SPECIAL HONORARY AWARDS

“LIFETIME ACHIEVEMENT AWARD”Rtd. Justice Ash-Sheik Mufti Muhammad Taqi Usmani, Executive Member and Chairman of the Sharia Board of AAOIFI and a

former member of the Sharia Appellate Bench of the Supreme Court of Pakistan

“SERVICE EXCELLENCE IN ISLAMIC FINANCE”State Bank of Pakistan

In recognition of the contribution made, especially to startups, in the IBF Industry all over the world, by the dissemination of

information on a free to view public website that many institutions in South Asia would have availed of.

“LEADERSHIP IN ISLAMIC FINANCE” Mr Mohammed Kateeb, Group Chairman & CEO, Path Solutions, Kuwait

In recognition for the leadership provided to one of the trailblazers in Information Technology germane to the IBF Industry

“SERVICE TO HUMANITY” Mr Mushtaq Chappra, Founder and Chairman, The Citizen’s Foundation, Pakistan

In recognition of the immense contribution to society as a whole, specifically the work done by TCF, which was founded and is

currently chaired by Mr Chhapra, to providing education to children who may have otherwise been denied this basic right in

Pakistan.

“CONTRIBUTION TO THE GLOBAL HALAL INDUSTRY”Rushdi Siddiqui, Co-Founder & CEO, Zilzar Tech, Malaysia

In recognition of the services rendered to the global Halal Industry encompassing Islamic Finance, Halal Friendly travel and

Islamic lifestyle. A true friend to the Industry straddling all the continents

SPECIAL

SUPPLEMEN

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Special IBF Supplement

VOL 3 | ISSUE NO 19

COMPETITIVE COUNTRY AWARDS

GOLD AWARD

SILVER AWARD

DEAL OF THE YEARSri Lanka

HNB Al Najah : Syndicated Diminishing Musharakah facility to Muvumbe Hydro U Ltd for the Hydro power project in Uganda by AL NAJAH.

Amana Bank : Financing Fortune Agro Industries (Pvt) Ltd to set up the Sri Lanka’s largest livestock feed mill by Amana Bank PLC

GOLD AWARD

SILVER AWARD

PRODUCT OF THE YEARSri Lanka

“Flexi Term Investment Account” by Amana Bank

“Deergayou Retirement Plan” by Amana Takaful Life

Pakistan

GOLD AWARD “Meezan Gold Fund” – Al Meezan Investment Management Limited

GOLD AWARD

SILVER AWARD

SOCIAL UPLIFTMENTSri Lanka

Muslim Aid, Sri Lanka

Al Falaah, Islamic Business Unit of LOLC Finance

Amana Takaful LifeGOLD AWARD

SERVICE PROVIDER OF THE YEARSri Lanka

First Global Academy

GOLD AWARD

India

Octaware Technologies Ltd

GOLD AWARD

EDUCATION PROVIDER OF THE YEARMaldives

CMDA Institute of the Capital Markets Development Authority

GOLD AWARD

PakistanAL Huda Center of Islamic Banking & Economics

GOLD AWARD

ADVISORY SERVICES PROVIDER OF THE YEAR

IndiaTASIS - Taqwaa Advisory and Shariah Investment Solutions (Pvt) Ltd

GOLD AWARD

Pakistan

Meezan Bank

HONORARY AWARDSDr. Shariq Nisar, Director, Octaware Technologies Ltd., India

In recognition for the contribution to the IBF Industry in India over a period of one and a half decades. Considered by his peers to be one of the catalysts in the development of the industry to what it is today

Dr Aishath Muneeza, Chairman, Maldives Centre for Islamic Finance, Maldives

In recognition for the contribution to the IBF Industry in the Maldives, being involved in some of the major initiatives in the industry, including the honorary work that has benefited individuals and institutions alike.

Mr Irfan Siddiqui, President & CEO, Meezan Bank, Pakistan

In recognition for the contribution to the IBF Industry in Pakistan, following the setting up of Meezan Bank which has grown to be the largest Islamic Bank in Pakistan

Mr A I Marikar, Member, Advisory Board of AAFI, Sri Lanka

In recognition for the contribution to the IBF Industry in Sri Lanka, not just as the CEO of the first fully fledged IFI but continuing to assist the industry following his retirement, extending to the development and teaching of the IF courses in specialised degree courses designed by him

Mr Osman Kassim, Chairman, Amana Bank, Sri Lanka

In recognition for the contribution to the IBF Industry in Sri Lanka, considering to many to be the visionary of the IF industry in Sri Lanka. A true pioneer

TECHNOLOGY PROVIDER OF THE YEARBRONZE AWARD

Special IBF Supplement

GOLD AWARD

MICRO FINANCE COMPANY / PROJECT OF THE YEARIndia

Bait-un-Nas’r Urban Co-Op Credit Society Limited

GOLD AWARD

Pakistan

Meezan Upaisa by Meezan Bank

GOLD AWARD

CAPITAL MARKETS SERVICE PROVIDER OF THE YEARIndia

TASIS- Taqwaa Advisory and Shariah Investment Solutions (Pvt) Ltd

GOLD AWARD

Pakistan

Meezan Bank

GOLD AWARD

SILVER AWARD

RISING IF PERSONALITY OF THE YEARSri Lanka

Ms Fatima Sarah Afker of BDO PARTNERS

Muhammad Nadheer Muhammad Siddeeq – AL-FALAAH TAKFUL – LOLC GENERAL INSURANCE LTD

Muhammed Abdulla Ifath Zuhry of ARIJ, RICHARD PEIRIS FINANCE LTD

GOLD AWARD

SILVER AWARD

EMERGING IF ENTITY OF THE YEARSri Lanka

Amana Takaful Life Ltd

NDB Shareek

Arij, Richard Peiris Finance Ltd.

