Islamic Banking and Finance Course Syllabus Lecturer(s) Dir. Naser Al Ziyadat, Al Mashora & Al Rayah for Islamic Financial Consulting, Kuwait. Prof. Dr. Sami Al Swailem, IDB Islamic Development Bank, Saudi Arabia. Guest Lecturers Mag. Wilhelm Kerschbaum, European Institute for Islamic Finance, Austria Prof. Christopher Schwand, IMC Krems. Place January 29-Feb 02, 2013, at Campus Krems, G Wing. Course Information The recent turbulence in the global financial markets has drawn attention to an alternative system of financial intermediation: Islamic banking and finance. Although the concept of Islamic finance can be traced back about 1,400 years, its recent history can be dated to the 1970s when Islamic banks in Saudi Arabia and the United Arab Emirates were launched. Bahrain and Malaysia emerged as centres of excellence in the 1990s. It is now estimated that worldwide around US $1 trillion of assets are managed under the rules of Islamic finance. Islamic finance rests on the application of Islamic law, or Shariah, whose primary sources are the Qur'an and the sayings of the Prophet Muhammad. Shariah, and very much in the context of Islamic finance, emphasises justice and partnership. With the estimated growth rate of up to 20% year on year, the need for human capital to bring Islamic finance to the level at which it deserves and meet its markets demands is higher than ever. At least 50,000 professionals are needed within the industry over the next 7 years. This course provides a comprehensive introduction to Islamic Banking and Finance, augmented with an analysis of the situation in Austria and the business potential for Austrian companies. Learning Outcomes Although its presence is not yet perceptible in all countries, the growth of popularity of Islamic finance is visible in the expanding range of products and services that comply with the Sharia law. Asia Pacific regions and the Middle East as well as the United Kingdom and the United States have seen a number of Islamic banks and banking units being opened in recent years. Nevertheless, such emergence and worldwide evolution of modern Islamic finance and institutions indicates a gap in adequate education of financial sector specialists in Austria. The IMC, university of Applied Sciences, Austria, wants to close this gap and offer high quality training for all interested parties.

Therefore, the main objectives of the Islamic Banking and Finance course are to:     

Explain the origins and the most important concepts of Islamic Finance; Expose the participants to a wider range of Islamic banking and finance instruments available to the industry players Introduce countries where Islamic Finance is practiced and widely used and share various business experiences; Provide general education in the field of Islamic Banking and Finance; Help the development of the Islamic Finance

Upon successful completion of the course participants will:        

Have a basic understanding of the Islamic World and Muslim beliefs; Know the origins of the Islamic Banking and Finance; Appreciate the rationale behind the development of the Islamic finance industry; Be able to assess the nature and scope of the Islamic finance industry in relation to its conventional counterpart; Develop an appropriate level of understanding of the main principles of Islamic banking and finance; Acquire essential knowledge about the key Islamic financial contracts, as used by the industry; Know about Murabaha and Musharaka contracts, Ijara and Istisna'a financing methods, as well as Salam and Takaful insurance; Be familiarised with the Islamic financial infrastructure, international financial institutions and regulatory bodies.

Course Concept and Description This is the first course on Islamic Banking and Finance in Austria. It will be conducted Jan29 - Feb 02 at Campus Krems. Each day of the course will be generally divided into three parts with the opening unit (morning session) devoted to the presentation of one state which complies with Sharia law. In addition, the situation in selected countries will be highlighted. The first unit, however, will not include the presentation. It will instead focus on the present situation of Islamic Finance in the world. The remaining two units of the day (afternoon sessions) will comprise theoretical classes dedicated to Islamic finance. These lectures will be held by international specialists upon recommendations from embassies according to selected topics of expertise. Following the reflection session on the Islamic and Conventional Banking, the last unit of the course will be devoted to Q&A and discussion. The course will be supported by personal experience of the lecturers, practical insights into each topic as well as case studies and exercises.

