7/29/2019 Bulletin Oct Dec 2008
1/27
ISLAMIC BANKING BULLETI NOCTOBER-DECEMBER 2008
Islamic Banking Department
State Bank of Pakistan
7/29/2019 Bulletin Oct Dec 2008
2/27
IIISLA MICSLA MICSLA MICBBBA NKINGA NK INGA NK INGDDDEPARTMENTEPARTMENTEPARTMENTTo Promote and Regulate
Islam ic Banking Industry in
line with Best International
Practices, ensuring Shariah
C o m p l i a n c e A n d
Transparency
To M a k e I s l a m i c
Banking the banking of
first choice for the
providers and users of
financial se rvice s
Perv ez Said perv [email protected] g.pk +9221-9212495
I m ran A hm ad im ran.ah m [email protected] +9221-2453711
M . M azhar Kh an mazhar.k h [email protected] +9221-2453724
Sarf r az A hm ed ahm ed.sar fr [email protected] +9221-2453772
For Soft copy and pr evi ous issues pl ease v isit :
ht tp: / /www.sbp.org.pk/ ibd/Bul let in/Bul let in.asp
. .. .. . I shal l w atch w ith keenn ess th e w ork of y our Research Or gani zati on i n evolv -
ing banking practices compatible with Islamic ideas of social and economic life. The
econom ic system of th e W est h as created alm ost i nsolu ble probl ems for h um ani ty
and to m any of us it appears that on ly a mi racle can save it fr om disaster t hat i s not
facing the w orld. The adoption of W estern econom ic theory and pract ice wi l l n ot
help us in achi evin g our goal of creati ng a happy and contended people. W e m ust
work our destiny in our own way and present to the world an economic system
based on tr ue Islami c concept of equali ty of m anh ood and social justi ce. W e w il l
th ereby be fulf i l l in g our m ission as M uslim s and giv in g to hu m ani ty th e message of
peace w h ich alon e can save i t and secur e t he w el fare, happ iness an d pr osper i t y of
mankind........
Quaid-i-Azam's Speech On the occasion of the Opening Ceremony of The State Bank
of Paki stan on 1st July , 1948 available at h tt p://w w w .sbp.org.pk/about/h istory /
h_moments.htm
7/29/2019 Bulletin Oct Dec 2008
3/27
State Bank of Pakistan
Islamic Banking Bulletin
First of all on behalf of State Bank of Pakistan I would l ike to thank the
IFSB team for holding this important workshop in our country. IFSB as
an in ternational standard settin g body i s playing a signifi cant role to help
the Islamic financial services industry grow worldwide on a sound and
stable footin g. Th e hard work being put in for prepari ng various
Standards w herein best in tern ati onal practices are developed th rough
an exhaustive process involving thorough research, discussions, public
hearin gs, w ork shops/semi nars etc. is in deed laudable.
SBP has played a key role in providing an enabling environment and a
level playing field to the Islamic banking industry through the provision
of a facil i tative regulatory and supervisory framework. Our Shariah
compliance mechanism is the most comprehensive available in the
world. Pakistan is the only country which has issued Guidelines on
Islamic agriculture and microfinance. Similarly, SBP is the first centralbank to h ave in iti ated Shariah-compl iance inspection.
A s a result , th e ind ustr y h as experienced robust grow th . SBPs recent
achievement of being ranked as the second best central bank in
prom otin g Islamic bankin g is a reflection of t hi s effort.
SBPs next five years strategy for development of Islamic banking
industry envisages roll ing out of various international prudential
standards developed by IFSB as an im port ant pil lar. W e have
accordingly seized the opportunity by capitalising on IFSB's expertise
th rough h oldin g such w ork shops at t hi s junct ure. Bank s in Paki stan havealready adopted Basel II and adaptation of IFSB standards in Pakistan
w ould enable Islamic bankin g instit uti ons to perform on an equal footi ng
w ith the conventional in dustry thereby achieving the ul t im ate objective
of financial stability and soundness at the national level and smooth
int egration w ith the in ternational f in ancial infr astructur e.
Just to mention the progress the Islamic banking industry has made, let
me share with you that over a period of time, there is a healthy growth
of Islamic banking industry of Pakistan. The financing and investment
portfolio of local Islamic banks has reached Rs 185 billion in December
2008, compared w it h Rs 137.6 bil l ion in December 2007. M ark et share of
Islamic banks in the overall banking has been increased to 5 percent at
Islamic Bank in g Bullet in gives
an overview of the Is lamic
Banking Industry of Pakistan
and prov ides informat ion
regarding the developments
taking place in the industry
locall y and in ternationally.
Vol III No. 4Published on May 13, 20 09
SBP Deputy Governors Speech
In dustry Progress and M arket
Share
Comparativ e Consoli dated Bal-
ance Sheet
Book Review
Bank in Focus
M ode of Financing in Focus :
Shariah Compliance Framework
in Pakistan
FAQ s on I slamic Bankin g
Developm ents at IBD - SBP
Internat ional News
Islami c Bankin g Branch
Network
Provin ce-w ise Breakup of IBIs
Cities-wise Breakup of IBIs
Contacts Detail s of I BD (SBP)
Local N ews
CONTI NUED ON P AGE 23
7/29/2019 Bulletin Oct Dec 2008
4/27
October-December 20 08
4
I s l am i c b an k i n g r e m a i n e d r e si l i en t d u r i n g t h e
q u a r t e r u n d e r r e v i e w , d e s p i t e s o m e n e g a t i v es h o c k s w i t n e s s e d b y t h e b a n k i n g s e c t o r i n
P ak i st a n e sp e ci a l l y i n O c t o b e r 2 0 08 . M o r e
s p e c i f i c a l l y , t h e c o n v e n t i o n a l b a n k i n g
i n d u s t r y r e m a i n e d s u r r o u n d e d b y r u m o r s a t
t h e s t a r t o f O c t o b e r 2 0 0 8 , t h a t c u l m i n a t e d i n
p r e s s u r e o n r u p e e d e p o s i t s w i t h t h e
c o n v e n t i o n a l b a n k s .
T h e Q o Q g r o w t h i n a s s e t s , d e p o s i t s ,
f i n a n c i n g & i n v e s t m e n t , a n d n u m b e r o f
b r a n c h e s w a s 1 0 , 1 8 , 2 . 4 an d 4 0 p e r c e n t ,
r e s p e c t i v e l y . N u m b e r o f b r a n c h e s o f I s l a m i c
b a n k i n g i n s t i t u t i o n s h a s c r o s s e d 5 0 0 m a r k ,
w h i c h i s i n d e e d i m p r e s s i v e . T h i s g r o w t h i s a
c o n t i n u a t i o n o f g r o w t h m o m e n t u m s i n c e
C Y 0 2 . I n sp e ci f i c t e r m s, I s l am i c b a n k i n g g r e w
a t a y e a r l y a v e r a g e o f 3 7 p e r c e n t . D e s p i t e t h e
i n c r e a s e i n s i z e , t h e c o n t i n u a t i o n o f g r o w t h
r a t e i s c o m m e n d ab l e .
T h e r a p i d g r o w t h i n I sl a m i c b an k i n g i s
r e f l e ct e d i n g r o w i n g sh a r e o f I sl a m i c b a n k i n g
i n a s s e t s , d e p o s i t s a n d f i n a n c i n g o f b a n k i n gi n d u s t r y . T h e r e s p e c t i v e s h a r e o f I s l a m i c
b a n k i n g a s s e t s a n d d e p o s i t s a r e 4 . 9 a n d 4 . 8
p e r c e n t o f t h e b a n k i n g s e c t o r . O n t h e f a c e ,
t h e s e l o o k m o d e s t s h a r e s b u t g i v e n t h e
s m a l l e r t i m e f r a m e a n d o t h e r c o u n t r i e s
e x p er i e n c es t h i s i s r e al l y si g n i f i c an t .
Tot al A ssets 206 119 72 44 13
% of Banki ng Industry 4.0% 2.8% 2.0% 1.5% 0.5%
Deposits 147 84 50 30 8
% of Banki ng Industry 3.8% 2.6% 1.8% 1.3% 0.4%
Financing. & Investment 138 73 48 30 10
% of Banki ng Industry 3.5% 2.3% 1.7% 1.3% 0.5%
No. of Full Fledge Islamic Banks 6 4 2 2 1
No. of Convent ional Bank s w it h I slamic
Banki ng D ivisions12 12 9 9 3
No. of Branches 289 150 70 48 17
276
4.9%
202
4.8%
187
4.4%
6
12
514
(Rs. in bil l ion)
-
50
100
150
200
250
300
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
Years
Islamic Banking 2003 - 2008
Total Assets Deposits Financing. & Invest.
Rs
Tot al A ssets 251 276 10%
D eposit s 171 202 18%
Fin anci ng. & In vest. 182 187 2.4%
N o. of Branches 367 514 40%
P: Provisional D ata
7/29/2019 Bulletin Oct Dec 2008
5/27
October-December 20 08
5
Cash and balances w it h tr easur y
banks22,334 21,786 -2%
Balances w it h oth er banks 9,900 22,337 126%
Du e from fin ancial in sti tut ions 11,622 20,397 76%
I nv estm ents 40,274 42,172 5%
Fin ancin gs 142,178 144,671 2%
Op erati ng fi xed assets 9,488 10,923 15%
D eferr ed tax assets 781 843 8%
Ot her assets 14,448 13,217 -9%
Bil ls payable 2,814 2,640 -6%
D ue to fi nancial in sti tu ti ons 12,525 17,447 39%
D eposit s and oth er account s 171,302 201,698 18%
Li abil it ies again st assets subj ect
to finance lease318 77 -76%
D eferred tax li abili ti es 691 1,126 63%
Ot her li abili ti es 15,240 17,580 15%
REPRESENT ED BY
Paid-up capital/Head office capi-
tal accoun t29,423 31,962 9%
Reserv es 1,004 1,913 90%
Un-appropr iated/Un-remitted
profi t1,641 1,818 11%
32,068 35,693 11%
Surpl us /(Deficit) on revaluation
of assets422 84 -80%
Rs. in M i l l i on
Islamic banking assets grew at QoQ 10 percent.
