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Islamic Finance
UK’s Al Rayan closes last retail banking branch

The UK’s largest and oldest fully-fledged Islamic bank recently closed its last retail banking branch and now maintains a single branch only for high and ultra-high net worth customers.


London: Al Rayan closed its Edgware Road branch in the capital on 3 August. The branch’s shuttering follows a gradual closure of other retail bank branches over the past few years. The bank closed its London Whitechapel and Birmingham Small Heath branches in 2021. This came after it closed its Manchester and Leicester branches in September 2020.

An Al Rayan Bank spokesperson told Salaam Gateway that existing customers can continue to bank with Al Rayan Bank through their Digital Banking App and Telephone Banking service. Personal and business customers can also continue to deposit cash and cheques at nearby Lloyds Bank branch counters.

“Like many banks in the UK, Al Rayan Bank is finding that more and more customers are choosing to access their banking services digitally, rather than through a branch,” said the spokesperson. “As demand for branch services and customer footfall reduces, some commercial decisions have to be made.”

Al Rayan now only maintains its Knightsbridge branch which is only open to “premier” banking customers. Premier banking is for those who require home finance of £500,000 ($589,000) or more, are GCC clients or ultra-high net worth individuals. 

Mohammed Amin, an Islamic finance consultant and former tax partner at PwC in the UK, said that the closure of Al Rayan’s Edgware Road branch, while keeping a Knightsbridge branch for premier customers, is not surprising.

“I have long considered branches to be a way for retail banks to waste money,” he said. “That is why the major UK conventional banks have been reducing their branch footprint for many years. When Islamic Bank of Britain (as it then was) embarked on its branch strategy, I always felt that was a bad strategy and that they would be better off being internet only.”

Zahir Nayani, partner at Bristol-based law firm Foot Anstey, added that Al Rayan's shift to reduce its branch footprint has been driven principally by the increasing digitisation of retail banking and decrease in high street footfall.  

“Arguably, bolstering their online offering is a useful long-term play given increasing competition from values-based fintech offerings such as Algbra and Nester,” he said. 

New incoming charges

In addition to branch closures, Al Rayan is also set to introduce fees for its current accounts from January 2023, according to customers who spoke to Salaam Gateway.

One Al Rayan customer expressed dismay over the incoming fees in addition to branch closures.

“The current account fee is a ruse to encourage retail customers to walk away,” he said. “Branch closures have been framed under the pretext that digital banking is the future but they still require manual processes to do important tasks. It is just another reason for retail customers to get frustrated and switch to a conventional high street bank.”

In response, the Al Rayan spokesperson said they regularly review their products and strive to offer customers a range of services that meet their needs.

“In our recent review we found that most of our current account customers do not use Al Rayan Bank as their primary current account. When a current account is not used regularly, it can become inactive which could pose a greater security risk for customers,” said the spokesperson. 

“For our customers that wish to use their current account and subsequently maintain a set balance in their current account, the charges will not apply, thus allowing us to offer our services to our target market who actually use the product,” the spokesperson added.

Commitment to UK sector

There are five Islamic banks in the UK, although each are serving different areas of the market like retail, corporate, private and real estate financing.

Established in 2004, then as Islamic Bank of Britain, Al Rayan provides Sharia-compliant savings, finance and current account services to over 90,000 personal, business and premier customers.

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.”

© SalaamGateway.com 2022. All Rights Reserved

Islamic Finance
Newswrap: Islamic finance

Iraq Islamic Bank partners with MSA Novo to launch a fund to invest in tech-focused startups; Iraq’s Al Sanam Islamic Bank signs with ICSFS; Nominations open for 2023 Islamic Development Bank prize for Impactful Achievement in Islamic economics; Bank Negara Malaysia to announced 6th Royal Award for Islamic Finance in October; Book released on Islamic Development Bank Institute's evolution and first president; UAE-based B2B marketplace Produze raises $2.6 million to digitalise agricultural value chain; Egyptian e-commerce platform Sharwa raises $2 million in pre-seed financing.


