LAHORE:State Bank of Pakistan Deputy Governor Saeed Ahmed has said there is a dire need to create awareness to promote Islamic mode of banking that is fast gaining grounds around the globe.
Talking to the LCCI Senior Vice-President Almas Hyder, State Bank of Pakistan Deputy Governor said that bankers should launch new schemes to attract people towards Islamic banking. He said though Islamic mode of banking looks like conventional banking there is a lot of difference between the processes.
Speaking on the occasion, the LCCI Senior Vice-President Almas Hyder said that today more than 250 Islamic financial institutions are operating worldwide from China to USA.
Western banks through their Islamic units in UK, Germany, Switzerland, Luxembourg etc. are also practicing Islamic banking. He said the basic principle of Islamic banking was the prohibition of Riba or interest, which had seldom been recognised as applicable beyond the Islamic world but many of its guiding principles had consciously or unconsciously been accepted.
The majority of these principles are based on simple morality and common sense, which form the bases of many religions, including Islam.
Almas Hyder said Islamic finance was practiced mostly in the Muslim world throughout the Middle Ages facilitating trade and business activities.
In Spain and Baltic States, Islamic merchants became indispensable middlemen for trading activities. It is claimed that European financiers and businessmen later adopted many concepts, techniques and instruments of Islamic finance. He said the Islamic financial system employs the concept of participation in the enterprise, utilising the funds at risk on a profit and loss sharing basis.
This by no means implies that investments with financial institutions are necessarily speculative. This can be excluded by careful investment policy, diversification of risk and prudent management by Islamic financial institutions.
The LCCI Senior Vice-President suggested that the Islamic countries that had undergone the experience of Islamic banking should be consulted so that the existing level of services could be improved and more diversified products be introduced.