The assets mix have shown some interesting
changes. The l ow er grow th of f i nancing contrast
w it h substanti al i ncr ease in balance with other
banksand due f rom f inancia l inst i tu t ionscate-
gory shows a greater degree of risk aversion.
M oreover, there is a shi ft t ow ards inv estm ents as
w ell. Th ese trends are not sur pri sin g as th e con-
ventional banks are showing similar trends in
th e aft ermath of global fi nancial cri ses.
The f inancing & investment mix have changed
in favor of investments during Oct-Dec 2008.
Th e in crease I nv estm ent s sh ow s th e in crease in
in vestm ent avenues ari sin g from issuance of GoP
I jarah Sukuk . W hi l e slow down in the f inancing,
as di scusses earl ier , is a refl ection of gener al r isk
aversion by banks.
The breakup of f inancing activit ies remained
almost same as the previous quarter with a con-
centration of financing activities in trade/sale
based m odes. Th e part icip ator y m odes remain ed
sidelined with combined share of less than 2
percent in the overall f inancing. Specif ical ly,
M urabaha, Dim ini shi ng M usharaka and I jarah
are leadin g fin anci ng m odes w it h shares of 40.6,
30.5, and 20.5 percent in tot al fi nancin g, respec-
t ively. P: Provi sional D ata
7/29/2019 Bulletin Oct Dec 2008
6/27
October-December 20 08
6
Th e share of oth er mod es, namely M udaraba,
M ush araka, Salam and I sti sna rem ained di sm al, at
0.2, 1.7, 1.8, 2.9 r especti vel y.
The deposits growth during the quarter re-
mained strong at 18 percent. This seems impres-
sive as the conventional banks deposits grew
onl y at l ess th an 2 percent.
The deposits breakdown shows that bulk of the
deposits are mobilized in fixed and saving ac-counts, which cumulatively account for around
65% of total deposits. This is increasing by
around 18% besides healthy growth in f inancial
in sti tu ti ons deposit s.
The Islamic banking windows at the end of the
quarter were 46. The deposit mobilized by these
w in dow s stood at Rs 4.4 bil li on. Th e share of de-
posits of windows has increased substantially,despite the fact that conventional banks faced
201,698 18%
180,664 12%
Fix ed deposit s 67,452 75,284 12%
Savi ngs deposit s 53,368 56,072 5%
Current Accounts
Remunerative
104 167 60%
Curr ent account s
N-Remunerative
38,293 47,269 23%
Others 2,522 1,871 -26%
21,034 120%
FI-Remunerative 9,526 20,946 120%
FI-Non Remunerat ive 37 88 138%
No of Islamic Banki ng W indow s 46
Deposit s mobi l ized th rough IBW s Rs. 4.396 Bil l ion
% of Islami c Bank ing D ivi sions total
Deposits7.42 %
Fixed
deposits
37.3%
Savings
deposits
27.8%
Current
accounts
Remunera
tive
0.9%
Current
accounts
22.6% Others
0.9%
FI
Remunera
tive
deposits
10.4%
BreakupofDepositsDecember2008
Murabaha
40.6%
Ijarah
20.5%
Musharaka
1.7%Mudaraba0.2%
Diminishing
Musharaka
30.5%
Salam
1.8%
Istisna
2.9%Others
1.8%
ModeofFinancingDecember2008
P: Provi sional D ata
Rs. In M i l l ion
7/29/2019 Bulletin Oct Dec 2008
7/27
October-December 20 08
7
slow dow n in deposits.
The earning and profitabil i ty rat ios remained
almost unchanged as from the previous quarter.
The markup income remained the major con-
t r ibu tor to the pro f i tab i l i t y wi th non-markup
income contr ibutor just a fraction. On the ex-
pense side, the markup and non-markup ex-
penses are alm ost at t he same level as w ell . Th eROA and ROE of Islamic banks have shown a
very sl ight declin e.
The asset quality of the Islamic banking institu-
tions also remained almost intact compared to
the previous quarter. There are slight slippages
in NPFs to financing, NPFs to net financing, and
provisioning to NPFs ratios. Nonetheless, the
Net NPF to Capital rat io has improved margin-al ly.
M ark -up In come to Total
A ssets7.9% 7.9%
M ark -up Expense to Total
A ssets 4.0% 4.1%
Net M ark -up In come to Total
A ssets3.9% 3.8%
Non- M ark- up Income to To-
tal Assets0.8% 0.8%
N on-M ark -up expense to
Tot al A ssets3.5% 3.5%
RO E (A verage Equit y) 5.65% 5.31%
RO A (A verage A ssets) 0.75% 0.69%
N PFs to Fin anci ng 2.2% 2.3%
Net NPFs to Net Financing 0.7% 0.8%
N et N PFs to Tot al A ssets 0.4% 0.4%
Prov isions to N PFs 65.9% 67.6%
N et N PFs to Tot al Capit al 3.3% 3.1%
M ur abaha 59,067 59,640 1%
Ij arah 30,656 30,173 -2%
M usharaka 2,421 2,469 2%
M udarbah 453 308 -32%
Dimin ish ing
M usharaka
43,434 44,812 3%
Salam 2,104 2,649 26%
Isti sna 3,566 4,268 20%
Qarz-e-H asna - 0%
Ot her s 2,535 2,650 5%
Am ount o f Non per -
formi ng Financing
3,122 3,420 10%
Prov ision against N PFs 2,057 2,311 12%
Net NPF
Breakup of Financing (Rs. In Millions)
*Annualized growth rates
Im portant Note:
The data used in this Bulletin is based
on unaudited Quarterly accounts sub-
mitted by IBIs for the quarter of De-
cember, 2008. The figures may vary
from the annual audited accounts of
2008 which provide full year coverage
of th e Islami c Bank in g In dustr y.
P: Provisional D ata
7/29/2019 Bulletin Oct Dec 2008
8/27
October-December 20 08
8
I slam ic Fin ance: A gui de for I nt er-
n at i onal Bu sin ess and I n vestm en tH abiba A nw ar and Roderick M i l lar
Global M ark et Briefings (In associati on w it h
th e Institut e of I slamic Bankin g and I nsurance )
$115.00
216 Paperback
9781846730788
Nov ember 2008
T hi s tim ely guide to I slamic f in ancial practice is aim ed atbanking professionals and corporate investors worldwide.
W ith sim i lar i t ies to 'ethical i nvestm ent' in the W est, Is-
lamic investment is based on socially-responsible princi-
pl es exclu di ng areas such as gam bl in g, alcoh ol, w eapon s
and product s th at are high- ri sk / h igh-r etur n. Islami c and
conventional banking have converged in recent years and
investors and asset managers have become increasingly
attracted to financial products and the institutions that
adhere to Shariah pri nciples. Th is impor tant book aim s to
support and inform investors by providing an accessible
guide to the principles and current practice of Islamic
bank in g and Shariah-compl iant f in ance.
Islamic Finance: A Guide for International Business and
Investment serves as a comprehensive guide; be it to a
novice wanting to learn the basics of Islamic finance or
even t o the experi enced practi ti oner, wh o is looki ng for a
refresher course. W ri tten by th e most n otable practi tio-
ners from the top institutions in the industry, this guide
has managed to cover the most crucial sectors in the in-
dustry such as Syn dicated and Str uctu red Fin ance, Capit al
M arkets, Retail Bank in g, Com m ercial Real Estate and
Project Financing and even Takaful (Islamic Insurance
concept). The flow of each chapter, which begins with
the introduction to Islamic Finance and ends with the
Regulatory issues, is almost seamless, not only making it
an easy read but providing an excellent insight into the
fundamentals and the latest developments of Islamic fi-
nance.
Raphael W ong, editor of I slamic Fin ance news.
"Designed as a guide for global business and investment,
th is book aim s to equip r eaders w it h a basic un derstand-
in g of th e principl es and cur rent pr actice of Islam ic bank-
in g and Shariah-compl iant f inance. Thi s Global M ark etBriefin gs publi cati on h as part icular r elevance in th e cur-
rent cl im ate, wi th th e failu re of deri vatives-based mark ets
tendin g to make Islami c financial instr um ent s mor e w ide-
spread. Th is is a wor th w hi le reading f or f inancial profes-sionals and students alike". Securities & Investment Re-
view , February 2009
This guide to Islamic finance covers the religious founda-
tions that affect banking and lending practices, trade fi-
nance, working capital, credit, commercial real estate
investment banking and regulatory issues so that financial
prof ession als and global in vestor s can be Shari '-a com pli -
ant . Editor A nw ar (European and in ternational commerce
law, The College of Law, London) has enlisted the help of
international bankers and analysts from firms such as the
Bank of Lon don and t he M iddl e East, Credit Suisse andth e Islamic Bank of Brit ain to explain th e fundamentals of
Shari'-a compliance, and how investors take advantage of
banking products that do not pay interest and yet sti l l
offer low risk and high returns. Human resources and
financial training for Islamic banking institutions is also
discussed.
M r. M ohamm ad A . Qayyum , Director General of th e In-
sti tut e of Islami c Bank in g and I nsurance (II BI) r emark s:
In the years to come, the growth in Islamic banking
looks set to continue to make rapid progress as more and
m ore, the great r eserves of w ealt h of M usli m s are di-
verted away from conventional banking practices. This
book is invaluable in understandin g how th e principl es of
Islamic financing and investments are being practised in
modern tim es.
W hi le the global economy remains uncertain, Islami c
Finance is steadily growing at an annual rate of 10-15 per
cent, and is estimated to be currently worth $800 bil l ion.
Although Islamic financial products do not pay interest
they can often be as advantageous, or more so, than con-
venti onal products. A nd at a tim e w hen deriv ati ves-basedmarkets have failed, Islamic financial instruments, based
on the firm establishment of underlying assets, are going
to be ever more popular.
Th is new book prov ides accessibl e advi ce and up- to- date
guidance for foreign investors helping them understand
th e principl es and cur rent pr actice of Islami c bank in g and
Shariah-compl iant fin ance:
outl ini ng the background to I slamic fin ance;
examining Islamic financial products including loans,
mortgages, trade finance, investment banking and
Takaful;
Book Review
7/29/2019 Bulletin Oct Dec 2008
9/27
October-December 20 08
9
exploring important regulatory issues.
