In simple words Islamic Banking means "Banking ac-cording to norms of Shariah ".Shariah are the basic prin-ciples of Islam. Islamic banking goes beyond the strict principles of Islam. It is strictly not banking related to ones religion rather the banking operates in an emanci-pated manner which makes it equally viable to non Mus-lims as well. History: The history goes back in 1963 where LATE DR. AH-MAD ELNAGGER initiated the first modern Islamic profit sharing method of contract in Egypt. Since then it has gained popularity among nations and Bahrain be-came the first country to recognize the importance of the industry.

Mr. Arul Vel Arasan C

Management Consultant KPMG (Bangalore)

1.It has been a long journey from being a fresher to becoming a Consult-ant of such a well reputed company. How has the experience been?

Ans: It has been a learning experience throughout. With work and responsi-bilities we get maturity and with time and maturity we learn to implement the knowledge at the right place. Knowledge can be gained easily but what is needed is its implementation in practical scenarios. Experience also teaches one a lot. The more experienced you are, the better you learn to implement knowledge. Life is not a straight road and no one knows what lies at the next turn, so accepting things as they come and putting in your hard work all through is very important.

Equities have been feeling the heat of rising inflation over the past few sessions. Unlike debt markets, which track inflation data closely, the stock market normally reacts when there is a significant change in inflation, either ways (fall/ rise), over a period of time. Inflation and its related concepts. Simply put, inflation is a rise in prices of several items over a period of time. It is measured through various indices and each indices pro-vides specific information about the prices of items that it represents. The index could be the Wholesale Price Index (WPI) or the Consumer Price Index (CPI). The Wholesale Price Index focuses on the price of goods traded between corporations, while Consumer Price Index fo-cuses on the price of goods bought by consumers. The purpose of the WPI is to monitor price movements that reflect supply and demand in industry, manufacturing and construction. This helps in analyzing both macroeconomic and microeconomic conditions. Changes in CPI are used to assess price changes associated with the cost of living.

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IN THIS ISSUE: Inflation a CURSE on Indian Economy……….,……….1

Islamic Banking: An emerging Paradigm in world economy.1

CORPORATE SPEAK ……………………………...1

QUOTE FOR THE MONTH…………………. ………4

Volume 2 , Issue 2 | April 2013

Masters of International Business , Centre for management Studies , JAMIA MILLIA ISLAMIA

CORPORATE SPEAK Islamic Banking: An emerging Paradigm in World Economy……...

Cont….on Page 4

Cont….on Page 3

CURRENCIES: WAR OR PEACE???........................…….….. 2

Inflation a CURSE on Indian Economy..

Working of Islamic financial institutions: The whole banking activity works on the basic principles of Islam where the dealing with interest (usually called as riba ) gambling and other unlawful activities are strictly prohibited. Any income from these sources are not accepted in the banks, however a mini-mum amount of income from these activities (amount as per screening according to shariah norms ) is permissible. Islamic banking operates in markets as well. There are shariah compliant bonds called as Sukuk to operate in the market. Markets are free and competition is allowed no fixed pricing but fair pric-ing where there can be no total loss or no total gain of the either party can happen. It simply works on profit sharing mechanism. Another aspect of profit sharing can be found in Islamic Insurance called as Takaful where insurance company works on the contribution made by the pool of insurers. In any way either party gets something. Whole concept of the banking is same as the conventional banking only the elements different that clearly demar-cates haram and halal activities. The norms and standards are set by Accounting And Auditing Organization for Islamic financial institutions and Islamic financial services board and they are the regulatory bodies that sets rules and regulations for the bank-ing and finance industry.

The components of Islamic Banks: Banks: First building blocks of Islamic financial system. 1-Invest deposited funds in sharia’h compliant activities. 2- Offer variety of financial services with sharia’h compliant ar-rangements. 3-Also offers social service activities by purification of fund or zakat.

Equity and capital markets. 1-Islamic markets allow investors ,potential individuals to own shares that are sharia’h compliant. The companies need to list themselves as sharia’h complaint before offering shares, invest-ment or deposits. 2-Funds are also raised through Islamic bonds called as sukuk they are designed to fulfill sharia’h requirement and have a pre determined investment period. The fund manager who operates its functions and help the needful when claim arises. The profit is distributed among the insurers according to the pre determined ratio.

Global currencies have seen more active management since the onset of the finan-cial crisis. While the proportion of IMF members that let their currencies float freely declined between April 30, 2008, and April 30, 2012, from 39.9% to 34.7%, the percentage of those managing their currencies increased. The proportion with hard pegs rose from 12.2% at the end of April 2008 to 13.2% four years later. And while the portion with soft pegs of various kinds ticked down from 39.9% to 39.5%, those with “crawl-like arrangements” climbed from 1.1% to 6.3%.

The IMF notes that “this shift away from soft-peg arrangements to other managed arrangements mirrors what happened at the beginning of the crisis, when many countries abandoned less flexible exchange rate arrangements in response to in-creased volatility in foreign exchange markets.” The proportion of members em-ploying managed arrangements besides soft pegs rose from 8% to 12.6% during the four-year period.