Iraq Islamic Bank partners with MSA Novo to launch a fund to invest in tech-focused startups

As the global drive toward digitisation accelerates in the wake of Covid-19, implementing online solutions is even more critical to meet adapted consumer behaviour and market conditions. Moreover, particularly in emerging technology markets, the integration of paradigm-shifting technologies allows consumers, corporates, and governments to leap rungs on the evolutionary ladder.

Novel technologies allow for virtual infrastructure where the physical lags, allowing the provision of critical services not possible in the offline realm. Nowhere is this demand more critical than Iraq, a market with massive untapped potential, hindered by a historical lack of cohesive offline infrastructure. Iraq boasts a young, technology-savvy, well-educated consumer base with relatively high purchasing power. Yet these individuals struggle against the challenges imposed by outdated or broken infrastructure and fragmented supply chains.

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.

Islamic Finance
Indonesia seeks greater role of Islamic finance amid global financial inclusion push

Indonesia, which holds the presidency of the G20 group of major economies this year, wants to use this position to increase the role of Islamic finance worldwide, to boost consumer access to affordable financial products and services.


Jakarta: Financial inclusion is one of the goals of the G20, made more important by the COVID-19 pandemic widening inequality for the most financially vulnerable and underserved groups, said Dian Triansyah Djani, Indonesia’s ‘co-sherpa’ (diplomatic coordinator) for the G20.

“There’s no specific Islamic finance agenda at the G20, but Islamic finance plays a significant role in the global economy,” Dian told Salaam Gateway.

“At the G20 we want to move forward the financial inclusion agenda, with a focus on wider access to funding for small and medium enterprises, and this is closely linked to Islamic finance,” he said.

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.

© SalaamGateway.com 2022. All Rights Reserved

Islamic Finance
Newswrap: Islamic finance

$17.6 million raised for fintech in Pakistan’s largest-ever seed round; ESG-linked sukuk on growth trajectory; Pakistan makes payment on Sharjah Islamic Bank sukuk; Oman’s Islamic banking sector reports double-digit growth.


$17.6 million raised for fintech in Pakistan’s largest-ever seed round

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.

Islamic Finance
Muslim credit society transforming lives of the poor in India

Helping community members while adhering to Islamic principles.


Patna: A Muslim cooperative credit society, founded on the Islamic principle that prohibits charging interest on loans, is transforming the lives of numerous poor Hindus and Muslims throughout India.

In the past 20 years, the Al-Khair Society has provided interest-free loans of over Rs. 1,250 million (about $15.2 million) to nearly 25,000 people, mostly those struggling for survival.

Syed Shamim Rizvi, Chairman of Al-Khair told Salaam Gateway, “We have been successful in providing help to those who needed small loans. Initially it was difficult to win (their) trust because … some cooperative credit societies and finance companies had committed fraud and fled with the people’s hard-earned money, but Al-Khair succeeded in dispelling the fears of small depositors and won their confidence with honesty and dedication to work.”

Most beneficiaries are low-income groups like small traders, shopkeepers, roadside hawkers, owners of small roadside eateries (dhaba wallas), women, labourers and small farmers who had been fleeced by unscrupulous private moneylenders providing loans at exorbitant interest rates.

The Al-Khair Society helped them break free from the loan sharks’ clutches and secure interest-free loans. Roughly half of these beneficiaries are Hindus.

The organisation has 13 branches across Bihar, Jharkhand, Uttar Pradesh (UP) and Delhi and provides hassle-free loans two weeks after an applicant has submitted basic documents. Field staff visit the borrowers directly to collect loan instalments, simplifying the repayment process.

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.

© SalaamGateway.com 2022. All Rights Reserved

Islamic Finance
Sharia considerations for Web3, DeFi and NFTs

Mufti Faraz Adam is the CEO & Head Shariah Advisor at Amanah Advisors.


