Category Archives: Around the world

SEDCO’s Shariah funds offer responsible investing

Financial Times: SEDCO’s Shariah funds offer responsible investing

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Despite myriad column inches, and the urgings of governments from east to west, the Islamic fund industry remains something of a pygmy.

The markets for Islamic banking, insurance and sukuk bonds have all seen solid growth in recent years, but the sharia-compliant fund industry remains tiny, with Ernst & Young estimating it at $58bn, as of 2010, a fraction of the $300bn sukuk sector.

The sharia fund market, which is heavily skewed towards equities, was not helped by its emergence coinciding with the global financial crisis, damaging confidence at an inopportune time.

However, to Hasan Al Jabri, chief executive of Saudi Arabia’s Sedco Capital, the resultant “chronic” lack of high-quality sharia-compliant products represents both a challenge and an opportunity.

“Islamic investors have traditionally found it difficult to access the same investment opportunities as non-Islamic investors. The growth of sharia-compliant investment has been stunted by a reputation for a lack of diversity, poor performance and high fees,” says Mr Al Jabri, who also cites the lack of “credibility” of houses that sell both sharia and non-sharia products and a view in some quarters that sharia funds are a relatively unimportant niche.

“For some of the western banks it’s not really meaningful, it’s not worth the attention. When we grow to $5bn, it’s very meaningful for us,” he says.

Since May 2012, Sedco Capital has “addressed these challenges head on”, building what is believed to be the largest sharia-compliant fund platform in Luxembourg. Its five vehicles, covering passive US equities, fundamental US equities, global dividend stocks, emerging market equities and global real estate investment trusts, hold $900m of assets.

Although this number is small in the great scheme of things, Mr Al Jabri points out that Sedco’s sharia-compliant US Equities Passive fund, with assets of $360m, dwarfs the $20m held by the iShares MSCI USA Islamic exchange traded fund, and has lower fees, 40 basis points against 50bp.

“I’m not aware of any single entity that has the range of sharia products we do. Certainly in Luxembourg we are the largest platform and the most diverse,” says Mr Al Jabri.

Jeddah-based Sedco is currently launching two more vehicles with one, the Global Market Sentiment fund, designed to switch between equities and Islamic time deposits, or murabaha, as the manager sees fit.

“We are very excited about it,” says Mr Al Jabri. “It’s a tactical fund. The economic cycles have become shorter, the markets move very fast. We see a bull market then a bear market then a bull market, it’s happening every two to three months.

“Therefore we need a tactical component because we cannot short equities in sharia-compliant funds. It will look at the fundamentals of the market. Where the market is unduly pessimistic, we go into the market. When it’s too optimistic, we put it in murabaha. We are telling the manager, when it doesn’t make sense, have the courage to pull the money out.”

The Market Sentiment fund is being launched alongside a fixed income equivalent, and each vehicle has been seeded with $150m from Sedco’s wealth management clients.

The plan is to launch around eight to 10 funds during 2013, raising assets on the Luxembourg platform to $1.6bn. Asia-Pacific and emerging market equity funds are on the drawing board, alongside a US real estate fund and private equity funds covering the US and Brazil.

All the funds are outsourced to external managers with, for instance, State Street Global Advisors managing the US Equities Passive fund and Credit Suisse contracted to run the two latest offerings.

Sedco has a series of Saudi feeder funds to channel money from its home market into the Luxembourg platform, but Mr Al Jabri says the bulk of the money is coming from elsewhere, a trend he expects to become more pronounced, even though Sedco is targeting only “sophisticated” investors.

“Several private banks have approached us. They want to do their due diligence and then they will start very actively marketing it to their own private clients,” says Mr Al Jabri, who says Sedco has also had “preliminary discussions” with non-Muslim investors.

Indeed, Mr Al Jabri believes sharia investment could find favour with a growing number of western investors.

