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Islamic banking in Kazakhstan Al Hilal’s story

Islamic banking in Kazakhstan Al Hilal’s story. The first Islamic Bank in Kazakhstan and its relations with domestic regulative bodies: lessons and recommendations By Prasad Adraham Chairman Al Hilal Bank Kazakhstan. 2. Quick Facts. Introduction.

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Islamic banking in Kazakhstan Al Hilal’s story

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  1. Islamic banking in Kazakhstan Al Hilal’s story

  2. The first Islamic Bank in Kazakhstan and its relations with domestic regulative bodies: lessons and recommendations By Prasad Adraham Chairman Al Hilal Bank Kazakhstan 2

  3. Quick Facts. Introduction • Al Hilal Islamic Bank is a 100% subsidiary of Al Hilal Bank, UAE; • First Islamic bank in Kazakhstan and CIS countries; • Raise the profile of Islamic banking in the CIS countries whilst contributing to Kazakhstan’s national growth and prosperity; • Provide the right Islamic finance solutions to meet Customers needs; • Shariah Board – Shariah Coordinator; • Almaty Astana More Planned for 2010. 3

  4. Quick facts. What has been done Intergovernmental agreement approved by the Governments of UAE and Kazakhstan First transaction approved on amount of $8mln. President’s Nazarbayev visit to UAE Introduction of amendments to Banking law, related to Islamic banking activity Intergovernmental working group started working on agreement Official registration of legal entity May2009 June 2009 January 2010 March 2010 April 2010 February 2009 August2009 End of 2009 Al hilal, Abu Dhabi decides to enter Kazakhstan market First Islamic banking license obtained on 17th of March Al hilal, Abu Dhabi started working with Legal advisors on basic documents and agreements 4

  5. The target investment range is between 750 and Product philosophy • Strict Adherence to Sharia Requirements • To start with Basic products – the must haves • To evolve into Market Differentiation • To take important role in syndication • To develop strong Sukuk structuring capabilities • Customer is at the Centre of Our Product Development Philosophy 5

  6. Industry breakdown of Al Hilal bank’s portfolio 6

  7. Industry breakdown. Financing Criteria 7

  8. FINANCING PRODUCTS Products offered by Al Hilal Islamic Bank FINANCING PRODUCTS DEPOSIT PRODUCTS 8

  9. Islamic Products Ijara • - Ownership Registration Requirements • - Transactions Subject to lease Law • -IjaraMawsuffaFiDimma (Forward Lease) • Murabaha • - Promise to Purchase • - Non Recognition of Murabaha • - Reverse Murabaha • - Murabaha Transaction Sequence • Letter of Credit • Savings Account • FX Forward Transactions • New Islamic Products • Interbank Transactions 9

  10. Practical Issues • Off Balance Sheet Booking of Wakala and Mudaraba • VAT Issue on Wakala transactions • Penalty Clause • Governing Law Clause • Interest Waiver Clause • Mudaraba Issues • Investment Risk Reserves • Sukuk • Subordinatd Financing – Tier 2 Capital • Prudential Regulations 10

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