Outline of the course Day

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Topics covered  Islamic Finance today  Global presence  EU perspective on Islamic Banking and Finance  Status Quo in Austria  Opportunity for Austrian Companies  Austrian Standards ONR 142001-1 Introduction to Islam – Relevant aspects for business Muslim Beliefs  Five Pillars of Faith  Six Islamic Creeds  Religious Beliefs Sharia Law and Sharia Boards: Roles, Responsibility and Membership  Definition of the Sharia  Allah is the Law Giver  Objectives of the Sharia  Sources of the Sharia  Sharia Islamic Investment Principles  Conditions for Investment in Shares  Sharia Supervisory Board  Sharia Board Scholar Qualifications  State Bank of Pakistan: Proper Criteria for Appointment of Sharia Advisors Case study 1: Sources of Finance for Islamic Banks Case study 2: Financial Statement Analysis for Islamic Banks Islamic Law of Contracts and Islamic Banking  Conventional Banking and Islamic Banking  Six Key Islamic Banking Principles  The concept of Wa’d  Elements of a valid contract  Definition of Asymmetric Information  Origins of Asymmetric Risk within Islamic Banking  Riba in the Qur’an and Sunnah or Hadith  Five Reasons for the Prohibition of Riba Case study 3: Islamic Investment Prohibitions Murabaha as a Mode of Islamic Finance  Definition  Compliance  Practicalities of Implementing Murabaha  Murabaha and the Sharia  Practical Examples of the Application of Murabaha  Key Issues and Problems Associated with Murabaha Comparison with the Conventional Banking Equivalent  Country/Business Presentation  Q&A Session & Networking Mudaraba as a Mode of Islamic Finance  Definition  Compliance  Practicalities of Implementing Mudaraba  Mudaraba and the Sharia  Practical Examples of the Application of Mudaraba  Key Issues and Problems Associated with Mudaraba

Source EIIF IMC Austrian Standards Institute Textbook Chapter 1

Textbook Chapter 2

Textbook Chapter 3

Textbook Chapter 4

Textbook Chapter 5

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 Comparison with the Conventional Banking Equivalent Case study 4: Mudaraba Contract Musharaka as a Mode of Islamic Finance  Definition  Compliance  Practicalities of Implementing Musharaka  Musharaka and the Sharia  Practical Examples of the Application of Musharaka  Key Issues and Problems Associated with Musharaka  Comparison with the Conventional Banking Equivalent Case study 5: Musharaka Contract  Country/Business Presentation  Q&A Session & Networking Ijara as a Mode of Islamic Finance  Definition  Compliance  Practicalities of Implementing Ijara  Ijara and the Sharia  Practical Examples of the Application of Ijara  Key Issues and Problems Associated with Ijara  Comparison with the Conventional Banking Equivalent Case study 6: Ijara Contract Istisna’a as a Mode of Islamic Finance  Definition  Compliance  Practicalities of Implementing Istisna’a  Istisna’a and the Sharia  Practical Examples of the Application of Istisna’a  Key Issues and Problems Associated with Istisna’a Comparison with the Conventional Banking Equivalent  Country/Business Presentation  Q&A Session & Networking Salam as a Mode of Islamic Finance  Definition  Compliance  Practicalities of Implementing Salam  Salam and the Sharia  Practical Examples of the Application of Salam  Key Issues and Problems Associated with Salam Comparison with the Conventional Banking Equivalent Takaful: Islamic Insurance  Definition, Concept and Parties of Takaful  Takaful in Practice  Takaful and Conventional Insurance  Alternative Models of Takaful  Sharia Law as Applied by Takaful Operators  Takaful Operators  Definition of ReTakaful (Reinsurance)  Role of the Sharia Board in Takaful Reflection: Islamic versus Conventional Banks  Case study 7: Opening an Islamic Bank within a Western Regulatory Framework Q&A Session & Networking Q&A Session & Networking

Textbook Chapter 6

Textbook Chapter 7

Textbook Chapter 8

Textbook Chapter 9

Textbook Chapter 10

Teaching Concept This course will be held primarily as a lecture, certain cases and topics will be discussed in class. The instructor will introduce participants of the course to the basic theoretical concepts of the topics announced for the respective sessions. Structured discussions and group works ought to develop an ability to analyse business concepts and to provide an indication how to apply these concepts in real-life situations. Participants of the course are recommended to read (skim) covered chapters upfront to enhance their experience.

Readings and Media, Sources for Individual Studies The course will be based on: Hand-outs from lecturers (e.g. presentation slides, case studies and exercise sheets) distributed in class. Kettell, Brian: Introduction to Islamic banking and finance; John Wiley & Sons, 2011, ISBN 978-0-470-97804-7 The textbook was selected as it provides a comprehensive overview and is also suitable for additional self-study, for additional studies self-study we recommend also the companion material: Kettell, Brian: The Islamic banking and finance workbook; Step-by-Step Exercises to help you Master the Fundamentals of Islamic Banking and Finance; John Wiley & Sons, 2011, ISBN 978-0-470-97805-4 Kettell, Brian: Case studies in Introduction to Islamic banking and finance; John Wiley & Sons, 2011, ISBN 978-0-470-97801-6

Website

Information about the course and registration is available here (click to follow): http://www.fh-krems.ac.at/de/aktuelles/veranstaltungen/event/islamic-banking-and-finance-course/

Disclaimer IMC University of Applied Sciences Krems strives to keep information presented on its website and in course syllabi up-to-date, but does not guarantee the accuracy, reliability or currency of the information. The University reserves the right to alter, amend, vary or otherwise change the details relating to its programmes and courses. Please note the University may discontinue, vary or make unavailable any programmes and courses contained at any time without notice.