1. News Report: A new Islamic Product from UAE
Iryani Nasrun
Nor Effendy Shahrom

2. THE WORLD’S FIRST ISLAMIC SAVINGS BOND
Launched date : 18th March 2006
1st Draw Date : 6th May 2006
Minimum deposit of AED100 (USD 27)
Over 100 distribution outlet & internet
A winning number will be picked monthly
16,318 prizes to be given away, 1st prize is 1million
National Bond acts as Mudarib & fully authorize
to decide on funds management
Claims it is fully shariah compliance
No guarantees but only possible returns based on winning number
Targets the mass retail market especially labourers & maids
Investment not decided yet but it will be in shares, bonds & others
Mgt sees it as taking Islamic finance to another level
If successful, would be replicated globally
Prize Amount
No. of Prizes
AED 1,000,000 1
AED 100,000 2
AED 50,000 5
AED 10,000 10
AED 5,000 50
AED 1,000
250
AED 500
500
AED 250
1,000
AED 100
14,500
Total: 4,000,000
16,318

4. Quotes from the CEO, Nasser Hassan
“We are accountable to
our stock & bondholders”
“We were inspired by the
success of Premium Bonds in
UK, Prize Bonds in Ireland and
Bonus Bonds in New Zealand”
“We are proud to engage Grey Worldwide of New York in Promotion & advertising”
“We want to replicate this model globally thus taking
Islamic finance to higher levels”
Should also be accountable to
Allah and within the shariah
Should be inspired from
Islamic Worldview & based from Quran & Sunnah
Is it Western worldview or Islamic Worldview
Do we really want a “winning number model” to spearhead
Islamic finance ?

5. ISSUES Must also be accountable to Allah & ensure shariah compliance
Cashflow to support monthly winning payout comes from depositors
Distributes monthly winnings not from profits made
Only 2 shariah members to come out with fatwa
Similarity to the lucky draw / lottery inspired by the West
The maqasid al shariah - creates a “hope” culture for a big win
Uses influential position to restrict media coverage. Anxious to play down the issue on gambling, the authorities banned any media coverage to use the word lottery
Promotional ideas comes from New York via Grey Worldwide
Undisclosed asset allocation
Issuer is a new private company & provides no disclosure on details of the offer, accounts, investment overview, mgmt etc. No prospectus.
Lack of transparency / disclosures
The hassle in redeeming the units
Big fund needed to provide the luxurious gift every month

6. ISLAMIC ACCOUNTING IMPLICATION
Objective of Islamic Accounting
Islamic Accountability
It requires NBC to ensure that every word and deed is in line with Islamic teachings
2. Falah and Maslaha
Does National Bonds objective is to achieve falah in this world and hereafter?
Does National Bonds serve the public interest?
3. Social Welfare Orientation
In what way does it help the needy?

7. ACCOUNTING ISSUES Is Capital Adequacy Ratio determined, is it enough?
Can the funds inflow match the funds outflow in the long run?
Would there be funds mismatch, may need some time to liquidate investment
If there is 16, 318 depositor, then all will be winners
No profits yet in the first month conducted draw already with payouts of AED 4 million
No financial statements, possible risk expose, asset allocation of funds, etc. In other words, financial information except for the “AED 1 million carrot”

8. CONCLUSION
If it is successful globally, it could lead to a massive accumulation of Muslim’s wealth away from productive sectors
Muslims would be seen as a hopeful society and channel most funds in the hope of striking it big
Islamic Savings scheme would be associated with lottery
A pure monetary objective derived from monthly deposit collection

9. Wallahu A’lam Sources www.nationalbonds.ae
The Economist – 10th March 2006
Khaleej Times – 17th March 2006
Arabian Business Magazine – 12th March 2006
Gulf News – Gulf Research Center ( – 28th Feb 2006
Asia Pacific Conference 1- Accounting In The New Millennium
Wallahu A’lam