W ith contr ibutions from l eading industry experts includ-
ing the Institute of Islamic Banking and Insurance,
D enton W il de Sapte LLP, State Bank of Paki stan, A l Rajhi
Bank , th e Islam ic Bank of Br itain, Pri cew aterhouseCoop-
ers and t he Bank of Lon don and th e M iddle East, th is new
book is an essential resource for organizations engaged in
business development, asset management, banking and
fin ance in an Islam ic context.
About the Author
Roderi ck M il l ar i s an experienced auth or and edit or. A f-
ter gaini ng an M BA in M adri d he has specialized in f i-nance, business start-ups, development economics and
recently management education. He has edited several
GM B tit les, inclu din g Doi ng Busin ess w it h... France,
Germany and India. He is the author of the Daily Ex-
press "Complete Guide to Family Finance" and "Start-up
and Run Your Own Business". Currently he runs
IED P.info, th e executi ve development w ebsit e. H abiba is
a graduate of Brunel University where she earned an LLM
in European and International Commercial Law in addi-
tion to a Postgraduate Diploma in Legal Practice fromTh e College of Law, Lon don, before joini ng GM B Pub-
lishing as an Editor-Analyst. Bringing an array of legal
experience from international internships, and a multi-
cultural background coupled with fluency in South Asian
languages, Habiba is involved in commissioning content
for GM B Research, l i aisin g w ith global cont ri butor s, and
project managin g a num ber of book publi cati ons.
PART ON E: Background t o Islamic Fin ance
1.1 Reli gious Foundati ons of I slami c Finance
1.2 Th e Developm ent of I slamic Finance in th e UK
1.3 Islamic A ltern ati ves to Conv entional Fin ance
1.4 Th e Insti tut ional In frastr ucture Supporti ng the Is-
lamic Fin ance Industry
PART T W O: Islamic Finance in Practice
2.1 Retail Bank in g: Cur rent and Savi ngs A ccount s and
Loans
2.2 Personal Fin ance: Credit Cards
2.3 I slami c M ort gages
2.4 Trade Finance
2.5 W ork in g Capit al
2.6 Comm ercial Real Estate and Pr oject Fin anci ng
2.7 Syn dicated and Str uctu red I slami c Finance
2.8 In vestm ent Bank in g
2.9 Islamic Capital M ark ets
2.10 Secondary M ark ets in I slami c Fin ance
2.11 Screening and Purification Criteria: Shariah Applica-
t ion t o Inv estm ents
2.12 Takaful
2.13 Takaful vs. Conventional Insurance
2.14 Human Resources and Training for Islamic Financial
Act iv i t ies
2.15 Taxati on
PART THREE: Regulatory Issues
3.1 Prudenti al, Regulatory and Supervisory Crit eri a
3.2 Basel I I and Capital A dequacy
3.3 Regulation s and Ch allenges in th e UK
3.4 Shari ah Supervi sory Boards and Shari ah Com pli ance
Book r eview taken from:
www.globalmarketbriefings.com/?id=2979A n d
w w w .bi-m e.com/m ain.php?
id=31487& t=1& c=129& cg=4& m set=1011
Biography from :
w w w .am azon.com/gp/product/product-
description/1846730783/
ref=dp_proddesc_0?
ie=UT F8& n=283155& s=book s
Book Review Continued from previous page
7/29/2019 Bulletin Oct Dec 2008
10/27
October-December 20 08
10
Bank in Focus
Du bai I slamic Bank Pakistan L im it ed was in corporated in
Paki stan as an u nli sted public l im it ed company on M ay
27, 2005 to carry out the business of an Islamic Commer-
cial Bank and commenced its operations as a scheduled
Islami c Comm ercial Bank on M arch 28, 2006.
Dubai Islamic Bank Pakistan Limited (DIBPL) is a 100%
owned subsidiary of Dubai Islamic Bank PJSC, UAE,
which takes pride in being the first Islamic Bank of the
w orl d. A s at D ecem ber 31, 2008, the i ssued, subscri bed
and paid-up capital of DIBPL stood at Rs 6,017.780 mil-
l i on w hereas th e auth orized capit al w as Rs. 8 bil l ion .
DIBPL has a branch network of 25 branches including 1
sub- branch spread over 10 cit ies, as of M arch 31, 2009.
Th is netw ork covers all 4 provi nces of Paki stan. 12 more
branches have been approved in the Annual Branch Ex-
pansion Plan.DI BPL h as a deposit per br anch r ati o greater
than Rs. 900 mil l ion per branch, which is the highestamongst all fu ll fl edged Islam ic bank s. Th e bank s str ategy
is to open up branches targeting greater value with a rela-
t iv ely smal ler f ootpr int.
DIBPL offers a full suite of Shariah compliant banking
products to meet the requirements of its customers. The
product r ange incl udes th e follow in g:
DIBPL is currently offering Home Finance and Auto Fi-
nance, based on th e Dim ini shi ng M usharkah m odel. On
the home finance side DIBPL offers three product vari-
ants:
H om e Pur chase.
Purchase of undivided share (Home Renovation).
Purchase of undivided share of property at other bank
(Balance T ransfer).
Dubai Islamic Auto Finance offers a quick, convenient
and fully Shariah compliant manner of financing a car.
DIBPL has established itself as the market leader on a
month-to-month acquisition basis in a very short span of
ti me. The str ength of D IBPLs consum er fin ance products
can also be judged by the fact that its delinquency rate is
low as compare to other players in th e market.
DIBPL offers a wide range of wealth management prod-
ucts including Current, Savings and Fixed deposits in lo-
cal and foreign currencies. In additi on, DI BPL was th e
fir st I slamic bank to in tr oduce V ISA debit card and Pri or-
ity Banking services under the brand Dubai Lounge to
it s cli ents.
D IBPL prov ides a wi de range of serv ices specifi call y d e-
signed to assist Pakistani businesses.
Cash M anagem ent Servi ces
Trade Related Services
In vestm ent Banki ng Services
Servi ces for Sm all and M edium sized Enterpr ises
An ever expanding network of correspondent banks al-
lows DIBPL clients to uti l ize the arrangement with nu-merous local and foreign commercial banks in meeting
th eir collection s and paym ent s requirement s.
W it h i ts team of h and-pi cked seasoned prof ession als,
DIBPL has become the Investment Bank of choice for
local and regional cl ients within a short span of time by
leveraging a unique blend of regional expertise and local
kn ow ledge to create tailor- m ade soluti ons for i ts custom -
ers. Guided by Shariah principles, DIBPL Investment
Bank ing of fers the foll ow ing serv ices:
Corporate Finance
Project Finance
M ergers & A cquisiti ons A dvisory
Privatization Advisory
Real Estate A dvi sory
Syn dicati ons (inclu ding equity )
Balance Sheet Opt im ization A dvisoryCapit al M ark et Issuances (m ail y Suk uk )
Dubai Islamic Bank Pakistan l imi ted (DIBPL )
7/29/2019 Bulletin Oct Dec 2008
11/27
October-December 20 08
11
Bank in Focus Continued from previous page
DI BPL takes great pr ide in being the bank er of choice for
major Sukuk arrangements in Pakistan, especially for the
public sector. For instance, in 2008, DIBPL was selectedas one of th e tw o str uctur ing banks for t he inaugural l ocal
currency GO P Ijarah Suk uk pr ogram.
Despite econom ic challenges ow in g due to th e crunch on
the national and international markets, DIBPL continues
to navigate the bank on the course set for 2008. DIBPL
financings have registered growth of 59.27% during 2008
and deposits growth by 57.99% during same period. The
current losses incurred by the bank are on account of up-
front investments in infrastructure, and are in l ine withfin ancial pr ojection s.
To ensure that every transaction complies with Islamic
Law, bank has in place a Shariah Board, comprising of
experienced Schol ars in th e field of I slami c Jur isprudence,
economics and banking. The Shariah Board ranks above
th e Board of D ir ectors and is em pow ered to issue Fatw as
on any matter pr oposed before it by th e different bu sin ess
uni ts of th e Bank .
Dr. Hussain Hamid Hassan is the Shariah Advisor of
DIBPL. He is an international ly renowned f igure in the
field of Shariah, Law and Islamic Finance. He received his
PhD from the Faculty of Shariah at A l-A zhar U niversi ty
in Cairo. H e also holds a M asters degree in law fr om t he
International Institute of Comparative Law, University of
New Yor k and a degree in Law and Economi cs fr om Cairo
University. He served as Assistant Professor, Associate
Professor and Professor of Shariah in the Faculty of Law
and Economics at Cairo University. He had been deputed
by th e Cair o Un iversit y as Chairm an of th e Post GraduateStudi es Departm ent, at Ki ng Abdul A ziz Uni versity , M ak-
kah Campus, Saudi A rabia.
Dr. Hassan served as General Director of the Research
and Reviving the Islamic Heritage Centre, King Abdul
A ziz Un iversity at M akk ah. I n t he year 1979, Dr. H assan
was deputed by the Cairo University to establish the In-
ternational Islamic University at Islamabad where he re-
m ain ed the President of th e said U niv ersity f or almost 20
years.
Som e of th e posit ion s held by Dr . H assan are as fol low s:
Legal A dvisor to t he President of th e Republic of Ka-
zakhstan
Econom ical A dvisor to the Prim e M in ister of th e Re-
publi c of K yr gestan.
Advisor to Chancellor IIUI / the President of the Is-lamic Republi c of Paki stan.
A dvisor to th e General Secretary of th e M uslim
W orld League, M akk ah, Saudi A rabia.
A dvisor to t he President of th e Islamic Conf erence of
th e M usli m W orld, Jeddah, Saudi A rabia.
Legal Advisor of the Society of the Revival of Na-
ti onal Herit age of the UA E.
Chairman, Shariah Supervision Board of Liquidity
M anagement Center, Bahrain.
Chairman, Shariah Supervision Board, Islamic Bank
of Sharjah.
Chairman, Shariah Supervision Board, Dubai Islamic
In surance and reinsurance Company (A M A N), Du -
bai.
Chairman, Shariah Supervision Board, Tamweel Fi-
nance Company
Chairman, Shariah Supervision Board, SALAM
BAN K Bahrain
Chairman, Shariah Supervision Board, Emirates &
Sudan Bank
Chairman, Shariah Supervision Board, First GulfBank
Chairman, Shariah Supervision Board, National
United Bank
M ember of t he Shariah Supervision Board, I slamic
D evelopment Bank , Jeddah.
