IIFM took the lead by creating awareness in the Islamic finance industry on this significant development and highlighted the challenges posed, in particular to Islamic financial product structures, transactions, documentation, credit and legal matters through consultation with key industry stakeholders and published the industry’s first and only white paper on “Global Benchmark Rate Reforms and Implications of IBOR Transition for Islamic Finance” in March 2021.
Since the publication of the white paper, IIFM has moved forward and started working on implementation of RFR’s in Islamic Financing and Hedging transactions so that the transition to RFR’s does not affect industry development and competitiveness. Contributions from leading financial institutions, accounting firms, law firms and a few other market participants came together to create awareness and highlight potential challenges that the Islamic financial industry may face in its activities due to this new transformation development.
In order to form a consensus around the development of viable and standardized Shari’ah-compliant solutions and amendments particularly in documentation, IIFM worked with three (3) specific work streams namely Financing, Hedging and Sukuk to deal with this important development and to reach practical and workable solutions relating to IIFM mandated areas of focus.
The publication of IIFM Shari’ah-compliant standard structuring solutions for RFR’s implementation for Murabahah and Ijarah transactions is culmination of hard work carried out by the financing workstream and final guidance and approval by the esteemed Scholars of IIFM Shari’ah Board.
Mr. Khalid Hamad Al Hamad, Chairman of IIFM said, “IIFM has always strived to take active role in the industry’s development and its unification and the publication of these Shari’ah-compliant solutions required for smooth transition by the Islamic Finance industry. Developing a Shari’ah solution on these new alternative benchmark rates is testament to IIFM’s valuable contribution to the industry and no doubt these standard guidelines will greatly benefit all the market participants globally.”
In a related context, Mr. Khurram Hilal, Chief Executive Officer of Standard Chartered Saadiq and member of the IIFM Board of Directors said, “This is an important milestone for Islamic Banking industry. We are indeed grateful to IIFM for the pivotal role they are playing in shaping the future of Islamic Banking through such initiatives. IIFM has provided us with the right platform to bring thought leaders together while helping us develop a practical solution following an extensive consultation with industry leaders. Standard Chartered Saadiq is proud to have contributed in introducing this important industry initiative”
“Publication of these Shari’ah-compliant Standard Solutions amplifies the importance of collaboration needed to overcome challenges and develop Shari’ah-compliant standardized guidelines, solutions and documentation as Islamic finance industry cannot develop on a sound footing without cooperation and support of all stakeholders”, said Mr. Ijlal Ahmed Alvi, Chief Executive Officer of IIFM. He also added, “Industry stakeholders can drive maximum benefit by ensuring wider implementation levels of these RFR implementation related standard solutions which will be beneficial to the users as well as to the industry globally”.
Dr. Ahmed Rufai, Head of Compliance at IIFM commented, “On this auspicious and blessed occasion, we would like to express our sincere appreciation, heartfelt gratitude and thanks to all the esteemed members of the IIFM Shari’ah Board for their guidance and unconditional support to IIFM for a great cause and for the sustainable development of the Islamic financial services industry”.
IIFM is indebted to all the members of the Financing Workstream particularly Standard Chartered Saadiq, Bank ABC Islamic, Saudi National Bank, Dubai Islamic Bank, Emirates Islamic, CIMB Islamic, Kuwait Finance House, Islamic Development Bank, First Abu Dhabi Bank, Dentons and other leading institutions who have actively participated in the development of these solutions for the benefit of all the stakeholders globally.
Mr. Ijlal also thanked The Waqf Fund (Bahrain) for its grant support which made the publication of these urgent RFR related standard solutions possible. He also expressed his thanks to Saudi National Bank for its continuous support and efforts in the Arabic translation of the Shari’ah-compliant Solutions for New Risk-Free Rate (RFR) Benchmark paper.
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About International Islamic Financial Market (IIFM)
IIFM is a global standard-setting body of the Islamic Financial Services Industry (IFSI) focusing on standardization of Shari’ah-compliant financial contracts and product templates.
IIFM is hosted by the Central Bank of Bahrain (CBB) and was established under Royal Decree No (23) Year 2002 of the Kingdom of Bahrain as a neutral and non-profit international Islamic infrastructure development institution, by the collective efforts of the CBB (formerly Bahrain Monetary Agency), Islamic Development Bank, Bank Indonesia, Bank Negara Malaysia (delegated to Labuan Financial Services Authority), Central Bank of Sudan and Autoriti Monetari Brunei Darussalam (formerly Ministry of Finance Brunei Darussalam).
Besides the Founding and Permanent Members, IIFM Board of Directors consist of Islamic and international banks namely Kuwait Finance House, Dubai Islamic Bank, National Commercial Bank, Bank ABC Islamic, Gulf Finance House, Standard Chartered, Credit Agricole CIB and National Bank of Kuwait.
IIFM is also supported by certain regulatory and government bodies such as State Bank of Pakistan, National Bank of Kazakhstan and DIFC Authority as well as by a number of international and regional financial institutions and other market players active in Islamic finance.
Information on IIFM and its activities is available on www.iifm.net
Mr. Usman M. Naseer, Senior Officer-Business Development, IIFM
Office No: +973 17 500161; Email: firstname.lastname@example.org
© Press Release 2021