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The Performance of Takaful Companies (2011)

Compiled by Aamir Sheikh and M. Saad Faruqui
Ayat of the Month

Overview of Takaful market

In the recent years, Takaful has made its place in Pakistani market at a rapid pace. This is supported by the rules and regulations issued by SECP (Securities and Exchange Commission of Pakistan) over the years. Recently, SECP issued Takaful Rules, 2012 allowing insurance companies to setup window Takaful operations. However, Takaful companies filed a petition through which the Sindh High Court (SHC) restrained SECP from implementing the Takaful Rules, 2012. Takaful companies are of the view that the new rules had been issued by the SECP without considering the opinions of religious scholars who would have advised the regulator that the new rules were not in line with the Islamic principles. However, the matter is still pending in court. Currently the market has 5 players, two family Takaful and three general Takaful companies.

Overall profitability growth of Takaful Companies during 2011

In 2011, various Takaful companies in Pakistan have

In the recent years, Takaful has made its place in Pakistani market at a rapid pace. This is supported by the rules and regulations issued by SECP over the years.

O you who believe, when the call for Salah (prayer) is proclaimed on Friday, hasten for the remembrance of Allah, and leave off business. That is much better for you, if you but know. Then once the Salah is over, disperse in the land, and seek the grace of Allah, and remember Allah abundantly, so that you may be successful. [Surah AlJumua:9,10]

Inside this issue

Inside Story Editors Message Local and International News Get a glimpse of what is happening in the world of Islamic finance In the Spotlight Find our read of the month 1 2 11


Ask US 13 By Mufti Ibrahim Essa and Mufti Javed Pakistan Islamic Banking Industry Analysis 14

Sukuk is an Islamic financial certificate, similar to a bond in Western finance, that complies with Shariah. In its simplest form Sukuk are assetbacked trust certificate evidencing ownership of an asset or its usufruct. As the traditional Western interest paying bond structure is not permissible, the issuer of a Sukuk sells an investor group the certificate, who then rents it back to the issuer for a predetermined rental fee. The issuer also makes a contractual promise to buy back the bonds at a future date at par value. As Sukuk securities adhere to Islamic laws sometimes referred to as Shariah principles, it prohibits the charging or payment of interest as to conventional bonds. Modern Islamic finance is a recent phenomenon. Only 30 years have passed since the first fully fledged Islamic financial institution (IFI) emerged, and the market for Sukuk (Islamic bonds) was non-existent up until the beginning of this century. The emergence of Sukuk has been one of the most significant developments in Islamic capital markets in recent years. Simply put, Sukuk instruments links their issuers, with a wide pool of investors, many of whom are seeking to diversify their holdings beyond traditional asset classes, thereby acting as a bridge for linking issuers with a pool of investors. Sukuk issuance has proven its resilience during the recent periods of global capital markets financial crisis. According to Moodys report on Islamic Banks and Sukuk, growth rates are at least twice as high as those recorded on global conventional financial markets. Nevertheless, liquidity in the Sukuk market is expected to improve gradually as the variety of Sukuk issuances widens. Not only the volumes are expected to exceed by the end of the current decade as seen by the industry experts, but the nature, geographic location and credit quality of future issuers are also expected to considerably diversify. Happy Reading!

Advisory Board
Mufti Irshad Ahmed Aijaz Mufti Najeeb Khan Anwar Ahmed Meenai Mohammad Aslam Mujeeb Baig Syed Shahjahan Salahuddin Faizan Memon

NusratUllah Khan

Associate Editors
Muhammad Shahzad Hussain Arshad Hussain Zubairi Ammar Khalid Rima Farooq

Let us know, if you know friends or colleagues who, in your view, may benefit from this newsletter. Send us their email addresses at

