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Saturna Unveils Shariah-Compliant Investment Platform for Digital Investors



Saturna Sdn Bhd, a Shariah-compliant financial services company, today (9 March) officially launched its digital platform to help investors grow their wealth ethically and securely.

The online tool allows individuals to start their investment journey with just a few clicks, guided by Saturna’s deep expertise in the world of Islamic finance. Unlike other offerings currently available in the market, Saturna takes an investor-friendly approach by charging no sales or redemption fees and no hidden charges. Potential investors can also enjoy flexibility as Saturna’s funds have no minimum holding period.

“Our new online platform is designed to be simple and secure for a seamless user experience,” said Shahariah Binti Shaharudin, President of Saturna Sdn Bhd. “It is accessible enough for anyone to start investing in Shariah-compliant solutions immediately, regardless of their experience or investment budget.”

The launch of Saturna’s digital platform was officiated by Ruslena Ramli, Director of Digital Finance and Islamic Digital Economy, Malaysia Digital Economy Corporation (MDEC), who expressed her hope that more organizations in the Islamic finance space will adopt innovative solutions to further grow the industry. “With this online platform, Saturna has led the way in making Islamic-based investment opportunities available to a wider audience, allowing more people to benefit from the wealth of expertise they have to offer,” said Ruslena.

In addition to Islamic principles, Saturna’s funds also comply with global environmental, social, and governance (ESG) standards, investing in companies with socially responsible and environmentally friendly business practices or products.

“We see ESG measures as complementary to Shariah-compliant initiatives, as both are driven by sustainability considerations, mitigate volatile risk-taking, and value long-term growth,” explains Pn.

Shahariah. “I believe the events of the past few years, from the 2008 financial crisis to the Covid-19 pandemic, have inspired a paradigm shift in the way we view investing and increased the appetite for socially conscious metrics. With our extensive expertise in Islamic-based fund management, Saturna is well-positioned to meet this demand with alternatives to conventional financial planning solutions.

The launch event also included a forum discussion on future trends that will shape the investment scene in the coming year.

The panel included Pn. Ruslena Ramli, Director of Digital Finance and Islamic Digital Economy, Malaysia Digital Economy Corporation (MDEC); Yang Berusaha Ahmad Dasuki Abdul Majid, Chief Executive Officer, PTPTN; and Professor Dato’ Dr. Mohd Azmi Omar, President, and Chief Executive, International Centre for Education in Islamic Finance (INCEIF).

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Islamic Coin Allocates $40M for Shariah-Compliant Funding




Islamic Coin (ISLM), a Shariah-compliant financial ecosystem, has launched a grants and investment program with the support of $200 million from private investors. The program will allocate $20 million in USD/USDT and $20 million in Islamic Coin to enhance global adoption and advance HAQQ Blockchain and Islamic Coin through various initiatives, including development, marketing, bug bounties, and other projects. All investments and grants will undergo ethical and Shariah evaluations to ensure compliance with Muslim values.

To oversee the project’s adherence to Shariah principles, Islamic Coin has established its own Shariah board headed by Sheikh Dr. Nizam Mohammed Saleh Yaquby, known as ‘The Gatekeeper’ of the $2 trillion market for Islamic financial products. Sheikh Yaquby is a member of the Shariah boards of several global financial institutions such as HSBC, Lloyds TSB, Barclays, BNP Paribas, and Credit Agricole of France Citigroup.

Islamic Coin’s Haqq Blockchain and its native currency, Islamic Coin, are trailblazers in introducing the world’s first currency that gives back to the world. The Advisory Board includes distinguished members such as Sheikh Dr. Hazza bin Sultan bin Zayed Al Nahyan, Sheikh Saeed bin Hamdan bin Mohammed Al Nahyan, Sheikh Khalifa Bin Mohammed bin Khalid AL Nahyan, Sheikh Mohammad Bin Khalifa Bin Mohammad Bin Khalid Al Nahyan, and His Highness Sheikh Juma bin Maktoum Al Maktoum.

