Global Islamic Finance and Investment Group
1 Apr 2014 03:43 PM
UK hosts first meeting of the Global Islamic
Finance and Investment Group (Global IFIG).
The
Rt Hon Baroness Warsi hosted and chaired the inaugural meeting of the Global
Islamic Finance and Investment Group (IFIG) in London on 26 March. The group
was established following a commitment made at the World Islamic Economic Forum
(WIEF) in October 2013. Its aim is to identify the key global opportunities and
barriers facing Islamic Finance and to use its extensive knowledge and
expertise to create a global Islamic Finance market that supports growth and
prosperity, including in the UK. The group includes Premiers, Ministers, CEOs
of major Islamic banks, central bank Governors and regulators - people who can
make a real difference to the global landscape of Islamic
Finance.
The
meeting on 26 March resulted in a number of concrete steps that the group
agreed to take action on:
-
Communicating: the group recognised the need to build
greater understanding and better communicate the value of Islamic Finance. It
recommended that a comprehensive analysis be conducted on the current global
market and a broad strategy developed to foster understanding and challenge
perceptions of Islamic Finance.
-
Regulation: Islamic Finance is a fast-developing
industry which has to operate in different domestic regulatory environments as
well as internationally. The group suggested that it would be beneficial to
consider how to exchange knowledge on Islamic finance and approaches to
regulating it. With this in mind, Baroness Warsi outlined her intention to ask
relevant stakeholders to consider how best to pool resource and share expertise
on Islamic finance, possibly through the establishment of a physical or virtual
hub.
-
Investment: the group recognised the huge investment
potential both outside of and within the Muslim world, where an estimated 72%
of Muslims are “unbanked” (do not use any banking services at all);
and that insurance and pension funds are underdeveloped across the Islamic
World. The Group agreed to consider an engagement strategy for potential
investors, looking at:
- innovative Islamic Finance products for the tech savvy
generation;
- the
potential of the Waqf ; and
- long-term development opportunities in the Takaful
market - a source of long-term capital and potentially a big growth
area.
The
group agreed to meet on a bi-annual basis to drive progress in the key areas
highlighted and to continue to identify areas where collective action will lead
to further opportunities.
Following the meeting, Global IFIG Chair, Baroness Warsi
commented:
The
global development of Islamic Finance is a huge opportunity for all of us.
Interest in its potential both from within the Muslim World and outside of it
demonstrates that it may be the next big thing. I’m confident that by
harnessing the technical expertise, business knowledge and political influence
of all our members, this group will accelerate the global growth of the Islamic
Finance industry. Our ambition is to get things done.
Other areas where government is already making progress
on Islamic Finance
Sukuk project
- HMT
is on course to issue £200m of sovereign Sukuk in the forthcoming
financial year.
- It
is anticipated that this will be an Al-ljara structure, backed by government
property.
- Following an open competition, HM Treasury appointed
HSBC and Linklaters LLP as external advisors to assist the Government’s
work on the project.
- Closer to the time of the transaction HMT will be
seeking to include additional syndicate members to help bring it to
market.
Extension of Help to Buy scheme to Home Purchase
Plans
- In
February 2014 a series of amendments to the rules of the Help to Buy scheme
were announced by the Financial Secretary, enabling providers of Home Purchase
Plans (HPPs), which are an alternative to a mortgage but consistent with the
principles of Islamic finance, to benefit from the scheme.
Start up loans
- Further to the announcement that the government has
agreed a mechanism for Start-Up Loans to pursue a Shari’ah-compliant
model, work on the design has been completed.
- The
project is awaiting a fatwa from the Shari’ah Supervisory Board at
Gatehouse Bank. In the meantime, those seeking Shari’ah finance can apply
via Start up
Loans so work on their business plans can get
underway.
Student loans
- The
government is planning to hold a consultation this year on the model which has
been identified as the best candidate for making Shari’ah-compliant loans
available through the Student Loans Company.
FSTIB
- This government is fully committed to supporting the
development of Islamic finance in London and the UK. The Financial Services
Trade and Investment Board, created by the Chancellor at Budget 2013, includes
Islamic Finance as one of its priorities.
- The
board, a joint government and industry partnership, has been tasked with
attracting inward investment, promoting external trade and lifting barriers for
the UK’s financial services sector. This will help UK financial services
firms to increase their market shares overseas and cement the role of the UK as
a pre-eminent global financial centre.
- The
board will look to the Global IFIG to help identify the opportunities and
barriers in Islamic Finance and create a vibrant global Islamic finance market
to support mutual growth and prosperity.
Shari’ah-compliant assets permissible in the
UK
- The
Bank of England recently published consultation paper 5/14, which asks whether Islamic banks should be
permitted to hold a slightly wider range of eligible assets to mitigate the
concentration risk arising from only being able to hold the Islamic Development
Bank (IDB) sukuk for the LAB. The IDB sukuk is the only security currently
which is both LAB eligible and also Shari’ah compliant. The consultation
period ends on 15 April 2014.
Further information
Follow Foreign Office Minister Baroness Warsi on
twitter @SayeedaWarsi
Find further information on Islamic
Finance
More information on World Islamic
Forum
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