On the inaugural day of conference Dr. Miftah Ismail Adviser
to the Prime Minister on Finance and Economic Affairs said the Ministry of
Finance would soon set up a separate division for the promotion of Islamic
banking in Pakistan. He was the Chief Guest at a two-day World Islamic Finance
Forum (WIFF-2018). The international forum was organized by Institute of
Business Administration’s Centre for Excellence in Islamic Finance IBA-CIEF in collaboration
with key partners. The theme was “Expanding the Footprint of Islamic Finance:
Innovation, Fintech and Regulations.”
In his visionary note, Shaikh Muhammad Taqi Usmani Chairman,
Shariah Board of Accounting and Auditing Organization for Islamic Financial
Institutions (AAOIFI) said the people of Pakistan origin were holding key
positions in Islamic banking industry around the world, making contribution in
developing regulatory framework and above all developing products that would
meet the emerging needs of trade and industry. He urged the government to take
concrete steps for making the economy Riba (interest) free. He also pointed out
that Islamic financial institutions have ample liquidity and the government
should work for creating new avenues for its deployment in remunerative options.
He suggested that the ruling party should also include in its election
manifesto that Riba would be eradicated totally from economy at the earliest.
Chairman AAOIFI Board of Trustees, Bahrain Shaikh Ebrahim Bin
Khalifa Al Khalifa said it was heartening to note that Pakistan was striving to
become another hub of Islamic finance. The country has all the basic
ingredients — a population of 200 million predominantly Muslims, a robust
banking and finance sector, vibrant agriculture, industrial and services
sectors.
On the occasion were present the top officials of the apex
regulators – State Bank of Pakistan (SBP) and Securities & Exchange
Commission of Pakistan, Deputy Governors of the central bank, Jameel Ahmad and
Shamsul Hasan talked about the central bank’s initiatives for the to promote
Islamic banking in the country. The progress made over the last decade has been
encouraging that has facilitated in achieving the target. They were also of the
view that making Pakistan hub of Islamic finance would not be difficult.
Irfan Siddiqui, President Meezan Bank requested the federal
government to set a target to acquire at least 25 per cent of the local funding
through Islamic banking as Islamic financial institutions have ample liquidity
and limited avenues for investment.
In his key note address, Dr. Ishrat Husain, Chairman,
IBA-CIEF talked about the progress made by Islamic banking in Pakistan. He was
of the view that the progress made during last one decade was enormous but new
products need to be introduced to provide fresh impetus for growth.
IBA-CEIF Director, Ahmed Ali Siddiqui, welcoming the
delegates, said the Centre had emerged as a regional platform for excellence in
Islamic finance. He said focus areas of CEIF included development of Islamic
finance professionals and new human resources talent pool through industry
linkages and international collaborations.
Two of the closed-door meetings deserve special mention,
though details discussed were not made public. In the first session players and
regulators discussed details that could help in making capital market and
mutual funds Shariah compliant. The issue of financial inclusion and outreach
were the two important themes to be discussed at length. The second session was
between Sharaih scholars and regulators for evolving regulatory frame work that
can help in developing products to meet the needs of different income strata
and those having different risk appetite.
Yet another initiative was presentation of research papers
discussing contemporary issues. One of the sessions deserves a specific mention
where lending to farmers was discussed. At present bulk of the loans are
extended to farmers against passbook or the landownership document. This
process mostly benefits the feudal lords. In this discussion the issue of
warehouse receipt financing was also debated. However, it was evident that
unless modern warehouses and collateral management companies are established
warehouse receipt financing may not be possible. Authors of selected papers
were awarded cash prizes.
The takeaways of the concluding remarks of Dr. Ishrat Husain
were: 1) creation of Shariah Board at Ministry of Finance, 2) borrowing for
infrastructure development projects through flotation of Rupee and Dollar
denominated Sukuks, 3) focus on the development of Fintechs for extending
outreach of banks and ensure financial inclusion and 4) development of
alternative delivery channels.
