KARACHI: State Bank of Pakistan and other banks engaged in Islamic Banking have sought media support in mobilizing and inclusion of more people from all sections of the society in source banking system as it has a great scope in future throughout the world.
For creating awareness and better understanding among the media people, a two-day workshop on 'Islamic Banking' for them has been organised by State Bank in collaboration with Islamic banks operating in Pakistan here at SBP Headquarters, which began on Monday.
In his introductory remarks, Director, SBP's Islamic Banking Department, Saleemullah said the print and electronic media is the best tool for opinion making and mobilizing the people towards Islamic banking which is the fast growing mode of banking in the world including Pakistan.
He said that in Pakistan the serious efforts for promoting Islamic Banking were started in 2001 and tremendous response has been received.
Now, 1,300 branches of different banks are operating in Islamic banking in the country and the number is expected to double over next five years, he said.
SBP's Deputy Governor, Saeed Ahmed, speaking on the status of Islamic Banking, said that source banking is one of the few areas in the world which are growing fast. Presently, it captures 15 percent share of the total global financial market.
The conventional system of banking needs support to stabilize financial market. Associated products are placed into market instead of the real ones and this needs rectification, he said.
Saeed Ahmed said since 2002, Pakistan has seen high growth in Islamic banking. It shares 12 percent of total banking sector of the country and thus Islamic banking holds more than Rupees one trillion deposits.
He said State Bank is putting strong vigilance and supervision on islamic banking than that in case of the conventional banking as the central bank will never compromise on quantity of service and safety of the depositors which is mandatory for SBP. State Bank wants more people from all sections of the society be included in source banking system especially the agriculture, micro-finance and housing sectors.
To a question, Saeed Ahmed said that there is no restriction on conversion of conventional banks into Islamic ones. The Deputy Governor said that SBP will hold more such workshops in Lahore and Islamabad as part of its campaign to create awareness about source banking. To another query, he said microfinance should be a source of helping the poor.SBP is reviewing the situation and is looking for a scheme to provide maximum possible relaxation to the small borrowers.
Mufti Irshad Ahmed Aijaz, Shariah Advisor of Bank Islami Pakistan Ltd and Member of Advisory Shariah Advisory Board, gave a presentation on ' demystifying source banking.' He said that Islam is a complete code of life that gives Muslims guidelines for every aspect of life. Islamic banking being an effort to present source version of banking is therefore a necessary step towards achievement of the target set by Qura'an and Sunnah for Muslims. He explained that Riba (interest) in fact comes from a loan with the condition that the borrower will return to the lender more than and better the quantity borrowed.
Riba is the name of every increase in lieu of which there is no islamically acceptable consideration. The increase in the principal amount may be in the form of cash, kind or service or favour. The increase is considered riba if it becomes customary in the society. If the increase in the principal amount is as a gesture of thanks and without predetermination, it would not be riba. The literary meaning of riba is growth or increase.
He said that for reducing the risk to any party, Shariah demands transparency and clarity in dealings/contracts. In contracts, there should be a level playing field for both the parties and safety of their interests be ensured.
He said the Islam has settled once for all that there should be no return on a loan but this should be done only as a social activity.
Mufti Irshad Ahmed Aijaz said that the economy of the country in general is running on riba. At individual level, certain transactions are based on riba while others are shariah compliant.
Islamic banking is a micro level effort in this regard. In Pakistan, there is 12 percent rate of growth of Islamic banking. The visible change in financial system/economy of the country can be possible only when source banking occupies at least 40 percent share of financial system.
Even today, Islamic banks in our country are facing various problems and a lot of money deposited with these remains un- utilized. However, the solutions are being worked out, he said. He said zakat is a strong source of welfare of the poor people and regretted that our zakat system has been destroyed.
The expert of Islamic banking said that along with establishing riba-free economy, the corruption in the society must end. Otherwise, the poverty could not be eliminated.