KARACHI, Nov 7: A 10-year master plan has been made to promote Islamic banking globally and increase its size to make it an agent for the change so as to save people from the curse of inflation, which is an integral part of capitalism.
This was disclosed by the renowned Islamic banker D.M. Qureshi in the second “Pakistan Islamic Banking and Money Market Conference” on Tuesday. The draft of the plan is ready, he added.
Mr. Qureshi said this was a framework but the targets had been set. He said the size of the Islamic financing will be increased to 10 per cent from 2.5 per cent in Pakistan, from 13 to 20 per cent in Malaysia, 3 per cent to 10 per cent in Indonesia and 60 per cent in the Gulf Cooperation Council (GCC) countries.
He said in next two decades this part of the region would be the hub of economic activities and it would provide opportunities for Islamic banking and finance to grab the most available potential.
However, he warned that the urge for maximising profits could result in the loss of spirit of Shariah and the people might say that the products were just branded Islamic and are not Shariah compliant.
His remarks turned critical when a participant asked Mr. Pervez Saeed, the director Islamic Banking at the State Bank of Pakistan, about the Shariah compliance of the Islamic banking.
The questioner referred to a Quranic example according to which the Jews were stopped from fishing on Saturday but they engineered to get fish through another way, which was termed as Hila. The questioner maintained that the Islamic banking was like Hila.
Pervez Saeed strongly rejected the example. Dr Imran Usmani, a Shariah scholar also rejected the allegation by saying that only scholars have the right to decide whether it is Hila or not.
Questions also created controversy over Takaful (Islamic insurance). Dr. Usmani said, “We should be realistic. Takaful products are not ideal but we are moving gradually towards it.”
When Morabaha was launched some 10 years ago, it was claimed by the Shariah scholars that it would be replaced as the product was not Islamic in true sense but the product is still on sale with the slogan of Shariah compliance, he added.
However, he admitted that there were significant differences over Takaful among the Islamic scholars and some believe it is un-Islamic.
Later Mr. Qureshi discussed the challenges to Islamic financial system. He said that the greater threat was that the purity of the system was getting diluted under the urge of growth. Secondly, a new breed of Shariah scholars is required as the same scholars are directors, promoters and the advisors.
Differences also emerged at the conference over the issue that will this Islamic banking change the whole financial system or it would be an agent to bring change or it would remain as an alternate way of financing.
Most of the speakers believe that it would be an agent to bring change in the financial system.
Mr. Saeed was of the view that with the size of just 2.5 per cent of total banking assets, no one can expect change in the economic system. He said with significant increase in the size, the Islamic banking could change the conventional banking system. Mr. Qureshi believed that it would be an alternate financing system but at the same time was the only system, which gets the people rid off the curse of inflation, a heavy tax on the poor and a must for capitalism.
Mr. Saeed was highly enthusiastic and optimistic about the growth. He said the Islamic banking would follow the same trajectory as “we witnessed in the case of mobile phone.”