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An initiative of IFP forum

Continued The Performance of Takaful Companies (2011)

performed well in terms of profitability. This could be judged by the financial results of the Takaful leaders in Pakistan. Pak Qatar General Takaful Limited (PQGTL) converted its loss before tax into profit in the year 2011. In the year 2010, it recorded the loss of PKR 28 million where as in 2011 it registered a profit of PKR 8 million. It was mainly due to the favorable movement in gross contributions by 52% in 2011, supported by the reasonable growth in the different segments of the business especially by motor (which represents 71% of contribution) and fire (which represents 13% of total contribution) segment. Moreover, the reduction in various expenses, for instance, management fee by 7% and general and administration expenses by 9% also contributed to the increase to some extent. Pak Qatar Family Takaful Limited (PQFTL) reduced its loss from PKR 72 million to PKR 9 million. It was due to rise in contribution income (annualized) of different segments such as individual family by 78%, group family by 113% and group health by 61%. Moreover, the rise in net investment income by 89% and the reduction in the expenses such as expenses not attributable to statutory fund moved down by 28% also contributed to the reduction in the loss. Dawood Family Takaful Limited (DFTL) loss further heightened by 38%. The primary reason behind the fluctuation was the significant rise in the commission expenses by 35% and the management expenses by 14%. Moreover, the fall in investment income by 24% also moved the loss figure up. Pak-Kuwait Takaful Company Limiteds (PKTCL), profit moved down by 27% which was primarily due to the rise in net commission by 106% and the reduction in the net investment income by 21%. In the case of Takaful Pakistan Limited (TPL), it also posted the loss of PKR 35 million into the profit of PKR 3 million, it represents the significant movement around 91%. It was mainly

Expense Ratio (2011)



50% 40% 30% 20% 10%


PQGTL PQFTL 26% 12% 13% 9% DFTL PKT


Takaful companies profitability graph have moved up in the recent years, solely based on the profitability.

due to the significant reduction in the direct expenses by 68 % and the

Gross Takaful contribution received in 2011 (Rs. in million)

1,400.00 1,200.00 1,000.00 800.00 600.00 400.00 200.00 PQGTL
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Re - Takaful Contribution in 2011 (Rs. in million)

60.0 50.0 40.0







An initiative of IFP forum

Continued The Performance of Takaful Companies (2011)

Management Expense Ratio (2011)

70% 60% 50% 40% 30% 20% 10%
increase in other income by 29%. Moreover, the reduction in management fee by 53% also contributed to the profitability.


also support the improvement in the performance of PTF. PQGTL Shareholders Fund (SHF) made pace ahead compared to the previous year as accumulated loss moved down by 20.8%.

was the increase in the issued share capital. Moreover, the increase in Shariah compliant fixed income and investment in low risk government backed Sukuks supported the increase in the fund. DFTL PTF figure increased by 144.9% compared to 2010 results. The gross contribution allocated to the PTF moved up by 54.7% compared to 2010 which improved PTF performance. Accumulated loss in the year caused the SHF to decrease. PKTCL PTF performance weakened as the deficit further decreased 12.7% increasing the accumulated deficit.

PQGTL 37% 20% 22% 14% PQFTL DFTL PKT


PQFTL Participation Reserve Fund improved by 115% compared to the last year. The main reason behind the improvement in the performance of the fund was the surplus in individual life and group life which overall strengthened the Takaful pool. Companys SHF increased by 19.8% , the primary reason behind the same


Analysis of Participants Takaful Fund (PTF) and Shareholders Fund (SHF)

PQGTLs PTF accumulated deficit further increased by 11.1% in 2011 compared to the previous year. Investment income of PTF increased by 2.2% Moreover, non-motor segment

There was slight improvement witnessed in PTF of PQFTL, DFTL and TPL. However, the same showed an increasing negative trend in PQGTLs and PKTCLs PTF.

There was slight improvement witnessed in PTF of PQFTL, DFTL and TPL. However, the same showed an increasing negative trend in PQGTL and PKTCL. Moreover, the analysis of SHF reveal that except in the case of DFTL every other operators SHF fund showed improvement, which is caused by increased paid up capital and better returns on investments in certain cases.

