Faisal Islamic Bank
Encyclopedia
Faisal Islamic Bank of Egypt is an Islamic bank in Egypt
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law.
The articles of incorporation
were amended under law No. 142 of 1981 and were amended for the second time under law 97 of 1996. There was a heavy demand for the bank's shares at the time of subscription in the bank's capital. This demand exceeded by five times the shares offered for subscription. This prompted successive increases in the bank's capital till it reached USD 500 million as an authorized capital against USD 198 million as an issued and fully paid up capital in 2007.
The ultimate goal being to eventually institute an elaborate and comprehensive banking system based on the rules of Islamic Shariah which meet the needs of shareholders, clients and employees. The bank conducts trade financing as well as investment activities. The bank also offers various services in the field of retail banking and corporate banking in addition to carrying out ventures of developmental and national interest.
The Central Bank also regularly inspects the bank's activities and endorses its financial statements. Moreover, all the bank's activities are subject to the supervision of the Religious Supervisory Board which endorses all the transactional contracts and revises all the practical implementations of such transactions. Furthermore, the external auditors carry out the audit of the bank's accounting procedures and practices.
The bank is also a member of the following organisations and associations:
The first and most important factor is the mobilization of a suitable volume of resources that is stable and diversified, then using such resources in a way that would promote the economic policy of the state and serve its developmental goals, whilst adhering at all times in its operations to the strict compliance with the rules of Islamic Shariah.
The second factor is the proper management of capital in a way that would strike a balance between the resources and the applications within the guidelines imposed by the monetary authorities and taking into consideration the factors of liquidity and profitability.
The bank draws its resources from two main sources.
The first source is the internal resources that include the paid capital, the reserves and the provisions.
The second source is the external resources represented in the clients accounts and saving pools.
The Islamic saving pools offered by the bank have been in high demand by the clients in Egypt and the Islamic world due to its advantages.
The bank has succeeded in planning and carrying out the process of collecting the deposits and developing savings which is considered the backbone of the investment activity that in turn represents the essence of the Islamic banking activity.
Such successes are due to a number of advantages offered by the bank to its depositors.
The most important of these advantages is the Islamic formulae that the bank offers through its various saving pools whether in Egyptian pounds or foreign currencies which include current accounts, general investment accounts, the three-year saving certificates and the seven years saving certificates with accumulated return Namaa.
The minimum deposit limit for an account is held very low in order to attract a very broad sector of clients that other banks were unable to attract.
Moreover, Faisal bank is the only bank that allows drawing sums from the deposit during its term without being deprived from the revenue calculated on the remaining part.
It is also noteworthy that the deposit base of the bank is characterized by relative stability given that it is distributed over eight hundred thousand accounts most of which are small depositors.
On the other hand (usage of resources), Faisal Islamic Bank of Egypt has succeeded in realizing substantial achievements in the field of investment in accordance with its policy that is governed by the rules of Islamic Shariah.
Based on this policy, the forms of investment in the bank include; funding through Musharaka (partnership), Mudaraba, Murabaha sale, Salam sales contracts and Istissnaa, direct trade in addition to incorporating companies and sharing in their capital.
The aforementioned operations represent the main legitimate methods of funding in the Islamic banking system.
The success in the field of collecting the savings and the development of deposits has led to the increase in the resources available for financing operations which has in turn led to doubling the effort in order to reach suitable returns on investment, in compliance with Shariah, and devising new funding and investment instruments that do benefit large sectors of clients.
This activity has certainly assumed greater importance after the debt crisis and the faltering of clients all over the world which led banks to become more conservative in funding operations particularly in medium and long term investments.
Hence, bank experts have started to re-engineer its existing operations and develop new activities.
The development of banking services has become the prime concern and has been given the first priority as it represents the most effective means for achieving greater penetration and wider deployment of its activities as well as greater revenues.