Source: Global Finance, April 2013

(http://www.gfmag.com/)

Takaful: referred as Islamic insurance ,provides insurance in a sharia’h compliant manner where participants or the insurers contribute to the pool of takaful fund. The takaful fund is managed by the takaful compa-ny which is also called as fund manager or operator. By the takaful company which is also called as fund manager or opera-tor. The fund manager who operates its functions and help the needful when claim arises. The profit is distributed among the insurers according to the pre determined ratio

Waqf and Zakat : Waqf is a charitable giving Waqf properties make up a considerable

proportion to the societal wealth in all Muslim populations . Zakat is a charitable tax payable by all Muslims population to the people in need .Amount of zakat to be given is calculated by the earning or the property or the savings one individual has in pos-session.

ISLAMIC BANKING: An Overview: The global development of Islamic banks has taken many forms and types according to type of country it is prevailing in. Some countries have adopted dual banking system where conventional institutions run alongside with Islamic banks whereas some has adopted fully fledged Islamic institutions as in the case with Kuwait. The evolution of global Islamic banking industry

is being continuously refined in each country and this has been attributed to the increasing maturity of the Islamic financial markets as well as the changing needs of financial communities in each countries.

Future: The whole conventional banking works on debt system whereas Islamic banking puts a prohibition on consuming or giving riba or interest. Though this system has not been accepted worldwide but if taken into consideration could help major economies like India not to face any recession and scampering when country goes haywire. Many Islamic commercial practices have been in operation for a thousand years but still it seems to be a young industry and it continues to look for shariah's compliant ways to compete with conventional banking. Much research is being undertaken to expand the industry. By-Fatima Khalid & Avneet Kaur

1st Year MIB , JMI.

Page 2 Islamic Banking: An emerging Paradigm in the world Economy Cont…..from Page 1

Currencies: War or Peace???

DO YOU KNOW??? CISCO – The confused acronym

CISCO is popularly confused as the acronym for ‘Computer Information System Company’. The name "Cisco" was actually derived from the city name, San Francisco, which is why the compa-ny’s engineers insisted on using the lower case "CISCO" in the early days.

Adobe – The River

Adobe Systems was incorporated in 1982 by John Warnock and Charles Geschke. The name evolved from Adobe Creek in Los Altos, California, a river that ran behind the house of one of the company’s founders.

2.What are the best practices followed by the organization and how do you keep the employees engaged within the organization?

Ans: The employees are self motivated here at KPMG, there is no specific policy to get our employees en-gaged they love to work and their work love them. Though we really welcome the Unique and innovative ideas of our employees and pay special attention to help them to get wings for their innovative Ideas to our best possible way. 3.Sir since you work in the domain of Management Consultant what measures do you take to leverage upon high potential employees?

Ans: We have diverse set of high skilled employees, we also do skill mapping to identify the interest of employees and match their interest area. 4.KPMG is a fascinating and truly global organization what are the privileges your company is getting in India being as the international Player?

Ans: As you said we are a global organization and the brand speaks for us, the client approach us, they find them self comfortable in our organization, the quality services provided by us make our client repeat the contract with us. 5.How does the company deals during the global crises?

Ans: Well we really do not get effected with global crises. Audit is our primary service which will never get affected from global crises. 6.Do you foster an environment to innovate?

Ans: Yes, as I have mentioned earlier we welcome all unique and innovative ideas of our employees, we put special focus to innovative ideas, and give wings to the dreams of our employees ideology. 7. What are the Unique Selling Preposition of your company over other management consultancies of India? Ans: Some of our major USP’s are, Unique KPMG methodology, one of best IT infrastructure, one of best in enterprise architecture. 8.What CSR (Corporate social responsibility ) activities the company is dealing with?

Ans: We have a lot of CSR activities going around in the organizations, some of them are awareness pro-gram, internal marathon to make people aware of current happenings. 9.What are your expectations from the Fresh Talent who are going to join the corporate world?

Ans: We want fresh graduates to be what they are and to put in their best in terms of hard work and efforts. If they are ready to work hard and are self-motivated, no one can stop them from further growth. Honesty towards life, work and career is the key to success. Passion for what you do is also very important. Fresh graduates should also have the patience to grow at a constant steady pace instead of an overnight victory! 10.I ask you this last question as we today represent 60 students of MIB who would be passing out next year and ready to prove our mettle. Sir, what kind of opportunities should young graduates like us seek?

Ans: MIB is just a platform that helps you gain knowledge. What you become in future depends on the ef-forts you make and your positive attitude towards life and work. It’s what you are that will make you what you want to be. Also I would like to advice the students not to come under and be affected by peer pressure. What others in the batch do, or how they do should not affect your motives. Every person is an individual in himself and has his own capabilities and strengths. Do not get influenced by what others do and have faith in you.