Chairm an of Th e Assembly of M uslim Juri sts in
A merica, W ashin gton.
M ember for Eur opean I slami c Board f or Research &
Consultat ion, D ubl in.
(The infor mation pr ovided by: Du bai I slamic Bank )
For further information please visit www.dibpak.com
7/29/2019 Bulletin Oct Dec 2008
12/27
October-December 20 08
12
There
are
three
basic
condi
ons
for
validity
of
a
sale
in
Shariah:
Thetradedcommoditymustbeexisng;
The seller shouldhaveacquired theownershipof that
commodity;and
Thecommoditymustbe inthephysicalorconstrucve
possessionoftheseller.
ThereareonlytwoexceponstothisprincipleinShariah.i.e.
SalamandIssna.
Is
snaisprimarily
adeferred
delivery
sale
contract
similar
to Salam. It is similar to convenonal workinprogress fi
nancingforacapitalproject.Inpracce,itisusuallyusedfor
construconandtradefinancesuchaspreshipmentexport
finance.It isasaletransaconwhereacommodity istrans
actedbeforeitismanufactured.Itisanordertoamanufac
turertomanufactureaspecificcommodityforapurchaser.
Themanufacturer useshisownmaterialtomanufacturethe
required goods. In this mode of financing, price must be
fixedwithconsentofallparesinvolved.
1.IstsnaSaleContract.
Thebuyer expresseshisdesiretobuyacommodityandta
blesIssnarequesttothebankwithaspecificprice.Theline
of payment whether cash or deferred shall be subject to
agreement.
Thebankusuallycalculateswhatitwillactuallypayinparal
lelIssnacontactplustheprofititdeemsreasonable.
Thebankputs itselfunderobligaontomanufactureacer
taincommodityandtodeliver itinaspecificperiodsubject
toagreement(thebankputsintoconsideraonthatthedue
dateisthesameasoraertheduedateofitsreceipttothe
commodityintheparallelcontact.
2.TheparallelIstsnacontact.
Thebank expresses itsdesire inorderingthemanufacture
of thecommodity ithasundertakentomanufacture in the
first Issna contract (with the same specificaon as in the
firstcontract)andagreeswiththe
makeron theprice and thedate
ofdelivery.
Thesellerputshimselfunderobli
gaontomanufacturethespecific
commodityand to itsdeliveryon
theduedateagreedupon.
3. Delivery and receipt of the
commodity
Thesellerdeliversthemanufacturedcommoditytothebank
directlyortoanyparty intheplacedecidedbythebank in
thecontract.
Thebankdeliversthemanufacturedcommoditydirectlyby
itselftothepurchaserorauthorizesanypartytodeliverthe
commodity sasfies the specificaon he has demanded in
thecontract.Butslleachpartyisresponsibletothepartyit
contractedwith.
IstsnaBasedfinancialProducts:
Issnamodeoffinancingmaybeusedforfollowingfinancial
products:
Shorttermfinancingformanufacturers.
Workingcapitalandexportfinancing.
To finance construcon industry such as apartment
buildings,hospitals,schoolsanduniversies.
Housingfinanceschemes.
FinancingofITindustry
Infrastructurefinancing
Asamodeofinvestment,Issnacanplayanimportantrole
in economic development by encouraging the demand of
manufacturinggoods
and
their
financing
which
would
help
instabilizingthepricesofmanufacturedgoods.
ISTISNA ( )
Settl ement Risk
Price Risk
D eli very Risk
Possession Ri sk
FLOW OF ISTISNA TRA NSA CTION
Financier(Bank)
DDeelliivv eerryy ooff aasssseett
aatt ff uuttuurree ddaattee
PPaayymmeenntt ooff ppuurrcchhaassee
pprriiccee oonn ddeelliivv eerryy
DDeelliivv eerryy ooff aasssseett
aatt ff uuttuurree ddaattee
PPrrooggrreessss ppaayymmeenntt
ooff ppuurrcchhaassee pprriiccee
Entrepreneur Manufacturer
7/29/2019 Bulletin Oct Dec 2008
13/27
October-December 20 08
13
Shariah compliance is the most important aspect of
Islamic banking and f inance. The credibi l i ty of Is-
lamic Banking Institut ions (IBIs) not only depends
on th e f inancial h ealt h of the in stit ut i on but also on
its adherence to the Shariah. Under the current
strategy for promotion and development of Islamic
Bank in g as a parallel, vi able and com pati ble banki ng
system, State Bank of Pakistan has taken a number
of steps to ensure Shariah compliance by IBIs and
for standardization of Shari ah practices.
To br in g in harmon y and standardi zati on of Shariah
practices, the State Bank has put together a compre-
hensive compliance /harmonization framework.
This is based on a detailed analysis of international
and local industry practices. The framework consists
of mult iple elements uti l izing formal as well as in-
form al foru m s. How ever, i t is to menti on here that a
flexible approach has been adopted while devising
the said Shariah compliance/ harmonization frame-
work. This has been done to avoid revisiting the ex-perience of 1980s where a rigid model was applied
that resulted in a stalled process of product innova-
t ion and development. The aim this t ime is not to
standardize each and every practice just for the sake
of standardization only. Rather emphasis has been
on a market based approach wherein the industry
can on an on going basis provide Shariah compliant
banking services through a parallel and compatible
system.
The framework already put in place and new init ia-t ives undertaken by SBP which either directly con-
tributes to, or indirectly augments the process of
Standardization of Shariah practices in the Islamic
banking industry of Pakistan both in the local as
w ell as global cont ext.
Th is str uctur e has th e follow in g sali ent featu res:
Shari ah Board at SBP
Shari ah A dvi sors as per Fit & Proper Cri teri a Essenti als & M odel A greem ents of I slami c
M odes of Financing
Shari ah Comp li ance In specti on
M eeti ngs of Shari ah A dvi sors
Th e Sh ar iah Board of SBP advi ses on th e procedur es,
laws and regulations pertaining to Islamic Banking
in l in e w it h Shariah prin ciples. All th e instruction s /
guidelines pertaining to the Islamic banking Indus-
try are issued with the approval of SBP Shariah
Board. Con fl ict Resolut ion in Shariah Ru li ngs is also
managed through the Shariah Board of SBP as in
case of any dif ference of opin ion th e decision of SBPShari ah Board is considered f in al.
:
Each Islamic banking institution (i.e. Islamic Bank
and conventional bank having Islamic Banking
Branches) is requir ed to appoint a Shari ah A dvi sor as
per Fit and Proper Criteria prescribed by SBP. The
requirement for Shariah Advisors to meet the said
criteria ensures that they have adequate and rele-
vant education, knowledge and experience, which
in tur n pl ays a vit al r ole in h arm onizati on of Shariah
Practices in dif f erent Islamic banki ng i nstit ut i ons.
Shari ah advi sor of t he bank is responsibl e to ensur e
that all the products and services, operations and
documents of the bank are compliant / consistent
with the Shariah Rules and Principles outl ined for
the respective modes of financing. Before launching
any new products the banks are required to get for-
mal approval from the Shariah Advisor regarding
Shariah compliance of the product and its related
documents.
:
Essentials of Islamic modes of Financing entai l the
basic principles of Islamic modes of financing that
have to be observed by Islami c bank in g institut ions
while designing their product structures, manuals
policies etc. These essentials ensure compliance with
mi ni mu m Shariah Standards by t he Islamic banki nginstitut ions.
7/29/2019 Bulletin Oct Dec 2008
14/27
October-December 20 08
14
M odel A greements for I slamic M odes of Financing
has been introduced in order to facilitate the exist-
ing Islamic banks and the potential market playersin developing Islamic banki ng products in a harm o-
nized manner (without restr ict ing the process of
product inn ovat ion) .
SBP conducts Shari ah Comp li ance In specti on on th e
basis of recently developed Shariah Compliance In-
spection M anual for Islamic Bank in g Institut ions. I t
helps in identi fyi ng variat ion in procedures adopted
by dif ferent bank s. Th e decision s on Shari ah In spec-
tion findings are also a source that helps in achiev-
ing the goal of having standardized procedures for
Shari ah pr acti ces in th e Islam ic banki ng in dustr y.
:
W hen Shariah opini on i s required regardin g an I s-
lamic banking issue of mutual/collective interest, the
sam e is tak en up in th e meetin gs of Shari ah advi sors
for discussion and possibl e resolu ti on if so r equired.
I n case th e issue requir es detail ed stu dy/ clarif ication ,
a sub com m it tee is form ed from th e panel of Shari ahAdvisors to do some research and submit/present
th eir f in din gs to SBP. In case of n eed th e matter un -
der consideration may be taken to the SBP Shariah
Board f or i ts f inal resoluti on.
Since some of the learned Shariah Advisors are
based in ot her parts of th e globe li ke M iddl e East,
we also get feedback/views based on their global
prospective/experience through their representa-
tives.
1.
.
The introduction of international players in our Is-
lamic banking industry has further necessitated the
need to bring our industry at par with the global
Shariah standards. Shariah Standards developed by
Accounting and Audit ing Organization for the Is-lamic Financial Institut ions (AAOIFI) are an impor-
tant and effective source available for bringing in
th e desir ed standardization in th e Shari ah practices.
In order to br i ng our industry at par w i th the inter-national standards and also achieve standardization
of Shariah practices locally, a mechanism for adop-
tion/adaptation of these Shariah standards has been
developed by SBP. According to this mechanism the
meetings of Shariah Advisors Forum of are being
held wi th a v iew to thoroughly study the AAOIFI
Shariah Standards one by one, for their possible
adoption / adaptation in our m ark et.
2.
:
Instructions & Guidelines for Shariah Compliance
have been issued vide IBD Circular No. 02 of 2008.
Instructions for Shariah Compliance cover regula-
ti ons in areas related to appoin tm ent, dut ies/ r espon-
sibilit ies and report of Shariah Advisor; conflict
resolution in Shariah rulings; permissible modes of
financing and investment; essentials of Islamic
modes of f inancing; use of charity fund; introduc-
ti on of new produ cts & servi ces and schedule of ser-
vi ce charges.