PTF and SHF Position in 2010 (Rs. in million)

PTF 2010 SHF 2010 643

PTF and SHF Position in 2011 (Rs. in million)

PTF 2011 SHF 2011 552 490

447 362 267

155 131 23 DFTL PKTCL -257 9 TPL PQGTL -104 PQFTL DFTL PKTCL 134 56 13 TPL




An initiative of IFP forum

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Continued The Performance of Takaful companies (2011) Financial summary of the Takaful Companies for the year 2011
Statement of Financial Position
Sr. No 1. 2. 3. 4. 5. 6. 7. 8. Description Total assets Investments Waqf / Cede money Creditors and accruals Total liabilities Paid up capital Share holders fund Participants Takaful fund PQGTL 443,621,775 131,274,372 500,000 54,867,057 271,930,919 307,800,080 275,297,452 (103,606,596) PQFTL 2,072,039,407 902,195,231 500,000 237,358,334 1,637,879,911 710,628,850 434,159,496 155,180,653 DFTL

Amounts in Rupees

873,603,996 681,036,614 488,902,019 333,157,472 100,000 56,870,735 500,000 57,771,415 500,000

116,055,062 152,825,078 174,366,245 321,223,707 481,306,680 341,587,131 750,000,000 400,000,000 300,000,000 552,380,289 489,609,180 134,448,233 56,228,690 (289,879,246) 12,866,655

Statement of Comprehensive Income


Net contributions

103,051,180 11,246,641 2,689,318 8,557,323 31,148,489 19,446,325 86,177,569 121,756,000


203,715,342 266,025,805 49,317,922 6,422,462 42,895,460 1,498,629 14,855,684

148,757,957 1,834,013 2,095,716 3,907,376 1,564,656 14,593,284 37,113,379 72,074,327

10. Profit / (loss) before taxation 11. Taxation 12. Profit / (loss) after taxation 13. Net investment income 14. Commission expense 15.. Management expenses 16. Wakala fees

(4,373,116) (115,532,353) 5,022,323 (9,395,439) 34,010,017 544,569,703 159,741,563 459,421,984 25,156,712 (90,375,641) 29,828,009 116,174,453

206,364,142 129,910,861 169,035,236 202,307,548

The data presented in this summary is extracted from the published audited financial statements of the respective Takaful companies for the year ended 31 December 2011. The newsletters management does not take any responsibility of authenticity of any data presented here and will not assume any liability due to any loss or damage caused by the usage of the information presented here. User discretion advised.
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An initiative of IFP forum

Announcement of the Islamic Financial Services Board's awareness program and FIS workshops 2012
The Islamic Financial Services Board (IFSB) is pleased to announce the upcoming awareness programmes and the Facilitating the Implementation of IFSB Standards workshops that will be held throughout the third and fourth quarters of 2012.

Kuwait's experience in this field and Turkey's promising economy. This led to a bank that is a source of pride for Kuwait and the GCC.

NASDAQ Dubai welcomes $650 million JAFZ Sukuk to its market

NASDAQ Dubai welcomed the listing of a $650 million Sukuk by Jebel Ali Free Zone ( JAFZ ) on its market. The listing confirms the exchange's status as the largest in the Middle East for Islamic bonds, bringing the total nominal value of its listed Sukuk to $7.1 billion.

Mortgage law to spur Islamic finance

Saudi Arabia's approval of a landmark mortgage law after a delay of more than three years will give rise to Islamic funding and tackle some of the challenges in the real estate sector in the Kingdom of Saudi Arabia.

Plan to open first Islamic Bank in Germany

Kuveyt Turk plans to open its first branch, following the principles of Shariah law, in Frankfurt-am-Main in cooperation with Ernst and Young auditing company and Norton Rose law firm. The other branches of the bank will be opened in German cities with large Muslim communities, particularly in Berlin. As for other European countries, such banks are already providing their services in Britain.

India may introduce Islamic Banking

The government is considering introducing Islamic Banking in the country. The Ministry of Finance recently asked the Reserve Bank of India to reconsider such a possibility. Experts believe that in order to tap the immense investment potential of the oil-rich Middle East, it was in Indias interest to introduce Islamic Banking.

Indonesia to allow currency hedging for banks

Indonesia will let Shariah-compliant banks hedge against exchange-rate movements to spur growth in Islamic financial assets and narrow the gap with Malaysias industry, which is seven times larger. Bank Indonesia, the National Shariah Board and the Indonesia Institute of Accountants have approved the instruments, available in Malaysia since 2006.