By—Hina Saifi 1st Year MIB, JMI

About KPMG

* KPMG was established in India in September 1993, and has rapid-ly built a significant competitive presence in the country. The firm operates from its offices in Mum-bai, Pune, Delhi, Kolkata, Chen-nai, Bangalore, Hyderabad, Ko-chi, Chandigarh and Ahmedabad, and offers its clients a full range of services, including financial and business advisory, tax and regula-tory, and risk advisory services.

* The firm's global approach to service delivery helps provide value-added services to clients. The firm serves leading infor-mation technology companies and has a strong presence in the finan-cial services sector in India while serving a number of market lead-ers in other industry segments.

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Volume 2 , Issue 1

CORPORATE SPEAK Cont…..from Page 1

Each of the indices is created in a specific manner with a certain year as the base year and they consider the price change over a year. In India, the base year for WPI is 2004-05, while for new series for CPI (wef from Feb 2012), base year is 2010. WPI is compiled by Office of the Economic Advisor to the Government of India, Ministry of Commerce & Industry. The new series of CPI is compiled by Central Statistical Organiza-tion in the Ministry of Statistics & Program implementation and it also includes services which is not the case in WPI series.

The specific items covered while calculating inflation indices.

WPI data is in use since 1939, and is being published regularly since 1947. We are well aware that with the changing times, the economies too undergo structural changes. Thus, there is a need for revising such indi-ces from time to time and new set of articles / commodities are required to be included based on current economic scenari-os. Thus, since 1939, the base year of WPI has been revised on number of occasions. Prior to September14, 2010(April 2000- September 2010), while calculating WPI, price data of 435 products was used with base year 1993-94. These prod-ucts were further categorized into three categories: primary articles(98 products), fuel & power(19), and manufactured products(318). The weights given to these product catego-ries were 22.02%, 14.23% and 63.75% respectively. But, the current series of Wholesale Price Index has 2004-05 as the base year. Latest revision of WPI has been done by shifting base year from 1993-94 to 2004-05 on the recommendations of the Working Group set up with

“Success breeds complacency, complacency breeds failure, only the paranoid survive.” - Andrew Grove

Senior Adviser , Intel Corporation

CMS , MIB

E-mail: hina_saifi786@yahoo.co.in, habib.siddiqui100@gmail.com

Phone: 8285817199

For Previous Editions Pleases Visit www.jmimibytes.webs.com

EDITOR-IN-CHIEF:

MS.SUNAYNA KUMAR

Assistant Professor.

STUDENT EDITORS:

AVNEET KAUR

FATIMA KHALID

HABIBULLAH SIDDIQUI

HINA SAIFI

RUKHSAR AKHTAR

Interview By:

HINA SAIFI

CONCEPT & DESIGN:

SAMIK SARKAR.

WEBSITE DESIGNER

MOHD IBRAHIM BADAR

Prof Abhijit Sen, Member, Planning Commission as Chair-man for revision of WPI se-ries. Now 676 products are taken into consideration and categorized into three catego-ries: primary articles (102 prod-ucts), fuel & power(19), and manufactured products(555). The new weights given to these product categories are 20.12%, 14.91% and 64.97% respective-ly.

Why does inflation shown by an index and that experienced by an individual differ?

An index used for measuring inflation comprises several items having different weight age and hence the index moves according to the price changes in these items. For an individu-al, the various quoted price indices are usually not an exact measure of the inflation that they are witnessing because their spending will not match exactly with the inflation index composition. More important, the consumers' expenditure basket will not be adequately represented by a price index because items like education fees or various services that they avail of are usually not a part of the price index.

Implication of inflation affect the stock market.

To tame inflation, the govern-ment usually hikes interest rates. This tends to make debt instruments attractive relative to equities as the former carry a lower risk (small savings instru-ments are risk free as they are guaranteed by the government). This results in some amount of investments shifting from equi-ty to debt. However, high infla-tion is not always bad and low inflation need not always be good for equity markets, as the impact will differ for compa-nies and sectors across different time horizons. The first thing to consider is the items where

Inflation a CURSE on Indian Economy

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Quote For The Month

where prices are rising. For example a rise in oil prices will impact a wide range of items from food products to those that require transpor-tation require transporta-tion.

Companies also get affect-ed by inflation and a con-sumers view towards it.

A rise in prices of several items means that the input prices for production of various goods and services are rising. In these cases market analysts and fund managers will always con-sider the net impact on the margin of the entity that they are tracking. While there might be an increase in the input prices, it has to be considered in the backdrop of the compa-ny's ability to pass on the price hike to the end-user. If a company is able to sustain its profit margin despite high inflation, the stock price is likely to hold. If the high inflation sustains, at some stage it will lead to a chain reaction across the economy, pushing up inter-est rates and even affecting demand. An increase in interest rates will push up borrowing costs for corpo-rate while lower demand will hurt growth in reve-nues. This is likely to im-pact sentiment for the stock market as a whole.

By—Habibullah Siddiqui 1st Year MIB,CMS, JMI.