Guidelines for Shariah Compliance cover areas like
In ternal Shariah compli ance, In ternal Shariah A udit ;
investment in shares; policy for profit distr ibution
w ith PLS account holders and f in ancial report in g &
general disclosur e r equirem ents.
3.
Islam ic Financial Servi ces Board (IFSB) pr omot es th e
development of a prudent and transparent Islamic
fin ancial servi ces indu stry th rough i nt roducing n ewor adapting existing international standards consis-
tent with Islamic Shariah principles. It has issued
standards/guidelines regarding Capital Adequacy,
Risk M anagem ent and Corpor ate Governance for
institutions offering Islamic financial services (other
th en Takaful ). SBP has alr eady adapted Ri sk M an-
agem ent Guidelin es for I slamic Bank ing I nstit ut i ons
vide IBD Circular No. 01 of 2008. Some other Stan-
dards (Corporate Governance, Capital Adequacy,
Tr ansparency and M ark et Di scipl in e and Supervi -sory Revi ew pr ocess) are also i n pr ocess of adapt a-
tions.
7/29/2019 Bulletin Oct Dec 2008
15/27
October-December 20 08
15
Q. 1 W hat is Islami c Bank in g?
Answer: Islamic banking is defined as banking systemwhich is in consonance with the spirit, ethos and value
system of Islam and governed by the pri ncipl es laid dow n
by Islami c Shariah. In terest free bank in g is a narrow con-
cept denoti ng a number of bank in g instr um ents or opera-
tions which avoid interest. Islamic banking, the more
general term, is based not only to avoid interest-based
transactions prohibited in Islamic Shariah but also to
avoid un ethi cal and un -social pr acti ces. In practi cal sense,
Islamic Banking is the transformation of conventional
money lending into transactions based on tangible assets
and real services. The model of Islamic banking systemleads towards the achievement of a system which helps
achieve economic prosperity.
Q. 2 W hat is th e phil osophy of I slamic bank ing?
A nsw er: The phil osophy of I slamic banki ng takes th e lead
from Islamic Shariah. According to Islamic Shariah, Is-
lamic banki ng cann ot deal in tr ansactions involv in g inter-
est/riba (an increase stipulated or sought over the princi-
pal of a loan or debt). Further, they cannot deal in the
transactions having the element of Gharar 1 or M aiser2.
M oreover, t hey cannot deal i n any tr ansaction, t he sub-ject m at ter of w h ich i s i nval id (h aram in the eyes of I s-
lam). Islamic banks focus on generating returns through
investment tools which are Shariah compliant as well.
Islami c Shariah l in ks the gain on capital w it h i ts perf orm -
ance. Operating within the ambit of Shariah, the opera-
tions of Islamic banking are based on sharing the risk
which may arise through trading and investment activi-
ties using contracts of various Islamic modes of finance.
The prohibition of a risk free return and permission of
trading, as enshrined in the Verse 2:275 of the Holy
Quran, makes the financial activities asset-backed in an
Islami c set- up w it h abil i ty to cause value additi on.
Q. 3 W hat is meant By Riba?
A nsw er: Th e w ord "Riba" m eans excess, in crease or addi-
tion, which correctly interpreted according to Shariah
terminology, implies any excess compensation without
due consideration (consideration does not include time
value of money). This definition of Riba is derived from
the Quran and is unanimously accepted by all Islamic
scholars. 3
The meaning of Riba has been clarified in the followingverses of Q ur an (Sur ah A l Baqarah 2:278-9)
"O those who believe; fear Allah and give up what sti l l
remains of t he Riba if y ou are beli evers. But i f y ou do n ot
do so, then be warned of w ar fr om A llah and H is M essen-
ger. If you repent even now, you have the right of the
return of your pr incipal ; nei ther wi l l you do wrong nor
w i l l y ou be w ronged."
Q. 4 W hat is interest? Is there any diff erence betw een int er-
est an d Ri ba?
Answer: The origination of term interest dates back to
17th century with the emergence of banking system at
global level. Interest means giving and/or taking of any
excess am ount in exchange of a loan or on debt . H ence, it
carr ies th e sam e meanin g/value as th at of Riba as defin ed
in the previous question. Further, i t is narrated that theloan that draws interest is Riba.4 There is consensus
amon g the M usli m scholars of all t he fiqh s th at i nterest i s
Riba in all its forms and manifestations. 5
Q. 5. W hat are different k in ds of Riba?
A nsw er: There are tw o ki nds of Riba:
1. Riba-An-Nasiyah/Riba-Al-Quran
2. Riba-Al-Fadl
1. Riba A n Nasiy ah/Ri ba A l-Q uran:
In th e Holy Qur an, A llah (SW T) says in Sura Al -Baqarah
(2-279):
..A nd if y ou repent , yours is your pr incipal
It is reported by H ari th ibe Abi U sam ah i n hi s M usnad
that Sayyidna Al i Radi-Al lahu Anhu reportedly referred
th at t he H oly Proph et said:
"Every loan that derives a benefit (to the lender) is riba"6.
Exampl e of Riba-al-N asiy ah/I nterest: If M r. A l ends
Rs.100 to M r. B (a borrow er) w ith a condit i on that M r.
B shall return him Rs.110 after one month. In this case,
th e ext ra am oun t of Rs. 10 is Riba or I nt erest.
2. Riba-al-Fadl:
Abu Said al Khudri Radi-Allahu anhu narrated that
H oly Proph et (Peace be upon hi m ) said:
"Gold for gold, si lver for si lver, wheat for wheat, barley
for barley, dates for dates and salt for salt, like for like,
payment made hand by hand. If anyone gives more orasks for m ore, he has dealt in ri ba. Th e receiv er and giver
are equally guilty " 7
7/29/2019 Bulletin Oct Dec 2008
16/27
October-December 20 08
16
Conti nu ed from previ ous page
Based on aforesaid definition, it may be noted that eco-
nom ically speaki ng it w ould be irr ation al t o exchange one
ki l ogram of w heat w ith one and a hal f k i logram of w heatin a spot exchange. Th erefore, some fuqaha have poin ted
out that Riba-al-Fadl has been prohibited because if it
was left un-prohibited it could be used as a subterfuge for
getting Riba-al-Nasiyah. Of the six commodities specified
in the hadith, two (gold and silver) unmistakably repre-
sent commodity money used at that time. One of the ba-
sic characteristics of gold and silver is that they are
monetary commodities. As a matter of fact, each of the six
commodities mentioned in the hadith has been used as a
m edium of exchange at some ti me or t he other.
Du ri ng the dark ages, only t he fir st form (Riba A n Nasi-yah) was considered to be Riba. However, the Holy
Prophet (peace be upon him) also classified the second
for m (Riba-al-Fadl) also as Riba8.
Q. 6 W hat are t he r evelations/verses in H oly Qur an re-
gardi ng prohibi ti on of Riba/interest?
Answer: There are four sets of revelations about Riba
w hi ch w ere revealed on diff erent occasions.
1. First Revelation: In Surah-Ar-Rum, verse 39 , dealing
in riba has been discouraged in the foll ow ing w ords:
"And whatever riba you give so that it may increase in
the wealth of the people, it does not increase with Al-
lah." [Surah A r- Rum 30:39]
2. Second Revelation : M usli m s have been in for m ed about
the practice of taking riba by Jews in Surah An-Nisaa:
"A nd because of t heir ch arging ri ba w hi le they w ere pro-
hi bited from it." [Surah A n- N isaa 4-161]
3. Th ir d Revelati on: Riba/I nt erest has been aboli shed in
th e thir d verse of Surah A l-
i - ' I mr an. The prohibi t ion of r iba is laid down i n the fol-
low ing words:
"O those who believe do not eat up riba doubled and re-
doubled." [Surah A l-e-I mr an 3- 130]
4. Fourth Revelati on: In t he fourt h revelation , Riba has
categorically been prohi bited
in all i t s form s. The foll ow ing set of verses is found in th e
Sur ah A l- Baqarah, v erse
275-281 in the fol low ing w ords:
"Those who take interest wil l not stand but as stands
whom the demon has driven crazy by his touch. That is
because they have said: 'Trading is but like riba'. And Al-
lah has permi tt ed tr adin g and prohi bited ri ba. So,
w hoever r eceiv es an advi ce fr om h is Lord and stops, he isallowed what has passed, and his matter is up to Allah.
And the ones who revert back, those are the people of
Fire. There they r emain for ever. A llah destr oys riba and
nourishes charities. And Allah does not l ike any sinful
disbeli ever. Sur ely th ose w ho believe and do good
deeds, establ ish Salah an d pay Z akah, have th eir re-
w ard w ith their Lord, and th ere is no fear for them, nor
shall th ey grieve. O th ose w ho believe, f ear A ll ah and
give up w hat sti l l remains of th e riba if you are be-
l i evers. But if you do n ot, th en l isten t o th e declaration of
w ar from Al lah and H is M essenger. A nd if you repent ,
yours is your principal. Neither you wrong, nor be
w ronged. A nd if th ere be one in m isery, th en deferment
ti l l ease. A nd th at you leave
it as alm s is far bett er for you, if y ou really kn ow . An d be
fearfu l of a day w hen you
shall be returned to Allah, then everybody shall be paid,
in full, what he has earned. And they shall not be
wronged." [Surah Al-Baqarah 2:275-281]
To be continued .
1 Excessiv e level of un certaint y or am bigui ty cr eated due
to th e lack of i nform ation or contr ol in a contract.
2 Game of Chance
3 Dr . M uhamm ad Im ran Ashr af Usmani (2002), M eezan
Banks Guide to Islamic banking, Darul Ishaat, Karachi,
Paki stan, p 45
4 Dr . M uhamm ad Im ran Ashr af Usmani (2002), M eezan
Banks Guide to Isalmic banking, Darul Ishaat, Karachi,
Paki stan, p 48
5 Dr . M uhamm ad Im ran Ashr af Usmani (2002), M eezan-
bank s Guide to Islami c Bank ing Darul Ishaat,
Karachi, Paki stan, p 45
6 A l- Syu ti , A l- Jam e al-Saghir V .2, P.94
7 Sahih M uslim , Karachi , V.2, P.25
8 Dr . M uhamm ad Im ran Ashr af Usmani (2002), M eezan-
bank s Guide to Islami c Bank ing Darul Ishaat,
Karachi, Paki stan, p 45
Excerpt fr om FA Qs published by I BD, SBP and available at
http://www.sbp.org.pk/departments/ibd/FAQs.pdf
7/29/2019 Bulletin Oct Dec 2008
17/27
October-December 20 08
17
Impact study on IFSB Standard of Capital Adequacy
was completed and it is in process of implementa-
t i on in Islamic Bank in g Industr y of Paki stan.