GOLD AWARD

TURNAROUND ENTITY OF THE YEARIndia

Bait-un-Nasr Urban Co-Op Credit Society Limited

Maldives

Maldives Hajj Corporation Ltd

GOLD AWARD HDFC Amna

SILVER AWARD

GOLD AWARD

TAKAFUL INSTITUTION OF THE YEARMaldives

Amana Takaful (Maldives}

GOLD AWARD

TAKAFUL WINDOW / UNIT OF THE YEARMaldives

Ayady Takaful - Allied Islamic Window

GOLD AWARD

PakistanAl Meezan Investment Management Ltd

ISLAMIC FINANCE BANK / ENTITY OF THE YEAR

GOLD AWARD

SILVER AWARD

Sri Lanka

Al Falaah, Islamic Business Unit of LOLC Finance

Amana Bank

HNB Al Najah

GOLD AWARD

Bangladesh

Union Bank of Bangladesh

GOLD AWARD

Maldives

Maldives Islamic Bank

GOLD AWARD

Pakistan

Meezan Bank

REGIONAL AWARDSISLAMIC FINANCE EDUCATION PROVIDER OF THE YEAR FOR SOUTH ASIA

Ethica Institute of Islamic Finance, Dubai, UAE

ISLAMIC FINANCE TECHNOLOGY PROVIDER OF THE YEAR FOR SOUTH ASIAPATH Solutions, Kuwait

BRONZE AWARD

BRONZE AWARD

BRONZE AWARD

Special IBF Supplement

The inaugural Islamic Finance Forum of South Asia (“IFFSA”) was held on 26th and 27th of July 2016 at Hotel Ramada, Colombo. The Conference was chaired by Mr. Rushdi Siddiqui (Co-Founder and Chief Executive Officer – Zilzar Tech Sdn. Bhd, Malaysia) with senior economist Dr Razeen Sally (Director - European Centre for International Political Economy (ECIPE), Singapore) delivering the Keynote Address while Mr. Ishrat Rauff (Group MD/CEO, Adl Capital) delivered the welcome address.

The two day forum comprised nine panel discussions featuring industry experts from India, Pakistan, Bangladesh, Maldives, United Arab Emirates and Sri Lanka. In addition to the panel discussions, the forum had a first of its kind; A One on One with Industry Pioneer, Mr. A I Marikar. The presentations included “Multi Currency listings on the Stock market” by Mr. Rajeeva Bandaranaike (CEO, Colombo Stock Exchange), “The Thematic Convergence of ESG, Ethical and Shariah compliant funds” by Mr. Arif Sultan (Regional Director - Asia Pacific, IdealRatings Inc. Singapore) and a Country Presentation on India by Dr. Shariq Nisar (Director - Octaware Technologies Ltd., India). Mr. Ravi Abeysuriya also addressed the august gathering in his capacity as the President of AAFI, Sri Lanka.

In his Opening Remarks, Rushdi Siddiqui spoke about the Headwinds and Tailwinds of Islamic finance. He noted that the Oil Prices, Islamic Finance Hubs, Entry and Exits of players, Innovation, Disruption and Consolidation were among the key facets that impact the global Islamic finance industry. He stressed that there is enormous potential for IBF Digital and Social media platforms. While adding on the tailwinds especially on Consumerism, he added that there is a vast Muslim Lifestyle Marketplace which is being catered to by the virtual world especially the Chinese. He also opined that Iran, with access to USD 50 billion, has a huge market potential, especially given the recent lifting of embargos. Siddiqui further emphasized that there are 4 Pointers for a Knowledge Based Economy - Access to Capital, Empowering Women, Identifying Youth & Entrepreneurs and Risk capital availability.

The keynote by Dr. Sally was centered on the economic state of play and prospects of South Asia. As per the macro indicators of South Asia compared to East Asia and the rest of the world, the SA region only accounts for 2.89% of World Trade while East Asia accounts for 29.96% of World Trade. On Inward FDI, South Asia only attracts a miniscule 12.35% as opposed to East Asia’s 87.65%.This is despite India now growing at 7.5%, compared to 5% previously, which is faster than China in terms of growth. However, on the regional economic integration in Asia, the South Asian region has an insignificant share of Asian and world trade. He commented that the region has hardly inserted into global supply chains and perhaps is the most mal-integrated region in the world. Some of the key reasons being big tariff and even bigger non-tariff barriers, poor cross-border infrastructure, light bilateral FTAs and SAFTA and the Indo-Pak political obstacles leading to lack of growth regionally. Commenting on the Sri Lankan economy, Dr. Sally stated that the post war peace dividend has not had the desired impact on economic growth, or at least not to the extent that was expected.

Following the keynote address by Dr. Sally, the plenary sessions discussed a wide variety of topics, deliberated on by experts from across the region. These include the Challenges facing IF in South Asia, along with the considerable opportunities (including cross-border) that the single largest bloc of Muslims in the world represents, creation of a more vibrant debt market for IF products such as Sukuks, Human Capital, Islamic Microfinance, the Impact of Technology, the Halal Lifestyle market and how it impinges on IF, and the evolution of Capital Markets. There were also an illustrious group of eminent personalities from Pakistan and the Maldives, discussing the progress that these countries have made in the IBF space in separate country sessions. Areas that have excited the markets such as Social Media, Crowdfunding were also topics that were debated on during this two day event.

By Sarah Afker

Special IBF Supplement

Amãna Bank awarded Islamic Finance Entity of the Year

Amãna Bank was awarded the Gold Award for the Islamic Finance Entity of the Year at the recently concluded inaugural Islamic Finance Forum of South Asia (IFFSA) Awards Night, cementing its leadership status in the Non-Interest based banking and finance industry in Sri Lanka. Held for the first time on an international level, this award ceremony succeeds the previously held annual Sri Lanka Islamic

Banking and Finance Industry Awards, which Amãna Bank has triumphed by winning many accolades. The ceremony also recognized the performance of industry practitioners from other South Asian countries including India, Pakistan, Bangladesh and Maldives. The Awards

were adjudicated by a distinguished panel of judges with the assistance of KPMG Sri Lanka.

In addition to winning the Gold for Islamic Finance Entity of the Year in Sri Lanka, Amãna Bank was also adjudicated the Gold Award for Islamic Finance Deal of the Year and Silver Award for Islamic Finance Product of the Year for its innovative Flexi Term Investment account.

