Finance & Banking

HUMAN CAPITAL DEVELOPMENT IN ISLAMIC FINANCE THE SUCCESS STORY OF KAZAKHSTAN

The Bureau for Continuing Professional Development has initiated development of the best
certification programmes in Kazakhstan with the purpose of forming a pool of professionals in
the sphere of Islamic Finance starting from 2017. The Bureau has selected top programmes from
international certification and education institutions and organised trainings for local community
and professionals. Currently, the Bureau has the following certification programmes in the pool:

Bahrain Institute of Banking & Finance (BIBF, Bahrain)
• Advanced Diploma in Islamic Finance (ADIF)
• Islamic Banking & Finance Certification (IBFC)
Chartered Institutes for Securities & Investments (CISI, Great Britain)
• Islamic Finance Qualification (IFQ) – б азовый уровень.
Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI, Bahrain).
• Certified Islamic Professional Accountant (CIPA)
Chartered Institutes for Securities & Investments (CISI, Great Britain)
• Professional Certificate in Islamic Finance (PCIF)

The Bureau had also organised Train the Trainer Programs to develop trainers in Islamic Finance Certification for further development of educational programmes in this direction. They are:
• Train the Trainer Program Certified Training Professional by Finance Accreditation Agency (FAA, Malaysia) in June 2017, 9 trainers have been accredited
• Train the Trainer Program INCEIF – Professional Certificate in Islamic Finance

BCPD is the exam centre for all above mentioned certifications

There are 60 retrained people in BIBF IBFC and
CISI IFQ, 5 certified in CISI IFQ to date. The total
number of retrained people in BCPD Islamic Finance
programmes is more than 100.

Conditional grants are issued in BIBF IBFC, CISI, PCIF
(INCEIF), CIPA (AAOIFI) to stimulate professional
development of financial sector specialists and
universities’ teaching staff.

Islamic Finance Week – platform for discussions of
Islamic Finance industry and education issues – is
conducted annually in October.

BCPD is developing its presence is academia by
opening joint centres in universities and redesigning
academic programmes. Thus, Islamic Finance
courses within academic programme in Finance are
launched in M. Narikbayev KazGUU University with
BCPD trainers, and tri-lateral MoU and joint Islamic
Finance Centre is launched in Al-Farabi KazNU in
cooperation with Hamad bin Khalifa University
(Doha, Qatar).

BCPD had conducted numerous Islamic Finance
programmes info sessions in universities in
Almaty and Nur-Sultan with the purpose of raising
awareness in Islamic Finance education and
certification issues.

Society of Islamic Finance Professionals had been
registered in 2018 for the development of Islamic
Finance community. It is a nonprofit organisation,
which is aimed to develop expertise and initiatives
of local Islamic Finance professionals.

The Astana International Financial
Centre (AIFC) is the farsighted
initiative of the First President
of Kazakhstan H.E. Nursultan
Nazarbayev. The Constitutional
Law on the AIFC was signed on 7
December 2015 by the President
of Kazakhstan. The aim of the AIFC
is to support economic growth and
foster the development of financial
services in Kazakhstan and the
region by enhancing human capital
development, providing services
in accordance with international
standards and the best practices
of the leading financial centres
and establishing Nur-Sultan as
the financial & logistics hub of the
vast Eurasian region. The AIFC
is a modern financial hub for the
countries of Central Asia, Eurasian
Economic Union, Caucasus, Western
China and Mongolia.

Following an ambitious goal of
becoming one of the top 10 financial
centres in Asia and one of the top
30 financial centres of the world
in the long-run, the AIFC focuses
on development of the following
core pillars: Islamic finance, capital
markets, asset management,
private banking, financial
technology and green finance.

Islamic finance is one of the
core strategic pillars of the AIFC
with special legal and regulatory
framework based on the English
Common Law and the Islamic
finance principles. The AIFC aims
to develop Islamic finance in
Kazakhstan and CIS region to serve
as the Islamic finance gateway
and the Islamic finance Hub of the
region.

