September 18, 2002	Wednesday	Rajab 10, 1423

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KARACHI, Sept 17: President Gen Pervez Musharraf said here on Tuesday that Pakistan will gradually move towards elimination of “Riba” from the banking sector.

He was speaking at the inauguration of the first Islamic commercial bank, Meezan Bank Limited.

Finance Minister Shaukat Aziz, Commerce Minister Abdul Razzak Dawood, Chairman Al-Meezan Bank, Sheikh Ebrahim Khalifa Al-Khalifa, Sindh Governor Mohammadmian Soomro, and Corps Commandar Lt-Gen Tariq Waseem Ghazi were also present on the occasion.

“Our approach...is to move gradually toward the elimination of Riba,” the president said.

He was of the view that there had to be an incremental move towards the new system so that the financial sector...was not faced with any “disruptive consequences.”

President Musharraf said the new framework formulated by the State Bank of Pakistan for encouraging Islamic financial institutions “is the most appropriate.” The experience gained through this framework would enable us to make further advances in this area, he observed.

“We believe that a pragmatic approach to allow Islamic banking to take root and go parallel with the existing conventional banking system in Pakistan is the wise course of action,” he noted.

He said the government will ensure that a level playing field was provided to Islamic banks vis-a-vis the conventional banks operating in the country.

“This approach that entails a negligible risk to the economy is somewhat similar to the one being practised in Malaysia with a good degree of success,” he said.

“This approach will also give us a chance to continuously refine the Islamic banking system by learning from our own experience,” Gen Musharraf said.

He said the Shariah Bench of the Supreme Court, in its recent decision, has recognised this approach. “We are grateful to them for this decision,” he said.

The president pointed out that in pursuance of this strategy, the State Bank would allow Islamic banking in three institutional forms.

First, he said, a fully dedicated Islamic bank would be given a license in the country.

The Al-Meezan Bank, which is the first fully dedicated Islamic commercial bank in Pakistan, has been issued the license by the SBP, he added.

Under this strategy, a conventional bank can also open a branch dedicated to Islamic banking, while a conventional bank can also open a subsidiary to do Islamic banking.

He said necessary arrangements in the Banking Companies Ordinance will be made shortly to support this strategy.

He said the SBP has issued a new export finance scheme for Islamic banks.

He said development of this regulatory framework has enabled the establishment of Al-Meezan Bank.

“My vision of Pakistan is that of Quaid-i-Azam Mohammad Ali Jinnah and that is modern, progressive and dynamic Islamic state of Pakistan,” the president said.

“We are an Islamic republic with an overwhelming majority of Muslims. Islam and its cherished values are very dear to all of us. Our Islamic practice is one of our greatest strength. We need to protect and promote this strength,” he said.

He noted that the Riba question was undoubtedly challenging and formidable and the government was striving to find the right course of action in this regard.

“We have spent efforts in studying the issue both here and abroad. We should shun the emotionalism. We are all Muslims. We want to introduce Islamic system in the country but we need to see the realities on grounds and then go forward, introducing Islamic system.

Referring to conducive investment climate in Pakistan, President Musharraf said the country has started attracting attention of foreign investors.

He said this phenomenon is visible in the just-finalised privatisation deal of the United Bank Limited where United Arab Emirates group of investors has finally emerged as the winner. —APP