1. Islamic banking in Kazakhstan Al Hilal’s story

2. The first Islamic Bank in Kazakhstan and its relations with domestic regulative bodies: lessons and recommendations By Prasad Adraham Chairman Al Hilal Bank Kazakhstan 2

3. Quick Facts. Introduction  Al Hilal Islamic Bank is a 100% subsidiary of Al Hilal Bank, UAE;  First Islamic bank in Kazakhstan and CIS countries;  Raise the profile of Islamic banking in the CIS countries whilst contributing to Kazakhstan’s national growth and prosperity;  Provide the right Islamic finance solutions to meet Customers needs;  Shariah Board – Shariah Coordinator;  AlmatyAstanaMore Planned for 2010. 3

4. Quick facts. What has been done 4 Introduction of amendments to Banking law, related to Islamic banking activity President’s Nazarbayev visit to UAE Intergovernmental agreement approved by the Governments of UAE and Kazakhstan First transaction approved on amount of $8mln. Intergovernmental working group started working on agreement Official registration of legal entity February 2009 May 2009 June 2009 August 2009 End of 2009 January 2010 March 2010 April 2010 Al hilal, Abu Dhabi decides to enter Kazakhstan market Al hilal, Abu Dhabi started working with Legal advisors on basic documents and agreements First Islamic banking license obtained on 17 th of March

5. The target investment range is between750 and Product philosophy 5  Strict Adherence to Sharia Requirements  To start with Basic products – the must haves  To evolve into Market Differentiation  To take important role in syndication  To develop strong Sukuk structuring capabilities Customer is at the Centre of Our Product Development Philosophy

6. Industry breakdown of Al Hilal bank’s portfolio 6

7. Industry breakdown. Financing Criteria 7  Industry:Any industry except military, tobacco, alcohol, gambling, residential construction and other non-Shari’a compliant industries;  Track record:The business should exist at least for three years; stand-alone start-up projects are not acceptable;  Owner contribution:The project owner contributes at least 20% of the project value in cash;  Financial reporting:Financial statements for the last 3 years;  Investment range:The target investment range is up to USD 20 mln;  Investment span:Up to seven years, depending on the industry and project features;  Investment purpose:Working capital, trade finance or capital expenditures;  Financial standing:Business has been profitable over the last three years;  Credit history:Absence of existing past-due loans;  Independent assessment:Feasibility study done by a reputable independent consultant.

8. Products offered by Al Hilal Islamic Bank 8 FINANCING PRODUCTS Product Structure Ijarah Murabaha/LC Murabaha Commodity Murabaha Currency Working Capital Finance●●KZT, USD Asset Acquisition Finance●●●KZT, USD Asset Finance●KZT, USD Project Finance●●●KZT, USD Contract Finance●●●KZT, USD PricingTenor FixedLess that 3 years FloatingMore that 3 years DEPOSIT PRODUCTS ProductStructure Current AccountQard Al Hassan Term DepositMudharaba and Wakala Investment

9. Islamic Products 9 Ijara  - Ownership Registration Requirements  - Transactions Subject to lease Law  -Ijara Mawsuffa Fi Dimma (Forward Lease) Murabaha  - Promise to Purchase  - Non Recognition of Murabaha  - Reverse Murabaha  - Murabaha Transaction Sequence  Letter of Credit  Savings Account  FX Forward Transactions  New Islamic Products  Interbank Transactions

10. Practical Issues 10  Off Balance Sheet Booking of Wakala and Mudaraba  VAT Issue on Wakala transactions  Penalty Clause  Governing Law Clause  Interest Waiver Clause  Mudaraba Issues  Investment Risk Reserves  Sukuk  Subordinatd Financing – Tier 2 Capital  Prudential Regulations