KFH-Turkey: 23 years of successful leadership of Kuwaiti private sector in Turkey

On 31st March 1989, KFH-Turkey began officially working in Istanbul as the first Islamic bank in Turkey. The bank was a result of the collaboration between Kuwait and Turkey, who believed in establishing an Islamic bank that depends on

ODB constitutes team to study Islamic banking products and services

In an aim to provide customers with Shariah-compliant banking products and services in the near future, Oman Development Bank (ODB) has decided to set up a team to study the current products and services the bank offers and the possibility of adding new products and services that are in line with Shariah. The team will submit its report by the end of August. The sultanate has decided to allow the establishment of Islamic banking and the opening of new outlets for Islamic banking products and services at existing banks. The aim is to take advantage of the rising demand for Islamic banking services and products.

The news included here is on the basis of information obtained from local and international print and electronic media sources. IFP team does not accept any responsibility about their bona-fide.
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An initiative of IFP forum

S&P Indices launches Shariah Index with OIC

S&P Indices announced the launch of the S&P/OIC COMCEC 50 Shariah Index, which is designed to measure the performance of 50 leading Shariah-compliant companies from the member states of the Organization of Islamic Cooperation (OIC). The Index has been designed in partnership with the OIC.

KFH-Research: Promising potential and numerous challenges facing Islamic finance in South Africa
KFH-Research prepared a report about Islamic banking in South Africa, where it noted that significant developments occurred during the past years in South Africa. Such developments allow South Africa to become one of the most important African countries in the Islamic finance field.

Emirates Money and Aman Insurance in partnership to launch "Banca Takaful" insurance programme
Emirates Money, a wholly owned subsidiary and consumer finance arm of the Emirates NBD Group, announced the launch of "Banca Takaful" insurance product, in conjunction with Dubai Islamic In sur a nc e an d R ei nsu ran c e company (AMAN) and FWU Global Takaful Solutions.

Over 90% of Moroccan consumers interested in Islamic finance survey findings revealed
Key findings published in July from Morocco's first independent market study, entitled 'Islamic Finance in Morocco - Sizing the retail market' points to a very strong interest from local consumers in Islamic Finance products and services. Over 80% of the Kingdom's consumers indicated their likelihood to take up a Shariah compliant financing (loan) upon launch.

QIB teams up with QIIB to provide $380m finance package for Nakilat
QIB - the benchmark Islamic bank in Qatar - has announced the signing of a financing package for the Qatar Gas Transport Company ( Nakilat ) in partnership with Qatar International Islamic Bank ( QIIB ). The value of the Sharia'-compliant 'Murabaha' financing is $380 million.

Gulf bond issuance activity to remain fairly robust

Gulf region's issuance activity is likely to remain fairly robust in the coming quarters, partly because of refinancing requirements, partly thanks to formally approved issuance programs by a growing number of regional companies, most notably banks, the National Commercial Bank said in its latest GCC Financial Market Quarterly.

105 young Emiratis embark on DIBs Iktaseb summer training programme

As part of the Bank's contribution to the UAE community, Dubai Islamic Bank ( DIB ) announced the launch of its annual Iktaseb summer training programme for young UAE nationals.

ONIC starts dialogue for JV Takaful firm

Oman's leading investment holding company Oman National Investment Corporation (ONIC) holding is negotiating with a regional Islamic insurance firm to jointly promote a Takaful company in Oman. ONIC Holding has already received an 'in principal' approval from the Capital Market Authority (CMA), after the government decided to allow Islamic banks and insurance firms. However, a licence will be given only after the regulating authority announces a separate set of rules for Shariah-compliant insurance companies and Islamic debt instruments like Sukuk.

The news included here is on the basis of information obtained from local and international print and electronic media sources. IFP team does not accept any responsibility about their bona-fide.
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Saudi Binladin Group (SBG) sells $267m shortterm sukuk

SBG one of the largest construction firms in the kingdom, has completed issuing $267m short-term sukuk, said legal advisor of the arranging bank. The sukuk, which has a 364 days tenor and was sold through the SBG Sukuk Ltd special purpose vehicle, pays a profit rate of 2.5 percent and is the third such issue from the company, the statement from Clifford Chance said.

