First priority of the government is to develop a true Islamic financial system ‘ senator Ishaq Dar
A true Islamic financial system is close to my heart and we are endeavoring to transform the financial system into a system truly based on justice and equity.
In order to give a big push to the movement of Islamic financial system, the Federal Finance Minister Ishaq Dar has also issued directives for appointing a Deputy Governor at the State Bank of Pakistan to exclusively take care of development of Islamic financial system in the country. A broad-based Shariah Advisory Committee, with Mufti Taqi Usmani as the pattern and guide to move the process of Islamic financial system on fast track has also been constituted by the Finance Minister.
The Finance Minister Ishaq Dar while addressing a round table conference on Islamic Banking at the Governor House Karachi said that with a humble beginning at the niche market in 1960, the Islamic financial system is now establishing itself as a mainstream global financial system growing amongst Muslims and Non-Muslims alike and over 150 percent growth over the last seven years speaks itself about its future outlook. The Islamic financial industry is projected to grow from $1.6 trillion to $2.5 trillion by 2016. The recently global financial crisis raised some serious concerns about the ability of conventional financial system to withstand the unpredictable shocks primarily due to structure flaws. The recurrence of crisis in the conventional financial system and increasing frequencies of crisis indicating the inability of the conventional system to check with speculative and unethical practices of maximizing the self interest even at the cost of severe pain suffered by the society.
Hence the financial managers across the globe are looking for a financial system that could preempt and mitigate the risks and could help a broad-based development. He expressed his confidence that the Islamic financial system answers most of these issues confronted to the conventional financial system. Its assets based nature gives resilience during the previous financial crisis has also testified the superiority of financial system, which is moral-based and economic model-based on Islamic Shariah.
The Western world has also started appreciating the advantages of Islamic financial system as can be seen in various reforms and initiative post financial crisis era of 2007 to avoid similar financial crisis.
The history of Islamic financial system in Pakistan is not much different from overall Islamic financial as it started with a regional initiatives during 1960s. Its role has been intensified during last decade. The overall Islamic financial industry in Pakistan is consists of 19 banks and over 500 branches spread over 80 districts in the country, 15 mutual funds and five Morahaba companies. The industry now constitutes over 10 percent of country’s financial system and projects a strong growth in the days to come. There are indicators for huge growth of Islamic Banking in the country in the face of hardly 20 percent of the farming community has access to the financial system while only five percent of the small and medium enterprises avail the financial access in the country. This indicates that a much greater segment of the population remains to be tapped the large un-banked population by the financial industry.
The linkages between Islamic Banks and Microfinance Banks are also vital to put the surplus funds for the good of the low income groups in line with Islamic norms of taking care of the wellbeing of the have nots and poverty reduction in line with the government policies.
The government is fully committed and determined to nurture the Islamic financial industry and development of financial system on a fast track system. He also quoted Prime Minister Declaration at the World Islamic Forum in London where the Prime Minister Nawaz Sharif expressed his firm desire of making every effort to make Pakistan a leader of the Islamic financial system in the world. It was the first time that the World Islamic Forum co-sponsored by UK’s Prime Minister and the Malaysian Prime Minister, had a meeting outside the Muslim World. Citing the significance of Islamic financial system, he quoted UK Prime Minister’s commitment at the forum that his government would give every incentive and facility to the Islamic financial system, which will be given by any Islamic countries, which is self -explanatory statement about the significance of Islamic financial system in the eyes of the non-Muslim countries as well. Actually they have no religious requirement; they were talking only from business point of view taking in consideration the worth of Islamic financial system going forward to have the biggest share out of the Islamic financial system, which is projected to grow from current $1.6 trillion to over $2.5 trillion in the next two to three years.
Being an Islamic country, we as the humble servant of Allah Almighty, and in conformity to the article 227 and 231 of the constitution, the government firmly believes in transforming the financial system of the country in accordance to Quran and Sunnah into a true Islamic financial system in Pakistan and Article 37 of the Constitution of Pakistan, which requires elimination of Riba (Interest) at the earliest. One of my top priorities is to convert the financial system into a Shariah compliant financial world.
“Despite all difficulties, there is a need to give a big push to the process of Islamization of the financial system in the country,” said the Finance Minister.
He also referred his initiative of formation of a Shariah Advisory Committee headed by famous Islamic Scholar Justice Taqi Usmani as a pattern and guide to this committee which will be fairly broad-based representing all the stakeholders in the society. The Committee will recommend the solutions to all the difficulties faced in developing a true Islamic financial system in the country. This committee will be independent and has been provided a secretariat in the State Bank of Pakistan.