The team behind Islamic Coin, including co-founders Hussein Mohammed Al Meeza, Mohammed AlKaff AlHashmi, Alex Malkov, and Andrey Kuznetsov, have been actively driving the project’s global sustainability efforts. As part of their commitment, they have participated in high-profile events such as the UN’s COP27 and the Youth International Conference, advocating the promotion of Sustainable Development Goals (SDGs) and sustainable digital finance. Additionally, the Haqq Blockchain implements an eco-friendly proof-of-stake protocol to align with the climate action agenda.

Mohammed AlKaff AlHashmi, a co-founder and member of the Executive Board, expressed his pride in launching the initiative. “We look forward to many exciting proposals from our dedicated global community,” he added.

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What Does Shariah-Compliance Mean in the Islamic Banking Industry?




Islamic banking, also known as Shariah-compliant banking or halal finance, is a system of banking and financial services that operates by Islamic principles and laws known as Shariah. Shariah compliance is of utmost importance in the Islamic banking industry, as it ensures that all financial transactions and products are ethically and morally sound and adhere to Islamic teachings.

Islamic banking is based on the principles of risk-sharing and profit-sharing, and it prohibits charging or paying interest, which is considered exploitative and unjust in Islam. Instead, Islamic banks provide financial services based on ethical and moral values, such as profit-sharing, partnership, leasing, and joint venture.

One of the key features of Islamic banking is its adherence to Shariah compliance. Shariah compliance refers to the dedication to Islamic principles and laws in all financial transactions and products Islamic banks offer. Shariah compliance ensures that all financial transactions and products are ethically and morally sound and adhere to Islamic teachings. The importance of Shariah compliance in the Islamic banking industry cannot be overstated, as it is the cornerstone of the industry’s credibility and trustworthiness.

Islamic banking has gained significant momentum recently, with the industry’s global assets reaching over $2 trillion. As the demand for Shariah-compliant financial services continues to grow, the importance of Shariah compliance in the Islamic banking industry will only increase, as it is fundamental to the industry’s success and growth.

Shariah is the set of Islamic principles and laws that govern all aspects of Muslim life, including finance and commerce. It is derived from the Quran and the Sunnah (the teachings and practices of Prophet Muhammad). Shariah is the cornerstone of Islamic finance and the basis for developing Shariah-compliant financial products and services.

Shariah compliance refers to the adherence to Islamic principles and laws in all financial transactions and products offered by Islamic financial institutions. Shariah compliance ensures that all financial transactions and products are ethically and morally sound and adhere to Islamic teachings. It is important to note that Shariah compliance is not limited to avoiding interest-based transactions but also encompasses other ethical and moral values such as justice, transparency, and accountability.

For Islamic financial institutions, Shariah compliance is of paramount importance. It is a key differentiator that sets Islamic finance apart from conventional finance. Islamic financial institutions must comply with Shariah standards set by independent Shariah supervisory boards (SSBs) comprising Islamic scholars and experts in Islamic finance. These boards ensure that Islamic financial institutions’ financial transactions and products comply with Shariah principles and laws.

The importance of Shariah compliance for Islamic financial institutions cannot be overstated. It is fundamental to the industry’s credibility and trustworthiness. Shariah compliance ensures that all financial transactions and products are ethically and morally sound and helps build and maintain trust between the institution and its clients. Shariah-compliant financial products and services are gaining popularity among Muslims and non-Muslims, as they are seen as more ethical and sustainable than conventional finance.

Islamic banks offer a range of Shariah-compliant products and services based on ethical and moral values and adhere to Islamic principles and laws. These products and services are designed to meet the financial needs of individuals and businesses while remaining Shariah-compliant.