Al Izz Islamic Bank may float IPO

The initial public offering (IPO) of Al Izz Islamic Bank, the second Sharia-compliant financial institution, is to be seen by September. Sources said the bank and issue managers are taking all efforts to open the share offer subscription, after Eid holidays. However, the bank is yet to get a final approval from the market watchdog.

Fitch assigns Development Bank of Kazakhstans Islamic finance programme

Fitch Ratings has assigned the Development Bank of Kazakhstans (DBK) Islamic Medium Term Note Programme, which has a total value of up to Malaysian ringgits (RM) 1.5b, a final rating of BBB-. The agency has also assigned a BBB- rating to the debut five-year RM240m issue of Sukuk.

Islamic finance body plans scholar accreditation, ethics code

The Malaysian-based Association of Sharia Advisors in Islamic Finance (ASAS), set up in April last year, plans this year to launch a test for the financial literacy of scholars, and ask its members to sign up to a code of ethics; if they break the code, they may be reprimanded by ASAS.

Axiata Group: Malaysia unit raised $1.60b via sukuk

Axiata Group Bhds Malaysian unit Celcom Axiata Bhd has raised $1.60b via an issuance of Sukuk, to partly retire existing debt and finance capital expenditure. The Sukuk range in maturity from three to 10 years. It is the second sukuk program set up by Axiata Group this year following an earlier $1.5 billion equivalent multi-currency sukuk issued in July.

Dubai Trade's Rosoom epayment gateway now available to DIB customers

Dubai Islamic Bank ( DIB ) now offers its customers full online payment facilities through Rosoom, the electronic payment gateway developed by Dubai Trade, the leading cross-border trade facilitator under Dubai World. Following integration of the Rosoom gateway with DIB 's online payment platform, the bank's customers can now enjoy highly secure, direct debit services.

Emirates Islamic Bank offers consumer finance for new-to-UAE nad newto-job customers
Emirates Islamic Bank (EIB), the Islamic banking arm of Emirates NBD Group, announced the launch of a banking package for new entrants to the UAE. The package includes personal and vehicle finance up to AED 75,000 and credit cards with one monthly salary limit, along with various account options and online banking facilities.

SEC bond gains rise 67% than Gulf Sukuk

Saudi Electricity Co.s (SEC) Islamic bonds returned 67 percent more than Gulf corporate sukuk, buoyed by a scarcity of Shariah-compliant securities in Saudi Arabia and demand for investment -grade debt. Islamic bond sales in Saudi Arabia rose to a record this year as demand outstrips supply. Sukuk offerings jumped to about $8.3 billion, or about 47 percent of the GCC's total issuance this year. Overall sales of Islamic debt in the Gulf increased to $17.7 billion this year from $3.8 billion in the year-earlier.

The news included here is on the basis of information obtained from local and international print and electronic media sources. IFP team does not accept any responsibility about their bona-fide.
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Islamic banking should be enforced under SC order

Islamic banking in Pakistan is being practiced on the basis of supply and demand and not as mandatory by the government, said Jamiatur Rasheed Education Dire cto r Ab du l A zi z R aj a. Addressing at a seminar on a case study on A Blend of Contemporary and Religious Education, held at Korangi Association of Trade and Industry (KATI), Raja said that banking ordinance was introduced in 1974 but tabled in the House in 1984, under which the Islamic banking in Pakistan should be mandatory and not the option.

open 20 per cent of all new branches i n r u r a l a r e a s . Islamic banking will help draw the funds of rural customers, a less sophisticated client base who also traditionally shun conventional banks due to concerns over interest which is forbidden under Islam, said Saleem Ullah, director of the Islamic banking department at the State Bank.

Islamic banks urged to explore SME, farm sectors

State Bank Governor Yaseen Anwar has said that the Islamic banking has great opportunity to finance projects in agriculture and small and medium enterprise (SME) sectors which are the avenues missed by conventional financial institutions.

