Religious scholar throws lights on importance of Islamic banking system

HYDERABAD: Mufti Shaikh Sufyan, Shariah scholar, Faisal Bank Hyderabad said that interest is a declaration of war against Allah and His Messenger. As highlighted during a seminar on the Islamic banking system for traders, industrialists and entrepreneurs, held at the Secretariat of the Hyderabad Chamber of Small Traders & Small Industry, it was emphasized that in accordance with the decision of the Federal Shariah Court in Pakistan, all commercial banks are mandated to transition to the Islamic banking system by December 2027.

He noted that the concept of banking finds validation in the teachings of hadiths, and Pakistan’s banking sector is swiftly progressing towards Islamic banking principles. In line with this, the State Bank of Pakistan has received requests to convert 1000 bank branches to the Islamic banking system within the current financial year.

The Islamic banking system distinguishes between lawful and unlawful transactions, operating on a basis of profit and loss sharing. In instances where a businessperson incurs losses, it is imperative that the contractual obligations regarding the exchange of goods and services are fulfilled during the distribution of funds under various bank finance methods such as mudarabah, musharakah, murabaha, agreements. Specifically, through mudarabah and musharakah, both parties share in any incurred losses.

Mufti Sheikh Sufyan highlighted that Islamic banking establishes relationships with the tangible sectors of the economy through commercial endeavors. By linking money to real investments, Islamic banking directly contributes to economic growth.

During his welcome address, President Chamber Farooq Shekhani emphasized that as Muslims, it is incumbent upon us to engage in interest-free trade, a principle upon which there is unanimous agreement. While the Federal Shariah Court has set a deadline for the full implementation of the Islamic banking system, there appears to be a lack of urgency in the efforts of the State Bank of Pakistan and all Islamic and commercial banks to execute this plan promptly. He pointed out the requirement of the comprehensive training for the staff of Islamic banks regarding the rules and regulations of the Islamic banking system. Oftentimes, bank personnel struggle to effectively explain the principles of Islamic banking to businessmen, industrialists, and the general public. Additionally, he called for the introduction of a scheme offering small business loans alongside personal finance options tailored for small and medium enterprises by Islamic banks.

President Chamber Farooq Shekhani emphasized the importance of banks conducting public seminars to elucidate the various types of Islamic banking systems, and Islamic financial structures, to both businessmen and the general public in easily understandable language.

Assistant Chief Manager of the State Bank Hyderabad, Syed Ghulam Ali Shah, said that globally, there are 520 Islamic banks operating across 70 countries. He highlighted the significant progress made by the Council of Islamic Ideology in Pakistan, which commenced its operations in 1980 and has accelerated its efforts since 2000. In Pakistan, there are currently 6 fully Islamic banks and 16 Islamic windows within conventional banks, demonstrating the growing presence of Islamic banking within the country.

Muhammad Izhar, the Acting Chief Manager of the State Bank of Hyderabad, expressed the State Bank of Pakistan’s commitment to providing a comprehensive Islamic banking system for the future generations of Pakistan. To achieve this mission, seminars are being organized in collaboration not only with business institutions but also with government support. Additionally, efforts are already made to corporate the Islamic banking system into college and university curricula, alongside the organization of seminars dedicated to this subject.

During the event, Senior Vice President Dr. Muhammad Ismail Farouk Nami, along with Shan Sehgal, Waseem Ahmed Qureshi, Kashif Shaikh, Shahid Qaim Khani, Parvez Faheem Noorwala and others, posed inquiries regarding Islamic banking.

Vice President Muhammad Yaseen Khilji, Former Presidents Doulat Ram Lohana, Muhammad Akram Ansari, members of the executive committee, conveners of sub-committee and members from the general body were also in attendance.

Copyright Business Recorder, 2024