Some examples of Shariah-compliant products and services offered by Islamic banks include:

  1. Mudarabah: A profit-sharing partnership between the bank (as the financier) and the client (as the entrepreneur).
  2. Murabahah: A cost-plus financing arrangement where the bank purchases the asset on behalf of the client and then sells it to the client at a marked-up price, with the payment being made in installments.
  3. Ijarah: A leasing arrangement where the bank purchases the asset and then leases it to the client for a predetermined period.
  4. Musharakah: A partnership where the bank and the client contribute capital to a joint venture, with the profits and losses shared according to a predetermined ratio.
  5. Sukuk: Shariah-compliant bonds backed by tangible assets and provide a return based on the profits generated by those assets.

Shariah compliance affects banking operations in several ways. Islamic banks must ensure that all financial transactions and products comply with Shariah principles and laws. This requires the establishment of independent Shariah supervisory boards (SSBs) that oversee the bank’s operations and ensure that they remain Shariah-compliant. SSBs comprise Islamic scholars and experts in Islamic finance who provide guidance and advice on all aspects of banking operations to ensure compliance with Shariah principles and laws.

Shariah-compliant certification is a process by which Islamic financial institutions obtain certification from an independent third party to confirm that their financial products and services comply with Shariah principles and laws. Shariah supervisory boards (SSBs), independent Islamic scholars’ bodies, and Islamic finance experts carry out the certification process.

The importance of certification for Islamic financial institutions cannot be overstated. The certificate provides credibility and trustworthiness for financial products and services offered by Islamic financial institutions. It assures customers that the products and services provided by the institution are ethically and morally sound and adhere to Islamic principles and laws. Certification also helps to differentiate Shariah-compliant financial products and services from conventional finance products and services.

The certification process typically involves a review of the financial institution’s operations by the SSB, which examines all aspects of the institution’s operations to ensure compliance with Shariah principles and laws. The SSB examines the institution’s products and services, investment portfolios, risk management practices, and accounting procedures to ensure Shariah compliance. The SSB also provides guidance and advice to the institution to ensure it remains Shariah-compliant.

Once the review is complete, the SSB issues a Shariah-compliant certification to the financial institution, which can then be used to market its products and services as Shariah-compliant. The certificate is typically valid for a specific period and must be renewed periodically to ensure continued compliance with Shariah principles and laws.

Shariah-compliant banking offers several advantages and benefits for customers and the global economy.

Advantages of Shariah-Compliant Banking for Customers

  1. Ethical and Moral Financial Transactions: Shariah-compliant banking allows customers to engage in financial transactions based on ethical and moral principles. Customers are assured that their financial transactions align with their religious and moral beliefs.
  2. Transparency: Shariah-compliant banking promotes openness in financial transactions. Customers are provided with clear and concise information about the terms and conditions of financial products and services.
  3. Risk-Sharing: Shariah-compliant banking allows customers to share risks with the bank. Profit and loss are shared based on a predetermined ratio. This encourages a more equitable distribution of risks and rewards.
  4. Lower Interest Rates: Shariah-compliant banking offers customers lower interest rates on financial products and services than conventional ones.

Benefits of Shariah-Compliant Banking for the Global Economy:

  1. Financial Stability: Shariah-compliant banking promotes financial stability by encouraging responsible and sustainable lending practices. Islamic finance prohibits speculative investments and facilitates investments in tangible assets, which can lead to a more stable financial system.
  2. Economic Development: Shariah-compliant banking promotes economic development by encouraging investment in projects with a positive social impact. This can lead to increased job creation and improved living standards.
  3. Diversification of Financial Markets: Shariah-compliant banking offers a different approach to finance based on ethical and moral principles. This diversifies the financial market and can lead to increased innovation in financial products and services.
  4. Inclusion: Shariah-compliant banking promotes financial inclusion by providing financial products and services that are accessible to a broader range of customers, including those who are excluded from conventional finance due to their religious beliefs.