“We don’t do alcohol, arms, the financial industry [because of leverage], pork,” he says. “We feel strongly about responsible investing. I deserve to make money only when I’m creating value for the economy, I’m helping to create the jobs. This is a very important factor for us and is something that the world really needs.”

This approach is perhaps more noticeable in Sedco’s private equity operations, where it already has some non-Muslim investors.

The company started investing in both property and private equity in the 1970s, when it was formed as the family office of Sheikh Salem Bin Mahfouz, the founder of Saudi Arabia’s National Commercial Bank.

However, restrictions on interest payments and debt mandated by a sharia-compliant approach means Sedco cannot participate in leveraged or management buyouts, although it is happy to invest in indebted companies as long as their debt is no more than a third of their market capitalisation.

This approach forces Sedco to concentrate on targeting growth companies via venture capital, something a number of established private equity groups are happy to accommodate by setting up parallel sharia-compliant funds alongside their mainstream offerings.

“The portfolio will be 20-30 per cent different [from the mainstream fund],” says Mr Al Jabri, who says this approach has benefited investors in both private and public equity markets.

“We were out of financial institutions and insurance companies because their leverage was too high. That has helped our performance in the past few years, although it can work against us. In 2012 we missed out on opportunities.

“Excessive leverage can drive companies into difficulties. I think that’s the main difference; when markets go down they are the most drastically affected.”

Source: http://www.ft.com/intl/cms/s/0/aab6dd18-79e1-11e2-9dad-00144feabdc0.html

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MasterCard for Muslims points way to Mecca

MasterCard for Muslims points way to Mecca

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Source: http://bottomline.nbcnews.com/_news/2012/10/12/14372544-mastercard-for-muslims-points-way-to-mecca?lite

A Gulf state-owned bank has rolled out a new MasterCard that not only complies with Islamic laws banning loans with interest but also includes an embedded compass pointing the way to Mecca.

The new card from Al Hillal bank in United Arab Emirates is the latest in a growing array of banking products aimed at the world’s 1.6 billion Muslims that comply with Shariah, or Islamic law.

“We continue to see a growing demand, especially in the Middle East, for Islamic banking in general, and more specifically in our case, for cards that are Shariah-compliant in accordance with the tenets of the Islamic faith,” MasterCard spokesman James Issokson said.

Shariah forbids “riba” or the charging of interest on loans because it could enable the rich to exploit the poor, encourages risk, and creates social and economic disharmony, according to Abed Awad, an expert on Islamic law who teaches at Rutgers and Pace universities.

Scholars say Muslims can pay interest when there are no other options to get the funds they need. Credit card operators get around the prohibition by charging users fees instead of interest rates.

In addition to the electronic compass that helps users orient themselves toward for prayers five times day, the new MasterCard offers other benefits. Card users are eligible for travel vouchers that can be used to pay for the Haj pilgrimage to Mecca, which Muslims are required to do at least once in their lifetime if they can afford it.

A percentage of the money spent using the card is donated to local charities, said Issokson.

Islamic banking is a huge industry with more than 500 Shariah-compliant funds around the world holding $1.5 trillion in assets, a third of which were launched in the past seven years, according to the Gulf Daily News, a publication based in Bahrain. Some of the products are available in the United States, where there are about 2.5 million Muslims.

Michigan-based University Bank offers Shariah compliant home financing, deposit products and commercial financing through its University Islamic Financial Corp business. Guidance Residential, which is based in Reston, Va., offers residential mortgages in more than a dozen states, according to its website.

Pakistan’s Meezan Bank launches ‘Laptop Financing’

Pakistan’s Meezan Bank launches ‘Laptop Financing

 

 

Meezan Bank has launched a new consumer financing product that will allow customers to purchase laptops on easy installments. The new product called Laptop Ease is being offered for repayment periods ranging from 3 months to 24 months. The bank will not charge any profit or return for customers who opt for the 3 month or 6 month installment plan. The product has been launched in collaboration with M/s. New Horizon and is available for only HP laptops. M/s. New Horizon will provide two years warranty with parts along with nationwide after sales services at the customers’ doorsteps.

