...Introduction Shariah principles are the foundation for the practice of Islamic finance through the observance of the tenets, conditions and principles espoused by Shariah. Comprehensive compliance with Shariah principles would bring confidence to the general public and the financial markets on the credibility of Islamic finance operations. Bank Negara Malaysia (the Bank) places great importance in ensuring that the overall Islamic financial system operates in accordance with Shariah principles. This is to be achieved through the two-tier Shariah governance infrastructure comprising two (2) vital components, which are a centralised Shariah advisory body at the Bank and an internal Shariah Committee formed in each respective Islamic financial institution (IFI). The Shariah Advisory Council of Bank Negara Malaysia (SAC) is a body established under section 51 of the Central Bank of Malaysia Act 2009 that has positioned the SAC as the apex authority for the determination of Islamic law for the purposes of Islamic financial business. The mandates of the SAC, among others, are to ascertain the relevant Islamic law on any financial matter and issue a ruling upon reference made to it, as well as to advise the Bank and the IFI concerned on any Shariah issues relating to Islamic financial business operations, activities or transactions. SECTION I: General Requirements of the Shariah Governance Framework Principle 1: It is the duty and responsibility of an IFI to establish...
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...Introduction Corporate governance refers to the method by which a corporation is directed, administered or controlled. It includes the laws and customs affecting that direction, as well as the goals for which it is governed. Corporate governance mechanisms and controls are designed to reduce the inefficiencies that arise from moral hazard and adverse selection. Corporate governance is also viewed as a process of monitoring performance by applying appropriate counter-measures and dealing with concepts such as transparency, integrity and accountability. Corporate governance requires corporations to exercise immense accountability to shareholders and the public, and also monitors the management of organisations in running their businesses. Corporate governance is normally divided into two categories, that is, self and statutory. Self-regulation involves aspects of corporate governance that are difficult to legislate. The issues in this category involve the human element, ie the independence of the board of directors, the relationship with the management and appraisal of the director’s performance. Statutory regulation, on the other hand, is the framework of corporate governance that can be explained in legal terms. The legislative and regulatory rules include: 1. Duties, obligations, rights and liabilities of directors, controlling shareholders and company officers. 2. Disclosure and transparency. Today, good corporate governance is considered vital as it promotes morality...
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...I. History of Islamic Banking in Malaysia Malaysia started Islamic banking in early 1980’s. Islamic Banking is especially true for Muslim world where currently Islamic banking strides at two separate fronts. At one side, efforts are also underway to convert the entire financial systems in accordance to Islamic laws (Shariah). At the other side, separate Islamic banks are allowed to operate in parallel to conventional interest based banks. Malaysia opted for the alternative gradual way of developing and implementing Islamic banking system. 1.1 Origin of Islamic Banking in Malaysia The roots of Islamic Banking in Malaysia should go back to 1963 when the government established Tabung Haji or Pilgrims Management and Fund Board. The organisatio was established to invest the savings of the local Muslims in interest free places, who want to carry out pilgrim (Haji). Tabung Haji utilizes Mudarabah (profit and loss sharing), Musharikah (joint venture) and Ijara (leasing) modes of financing for investment under the guidance of National Fatawah Committee of Malaysia. The first call for separate Islamic bank was made in 1980, in a seminar held in the National University of Malaysia. The members who attend had passed a decision requesting the government to create a special law to setup an Islamic bank in the country. Thereafter, the government had set up a National Steering Committee in 1981 to study legal, religious and operational aspects of organized an Islamic bank. The committee...
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...growth rates for various components of Islamic finance including sukuk, fund management and Islamic banking, whether at the national, regional or international levels. Additionally there has been increasing acceptance of Islamic finance not only in the Muslim-majority countries but also in certain predominantly non-Muslim jurisdictions. We have also witnessed the growing size of funds seeking Shariah-compliant investments and the increasing participation of multi-national corporations, multi-lateral institutions and conventional institutions in sukuk issuances. 3. It is not my intention today to revisit the benefits of Islamic finance or restate the pre-conditions for its further growth. As I have alluded to, these are welldocumented and well-known to all. Instead I would like to share my thoughts on just two aspects of Islamic finance which make up the theme of our Forum this year – the concept of risk-sharing and of public good. These two aspects of Islamic finance are often over-looked or perhaps under-valued. 4. Islamic finance started as an industry within the conventional framework based on adapted...
