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Role of CEIF in the growth of Islamic finance industry

Published on 24th Oct, Edition 43, 2016


Centre for Excellence in Islamic Finance (CEIF) has been established at IBA (Institute of Business Administration), Karachi with the objective of providing a platform for discovery, enhancement and dissemination of knowledge in the field of Islamic Finance. It aims to be a world class Centre which, through education and research. It carries on IBA’s legacy of thought leadership in the Islamic Finance industry.

Globally, Islamic Banking assets have witnessed a CAGR of 16 percent over a period of last 5 years exceeding US$801 billion in 2015. In Pakistan, the Islamic Banking assets growing at the CAGR of 30 percent at present are at 12 percent of the total banking assets, expected to exceed 20 percent by 2020.

This exponential growth of the industry has led to the vacuum of trained human resource at all levels. Wider arrays of products, which are distinctively Shariah-compliant are also the need of the hour, which would lead the industry to clearly differentiate itself in the market.

CEIF has been established to meet this need for greater research and training. It is based at the IBA’s City Campus. It offers Executive Learning Programs, Forums for discussions between various stakeholders. In this regard, CEIF has signed an MoU with Malaysian based University, INCEIF, as its Academic Partner. Furthermore CEIF has entered into collaborations with Islamic Research and Training Institute (IRTI) and International Shariah Research Academy (ISRA) to cooperate in enhancing the objective of Research, Training and Development in the field of Islamic Finance.

In line with its aim to provide demand driven training, IBA initiated a strategic partnership with Meezan Bank Ltd to establish the Centre. The Board of Management of the Centre includes CEOs of major market players and regulators with Dr. Ishrat Husain as the Chairman.

This strong linkage with the industry will enable the Centre to achieve its key objectives, which include:

– To provide trained human resource to the industry to take it to the next level of maturity.
– To conduct quality research and document case studies for enhancing and disseminating knowledge.
– To be a platform for debate, discussion and discourse on current issues and best practices around the globe.
– It is actively negotiating with various multilateral institutions to assure quality and best practices in this field.
– To provide a network of global outreach.

In this regards, an International Lecture Series has been launched where various leaders of the industry from around the globe will be invited regularly for training sessions to bridge the knowledge gap. The training includes:

– To advance theory of Islamic Economics and Finance and its role in the society.

– To establish a data centre with best local and international resources.

CEIF was established with the help of State Bank of Pakistan (SBP) financed through a program by DFID, UK.

Vision: “To excel as a knowledge Centre of first choice, providing thought leadership to the domestic and global Islamic Finance Industry”

Mission: “To be recognized as a reputable, research driven institution with strong industry linkages offering innovative world class education, training and research programs in Islamic finance to a wide range of audience and be a catalyst for change.”

USP: A Centre having affiliations and strategic relationships with international as well as local financial and infrastructure institutions and other industry bodies aligning offerings to the current industry needs.

Affiliates: INCEIF Malaysia and Centre for Excellence in Islamic Finance at IBA signed a MoU for jointly offering MSc Program in Islamic Finance at IBA. INCEIF will collaborate with IBA CEIF in launching the MS program.

Centre for Excellence in Islamic Finance (CEIF), at IBA and Islamic Research and Training Institute, (IRTI) mutually agreed to cooperate in enhancing the objective of Research, Training and Development in the field of Islamic Finance.

Both the entities will also work together for a Country Report on Islamic Finance in Pakistan.

Assistance of Meezan bank

Meezan Bank will assist Centre for Excellence in Islamic Finance (CEIF) at IBA in providing the knowledge about the current industry norms and practices, so that the Centre could be aligned in imparting knowledge that has both theory, as well as practical aspects in the field of Islamic Finance.


Inauguration of centre for excellence in Islamic finance

The Centre for Excellence in Islamic Finance (CEIF) was inaugurated by Federal Finance Minister, Mr. Mohammad Ishaq Dar on Friday, Nov 27, 2015 at IBA City Campus. Also present on the occasion was Governor SBP, Mr. Ashraf Wathra. Dr. Ishrat Husain in his welcoming address appreciated the efforts of State Bank of Pakistan (SBP) and Meezan Bank.