 “Meezan Laptop Ease” through which customers can purchase Hewlett-Packard (HP) laptops, equipped with the latest features under a Halal financing scheme, is another step towards achieving Meezan Bank’s Vision of making Islamic banking the banking of first choice. Through this Riba-free facility, customers will be able to acquire laptops at easy installments for periods ranging from 3 to 24 months.

Laptop Finance is based on the concept of Musawamah which is a general and regular kind of sale in which price of the commodity to be traded is bargained between seller and the buyer without any reference to the price paid or cost incurred by the former. Thus, it is different from Murabaha in respect of pricing formula. Unlike Murabaha, seller in Musawamah is not obliged to reveal his cost. Both the parties negotiate on the price. All other conditions relevant to Murabaha are valid for Musawamah as well.

An MoU for this arrangement was signed between Meezan Bank and New Horizon at Meezan Bank’s Head Office.  Mr. Mohammad Raza, Head of Consumer Banking of Meezan Bank and Mr. Rahim Eqbal, COO of New Horizon signed the MoU.

 Speaking at the occasion, Mr. Raza said that Meezan Bank has an active focus on developing customer-friendly, Islamic alternatives to conventional banking products, in line with its Mission to offer a one-stop shop for innovative value-added products and services to the customers within the bounds of Shariah.

Shariah financings in Indonesia up by 40%

Shariah financings in Indonesia up by 40%

Record car sales in Indonesia helped fuel 50 percent growth in Shariah-compliant banking assets last year and Islamic lenders are setting up booths at automobile shows to further develop the market.

Bank Muamalat Indonesia, the country’s oldest Shariah-compliant lender, said consumer loans jumped 40 percent in 2010 after taking part in exhibitions last year.

BCA Syariah, the Islamic unit of Indonesia’s biggest financial services company by market value, is offering a rate of 11 percent on a five-year car loan. Bank Syariah Mandiri is also attending the shows.

Tapping Indonesia’s burgeoning consumer loan demand will help the country’s Islamic finance industry catch up to neighboring Malaysia, the world’s largest sukuk issuer. Shariah banking assets in Indonesia make up 3.2 percent of the total, compared with about 20 percent in Malaysia.

“The retail market is where banks are focusing as the margins are good and it is profitable,” Adrian Gunadi, the head of retail banking at Bank Muamalat in Jakarta, said on Saturday.

“The sukuk market will take time to pick up because of regulatory challenges.”

Islamic banking assets in Indonesia, Southeast Asia’s biggest economy, grew to Rp 100.2 trillion ($11 billion) as of Nov. 30 from Rp 67 trillion at the end of 2009, Mulya Siregar, the head of Shariah banking at Bank Indonesia, said on Thursday.

The central bank aims to increase the amount to Rp 130 trillion this year, he said.

Car Sales Jump

Consumer financing made up 32.4 percent of the total of Rp 65.9 trillion of Shariah-compliant loans disbursed in the first 11 months of last year, according to central bank data.

Automotive sales surged 57 percent last year and Indonesia may overtake Thailand as Southeast Asia’s biggest car market by 2014, said Jody Jodjana, chief executive officer at Toyota distributor Auto 2000, Indonesia’s largest car dealer.

Indonesia passed a law in July 2008 to allow financial institutions to offer services that comply with Shariah principles, 25 years after Malaysia. Indonesia now has 11 Islamic banks.

Sales of sukuk, which pay asset returns to comply with Islam’s ban on interest, rose 56 percent in Indonesia to Rp 26.2 trillion in 2010, according to Bloomberg.

Sale Next Month

Indonesia will sell three-year Islamic bonds to individual investors next month, Rahmat Waluyanto, head of debt management at the Finance ministry, said.

The government failed to raise the targeted amount in 12 consecutive local-currency sukuk auctions in 2010 as investors demanded higher yields, saying the debt was riskier because of a lack of secondary-market trading volume.

