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ISLAMABAD: The National Assembly Standing Committee on Finance has constituted a special committee comprising members of the parliament, religious scholars and representatives of the Ministry of Finance and State Bank of Pakistan to finalize recommendations with regard to interest-free financial system in the country.

A meeting of the Standing Committee of the on finance presided over by Faiz Ullah on Friday after a detailed discussion on the Eradication of Riba Bill, 2019, moved by Abdul Akbar Chitrali expressed dissatisfaction on the presentation made in this regard and directed the additional secretary, Ministry of Finance and deputy governor, State Bank of Pakistan to arrange a meeting with the mover along with Dr Ayesha Ghaus Pasha, Amjad Ali Khan, Abdul Wasay, and Syed Javed Hasnain, MNAs, for concrete and speedy way forward in this regard. Mufti Taqi Usmani would also be part of this committee.

The committee ordered that State Bank of Pakistan and Ministries of Finance and Law should immediately arrange a meeting with Maulana Akbar Chitrali, Dr.Aisha Ghaus Pasha, Amjad Ali Khan, Abdul Wasay and Syed Javed Hasnain, MNAs for concrete solution and speedy way forward on complete Riba-free banking system in the country. The committee should also engage Maulana Taqi Usmani and suggest which laws are required to be amended in this regard.

A complete transition plan should also be presented to the committee before its next meeting, Faiz Ullah instructed after all the members were unanimous that at least the government should shift all its deposits to shariah-compliant mode of banking. They agreed that continuation of interest-based banking system was a collective failure of all.

Aisha Ghaus Pasha said there was a strong desire of Islamic banking and the government required to come up with a plan for incremental growth as Islamic banks like Alfalah and Meezan are showing considerable profits. Additional Secretary Finance Dr Arshad Mahmood agreed that Islamic banking a reality and Sharia-compliant system for banking sector is in place and efforts are under way to promote it. So far, he said, Islamic banking system got 10 to 12 percent success on Sharia-compliant products.

The committee was told that the share of Islamic banking currently stood over 16 percent and members regretted that 98 percent government business was still based on interest-based system. A representative of law ministry said the apex court had ordered shifting 90 percent banking to Islamic mode in 1990.

The committee observed that there was no bar on the parliament to make laws and the special committee of parliamentarians and religious scholars constituted should come up with a doable transition and suggest where legal amendments were required because a lot of developments had already taken place over the years. The next meeting of the committee would exclusively take up the matter.

The members argued that they could not wait for two years to gradually move towards Sharia-compliant financial system as there was a need to abolish interest-based banking and financial system in the country.

A senior representative from the Provincial Finance Commission, Punjab, briefed the committee regarding the disbursement of the National Finance Commission (NFC) allocation in the province and its further division in the districts but the committee expressed serious concern over the discriminatory distribution of funds in the districts, and suggested that the provincial government should review its policies in this regard, and the District Development Plans may be introduced for smooth functioning in future.

National Bank of Pakistan president Arif Usmani briefed the Committee about the hiring status of the employees from 2019 to 2020 and stated that the most critical element of any organisation was its people, that was particularly true of a service organisation such as a bank.

He said that the recruitment process was done by using existing board's approved policies and process for external recruitment. He said that all the senior positions were advertised internally (within the bank) accordingly, internal candidates were assessed and eligible candidates were short listed in interviews, however, none of them was found up to the mark.

The NBP president added that the new hires were very experienced in their disciplines, and expert in their roles, they had a proven track record, and had worked for top organisations with distinction. The president also invited the attention of the committee with regards to the accountability process initiated across the board, wherein, two Senior Executive Vice Presidents (SEVPs) and five EVPs were terminated in order to make NBP a thriving organization.

He was of the view that present chain of complaints was a reaction to the disciplinary performance measures being undertaken. The Committee members expressed their concerns over the educational criteria highlighted for recruitment of senior officers in the bank. Some members of the Committee apprehended that it seems like a violation of the recruitment policies.

The deputy governor, State Bank of Pakistan informed the Committee that the recruitment of the president, board of directors and key executives need approval of the SBP. Sometimes bank can appoint key executive officers itself and report to SBP, if the SBP thinks there was further clarifications required they can intervene accordingly.

Faiz Ullah, chairman of the committee expressed dissatisfaction over appraisement, rewards and appointments of branch managers in the NBP at lower level, especially in Faisalabad Division.

After a detailed discussion, the Committee made directions/recommendations to the Ministry of Finance and the National Bank of Pakistan.

The Committee recommended that Group Head (HR), NBP may be invited in person in the next meeting of the committee. President NBP informed the committee that the NBP attracted talented Pakistanis working in different international financial institutions as they introduced merit-based hiring policy and implemented it in true letter and spirit.

Copyright Business Recorder, 2020

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