A draft on standard of Corporate Governance was
sent to all stakeholders for their feedback and com-
ments/suggestions.
Initial drafts on Standards of Transparency and
M ark et Di scipl in e and Superv isory Review Proc-
ess are sent t o vari ous stakeh ol ders for com m ents.
Exposure Drafts on Guiding Principles on Shariah
Governance System and Conduct of Business for
Institutions offering Islamic Financial Services are
sent to all I BIs for th eir feedback.
Currently, IBIs are fol lowing different practices of
pool m anagement & profit distr i buti on. So th ere is a
need standardize and align these practices with thebest international practices. Accordingly, IBD has
in it iated a stu dy on Pool M anagement Pr acti ces in
IBI s. I t s hoped th at th e study w il l r esult i n im prove-
m ent and standardization of Pool M anagem ent and
Profit D istr i buti on M echani sm. The study i s l ik ely
to be fin alized by end of Jun -09.
SBP had evolved a three pronged strategy for pro-
motion of Islamic Banking is to allow, i.e., (1) new
full fledged Islamic banks in the private sector, (2)
the conventional banks to set up Islamic banking
subsidiaries and (3) the existing conventional banks
to open Stand-alone Islamic banking branches.
However, Conventional Banks are much incl ined
towards conversion of existing conventional
br anches to I slam ic br anches. SBP has allow ed con-
version of f ew convent ion al branch es on case to casebasis. Ther efore, it w as deemed n ecessary t o develop
guidelines for conversion of existing conventional
branches in to Islamic Banking branches. In this re-
gard, the draft parameters / guidelines will be circu-lated am ong th e stakehol ders for th eir f eedback.
IBD is current ly working on the Product Develop-
ment M anuals for I slamic M icrofi nance and I slamic
SM E financing w ith an objectiv e to provi de in dustr y
w it h detai l ed procedures and guidelin es for provi d-
in g Shari ah compl iant solu ti ons for th ese sector s.
Keeping in view of the representation of PBA Sub
Committee on Islamic Banking regarding practical
issues in implementation of this standard for the re-
porting year ending December 31, 2008, all IBIs
were directed to al low implementation of this stan-
dard w.e.f January 01, 2009 through IBD Circular
N o. 1 of January , 2009.
SayingsofHolyProphet(P.B.U.H)
..Nothing of his brother is lawful for a Muslim
exceptwhathehimself gives willingly. Sodonotwrong yourselves. O People! Every Muslim is the
brotherofeveryotherMuslim,andallthe Muslims
form one brotherhood. And your slaves; see that
you feed them with such food as you eat
yourselves, and clothe themwith the clothes that
you yourselves wear. Take heed not to go astray
after me and strike one anothers necks. He who
(amongst you) has any trust with him, he must
returnittoitsowner...
Source: The Last Sermon of The Holy Prophet
(P.B.U.H)
(KhutbatulHajjatul
Wida,
Seerat
Ibne
Hesham)
7/29/2019 Bulletin Oct Dec 2008
18/27
October-December 20 08
18
The State Bank of Pakistan is launching a Special Pi-
lot Project in Sindh from th e curr ent K harif season t o
improve the availabil i ty of agricultural credit to the
farm ers on fast t rack basis.
Disclosing this while presiding over the mid-term
review meeting of the Agricultural Credit Advisory
Committee (ACAC) at SBP the State Bank Governor,
Syed Salim Raza said that the project would initially
be launched in seven agri. in tensiv e distr icts of Sin dh
in cludin g H yderabad, Tando A ll ahy ar, M ir purk has,
Lark ana, Sangh ar, N aw abshah and Kh air pur . H e said
that the project, which is being launched from 15th
M arch, w ould be part icipated by 13 different banks
havi ng agri designated br anch es in th ese distr icts. He
said that SBPs pilot project will help to increase out-reach of agri. credit to underserved areas of Sindh
and added that the banks are meeting 47 percent of
the total credit requirement of farmers. The rest is
bein g met th rough i nf orm al resources.
The meeting was informed that the State Bank has
issued guidelines for Islamic Agricultural Credit and
in th is regard pr oducts are bein g developed for i m ple-
mentation through Islamic Banking Institut ions. Be-
sides, steps are being taken to increase the outreach
of m icro agri Credit for small and m arginalized farm -
ers through microfinance banks.
Banks assured the committee that they wil l try their
utmost to meet the annual agricultural credit dis-
bursement target indicated by the central bank. Some
part icipants of the meeting highlighted various bot-
t lenecks that are hampering growth of agri. credit
disbursement. W hi le respondi ng to th ese poin ts, th e
SBP Governor said that a smaller group should be
consti tut ed w hi ch w il l m eet on quart erly basis to de-vi se a meani n gful str ategy to resolv e th ese issues.
The countrys 89 per cent adults are not using any
banking services and Baluchistan is the most severely
affected province in terms of financial exclusion com-
pared to three other federating units, a survey spon-
sored by th e W orld Bank and U K- based D FID re-
vealed.Access to Finance Survey (A2FS) has been jointly
funded by th e Departm ent f or In ternational Develop-
ment of UK (DFID ), the W or ld Bank (W B) and the
Swiss Agency for Development and Cooperation
(SDC), at the request of the ministry of finance.
There are 71 per cent adult Pakistanis who think that
th ey can easily l iv e their l i fe w ith out a bank account .
Only 11 per cent of the adult population is banked
but almost a quarter of these people say that they
w ith draw fun ds im mediately, t he surv ey states.
M ore th an h alf of t he adult popul ation th at is f in an-
cially excluded comprises predominantly of house-
w iv es an d stu dent s. M oreov er, across all education al
levels th ere are large group s of people w ho are fi nan-
cially excluded. Amazingly, even among the post-
graduate people 13 per cent have not heard and do
not understand what is a PLS/Savings account.
Awareness and understanding about relatively more
sophisticated formal financial terms is even lower.
This trend is visible even among the graduate andpostgraduate people. For example only about 50 per
cent of the graduate respondents have heard about
and understand what is meant by credit and ATM
cards,
Awareness and understanding about Islamic banking
is also low across education grou ps. For exam pl e, on ly
about half of the population with over graduate and
postgraduate educati on have heard and un derstood it .
Overall , only 12 per cent understand what is meant
by th e Islamic bank in g.
ht tp://w w w .dail yt im es.com.pk/default .asp?page=2009%5C03%
5C07%5Cstory_7-3-2009_pg5_2
htt p: / /ww w .thenew s.com.pk/pr i nt1.asp?id=168153
M arch 20, 2009
7/29/2019 Bulletin Oct Dec 2008
19/27
October-December 20 08
19
Dawood Islamic Bank Limited has received Rs. 1 bil-
l ion (US$ 12.9 M i l l i on) investm ent f rom U nicorn I n-
vestment Bank Limited, based in Bahrain, this was
stated in a statement issued from Banks head office
in Karachi on T uesday.
Un icorn alr eady had a 22.2% equity stake in Daw ood
Islami c Bank pr ior t o the current investm ent. W ith
the new investment the equity of Unicorn Invest-
ment Bank, in Dawood Islamic Bank has increased to
37% percent
A am ir K han M anagin g Dir ector and H ead Global Pri-
vate Equity of Unicorn Investment Bank and a foun-
der Director of Dawood Islamic Bank said that the
decision to in vest i n D aw ood Islamic Bank, at a t im e
w hen th e global confidence in f in ancial inst it ut i ons is
at its lowest ebb in Pakistan, is based on excellentopportunities that are available in the Islamic bank-
ing sector of Pakistan. The stake in Dawood Islamic
Bank provides Unicorn with access to the Pakistan
m ark et w it h i t s 160 mi l l ion i nh abitants, 97 percent of
w hom are M uslim s, he added.
The inv estm ent by U nicorn I nvestm ent Bank, w ould
fur th er boost t he abil i ty of th e Daw ood Islamic Bank
to provide support to trade and industry through its
various Riba free banking products Said Rafique Da-
w ood, Chairm an D aw ood Islamic Bank .
Th e interest of U nicorn in D IBL r eflects th e strength
of the Islamic Banking System of Pakistan which has
withstood the current turmoil in the global f inancial
markets proving to the world that Shariah compliant
f inancing is more transparent and trust worthy. Is-
lami c deposit s represented 4 percent of t otal deposit s
in Pakistan in 2008, but this figure is projected to
reach 10 percent of total deposits, or approximately
U S$13 bil li on, by 2014.
Dawood Islamic Bank, launched in 2007 with an ini-
tial paid-up capital of Rs. 3 billion, is being operated
str ict ly in compliance with the principles of Shariah
and all its products are subject to the approval of its
Shariah board headed by the renowned Islamicscholar Professor M uft i M uneeb U r Rehm an.
D aw ood Islam ic Bank is focusin g on th e grow in g seg-
ment of im porters and exporters th at are reluctant to
uti l ize bank f inancing with the fear of breaching Is-
lami c laws as defin ed in th e Qu ran and Sun nah.
The Dawood Islamic bank has a branch network of
21 branches spread over the major cities of Pakistan,
including Karachi, Lahore, Islamabad, Faisalabad,
M ul tan, Sialk ot, I qbalabad and Joharab
Al-Huda-CIBE organized a national Road Show by
conducting over 300 awareness interactive pro-
grammes in Islamic Banking and Takaful, covering100 cities throughout Pakistan starting on 25th
M arch, 2009 from Kh yber spread over a wh ole
month to be concluded in Karachi on Apri l 25th
2009.