Global Shariah-compliant bonds returned 12.8 percent last year, the HSBC/NASDAQ Dubai US Dollar Sukuk Index shows. Debt in emerging markets gained 12.2 percent, according to a JPMorgan Chase index.

Growing Economy

Bank Indonesia forecasts the economy will expand as much as 6.5 percent this year from an estimated 6 percent in 2010.

“The Indonesian economy is expanding and gross domestic product per capita has surpassed $3,000,” said Winang Budoyo, an economist at Bank CIMB Niaga. “Demand for non-food items, including cars, will be trending up.”

Shariah-compliant auto financing in Indonesia is offered using a murabahah contract where the bank buys the car from the dealer and sells it at a mark-up, roughly equivalent to current interest rates, to the customer.

Financing Rates

Car financing currently makes up 35 percent of Bank Muamalat’s total consumer loans, up from only 20 percent in 2009, Gunadi said. BCA Syariah, which started operations nine months ago, set up its first motor show booth in November, said Soegiarto Pribadi, head of business.

The company offers five-year car loans, compared with three-year non-Shariah-compliant loans offered by parent, Bank Central Asia.

“Before the road show we had no customers applying for our car loans,” Pribadi said. “Now, 15 percent of BCA Syariah’s consumer loans are for cars.”

Source: http://www.thejakartaglobe.com/business/shariah-loans-up-40-percent-on-surging-car-sales/419014

Islamic finance in the US: Interview with Devon Bank executive

Islamic finance in the US: Interview with Devon Bank executive

Interview with David Loundy, vice-chairman and head of religion- based financing at Devon Bank. Devon is a Jewish community bank in Chicago, offering Islamic finance.

My comments: It is interesting to see David’s answer to the first question on how Devon, a Jewish community bank, got into Islamic finance: due to demand from the community. This shows that while a top-down demand approach is popular, grassroot-level demand that is effectively and appropriately communicated is often equally productive. Western Muslim communities should follow the example of the Chicago Muslim community and press their local banks to start offering Islamic financing options.

QUESTION: How did a Jewish-owned family bank, Devon, in Chicago, get involved in Islamic finance?

Answer: Although many of our shareholders are Jewish, we are a community bank. We were created by a community to serve the needs of that community. That community is in constant flux. Once, it was predominantly Jewish. It is a “new immigrant community”. People move in, get established, bring family from the old country, and then move on.

Our headquarters is supposedly in the most ethnically diverse neighborhood in the Americas. Indian, Pakistani, African, Eastern European, some Arab. This includes a large Muslim population. They asked us for help. We helped. This is part of our mission-serve members of our community in the ways they need to be served.

Our Islamic finance programme derives from a customer who wanted to open a bookstore. They asked if we could help, but without riba. At the time, we said no, and the group found financing from the United Bank of Kuwait (UBK). When UBK was acquired, it sent away all of its US customers. The customer came back and asked for help again. At that point, the head of our International Department convinced management that there was an unmet need.

The bank started looking into options. As word got out, the demand exploded showing there really was a need, and we were in a good position to help. We had done non-interest-based financing before for the observant Jews, but the strong Muslim demand for such products surprised us.

Q: What have been the challenges internally, community and with the regulators?

A: Internally, our biggest challenge has been to line up needed liquidity. We turn away a million dollars of businesses a day. Some of this we are looking to manage with two prospective sukuk issuances. We would like to put in place a larger permanent solution, but it requires raising quite a bit of funding in a bad market. Our second internal challenge is resource allocation. All bank functions must run well, conventional and Islamic.

We are striving to triple our mortgage volume (conventional and Islamic) in the next 18 months, but that requires an investment in staff, technology, and processes to handle higher volume.

