Islamic financial system can provide better banking, financial services: PCJCCI chief

LAHORE: “Islamic financial system has potential to provide better banking and financial services than the conventional system, provided it capitalises on its own inherent strengths and avoids following the conventional system,” said Moazzam Ghurki, President Pakistan China Joint Chamber of Commerce and Industry (PCJCCI) on Wednesday during a think tank session held at PCJCCI Secretariat. Business and commercial activities should be coherent with the Shariah Corridor and Islamic financial laws, he said.

Growth of Islamic banking in the country has been over 30 percent in the last few years, which is certainly above the average global growth rate of Islamic banking and finance. If this trend continues, then one should expect that in the next three years Islamic banking assets will at least double from its current size of Rs 926 billion,” he added.

Referring to the Global Islamic Finance Report, Moazzam Ghurki said that Pakistan ranks number nine in the world in terms of development of the Islamic financial services industry in the country.

He mentioned that the country is second largest Islamic market (population wise) after Indonesia, and can become the most important player in Islamic banking and finance, if it attains 20 percent market share.

Hamza Khalid, Vice President PCJCCI said that time has come where we should look ahead and concentrate on developing innovative products which are more towards perfection and purity rather than only towards mere permissibility by Shariah, he added.

He also stressed the need for strong role of Shariah Advisors in making the Islamic banking more Shariah compliant.

Moazzam Ghurki, President PCJCCI added that at present, there are more than 600 Islamic banking branches throughout Pakistan and 19 Islamic banking institutions are offering Islamic commercial banking services, he informed. According to a report, Pakistan comes after Iran, Malaysia, Saudi Arabia, Bahrain, Kuwait, United Arab Emirates (UAE), Indonesia and Sudan.

He also appreciated the new Islamic banking strategy of the State Bank of Pakistan to double the number of Islamic banking branches from 1,200 in the next four years, and to increase its market share from 10 percent to 15 percent. Highlighting the need of capacity building of professionals in the Islamic Finance Industry, he said that capacity building activities not only help improve human and institutional capacities but also enhance communication and co-operation among concerned institutions.

Salahuddin Hanif, Secretary General PCJCCI added that in order to achieve the desired goal, we need highly competent, motivated and involved persons with required knowledge of conventional banking and finance as well as knowledge of Islamic Shariah. He further said that Islamic banking has proved over time that it is based on firm and sound economic principles and has a good potential for become an alternative system of banking especially in view of the global financial crisis.

However, efforts need to be made to modify the existing structure to provide better products and quality service within the ambit of Islamic laws. To develop an economic system truly reflective of the principles of Islam, all stakeholders should understand the limitations at this stage and work towards its advancement.

Copyright Business Recorder, 2023