Challenges in Shariah-Compliant Banking

While Shariah-compliant banking offers many benefits, it also faces several challenges. These challenges can be internal or external and may arise due to cultural, legal, or economic factors.

Common challenges faced by Islamic financial institutions include:

  1. Lack of Awareness: One of the primary challenges confronting Islamic financial institutions is a need for more awareness and understanding of Islamic finance. This can lead to misconceptions and misunderstandings about Shariah-compliant banking products and services.
  2. Limited Product Offerings: Islamic financial institutions may need help developing a comprehensive range of Sharia-compliant products and services that meet the diverse needs of their customers.
  3. Shariah Compliance: Ensuring Shariah compliance can be challenging for Islamic financial institutions, as the interpretation and application of Shariah principles vary among scholars and countries.
  4. Regulatory Framework: Islamic financial institutions may face challenges in navigating the regulatory framework, as regulatory bodies may need a clearer understanding of Islamic finance or develop appropriate regulatory frameworks.
  5. Cost of Funds: The cost of funds for Islamic financial institutions can be higher than conventional banks due to the need to comply with Shariah principles, such as profit and loss sharing.

Solutions to overcome these challenges

  1. Education and Awareness: Islamic financial institutions can invest in education and awareness programs to increase understanding and awareness of Sharia-compliant banking products and services among the general public.
  2. Product Development: Islamic financial institutions can work on developing a comprehensive range of Shariah-compliant products and services to meet the diverse needs of their customers.
  3. Standardization: The development of standardized Shariah-compliant products and services can help address the challenge of Shariah compliance and provide greater clarity for customers and regulators.
  4. Collaboration: Collaboration between Islamic financial institutions and regulators can help develop appropriate regulatory frameworks that support the industry’s growth.
  5. Funding Sources: Islamic financial institutions can explore alternative funding sources, such as sukuk (Islamic bonds) or Islamic microfinance, to help reduce the cost of funds.

In conclusion, Shariah compliance is a fundamental principle in the Islamic banking industry. It is based on Islamic law principles and aims to promote ethical and responsible financial practices. Shariah-compliant banking products and services offer several benefits to customers and the global economy, including increased financial inclusion and stability.

Despite the benefits, Islamic financial institutions face several challenges, including a need for more awareness, limited product offerings, Shariah compliance, regulatory frameworks, and the cost of funds. However, solutions such as education and awareness, product development, standardization, collaboration, and exploring alternative funding sources can help overcome these challenges.

Shariah compliance is crucial for the growth and sustainability of the Islamic banking industry. As more people become aware of Islamic finance and its principles, the industry is expected to grow and become an essential part of the global financial system.

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Religious Investors put their Faith in Impact Funds




By Robert Wright in London

“Shunning harmful industries is good. Tackling poverty and injustice is even better”

When the managers of the Church of England’s financial endowment announced plans to set aside funds to right “past wrongs” in January, the news drew attention to a growing but still niche form of investing. Of the £100mn earmarked by the Church Commissioners as restitution for the church’s role in slavery, some would go into impact investment funds — vehicles whose purpose is to achieve social impact, rather than to maximize financial returns.

The Church Commissioners’ investments will become part of a pool of “faith-aligned” impact investment capital that researchers at the Oxford Faith-Aligned Impact Finance (Oxfaif) project have estimated as being worth a total of $5tn worldwide. The majority of that capital — $3tn — is held by sovereign-backed Islamic finance funds, according to a report by the project in September 2022. Another $1tn represents private funds devoted to Islamic capital, while a further $300bn is “Dharmic” capital — from Hinduism, Sikhism and other Dharmic faiths. Christian faith-based impact investors control $260bn, while their Jewish counterparts hold $16bn.

While plans for the Church of England restitution project are still under development, the funds are intended to benefit projects in communities particularly affected by the legacy of enslavement. Tom Joy, the Church Commissioners’ chief investment officer, says the organisation hopes that a few, relatively small, investments in so-called “impact first” funds will encourage others with deeper pockets to join in. “When I’m talking about the impact-first investments we’ve made already, what we’re really focusing on with that is how we can be catalytic, providing the sort of vital seed capital to impact-focused managers . . . and attract further investment,” Joy says.