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...ASSIGNMENT#1 Submitted By: Saadia 1. Accounting and Auditing Organization for Islamic financial institution (AAOIFI) The AAOIFI is a non-profit organization that focuses mainly on the area of accounting and auditing for Islamic financial institutions. While recognizing the need for standards, AAOIFI was established on February 1990 in Algeria and was registered on March 1991 in the kingdom of Bahrain. The organization is supported by 200 institution members from 45 countries across the global. The AAOIFI is one of prominent Islamic agency that attempts to install accounting and auditing standard for Islamic financial industry. The main object is to develop and disseminate accounting and auditing thought relevant to Islamic financial institutions and their applications. Its tasks include holding seminars, publishing periodicals, newsletters, commissioning research and prepare, promulgate, interpret and review, the accounting and auditing standards for Islamic financial institutions. Its notable efforts are to inform and encourage banking supervisors around the world to adopt its standard as the benchmark for Islamic financial institutions in their countries. These attempts to improve the transparency and comparability of the financial reporting of Islamic financial institutions are bearing fruit. The AAOIFI’s standard has been applied in various countries such as Bahrain and Sudan which require Islamic Banks in their countries to follow AAOIFI’s standards. In Qatar and Saudi...
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...The reason for IFI or any regulatory body considering the ‘enjoining what is good and forbidding what is evil’ to be one of the basic principles of IFI Shariah Audit is due to ensures acceptance, validity and enforceability of contracts from Shariah point of view. Stating by Islamic Financial Services Board (IFSB), Shariah compliance actually is a central in assuring the integrity and credibility of the Institutions offering auditing. They state that Shariah non-compliance risk is the risk that arises from auditing failure to comply with the Shariah rules and principles determined by the relevant body in the jurisdiction in which the auditing operate. According to these standards, Shariah compliance is critical to audits’ operations and such compliance requirements must permeate throughout the organization and activities. As a majority of the auditors use Shariah-compliant auditing services as a matter of principle, the clients’ perception regarding audits’ compliance with Shariah rules and principles is of great importance to their sustainability. In this regard, Shariah compliance falls within a higher priority category in relation to other identified risks. They accordingly, require that auditing shall have in place adequate systems and controls, including Shariah Board, to ensure compliance with Shariah rules and principles. In other words, it could be said that IFI needs to be responsible for appointing people to carry out the responsibility of enjoining good, whenever...
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...ANNUAL REPORT ANALYSIS - GROUP PROJECT Corporate Governance Analysis I | Group Members:i. NASSRAH NAZIRRAH BT ADENANii. NUR AMIRAH BT ZAKARIAiii. SITI NUR MARLIA BT MOHAMED GHAZALIiv. WAN AUNI NADIA BT ABU BAKAR SIDIK | Matrix No:2013245798201345120420138048862013294204 | II | Name of Company: | CIMB Group Holding Berhad | III | Year | 2012 | | No of pages | 1-270 | 1 | Vision or Mission:reflects (if any) If not available then just state “NOT AVAILABLE”Shareholder Theory Stakeholder Theory | Vision : To be the leading Asean CompanyMission : The company want to provide Universal Banking Services as a high-performance, institutionalized and integrated company located in Asean and key market beyong, and to champion the acceleration of Asean integration and the region’s links to the rest of the world. | 2 | Read chairman’s statement:Identify any strategies and when you read the statement just try to figure out whether the strategies or activities mentioned relates to either a shareholder or a stakeholder perspective & write your findings in the column provided. | RECORD PROFITIn 2012 is CIMB Group’s most profitability year yet, as creating value for our shareholder is a foundation of everything we do. I. We added or expanded operations in Sydney, Melbourne, Hong Kong, Taipei, Seoul, London and New York through the acquisition of some Asia Pasific units of the Royal Bank of Scotland II. We remain in discussion to purchase a majority stake in the Bank of Commerce in...
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...directors’ characteristics, consisting of board size, board composition, and the separation roles of CEO and chairman, on corporate social responsibility (CSR) disclosure in 53 annual reports of Islamic banks of Gulf Cooperation Council (GCC) countries after controlling of bank size, financial performance and relevant public. Based on the framework of legitimacy theory, the findings show that CSR disclosure has a negative and insignificant relationship with board composition. On contrast, the study found insignificantly and positive association between CSR disclosure and other characteristics of board of directors (board size and the separation roles of CEO and chairman). With regards control variables, the study indicates that bank size and financial performance have a positive and significant influence on CSR disclosure, while relevant public has no effect. Therefore, the results indicate that corporate governance structure of board of directors within Islamic banks of GCC region does not play a major role on CSR disclosure, because of family control. These findings suggest the need for improving the existence of the best practice of corporate governance for Islamic financial institutions by imposing additional constraints on the board of directors’...