SCB arranges $35m Islamic Trade Finance facility for PIA

Standard Chartered Bank (SCB) arranged one-year $35 million Islamic Structured Trade Finance facility for Pakistan International Airlines (PIA). The Bank was the sole arranger and structuring bank for this transaction. The facility is structured as an offshore transaction under an Islamic mode, which uses Ijara concept based on purchase and distribution of airline seats.

Bank of Khyber (BoK) expanded its wings in Islamic Banking with the brand name of BoK Raast
Managing Director, Mr. Bilal Mustafa, said; BoK is committed to cater the Banking requirements of Islamic Banking as well as conventional in a befitting manner in order to encourage the economic developmental activities in the country through its expanding network of branches.

Islamic banking growth is impressive

Attock Chamber of Commerce and Industry (ACCI) said that growth rate of Islamic banking in Pakistan is v e r y i m p r e s s i v e . 75 countries have recognised Islamic banking, major banks including HSBC, Citigroup, Deutsche Bank and Standard Chartered have Islamic banking branches or windows in Pakistan, which prove success of Riba-free banking, said President ACCI, Tariq Mehmood.

World's first postgraduate diploma on Halal industry launched

The world's first postgraduate diploma on Halal industry is going to be launched in Pakistan from November, which will be presented through modern online technology concurrently around the world so that the education and awareness regarding Halal food and products could be spread in Muslim and non-Muslim countries with special reference for those countries where Muslims are in minority and they remain tensed about Halal food products. This diploma would be of eight months which would consist of four modules and each module would consist of two courses. In first module, concepts of Halal and general guidance about Halal food would be taught whereas role of food ingredients and Halal slaughtering in second module, prospective of Halal industry world-wide and Halal banking in third module and Halal standardisation and prospective of Halal industry in developed area will be taught in fourth module.

Pakistan targets Islamic finance growth in rural areas

Pakistan, bidding to nearly double Islamic banking in the South Asian state by 2015, is focusing on poor, conservative villages to drive growth and has ordered Islamic lenders to

The news included here is on the basis of information obtained from local and international print and electronic media sources. IFP team does not accept any responsibility about their bona-fide.
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An initiative of IFP forum

SECP to support Islamic finance summit

The Securities and Exchange Commission of Pakistan (SECP) said it was firm to support the second World Islamic Finance Summit (WIFS), which is scheduled for September 12-13 in Karachi. The industry leaders at the summit will learn the perspectives of the regulator, as the SECP talks about the expanding footprints of Islamic funds and investment and its aspiration to promote and develop a financially strong and transparent Islamic financial market in Pakistan.

Meezan Bank profit after tax grows by 34%; declares interim cash dividend of 15%
The Board of Directors of Meezan Bank Limited, in its meeting held at Karachi on August 12, 2012 approved the half yearly financial statements of the Bank for the six months ended June 30, 2012. The Bank recorded 34% growth in its Profit-after-tax and EPS of the Bank was recorded at Rs. 2.04 on enhanced share capital of Rs 9b. The Bank not only maintained its impressive pay-out track record but improved upon it by approving a 15% interim cash dividend 50% higher than last years interim cash dividend.

First Islamic Master card / debit card launched

Burj Bank in association with MasterCard, a global payments and technology company, announced the launch of Pakistans first Islamic MasterCard debit card that is designed to benefit customers who prefer better control over their expenditure.

SECP may set up Shariah board to develop Islamic capital market

For developing an Islamic capital market in line with best practices globally, the Securities and Exchange Commission of Pakistan (SECP) is contemplating the establishment of a Shariah board, an official said. The board, comprising eminent Islamic scholars and market professionals, would ensure that all the products/ services offered under this umbrella are in conformity with the Shariah principles. Also, efforts will be made for consolidation of existing Islamic institutions and development of innovative Shariah- compliant institutions, products and services in order to deepen the capital market, the official said. It may be mentioned here that in consultation with relevant stakeholders, the SECP has drafted a comprehensive three-year Capital Market Development Plan (2012-14).

Pakistan's conventional insurance firms will have to wait a few more weeks to learn if they can open Takaful windows after a state court adjourned a case challenging new regulations for the sector. Takaful operators filed a petition in a court in the province of Sindh to protest the rules which allow conventional insurers to offer Takaful services.