Web3, DeFi and NFTs are debated among Sharia scholars across the world, but are we asking the wrong question and approaching the problem from the wrong angle? Instead of asking whether x or y is Sharia compliant and attempting to reach a conclusion from the get-go, it may make more sense to approach all emerging technologies with sandbox-like thinking, where it is more of an exploration and experiment without a premature conclusion. A ‘Sharia sandbox’ of some sort would facilitate this, where there is a live and controlled testing environment for various technologies to assist stakeholders in developing Sharia acceptable digital infrastructure for a decentralised digital economy. There is sufficient basis in Sharia to begin with a permissive footing, a positive stance and with an intention to continuously iterate for Sharia alignment. The foundational maxim in Islam which is cited by several classical authorities and legal schools, states: “Transactions are permissible by default, unless evidence is established to the contrary.”

This should be the starting point for all experiments with Web3, NFTs and DeFi. Any problematic areas or experiences should be individually stripped out of the use cases of these technologies. Experimentation allows growth and the best ideas to rise to the top in an unmanipulated market with low barriers to entry. Experimentation facilitates better Sharia understanding and Sharia research.

A Sharia sandbox would incubate and shield innovative products and emerging technologies from any premature Fatwa or view. Similar to regulatory sandboxes, a Sharia sandbox could house all new tech and innovative start-ups which do not explicitly and clearly involve any prohibited element yet are unclear in their nature.

This would allow firms to get Sharia advisory services and test their products in a live environment with the oversight and guidance of Sharia advisors before any Fatwa, view or official Shariah certification. A Sharia sandbox could incubate and shield any tech or start-up and give it room to grow and develop into a certified Sharia-compliant offering.

Ultimately, the Sharia has been revealed to add value to people’s live and make people prosperous eternally. That eternal objective is supported by a stable economy with people receiving their needs in this transitory existence. Whatever adds value to people in being meaningful contributors to the world, and assists in achieving the eternal goal, will be welcomed by the Sharia. Whatever hinders that route, will be unwelcome.

Islamic Finance
Supporting a developing Islamic fintech ecosystem

Ronald Wijaya is the Chairman of Asosiasi Fintech Syariah Indonesia (AFSI).


Indonesia is considered the fastest-growing fintech ecosystem in South East Asia since 2016 when the first fintech Peer- to-Peer (P2P) regulation was published by the Indonesia Financial Services Authority (OJK). To date, there are more than 300 fully licensed fintech players in the country, the number could easily beat least double had the regulator not implemented a moratorium on new licenses in early 2020. Indonesia’s supportive ecosystem has four fintech associations which are fully recognized and appointed as Self-Regulatory Organizations (SRO) by the regulator, classified by the types of services or business models such as P2P Association (AFPI), Securities Crowdfunding Association (ALUDI), and Digital Financial Innovation Associations (AFTECH & AFSI).

Although AFSI is recognized as a Digital Financial Innovation Association by the OJK, AFSI acts as the home for all Sharia-compliant fintech players and is the Sharia-compliant digital ecosystem in Indonesia.

Amidst the pandemic, Indonesia saw a slowdown in the absolute number of Sharia-compliant fintech players, but despite this Indonesia now has the highest number of recognised Islamic fintechs globally in the landscape and database of this report and the overall growth in the sector remains strong, with a 130%+ growth in financing volume year on year from 2020 to 2021.

Volumes remain low as compared to conventional fintech, however due to the continued development of better Sharia-compliant banking infrastructure, and greater collaboration amongst Sharia-compliant financial service providers such as Sharia-compliant rural banks, BMTs (Sharia-compliant microfinance institutions), Sharia-compliant regional development banks and the Sharia-compliant fintech players, the growth projection remains strong, evidenced with the improved position of Indonesia in this years’ GIFT Index.

