بسم الله الرحمن الرحيم
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ISLAMIC BANKING AND SUKUK PowerPoint PPT Presentation


Islam has given an immense importance to Islamic Entrance of Sukuk(Rental Certificates) in 2010. Increased Turkish export marketCauses of Emergence of Islamic Banking(Religious,Social,Economic)

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ISLAMIC BANKING AND SUKUK

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Islamic banking and sukuk

بسم الله الرحمن الرحيم

Starting in the Name of Allah,

The Most Beneficent, The Most Merciful


Islamic banking and sukuk

ISLAMIC BANKING AND SUKUK

By

TUGCE YUCEL

In partial fulfillment of a Master Thesis in Capital market and finance.

Email: [email protected]


Islamic banking and sukuk

Honorable Guests, Participants, Ladies & Gentlemen.

Thank you for giving me the honor of presenting an overview of Islamic Banking and Sukuk


Islamic banking and sukuk

Overview of Islamic Banking and Sukuk

  • What is Islamic Banking and Sukuk all about?

  • Historical review of Islamic banking and Sukuk in Turkey.

  • Importance of Islamic Banking and Sukuk

  • Objective of this study

  • Why Islamic banking?

  • Major difference between the Islamic and conventional banking system.

  • Islamic Banking Product: Sukuk


Islamic banking and sukuk

WHAT IS ISLAMIC BANKING AND SUKUK?

“Worldwide "Islamic banking", in Turkey also known as "participation banking" or interest-free banking, can be defined as working on the basis of profit and loss sharing in fund raising and in the use of funds, operating on sharing profit and loss by partners and institutions running according to Islamic principles.”

In Arabic the word ‘Senet’ refers to bonds and bills but Islamic bonds are called "Sukuk". In this context, the defined phrase as "financial certificate"s Islamic version is "Islamic bonds" and is used as sukuk. Its interest-free structure is considered as an instrument in harmony with Islamic principles. For this exact reason, Sukuk’s limits over interests is a security to Islamic laws Sukuk being a product of the participating banks(AlBaraka Bank, Kuveyt Turk Bank, Financial Turkish Bank, Asya Bank and Ziraat Bank) , it assures to be one of the most important beyond the exportation field worldwide


Islamic banking and sukuk

HISTORICAL REVIEW ON ISLAMIC BANKING AND SUKUK

  • 1Emergence Period (1972-1975): The first phase of the interest-free banking in this period excels sudden increase in oil income and huge liquidity.

  • 2.Development Period (1976-1983): A large number of international banks was established in this period, whereas the interest-free banks started spreading; from the East in Malaysia to United Kingdom in the West and the Arabian Gulf region.

  • 3.Maturity Period (1983-present): Is the period that experienced economic decline for reasons such as the decrease occurred in oil revenues, the dollar's strength, increased interest rates, the OPEC (Organization of Petroleum Exporting Countries Organization) and the removal of capital from each country


Islamic banking and sukuk

Importance of Islamic Banking and Sukuk

  • Islam has given an immense importance to Islamic

  • Entrance of Sukuk(Rental Certificates) in 2010. Increased Turkish export market

  • Causes of Emergence of Islamic Banking(Religious,Social,Economic)


Why islamic banking

WHY ISLAMIC BANKING

Before explaining the concept “what is Islamic Banking” the elaboration of concept “why Islamic Banking” is very important.

Islam is a complete code of life that provides guidance regarding each aspect of life.


Islamic banking and sukuk

WHY ISLAMIC BANKING

The primary objectives of Islamic Economic System are as under.

  • Equal Distribution of wealth

  • Social justice

    These objectives can never be achieved in Interest/Riba based economic systems.


Islamic banking and sukuk

DIFFERENCE BETWEEN ISLAMIC AND CONVENTIOANL BANKING

Islamic Banking

1) Functions and operations are based on Sharia’h principles

Conventional Banking

1)Functions and operations are based on fully man made principles


Islamic banking and sukuk

DIFFERENCE BETWEEN ISLAMIC AND CONVENTIOANL BANKING

Islamic Banking

2) Promote risk-sharing between provider of capital (investor) and user of funds (entrepreneurs)

Conventional Banking

2) Investor is assured of pre-determined rate of interest


Islamic banking and sukuk

DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING

Islamic Banking

3) Aim at maximising profit but subject to Sharia'h restrictions

Conventional Banking

3) Aim at maximising profit without any restrictions


Islamic banking and sukuk

DIFFERENCE BETWEEN ISLAMIC AND CONVENTIOANL BANKING

Islamic Banking

4) Partners, investor and traders, buyer or seller relationship

Conventional Banking

4) Creditor-Debtor relationship


Islamic banking and sukuk

DIFFERENCE BETWEEN ISLAMIC AND CONVENTIOANL BANKING

Islamic Banking

5) Encourage asset-based financing and based on commodity trading

Conventional Banking

5) Based on money trading. Money is a medium of exchange and not a commodity, its sale and purchase is prohibited in Islam.


Islamic banking and sukuk

DIFFERENCE BETWEEN ISLAMIC AND CONVENTIOANL BANKING

Islamic Banking

6) No right of profit if there is no risk involved. The profit and loss sharing depositor may lose money in case of loss.

Conventional Banking

6) It is almost risk free banking and depositor has no risk of losing its money because interest is guaranteed.


Islamic banking and sukuk

ISLAMIC BANKING PRODUCTS AND SERVICES

Currently available Islamic Banking Products and services are

  • Partnership based modes of Sukuk

    Musharaka Sukuk, Mudaraba Sukuk,

  • Trade based modes of Sukuk

    Murabaha Sukuk, Salam Sukuk

  • Rental based modes of Sukuk

    Ijarah Sukuk, Diminishing Musharaka Sukuk


Islamic banking and sukuk

ISLAMIC BANKING PRODUCTS: SUKUK

  • HISTORICAL DEVELOPMENT OF SUKUK

  • FEATURES OF SUKUK

  • SUKUK IN TURKEY (LEASING CERTIFICATES)

  • TYPESOFLEASINGCERTIFICATES

    (Ownership,Managementcertificate,Trading,Partnership,Work contract

  • SUKUK’S ADVANTAGES AND DİSADVANTAGES

  • PROBLEMS AND SOLUTIONS OF SUKUK


Islamic banking and sukuk

RECOMMENDATION : SUKUK

Increasing the number of the participating banks for more productivity on the no interest matter

Producing more Sukuk types and implementing them in the country for more productivity and benefits as the name Sukuk started as it is and is now named “Icara Sukuk” and could have more of secondary names for more implementation

Having a common thought regarding the religious matter of interests and implementing it in all banks for the satisfaction of all parties


Islamic banking and sukuk

RECOMMENDATION : SUKUK

Increasing the number of conferences, workshops and educations about the no interest banking

More methods like the certificate rentals and no interest based investments with more marketing and advertisement in regards with it, like television ads, newspapers, magazines and mostly social media and so on to raise awareness

Increasing the research on no interst banking and the products inthe making

Increasing the quantity of the products with no interest banking


For your time and your advice

FOR YOUR TIME AND YOUR ADVICE….


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