Commenting on the accolades, the Bank’s Chief Executive Officer Mohamed Azmeer said “ It is a great privilege to be awarded the Islamic Finance Entity of the Year along with the other accolades. These awards recognize and reflect the banks vision of being the admired leader in providing equitable finance solutions and pledge to develop this emerging industry. It is this focus which has resulted in the exceptional

growth we have witnessed at Amãna Bank which in turn has brought this honour to us.”

Amãna Bank is the first Licensed Commercial Bank in Sri Lanka to operate in complete harmony with the non-interest based Islamic banking model and is listed on the Diri Savi Board of the Colombo Stock Exchange. Fitch Ratings, in October 2015, affirmed the Bank’s

National Long Term Rating of BB(lka) with a Stable Outlook. The Bank was recognized as the Best ‘Up-and-Comer’ Islamic Bank of the World by ‘Global Finance Magazine’ at the 18th Annual World’s Best Banks Award Ceremony 2014 held in Washington DC, USA.

Powered by the stability and support of its strategic shareholders including, Bank Islam Malaysia Berhad, AB Bank in Bangladesh and The Islamic Development Bank based in Saudi Arabia, Amãna Bank is making strong inroads within the Sri Lankan banking industry and is

focused on capitalizing the growing market potential for its unique banking model across the country

Amãna Bank’s VP – Operations and SME Banking M M S Quvylidh receiving the Gold Award for Islamic

Finance Entity of the Year from KPMG Managing Partner Mr Reyaz Mihular

Amãna Bank’s Chief Risk Officer Ajmal Naleer receiving the

Gold Award for Islamic Finance Deal of the Year from Judging Panel Mem-

ber Omar Kayaam

Amãna Bank’s VP – Retail Banking and Marketing Siddeeque Akbar

receiving the Silver Award for Islamic Finance Product of the Year from Judg-

ing Panel Member Omar Kayaam

Visionary, Passionate, Resolute … Just a few of the adjectives that would only begin to describe Mr. Osssman Kassim (Rafik to those close friends and colleagues), the recipient of the Lifetime Achievement Award for Contribution to the IBF Industry in Sri Lanka at the recently concluded IFFSA Awards Ceremony. A true colossus in the industry, Mr. Kassim was undoubtedly the visionary behind the alternative financial model that revolutionised the financial landscape, as we all knew it, in Sri Lanka.

It was back in the mid-90’s that Mr. Kassim assembled a group of likeminded individuals from the business as well as the professional community and took up the challenge to set up a company that would offer financial services that was deemed alien to many in the financial industry at the time. To offer an alternative financial business model that was driven by faith and sought by a minority community was, needless to say, deemed by most to be an impossible task. Having withstood the numerous obstacles and challenges posed from various quarters, the public of Sri Lanka witnessed the birth of Amana Investments Ltd. (AIL) in the year 1997, the first Islamic Financial Services Provider in Sri Lanka. Ably led by Mr. Kassim, who served as the Founder Chairman, the institution was not content with being a mere financial services provider. The culmination of the efforts expended by Mr Kassim and his team, among who was the erstwhile Mr. Marikkar, a recipient of the Lifetime Award himself, and continues to hold the Chairmanship of what is now the only fully fledged Islamic Bank in Sri Lanka, Amana Bank PLC.

His dynamic leadership also steered the setting up of the first Takaful Company in Sri Lanka, Amana Takaful, also coming under the umbrella of Amana, which simply means “TRUST”. The word “Amana” has now grown to a household name in the field of Islamic Financial Services in Sri Lanka, Alhamdulillah, thanks largely to the untiring efforts of its Founder, Mr. Osman Kassim.

Mr. Kassim has continued to play a pivotal role in the progress of Islamic Banking as a whole and his efforts, even after two full decades, are still undiminished. This is despite his active involvement in his family business, Expolanka, which he co-founded with his siblings. Following its sale, Mr Kassim, whilst stepping down from the role of Chairman, continues to play an active role in the more recently incorporated Aberdeen Holdings. Mr. Kassim also serves as Chairman of the Board of Vidullanka PLC.

A multi-faceted individual and a pioneer, in the truest sense of the word, Mr Ossman Kassim, has balanced his business commitments with what many would argue was the area closest to his heart … Da’wah. Uncompromising in his approach, this devout Muslim continues to be a beacon to many in this field, providing guidance, counsel and much more, in his endeavor to make the world a better place, Insha Allah.

“Passion” is probably the closest word that one could coin to describe the amazing love story that blossomed between senior banking professional, Ahmed Ismaildeen Marikar and Islamic Banking and Finance (IBF).

Pioneers of iBf in sri Lanka

“a Visionary like no other”By Sabri A Cader & Ishrat Rauff

“an iconic figure in sri Lanka’s iBf industry”By Azad Zaheed

Special IBF Supplement

Mr A.I. Marikar , the gentleman banker, counts over 4 decades of service in the banking industry with the last two decades exclusively committed towards the introduction and growth of the Islamic Banking & Finance sector in Sri Lanka. This brief and summarized story does not do justice to the silent and untiring contribution made by him in molding and growing the domestic IBF industry. For one who shuns the limelight and who prefers to divert praise directed at him towards others, this modest tribute may very well cause raised eyebrows from the gentleman himself. But then, to state facts about a honorable, yet humble personality who undoubtedly gave the best years of his life towards a noble cause, cannot and should not be cloaked in secrecy.

Being part of the pioneering team that established Amana Investments Limited (AIL) , Mr Marikar functioned as the institution’s founding Managing Director from 1997 to 2004, nurturing AIL through its most challenging and formative years. Under his stewardship, Amana embarked on a meticulously planned journey where public awareness about the unique financial model it was advocating and salient features of its products & services were explained at a series of public seminars and private gatherings across the country.

The journey was by no means easy and was riddled with setbacks and successes. Faced with numerous obstacles, Mr Marikar, together with a dedicated Board of Directors, a key team of staff and a panel of Shariah scholars renowned for their deep knowledge and understanding of IBF principles, stuck to the task of crossing each hurdle with wisdom and foresight.