Furthermore, the Indonesian government’s vision within the National Agenda to support the development of a Sharia-compliant economy and the continued work of ecosystem supporters such as AFSI present a bright outlook for Islamic fintech in Indonesia.

Islamic Finance
Reputation management for fintech within Islamic finance

Lawrence Oliver is the Director and Deputy CEO of the DDCAP GroupTM, and Ian Bernard is the Group’s Head of Compliance.


In an ever-shrinking world where media runs 24 hours a day, seven days a week, reputation has become an even more important cornerstone of business, perhaps nowhere more so than in the rapidly developing Fintech sector that is and will increasingly underpin business activity within the Islamic finance industry. There is no clearer sign that reputational risk is becoming more significant than the recently published Wolfsberg Group guidance on Negative News Screening and how it has become a critical tool for client on-boarding and due diligence processes. Negative news screening applies a range of public information, data, and analysis to help determine the risk profile of a customer and to better understand, and manage, the financial crime and other reputational risks posed by a business relationship.

There has been an elevation in recent years in the extent of scrutiny of clients, service providers and business partners to ensure that, through business engagement, these third parties do not pose any undue reputational risk to financial market institutions, who have developed a heightened sensitivity to this type of risk.

A negative Google search does not always provide the necessary comfort - the dog that doesn’t bark can raise as much concern as the one that is making the noise. Fintech firms can address reputational risk and, for newer entrants, “lack of reputation” risk in several ways. Emerging firms might consider partnering with long established firms that can provide layers of professionalism, robust and tested processes and years of industry experience that cannot be hard coded. DDCAP GroupTM is one of the longest operating and most well- respected industry providers to the Islamic finance industry and with our ETHOS AFPTM platform we created a bridge that crosses the divide between traditional industry service providers and Fintech.

In recent years DDCAP has found an increased demand for our services from emerging Fintech firms and our experience shows that these partnerships can be rewarding on many levels. As our partners succeed, so do we and, as they build their individual businesses, we can offer them not only the benefit of DDCAP’s technology- based services and systems solutions but numerous others, that are available through our own partner integrations. As well as bringing automated efficiency to our clients, our partnerships are rooted in our commitment to ensuring that the best practice and governance protocols embedded within our services is available to them, too.

In the last few years, the world has had an awakening to the ESG agenda and, consequently, conversations have become more active and urgent around how businesses can intervene to ameliorate a growing number of issues, particularly in relation to the ‘G’ (governance). Again, such considerations have been central to building and developing our automated platform, ETHOS AFPTM, especially in ensuring sustainability of our supply chain and the integrity of our commodity inventory oversight and allocation disciplines. Emerging firms can leverage their own ability to respond decisively and swiftly to these issues by partnering with appropriately validated ESG focused initiatives, whose services and actions align with their individual Shariah and responsible practices and can be shared with other participant firms practising within our wider industry to create capacity and scale.

As an example of how valuable these partnerships can be, DDCAP’s engagement with newer Fintech operating across our global network has refocused and heightened our own awareness of the markets and cultures in which we work, as well as the laws and regulations to which those firms and we are obliged to adhere. In turn our relationships have helped us to better understand and serve those markets by further developing our automated governance protocols and risk mitigants in response.

Islamic Finance
Scaling up investments in Islamic fintech

Henk Jan Hoogendoorn is the Chief Financial Sector Officer at the Qatar Financial Centre (QFC), and Dr. Dalal Aassouli is Assistant Professor of Islamic Finance at Hamad Bin Khalifa University (HBKU).


Islamic Fintech is an emerging sector that focuses on delivering ethical and fair financial services to its clients and users, based on Islamic finance principles. The target audience can include the Gen Z and Millennial generations, who are attracted to responsible and fair access to their financial needs including in saving, investing, donating and lending. Fintech solutions, through convenient wallets, platforms and Apps services accessible by mobile phones are emerging fast as a convenient solution. Many of the products are available in white label solution for banks, while others like ALGBRA take a Revolut approach by adding more lifestyle elements to its app. 