However, like many other faith-based investors, the Church Commissioners hold multiple types of investment in their endowment, which is worth £10.1bn. They range from the largest slice, made on a normal commercial basis, to some small investments which the commissioners regard as grants, rather than moneymaking propositions. For Muslim investors seeking a faith-based approach, Sophia Shepodd Innocenti runs the Global Islamic Impact Investing Forum, an umbrella group and discussion platform. She set it up after realizing that Islamic capital could have a far more positive impact if fund managers simply paid more attention to their investments’ effects. Islamic capital represents a large proportion of faith-aligned capital because Islam forbids the charging of interest, which is regarded as “haram”, or contrary to Islam’s sharia law.

Observant Islamic investors also steer clear of other haram areas, such as gambling, alcohol production and the arms trade. According to Innocenti, it ought to be possible to match Muslim investors, who avoid many harmful investments, to investments that promote the UN’s Sustainable Development Goals. “I realised about four years ago that the majority of sharia-compliant investing would work towards the sustainable development goals if they were just audited and modelled the appropriate way,” she says.

Gayle Peterson, co-principal investigator for Oxfaif, acknowledges that impact investing sits on a “spectrum” of activities that overlap at the margins. These range from impact investing to investments aligned with environmental, social and governance (ESG) principles to standard, financially driven investments. She classes impact investing as having more “intentionality” than traditional schemes where decisions are based primarily on the expected financial return. “You’re making decisions specifically around social impact,” she stresses. The categorization of investments partly reflects investors’ shifting thinking about how to put their money to work — and also how not to.

Joy says his organization has probably the most comprehensive list of exclusions of any investor — the Church Commissioners avoid financing tobacco, alcohol and gambling, among other areas. But they are focusing more and more on actively seeking to do good, rather than simply avoiding harm. “We increasingly believe, as a faith-based investor, that you should look at impact and look to effect change with any investments,” Joy says. “So you think about the positive — not just about avoiding things but about trying to effect change in the real world as well.”

There are similar issues in Islamic finance, according to Innocenti. “The easiest way for fund managers is just to become exclusionary in order to become Islamic-compliant — instead of looking at fundamentally ‘What do we want to invest in? What do we want the impact of our investments to be?’” she explains. She calculates that, if all Islamic funds started measuring the impact of their investments and using those measures to direct their decisions, it could free up enough money to achieve the UN SDGs by the target date of 2030.

Sophia Shepodd Innocenti argues that most sharia-compliant investing can support the UN’s Sustainable Development Goals

Instead, she says, many Islamic funds concentrate solely on property. “A few impact funds have failed because Muslim investors are just so used to investing in real estate, essentially, that everything else seems daunting,” she observes. But Peterson points to programs backed by churches in Canada — including the Church of England’s sister church, the Anglican Church of Canada — as evidence that some impact investors are more imaginative. Just as the Church Commissioners are offering restitution for slavery, some Canadian churches are making impact investments to help those harmed in church boarding schools.

Peterson accepts that some faith-based investors avoid groups that wider society might regard as deserving. Some institutions, convinced that gay sex is wrong, will hesitate to devote money to projects supporting marginalised gay people, for example. For some Roman Catholic institutions, any involvement in healthcare has to steer clear of abortion. Nevertheless, Peterson argues that the aims of most faith-based investors fit neatly with the SDGs, which means the growing amount of capital at their disposal can help to narrow the wealth and wellbeing gap between people in poorer parts of the world and the industrialised countries. “I think it’s an opportunity to reach, with compassion and courage, resources that haven’t been tapped — and be more intentional about that,” Peterson says.

This article was first published in the Financial Times of February 20, 2023

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