Having established a stable operation which witnessed a period of steady organic growth, it was during the stewardship of Mr Marikar that Amana’s first subsidiary, Amana Takaful Ltd (ATL) opened its doors for business as an Insurance service provider in 1999. This was followed by the inking of Amana’s strategic partnership with Bank Islam Malaysia (BIMB), Berhad where the Malaysian banking giant took a minority equity stake in AIL; a move which undoubtedly later contributed significantly in Amana’s pursuit of securing a commercial banking license.

The opening of Amana’s first branch in the trading hub of Pettah in late 1999, followed by the opening of its first outstation branch in the city of Kandy in 2000, provided much impetus to AIL’s growth momentum. There was little doubt that, despite being unduly disadvantaged in the market place with no banking license in its possession, AIL had grown its balance sheet to a size that was bigger than at least a few long established financial institutions operating in Sri Lanka. Mr Marikar was personally involved in the feasibility study and opening of the first branch in the East of Sri Lanka even whilst the country’s ethnic conflict was still raging . Such was his commitment towards a cause which he considered sacred.

He was more than a visionary, highly respected within and outside the banking fraternity. He was a team person and gelled exceptionally well with the founding fathers of Amana , notably its chairman, Mr Osman Kassim and its other illustrious board of directors, the late Dr Iqbal, the late Mr Alif, the late Justice Jameel, Mr Tyeab Akbarally and President’s Counsel, Faisz Mustapha. In late 2004, Mr Marikar, together with his fellow director D’ato Tajuddin Ahmed, who was the former MD, BIMB and presently on the board member of Amana Bank (ABL) visited the Islamic Development Bank (IDB) in Jeddah, Saudi Arabia in pursuit of establishing a strategic relationship with AIL. The IDB today holds a significant equity stake in the bank.

Professionally, he was a man of unwavering principles but would still lend an attentive ear to any

constructive suggestions and would not hesitate to take a step backwards is deemed necessary. Sharia compliance and complying with the laws of the country was top of his list of priorities. His staff at AIL, across all ranks, the BOD and Sharia Board members would treasure fond memories of him, remembering him as a wonderful human being with a large heart. Compassion & humility were perpetual attributes, embedded in him. As Managing Director of AIL, his discussions with world renowned Sharia scholar Mufti Taqi Usmani who was then the Chairman of AIL’s Sharia board and its local scholars, Sheikh M.M.A. Mubarak, Mufti M.I.M.Rizwe and late Justice M. Jameel, were always done with high levels of mutual respect.

The amendments to the country’s Banking act in 2005, which paved the way for Islamic Banking products & services to be offered by institutions licensed by the Central Bank of Sri Lanka, was yet another significant contribution made by him whilst he was Managing Director of AIL.

Having handed over the reins of AIL in 2004, Mr Marikar remained active in the domestic IBF space playing a pivotal role in the setting up of the first Islamic Banking ‘Window’ operation of MCB Bank Limited in March 2006. His professional services to the industry continued when the country’s leading private Bank, Commercial Bank of Ceylon engaged his professional services to set up their in-house Al Adalah Islamic Banking unit (IBU). This was followed by the country’s state banking giant BOC also enlisting his services in an advisory capacity in setting up its own ‘window’ operation BOC – Al Noor.

Having taken up the position of Chairman, Adl Capital Limited in 2010, Mr Marikar led the Adl Capital advisory team that set up IBU’s in HNB (Al Najah ) in 2012 & NDB Bank (Shareek) in 2014. His deep understanding of the conventional banking model, process flows coupled with his hands-on experience in Islamic Banking helped him give of his best to all these institutions. The tremendous achievements that the IBU’s of these institutions have achieved bear ample testimony to his selfless service he rendered.

Retirement and advancement in age did not deter Mr Marikar from responding to the call from the South Eastern University located in Oluvil, where he worked tirelessly to set up Sri Lanka’s first ever degree program in Islamic Banking and Finance, scripting almost the entire syllabus singlehandedly. Even today, following his retirement from Adl Capital Limited, he continues to drive this program forward, a degree program which is well attended by an enthusiastic student following. Whilst being the recipient of an honorary award at the recent Islamic Finance Forum South Asia (IFFSA) Awards Night for his services rendered is no doubt deserving, the award itself does not do justice to the overall contribution he has made towards the development of IBF during the past two decades. It is rather a symbolic recognition by an extremely appreciative IBF industry in saying … Thank you, Sir.

Special IBF Supplement

1. Could you give me a brief overview of Path Solutions?

Kuwait-based Path Solutions is a leading IT provider offering a broad, deep spectrum of Sharia-compliant integrated solutions and services to the Islamic financial marketplace.

The company’s flagship product - iMAL, provides a complete suite of Islamic banking applications with a rich sweep of functionality and features, addressing Sharia compliance, local and regulatory requirements. The system is complemented by the most comprehensive set of consulting, implementation and support services.

2. Roughly how many people work for Path Solutions?

In terms of workforce, we have over 500 people, the majority of them are IT developers and system engineers. Our team have real world experience and extensive expertise in the following areas: Accounting | Finance | Business | System Engineering Banking & Investment | Information System Security & Audit Design, Development & Implementation | IT Governance.

And we have Subject Matter Experts specialized in Islamic finance, who have achieved many certificates such as Certified Islamic Finance Executive (CIFE), CIMA Diploma in Islamic Finance (CDIF), CIMA Advanced Diploma in Islamic Finance (CADIF), and others.

3. Is the workforce largely local? What training and development systems are in place?

No, we are a multinational company with a multinational team. The team at Path Solutions come from different backgrounds with cross-cultural differences. All this helps us compete in a complex environment as we understand all mentalities and can collaborate easily with our clients spread on all continents.

Path Solutions provides leading-edge software solutions to the Islamic financial services industry, demanding knowledge transfer during and post-implementation.

By combining years of software development with industry best practice in implementation and training, Path Solutions has obtained a unique implementation approach - one that ensures our clients are fully capable to get the most from their software investment.