In Europe, where the Muslim population averages around 3%, there is a growing need for Islamic Finance solutions – including to purchase a home. The classical interest-based mortgages do not work well for everyone and we are progressively witnessing many “rent to own” Fintechs emerging in the UK, France, Germany and the Netherlands. Interestingly this is also of interest to non-Muslims.

Today, numerous UK-born Islamic fintechs that partner with banks in the Middle East and Asia use tokenization as a tool to democratize investing in sukuk and other investment opportunities such as crowdfunding exist.

The other areas where Islamic fintech can play an important role, is to provide financial services to groups that traditionally have difficulties in obtaining access, such as SMEs and migrant workers.

There are two schools of thought: “to be – or not to be “Islamic”. Some fintechs do not want to be labeled as “Islamic” as their focus is ethical and fair financial services. Adding an Islamic label would in their mind not necessarily be readily understood by the wider target group that is attracted to the ethical finance. Others see a great opportunity to offer Islamic finance for a wider and growing Muslim community in Europe.

The challenges to get funding for Islamic fintech are not dissimilar to other fintech propositions. Angel and seed investors are generally found for the early stages. For series A and beyond it becomes more difficult given perceived market limitations, and in general there is a concern that VCs and other professional investors will have more influence on strategy development. This could mean that the “Islamic” element of Islamic fintech needs to be flexible.

At a recent roundtable of Islamic fintechs in London, hosted by QFC, all participants genuinely felt the need for dramatically scaling up worldwide investment in Islamic fintech.

Global fintech investments exceeded $200 billion in 2021 with more than 5,600 deals. With the growing Muslim population, increasing sustainable development challenges and post-pandemic recovery measures, the deployment of innovative Islamic Fintech solutions can support the transition to more sustainable economies while promoting financial inclusion and stability. Three actions areas can scale-up investments in Islamic fintech:

Expanding fintech innovation for sustainability: Fintech can be a key enabler for sustainability and inclusivity. As investment opportunities arise in many Fintech segments, Fintech startups need to develop more innovative technology-based solutions aligning financial performance and impact. Innovations in Islamic fintech have the potential to accelerate the flow of capital to a more sustainable digital economy. It can also help meet global policy objectives, namely when it comes to climate change mitigation as well as achieving the sustainable development agenda for overall societal good. To do so, Islamic fintechs need to work on boosting sustainability innovation in order to attract the growing impact investor base in addition to traditional Islamic investors. According to the Global Sustainable Investment Alliance, global sustainable investment in 2020 reached $35.3 trillion in five major markets (the United States, Canada, Japan, Australasia and Europe), a 15% increase over two years.

Enhancing regulation: A study by the Bank of International Settlements (BIS) finds that Fintechs raise more capital in countries with higher regulatory quality. While more than 60 countries have established regulatory sandboxes to improve fintechs’ access to finance and foster innovation, only very few are located in the OIC region, which creates high regulatory uncertainty and therefore limits fintechs’ capital raising capacity.

Promoting the development of Islamic fintech venture capital funds: Venture capital funds can play a significant role in the development of innovative business models. Their role in providing early seed funding to innovative fintech startups is critical to mitigate their funding gap.

While the availability of Islamic fintech VC funding remains scarce compared to other conventional markets, Islamic fintechs needs to focus on innovation, relevance, and scalability of their solutions to secure VC funding. Simultaneously, government grants as well as partnerships between Fintech acceleration and incubation programs can promote the establishment of more Islamic VC funds.

In Malaysia and Indonesia, both with large Muslim populations, Islamic fintechs have emerged strongly and access is being created for early-stage investments. With the Islamic fintech sector maturing, the time is now for countries with large Islamic banking institutions and wealthy sovereign wealth funds to take the lead and create VCs and funds that can facilitate later stage investing globally in Islamic fintech or the wider Islamic digital economy.

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