New CBI announcement 12/01/2015

[yota691]

News & Announcements

 

 

• To / banks approved the exercise of all Islamic banking (Islamic Banking Law No. (43 for 2015)) 
  01.12.2015

 

[sandfly]

YOTA THANKS

[Jaygo]

How does this effect us Yota?

[calkid11]

Thank you Yota

[yota691]

AN INSIGHT INTO ISLAMIC BANKING IN IRAQ 2015OCTOBER

 

OCTOBER

An Insight into Islamic Banking in Iraq

by Mustafa Muayad  - m.muayad@tamimi.com

The Islamic banking industry began in Iraq in the early 1990’s, and has witnessed significant growth in the last decade.

There are now just over a dozen such banks in Iraq and the capital managed by them has grown considerably.

The establishment of usury-free Islamic banks, which aim to conform to Muslim Shariah Law, creates significant new investment opportunities to attract religious investors.

Why Islamic banks?

Usury-free banking is essential for countries  that wish to cater to their religious investors and aid them in investing their money in ways that goes along with their beliefs.  Islamic banks offer such services within the Islamic sharia boundaries, for example Murabaha, Mudarabah, and Sukuk.

In comparison with the conventional banking, Islamic banks do not deal with ‘toxic assets’, such as those that resulted in the financial crisis of 2008 (i.e. assets that consist of a bundle of debts, some of which are bad). Islamic banks also do not deal with non-existing assets (e.g. they do not trade in debt or interest). 

The Central Bank of Iraq (the “CBI”) governs Iraqi banks, whether Islamic or traditional, on the same basis. This has enabled Islamic banks to prosper among the more conservative investment sectors of the Iraq market. 

The issuance of the Islamic Banking Law

Islamic banks have, since the early years of their operation in Iraq, been required to comply with the Iraqi Banking Law number  94  for the Year 2004 (the “Banking Law”), despite the fact that the philosophy of Islamic banks does not fall within the same structure. 

The Banking Law addresses commercial banking regulations, whereas Islamic banks work within conventional banking structures while applying Shariah Law at the same time. This has contributed to the limited growth of the Islamic banking industry in Iraq.

An unsuccessful attempt by the CBI to issue regulations for Islamic Banks was faced with objections from the State Consultation Council (the “Council”). The Council stated that in the absence and non-existence of a relevant governing law, it is not possible to pass such regulations.  

In 2011, positive development took place in the Iraqi Banking industry.  The CBI approved the opening of two Islamic windows and approved the incorporation of a governmental Islamic Bank. Islamic windows are separate departments within a conventional bank, which operates under strict guidance by an independent Shari’a Advisory Board (comprising Muslims scholars of repute, credibility and due social recognition) to develop and offer Islamic financial products to the clients that demand such products. An Islamic Window may offer its products and services through conventional branches or dedicated Islamic branches of the conventional bank.  

During the same year the CBI issued the Islamic Banking Regulations number 6 for the Year 2011. These Regulations expanded on Article 104 of the Banking Law’s definition of Islamic banks. Under said Article, an Islamic Bank is “any legal entity certified or authorized hereunder to conduct Islamic banking business in accordance with Sharia, and does not deal with given or taken interest”. As such, these Regulation gave Islamic Banks the right to fund and invest in accordance with Islamic Sharia, and forbade them from dealing in usury, in any manner, whether for its own interest or for a third party’s interest. 

The Regulations further specified the authorities that may grant Islamic Bank licenses. Also, now these Islamic Banks were granted the right to open onshore and offshore branches, and offices in accordance with an annual plan to be submitted to the CBI for the purpose of acquiring the necessary approvals. 

In addition to the above, the Regulations stipulated the activities that can be conducted by the Islamic Banks.  These activities include but are not limited to investing and funding activities through Musharaka (an equity partnership investment), Mudarabah (profit sharing partnership, similar to traditional trust management), Salam sell,  Istissna’a (Manufacturing Finance), Ijara (Hire Purchase), and bargaining; incorporating companies; entering many activities with a shareholding not to exceed 20% of the capital; the right to own movable and immovable assets necessary for its investments or for leasing; funding internal and external trading activities; participating in agricultural, industrial, and architectural  projects.

