Islamic financial system can provide better banking and financial services than the conventional system: PCJCCI chief

Lahore: Islamic financial system has potential to provide better banking and financial services than the conventional system, provided it capitalizes on its own inherent strengths and avoids following the conventional system.

Pakistan China Joint Chamber of Commerce and Industry (PCJCCI) President Moazzam Ghurki expressed these views during a think tank session held at PCJCCI Secretariat.

He added that business and commercial activities should be coherent with the Shariah Corridor and Islamic financial laws. Growth of Islamic banking in the country had been over 30 percent in the last few years, which was certainly above the average global growth rate of Islamic banking and finance. If this trend continues, then one should expect that in the next three years Islamic banking assets would at least double from its current size of Rs 926 billion, he maintained.

Referring to the Global Islamic Finance Report, Moazzam Ghurki said that Pakistan ranked number nine in the world in terms of development of Islamic financial services industry in the country. He mentioned that the country was second largest Islamic market (population wise) after Indonesia, and could become the most important player in Islamic banking and finance, if it attained 20 percent market share.

PCJCCI Vice President Hamza Khalid said, “Time has come where we should look ahead and concentrate on developing innovative products which are more towards perfection and purity rather than only towards permissibility by Shariah.” He stressed the need for strong role of Shariah Advisors in making the Islamic banking more Shairah compliant.

Moazzam Ghurki added that at present, there were more than 600 Islamic banking branches throughout Pakistan and 19 Islamic banking institutions were offering Islamic commercial banking services. According to a report, he said, Pakistan comes after Iran, Malaysia, Saudi Arabia, Bahrain, Kuwait, United Arab Emirates (UAE), Indonesia and Sudan.

He also appreciated the new Islamic banking strategy of the State Bank of Pakistan to double the number of Islamic banking branches from 1,200 in the next four years, and to increase its market share from 10 percent to 15 percent. Highlighting the need of capacity building of professionals in the Islamic Finance Industry, he said that capacity building activities not only help improve human and institutional capacities but also enhance communication and co-operation among concerned institutions.

Giving his input, PCJCCI Secretary General Salahuddin Hanif said, “In order to achieve the desired goal, we need highly competent, motivated and involved persons with required knowledge of conventional banking and finance as well as knowledge of Islamic Shariah.” He said that Islamic banking had proved over the time that it was based on firm and sound economic principles and had a good potential for becoming an alternative system of banking especially in view of the global financial crises.

However, efforts needed to modify the existing structure to provide better products and quality service within the ambit of Islamic laws. To develop an economic system truly reflective of the principles of Islam, all stakeholders should understand the limitations at this stage and work towards its advancement, he concluded.