The prime objective of this programme was to pro-
mote logical awareness in Islamic Banking and Taka-
ful to the businessmen and industrialists. This cara-
van of Islamic Financial Road Show wil l include 35
chambers of commerce and industry, over 40 private
and public sector universities, 20 press clubs, over 25
trade and business associations and over 200 public
awareness meetings at different Islamic Banking
Branches of t he I slami c Bank s.
In addit ion f ive hundred thousand information leaf-
lets on basic learning in Islamic finance and Takaful
wil l be distr ibuted to the part icipants of al l the pro-
grams and indirectly almost f ive mil l ion people wil l
be att ached in t hi s programm e.
The road show wil l include a f leet of vehicles andpassin g thr ough N W FP, Federal Capital, A J& K, Pun-
jab and Sindh pr ov in ces. The Ro ad Show w i l l com -
htt p: / /ww w .onli nenews.com.pk/details.php?id=142527
http: / /www.brecorder.com/index.php?
id=5289& currPageNo=1& query=&search=& term=& supDate=
M arch 12, 2009
7/29/2019 Bulletin Oct Dec 2008
20/27
October-December 20 08
20
In yet anoth er act of conci l i at ion on th e part of W est-
ern r eli gions tow ards Islam, t he V ati can n ewspaper
O sservator e Romanohas voi ced i ts approv al of I slami c
finance. The Vatican paper wrote that banks should
look at the rules of Islamic finance to restore confi-
dence amongst their clients at a time of global eco-nom ic cr isis. Th e ethi cal pr in ciples on w hi ch I slamic
finance is based may bring banks closer to their cli-
ents and to the true spir i t which should mark every
financial service, the Osservatore Romano said.
W estern bank s coul d use tool s such as th e I slam ic
bonds, known as sukuk, as collateral. Sukuk may be
used to fund the car industry or the next Olympic
Games in London, the article says.
The Vatican article is only one of many articles that
h ave recent ly appeared on t he acceptance by W estern
govern m ents and bank ers of an I slami c fi nancin g sys-
tem . M ore than accepti ng it , they seem t o be w elcom-
ing it, though they are certainly being pressured into
this by unnamed forces bowing to the dictates of Is-
lam.
Last D ecem ber, th e French Senate looked at w ays to
eliminate legal hurdles, particularly levies, for Islamic
financial services and products in France and the po-
tential for listing companies on the Paris Stock Ex-
change. Senate sour ces said t h at th is area of t he f in an-
cial market is worth from 500 to 600 bi l l ion dol lars
and coul d grow by an average 11 percent a year.
French Fi nance M in ister Ch ri sti ne Lagarde h as an-
noun ced Frances in tenti on t o m ake Pari s t he capit al
of Islamic finance and announced several Islamic
banks would open branches in the French capital in
2009.
November 27, 2008 provides the fol lowing informa-
ti on, in addit ion to t he facts present ed above:
A revolut ion in the banking wor ld . Af ter London,
w here th e first I slami c bank opened it s doors in Sep-
tember 2004, France could authorize banks respecting
Shariah l aw to open i n 2009 (...) H erv de Charette,
presid en t of th e Fr anco-A rab Ch am ber of Com m er ce
emphasizes that import ing Islamic banking into
France w ould h elp th e in tegrati on pr ocess. Th e main
obstacle: Islamic banking arouses fear because it is
associated, wrongly, with religious fundamentalism,
even w ith the f i nancing of terror i sm, deplores Elys
Jouini, professor of economics at the University of
Pari s. (...)
Th e w orld econom ic cr isis has changed t he ball game.
From New York to Hong Kong, al l the f inancial cen-
ters on the planet are grabbing the bill ions of dollars
amassed by the oil-rich monarchies of the Gulf. To
tap in to t hi s m ann a (...) is th e stated goal of Chr isti ne
Lagard e. W e are determ in ed to m ake of Pari s a great
cent er for I slami c fin ance, declared the Finance M in -
ister as she inaugurated the second French forum on
Islamic bank ing.
Th e global econom ic cri sis has handed th e proponentsof I slamic f i nance a golden opportun ity t o show that
it is a better alt ernative to W estern- sty le capit ali sm .
Th at, at l east, w as w hat M alaysian Deputy Pri m e
M in ister N ajib Razak t old partici pant s at an Islami c
economic conference in K uala Lum pur l ast m onth .
Islamic finance, argued Datuk Seri Najib, could be-
come a model f or ch ange because it proh ibi ts many of
th e ri sky activ it ies th at t r i ggered th e curr ent cri sis. H e
m ay h ave a poin t.
Islamic banking complies with syariah (Islamic) law
by using returns on assets to pay investors instead of
htt p: / /ww w .brusselsjournal.com/n ode/3819
M arch 12, 2009
h t tp : / /www. thema lays ian ins ide r . com/ index .php /
business/18436-crisis-presents-golden-opportunity-
for- islamic-f inance
February 17 2009
7/29/2019 Bulletin Oct Dec 2008
21/27
October-December 20 08
21
interest.
M ost I slam ic scholars also agree that deri vati ves andhedge funds are haram (forbidden), as is short-selling
and speculation. As a result, argue its supporters, the
US$1 tril l ion (S$1.49 tril l ion) global Islamic banking
industry has emerged largely unscathed in the credit
crunch.
W hether th i s w i l l r esu l t in fur ther grow th in t he in-
dustr y as W estern capit ali sm decli nes, how ever, i s
another matter ent irely. The rapid growth of retai l
Islamic banking and services in Asia is stil l l imited by
a var iety of regulatory impediments. Arabic termssuch as M udh arabah (pr ofit sharin g) and W ahdi ah
(safekeeping) are also unfamiliar to most Asians, in-
cludin g many M usli ms.
Some believe that all this is about to change. Celent, a
Boston-based financial research and consulting firm,
released a report last month on the Islamic banking
in dustr y in th e Asia-Pacifi c region t hat suggested th at
the global financial crisis had made the Asia-Pacific
region seem far m ore att ractive to M iddl e Eastern i n-
vestor s th an t he W est.
W it h assets valued at U S$43 bill ion by t he end of
2007, M alaysia already h as th e th ir d biggest I slam ic
bank ing m ark et i n t he w orld after I ran and Saudi A ra-
bia. Investors from Saudi Arabia, United Arab Emir-
ates, Bahrain and Qatar, said the Celent study, were
beginnin g to channel th eir funds to developing coun-
tries like China, India, and Indonesia. The report
id enti fi ed Pak istan, Bangl adesh, and I nd onesia as hav-
in g part i cular l y good potenti al for growt h.
In terest in gly, non- M uslim m ajor i ty n at ion s in th e
region have already begun to recognise the potential
significance of Islamic financial instruments. Singa-
pore, for exam ple, laun ched its first Islam ic bond pro-
gram m e last m onth .
Similar plans to sell Islamic debt have been an-
noun ced by T hailand and Japan. Th e Hon g Kong gov-
ernment has also expressed an interest in promoting
the territory as an Islamic finance hub. And financial
institutions in South Korea have reportedly been lob-bying the government to adopt the necessary legal
and regulatory framework to enable Islamic financial
transactions in the country.
But to suggest that Islamic banking is set to growstrongly despite the global financial crisis may be
stretching things a litt le too far. Last years credit
crunch hit Islamic bonds much harder than other
forms of debt as sharply lower international oil prices
depriv ed oil -r ich M iddl e Eastern i nv estor s of cash.
A ccordin g to ratin g agency S& P, corporate and gov-
ernment sales of sukuk (syariah compliant bonds)
reached US$30.8 bill ion in 2007, but plunged 56 per
cent last year to just US$13.6 bill ion. By comparison,
conventional international bonds and emerging-market debt dropped 5 per cent and 15 per cent, re-
spectively
N ot surpri sin gly, I ndon esia delayed it s fi rst suk uk sale
tw ice last year.
Targeting mostly local investors, it eventually issued
the bonds in January. Japan is also holding back on its
plans, while Thailand has yet to set a date. As in the
case of Singapore, the Indonesian move is probably
best seen as an indication of the fact that the sukuk
market is stil l active rather than ready for a resur-
gence.
That said, the fact that many governments are trying
to spend their way out of the current economic
dow nt urn suggests th at in terest in Islam ic fi nance w il l
remain strong for some time. This is because tight
global credit markets are forcing cash-strapped re-
gional governments to seek out alternative sources of
funding.
The new global order that emerges from the currenteconomi c dow nturn is un l ik ely to invo lve the w hole-
sale replacement of W estern fi nancial system s w it h
I slam ic on es. But h istori cal w atersheds such as th e
one we are now entering do tend to be accompanied
by im portant systemi c changes.
If the new dispensation to emerge from the current
crisis involves fresh ways of discouraging speculation
and attempts to tie the global financial system more
closely t o th e real econom y, N ajib m ay perhaps regard
himself as at least partly vindicated. The StraitsT imes
7/29/2019 Bulletin Oct Dec 2008
22/27
October-December 20 08
22
M ald ives M onetary A uthor i ty (M M A) w i l l no t ob-
str uct any attempt t o open I slamic Bank s in M aldi ves
by suitable parties and that despite interested parties
being asked to submit formal applications for bank
operating licenses, no submission has yet been made,
M M A Govern or Fazeel N ajeeb has said.
Speak in g to M iadh u D aily , Fazeel exp ressed as I s-
lamic Bank in g is a new concept t o M aldiv es, w ork on
establ ishi ng necessary r egul atory system i s un derw ay.
He said even though the regulatory system is not set
up, once a for m al appli cati on i s receiv ed, every effort
to i ssue license, w it h t he consul tation and approv al of
M M A Board, w il l be made. He said th ere is no poli t i-cal agenda to delay the introduction of Islamic bank-
in g to M aldiv es.
H e also said as al l w orks of M M A are very w ell or-
gani zed and carr ied out in a responsible mann er th ere
is sim ply no chance of deviating or viol at in g the au-
thoritys rules and regulations. He further said he had
no in tention of respondin g to cr i t i cism s from govern-
ment institut ions or other bodies through the media
and such responses will be only given to government
institut ions directly.
Bri efing th e m edia , Govern or designated to M aldi ves
by Islamic D evelopm ent Bank Sheikh M ohamed Sha-
heem A li Saeed said th at he has receiv ed in form ati on
th e M M A is posin g obstacles to t he path of establi sh-
in g and in troducti on of Islamic Bank in g in M aldi ves.
