Islamic Banking & Finance 101

Islamic banking & finance 101

Course Outline

Table of Contents
Objectives ....................................................................................... 2 Participants Assumed background .............................................. 2 Learning Outcomes ......................................................................... 2 Primary Audience ............................................................................ 2 Orientation Outline ....................................................................... 3 Suggested Duration ....................................................................... 5 Coordinator and contact details ................................................ 5 Teaching and learning modes ........................................................ 5 Speakers Profiles ......................................................................... 6

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Islamic Banking & Finance 101

Objectives This course provides an introduction to the basic concepts of Islamic banking and finance applied locally and globally. It will attempt to differentiate the elements between the Islamic financial system and its conventional counterparts. It will simplify and explain the theories and concepts of the Islamic financial instruments used in the industry. This will expose the participants on how Islamic finance concepts are used in everyday life.

Participants Assumed background Attendees have basic knowledge of banking and finance in the conventional industry. Participants are interested in learning more about Islamic banking and finance with emphasis on its concepts and applications in the present global landscape.

Learning Outcomes At the end of the program, participants should be able to: 1. Get a comprehensive overview of the Islamic Banking and Finance Industry 2. Recognize the fundamental instruments and concepts available and used in the Industry. 3. Understand the differences between Islamic and Conventional based financing.

Primary Audience Financial Advisors, Analysts, Consultants, Corporate Lawyers, Real Estate Agents/Brokers, Mortgage Agents/Brokers, Conventional Bankers, Academicians. Banking Associates to Managers: Product Development Personnel, Branch staff, counter executives, customer service representatives, marketing and sales personnel especially front liners who are in first contact with the customers. Secondary Audience: Any business professional with an interest to learn more about Islamic banking and finance.

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Islamic Banking & Finance 101

Orientation Outline

Session 1: Why Islamic Banking and Finance? Overview of the industry What is Islam? Actions in Islam (Permissible vs Non-Permissible) o o Actions by Hukm Shari (5 categories) Sustenance predestined (Rezeki)

Islamic Banking vs Conventional Banking o Bay (Trade) vs Riba (Usury/Interest)

Prohibitions in Islamic Finance: o o o Riba and its implications (injustice, exploitation, etc) Gharar, Qimar, Mysir and Hilah (Uncertainty, Gambling, and Stratagems) Other prohibited (Haram) activities

Session 2: Introduction to Islamic Financial System (IFS) Purpose of the Financial System Savings Surplus Units (SSUs) and Savings Deficit Units (SDUs) Differences between Islamic and Conventional Financial systems

What is a Sale in Islam? Definition and purpose of a Sale Contract Types of sale contracts (Bay, Musawamah, Amanah: Murabahah, Tawliyah, etc) Pillars of a (Sale) contract Examples of these Sale contracts in everyday life.

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Islamic Banking & Finance 101

Islamic Financial Products Note: All instruments and products discussed in this section will cover the definitions, concepts, areas of applications in the industry and everyday life, default scenarios and issues pertaining to product management. Primary Reference: Islamic Financial Services, Dr. Mohammed Obaidullah (2005)

Session 3: 1. Deposit products Wadiah Deposits Mudarabah Deposits

Session 7: 5. Financing Product (Debtbased) 6. Repurchase (Bay al-Einah) Bill Discounting facility (Bay aldayn) Tripartite Sale (Tawarruq) Fee-based Financial Products Letter of Credit Letter of Guarantee

Session 4: 2. Financing Products (Equitybased) Mudharabah facility Musharakah facility Decreasing Musharakah facility

Session 8:

Session 5: 3. Financing Product (Debtbased) Murabaha and BBA facilities Working Capital Financing Leasing Ijarah facility

Session 9: 7. Islamic Securities Sukuk al-Murabaha Sukuk al-Ijarah Sukuk al-Salam Sukuk al-Istisna Sukuk al-Mudharabah

Session 6: 4. Financing Product (Debtbased) Salam facility Istisna facility Recurring sale (istijrar) Session 10: 8. Insurance and Islamic Alternatives Tabaru-based Takaful Mudharabah-based Takaful Wakalah-based Takaful

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Islamic Banking & Finance 101

Suggested Duration 10 Sessions @ 120 Minutes per Session

Coordinator and contact details Name: Rehan Saeed, MBA in Islamic Banking Tel: (416) 786 6063 Fax: (416) 946 1832 Email: rehan@islamicfinanceboard.com

Teaching and learning modes It will be a classroom style setting with Audio/Visual (ie. projector, whiteboard, etc.) aids for enriching the media presentations. Session will be an integral part of the lectures as the facilitator will encourage two-way communication with the audience. Notes: o Tests and assignments will be given from time-to-time to ensure participants have an in depth understanding of the course. o o o One-to-one sessions can be arranged for further clarification. Recommended 15-20 participants per classroom. Additional support provided via telephone and email.