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...Mohd Sobri 62289214372 Nur Aizat binti Mun 62289214006 Norhafiza binti Alalguring 62289214119 Noor Rahimah binti Abdul Rauf 62289214281 TABLE OF CONTENTS NO | TOPIC | PAGES | 1.0 | Introduction | 3 | 2.0 | Bank Profile | 5 | 3.0 | Financial Analysis | 7 | 4.0 | Credit Risk | 14 | 5.0 | Liquidity Risk | 24 | 6.0 | Operational Risk | 27 | 7.0 | Market Risk | 30 | 8.0 | Shariah Risk | 34 | 9.0 | Capital Requirement | 36 | 10.0 | Conclusion | 39 | 11.0 | References | 39 | 1.0 INTRODUCTION CIMB Islamic was officially launched by Malaysia’s Bank Negara Governor Tan Sri Dato' Dr Zeti Akhtar Aziz in June 2003. Since then, CIMB Islamic has won numerous accolades for its innovative Shariah-compliant solutions. It providing the consumer market with an Islamic alternative for deposit accounts and financing. CIMB Islamic offers a range of deposit and investment products to help manage business cash flow and cash reserves more effectively such as Wadiah Current Account-I, Fixed Return Income Account-I, and Special Investment Account-I. The money will only be invested in Shariah-Compliant activities. In the context risk, risk refers to the probability of loss. Risk actually elucidates the probability that an actual return on an investment will be lower than the expected return. Bank will dealing with high risk leading to high return or vise versa that can be manage, but not eliminate. Global trends are leading to the rising importance of risk management in financial...
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...2012. Pp. 16 - 31 Corporate Governance-Its Problems & Prospects in Banking Industry in Bangladesh Begum Ismat Ara Huq* and Mohammad Zahid Hossain Bhuiyan** Corporate Governance ensures to bring transparency, accountability and professionalism in the management system of a corporate body that enhances the credibility and acceptability to the shareholders, employees, potential investors, customers, lenders, governments and all other stakeholders. This is more true in case of Banking Industry. Since Banks deal in public money, public confidence is of outmost importance in this Industry. The study aims at finding out problems & deficiencies involved in Corporate Governance practice in Banking Industry in Bangladesh and also suggesting ways and means to remove the same in order to make the Corporate Governance practice sound and effective. In this study, both the primary and secondary data were used. The primary data relating to problems involved in Corporate Governance practice and suggestions to remove the same were collected on the basis of a questionnaire by interviewing 24 randomly selected Bank personnel such as Directors of the Board as the internal part of management and the Auditors as the external group. The secondary data were collected through an extensive literature survey on the subject. The study has identified some major problems in Corporate Governance practice in the Banking Industry of the country. The prospect of Corporate Governance practice is bright in Banking...
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...2012. Pp. 16 - 31 Corporate Governance-Its Problems & Prospects in Banking Industry in Bangladesh Begum Ismat Ara Huq* and Mohammad Zahid Hossain Bhuiyan** Corporate Governance ensures to bring transparency, accountability and professionalism in the management system of a corporate body that enhances the credibility and acceptability to the shareholders, employees, potential investors, customers, lenders, governments and all other stakeholders. This is more true in case of Banking Industry. Since Banks deal in public money, public confidence is of outmost importance in this Industry. The study aims at finding out problems & deficiencies involved in Corporate Governance practice in Banking Industry in Bangladesh and also suggesting ways and means to remove the same in order to make the Corporate Governance practice sound and effective. In this study, both the primary and secondary data were used. The primary data relating to problems involved in Corporate Governance practice and suggestions to remove the same were collected on the basis of a questionnaire by interviewing 24 randomly selected Bank personnel such as Directors of the Board as the internal part of management and the Auditors as the external group. The secondary data were collected through an extensive literature survey on the subject. The study has identified some major problems in Corporate Governance practice in the Banking Industry of the country. The prospect of Corporate Governance practice is bright in Banking...
