Principles of Islamic Banking and Finance

Venue: The Conrad Bali Resort & Spa

Location: Bali, Indonesia

Event Date/Time: Jun 27, 2005 End Date/Time: Jun 29, 2005
Early Registration Date: May 09, 2005
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Description

Expert Course Director
Dr Taha Eltayeb
Head of Islamic Banking at the Bahrain
Institute of Banking and Finance.

Course Objectives

Islamic finance is emerging as one of the fastest growing areas of international finance. One routinely-quoted estimate puts the value of this market at between US$200 and US$300 billion, with 10-15% annual growth expected over the next five years.

Islamic finance has come a long way since the early days of simple cost-plus structures. New products are emerging all the time, attracting new players and increased investment. However, the rules and conventions governing Islamic finance are significantly different to conventional finance. One of the most important differences is the complete absence of interest, making the structuring of Islamic financial products a complex and daunting task. To be eligible to offer such products, market participants must be well-versed in the groundings of Islamic finance. It is a characteristic of the market that there remains a significant shortage of such professionals.

As such, Islamic Finance Training are pleased to bring you this new, intensive course that will demystify this exciting sector. The 3-day programme will explain the background and most important characteristics of Islamic finance. The course will go on to examine the most commonly structured products, as well as equity investing, Sukuk and Takaful.

Who should attend

This is a comprehensive programme designed to give delegates an all round understanding of the issues involved in Islamic finance. The programme will benefit professionals already involved with Islamic finance, as well as those new to the market. This includes corporate treasurers, financiers, bankers (including those operating under Islamic windows), as well as end investors.

The course is specifically targetted at:
• Corporate Financiers
• Investment Bankers
• Corporate and Commercial Bankers
• Private Bankers
• Analysts
• Portfolio Managers
• Consultants
• Lawyers
• Investment Advisors
• Regulators
• Government representatives
• Insurance specialists
• Auditors and compliance


3-Day Course Outline

Islamic Jurisprudence-the main rules:
Figh Al-mamalat.
• Riba
• Gharar
• Jahalah
• Maysir
• Effects on contracts & Products

Conventional VS. Islamic Finance
An overview of Balance Sheets

Mobilization of Funds by Islamic banks:
Mudaraba Contract:
• What is Mudaraba?
• Terms & conditions
• Al-Wakalah
• Terms & conditions
• Unrestricted Vs. Restricted Investment Accounts- profit-sharing
o Saving Accounts
o Term Deposits (investment Accounts)
• Risks inherent in Mudaraba transactions
• Mudaraba Reserves
• Case: Shamil Unrestricted Mudaraba Contract (Term Deposits)
• Case: IDB Wakalah (agency) contract (Inter-bank Placements)
• Quard Hassan contract as basis for Current Account

Murabaha Contract

• Principles, terms & conditions
• Request based Murabaha
• Pricing Murabaha
• Collateral, Penalty & re-scheduling

Products Based on Murabaha:
• Consumer Finance
• Corporate Finance
• Inter-bank Placements
• Bank funding (commodity Murabaha)
• Tawarug
• Murabaha VS. term loans
• Case: Bank of Beirut Funding Murabaha
• Case: GIB & Gulf Air syndicated Murabaha
• Risks inherent in Murabaha Based Products



Musharaka:

• What is Musharaka?
• Principles, terms & conditions.
• Types of Musharaka:
o Permanent Vs diminishing Musharaka.
o Scholars Classification (Al-mufawada, Al-anan etc).

Products based on Musharaka:
• Corporate finance
• Project finance
• Musharaka Certificates (Sukuk)- Case of Sudan
• Case: Airport cleaning Musharaka (Bank Al-Gazira-Saudi Arabia)
• Risk inherent in Musharaka Based products

Ijarah (Islamic Leasing):

• What is Ijarah?
• Principles, terms and conditions
• Islamic Vs. conventional leasing
• Pricing Ijarah transactions
• Collateral and penalty clauses

Products based on Ijarah:
• Corporate Finance
o Case: Jamjoom & Faisal Islamic Bank trucks lease transaction
o Case: Sale-leaseback Islamic transaction (BAIT)
• Islamic Credit Cards
o Case: Kuwait Finance House
• Sukuk
o Sovereign Sukuk
o Corporate Sukuk
• Risks inherent in Ijarah Based Products




Islamic Forward delivery Sale Contracts

Salam and Istisna’a:

• What is Salam?
• Principles, terms and conditions
• Pricing, Collateral and Default
• Products based on Salam:
o Crop Finance
o Corporate Finance (Case: Alba Aluminum)
• Risk Inherent in Salam Based Products

Istisnaa:
• What is Istisnaa?
• Principles, Terms and Conditions
• Pricing, collateral & Default
• Collateral and Penalty clause
• Products based on Istisnaa:
o Project and corporate finance.
o Case: Real estate Istisnaa contract
• Risks inherent in Istisnaa based products

Structuring Islamic Tradable securities (Sukuk)

• Need for Islamic capital/money markets
• Reasons for lack of Islamic money market
• Main features of money market products
• Sharia requirements of acceptable securities
• Islamic sukuk-Salam (non-tradable)
• Islamic sukuk-Ijarah- Sovereign Sukuk (Bahrain, Malaysia & Qatar)
• Islamic Sukuk Ijarah- Corporate Sukuk (IDB)

Equity Investing
• Why investing in equity poses a religious concern?
• What is Shariah-compliant equity?
• Rules governing equity investing
• Dow Jones Islamic equity indexes


An Overview of Takaful
• Insurance and Islam
• Why does conventional Insurance model contradict Sharia?
• The Solution: Takaful
• Meaning of Takaful
• How does a Takaful company work?
• Takaful Models:
o Mudaraba Model.
o Wakalah (agency) model

Venue

Types