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