Educating Islamic Banking and Finance: – Islam is not only a religion in the ordinary sense of the word, but a complete system of life. While other religious codes provide guidance only for the relation between man and his Creator, Islam guides man in his relationship with God and gives him the norms which govern his temporal existence, since Islam is concerned with the spiritual, political, social economic, moral and all other material aspects of the human being.
Islamic banking is banking or banking activity that is consistent with the principles of Islamic law (Shariah) and its practical application through the development of Islamic economics. Shariah prohibits the fixed or floating payment or acceptance of specific interest or fees (known as Riba or usury) for loans of money. Investing in businesses that provide goods or services considered contrary to Islamic principles is also Haraam (forbidden). While these principles were used as the basis for a flourishing economy in earlier times, in the late 20th century that a number of formal Islamic banks were formed to apply these principles to private or semi-private commercial institutions within the Muslim and Non-Muslim Communities.
The main reason for the growth stem from a number of sources:
– Muslims worldwide are starting to use Shari’ah compliant products that were not previously available to them;
– Due to the increase in oil wealth of the Muslim nations in the Middle East and their decision to use Shari’ah compliant products, western governments and conventional financial institutions are considering using Islamic Finance
– Due to their escalating competitiveness and focus on ethics, Islamic products are attracting not only Muslims but non- Muslims as well.
– Islamic Finance has no way to leave in any time soon as Islam is the fastest growing religion in the world and is the second largest religious group in the UK, USA and France.
The GCC countries account for nearly 56 percent of the total Islamic banking assets other than Malaysia and Pakistan.
Need of Islamic Banking and Finance Education & Trainings:-Islamic banking faces an increasing problem of Human Resources with the start of the perspective to open Islamic banks, according to a careful estimate more than 50000 Islamic financial professional are needed in Islamic Financial industry. The need of human resources is growing indeed but the Human Resources are not growing in line with the opening of Islamic banks. It is a fact that a person cannot become an Islamic banker just by studying a few books or One week training, it needs many things in collective. To become an Islamic banker, one needs to spend life in this field and gain experience. We do not have enough trained professionals in the field of Islamic banking and finance but we also need to replace the conventional staff from Islamic Banks, so that Islamic Bank can be performed accordance to Islamic principles. We need suitable people and it will take time to the problem to be solved, the human capital can be trained in this field in accordance with the demand. Education will indeed raise standards in Islamic finance.
Current Status of Islamic Banking Education at University, College and Religious Schools :-Currently, in accordance with a careful approximation, more than 40-80 Universities all over the world are providing Post Graduate, PhD and Bachelor level programs on Islamic Banking and Finance, these universities are producing approximately 5000-10000 professional every year while the demand of the Islamic Financial professional are 10 times high, it is an immediate need to fulfill the demand and supply gap from the Islamic Financial Industry.
With reference to Pakistan, more than 10 institutions are offering masters level program in Islamic Banking and Finance. Dadabhoy Institute of Higher Education, University of Management and Technology, KASBIT, Sheikh Zayed Islamic Center, International Islamic University Islamabad, Riphah International University and PAF Karachi Institute of Economics & Technology are some well-known name of institutions in Pakistan. Al-Huda Center of Islamic Banking and Economics (Al-Huda CIBE) is also working on the same grounds. It is a well established name, working in the field of Islamic banking and Finance from the last many years.
In addition to this, training is an effective tool for Human Resource Development (HRD) as well as for achieving the goals of an organization. Islamic banking is a Shari’ah-based interest-free banking system. It has to operate in a way that benefits society as a whole. Its features and functional procedures are quite distinctive than that of the traditional banking system. To satisfy the objectives of the Islamic banking and to face the challenge of the next century, the job of Islamic banking is becoming more complicated and more technical day by day. The personnel of Islamic banks require special Attitude, Skill and Knowledge, which can be developed through proper training. It is obvious that a large number of appropriately trained employees would result in increased output and reduced costs, further resulting in maximum utilization of human resources, which will ultimately benefit the entire nation.
Many institutions are providing Distance Learning Program on Islamic Banking and Finance. Through this mode, masses can be educated in a flexible and convenient manner. As Muslim are not only limited in Asia or Africa but they also reside in all over the world, so we can educate the Muslims and Finance professional globally through Distance learning programs. In addition to this, publications can also be used as a medium to educate masses about the latest news and updates on Islamic Banking and Finance.
We are sure that Islamic Banking system can be strengthened in better way by promoting Islamic Banking Education and Trainings. The basic point is to create a bridge between academics and practical knowledge of Islamic Banking and Finance pertaining to markets.
Centre of Advisory Services for Islamic Banking and Finance through its website (islmaicfinanacecaif.com) and literature pertaining to Islamic Banking and Finance highlighting facts, challenges and their solutions existing in 2018 is working to bring actual face of Islamic Banking and Finance that is required to change the banking and financial system in service of its people.
