Main point to Remember in Development of Islamic Finance
Normally it has been seen that high officials working in SBP or any commercial Bank use to avoid discussion on development of Islamic Finance with reference to its challenges. They normally say that what has been stated by the Muftis are final and they do not want to enter in to any controversy.
But in reality, Islam is a natural religion so it’s all parts needs to be implemented in line with changing environments of the world. This can be done by following Ijtihad remaining within the ambit of basic principles of Islam. For this new strategy with new products are required to be found mainly through research.
Islam has come to the world for the welfare of its people and if this basic objective is missing in Islamic Finance than it means that it is not on the right way.
In this competitive world that has now acquired the shape of a global village Islamic Finance needs comprehensive macro and Micro structures to operate. This is the area which we have to discover through research.
Reasons for rise of Islamic Banking in UAE in 2019
Better banking rates, pricing and better customer services were the key reasons for this rise.
Islamic banking continues to maintain its appeal not just among the Muslim residents but also among the non-Muslims in the UAE, according to Islamic Banking Index 2019 released recently.
“Islamic banking is on the rise in the UAE as three out of five respondents now have at least one Shari’a-compliant product — 60 per cent — up from 55 per cent in 2018. The use of conventional banking products has rallied by two percentage points since 2018, but has fallen overall by five percentage points since 2015, while Islamic products have grown by 13 percentage points during the same period,” said Wasim Saifi, deputy CEO for consumer banking and wealth management at Emirates Islamic bank, which conducted the survey in conjunction with You Gov.
The survey found that better rates and pricing, and better customer service were among the key factors influencing shift to Islamic banking among non-Muslim respondents.
The survey found that that the penetration among non-Muslims grew from 40 per cent in 2018 to 45 per cent this year while penetration in conventional banking increased by just one per cent to 72 per cent. It found that the use of Shariah-compliant products has increased faster since 2015 for non-Muslims than Muslims, from 31 per cent to 45 per cent.
The survey found that Islamic banking penetration reached its highest level since the inception of the index five years ago. “Interest by non-Muslim customers surveyed, in Islamic products, has seen a significant increase in all areas since 2018, including a nine percentage points increase in Islamic current accounts, while conventional current account products fell by 10 percentage points. There was also a six percentage point increase in Islamic savings accounts for this customer group, while conventional products fell by six percentage points,” it said.
The survey was conducted online from 900 respondents with a bank account in UAE and earning more than Dh 500 a month. It consisted of 62 per cent Muslims and 38 per cent non-Muslims.
Dr Ishrat on Islamic Banking (in Nov 2019)
Industry leaders, researchers and practitioners gathered at the Institute of Business Management (IoBM) for the 3rd International Conference on Islamic Banking and Finance (ICIBF) on November 06, 2019. The theme of this two-day Conference was “Islamic Finance for Small and Medium Enterprises (IFSME) and Social Responsibility.” Dr. Ishrat Husain, Advisor to the Prime Minister on Institutional Reforms and Austerity attended the event as the chief guest.
Dr. Ishrat Husain advised students to absorb knowledge and use it to solve real problems. He highlighted four key problems hampering Pakistan’s economic growth including poverty, economic inequality, regional disparity and illiteracy. He proposed the need to help young entrepreneurs, provide education to rural women and promote the program-lending business model. He stressed the use of Ijara in agricultural financing and to educate poor students from backward areas. He was hopeful that fintech and artificial intelligence can develop credit scoring models. He was confident that investments in low-cost affordable housing schemes will bring positive results and that the government of Pakistan is promoting this initiative. During his address, Talib S. Karim congratulated the organizing committee to host ICIBF for the third time. He expressed the need to establish a Centre of Islamic Banking to explore the potential of this sector in Pakistan. Speaking at the event, Bashir Jan mohammed said that individuals and institutions must facilitate economic growth. He advised students to create jobs by launching startups. Syed Amir Ali emphasized the role of Sharia scholars to promote Islamic Banking. He shared that the assets of Islamic banking in Pakistan crossed by Rs. three billion while its share in the overall banking sector was 15.9%. He further stressed the need to evolve SMEs that can add value to the country’s financial sector.