The Regulations specify activities which the Islamic Banks (and Islamic windows within conventional banks) are prohibited to carry out, such as the prohibition towards dealing with interest and issuing saving accounts. Moreover, the Regulations also illustrates funding and dealing mechanisms regarding the purchase of foreign currencies, foreign currency exchange companies, commercial papers, stock market and sets out conditions on how to offer loans from the bank within the allowed rates to fund any natural or legal entities and the imposed obligations pertaining to dealings in foreign currency.

The Regulations also set out the procedures for establishing a Sharia Board. Based on the Regulation, Islamic banks (and the Islamic windows) must have a Sharia Board which shall carry out the responsibility of providing a Sharia view on the operations of the bank in order to ensure its compliance with the Sharia Law. One of the main activities of the Sharia Board is to suggest to the General Assembly of the bank or its Board of Directors all the necessary steps that need to be taken or carried out to achieve compliance with Sharia Law. The decisions of the Sharia Board are binding on the executive management of the bank.

Finally, the Regulations give the right to conventional and investment banks to open an Islamic window or to establish an Islamic branch. The Body entrusted with the authority to grant such license is the CBI. The license gives conventional banks the ability to establish Islamic banks or corporations, affiliate with Iraqi or non-Iraqi Islamic banks, or to open an Islamic window within the conventional bank.

How To Establish an Islamic Bank in Iraq

Pursuant to the current Banking Law, Regulations and the CBI, the following are three processes to set up an Islamic Bank in Iraq:

1. Opening an Islamic window affiliate within a conventional banks

It is permissible for a conventional and commercial banks to open an Islamic window according to the terms and conditions specified by the CBI. These terms and conditions require the CBI’s prior consent. The bank may open an Islamic window after including such plan in the bank’s annual strategy that is submitted to the CBI, or by converting the activity of an already existing branch to conduct Islamic Banking activities. In addition, the bank must allocate independent capital for these windows, making clear that the source of said capital is not connected with any usury dealings

2. Setting up a branch for a Foreign Bank

The Regulations grant a Foreign Bank the ability to set up an Islamic bank in Iraq because Islamic Banks have the right to register branches and offices onshore and offshore. In order to being the process, the Islamic Bank must include said plan in the annual strategy that is submitted to the CBI in order to obtain the latter’s approval. Further, in addition to the supervision of the competent authorities in the country of origin of the Foreign Bank, these Iraqi branches shall be subject to the direct supervision of the CBI in accordance to an agreement prepared for said purpose.

3. Establishment of an Islamic Bank as Shareholding Company

The aforementioned Regulations have given the right to set up an Islamic Bank by a shareholding company. As such, after finalizing the registration procedures of the Shareholding company in Iraq, it must submit a written request to the CBI accompanied with required supporting documents to establish an Islamic Bank. The CBI shall then review the submitted documents to provide its initial approval. After fulfilling all the requirements and obligations, the CBI shall then grant the license upon registration as a Shareholding Company.

Future Islamic Law 

As for the governmental side, the General Budget of 2015, has exempt the establishment of Islamic Banks from the  capital increments imposed by the CBI in order to encourage the use of Islamic Bank products. 

In addition, there is a draft Islamic Banking Law under review to be passed sometime this year. This law will regulate the operations of the Islamic Banks in a more thorough manner. One of the important articles in the draft law aims to exclude Islamic Banks and their branches from the taxes and fees arising from dealing in contracts relating to estate, land, cars, Murabaha deals and Ijara deals. 

Conclusion 

The current Regulations and laws (current and proposed) offer real and significant encouragement for the Islamic banks and their activities. It is important to note that the CBI, in many announcements, has encouraged the establishment of Islamic Banks and their growth, having recognised that they are an attractive solution to attracting the conservative public who are un-willing to deal with usurious and conventional banks. All in all, we believe that Iraq is a very promising market for Islamic bank investment. 

