Skip to main content

Islamic finance

With more than 1.5 billion Muslims1 in the world today, the global Islamic funds market is poised for exponential growth as Muslims increasingly seek banking services that conform to their religious beliefs. With a long-standing presence across much of the Muslim world, Standard Chartered is ideally placed to play a prominent role in this ever expanding market.

It is a market we know and understand well. In 1992 we became the first international foreign bank to offer Islamic banking services in Malaysia. In 2003 we established a dedicated Islamic banking unit with a global headquarters in Dubai to respond to the needs of customers who want to participate in the economy in accordance with their Islamic beliefs. In 2007, the brand Standard Chartered Saadiq was launched to represent our Islamic Banking business. The word 'Saadiq' means 'truthful' in Arabic, which represents our commitment to provide economically viable solutions based on Islamic values that meet Shariah requirements.

Concept of Islamic banking

Shariah, or Islamic law, applies to all aspects of a Muslim's life, including their finances. The foundations of Islamic banking rest on the fact that money, in itself, has no intrinsic value. It should not be treated as a commodity but as a unit of account. Shariah law prohibits charging and earning interest on lending or receiving money, because interest (the Arabic word for which is 'riba') is prohibited. In short, money cannot be made out of money. However, Shariah law permits wealth to be generated through trade and investing in assets. Other Shariah principles and their impact are listed below:

Shariah prohibits:
Shariah Encourages: Impact:
Interest (Riba) Trade; exchange of commodities Real economic growth; equitable distribution of wealth
Uncertainty (Gharar) Transparency Full disclosure of rights and obligations
Speculation / gambling (Maysir) Fairness No exploitation
Return without risk Economic participation - sharing both profits and losses Sharing of risk and reward
Financing Shariah prohibited activities, such as alcohol, ammunitions, pornography or tobacco Shariah compliant business Community based
A comprehensive demographic study of more than 200 countries finds that there are 1.57 billion Muslims of all ages living in the world today, representing 23 per cent of an estimated 2009 world population of 6.8 billion. Source: Mapping the global Muslim population - A report on the size and distribution of the world's Muslim population, October 2009.

Conventional banks operate on interest based loans on both the asset and liability side of their balance sheets. However, Islamic banks operate on the basis of trade, investment and the providing of services, with the ultimate aim of achieving real economic growth. A comparison of conventional and Islamic banking is given below:

Conventional banking   Islamic banking
1. Based on interest   1. Based on trade or rent
2. Deals in money or paper   2. Deals in tangible assets
3. Based on fixed returns on both sides of the balance sheet   3. Based on profit sharing on the deposit side, and based on return from economic activity on asset side
4. Extends credit to businesses for trade   4. Actively participates in the real economy

Islamic banks use trade, both buying and selling; investment, in which both profits and losses are shared; rent and services as the basis to structure their financing products.

The Islamic terms for these structures are:

  • Murabaha and Musawamah: Trade and Sale based
  • Musharakah and Mudarabah: Investment based
  • Ijarah and Wakala: Rent and Services based

Distinct features of Islamic banking

  • Oversight by the Shariah Supervisory Committee (made up of Shariah scholars)
  • Value oriented system
  • Community based
  • Saving is encouraged
  • Sharing of risk and reward
  • Funds are raised and invested within the conformity of Shariah guidelines
  • Assets based financing
  • Transparency of terms and conditions contracts

Our Shariah Supervisory Committee

Standard Chartered Saadiq has the benefit of a dedicated Shariah Supervisory Committee, comprising three renowned Islamic banking scholars:

Dr Abdul Sattar Abu Ghuddah

Dr Abdul Sattar Abu Ghuddah holds a PhD in Islamic Law from Al Azhar University Cairo, Egypt. He is a Professor of Fiqh, Islamic studies and Arabic in Riyadh and an active member of the Jeddah-based Islamic Fiqh Academy and the Accounting & Auditing Standards Board of Islamic Financial Institutions. He also served in the Ministry of Awqaf, Kuwait. Dr Abu Ghuddah has written several books on Islamic finance. He is a Shariah Advisor to several international and local financial institutions.

Sheikh Nizam Yaquby

Sheikh Nizam Yaquby was educated in the classical Shariah sciences in his native Bahrain and in Makkah. He received his bachelors degree in economics and comparative religion from McGill University, Montreal, Canada. Since 1976, Sheikh Yaquby has taught Tafsir, Hadith and Fiqh in Bahrain. He is also the author of several articles and publications on Islamic finance. He is a Shariah Advisor to several international and local financial institutions.

Dr Mohamed Ali Elgari

Dr Mohamed Ali Elgari holds a PhD in economics from the University of California and is a professor of Islamic Economics and the director of the Centre for Research in Islamic Economics at King Abdul Aziz University in Saudi Arabia. Dr Elgari is also an expert at the Islamic Jurisprudence Academy (OIC), Jeddah and has published several articles and books on Islamic Finance. He is a Shariah Advisor to several international and local financial institutions.