This prime concern, which will always remain on going, aims at making the best use of existing and available information technology which is in constant progress. In response to the new trends in international banking and in order to promote its activities in all fields, the bank has given great attention to its mandate as a provider of services and consequently has integrated this function in its medium and long-term strategy, given that most of the services do not violate the rules of Shariah.
With the view of providing high quality banking services to its clients, the bank has introduced modern techniques.
A full conversion of operations from manual to automated systems has been carried out in all branches.
The current electronic services include the modern devices for signature matching, automatic teller machines ATM Cards, Visa Electron Cards, banking services through the Internet, Phone banking, Electronic collection of cheques, issuing cheque books, international and local Swift transactions, inquiring about protesto and bankruptcy conditions, in addition to a dealing room for securities, and a Reuters system.
Egypt
Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...
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History
Faisal Islamic Bank of Egypt is the first Egyptian Islamic & Commercial Bank and is one of the most important Egytpian banks . The bank officially started operations in May 1979, but its origins were five years earlier, when the founders met and agreed to establishing a bank in Egypt operating in accordance with the Islamic Shariah to serve as a model for Islamic banks all over the world. Prince Mohamed Al-Faisal Al-Saud, Chairman of the board of directors, submitted the idea before a number of Egyptian personalities and officials. The idea was widely welcomed on the popular as well as the official level. The bank was incorporated under Law No. 48 of 1977, which was then endorsed by the Egyptian Parliament and the bank was licensed as an economic and social institution taking the form of an Egyptian joint-stock company operating in compliance with the rulings of Islamic ShariaSharia
Sharia law, is the moral code and religious law of Islam. Sharia is derived from two primary sources of Islamic law: the precepts set forth in the Quran, and the example set by the Islamic prophet Muhammad in the Sunnah. Fiqh jurisprudence interprets and extends the application of sharia to...
law.
The articles of incorporation
Articles of Incorporation
The Articles of Incorporation are the primary rules governing the management of a corporation in the United States and Canada, and are filed with a state or other regulatory agency.An equivalent term for LLCs in the United States is the Articles of Organization...
were amended under law No. 142 of 1981 and were amended for the second time under law 97 of 1996. There was a heavy demand for the bank's shares at the time of subscription in the bank's capital. This demand exceeded by five times the shares offered for subscription. This prompted successive increases in the bank's capital till it reached USD 500 million as an authorized capital against USD 198 million as an issued and fully paid up capital in 2007.
Objectives
The main objective of the bank is to carry out all banking, commercial and investment activities, financing economic and urban development projects in addition to performing various social services through the Zakat Fund. The bank, hence, aims at consolidating the basis of Islamic banking practices and developing it further by introducing successful practical applications of the legitimate concepts which are at the core of Islamic transactional jurisprudence.The ultimate goal being to eventually institute an elaborate and comprehensive banking system based on the rules of Islamic Shariah which meet the needs of shareholders, clients and employees. The bank conducts trade financing as well as investment activities. The bank also offers various services in the field of retail banking and corporate banking in addition to carrying out ventures of developmental and national interest.
Governance
In addition to the special law No. 48 for the year 1977 under which the bank was established and its amendments, the last of which is law No 97 of the year 1996, the bank is registered at the Central Bank of Egypt as a commercial bank subject to the provisions of the law of the CBE and the banking system No. 88 of the year 2003. The bank is also subject to the supervision of the central Bank of Egypt and is committed to carrying out all its instructions in addition to submitting the required monthly reports to the general administration for supervising banks.The Central Bank also regularly inspects the bank's activities and endorses its financial statements. Moreover, all the bank's activities are subject to the supervision of the Religious Supervisory Board which endorses all the transactional contracts and revises all the practical implementations of such transactions. Furthermore, the external auditors carry out the audit of the bank's accounting procedures and practices.
