Islamic Banking

By Sahar Ahmed

KARACHI (Reuters) - Dutch bank ABN AMRO on Thursday opened its first Islamic banking branch in Pakistan, as the market for sharia-compliant assets hots up, the head of the bank’s Asia operations said.

Islamabad: The second World Islamic Economic Forum (WIEF) ended a three-day meeting here yesterday with a declaration urging Muslim countries to "promote and intensify Islamic banking, finance and insurance".

The declaration called on governments of the 57 member states of the Organisation of the Islamic Conference (OIC) to provide "fullest support" to the activities and programmes of the forum.

The governments should continue to "create a conducive environment for business, investments and economic growth through regular dialogues, consultations and smart partnerships with the private sector", it said.

The WIEF document also exhorted the governments in Islamic countries to provide an "efficient framework" to facilitate the movement of entrepreneurs, capital and trade flows between the OIC states.

Regional and sub-regional cooperation should be accelerated so that it leads to the establishment of an Islamic Free Trade Area, the declaration said.

The inaugural meeting of WIEF was held in Kuala Lumpur in October 2005 and the second Forum in Islamabad decided to hold the third session in the Malaysian capital from May 7 to 9 in 2007.

Pakistan President General Pervez Musharraf, Prime Minister Shaukat Aziz and his Malaysian counterpart Abdullah Ahmad Badawi, former Australian premier Bob Hawke and former Sri Lankan president Chandrika Kumaratunga contributed to the deliberations.

Over the three days, hundreds of local and foreign delegates discussed a wide range of economic issues.

The Malaysian prime minister, who is also current OIC head, stressed the need for exchanging expertise and knowledge to exploit natural resources and tap potential of Muslim countries.

The former Australian premier highlighted the importance of modern education in social-economic uplift, saying it would be the best investment for the generations to come.

During the interaction, Musharraf told the delegates that religious extremism and intolerance in Muslim societies were blocking their political and economic development.

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With the increasing demand for Islamic banking in the country, there is a need for trained bank staff with the right qualifications to undertake Islamic banking based on Shariah principles and methodologies, said Dr Ishrat Husain, governor, State Bank of Pakistan (SBP), here on Monday.

The governor, while inaugurating the First Islamic Banking Certificate Course at the National Institute of Banking & Finance (NIBAF), Karachi Campus, said the State Bank was implementing in letter and spirit the decision of the Supreme Court regarding the Riba-free banking in the country.

He said that they would provide a level playing field for the conventional and Islamic banking in the country. Islamic banking would run parallel to the conventional banking and it is upto the people of Pakistan to choose which type of banking they would adopt, he said and added: “We need to encourage growth of genuine Islamic banking in the country.”

Dr Ishrat Husain said the State Bank had taken a number of steps for the promotion of Islamic banking in Pakistan, which included the issuance of licences to Islamic banks, Islamic banking branches and setting up of subsidiaries by commercial banks for Islamic banking

He said the State Bank had issued the Essentials and Model Agreements of Islamic Modes of Financing as recommended by the Commission for Transformation of Financial System and approved by the Shariah Board of the SBP in order to ensure observance of Shariah principles by the institutions conducting Islamic banking in Pakistan.

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