The development of Islamic
banking and the Omani
Experience
Growth of Islamic Banking Industry
Remarkable growth, both in terms of size and reach, has been witnessed in the Islamic Finance Industry.
Source: The World Islamic Banking Competitiveness Report 2013 – published by Ernst & Young
Estimated around US$ 1.8 trillion in 2013 (2011: US$ 1.3 trillion) Market Size
Go beyond US$ 2 trillion by 2014. Expected
Market Size
Annual growth rate 17%. Growing 50% faster than overall banking sector.
Growth Rate
Industry average ROE was 12% as against 15% of conventional, in 2011. ROE
Over 450 Islamic financial institutions worldwide. Industry
Growth of Islamic Banking Industry (contd…)
In the 4 decades, Islamic finance industry has shown a meaningful growth.
Sudan’s banking system becomes 100% Islamic
Islamic Financial Services Board (IFSB) established in Malaysia – mandate to develop regulatory standards Islamic Development Bank
(IDB) established to foster the economic
development and social progress of member countries and Muslim communities. IDB participates in equity capital and grant loans for projects in member countries
Iran introduces 100% Islamic Banking System
Accounting and
Auditing Organisation for Islamic Financial Institutions (AAOIFI) established – leading standard setting institution for Islamic
financial industry globally IFSB introduces standards on Basel II compliance for Islamic institutions Malaysia passes comprehensive legislation on Islamic Finance Sudan launches Islamic Banking
Total Islamic banking assets reach US$ 1 trillion, growing at 15% to 20% annually
Islamic assets expected to exceed US$ 2 trillion by 2017
Dubai Islamic Bank established under special law pioneering Islamic Banking in the Middle East region First Islamic Bank
Established in Egypt
Fiqh Council of OIC declares Takaful as fully Islamic paving the way for Islamic Insurance to flourish 2017 2010 2005 1991 1989 1985 1984 1983 1975 1963 2002
Inclination Towards Islamic Banking Industry
(contd…)
Various countries are now showing inclination towards the Islamic Financial alternatives.
Oman
First two Islamic license awarded…potentially a 10% market share play …
Libya
Banking industry to be made Shari’a compliant…
Egypt Considering sovereign sukuk… Switzerland Islamic Bank of Switzerland to open… Kenya
Kenya to emerge as the Islamic finance gateway to East Africa…
Tunisia
Central bank mulls Islamic banking regulations…
Hong Kong
HK legislating for Islamic banking…
Islamic Banking Regulatory
Framework (IBRF)
IBRF – Key Features
1. Licensing and Capital Requirements 2. Shariah Governance
3. Islamic Windows
4. Accounting and Auditing Standards
5. Capital Adequacy and Risk Management 6. Liquidity Management
IBRF – Licensing and Capital Requirements
• With respect to the minimum capital allocation
requirement, Central Bank of Oman has imposed various limits according to the type of Islamic
Financial Institution (such as Islamic windows, full-fledged Islamic banks etc.)
• Other obligations includes establishment of
Shariah Supervisory Board and internal Shariah reviewer, integration between Islamic and core banking system, submission of medium-term plan detailing vision for the future of the Islamic Bank / Window.
IBRF – Shari’a Governance
IBRF – Shari’a Governance (contd…)
• Primary objective of the Shari’a governance is to
provide a sound “system”, to govern all the
business activities of the Bank, in order to ensure compliance with Shari’a requirements at all times and at all levels.
• Moreover, Shari’a governance also enables the
Bank to be “perceived” as a Shari’a compliant
IBRF – Accounting and Auditing Standards
• Full-fledged Islamic Banks and Windows will both
report under AAOIFI accounting and auditing
standards but can also prepare their accounts
under IFRS, if needed.
• Consequently, external auditors may be asked to
audit under both standards.
• AAOIFI’s accounting and auditing standards has
some key financial reporting differences i.e. it also
requires the preparation of statement of sources of Qard-e-Hasan, statement of Zakat expense etc.
Meethaq Strategic Focus 2013
Meethaq Mission Statement
Committed to make Islamic Banking the banking of first choice for all stakeholders
Meethaq Strategic Focus 2013 (Contd..)
•Toeing to the line, in
respect of the market prices offered by others.
•But the pricing actions
will be based on the detailed study of market trends and responses of the competitors.
Meethaq Strategic Focus 2013 (Contd..)
•Obtain higher
proportion of long term deposits from customers.
•Seek to obtain deposit
for large organizations such as Pension Funds, Govt. bodies etc.
•Also need to invite
deposits from across the border.
Meethaq Strategic Focus 2013 (Contd..)
•Massive business
potential in the Islamic banking area.
•Large number of
potential customers waiting for the Islamic financial products.
•Diversified nature of
product portfolio to cater majority market needs.
Meethaq Strategic Focus 2013 (Contd..)
•Need to change the public
perception of separate Islamic banking operations.
•Educate the people / customers
through Nadwats and marketing documents (product broachers, booklet etc.).
Meethaq Strategic Focus 2013 (Contd..)
•Efficiently and
effectively extend the Islamic banking services to the targeted segments.
•Proper utilization of the
available technological means.
Meethaq Strategic Focus 2013 (Contd..)
•To impart a Shari’a and
banking knowledge. •Instill a Shari’a compliant culture. •Training assessment of each category of employees and
Business Activities Analysis – Q1 2013
(Contd..)
Product Development (Contd..)
POTENTIAL DEALS:
- Advising CBO on liquidity instrument for IBs. - Sukuk issue of Real Estate projects.
- Project Finance & Equity Arrangement for Industrial projects in Sohar
Branches and System
Development
Meethaq Signature Branches
• World-class customer service
environment.
• Hotel lobby structure. • Free Wi-Fi facility.
• Video Conferencing facility. • Meethaq Smart 24/7
• Internet Kiosk • RFID function • Multi Touch Screen • Video Call Kiosk •Interactive ATMs/ CDMs • Financial Theatre •Virtual Assistant
Branch Development
Meethaq Standard Branches (4 Branches)
SQU Branch Ibri Branch
Al Khuwair Branch Salalah Branch
Meethaq Signature Branches (7 Branches)
Ghubrah Branch
(Opened) Sohar Branch(31 Dec ’13) (31 Aug ’13)Ibra Branch Qurum Branch(30 Sep ’13) Nizwa Branch
