The Islamic Banking System is the true form of banking and it is the only alternate to the conventional system of banking which has failed to support the bolster up world’s economy. This was stated by the Director of Islamic Banking desk at State Bank of Pakistan (SBP) Professor Dr Pervaiz Saeed, while addressing a two-day workshop on “Islamic Banking and Finance” at Council of Islamic Ideology (CII).
The workshop inaugurated by CII Chairman Dr. Khalid Masud has been organised as a follow of international conference on “Islam and current economic issues” held in Islamabad in 2007. The objective of workshop is to review the existing Islamic Banking system in Pakistan which dates back to 1990 and take recommendations from Ulema who are attending the event.Pervaiz Saeed said the Islamic Banking system that is future of Pakistan’s banking sector is much dynamic system as compared to the conventional banking which is based on money-lending. “Islamic economic model is brilliant which envisages equal distribution of wealth which is obvious from the fact that economy flourishes where ever Muslims reached,” Saeed said.
He pointed that even the non-Muslim countries like Hong Kong, Thailand and Singapore besides Muslim countries were successfully operating Islamic Banking system for the last many years where various problems were being faced in its implementation in letter and spirit in Pakistan.
Saeed apprised the audience that Islamic Banking currently had a share of 5 per cent in country’s banking and it would be expanded extensively when its share increased to 10 or 15 per cent. He said all banks in Pakistan are bound to Shariat audit and if any issue arises, it is taken up by the Shariat Board and the financial institutions are bound to obey board’s directives.
He mentioned that Mudaraba and Musharaka were the real instruments of sophisticated Islamic Banking system. “If continues with conventional system of banking, we will go back 250-year old economic system while Islamic banking is sophisticated one,” he said. In his address of welcome, Khalid Masud said the law-making and legislation is responsibility of state and the government saying it should not be against teachings of Islam.
He said to achieve this objective, the CII was formed. “The CII is constitutionally bound to recommend necessary recommendations in country’s law to make those according to Islamic teachings,” he said.
He said the workshop on Islamic Banking and Finance being organised by CII was part of consultation process to recommend required changes and review in the existing Islamic Banking. “The CII was also behind introducing Profit and Loss System (PLS) system in banking in 1990,” he said