Mr. Mohammed Kateeb,

IFFSA Supplement – August 2016

Training plays a critical role in the adoption of new technologies. Trainings at Path Solutions are delivered by senior business consultants, who have a broad experience in working with our applications. Being part of our organization, they are up to date with our latest product releases and upgrades. All necessary documentation, user manual guides and other materials are supplied to assist in the implementation and training process.

Our training programs range from basic trainings to advanced trainings that teach users how to customize their solutions to meet their organization special needs. All trainings are hands-on and cover all modules installed, providing users with the information and aptitude to make optimum use of our software solutions.

4. Do you work regularly with long term clients? How do you manage those relationships?

Our aim is to make sure all our clients are attended and provided with the best services.

The Path Solutions’ client engagement model is unique in the market. With such a unique mix of resource pool, we are capable of taking care of all business consulting, project implementation, training, and support needed by our clients. The client IT department and our project team strive towards synergic relationships, working as one team with an honest and transparent approach in order to fetch greater client satisfaction and convenience for both institutions.

5. What issues have been affecting your industry as a whole?

Islamic banking is facing some important challenges worldwide because the financial system is more favourable almost everywhere to conventional banking. Major challenges are brought by disparate accounting models, jurisprudence and some other constraints such as the unfamiliarity with the Islamic banking system and lack of funding.

We believe a reshaped banking sector can rise to these challenges. If those challenges are addressed proactively, it would most likely reinforce the credibility of Islamic banking globally, contribute to the sustainable growth and success of an industry which has produced notable achievements, and may dilute the form-versus-substance debate.

6. What are Path Solutions’ plans for the future?

Our company will continue to focus on the Islamic finance segment. This segment just like the conventional finance segment is going through a revolution of disrupting factors that will change this industry forever. New types of institutions will be created such as online banks; some fintechs will compete with financial institutions through creating mobile banking; and some telcos will try to provide banking through their mobile networks; and some global technology and social media companies will attempt to play a major role in this space, such as Apple, Google and Facebook. Huge risks and major challenges but also amazing opportunities will present themselves in the near future.

Path Solutions will continue to align itself with the different needs of its clients, and will continue to be a true technology partner to all, and of course the technology leader in this segment. We will increase the breadth of our solutions by providing more innovative modules in areas we don’t currently cover, and more solutions to new businesses and new business models. In addition, we will continue to focus on increasing the depth of our solutions and provide richer features for an efficient and more engaging customer experience. And we will be investing more into advancing our technology platform, the mobile technology and cloud support.

Besides, we are determined to continue our expansion into new geographic markets such as the CIS countries, and thus broaden further our client base.

Group Chairman & CEO of Path Solutions with H World

Interview of

Special IBF Supplement

aL-faLaah of LoLC finanCe sets the BenChmark in sukuk issuanCes in

south asiaAl-Falaah LOLC Finance PLC has successfully issued a Rs. 500 million (US$3.37 million) Sukuk from the domestic market, setting a precedent for corporate Sukuk issuances in South Asia. Sukuk is commonly referred to as ‘Sharia’h compliant’ securitisation which is

a fast emerging source of alternative funding often referred to as Islamic securitisation.

The Sukuk Al Ijarah issuance of LOLC Finance was subscribed entirely by the Bank of Ceylon. The three-year Ijarah facility proceeds will contribute to further develop the Islamic Finance capital market, by not only opening a new window for companies seeking Islamic Finance but also provide a viable investment instrument for any potential Islamic investor. The Trustee to the issuance was HNB Custodial Services while Trillion Securities (Pvt) Limited acted as the financial adviser, arranger and lead manager. The Legal

aspect was handled by Nithya Partners.

Elaborating on Sri Lanka’s first Sukuk Al Ijarah issuance, Mr. Krishan Thilakaratne, the Group Head of Islamic Finance of LOLC said, “As there has never been a Sukuk issuance in Sri Lanka, we had the challenge of drafting the agreements and arranging the parties. Further, we are building a fairly substantial Ijarah base and we have the capacity to go with a larger issue in the future. Ideally, we would

like to get off shore investors but there are hurdles to overcome such as exchange risk options”.

Mr. Thilakaratne further said, “There is a great appetite for investment in the company but we lacked a proper Sukuk structure or product that we could bring to the capital market. The focus for us now is to fine-tune what we have now for the international market. I would also like to make special mention of the members of Al-Falaah’s Shari’ah Supervisory Board, Ash-Shaikh Fazil Farook, Ash-Shaikh Murshid Mulaffer and Mufti Shafiq Jakhura, who are all well-known, eminent Scholars in the industry for their pivotal role in

structuring and drafting the agreements according to the precepts of Islamic Finance”.

Having successfully raised Islamic capital from the domestic market, LOLC Finance is focusing on capturing foreign funds, in a Sharia’h compliant manner. Backed by Japan’s multinational conglomerate ORIX Corporation, the LOLC Group is renowned for its

strong international funding base.

Speaking about the landmark deal, Mr. D.M Gunasekera, General Manager of Bank of Ceylon (BOC) said, “The experience and the learning curve of this joint effort is one of the convergence the industry is vying for and therefore others too can join hands with us for win-win deals. BOC being the No. 1 Bank in the country has the responsibility to support the financial industry to introduce various

types of products depending on the requirements of the depositors and the borrowers”.

Meanwhile, Sampath Kulatunga, Director / CEO of Trillion Securities (Pvt) Limited (TSL), the arranger and lead manager of the issue said, “The challenge to us was that this issue was the first ever Sukuk Al Ijarah receivable securitisation transaction, structured in the Sri Lankan capital market. The first ever Sukuk Al Ijarah securitisation transaction became a reality due to the effort of all stakeholders

who worked tirelessly to ensure the successful launch of this issue”.

Mr. Jonathan Alles, Managing Director and CEO of HNB commented that the Bank is proud to be appointed as the trustee to the Rs. 500 million Bank of Ceylon funded, Sri Lanka’s first Sukuk Al Ijarah securitisation of LOLC Finance PLC and this mandate is a

testament of the level of confidence that the market has placed on HNB as the preferred corporate banking partner.