Pakistan's Islamic insurance rules in limbo after court hearing

Islamic banking, Takaful discussed at federal chamber

Sherani said that the FPCCI will play its role in creating awareness about Islamic Banking and Takaful in the business community and will support every effort which can rid the Pakistan from the curse of the Interest based financial System. He was speaking at the second meeting of FPCCIs Standing Committee on Islamic Banking & Takaful which was held under the Chairmanship of Mr. Mehmood Arshad. The President FPCCI assured his full support for the executions of plans made by the committee. The meeting was attended by almost all members of the committee.

The Islamic Finance news Pakistan, Roadshow 2012

Supported by the State Bank of Pakistan, the Islamic Finance news Pakistan Roadshow 2012 will be held on Tuesday 4th September and will feature prominent players from around the world to share their knowledge and expertise within the Pakistani market.

The news included here is on the basis of information obtained from local and international print and electronic media sources. IFP team does not accept any responsibility about their bona-fide.
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An initiative of IFP forum

Book in the Spotlight

Islam Aur Jadeed Maashi Masail

By Justice Mufti Muhammad Taqi Usmani Reviewed by

Mufti Haseeb Ahmed

This book is the first volume of the 8 volume set that is a compilation of different articles written by Mufti Muhammad Taqi Usmani. Some of them were published separately, while others were a part of his other independent books (the source of the article is mentioned on the title of each chapter). The book starts with a preamble written by Mufti Mahmood Ashraf (who is also a very senior member of the Darulifta Jamia Daruloom Khi) in which he describes the importance of innovational research in the field of various aspects of a Muslims life regarding Shariah rulings which also includes Islamic economic system, and he further sheds light on the author and his publications. The preamble is followed by compilers views about the contents of the book and his inspiration and respect for the original author.

The book generally describes the economical values for Muslim ummah, and this being the very first

good and bad intentions may render economical benefits impermissible for a Muslim. The first article is about unwanted human attachment with fame and money, but on the other hand also depicts the importance of work and earn income within the prescribed Shariah limits. He even writes the virtue of trading as it was also sunnat of the Prophet (P.B.U.H) and the evil practices involved in it today. All of his discussions are supported with Quranic verses and Hadiths with their translations and understandings, and they also include examples from the lives of the companions of the Holy Prophet (P.B.U.H) and the ongoing list of the followers. Published by: Idarat ul Islami, Karachi.

of the whole compilation the compiler came up with the articles which were intended for ethical and moral building of the reader, as

About the Author

Mufti Muhammad Taqi Usmani is one of the leading Islamic scholars living today. He is an expert in the fields of Islamic Jurisprudence, Economics, Hadith and Tasawwuf. Born in Deoband in 1362H(1943 CE), he graduated par excellence form Dars e Nizami at Darul Uloom, Karachi, Pakistan. Then he specialized in Islamic Jurisprudence under the guidance of his eminent father, Mufti Muhammad Shafi, the late Grand Mufti of Pakistan. Since then, he has been teaching hadith and Fiqh at the Darul-Uloom, Karachi. He also holds a degree in law and was a Judge at the Sharia Appellate Bench of the Supreme Court of Pakistan. He has been writing on various Islamic topics and is author of more than 60 books and numerous articles. Presently he is the Vice-president of Darul-Uloom, Karachi, Pakistan, where he teaches Sahih Bukhari, Fiqh and Islamic economics.
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An initiative of IFP forum

Ask Us
By Mufti Ibrahim Essa and Mufti Javed Ahmed
Question: In a deferred sale contract, is it permissible to stipulate a condition that the seller will retain the subjectmatter into his ownership until the full payment of the price? Answer: A seller is not allowed to stipulate, after conclusion of a sale contract, a right to retain an asset sold on a deferred basis, as security for payment. This is because the legal effect of a sale contract is the transfer of ownership of the asset sold. However, it is permissible for the seller to stipulate that the buyer should release the sold asset into the sellers custody as pledge of security so as to ensure recovery of the remaining deferred installments. It is also permissible for the buyer to retain an asset sold on an immediate payment basis until the consideration for the asset is paid. Question: In an Ijarah transaction, if the lessee stops using the leased asset or returns it to the asset before the term expires, is it permissible to charge him the remaining rentals of that period where the leased asset was not used by the lessee? Moreover, can the lessor lease that asset to another person for that period? Answer: If the lessee stops using the leased or returns it to the owner without the owners consent, the rental will continue to be due in respect of the remaining period of the Ijarah and the lessor may not lease the property to another lessee for this period, but must keep it at the disposal of the current lessee.

