ICM255-Design, Implementation and Risk Aspects of Islamic Financial Products and Services

Module Provider: ICMA Centre
Number of credits: 20 [10 ECTS credits]
Level:7
Terms in which taught: Spring term module
Pre-requisites:
Non-modular pre-requisites:
Co-requisites:
Modules excluded:
Module version for: 2017/8

Module Convenor: Dr Mohd Pisal Zainal

Email: m.p.zainal@reading.edu.my

Summary module description:

Provides students with the opportunity to study the application and mechanism of the most widely used Shariah principles such as: Mudaraba; Murabaha; Bai Bithaman Ajil / Bai Muazzal; Musawama; Salam; Istisna; Ijarah; Bai al-inah; Tawarraq; Urbun; Hiwalah; Kafala; Wakalah; Wadiah; Ujr; and Rahn.



This module is delivered at University of Reading Malaysia only. 


Aims:
Provides students with the opportunity to study the application of Shari’ah principles and nominate contracts in the design of financial products and services that are Shari’ah compliant, as well as the risk characteristics of these products and services, with particular reference to Islamic banks and insurance (Takaful) undertakings.

Assessable learning outcomes:
Students will develop an understanding of (i) how these products and services meet various financial needs at both wholesale and retail levels, based on the Shari’ah nominate contracts in a manner that is compliant with Shari’ah rules and principles, (ii) the risk characteristics of these products/services and (iii) a number of unresolved Shari’ah issues that arise.

Additional outcomes:

Outline content:

1. Review of Shari’ah principles – Fiqh al Muamalat (with reference to Module ICM 257)



2. Islamic banking products and their basis in nominate contracts – Islamic financing (asset side) sale and mark-up based financing: Murabahah, Salam, Istisna’a, Tawarruq lease (Ijarah) based financing: Ijarah and Ijarah Muntahia Bittamleek profit and loss sharing based financing: Mudarabah and Musharakah risks of these modes of financing: credit risk and market risk, credit risk mitigation and collateral (Rahn)



3. Islamic banking products and their basis in nominate contracts – Islamic funds mobilisation (liabilities & capital side) current accounts (Qard) profit sharing investment accounts – PSIA (Mudarabah): restricted and unrestricted



4. Islamic securities (sukuk) held as assets issued to securitise assets Shari’ah considerations in sukuk structures



5. Risk management and capital adequacy aspects IFSB capital adequacy standards Risk weights and the CAR formula Problem of PSIA



6. Islamic insurance (Takaful): Introduction to insurance.



7. Takaful basic principles and basis in Fiqh al Muamalat Structure of Takaful undertakings and role of Takaful operator General (non-life) Takaful Family (life) Takaful Reinsurance



8. Supervisory and regulatory considerations



9. IFSB Guiding Principles for the Supervisory Review Process


Brief description of teaching and learning methods:
Full-time: 2-hour lectures plus seminars for discussion of coursework assignments

Contact hours:
  Autumn Spring Summer
Lectures 22
Tutorials 20
Guided independent study 158
       
Total hours by term 200.00
       
Total hours for module 200.00

Summative Assessment Methods:
Method Percentage
Written exam 60
Written assignment including essay 40

Other information on summative assessment:

There are 2 coursework assignments, each worth 20% of the overall module mark. One is a group assignments for small groups (2 or 3 students) while the other is an individual assignment. 


Formative assessment methods:

Penalties for late submission:
Penalties for late submission on this module are in accordance with the University policy. Please refer to page 5 of the Postgraduate Guide to Assessment for further information: http://www.reading.ac.uk/internal/exams/student/exa-guidePG.aspx

Length of examination:

Two hours


Requirements for a pass:
50% weighted average mark

Reassessment arrangements:

By examination only, as part of the overall examination arrangements for the MSc programme.


Last updated: 10 May 2017

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