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...pdfInternational Journal of Education and Research Vol. 1 No. 6 June 2013 SHARIAH GOVERNANCE FOR ISLAMIC CAPITAL MARKET: A STEP FORWARD Nawal Kasim Accounting Research Institute, Faculty of Accountancy UniversitiTeknologi MARA, Shah Alam, Malaysia Sheila Nu NuHtay Institute of Islamic Banking and Finance International Islamic University Malaysia, Gombak, Malaysia Syed Ahmed Salman PhD. Candidate and research assistant at Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur Sponsored or supported by: ARIHICoE Research Grant Abstract Since the last few decades, Islamic finance industry has developed tremendously penetrating not only the Muslim countries but surprisingly the non-Muslim countries as well. It has been acknowledged by the scholars on the need for this development to cater for the Islamic banking, Takaful and Islamic capital market industries. These three main industries are interrelated and dependent on each other in order to ensure that the whole Islamic financial system is in compliance with the Islamic principles. Among these three streams of the service industry, the Islamic capital market plays a crucial role to support the other two. Since Islamic banks and Takaful operators have to invest to provide the benefits to the investors and policy holders which are compatible with the conventional counterparts, the Islamic capital market is assumed to be the backbone for the two to survive and grow in the Islamic...
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...National College of Business Administration & Economics (NCBA&E) Business Strategy Assignment: Detailed Analysis of Islamic Banking in Pakistan. Submitted By: Saad Alam 2151407 Submitted To: Sir Qayyum Qureshi | | | | | Type | Public Limited | Traded as | KSE: MEBL | Industry | Islamic Banking, Commercial Banking | Founded | 1997 | Headquarters | Karachi, Pakistan | Products | Murabaha, Ijarah, Diminishing Musharakah, VISA Debit Card, Saving Accounts, Consumer Banking etc. | Number of employees | 7,000 - 2014 | Slogan | The Premier Islamic Bank | Website | www.meezanbank.com | | PROFILE:Meezan Bank (Urdu میزان بینک) is the first and largest Islamic commercial Bank of Pakistan. The Bank is headquartered in Meezan House - Karachi, Pakistan. It has a network of over 490 branches in more than 100 cities of Pakistan. It commenced operations in 2002 when State Bank of Pakistan issued first-ever license for Islamic commercial banking. The Bank has a market share of 35% in Islamic banking industry of the country.JCR-VIS Credit Rating Company Limited, an affiliate of Japan Credit Rating Agency, has rated the Bank’s short term rating at A1+ (A-One Plus), the highest standard in short term rating, and the long-term entity rating at AA (Double A) with “Stable” outlook, making it the only Islamic bank with AA credit rating in the Islamic banking industry of Pakistan. | | HISTORY:The founder...
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...Chapter: 1 Introduction 1. Introduction As mandatory requirement of the Bachelor of the Business Administration (BBA) program under Eastern University, this report entitled – “Business Strategy”, a study on Fareast Islamic Life Insurance Co. Ltd. Insurance is a growing business in Bangladesh and has more and more scope to develop the economy of Bangladesh. In this report, we have tried our best to introduce the company and show their background, company policies, financial condition, performance and various analyses. 1.2 Objectives of the Study The report is the part of the Insurance sector that we are studying in our BBA course. The objective of the report is to present the practical view about the “Insurance Practices in Bangladesh”, that provides facility to the ends of the Individuals and to transform our modern social order. 3. Scope of the Study The scope of this report is limited to overall description of the company, its services and its financial performance analysis. The scope of the study is limited to organizational setup, functions and performance. Since FILIC is still its growth stage in Bangladesh; it has go to long way to achieve its destination. The report will mainly focus on what criteria FILIC maintaining before insuring and their claim settlement process. The will also emphasize on the financial ratios. 1.4 Methodology of the Study Selected Subject Matter We have...
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...Shari’ah Governance System The existing framework of Islamic finance in various countries shows different practices and models of Shari’ah governance system. Some countries prefer greater involvement of regulatory authorities but some countries prefer little involvement of regulatory authorities. Until now, it is still debatable whether which one will be more appropriate for possible adoption. There are different types of approaches to differentiate the Shari’ah governance system. For United Kingdom, they applied reactive approach which is more popular in non-Islamic countries. Although several Islamic banking licenses have been issued to Islamic Financial Institutions (IFI), the regulatory authority is silent upon the Shari’ah governance framework....
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