LOLC Finance PLC, which is one of Sri Lanka’s largest non-banking financial institutions is a regulated Finance Company of the Central Bank. LOLC Finance is rated [SL] A with stable outlook by ICRA Lanka Limited, a wholly owned subsidiary of ICRA Ltd, an

associate of Moody’s Investors Service.

Special IBF Supplement

The archipelago of Maldives, globally reputed for its resplendent islands with pristine beaches, has consistently attracted high end tourists from all over the world. Whilst Tourism will probably continue to be the mainstay of its economy, the country has made a conscious e�ort to develop other industries and sectors. What is probably less known about the Maldives is the quantum leap it has made in developing a knowledge based economy. The general populace has seemingly bought into this initiative, as is evident by the numbers that have enrolled even in some of the more elite universities across the world. It has been claimed that the “Maldives probably has the highest PhDs per capita in the world”; this is no

wild exaggeration and could well be a very accurate assessment of the Maldives.

Leveraging o� this foundation, the Maldives is seeking to position itself as a Centre for Islamic Finance, targeting IFIs from all over the world to consider the Maldives as an option to base part of their operations. What some may perceive to be a lofty aspiration is actually well within the reach of a player with increasingly strong credentials. The 3rd MIBFI, to be held for the �rst time on a beautiful island resort, rather than the capital, Male, will explore its �edgling status as a Centre for Islamic Finance. The Conference, held for the third successive year, which is in itself testament

to the endeavor, will deliberate and discuss means of enhancing its position not just within the South Asian region but maybe even beyond.

•Creation of a Sovereign Wealth Fund

•Setting up in the Maldives: what would it take to attract international IFIs to locate in the Maldives

•Evolution of Islamic Finance in the Maldives and Future Prospects

•The Halal Industry – Should Maldives participate in this burgeoning industry and, if so, what route should it take?

• Halal-friendly Tourism: Boon or Bane to the existing market

• Creating a more buoyant industry – Increasing and Incentivising stakeholders.

• Cross Border Opportunities

• Capital Markets • Public - Private Partnerships

Key Discussion Points

3rd maldives islamic banking & finance industry conference

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1 7 T H N o v e m b e r 2 0 1 6 | R e s o r t B a n d o s , M a l d i v e s

When a woman veils her body in modest clothing, she is not hiding herself from men. On the contrary, she is expressing her right to be dignified. To wear modest clothing is an interpretation, choice, right, statement, and a “business opportunity”.

Modest fashion for Muslims is underpinned by religious guidelines for both females and males. The Holy Quran instructs Muslims to dress in a modest manner. The need for modesty extends to other religions: Judaisam (‘tzniut’, meaning ‘modesty or privacy’, is a concept used by Orthodox and Conservative Jews concerned about modesty in both dress and deed), Christianity, and Hinduism (the Rigveda 6 instructs a woman to wear a veil and lower her gaze). Thus, the cross appeal of modest fashion to people of other faiths and ideologies present an expansive opportunity.

Today, there are at least 25 mainstream apparel companies (and growing) that address the modest fashion opportunities. Fashion icons like Italy’s Dolce & Gabbana, America’s Donna Karan, Sweden’s H&M, Japan’s Uniqlo and other western fashion houses, brands and retailers all have one thing in common! They, and many others, are looking for ‘new’ growth markets, as their existing markets are mature and saturated. They are now aggressively courting and targeting the growing Modest (Muslimah) Fashion.

Let’s be clear of one fact: Muslim women are trend-setters and western brands are trend spotters.

We need to take a background look at fashion landscape, examine how much is ‘owned’ by modest fashion, and see if there are inorganic ways to grow this niche market into a mainstream one.

GLoBaL and musLim sPend on aPPareLs 2015Global spend on apparel was worth an estimated $1.73 trillion in 2015, of which Muslims accounted for 14 percent or an estimated $244 billion. However, with a rapidly increasing population, Muslim spend on apparel is expected to grow by 6 percent per annum between 2015 and 2020, which is double the growth rate of the global apparel industry. Modest clothing represents a key category of Muslim spend. Thomson Reuters & Dinar Standard Feb 2016.

modest fashion LandsCaPeToday, the modest fashion industry is disbursed and fragmented, as modest fashion is a country centric phenomenon due to the influence of culture, religious interpretation, etc. For example, modest fashion varies (in style and wear-ability) from Indonesia to Malaysia to Pakistan to Saudi. Today,

there are 146 modest fashion brands, 58 retailers and over 800 apparel manufacturers in the major Muslim country export markets.

This report identified 146 Islamic modest fashion brands and 85 Islamic modest fashion retailers with Indonesia, the United States and Malaysia representing the top retail markets. The 146 brands identified primarily sold through three of the leading e-commerce websites: Modanisa, Sefamerve, and HijUp. Source: TR/DS.

musLim sPend on CLothinGMuslims spent an estimated $230 billion on apparel in 2014, and this expenditure is projected to grow to $327 billion by 2020. Based on the estimated CAGR, the aggregate was $244 billion in 2015, amounting to 14 percent of the global apparel industry. The five largest consumption markets in 2014 were Turkey ($25 billion), the United Arab Emirates ($18 billion), Nigeria ($15 billion), Saudi Arabia ($14.7 billion), and Indonesia ($12.7 billion).

Most sales are off-line retail channels, but e-commerce is a high growth channel estimated at above $5 billion in 2015, and the top ten markets account for over 60 percent of spend. E-commerce spend on clothing is estimated at $4.8 billion in 2013. Assuming a similar share of the overall Muslim spend on apparel in 2015 would suggest a $5.2 billion market in 2015, although digital penetration rates are likely to have increased much faster than growth in total spend on clothing.

modest fashion = $100 BiLLion++ PurseBy Rushdi Siddiqui, Co-Founder & CEO, Zilzar Tech Sdn. Bhd.

