Jamelah Jamaluddin is the first woman to head an Islamic bank anywhere in the world. As the managing director of RHB Islamic Bank, a wholly-owned subsidiary of Malaysia’s fourth largest banking group, she is giving some of her male counterparts in the industry something to think about.

An acknowledged expert on Islamic capital markets and investment products, her appointment in 2008 as the new managing director of RHB Islamic Bank replacing Khalid Bhaimia did raise some eyebrows. These were largely of her male colleagues, some of whom still have gender issues to sort in their emotional makeup.

Malaysia of course leads the sector in the empowerment of women. Of course the two most important regulators in financial services in Malaysia are also women — Tan Sri Zeti Akhtar Aziz is the globally respected governor of Bank Negara Malaysia, the central bank, and Tan Sri Zarinah Anwar who is the chairman of the Securities Commission of Malaysia, the securities regulator.

Bank Negara Malaysia has already approved the appointment of two woman CEOs of Islamic banks — Jamelah Jamaluddin and Fozia Amanulla, the CEO of EONCAP Islamic Bank.

“I have to give due respect to RHB Banking Group and the shareholders for being ‘an equal opportunity employer’. My appointment is valid proof, a female banker heading an Islamic bank. Yes, previously, the banking industry, whether conventional or Islamic, was dominated by men. But now the situation has changed. More capable women are being appointed as ‘Captains of Industry’. I’m very fortunate to be able to steer a respected Islamic bank that operates in a jurisdiction which is well-regulated and performed far ahead compared to others. A mixture of men and women steering the industry will definitely benefit the industry in terms of unique individual approach to banking business as well as risk appetite. This development is healthy,” explained Puan JJ, as she is popularly known at her bank.

Perhaps more importantly, RHB Islamic Bank, on her watch is also spearheading innovation in Islamic finance as highlighted by the recent launch in Malaysia of a pioneering Tawarruq (Islamic cash management) product based on the use of mobile phone airtime, which the bank claims is the first commodity Murabaha type product based on mobile phone airtime.

Jamelah is not unduly concerned about the fallout of Resolution 179 (19/5) in relation to “Tawarruq: Its meaning and types (classical applications and organized Tawarruq)” which was adopted by the Makkah-based International Council of Fiqh Academy (ICFA), an organ of the Organization of the Islamic Conference (OIC) states, at its 19th session held at end April 2009 in Sharjah, UAE.

“We are fully aware of the resolution,” she stresses. “For us the resolution is in line with earlier resolutions made by the International Fiqh Academy of Rabitah (World Muslim Congress) on organized Tawarruq (Tawarruq Munazzam). With all due respect to the resolution, RHB Group Shariah Committee (GSC) is of the view that the Tawarruq contract is a valid and legal contract from a Shariah perspective. In this regard, RHB Islamic Bank should observe to the restrictions set by AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) Shariah Council in relation to the Tawarruq transaction. Among the restrictions include that the commodity trading should adhere to the requirement of true sale and purchase. Moreover, the involved commodity brokers should be a separate legal entity from each other and the bank cannot act as an agent to sell the commodity on the customer’s behalf,” she adds.

Several Shariah scholars hold the view that currently there is no alternative to Tawarruq especially in providing the liquidity facility for Islamic financial institutions — a view which Jamelah agrees with. Tawarruq is also an essential tool in developing Islamic alternative to the existing financial products such as Islamic derivative products. “Notwithstanding the above, the RHB Group Shariah Council is of the opinion that Tawarruq should be considered as a last resort as there are other acceptable options to fulfill the customers’ needs such as Ijarah, Istisna’, Mudharabah, Musharakah and so on,” she advises.

In any case RHB Islamic’s product is a classical Tawarruq, which is not in dispute. The difference, explains Jamelah, is only on the “Akad” (which is through SMS instead of written documents) and the asset to be transacted (the normal trading asset is commodity).

Tawarruq is used as a cash management instrument by some Islamic banks which allows customers to raise funds. Normally in a Tawarruq transaction, according to RHB Islamic Bank, the purchaser will buy a commodity from the bank on a deferred payment plan and thereafter, sells it to the market to raise instant funds. “In the past, commodities such as precious metals and crude palm oil have been used as the intermediary asset for Tawarruq. Due to its nature and the environment that it operates, it presents a barrier for a wider application of Tawarruq. The commodity requires huge storage and logistics cost, and is subject to price and forex fluctuations as well as governed by its spot-market regulations,” added Jamelah.

The RHB Islamic Bank Tawarruq offering, maintained Jamelah, will be used to offer personal financing facilities to clients.

The minimum financing is RM3,000 and the maximum financing is RM150,000. The bank will buy the airtime from a broker at cost price and sell it to the customer at the mark up price depending on the rate of the facility at the point of application and the customer can choose the payment period between 2 years up to the maximum of 10 years.

RHB Islamic Bank signed an agreement with Sedania Media Group and E-Pay for the introduction of telecommunication airtime in its Tawarruq offerings, with Sedania being the ready buyer and E-Pay the ready seller for the commodity.

The bank is in fact planning a series of potential airtime-based Islamic financing products. These, stress Jamelah, can also be applied for trade finance facilities, remittances as well as deposit products.

She believes that the current financial crisis and credit crunch is a blessing in disguise to the Islamic finance industry. “Due to the crisis, many countries throughout the world are currently looking with strong interest into Islamic finance and are acquiring more information from relevant advising parties on how Islamic finance can be adopted in the short run,” she added.

To her, the challenges for the global Islamic finance sector include harmonization of Shariah interpretations and rulings; the development of human capital for the supply of the next generation of Islamic bankers. The demand for qualified manpower does not match the supply. And such banks, she says, are poaching each other’s staff. “It’s really a global challenge whereby regulators and players need to work hand in hand to address this issue,” she concluded.