The community is not homogenous. 2010 was the bank’s 65th anniversary. We are generally known and respected in the community. People with prejudices do not respect that we are trying to serve the WHOLE community. I laugh at those that think that any entity providing Islamic finance has to, by definition, be donating to terrorist groups. A local synagogue soup kitchen or the Salvation Army are acceptable recipients for any donations.

The worst prejudice comes from competitors who publicly inquire as to how a non-Muslim institution can be an acceptable source of Islamic products. Answer: Because our products are better. Some in the community see our Islamic finance programme as a step towards peace and understanding. Our Muslim customers are just grateful that someone cares about their needs and is accommodating them.

Regulators are also not a homogeneous group. Banking regulators are largely supportive-they see us as “banking the unbanked” – a good thing. After 65 years in business, our regulators know us. They know we are experienced and careful, bankers. However, I often say that “Islamic finance is easy, dealing with the secretaries of state is the bane of my existence”. The amount of detail that goes into fitting the square peg of Islamic finance into the round hole of a conventional regulatory system, which can vary in each of several thousand counties, can be extreme.

Q:. The sub-prime induced credit crisis devastated the mortgage market, how were the Islamic mortgages impacted in Devon’s portfolio?

Devon Bank didn’t do sub-prime mortgages. Our Islamic portfolio has been performing VERY well compared to larger averages and even our conventional portfolio. In our 7.5 years of providing Islamic product, our write-offs have amounted to less than 90 basis points on originations-mostly due to a fraud and not credit loss. We have been careful in our underwriting, but if a customer losses a job, we both have a problem. An Islamic product has restrictions on what workout options are available, but we have been able to successfully arrange several restructurings.

The sub-prime mess disrupted entire markets. It negatively affected property valuations, and thus reserve requirements. It has scared investors, even in the face of great opportunities. A number of vendors are just plain gone. Things are starting to normalise a bit now, but the reverberations from the meltdown will take years to work out of the system.

Q. What is the profile of your typical Islamic mortgage customer, both residential and commercial?

It is fairly broad across the income spectrum. Usually first- or second-generation immigrants. Initially predominantly Indo-Pak, but now covering a much wider geographic origin. Because of our compliance level, we tend towards the more conservative end of the religious spectrum, but we get a broad range here too. We have forced industry pricing down so customers don’t feel punished for their religious observance. Our customers tend to have family networks helping with the purchase. Credit scores are a bit higher, but are often “shallow”.

Down payments are often either particularly high or low-depending on whether customers were saving to buy with cash or assuming they never would be able to buy at all.

On the commercial side, because we are a small bank, our size and location constraints produce some customer selection. They tend to be small business operators and investors; frequent masjid financing inquiries; an occasional inquiry from a Gulf investment bank.

Q: Has the time arrived for a licensed deposit-taking Islamic bank in the US? If not, what are the challenges?

We are between windows of opportunity. Devon Bank made two attempts to buy a bank to convert to Islamic. One was geographically located in a community where it would have also reached a sect of Christians that follow their religion’s prohibitions on interest as well as accommodating Jewish and Muslim prohibitions. US$6-US$9 million (US$1 = RM3.06) would have bought either institution. We could have cleansed the balance sheet and had the bank operating as a “proof of concept” pending further regulatory discussions. Our regulators were willing to see us try and make it happen in the beginning. We did not, however, have investor support.

A new charter is practically impossible to create, and largely un-economic to buy. When the right opportunity comes along, you have days in which to strike and consummate a deal. It takes a special investor who can work that fast on something novel. Now, the regulators are too busy with failing and flailing banks to put the resources into figuring out how to handle an Islamic bank. They know it WILL happen, but they don’t even know what questions to ask. It will happen, but it will be easier in a few years than it will be today.

The more interesting question is about customer demand. A subset of people will only deal with an “Islamic” bank, either out of prejudice or out of concerns over the “purity” of money coming from a conventional bank.