- The index is a benchmark survey revealing the progress, penetration and perception of the Shari’ah-compliant banking sector in the UAE, as well as the future intentions of the nation’s banking customers. Findings demonstrate that Islamic banks are outperforming their conventional peers in customer acquisition—55 per cent of the UAE consumers now have at least one Islamic banking product, compared to 47 per cent when the Index was launched in 2015. In contrast, the penetration score for conventional bank products has shrunk from 69 per cent in 2017 to 63 per cent in 2018.
- Hamdan Bin Mohammed Smart University (HBMSU) has announced the completion of preparations for the launch of the China-UAE Conference on Islamic Banking and Finance (CUCIBF III) for the third consecutive year under the theme, ‘The potential for participate economy and financial system: growth, development, integration, and cooperation.’ The conference, set to take place on November 7 and 8, 2018, aims to strengthen knowledge, civilizational, cultural and economic exchanges with China. The event is a major milestone in the consolidation of efforts to support Islamic financing between the UAE and China, highlighting shared interest of both parties to employ Islamic economy model to achieve the objectives of the ‘One Belt, One Road’ initiative.
- It is getting to the stage where Islamic banking is catching up very closely with conventional banking system. We have seen that more Muslims now have Islamic banking products than conventional banks as penetration grew from 61 to 65 per cent while penetration level for conventional bank went down from 65 to 58 per cent. Non-Muslims gap is there but that’s narrowing also. Last year, we had 38 per cent of non-Muslim respondents had Islamic product this year that has gone to 40 per cent. And conventional bank’s share has come down from 75 per cent to 71 per cent, reported Khaleej Times.
- In a major cyber-attack on a Pakistani bank, hackers siphoned off at least Rs2.6 million through October 27 from debit cards issued by Bank Islami. Bank Islami says it has credited an equal amount (Rs2.6 million) to the accounts of customers who were affected due to data breach.
In this situation Auditor General of Pakistan (AGP) office has once again raised concerns about the shady deal between Bank Islami and KASB Bank. AGP raised objections in the audit report for the fiscal year 2017-18. The case came into the limelight some time ago when top bankers sold the KASB bank shares for just Rs 1,000. KASB Bank was then sold for an unbelievably low price of Rs 1,000 to Bank Islami. At the time, the report says that KASB Bank had Rs 57 billion worth of assets and deposits. The market value of the bank was Rs 6.6 billion when it was sold for Rs 1,000.
After the deal, the State Bank granted Rs 5 billion to Bank Islami at a low 0.01% interest rate per annum for ten years. The purpose of this grant was to cover the losses of the KASB Bank. The amount resulted in a loss of over Rs 3 billion to the treasury. The report says.
With this history, Bank Islami has again come in to lime light with its structural weaknesses and ignorance by SBP in this specific case.
- The growth of Islamic finance in post-Soviet Central Asia, namely in Kazakhstan, is attracting the attention of the international banking industry:- The IDB in September 2018 has unveiled a $1.3bn-partnership for the years up to 2021 with the Uzbek government to fund a number of activities based on Shariah-compliant financing, including infrastructure modernization, enhancing efficiency and productivity in the agricultural sector and promoting private sector development. Part of the partnership is also a plan to provide Uzbekistan’s small and medium sized enterprises with Islamic financing tools, including halal crowd funding and microfinance.
Moreover, the Islamic Corp for the Development of the Private Sector, a subdivision of the IDB, has initiated a Shariah-compliant financing cooperation with six banks in Uzbekistan, including a $7.5mn-financing agreement with state-owned banks.
- Singapore does have the right ingredients in terms of flexibility and clear regulations to incorporate Islamic Banking.” Geographically, Singapore has an advantage as it “sits among the most populous Muslim countries on its doorstep”:-It is also near China, where the “One Belt, One Road” development holds opportunities for infrastructure financing. However, there have only been 20 sukuk issuances in Singapore over the past 16 years, says the International Islamic Financial Market data. The experts points to a lack of focus on a niche offering and inadequate demand from retail and corporate investors, the reasons for the failure of Islamic finance to take off.
Malaysia and the UAE have seen a fast pace of growth of Islamic finance vis-a-vis conventional finance mainly driven by policymakers and regulators. Hence need is there to look at other Islamic finance markets to see what can be Singapore’s role going forward.
- Al Baraka Bank (Pakistan) Limited (ABPL), result of a merger between Al Baraka Islamic Bank Pakistan (AIBP), the branch operations of Al Baraka Islamic Bank (AIB) Bahrain and Emirates Global Islamic Bank Pakistan, took place in October 30th 2010.This growth was further enhanced in November, 2016 when Burj Bank Limited’s operations were merged into ABPL; making the Bank one of the leaders in the Islamic Banking sphere of the country. Now it is in loss by Rs 270,165 thousand as of June 2018 as compared to profit of Rs 52,323 thousand as of June 2017 showing, the bank has the need to bring immediate structural changes, going forward.