Monetary policy, banking and systemic risk in open economies
30 Nov 2004Islamic Banking at Systemic Level1 Islamic Banking at Systemic Level: Issues and...
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![Page 1: 30 Nov 2004Islamic Banking at Systemic Level1 Islamic Banking at Systemic Level: Issues and Approaches Prof. Dr. Sayyid Tahir IIIE, International Isl.](https://reader036.fdocuments.in/reader036/viewer/2022083005/56649f1f5503460f94c374ef/html5/thumbnails/1.jpg)
30 Nov 2004 Islamic Banking at Systemic Level 1
Islamic Banking at Systemic Level:
Issues and Approaches
Prof. Dr. Sayyid TahirIIIE, International Isl. Univ., Islamabad
IRTI DLP Lecture 9
![Page 2: 30 Nov 2004Islamic Banking at Systemic Level1 Islamic Banking at Systemic Level: Issues and Approaches Prof. Dr. Sayyid Tahir IIIE, International Isl.](https://reader036.fdocuments.in/reader036/viewer/2022083005/56649f1f5503460f94c374ef/html5/thumbnails/2.jpg)
Islamic Banking at Systemic Level 2
Agenda
I. Financing private and public sector needs
II. Transformations Called for in:1. International Trade2. Regulation & Control of Isl.
Banks and Monetary Policy3. Legal & taxation framework
III. Islamic banks versus conventional banks
![Page 3: 30 Nov 2004Islamic Banking at Systemic Level1 Islamic Banking at Systemic Level: Issues and Approaches Prof. Dr. Sayyid Tahir IIIE, International Isl.](https://reader036.fdocuments.in/reader036/viewer/2022083005/56649f1f5503460f94c374ef/html5/thumbnails/3.jpg)
Islamic Banking at Systemic Level 3
1. Financing Private Sector Needs
• Consumer Financing
• Working Capital Financing
• Industry’s Expansion Needs
• Resource Mobilization through Salam Certificates
• Agricultural Financing
• Real Estate Financing [MF, IJF or DMF]
![Page 4: 30 Nov 2004Islamic Banking at Systemic Level1 Islamic Banking at Systemic Level: Issues and Approaches Prof. Dr. Sayyid Tahir IIIE, International Isl.](https://reader036.fdocuments.in/reader036/viewer/2022083005/56649f1f5503460f94c374ef/html5/thumbnails/4.jpg)
Islamic Banking at Systemic Level 4
2. Financing Public Sector Needs
• Murabahah with Divisible and Tradable Securities
• Project Financing through Ijarah
• Istisna’-cum-Murabahah Financing
• Redeemable Musharakah
• Resource Mobilization through Selective Musharakah
![Page 5: 30 Nov 2004Islamic Banking at Systemic Level1 Islamic Banking at Systemic Level: Issues and Approaches Prof. Dr. Sayyid Tahir IIIE, International Isl.](https://reader036.fdocuments.in/reader036/viewer/2022083005/56649f1f5503460f94c374ef/html5/thumbnails/5.jpg)
Islamic Banking at Systemic Level 5
General Formula
• Mute Investments - MF, IJF• Financing for value- - MF, SF
added activities IJF, MUF
Note:
Combinations of the above to suit a given instance also possible.
![Page 6: 30 Nov 2004Islamic Banking at Systemic Level1 Islamic Banking at Systemic Level: Issues and Approaches Prof. Dr. Sayyid Tahir IIIE, International Isl.](https://reader036.fdocuments.in/reader036/viewer/2022083005/56649f1f5503460f94c374ef/html5/thumbnails/6.jpg)
Islamic Banking at Systemic Level 6
3. Special Issues in Foreign Trade Financing
• Intermediary role of the banks
• Trade Financing
1. Trade-based: Exports (MF)Imports (SF)
2. Partnership-based: MUF or MOF
• Some special considerations
![Page 7: 30 Nov 2004Islamic Banking at Systemic Level1 Islamic Banking at Systemic Level: Issues and Approaches Prof. Dr. Sayyid Tahir IIIE, International Isl.](https://reader036.fdocuments.in/reader036/viewer/2022083005/56649f1f5503460f94c374ef/html5/thumbnails/7.jpg)
Islamic Banking at Systemic Level 7
4. Regulation and Control of Islamic Banks
• Prudential regulations
• Liquidity and reserve requirements
• Provision of liquidity to Islamic banks
• Checks over the role of Islamic banks
• Checks on misuse of Islamic Banking
• Shari’ah Audit
![Page 8: 30 Nov 2004Islamic Banking at Systemic Level1 Islamic Banking at Systemic Level: Issues and Approaches Prof. Dr. Sayyid Tahir IIIE, International Isl.](https://reader036.fdocuments.in/reader036/viewer/2022083005/56649f1f5503460f94c374ef/html5/thumbnails/8.jpg)
Islamic Banking at Systemic Level 8
5. Monetary Policy
• Nature of the Islamic financial system:
1. Closer integration between thereal and the financial sectors
2. Primacy of the private initiative
• Need for and Room for Monetary Policy Measures
![Page 9: 30 Nov 2004Islamic Banking at Systemic Level1 Islamic Banking at Systemic Level: Issues and Approaches Prof. Dr. Sayyid Tahir IIIE, International Isl.](https://reader036.fdocuments.in/reader036/viewer/2022083005/56649f1f5503460f94c374ef/html5/thumbnails/9.jpg)
Islamic Banking at Systemic Level 9
6. Transformations in the Legal Domain
• Renewed emphasis on rights of the creditors (against the debtors)
• Review of laws affecting role function of Islamic banks
• Taxation reforms
![Page 10: 30 Nov 2004Islamic Banking at Systemic Level1 Islamic Banking at Systemic Level: Issues and Approaches Prof. Dr. Sayyid Tahir IIIE, International Isl.](https://reader036.fdocuments.in/reader036/viewer/2022083005/56649f1f5503460f94c374ef/html5/thumbnails/10.jpg)
Islamic Banking at Systemic Level 10
7. Challenges from Conventional Banks
• Critical dependence on distinctive nature of Islamic banking
• Competitive financial products
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30 Nov 2004 Islamic Banking at Systemic Level, IIIE Islamabad
11
Thank you.
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Islamic Banking at Systemic Level 12
Consumer Financing
• MF – small financing for a short period
• IJF – sizeable financing for longer duration
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Islamic Banking at Systemic Level 13
Working Capital Financing
• MF – for a single input(sugarcane)
• SF – working capital for the season
• MUF – (pure) musharakah for season
• MUF + IJF – musharakah blended withijarah for the season
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Islamic Banking at Systemic Level 14
Industry’s Expansion Needs
• MR, SF, IJF or DMF
for purchase of machinery and
equipment
• DMF or ISF+MF for additions to plant
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Islamic Banking at Systemic Level 15
Resource Mobilization through Salam Certificates
• Presumption
• Tradable salam certificates
• The Shari’ah restrictions
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Islamic Banking at Systemic Level 16
Agricultural Financing
• MF or IJF financing for inputsneeded by the financing
sector
• SF financing with settlement interms of produce
• MUF financing for miscellaneouscases