,” he told the Global Islamic Investment Forum (GIIF), in Jakarta, in March – an event staged within Indonesia’s G20 presidential programme.

Al Jasser said awqaf - assets that are donated, bequeathed, or purchased for being held in perpetual trust for charitable causes - could be an alternative social finance framework, and reaffirmed the bank’s commitment to work with Indonesia's G20 team to bring the effort to fruition.

In 2020, the Islamic banking sector grew 4.3% year on year, reaching more than $2.7 trillion in total assets, according to Qardus, a UK-based Sharia-compliant business financing platform.

Islamic banking accounts for over 6% of the global banking market and comprises 68.2% of the total market of the global Islamic financial services industry, Qardus noted.

Continued growth in these banking services could help expand the halal sector, which according to the State of Global Islamic Economy Report 2022, involved Muslims spending $2 trillion in 2021 across the food, pharmaceutical, cosmetics, fashion, travel and media/recreation sectors.

This is especially the case in Indonesia, the world’s largest domestic halal economy market and home to nearly 230 million Muslims, with domestic spending across halal economy products and services of $184 billion in 2020, according to the Indonesia Halal Markets Report 2021/2022.

According to a 2020 census, only 40.3%, about 80.3 million people, in Indonesia have a bank account, up 50% from 2014. “Islamic finance plays an important role in meeting the financing needs to achieve the sustainable development goals,” said Tomi Soetjipto, a spokesman for the United Nations Development Programme (UNDP), in Jakarta.

“Therefore, in the past few years we have worked together with Islamic institutions to channel funds for SDG projects in Indonesia,” he told Salaam Gateway.

He noted that the Islamic finance sector in Indonesia has been growing between 10-12% annually across instruments such as sharia-compliant banking, asset management, sukuk and takaful.

Non-commercial instruments such as zakat, sadaqah and waqf “have also attracted the interest of the global community,” he added. The Indonesian government wants to ease payments of zakat and sadaqah through the banking system (both Sharia-compliant and conventional), plus mobile payment apps and online marketplaces. And its G20 presidency has also been an opportunity to push for the digitisation of small-and-medium enterprises (SMEs), which will aid the facilitation of these payments. Indonesia has set three priority issues for its G20 presidency on digitisation: connectivity and post-Covid recovery; digital skills and literacy; and cross-border data free flows with trust, said the country's communications and information technology minister Johnny G. Plate at a G20 digital economy working group meeting in March.

Indonesia is also advocating dialogue between countries on the governance of the global digital ecosystem. Dima Djani, CEO of Indonesia-based Alami, a Sharia-compliant peer-to-peer lending platform, said: “SMEs are the driver of the economy and have proven to be resilient in the face of the Covid-19 pandemic and it should be the government’s priority to increase access to funding for them.”

Digitisation is a major driver of economic transformation, with financial technology and e-commerce transactions valued at an estimated $24.8 billion in Indonesia last year, said Dima.

Alami has disbursed Indonesia Rupiah IDR2.6 trillion ($179.8 million) in sharia financing to SMEs across the country’s 32 provinces since it began operations in 2019.

“With increased financial inclusion it is important that we also increase the financial literacy of the people, so that they will manage their money more wisely,” she said. It is a sign of optimism that such a grassroots benefit can be yielded from global policy making at the G20.

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Islamabad-based fintech Dbank raised $17.6 million in Pakistan’s largest seed round, reported Bloomberg. The funding round was co-led by Sequoia Capital Southeast Asia and Kleiner Perkins, with Askari Bank Ltd, Brazil’s Nubank, and Rayn also involved. Pakistan has the world’s third largest unbanked population, which the fintech hopes to target and then expand to other Muslim-majority countries. “Pakistan has a fast-growing middle class with increasingly sophisticated banking needs. This signals a unique opportunity to build a large, customer-centric bank for millions of people,” Sequoia Southeast Asia’s Vice President, Johan Surani, is quoted as saying. Start-up financing is burgeoning in the Islamic Republic, the world’s fifth most populated country, attracting $350 million last year.

ESG-linked sukuk on growth trajectory

Environmental, social and governance (ESG)-linked sukuk is likely to persist as a key issuance theme in core Islamic finance jurisdictions amid government initiatives that promote sustainability and economic diversification, along with rising investor demand and awareness, says Fitch Ratings. Fitch rates more than 80% of the hard-currency ESG-linked sukuk market; while 10.4% of all Fitch-rated sukuk is ESG-linked, the segment’s growth potential remains high.