While we do not respect the first view, the second is one of religious conviction that we must acknowledge. There are solutions to this concern besides the creation of an Islamic bank. An end-to-end syariah-compliant bank would need to start small and demonstrate market demand. I believe there is sufficient demand for such an institution, but most plans are from people who don’t understand the US banking market and how it is regulated.

Q: What kind of interest and inquiries have you received from a Gulf or Malaysia-based institution in Devon Bank and its Islamic portfolio?

All of our businesses and funding so far have been from “onshore” sources. To date, we have not had good contacts in Malaysia. They just don’t know us-it has simply been a mismatch of networks. We have had more visits and potential businesses from Indonesians. We have had a number of contacts from Gulf entities, and I have taken several trips to the UAE, but they have been frustrating.

To some, we are a novelty (Oh look! An American doing Islamic finance! Isn’t that cute!). Others see our potential, but we have been the wrong thing at the wrong time. It is a frustration when you schedule a due diligence trip only to have the next eruption in the financial meltdown scare investors and kill discussions; or you read in the news about your potential partner defaulting on a few billion dollars worth of its debt during your discussions. Others are so fixated on winning the biggest prize that they don’t look at the merits of the race – for example, they are more interested in buying a trophy property rather than smaller more profitable ones.

The right people with the right vision WILL line up with the right time. We believe we have a compelling story and Grand Plans capable of execution – just bad timing. When those in the Gulf and in Malaysia are ready for us, we are ready for them. Our performance speaks louder than our “wasta”. In the mean time, we are not waiting – we have added capital to the bank and are adding more. We expect our business will continue growing.

Q: If you had to start all over for Islamic mortgages, what would you do differently?

I would have been more aggressive about developing infrastructure faster – vendors, staff, technology, business partners, etc. We started our programme slowly to make sure everything worked as it should and that our regulators didn’t see problems we were missing. However, it meant that resources weren’t lined up when needed.

The global credit crisis put an awful lot of plans on hold for a lot of people, and it prevented us from moving more quickly to the next stage. If we had shifted our entire timeline nine months earlier, we could have been functionally several years ahead of where we are now.

Q: What could the state of Islamic finance in the US be in 2020?

There will be an Islamic bank. A major US provider would have been long gone (five minor players pulled out of the market in the last two years). There will be a larger menu of investment options that many will not even know are syariah-compliant.

There will be “crossover” products that are syariah-based and valued for their performance characteristics, not because they fit a moral code, though they will not be widely used.

Many Islamic finance projects will continue to be done quietly in the background. The scope of product offerings will increase as providers stop trying to fit square pegs into round holes as much and develop legitimate de novo alternatives.

The Bigot Brigade will still be warning that Islamic finance is the road to Armageddon – without doing any more fact-checking than they have done today. The market will go from under-served to adequately served, though “adequately served” will not mean (fortunately) what people might have wanted it to mean three years ago.

Source: http://www.btimes.com.my/articles/jewbi/Article/

 

US legal win to boost Islamic finance: Case against insurer AIG’s Islamic investments dismissed

US legal win to boost Islamic finance: Case against insurer AIG’s Islamic investments dismissed

Lawyers said a U.S. court decision to dismiss a case alleging AIG’s <AIG.N> sharia-compliant businesses promoted religious doctrine, will boost confidence in the industry and lift sales of Islamic products in the longer term.

A Michigan district court rejected on Friday a claim filed by Marine veteran Kevin Murray in 2009 that the U.S. government violated the constitution by allowing funds from insurer American International Group’s $40 billion bailout to be used to fund its Islamic insurance businesses.

Lawyers say the case is significant for the industry in the United States, which has struggled with a backlash against Islam, and is looking for support from the courts and government to promote Islamic finance as a legitimate business.

“The decision … debunks the myth that Islamic finance is unacceptable and unlikely to withstand legal challenges to its validity in court,” said Megat Hizaini Hassan, head of Islamic finance at Malaysian law firm Lee Hishammuddin Allen & Gledhill.

“Once the financial services industry in the US realises that there should be no major legal issues, then hopefully this may help to make Islamic finance more acceptable in the mainstream.”