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Islamic Banking & Finance 101

Speakers Profiles Dr. Azeemuddin Subhani Dr. Azeemuddin Subhani currently functions as a Canadian Independent Financial Shariah Scholar, with several professional affiliations, Shariahcompliance consulting assignments (frontier Alt), speaking engagements at international Islamic Finance conferences (Toronto 2007, IIR Dubai 2008, and Harvard 2008) and visiting teaching positions in Islamic Studies including Shariah at Canadian universities (Waterloo). His language proficiency includes Arabic and he is currently pursuing the prestigious new professional qualification of Certified Sharia Adviser and Auditor (CSAA) from the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) the global standard-setting body on Islamic finance products and practices, thus positioning to be the first AAOIFI-certified Sharia-compliance advisor and auditor in Canada. Dr. Subhani has the unique distinction of being well versed in Islamic Law as well as in both Western and Islamic Finance, through advanced degrees and long, varied experience. He holds a PhD and an MA in Islamic Law/Islamic Finance (Institute of Islamic Studies, McGill University: 2007, 2001), an MBA and Doctoral Studies in Finance (University of Southern California, 1965), and an MBA in Accounting (IBA Karachi, 1963). His PhD dissertation, Divine Law of Riba [usury] and Bay [exchange]: New Critical Theory, has officially been recognized by McGill as a seminal theorization on an important institution of Islamic law, as it posits a pioneering interpretation of the rationale of the foundational prohibition of riba, with far-reaching conceptual and practical structural implications for the standardization of the emerging Islamic Finance industry. He brings over four decades professional experience from Pakistan, Saudi Arabia and Canada, covering financial Sharia consulting in personal/housing finance, mutual funds, hedge funds, and sukuk; university teaching/research; investment banking; project/infrastructure/corporate/government finance; and petro-chemical/oil/gas financial advisory work, including 25 years as Financial Advisor to the Saudi Arabian Government on negotiation and implementation of a variety of ARAMCO and PETROMIN oil & gas agreements (including

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Islamic Banking & Finance 101

Concession, Government Participation, Nationalization, Exploration, Production, Pipeline, Refining, Infrastructure, Export, Net-back Pricing, Management Service, Processing, and Petroleum Exchange). His extensive written work on Petroleum Finance and Islamic Finance, including his PhD dissertation, is currently under publication. Rehan Saeed, MBA (Islamic Finance) Mr. Saeed currently consults various financial institutions in Shariah compliant product development on both sides of the balance sheet. He has a degree in IT from York University. In 2006 he completed his MBA in Islamic Banking and Finance from the well renowned International Islamic University of Malaysia. Mr. Saeed also started his career in sales for Group Telecom, a communications service provider. He later joined CIBC-Edulinx, a company dealing with government sponsored student loans, where he worked as interest relief analyst. Subsequently, he joined hands with the owner of UM Financial and was their first employee. He performed the sales and marketing functions in UM Financial and was instrumental in the rapid growth of UM from an upstart to a $100 million asset-based company in 2 years. He then left for Malaysia to pursue his MBA in Islamic Finance. While in Malaysia, he worked as a research associate & trainer for Kuwait Finance House (KFH), one of the largest Islamic banks in the world. He developed KFH's in-house training program and conducted market research for them. Mr. Saeed is multi-talented and equally proficient in IT and finance. His formal education in Islamic finance and subsequent working experience in an Islamic bank has given him unique exposure. He is passionate about developing the nascent Shariah based financial services industry in Canada and is in an exceptional position to translate his educational and oversees work experience to the Canadian market. In May 2007, Mr. Saeed presented an original research white paper on Shariah compliant Mortgage Investment Corporation (MIC) which he presented at the 3day Islamic Banking & Finance Conference held in downtown Toronto.
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