1/30/2005 3:00:00 PM GMT
Source: AFP
The financial sector in Pakistan is witnessing growth in Islamic banking, which is being demanded by millions of Muslims who regard conventional banking as anti-Islamic.
The past 18 months have seen a sharp increase in Islamic banking counters at major local and foreign banks across the country.
Two key banks – one local and one foreign-based – have launched 23 branches recently, while nine conventional banks including Standard Chartered and AG Zurich have 25 branches across the country.
Islamic banking bans fixed-interest returns and speculation. It also outlaws investments in alcohol, pork or gambling. Instead, Islamic banks make regular payments based on profits from accepted investments.
Moeenul Haque, a dealer in imitation gold and silver ornaments in Karachi, said that his dream came true when he opened an interest-free bank account that complies with his Muslim faith.
"I never went for conventional banking as it is based on interest, which is prohibited in Islam and amounts to waging war against Allah," he said. "Now I have my bank account in an Islamic bank and it satisfies my faith."
Recently, the central State Bank of Pakistan allowed Citibank, ABN Amro and seven other banks to start negotiations for Islamic banking licenses.
"Almost all the strong and major banks are negotiating with us," said Pervez Said, director of the Islamic banking department at the state bank.
"Islamic banking is here to stay," he said. "They are not coming out of some religious fervor but because there is a strong consumer push."
"Now Pakistan has the best possible framework for Islamic banking that it can," he added.
Also, Fazal Ahmad, chief financial officer of the Islamic Investment Bank, said that "There has been tremendous success during the roadshows in the Middle East, and HSBC and Citibank are said to have underwritten Islamic bonds worth 600 million dollars,"
"Pakistan followed Malaysia and Bahrain -- considered the role models of Islamic banking -- while it formulated its regulations.” He added.