Developing Shariah compliant Islamic products

Standard Chartered Saadiq employs an international team of professionals with Islamic financial expertise who develop Shariah approved financial solutions for our clients. They are advised by our Shariah Supervisory Committee, who also approve each Islamic product. For example, we have been advised that we may levy a late payment fee to discourage customers from making unnecessarily late payments. This fee is not linked to the interest rate and is not deemed to be interest. However, our Shariah Supervisory Committee will not allow this charge to become part of Standard Chartered Saadiq's income, instead these charges are donated to an approved charity, after administrative costs have been deducted.

Standard Chartered Saadiq is unique because we offer Islamic products to both our Wholesale Banking clients and Consumer Banking customers.

Saadiq Wholesale Banking

Standard Chartered Saadiq has a dedicated central Islamic origination and structuring team based in Dubai, which works globally with our relationship and product teams, leveraging the knowledge of the bank to originate and execute Shariah compliant structured solutions.

These transactions are spread across various industries, markets and asset classes and cover financing alternatives in the areas of:

  • Transaction Banking
  • Capital Markets
  • Syndicated Finance
  • Project and Export Finance
  • Structured Trade Finance
  • Hedging Solutions

Standard Chartered Saadiq uses our strong presence in emerging markets and our origination and distribution capabilities across products and geographies to ensure our clients achieve the best execution and maximum distribution coverage. The Standard Chartered Saadiq Wholesale Banking team has successfully delivered structured finance and banking solutions to corporate and institutional customers in:

  • Africa
  • Pakistan
  • Bahrain
  • Qatar
  • Brunei
  • Saudi Arabia
  • Indonesia
  • Singapore
  • Jordan
  • Turkey
  • Kuwait
  • UAE
  • Malaysia
  • UK

Saadiq Consumer Banking

Standard Chartered Saadiq offers comprehensive Islamic consumer banking products in the following customer segments:

  • Personal Banking
  • Private Banking
  • Premium Banking
  • Small and Medium Enterprise Banking

Standard Chartered Saadiq currently has dedicated consumer banking Islamic branches in addition to conventional branches that offer Saadiq products to our customers. Standard Chartered Saadiq offers comprehensive Islamic consumer banking products in:

  • Bangladesh
  • Bahrain
  • Indonesia (through our affiliate Permata Bank)
  • Malaysia
  • Pakistan
  • UAE
Product Bahrain Bangladesh Indonesia Permata Malaysia Pakistan UAE
Home Financing   tick tick tick tick tick
Auto Financing tick tick     tick tick
Assets tick tick tick tick tick tick
SME     tick tick tick tick
Liabilities tick tick tick tick tick tick
Investment Products tick   tick tick tick tick
Bancassurance* tick   tick tick tick tick
Bancassurance is provided through bundled offerings, such as home mortgage and insurance

Development of the industry

Standard Chartered Saadiq is an active participant in a number of regulatory bodies to develop regulatory frameworks for the Islamic Banking industry, such as:

  • ISDA: Working to develop master agreements for derivatives with the International Swaps and Derivatives Association
  • UAE: Member of Islamic Finance Advisory Council for the Dubai International Financial Centre for Islamic Finance
  • IIFM: Board member of the International Islamic Financial Market
  • UK: Member of Islamic Finance Expert Group
  • Hong Kong: Member of Task Force of Hong Kong Government

Standard Chartered Saadiq industry firsts

Standard Chartered Saadiq is a leader in the industry by delivering groundbreaking solutions in Wholesale and Consumer Banking:

Wholesale Banking:

  • The inaugural dollar-denominated Sukuk issued by the Republic of Indonesia
  • The first sovereign Sukuk issued in AED denomination by the Emirate of Ras Al-Khaimeh
  • The first local currency Sukuk programme issued by the Government of Pakistan and the Monetary Authority of Singapore

Consumer Banking:

  • The first international bank to globally launch an Islamic credit card
  • The first to pioneer an Islamic overdraft facility in the UAE
  • The first to issue Term-Financing in Pakistan

Standard Chartered Saadiq's Industry Recognition

Standard Chartered Saadiq has won more than 40 industry awards in the last three years, including 25 this year. Standard Chartered Saadiq was honoured to be voted 'Best International Islamic Bank' by Euromoney Awards 2009 and the 'Best Sukuk House' and 'Best Islamic Investment Bank' by The Asset Triple A Awards 2009 for Islamic Finance.

Standard Chartered Saadiq's Performance

Our commitment and success in Islamic Banking is demonstrated by our league table standings:

  • Number one in the international Sukuk league tables for 2009, with 17.1 per cent market share2
  • Number two in the Syndicated Financings (Loans) league tables for 2009 with 13.5 per cent market share3
Source: Bloomberg
Source: Bloomberg

Report tools

Annual Report and Accounts 2009