[Jaygo]

Ya that doesn't help me understand any better at all Yota.

[skrappyone]

IMO.......This states that the Islamic Banks have different ideas on how they want to run their banks.  Their ideas was not allowed under the current banking law, so they issued this law, which better caters to their beliefs.  I believe this will help ease tensions in the banking arena and more citizens will have more faith in the banking system in general because it will give them more options of how they do their banking.  Just the way I read it.  I could be in left field.

[yota691]

Islamic banking in the quality of its contribution to achieving financial inclusion

 

 

         

6/12/2015 0:00 

 BAGHDAD - Hussein al-Tamimi Tgb 

praised Islamic banks in Iraq on the approval of the Islamic Banking Act, which recently passed, and its role in the promotion of Islamic banking products through financial inclusion prepared by the starting point for their work, especially as the law coincided with the Annual Arab Banking Conference which Describe the expansion of the work of Islamic banking and commensurate and directions 

 communities. 

According to the recommendations of the Annual Arab Banking Conference for 2015, the need for joint Arab cooperation for the development of a comprehensive Arab strategy to promote financial inclusion with an emphasis on anti-money laundering and terrorist financing, and to promote construction policies 

and construction. 

Dr. Sadeq al-Shammari member of the World Union of Arab banks: The issuance of Law regulating the work of Islamic banks as well as regional and international support to activate the Islamic banking products leads to the need to create products that fit and law as well as the needs of the communities that have become going to be this type of service 

banking. 

Shammari said in an interview for »Sabah« that the Arab Banking Conference which set aside time to discuss the development of the reality of Islamic banking and the role of financial inclusion in achieving economic feasibility saw the participation of quality represented by more than 800 leading personal financial and banking Arab and international presence of ministers and rulers of the central banks of 24 countries, pointing to discuss ways of banking cooperation between the participating countries, including Iraq, which is of interest to all participants. 

He noted that the recommendations of the conference focused on financial inclusion inclusion as an objective strategic new governments and regulators, and the integration of financial inclusion and financial stability and financial integrity and financial protection for the consumer to realize the Integrated Framework for inclusion and financial stability, as well as to urge the decision-makers on the importance of achieving harmony between strategies development projects micro, small and medium, and given the financial education necessary importance of large cross-section of communities 

Arabah.wachar to that interest in the electronic systems and optimization of the great development in the financial services and innovative products and the development of infrastructure of the Arab financial system, and improve the credit reporting systems, and protect the rights of creditors, and to facilitate the the safeguards systems of the most prominent recommendations that urged the creation of an environment conducive and favorable to get young people and women to finance and financial services, and the expansion of financial services to include the wider rural areas in Arab countries, and the diversification and development of financial products and services in the region in order to provide innovative and affordable services, Designated categories 

poor. 

Shammari said the recommendations developed by committees elected by the Congress administration stressed the importance of increasing and expanding the role of Islamic banking to give a push for financial inclusion by allowing individuals and enterprises of small and medium who prefer a compliant banking operations with the law, dealing with the banking system, financial Tazizalmassat Arab policies Financial Inclusion has, to affect the micro and small and medium segments of low-income in the community, and emphasis on the integration of social responsibility and the principles of sustainable development into its policies Altamoalah.omnan recommendations given to the problem of the Arab exodus of great importance, to reduce the aggravation of social and humanitarian crises, and the development of the adoption of a statistical standard for measuring the level Financial Inclusion in the Arab countries, and follow-up Ttorhma inclusiveness, respectively, as well as the need for action to combat illiteracy banking through educational educational programs starting from the rows 

 of First Instance.

 

[yota691]

Islamic banks .. Between al-Shara and the economy

 

 

         

8/12/2015 0:00 

 Dr.. Acer Yassin 

current circumstances experienced by the Iraqi economy from the beginning of the recession could be long requires us to deal with all the data available in the economy and revitalize and re-breathe life into some of the doors of economic activity. 

