Karachi: Shaikh Khalid Tawab, Sr. Vice President FPCCI has lauded the decision of Finance Minister for formulating a Committee for the implementation of recommendations of the Steering Committee for the promotion of Islamic Banking. He stated that the expansion and promotion of Islamic banking is the need of the hour because it is risk-sharing and asset-backed nature and was growing and unaffected in the period of global financial crisis. He also lauded the role of State Bank in promoting the Islamic banking and establishment of centers of excellence, launch of All Islamic Share Index and policy framework for establishment of Islamic banking subsidiaries in Pakistan.
The Sr. Vice President FPCCI elaborated that Islamic Banking has become an emerging field in global financial market and the time has proved that it has tremendous potential and is growing at a very fast pace all around the world. He added that Pakistan, with more than 95 percent Muslim population, and a constitutional obligation of ensuring a riba free economic system, has huge potential of expanding Islamic banking if the deposits are used on the basis of detailed analysis to get rate of return more than the conventional banks because at present the return on the Islamic banks instruments is lesser than the conventional banks. While quoting the statistics, he disclosed that Islamic financial country index ranked Pakistan 10th in world in terms of their role in developing, promoting and advocating Islamic banking and finance. Currently as many as 22 Islamic banking institutions comprise 6 full fledged Islamic banks and 16 conventional banks operating Shariah compliant branches. He further stated that the size of total assets of Islamic banking is just 11.4 percent of total assets of all banks and 13.2 percent share in Total deposits of all banks which need special attention for encouragement and enhancement.
Khalid Tawab added that although Islam has banned the interest but it does not mean that capital is costless in an Islamic system as it allows profit-sharing to investment. Islam recognizes capital as a factor of production but it does not allow it to make a prior or predetermined claim on the productive surplus in the form of interest. He further said that at present, the foreign banks in Pakistan have also Islamic banking windows and started competition with the commercial banks and they have also initiated this practice in European countries as well where one third of the Muslim populations live and making investment in Islamic mode of banking