The bank is also a member of the following organisations and associations:
- Association of Egyptian Banks
- Accounting & Auditing Organisation for Islamic Financial Institutions
- General Council for Islamic Banks and Financial Institutions – Bahrain
- Islamic Financial Services Board (IFSB) – Malaysia
The Investment Activity
The investment activity represents the main basis of Islamic banking. It is the investment activity that distinguishes Islamic banks and the efficiency of this function is considered the real indicator of the proper performance of the Islamic banks operations in general. According to the aforementioned, the framework of such an activity is based on a number of factors.The first and most important factor is the mobilization of a suitable volume of resources that is stable and diversified, then using such resources in a way that would promote the economic policy of the state and serve its developmental goals, whilst adhering at all times in its operations to the strict compliance with the rules of Islamic Shariah.
The second factor is the proper management of capital in a way that would strike a balance between the resources and the applications within the guidelines imposed by the monetary authorities and taking into consideration the factors of liquidity and profitability.
The bank draws its resources from two main sources.
The first source is the internal resources that include the paid capital, the reserves and the provisions.
The second source is the external resources represented in the clients accounts and saving pools.
The Islamic saving pools offered by the bank have been in high demand by the clients in Egypt and the Islamic world due to its advantages.
The bank has succeeded in planning and carrying out the process of collecting the deposits and developing savings which is considered the backbone of the investment activity that in turn represents the essence of the Islamic banking activity.
Such successes are due to a number of advantages offered by the bank to its depositors.
The most important of these advantages is the Islamic formulae that the bank offers through its various saving pools whether in Egyptian pounds or foreign currencies which include current accounts, general investment accounts, the three-year saving certificates and the seven years saving certificates with accumulated return Namaa.
The minimum deposit limit for an account is held very low in order to attract a very broad sector of clients that other banks were unable to attract.
Moreover, Faisal bank is the only bank that allows drawing sums from the deposit during its term without being deprived from the revenue calculated on the remaining part.
It is also noteworthy that the deposit base of the bank is characterized by relative stability given that it is distributed over eight hundred thousand accounts most of which are small depositors.
On the other hand (usage of resources), Faisal Islamic Bank of Egypt has succeeded in realizing substantial achievements in the field of investment in accordance with its policy that is governed by the rules of Islamic Shariah.
Based on this policy, the forms of investment in the bank include; funding through Musharaka (partnership), Mudaraba, Murabaha sale, Salam sales contracts and Istissnaa, direct trade in addition to incorporating companies and sharing in their capital.
The aforementioned operations represent the main legitimate methods of funding in the Islamic banking system.
The success in the field of collecting the savings and the development of deposits has led to the increase in the resources available for financing operations which has in turn led to doubling the effort in order to reach suitable returns on investment, in compliance with Shariah, and devising new funding and investment instruments that do benefit large sectors of clients.
The Bank as a Provider of Services
This activity is considered a distinguishing characteristic of the modern banking system due to the revenue it yields in addition to its main role of attracting clients and encouraging them to deal with the bank in other activities.This activity has certainly assumed greater importance after the debt crisis and the faltering of clients all over the world which led banks to become more conservative in funding operations particularly in medium and long term investments.
Hence, bank experts have started to re-engineer its existing operations and develop new activities.
The development of banking services has become the prime concern and has been given the first priority as it represents the most effective means for achieving greater penetration and wider deployment of its activities as well as greater revenues.
This prime concern, which will always remain on going, aims at making the best use of existing and available information technology which is in constant progress. In response to the new trends in international banking and in order to promote its activities in all fields, the bank has given great attention to its mandate as a provider of services and consequently has integrated this function in its medium and long-term strategy, given that most of the services do not violate the rules of Shariah.
With the view of providing high quality banking services to its clients, the bank has introduced modern techniques.
A full conversion of operations from manual to automated systems has been carried out in all branches.
The current electronic services include the modern devices for signature matching, automatic teller machines ATM Cards, Visa Electron Cards, banking services through the Internet, Phone banking, Electronic collection of cheques, issuing cheque books, international and local Swift transactions, inquiring about protesto and bankruptcy conditions, in addition to a dealing room for securities, and a Reuters system.