Expressing his concern over the matter, IDB Gover-
nor to M aldi ves Shi ekh Shaheem said t hat he in tends
to consult with the President on the matter and that
he wil l br ief the media fol lowing the consultat ions
w it h th e President.
Th e Shariah bank in g system can offer I ndon esia hope
in the m idst of t he current global econom ic slow dow n
because Islamic banking has not been affected, the
President said at the openi ng of th e W orl d Islam ic
Economi c Forum (W IEF) in Jakarta on M onday.
"Islamic banking should take a front seat because it
has not been affected by the crisis," President Susilo
Bam bang Y udh oyono said.
Yudh oyono added th at r ecentl y m any count r ies in the
W est h ad w arm ed to Shariah bank in g because it d oes
not incorporate dubious assets in investments and is
risk-free.
"I n t he W est, Shari ah bank s h ave a m ission because
countries are increasingly welcoming them," Yud-hoy ono said , as quot ed by kompas.com.
The domestic Shariah banking industry has shown
promising growth results, which have been increasing
fr om year to y ear, h e said.
"W e hope in fut ur e In donesia w il l serv e as a Shariah
econom ic hub. W e invi te investors to develop th is
sector."
According to data at Bank Indonesia, the amount of
f inancing provided by the country's Islamic bankinginst i tut i ons had grow n fr om a mere Rp 5.53 tr i l l ion i n
2003 to Rp 27.94 tri l l ion i n 2007 and Rp 38.19 tri l l ion
in 2008.
The 2008 figure constituted about 3 percent of the
total am ount of nat ional bank f in ancing.
The amount of assets managed by the country's
Shariah banks also rose from 1.4 percent of the coun-
try's national bank assets in 2005, to 1.6 percent in
2006, 1.8 percent in 2007 and 1.8 percent , or about Rp
50 tr i l l i on in 2008.
http://miadhu.com.mv/news.php?id=9427
27 Febru ary 2009
ht tp://w w w .thejakartapost.com/new s/2009/03/02/sby
-future-sharia-banking-indonesia.html
M arch 3, 2009
7/29/2019 Bulletin Oct Dec 2008
23/27
October-December 20 08
23
The central bank said there were currently 1,470
Shariah bank offices across the country, and that they
had disbursed Rp 326 bill ion in loans for micro- and
sm all -scale fi rm s as of t he end of 2008.
M usli m president s, prim e mi ni sters and pr in ces on
M onday cal led on t he w orld t o adopt Islamic f i nancialpractices to overcome the global crisis and urged Is-
lamic banks to undertake missionary work in the
w est to pr omot e Shariah banki ng.
Almost every speaker at the opening of the fifth
W orld Islam ic Economi c Forum (W IEF) in Jakarta
lambasted the excesses of irresponsible, unregulated
western financial markets for tr iggering the crisis,
and t outed Shariah banki ng as a fr am ewor k for a mor e
stable global fi nanci al system.
But while Islamic banking could play a useful role, it
w ould n ot be a silver bul let f or t he crisis. Bank ers at
the conference said greater standardization of struc-
tures, improved transparency and more innovative
produ cts w ere needed for th e industry t o develop.
Islamic financial institutions do not pay interest and
require transactions to be backed by real assets. Their
assets com pri se onl y a few per cent of t he global
banking industry but they have suffered less than
their conventional counterparts because they did not
deal in subprime mortgages or complex structured
products.
But some, particularly in the Gulf, are starting tostruggle as values of their underlying assets, notably
property , start to t um ble and l iquidi ty t ightens.
The polit icians were extremely bullish in Jakarta.
M usa H i tam, W IEF chai r man said : Our
[conventional] gurus have failed us in theory and in
practice. W e need a new approach.
Susilo Bambang Yudhoyono, the Indonesian presi-
dent, told the 1,550 delegates from 36 countries that
Islam ic banki ng should n ow be able to take a leader-ship role. Islamic bankers should therefore do some
m issionary w ork i n th e w estern w orld to promote the
concept of Shariah banking, for which many in the
w est are more th an r eady n ow .
M r Y udh oyono also proposed the creati on of an I s-
lamic W orld Expendit ure Support Fund to help the
m any least developed M uslim -m ajor i ty count r ies.
Standard & Poors, the rati ng agency, said last w eek
that while Islamic f inancial inst i tut ions had strong
lon g-term prospects, the im m ediate futu re w as un cer-
tain.
M uk ht ar H ussain , global chief executi ve of HSBC
Amanah, agreed that Shariah banking had an impor-
tant role to play and should seek to become more
mainstream, but said growth was hampered by its
im matur i ty and size.
h t tp : / /w w w . f t . com/cm s/s/0 /0 f74e17a-0757-11de-
9294-000077b07658.html?nclick_check=1
M arch 2 2009
Th e n e w s s e c t i o n o f I s l a m ic Ba n k in g
Bu l l e t i n i s b a se d o n i n f o r m a t i o n o b t a in e d f r o m l o c al
a n d i n t e r n a t i o n a l p r i n t a n d ele c t r o n i c m e d ia.
th e end of Decem ber 2008, compared w ith 4 percent at end
of December 2007. Similarly, branch network of Islamic
banks has crossed 500 branches in December 2008,
compared with 289 branches in December 2007 whereas
total assets of Islamic banking has reached Rs 271.1 billion
in December 2008 compared with Rs 205.2 bil l ion in
D ecem ber 2007.
I would l ike to congratulate the participants from Islamic
banking industry as well as SBP for having availed the
opportuni ty to interact wi th experts from IFSB. This
exercise wil l surely facil i tate the implementation of the
standards developed by IFSB.
(Speech of deputy Governor on closin g ceremony of l ectur e
series
arranged by SBP in coordination with
Islami c Fin ancial Servi ces Board, M alaysia)
COVER STORY CONTINUED FR OM P 3
7/29/2019 Bulletin Oct Dec 2008
24/27
October-December 20 08
24
A lBaraka Islam ic Bank 30
Bank Islam i Paki stan Li m it ed 70
Daw ood Islam ic Bank Lim -
ited15
D ubai Islami c Bank Paki stan Lt d 23
Emi rates Global I slami c Bank 42
M eezan Bank Lt d 127
A skari Bank Lim ited 18
Bank A lfalah Ltd 48
Bank A l H abib 6
H abib Bank Ltd 1
H abib M etropol i tan Bank 4
M CB Bank Ltd 11
N ati onal Bank of Paki stan 4
Soneri Bank Lt d 6
Standard Chartered Bank 11
Th e Bank of Kh yber 16
Th e Royal Bank of Scotland 3
Un i ted Bank Ltd 5
Daw ood Islam ic Bank Lim -
ited6
D ubai Islami c Bank Paki stan Lt d 2
M eezan Bank Ltd 33
Bank Islam i Paki stan Li m it ed 32
A skari Bank Lim ited 2
plete its journey on April 25, 2009 in a very special
convention at K arachi . The road show w il l also dis-
tr ibute memorial shields to 300 prominent IslamicBankers and 200 corporate clients of Islamic Bank-
ing and Takaful to acknowledge of their services to
th e cause of Islam ic bank in g and fi nance.
A not her special aspect of th is road show is that ov er
20 programmes in this process have been organised
at dif feren t Pr ess clu bs and M edia cent res, so th at
special feature of Islamic banking and Takaful are
brought to the journalists community for the f irst
t ime at their doorstep which wi l l u l t imately pro-
mote general awareness on the subject in a more
convenient way.
Addressing at a reception hosted by the HyderabadChamber of Commerce and Industry president Shafiq
A hm ed Qur eshi , M r Chaw la said th at th e country s
economy could improve only i f the interest based
banki ng w as aboli shed.
He said that there is stagnation in economy due to
interest rate and people dont have job opportunities.
H e poin ted out th at cost of borrow in g and cost of pr o-
duction are increasing. He said that it was all due to
poor pace of supplies and not due to increase in de-
mand. There is no change in demand but certainlythere is stagnation in supply, he said. He stated that
governments policy of deficit f inancing had led to
probl ems of consum ers.
Unless our economy gets rid of interest-based sys-
tem, its healt h w il l not im prove. The mark- up system
had destroy ed our econom y and it never promoted it ,
he said. Besides cost of borrowing, shortage of energy
and in creasin g tarif fs of electr ici ty , gas and w ater also
caused probl ems for econom y. H e said th at t hese w ere
essential for our economy and slow pace of their sup-ply had led to in surm ountable problems.
ht tp: / /ww w .daw n.com/w ps/wcm/connect /daw n-content - l ibrary/
dawn /th e-new spaper/l ocal/h yderabad-fpcci-ch ief-opp oses-
interestbased-banking
A pril 19, 2009
**Provisional data
7/29/2019 Bulletin Oct Dec 2008
25/27
October-December 20 08
25
AzadKashmir
Balochis-tan
FederalCapital FAA NWFP Punjab Sind
1 3 3 15 8
1 8 2 1 5 29 24 1 6 8
1 2 1 12 7
1 2 5 20 14
1 3 7 12 55 49
3 13 17 1 26 137 110
1 1 2 9 5
1 1 2 2 1 3 3 29 12
1
1 3
1 1 1 5 3
1 2 1
1 1 1 1 2
1 1 3 3 3
1 10 3 2
1 2
1 3 1
7 7 24 59 37
3 3
1 1
1 1 4 14 13
1 3 5 7 26 32
4 23 29 1 57 223 179
BankIslami Pakistan Limited 1 2 3 2 9 14
Askari Bank Limited 1 1
GrandTotal
30
7015
23
42
127
307
18
648
1
4
11
4
6
11
16
3
5
133
2
32
6
2
33
75
515
(A s of M arch, 2009)
**Provisional data
Islamic Banking Department's Publications (These publications are also available in SBP Library)
S. No Publications Web Address
1 SBP Governors Speeches on Islamic Finance http://www.sbp.org.pk/ibd/speeches.htm
2 Strategic Plan for Islamic Banking Industry http://www.sbp.org.pk/departments/pdf/StrategicPlanPDF/Strategy%20Paper-Final.pdf
3 Frequently Asked Questions (FAQs) http://www.sbp.org.pk/departments/ibd/FAQs.pdf
4 Risk Manageme