subject: Islamic Banking Flourishing In Pakistan [print this page] Quran teachings teach us the way of dealings and trade with others. Riba is prohibited in Islam that is to excess or increase the money or quantity in inappropriate way. Conventional banking is based on Riba based business to earn profit that is strongly prohibited in Islam and Quran. Reading Quran verses convey us the strong hatred from Riba dealings. Therefore, Islamic countries are increasing Islamic banking in many Muslim countries that are free from interest and based on actual profits.
Islamic banking is growing faster in Pakistan and many other Islamic countries. Pakistanis are progressively more turning to Islamic banking, making it one of the fastest growing sectors in the South Asian Muslim country.
The first and foremost reason behind growth of Islamic banking is Islam that strictly prohibits Riba. You can understand Allahs command regarding Riba by understanding Quran. You can get more details on Riba free economy after learning Quran.
Islamic banking provides a lot of opportunities to the people having their current accounts for security reasons and do not take any interest on their accounts. In contrast to conventional banks, they earn total profit on your amount in bank and also give a share of profit to you but all this is interest based.
There are six Islamic banks in Pakistan namely, Meezan Bank, Bank-al-Islami, Global Islamic Bank, Al-Barka Bank, Dawood Islamic Bank and Global Emirates Islamic Bank. These six Islamic banks has almost 500,000 customers in consumer financing and deposits sectors and have 5 percent share in the overall banking sector in the country.
Meezan Bank got the lisence in 1997 by State Bank of Pakistan that was the first full fledged Islamic bank. Islamic banking has shown devastating growth in Pakistan over the past five years that is clear from the rise of Islamic banking share from 0.5 percent in 2002 to 7 percent till present.
Almost for more than ten years, Islamic banks are operating in Pakistan. Its sustainability was in doubt in start but now people realize that it can compete with conventional banking.
Islamic banks and finance institutions cannot accept or offer funds for anything linking alcohol, gambling, pornography, tobacco, weapons or pork. Islamic or shariah based financing deals with leasing, joint purchase and sale agreements, or partnerships.
Pakistan is planning to double its share to 12 percent by 2015. To achieve this goal, Pakistan has ordered Islamic lenders to open 20 percent of all new branches in rural areas. Islamic banking currently has account statement of 497 billion rupees or 7.3% of Pakistans overall banking system.
Constraints:
He says that the ratio between Islamic banking and the conventional banking is still 1-10, which shows that the industry still has a small base. Although there is a fast growing of Islamic banking but still it is facing many constraints. The major constraint for the industry is its small base. The ration between Islamic and conventional banks is 1:10 that is a big difference. That effects the rapid growth of Islamic banking.
The other constraint is the lack of back support of big players while conventional banks are being supported by many local or international big players. But even now if all the Pakistanis today decide to deposit their money in Islamic banks, Islamic banking can get huge promotion.