While elaborating on the objectives of the Centre, he stated that it is expected to provide qualified human resource to the industry and play a pivotal role in developing shared understanding of Islamic finance principles among the participants.

Governor SBP speaking at the occasion stated that the Centre is expected to develop multipronged strategy to meet both long term and short term needs of the industry.

It will provide fresh trained human resource to the industry, improve existing human resource capacity, invest in research and collaborate with other institutions achieve excellence in the field.

Senator Mr. Mohammad Ishaq Dar’s commended the State Bank of Pakistan for taking this initiative of filling in the gap of human resources and expertise in Islamic finance by setting up these Centres of Excellence in Islamic Finance at three most reputable institutions of Pakistan i.e. IBA, Karachi; LUMS, Lahore and IMS, Peshawar.

He further stated that Islamic banking has a great future as the current global financial architecture has failed to deliver stability, solidarity and sustainability to the financial system.

Islamic banking is an attractive candidate to present itself as an anchor of financial stability and social purposefulness.

The government is committed to the cause of increasing Islamic finance and has taken various steps in this direction in the past two years. Establishing of a Steering Committee under the leadership of Mr. Saeed Ahmed, the Deputy Governor of SBP, the recent launch of Karachi All share Islamic Index, Setting up an Islamic Finance Department in SECP, issuance of sukuk and Islamic capital market reforms are some of the efforts in this regard.

The Ministry of Finance is taking steps to make shariah compliant financing its first choice in infrastructure building and long term financing needs. In the next few years the share of Islamic banking should reach 20-30 percent of total banking.

With banking penetration of 13 percent (according to World Bank) in Pakistan, banks have a huge untapped potential to increase financial inclusion.

Islamic banks have the risk sharing modes which can be developed to support SME, Micro finance and agricultural financing. With branchless banking and mobile banking making inroads, the situation is ripe with opportunity. Some of the voluntary exclusion due to Shariah concerns can be alleviated by Islamic banks.

The role of Islamic banks should expand to build the real economy and focus on SME financing, which is the bank bone of any economy.

Financial inclusion and shared prosperity can be achieved if Government and the Financial Sector work together to achieve these goals. The chief guest concluded the speech with thanking all the participants.

Later, talking to newsmen at IBA city campus, Dr Ishrat Hussain, Chairman CEIF, said that the Center had been set-up with the objective to bridge the gap between trained human resource and industry’s growing requirement. He hoped that IBA-CEIF will play a vital role for providing skilled and qualified workforce to the Islamic Banking Industry of Pakistan.

Chairman CEIF said that Centre for Excellence in Islamic Finance has won the competitive award under a challenge competition organised by SBP, which is being financed under a program by UK Aid. This centre will offer degree programs in Islamic Finance, besides conducting research and case studies for enhancing and disseminating knowledge in Islamic Finance, he informed.

“We will offer short term open and customized executive courses for the professionals working in the industry and will provide a platform for debate, discussion and discourse on the current issues, the future evolution of Islamic Finance,” he mentioned. In addition, with collaborate of international players CEIF will assure introduction of best practices, governance and management in the Islamic banking industry of the country, he added.

This is the largest initiative taken in history of IBA and with these features, the Centre is in advance stages of establishing international collaborations to make it a truly world class Centre, Chairman CEIF said.

Talking about the banking industry scope in Pakistan, he said that a large number of masses agreed to join Shariah mode of banking, but in real term they preferred profitability, that is higher in conventional banking. “SBP is making efforts to promote the Islamic Banking and as part of these efforts SBP being a regulator is encouraging new Islamic Banking licenses and discouraging the new conventional banks,” he added.

To a question he said that Pakistan’s entire banking system cannot be switched over to Islamic mode of banking. “In such case our banking system will collapse as global system, which largely depends on conventional, will not support us, therefore it should be converted in phases for sustainable conversion,” he added.

Dr Ishrat said that still there were many sectors where Islamic Banks can invest hugely. “Islamic Banking industry can invest excess liquidity in Small and Medium Enterprises (SME), Agricultural, Housing sector as these sectors need financing for growth. Financing to SME was 17 percent of total advances in 2006 as compared to 5 percent presently,” he added.


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