Including Islamic banks, which restricted its unfair competition from some of the Iraqi private banks, which was based on dealings in the currency of the Central Bank of Iraq auction in the conduct of its business and achieve sustainability of its dominance of the data of the Iraqi banking work without a guarantee in the financing of real processes of development in the Iraqi reality and the survival of its ink on transactions and transfers paper was marred in the last period a lot of suspicions of money laundering. 

These data are all paid the limited number of Islamic banks to adopt investment formulas distance often from the provisions of Sharia and Islamic approached from traditional commercial banks, albeit an Islamic cover such as Murabaha formula to buy something which we find unfair for its intended role of Islamic banks which are financial institutions working to assemble Savings and investment the best form that does not contradict the provisions of Islamic law, adoption is based in its dealings on the Islamic modes of financing of acts of banking and finance and others to meet the needs of emerging economic sectors in order to collect on the specific share of Murabaha is the information from this process and its distance through it from any suspicion of usury is forbidden. 

We First of all can confirm that righting the foundation for the establishment of Islamic banks is to meet the requirements of the users are trying to reconcile their need to finance or invest their money within the framework of Islamic law and in line with founded in the prohibition of usury in Islam, but it remains in line with the vision of the Islamic to the role of money in economic development and social and salvation of the human cases of destitution and ignorance and to the existence of a divine control over the employment of money these banks being Mstkhalafa on that money and an accountant before God Almighty to use it for the money and move it to the active investment to serve the community and directs for the purpose of compactness, monopoly and based on the fact that it agrees with the commercial banks in The investment is the lifeblood her and the sustainability of its work requires investment efficiency. 

for the sake of the advancement of the Islamic banks in Iraq, we need to look at alternative ways, including the establishment of an Islamic joint-stock companies shares are traded among partners and trading profit in line with Islamic law by participating different its methods which fixed and fixed MMP and participation which vary in Mdyatea through the first fact is characterized by the contribution of the Islamic Bank to finance part of the capital of the company or the project the most prominent and is thus a partner in the ownership until the end of the project period and the company or duration identified under the project, which could take the form of a fixed in the context of man-made laws, either Figures other two of partnership it would be the right partner in which to replace the bank in the ownership of the project replaced the Islamic Bank especially in cases where individuals do not wish to continued involvement of the bank to them which is called «MMP». 

Such trends employment funds Islamic banks and the introduction of the money deposited in an episode of internal criticism and turn them into development projects targeted by specialized companies, would all of this to come out of Islamic banks from the collar Murabaha-profit between the price urgent and term, which targeted the consumer side limited to the needs of individuals rather than a meet requests for development and production sectors with medium and long term foreign to any risk by the bank on its investments and without any need to examine the client's accounts, which weakens its authority jurisprudence for the loss of an element participating in the risk in the event of loss and exit from one of the basic principles of the economic system of the Islamic a «sheep Balgrm» which calls for the approval of Justice of the transactions and the inadmissibility of the financial institution to ensure Mganmha and take a loss or pays the responsibility of 

others. 

and this will make it difficult for the business-minded Muslim men to obtain required for their projects funding the fact that Islamic banks seeking to edgewise risks in order to achieve revenue almost stable The weak through orientation towards Murabaha sterile. 

stresses of modern international studies on the importance of Islamic banking mechanisms in reducing the impact of the global financial crisis being dealt in real terms and not with the natural monetary transactions speculation that are highly volatile and carries with it the risk to depositors and borrowers, as well as meet the needs of Muslim communities in finding channels to employ excess of their money without getting into problematic dealing in riba and made ​​available to entrepreneurs who are serious about the use of those resources in accordance with the principles of Islamic banks Kmstkhalafan on that money for the benefit of human development 

overall. 