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The largest markets identified in the 2013 study were as follows:-

Turkey (9.8 percent share of total spend), U.S.A. (9.2 percent share of total spend), U.A.E. (8.9 percent share of total spend), Saudi Arabia (7.6 percent share of total spend), Germany (6.1 percent share of total spend), U.K. (4.9 percent share of total spend), France (4.3 percent share of total spend), Iran (3.9 percent share of total spend), Egypt (3.4 percent share of total spend), Morocco (2.8 per cent share of total spend).

inVestment oPPortunituties in modest fashion:

Now, does venture capital, private equity, mergers and acquisitions have a role (to grow) the embryoinic/emerging modest fashion industry?

As stated above, it is a disbursed and fragmented maket, with national emphasis today, ex EU or US where there may be more fusion of modest fashion mixing and matching, hence, ripe for a roll-up or consolidation strategy.

Today, there are three potential players to fast track modest fashion growth(?):

Fashion industry companies—existing fashion houses/retailers acquire modest fashion shops as part of entry wedge into this growth market.

Private equity firms—demographic growth opportunity presents, in today’s slow growth environment, an attractive choice for PE firms.

Venture capital firms—VC firms may be in the best position to understand the risks of many of the modest fashion designers who have established a brand with their own funds, have run (or running) out of funds or need funds for scaling, marketing, etc.

oPPortunities for fashion industry PLayers

Consolidation can build scale through greater purchasing power with manufacturers and by leveraging relatively fixed support supply chain costs. Given the success of several mainstream brands in launching their own modest fashion brands, like DKNY and Dolce and Gabbana, acquisitions can help brands boost their product diversity and reach.

oPPortunities for PriVate equity inVestors

Modest fashion is an emerging area for private equity firms as it has attractive (read demographic) investment fundamentals. It represents an attractive niche for private equity players to invest in, with notable brands and retailers gaining traction and growing rapidly—such as Modanisa and HijUp, which secured multi-million dollar investments in the last year—and developing a loyal and increasingly global customer base.

oPPortunities for Venture CaPitaL inVestors

The ‘rules’ for modest fashion can actually spur innovation, where xisting subject matter and innvoation is ripe for VC interest. For example, an innovation is Veil Hijab, a U.S.-based startup launched a pre-order campaign on Kickstarter for ‘the first water-repellent, climate-adapting hijab’ in 2015. The campaign exceeded its goal of $5,000 by 784 percent, having raised $39,221 from nearly 900 people.

Another example of innovation is from Singaporean based designer. Adlina Anis, where she has come up with a pilot product where the hijab enables use of earphones or stethscopes. Furthermore, Turkey-based e-commerce company Sefamerve is working on bonnets that will include Vitamin E capsules to prevent hair loss.

m & a aCtiVity in the modest fashion VaLue Chain.

The Thomson Reuters & DinarStandard report identified 32 M&A apparel-manufacturing deals between February 2013 and February 2016 in the OIC.

In the OIC markets, 32 investments in textile and apparel manufacturers were identified between February 2013 and February 2016, valued at $186 million in aggregate.

Five OIC markets accounted for over 80 percent of deal volume and over 90 percent of deal value. The largest markets, in order of size, were Indonesia, Turkey, Pakistan, Egypt and Malaysia.

Indonesia, the third-largest apparel-export market in the OIC, was the largest market by both deal volume (accounting for seven deals, or 22 percent of deal volume) and by value (accounting for 33 percent of value). The top 10 deals accounted for 75 percent of aggregate deal value, with all top deals being corporate acquisitions, and with limited evident involvement by private equity players.

Conclusion

The above headwinds and tailwinds yield a way forward, and several colleagues and myself are looking at providing value to spark the growth the modest fashion with risk capital, mentoring/coaching, consolidation, etc.

In preliminary conclusion, the Modest fashion space needs to have a regional and eventually a global brand on par of western fashion houses and the landscape is ripe for a roll up strategy to get us there.

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BaCkGround

Maldives is a One Hundred percent Muslim country with a population of less than Four Hundred thousand. The country generates most of its income from tourism and depends heavily on imported goods. In March 2015, the government of Maldives created the Maldives Centre for Islamic Finance (MCIF) to strategize Maldives as a hub for Islamic Finance and halal industry in South Asia. It is a separate legal entity owned entirely by the government of Maldives.

MCIF is preparing to undertake a special endowment project to develop Islamic tourism for the very first time in the country. The revenue thus generated will be used to fight against poverty and promote Islamic microfinance for the poor and vulnerable population in the country. MCIF has already proposed the idea to a multilateral financial institution, which is expected to join the project as an equity partner.

This model proposed is unique in the sense that the model integrates the concept of waqf (endowment) linked with the development of Islamic tourism, thus creating a profitable business with the capacity to generate profit which, in turn, will be accumulated to create a sovereign wealth fund targeted for poverty alleviation.

modus oPerandi

In the proposed project, the government of Maldives will provide an island as an endowment to develop an Islamic resort. The investor in the project will contribute equity in developing the resort. A profit sharing ratio will be agreed between the Government of Maldives and the investor.

The proposed project entails the construction and development of an Islamic Resort in an island of Maldives, given that Tourism is considered the most profitable industry in Maldives. Given the popularity of Maldives as a tourist destination, the return on investment is substantial with a short payback period. The average cost for developing a resort island would be about 50 million USD.

imPaCt of the ProJeCt

The proposed project aligns well with the objective of Islamic economy in the area of endowment development and also on social and human development via Islamic finance. The project will also be a pilot project to prove the viability of Islamic tourism in Maldives and in South Asia. Furthermore, the proposed project will be a profit generating project that will assist the investors involved to grow its capital and at the same time the government of Maldives will take its first step to create a sovereign wealth fund to alleviate poverty.

The broad areas in which the government intend to focus to alleviate poverty are human development in education and health sector, agriculture and rural development, microfinance and empowerment of women.

ConCLusion

It is hoped that this highly prospective project will commence soon and provide the opportunity to be able to witness not only the practicality of Islamic tourism, but simultaneously see a growing fund that will be used to fight against poverty.

(Former Senior Visiting Fellow at Harvard Law School, Professor at Rizvi Institute of Management Studies and Research, Mumbai and independent Islamic Banking consultant. The views are personal)

Islamic banking and finance, also referred to as ‘Shariah compliant banking’, ‘interest-free banking’, ‘PLS banking’ or ‘special finance’, is currently practiced in more than 75 countries. However, India, home to the second largest Muslim population in the world, is yet to accord formal recognition to the concept. This situation becomes more perplexing when one reads

some economic historians’ claim that India is the birthplace of Islamic economics and finance.

