Yavar Moini Director - Islamic Banking Department International Conference on Affordable Housing &...

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Yavar Moini Director - Islamic Banking Department International Conference on Affordable Housing & Mortgage Finance, May 28-29, 2015, Islamabad 1

Transcript of Yavar Moini Director - Islamic Banking Department International Conference on Affordable Housing &...

Page 1: Yavar Moini Director - Islamic Banking Department International Conference on Affordable Housing & Mortgage Finance, May 28-29, 2015, Islamabad 1.

Yavar MoiniDirector - Islamic Banking Department

International Conference on Affordable Housing & Mortgage Finance, May 28-29, 2015, Islamabad 1

Page 2: Yavar Moini Director - Islamic Banking Department International Conference on Affordable Housing & Mortgage Finance, May 28-29, 2015, Islamabad 1.

Unique in Islamic countries- Islamic banking attempted twice in 1980s and 2001First attempt achieved limited success but second attempt has

rather been successful

Current Islamic Banking Paradigm-Key Features Parallel Banking System- Three Types of Islamic Banking

Institutions Full fledged Islamic banks, Islamic banking subsidiaries of conventional banks and Islamic banking branches (IBBs) of conventional banks.

Conventional banks having Islamic banking branches also allowed to have Islamic banking windows in their conventional branches.

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Page 4: Yavar Moini Director - Islamic Banking Department International Conference on Affordable Housing & Mortgage Finance, May 28-29, 2015, Islamabad 1.

Establishment of Steering Committee

Islamic Banking Strategic plan 2014 – 2018

Issuance of comprehensive Shariah governance framework

Development of comprehensive liquidity management framework

Rationalization of MCR

Active collaboration with stakeholders

Nation-wide mass awareness media campaign

Launch of first survey based national study on Islamic banking -

Knowledge, Aptitude and Practices

Establishment of Centre of Excellence

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Number of IBIs: 22Number of Branches: 1574

Page 6: Yavar Moini Director - Islamic Banking Department International Conference on Affordable Housing & Mortgage Finance, May 28-29, 2015, Islamabad 1.

There is a large and widening gap in housing market in Pakistan

World Bank estimated a shortfall of 8 million housing units in Pakistan in 2009

ABAD claims annual incremental demand of 600,000 units of which 50% is met by the private/public investment leaving an annual shortfall of 300,000 units

Formal financial sector caters only up to 2 per cent of all housing transactions, the lowest ratio in region

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State of Housing Sector in Pakistan

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1952

HBFC

1992

1st HFC

2001

National Housing Policy

2003

Commercial Banks

2004

Islamic Banks

2006

I&HFD

2007

HAG Recommendation

2008

MFBs2015 MRC(expected)

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Formation of Housing Advisory Group

• Implementation of HAG recommendations

Issuance of Prudential Regulations for Housing Finance – 2014

Issuance of Housing Finance Guidelines – 2014

• Guidelines for financing to Housing Builders / Developers – 2014

Development of secondary mortgage market in Pakistan by creating a

Mortgage Refinance Company (MRC) – 2015

Capacity Development Programs – IFC, World Bank

Effective coordination with key Stakeholders – ABAD, AMB, Banking

Courts, Financial Institutions and GOP

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Page 9: Yavar Moini Director - Islamic Banking Department International Conference on Affordable Housing & Mortgage Finance, May 28-29, 2015, Islamabad 1.

Twenty nine financial institutions are catering to housing finance needs:

Commercial banks 27 (including 5 Islamic Banks) HBFC 1 MFB 1

Forty industries allied to housing sector Principle nature of housing finance / mortgage product

Construction Outright purchase Renovation

As of Dec 2014, Islamic banking industry has a share of 33.4% in overall housing finance which is growing at an unprecedented growth rate

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59 55 51 5467

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Core Structures Core Structures Product Types Product Types

Murabaha Ijara Istisna Diminishing Musharaka

(Mostly used in banks for Islamic Housing Finance)

Murabaha Ijara Istisna Diminishing Musharaka

(Mostly used in banks for Islamic Housing Finance)

Home Purchase – Buying a new house Home Construct – Constructing house on

already owned land or purchasing land and constructing house thereon

Home Renovate – Renovating the existing house

Facility Replacement – Replacing the existing home mortgage facility from any other bank to Islamic Bank

Home Purchase – Buying a new house Home Construct – Constructing house on

already owned land or purchasing land and constructing house thereon

Home Renovate – Renovating the existing house

Facility Replacement – Replacing the existing home mortgage facility from any other bank to Islamic Bank

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Page 12: Yavar Moini Director - Islamic Banking Department International Conference on Affordable Housing & Mortgage Finance, May 28-29, 2015, Islamabad 1.

Weak property rights Inefficient legal framework and land information systems Improper implementation of foreclosure laws; outdated

building and zoning regulations Lack of secondary mortgage market Rising land prices and rapid urbanization Lack of product innovation Inadequate research for introducing cost effective

construction techniques

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Catering to faith sensitive customers Rationalization of transaction costs in housing sale/purchase

transactions

Investment linked tax incentives for developers to increase the supply of affordable housing

Development of Shariah compliant REITs Focused research initiatives

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