“Commonalities exist between Islamic finance and ESG principles due to built-in sharia filters, but there are differences,” said Bashar Al-Natoor, Global Head of Islamic Finance at Fitch. “Islamic finance does not relate only to the use of proceeds, but Islamic products also have to be structured in a way that complies with sharia. The global ESG-linked sukuk market has flourished in recent years, and we expect growth to continue in the medium term.”

Outstanding ESG-linked sukuk expanded by 11.2% quarter on quarter in Q2 2022, reaching $19.3 billion. About $4.3 billion of ESG-linked sukuk was issued in the first half of 2022, wrote Fitch in report Global ESG Sukuk Market.

Key challenges in core Islamic finance markets include a complex issuance process, regulatory constraints as well as a shortage of domestic ESG-focused investors and issuers. Sukuk must also comply with sharia.

ESG-related issues, such as water scarcity, climate change and governance reform, are key issues in a number of Organisation of Islamic Cooperation (OIC) countries. For example, five out of six countries in the Gulf Cooperation Council region rank in the top-10 globally when it comes to extreme temperature and drought.

Pakistan makes payment on Sharjah Islamic Bank sukuk

Pakistan is going through an economic crisis, seeking $6 billion from the IMF. Despite its financial woes, with a deficit of around $10 billion, the Islamic Republic has signalled it will not default on its external debt of $24 billion and has kept up with its bond repayments. Bloomberg reported that the Sharjah Islamic Bank received a schedule coupon of around $40 million on 31 July for its holding of a $1 billion sukuk issued in January. The State Bank of Pakistan confirmed the development to Bloomberg, saying “Pakistan’s sukuk coupon payment has been executed and all debt repayments during this week are on track, including the one due on August 3”.

Oman’s Islamic banking sector reports double-digit growth

Oman’s Islamic banking sector asset base grew by 13.6% in 2021, to RO5.9 billion ($15.34 billion), according to the central bank’s Financial Stability Report 2021, reported the Oman Observer. The Sultanate has two Islamic banks and five Islamic banking windows, which account for 15.2% of the overall banking sector’s assets. Profitability was three times higher last year on 2020, when there was a drop in activity due to the COVID-19 pandemic.

Launched in 2002 by Arshad Ajmal, then Chairman of Al-Khair Charitable Trust, Badurl Hoda, Syed Shamim Rizvi and a few others, the society currently has 29,000 members across India.

The founders contributed money and set the ball rolling, registering the organisation under the Multi-State Cooperative Societies Act and operating via a 21-strong board.

Over one-third of Al-Khair’s members are women

About 35% of the society’s members are women and, in 2012, it established a branch in the Bihar capital Patna fully managed by women. There are four other branches also headed by women with more to follow.

Al-Khair has worked assiduously to build a female workforce. Rizvi said the society has employed widows and divorced women in dire need of financial help. During the nationwide COVID-19 shutdown from March 2020, it became difficult for people to make ends as businesses closed and unemployment climbed.

Rizvi said in that situation, Al-Khair became a saviour for hard-hit poor and low-income families.

“I run a small boutique shop, but it remained closed for months … and my husband, a private school teacher, also faced salary cuts. We have two small children and the government assistance was not enough,” Reshma Khan, a 30-something Patna resident, told Salaam Gateway.

She added, as an Al-Khair member, the society provided her with a Rs 30,000 ($390) loan from which they managed their household expenses.

Khan also invested a portion of her loan into the shop to acquire fresh stock and repaid the loan as business slowly picked up.

While the organisation helped other needy people during the pandemic, the COVID-19-induced lockdowns also meant Al-Khair faced financial hardship as deposits dwindled. However, Rizvi said they could not let people suffer and their diligence further strengthened people’s faith in Al-Khair.

(Al Khair/Shuriah Niazi)

Helping those who can’t get bank loans

Al-Khair extends a helping hand to needy Hindus and other communities without discrimination and presents an example of communal and religious harmony. Dinesh Vishwakarma, a young Hindu who runs a small roadside eatery in the UP capital Lucknow, said his shop recently suffered substantial financial loss and he urgently needed money.

“It is very difficult for people like us to get loans from commercial banks. The banks are reluctant … as they require guarantee the loan will be repaid. Al-Khair is different. They don’t demand too many documents and charge only a small service fee, so repaying the loan is easy as there is no burden of interest,” he said.

Vishwakarma said the Al-Khair loan helped him refurbish and expand the shop, boosting his income.

“It is aptly a people’s cooperative,” he added.

Given Al-Khair’s current popularity and trust, it is not surprising there is demand to open branches, but administrative hassles have prevented the society from new launches since the 2014 venture into Delhi. It plans to open three branches in Bihar and two in Jharkhand, but its application has been pending with the government authorities since 2016.

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