Islamic finance has been plagued by criticism in the U.S. that it is a means of funneling funds to terrorists or a plot by Muslims to spread a system of Islamic principles known as sharia has plagued the industry in the U.S.[ID: nLDE6971BO]

In his opinion, District Judge Lawrence Zatkoff, said the plaintiff did not prove that AIG’s sharia-compliant businesses engaged in religious indoctrination.

The distinction between sharia-compliant business as a financial model and overall Islamic law, is a positive step for Islamic finance growth in the U.S., lawyers said, but is just one battle won as the industry seeks to grow.

“The case helps the industry by putting the fringe element that is fearful of sharia in its place,” said Isam Salah, partner at King & Spalding in New York. “But I expect we’ll see more of these kinds of cases as we see a multi-pronged effort to combat all things Islamic in the U.S.”

An appeal of the ruling has already been filed to the Sixth Circuit Court of Appeals, said David Yerushalmi, Murray’s attorney and general counsel for the Center for Security Policy.

“Sharia compliant finance is a religious endeavour, there is no way you can separate it from political Islam,” Yerushalmi said. “Sharia can’t be cut up and diced, it’s an integral whole.”

Source: http://ph.news.yahoo.com/rtrs/20110118/tbs-lawsuit-islamic-7318940.html

Habib Bank Limited Islamic Banking launches Al-Ziarat Account for Hajj and Umrah

HBL Islamic Banking launches Al-Ziarat account for Hajj and Umrah

Habib Bank Limited on Monday launched ‘HBL Al-Ziarat Account’ as Haj & Umrah saving plan. The product is based on the concept of Modaraba and under the scheme, bank will provide Takaful also. At the launching ceremony, HBL President Zakir Mehmood said that rising Non Performing Loan (NPLs) is a major challenge for the banking industry and banks with the central bank assistance are taking several initiatives to curb the rising NPLs.

He said that Islamic banking is a different segment and using the new technology, HBL Islamic banking is being operated through different accounts. “HBL Islamic banking accounts are totally different from its conventional banking accounts and presently deposits of Islamic banking stand at Rs 6.3 billion,” he said. Keeping on mind the essence of Islamic economic system ie welfare of the society and sharing of the benefits, HBL has introduced this account, he added.

It is an immense desire of every Muslim to perform Haj & Umrah but due to high cost it is not possible for most of us to perform Haj & Umrah at will, he said and added that however, this unique product will enable Muslims to perform their religious duty under the saving plan ranging from 6 months to 20 years.

Zakir said HBL is the largest private sector bank in Pakistan with more than 1,450 branches nation-wide and HBL Islamic Banking is on fast track and its operation has increased to 19 dedicated Islamic banking branches across Pakistan offering Islamic Banking products and services from 206 branches of retail, commercial & corporate centers directly linked to the dedicated Islamic banking branch of the concerned region.

This product is initially offered through selected branches of HBL and more branches will be engaged on need basis, said Muhammad Aslam head of Islamic Banking HBL while giving the details of the product. “Under this product intending pilgrims wilt join the saving scheme by opening HBL ‘Al-Ziarat Account’ with any of 225 branches of HBL spread across the country,” he added The account will be opened in the Islamic Banking branch of HBL through either dedicated Islamic banking branch, as HBL has attempted to offer the service at the doorstep of the pilgrim, he said.

In addition, the life of the pilgrim will be covered through family Takaful coverage from Pak Qatar Family Takaful free of cost. The Takaful cost will be borne by HBL, Aslam added. At the time of opening of account, the pilgrim will nominate a relative to perform Haj-e-Badal or Umrah if needed and in case of pilgrim’s death during the plan, any shortfall between the target amount and savings will be paid by Takaful operator and the nominee will perform Haj or Umrah in place of the deceased.

Source: http://www.brecorder.com/news/money-and-banking/pakistan/1144640:news.html