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An initiative of IFP forum

Financial summary of the Islamic banks for the year 2011

Amount in Rs. millions
Islamic banking division
7,577 13,806 9,818 3,036, 14,956 11,842 14,037 919 1,274 1,878 805 488 6,231 1,169 1,192 7,045 10,734 11,847 8,303 87,105 14,570 12,032 5,447 10,059 10,977 8,155 80,780 11,945 7,306 1,192 124 1,923 8,319 12,613 12,652 8,791 6,231 15,739 13,224 2,998 28,705 18,610 5,359 3,072 4,974 521 934 5,611 1,764 14,335 6,446 1,362 7,723 5,587 4,491 42,927 12,648 2,939 607 5,924 10,051 1,557 1,753 26,179 20,110 140,725 58,821 407,755 1,736 61,559 53,508 370,094 5,312 37,660 50,568 340,990 800 460,970 21,067 168,653 549 528 494 531 174 1,714 5,843 17 0.026 1,745 141 10,658 95,816 44,770 3,383 131,266 3,239 1,519 169,642 3,011 200,218 252 2,922 1,569 371 18,151

Statement of Financial Position

IBIs and IBDs analysis was reported in previous issues separately. They are being reported together again in this issue to p rovide a comparison between them.

Islamic Banking Institutions

24,464 264,469 185,459 539,021 464,209 510,632 570,312 55,811




Burj Bank

Balances with 1. other banks




2. Investments




3. Financings






1,899 447,300

4. Total assets Due to financial 5. institutions Deposits and 6. other accounts




2,172 16,534 14,747 2,746 25,784 17,041

7. Total liabilities



8. Net assets



Statement of Comprehensive Income

6,699 372,41 20,368 831 78 559 59 520 98 128 372 41 90 424 492 459 826 29 16 503 23 396 130 569 394 598 438 30 187 41 216 12 5,001 (227) 1,925 482 1,926 13,870 5,414 4,112 480 410 409 608 2,215 226 192,206 2,597 715,560 21 252,773 2,883 5,502 1,312 1,029 1,249 1,117 595 8,062 4,346 40 2,753 574 1,896 1,430 2,086 1,214 365 506 43 240 309 1,422 979 37 406 115 344 176 398 354 157 -113 145 166 (147) 2,356 628 186 1,542 462 798 1,206 2,095 1,452 74 569 69 99 539 529 20,939 280 11,252 60 170 4 103 71 993 7,810 1,606 4,812 4,591 58,180 31,620 253,766 723,370 193,812 18,682 10,005 4,112

Profit on 9. financings Return on 10. deposits








10 251,580

11. Provisions Net spread after 12. provisions Total other 13. income


2,227 700,834


457 188,537



14. Administrative / Profit / (Loss) 15. before taxation Profit / (Loss) 16. after taxation








The data presented in this summary is extracted from the published audited financial statements of the respective banks for the year ended 31 December 2011. The newsletters management does not take any responsibility of authenticity of any data presented here and will not assume any liability due to any loss or damage caused by the usage of the information presented here. User discretion advised.

The analysis of IBDs is reported again with the inclusion of Bank Al Falah Limited (BAFL) which was not included in the previous issue as its financial data was not available. Previously SCB was reported as the highest profit before taxation among all the IBDs with a profit of 1.2 billion whereas now with the inclusion of BAFL it is the leading IBD with a profit of 1.4 billion in FY 2011. The increase in profit of BAFL is 16% compared to SCB in the FY 2011. BAFL net assets are of 6.2 billion and SCB net assets are of 3 billion. Detailed comparative analysis of the IBDs was covered in our previous issue of July 2012.
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