The key features of the AIFC is an
attractive business environment
and the presence of the Astana
Financial Services Authority
(regulatory body), the AIFC Court,
the International Arbitration Centre
and the Astana International
Exchange (AIX). The independent
AIFC bodies, the AIFC legal and
regulatory regime ensure fairness,
justice and greatly enhance
the credibility of Kazakhstan
in the eyes of foreign investors
community.

The AIFC fulfils the development of
all its pillars through the following
benefits such as tax exemption
for 50 years (corporate income
tax, personal income tax, land
tax, property tax); simplified
currency, visa and labour regimes
for participants and employees
of the AIFC; modern offices at
the premises of the international
exhibition Expo 2017; as well as
connectivity of Nur-Sultan with the
key financial centres around the
world via direct flights and open
sky policy.

Pause for thought PROF. HUMAYON DAR SHARI’A GUIDELINES ON MARKETING ANDSELLING

While gharar has received a lot
of attention in Islamic banking
and finance, a related concept,ighra, is not so commonly known
and understood in the industry.
Other Shari’a rules like la tabi’a ma laisa ‘indak/
ladaik (prohibition of sale of something not owned/
possessed by the seller) are also adequately known
and fairly understood.

Ighra means luring, attracting or enticing usually
with deception, but not necessarily always in a
negative way. The word is used both in a negative
and positive sense in the Arabic language, like libis
mughri (enticing dress) and ratib mughri (attractive salary).

n fiqhi (Islamic juristic) context, however, it is
usually used in a negative context, implying enticing
wrongly by attracting someone to a dangerous
activity or an outcome. For example, by making a
path in a jungle attractive to allure travellers to a
place where they could be robbed. In this context,
ighra is certainly not allowed.

While Shari’a scrutiny takes place at each and
every stage of product development, the advice
offered by Shari’a scholars is taken lightly when it
comes to marketing and sale of Islamic financial
products. This is by no means to suggest that Shari’a
guidelines on marketing and selling are relaxed or
abused. In general, Islamic financial institutions
are very sensitive to the cultural requirements and
ensure that their advertisements or other marketing
collateral do not lead to raising of eyebrows or
explicit criticism.

Most of advertisements by Islamic banks and
financial institutions do not fall under the definition
of ighra as they do not lead people to any negative
outcome, and they are not based on any deception.
Some people, however, raised the question if it is
acceptable to advertise prizes attached with some
of the Islamic financial products, e.g., investment
accounts and other products like National Bonds in
the UAE.

The promise of prizes leads the promisor to give
certain prizes to those who qualify to receive it. As
such it is not based on any false presumption as the
prizes are given in all circumstances to those who
win it. This is a view taken by the contemporary
Shari’a scholars who have allowed promising and
giving prizes by way of draws (e.g., National Bonds
in Dubai, and numerous Islamic saving products
with prizes attached).

Each and every Islamic financial/business contract
has its own idiosyncratic requirements, and it is
important for the sale and other staff to be aware
of these so that they do not inadvertently breach
them and expose their institution to what is known
as Shari’a risk. For example, while attracting new
customers by way of offering them some incentives
in the form of cash back or loyalty points is
acceptable in case of Islamic investment accounts
and most of the assets-side products, it is strictly
prohibited to offer such incentives in case of current
accounts.

There are three aspects about which no meddling
is acceptable when marketing, trying to sell, or
advertising Islamic financial products:
• Price
• Object of sale
• Delivery

Fortunately, these are regulatory requirements as
well in almost all the jurisdictions in which Islamic
banks and financial institutions operate. Hence,
any miscommunication will be deemed mis-selling
and hence subject to apprehension and reprimand
by the regulators and other authorities. This has
been the primary reason for lack of explicit Shari’a
guidelines on marketing and selling. However, it
is important for Islamic financial services industry
to start developing such guidelines for the sake
of completeness of the regulatory framework for
Islamic banking and finance.

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