[justchecking123]

Islamic banks .. Between al-Shara and the economy

 

 

         

8/12/2015 0:00 

 Dr.. Acer Yassin 

current circumstances experienced by the Iraqi economy from the beginning of the recession could be long requires us to deal with all the data available in the economy and revitalize and re-breathe life into some of the doors of economic activity. 

Including Islamic banks, which restricted its unfair competition from some of the Iraqi private banks, which was based on dealings in the currency of the Central Bank of Iraq auction in the conduct of its business and achieve sustainability of its dominance of the data of the Iraqi banking work without a guarantee in the financing of real processes of development in the Iraqi reality and the survival of its ink on transactions and transfers paper was marred in the last period a lot of suspicions of money laundering. 

These data are all paid the limited number of Islamic banks to adopt investment formulas distance often from the provisions of Sharia and Islamic approached from traditional commercial banks, albeit an Islamic cover such as Murabaha formula to buy something which we find unfair for its intended role of Islamic banks which are financial institutions working to assemble Savings and investment the best form that does not contradict the provisions of Islamic law, adoption is based in its dealings on the Islamic modes of financing of acts of banking and finance and others to meet the needs of emerging economic sectors in order to collect on the specific share of Murabaha is the information from this process and its distance through it from any suspicion of usury is forbidden. 

We First of all can confirm that righting the foundation for the establishment of Islamic banks is to meet the requirements of the users are trying to reconcile their need to finance or invest their money within the framework of Islamic law and in line with founded in the prohibition of usury in Islam, but it remains in line with the vision of the Islamic to the role of money in economic development and social and salvation of the human cases of destitution and ignorance and to the existence of a divine control over the employment of money these banks being Mstkhalafa on that money and an accountant before God Almighty to use it for the money and move it to the active investment to serve the community and directs for the purpose of compactness, monopoly and based on the fact that it agrees with the commercial banks in The investment is the lifeblood her and the sustainability of its work requires investment efficiency. 

for the sake of the advancement of the Islamic banks in Iraq, we need to look at alternative ways, including the establishment of an Islamic joint-stock companies shares are traded among partners and trading profit in line with Islamic law by participating different its methods which fixed and fixed MMP and participation which vary in Mdyatea through the first fact is characterized by the contribution of the Islamic Bank to finance part of the capital of the company or the project the most prominent and is thus a partner in the ownership until the end of the project period and the company or duration identified under the project, which could take the form of a fixed in the context of man-made laws, either Figures other two of partnership it would be the right partner in which to replace the bank in the ownership of the project replaced the Islamic Bank especially in cases where individuals do not wish to continued involvement of the bank to them which is called «MMP». 

Such trends employment funds Islamic banks and the introduction of the money deposited in an episode of internal criticism and turn them into development projects targeted by specialized companies, would all of this to come out of Islamic banks from the collar Murabaha-profit between the price urgent and term, which targeted the consumer side limited to the needs of individuals rather than a meet requests for development and production sectors with medium and long term foreign to any risk by the bank on its investments and without any need to examine the client's accounts, which weakens its authority jurisprudence for the loss of an element participating in the risk in the event of loss and exit from one of the basic principles of the economic system of the Islamic a «sheep Balgrm» which calls for the approval of Justice of the transactions and the inadmissibility of the financial institution to ensure Mganmha and take a loss or pays the responsibility of 

others. 

and this will make it difficult for the business-minded Muslim men to obtain required for their projects funding the fact that Islamic banks seeking to edgewise risks in order to achieve revenue almost stable The weak through orientation towards Murabaha sterile. 

stresses of modern international studies on the importance of Islamic banking mechanisms in reducing the impact of the global financial crisis being dealt in real terms and not with the natural monetary transactions speculation that are highly volatile and carries with it the risk to depositors and borrowers, as well as meet the needs of Muslim communities in finding channels to employ excess of their money without getting into problematic dealing in riba and made ​​available to entrepreneurs who are serious about the use of those resources in accordance with the principles of Islamic banks Kmstkhalafan on that money for the benefit of human development 

overall.

Good op-ed piece.