This article is an attempt to recap the journey of Islamic banking and finance along with its associated challenges and success stories. Diagram below gives a decade-wise synoptic view of the efforts carried on for the promotion of Islamic finance in the country. Islamic Finance in India

IBF INSIGHTS FROM THE REGION

Creation of an isLamiC soVereiGn WeaLth fund Via isLamiC tourismBy Dr Aishath Muneeza Chairperson, Maldives Centre for Islamic Finance

isLamiC BankinG and finanCe in india: ChaLLenGes and the suCCess storiesBy Dr Shariq Nisar

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isLamiC BankinG and finanCe: some key aCademiC Works

Economic historians note that the first ever thought of Islamic kind of banking or banking without interest emerged during India’s struggle for independence. It was Islamic scholars who initially pointed out that the modern banking which relies mainly on paying and charging of interest is against the teachings of Islam which prohibits interest in very unequivocal terms. The first ever book on the subject Islam Ka Iqtisadi Nizam (Economic System of Islam) was written by Indian scholar Hifzur-Rahman Seoharvi in 1938. The first book in English on the subject Islam and the Theory of Interest was written by Prof. Anwar Iqbal Qureshi of the Usmania University in 1946. Syed Manazir Ahsan Geelani wrote Islami Maashiat (Islamic Economics) in 1947. Many of the writings of Maulana Abul Aala Maududi and Shaikh Mahmood Ahmad were in circulation much before they were finally published. Partition of the country however adversely affected the academic works for at least two decades. The next important academic work appears in 1969 in the form of Muhammad Nejatullah Siddiqi’s A Model of Interest Free Banking (Banking Without Interest; 1969).

isLamiC BankinG and finanCe: some PraCtiCaL Works

Endeavors to establish interest free financial institutions India have been consistently found since beginning of the twentieth century. The purpose to establish such institution was mainly to avoid interest and to provide succor to the destitute. Hamidullah Siddiqui’s, Anjuman Qard Hai Bila Sood, (Interest Free Loan Society) article in ‘Maarif ’, 1944, gives an account of the practical effort on the lines of Islamic banking. The society collected membership fees and donations to provide interest-free loans to the poor. Maulana Husain Ahmed Madani initiated a model in 1934, which is now more popularly known as Muslim Fund Model. However, efforts like these also suffered heavily due to the country’s partition. The next Muslim Fund Deoband could be established only in 1960s. The 1970s witnessed some concerted efforts made by professionals to establish an interest-free institution. Bait-Un-Nasr of Mumbai was the most successful effort among them. Before being registered in 1976 Bait-un-Nasr ran on a pilot basis for nearly three years. Decade of 1980s saw the emergence of Islamic Non-Banking Finance companies in the country. Most of them collapsed for one or another reason in the next fifteen to twenty years. Bait-un-Nasr also had a run on it caused by failure of its sister concern Barkat Investment Group (Islamic NBFC). Some mainstream professional wealth management groups, having witnesseed the appeal of Islamic NBFCs, started to develop an interest in Islamic Wealth management. Tata Mutual Fund, one of India’s largest Mutual Fund players started India’s first Islamic mutual fund scheme in 1996. The scheme, due to marketing association with couple of community based institutions, was quite successful in attracting investments from the Muslim community. However, failure of several Islamic NBFCs in late nineties followed by a downturn in real estate and capital market dampened the community’s will and spirit. Many of them began to consider India as misfit for such kind of ventures. Poor performance of Tata’s scheme during early years of its launch exacerbated the concerns held by the community.

Current ChaLLenGes and the future

Success of Islamic Banking and finance at global level managed to attract India’s Reserve Bank’s attention which consequently facilitated

the formation of RBI’s internal committee to examine Islamic banking products. In the light of its own study and observations the Committee concluded that Islamic banking is not possible in India without a separate specific regulation. There were doubts raised on the conduct of monetary policy in the absence of interest rate mechanism. Some notable efforts are referred in the table below.

While RBI was still debating the issue, the Report of Sachar Committee on Indian Muslims’ social, economic and educational condition brought to the fore the community’s economic backwardness and the extent of financial exclusion. There were fervent calls to rectify some of the obvious adversities which eventually received some support from then Prime Minsters’ own economic advisory circle. Government showed some intent but couldn’t do much mainly on the face of stiff opposition from the RBI. In the meanwhile, capital market regulator Securities and Exchange Board of India (SEBI) permitted two financial products that specifically targeted Muslim community investors on the premise of Shariah compliance. Encouraged by these developments, Bombay Stock Exchange in 2010 launched a Shariah Index in association with local Shariah advisory firm TASIS. Next few years however proved more challenging as State of Kerala’s attempt to promote a state owned Islamic NBFC was challenged in the court on legal grounds which unfortunately received full support from the RBI. Kerala state eventually won the case in High Court but lost much of its business capital and enthusiasm in the process. RBI, in the meanwhile cancelled the license of India’s then only Islamic NBFC, Alternative Investments and Credit Limited (AICL), citing the absence of an interest charge as the reason. In 2014, India’s largest public sector bank, State Bank of India was discretely working on launching a Shariah compliant mutual fund scheme on the pattern of already existing two schemes approved by SEBI but that effort received a severe setback when an influential politician managed to stall the scheme a mere few hours before its scheduled launch.

Year 2015 provided some hope when RBI under its current leadership recommended through a committee to introduce interest-free windows by Indian commercial banks. Only time will tell how seriously India’s central bank recommendation is taken by the government.

India, which is home to the second largest Muslim population in the world, has begun to slowly open for Islamic banking and finance. SEBI, has approved couple of schemes based on the Islamic Wealth Management concept. Central government owned company GICRe is offering ReTakaful. RBI’s recommendation in favour of Islamic banking brings a new ray of hope for the community that is simultaneously considered as propounder and the most backward in the area of Islamic banking and finance.

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