LAHORE, Nov 29: Islamic banking is fast gaining ground in Pakistan and needs a wider debate involving all the stakeholders for translating it into easy and understandable language.

This was the consensus of opinion at a seminar on Islamic banking organized by the Lahore Chamber of Commerce and Industry and Al Baraka Islamic Bank here on Tuesday.

Chamber president Mian Shafqat Ali said more than 250 Islamic financial institutions were operating worldwide from China to the US and managing funds to the tune of $200 billion. Western banks were also practising Islamic banking in the UK, Germany, Switzerland, Luxembourg and other places.

He said prohibition of Riba (interest) was the basic principle of Islamic banking, which had seldom been recognized as applicable beyond the Islamic world but many of its guiding principles had been accepted consciously or unconsciously.

The principles were based on simple morality and common sense forming the basis of most of the religions, including Islam.

He said the Islamic financial system was practised in most of the Muslim world throughout the Middle Ages and Islamic merchants became indispensable middlemen for trading in Spain and Baltic states. Many concepts, techniques and instruments of Islamic banking were later adopted by European financiers and businessmen.

He said Islamic financial system was based on the concept of participation of the investor in the enterprise using the funds on profit-loss sharing basis. This by no means implied that investments with Islamic financial institutions were speculative. The speculative factor could be excluded by the Islamic financial institutions by a careful investment policy, diversification of risk and product management.