ISLAMABAD (October 25 2003): The State Bank of Pakistan is forming a Shariah Board comprising 5-7 religious scholars as well as market professionals to facilitate Islamic financial system in the country.
The 'Board' would approve Islamic instruments for State Bank, commercial banks and 'takaful' (Islamic insurance) companies regulated by Securities and Exchange Commission of Pakistan, sources told Business Recorder.
SBP Governor Dr Ishrat Hussain has appointed Pervez Saeed as Advisor on Islamic Banking and head of Islamic banking department.
He was formerly working with Almeezan Bank and iHilal.com a Dubai based Islamic bank on Internet.
The department is focusing on liquidity management (Islamic) instruments of commercial banks, customer facilitation in Islamic banks and successful transfer of best global practices of Islamic banking to local institutions.
Dr Mahmud Ghazi was one of the candidates likely to head the Board. However, there are fears that Riaz Husain Gilani, who opposed Islamic banking by calling bank mark-up as Islamically permissible, if chosen as member of the Board, could again create hurdles, said an expert on Islamic banking and 'takaful'.
Gilani gave those arguments during hearing in Supreme Court Shariat Appellate Bench (SCSAB) on UBL appeal against historic decision of December 23, 1999, of the SCSAB to eliminate Riba (interest) from economy.
However, SBP officials were hopeful for Gilani's role as facilitator this time. In its operations, the 'Board' would lay down criteria for Shariat audit of the banks applying Islamic mode of financing. It would also formulate criteria for appointing Shariah advisors for banks.
Islamic banking department is hoping to see almost 12 new branches operating on the basis of Islamic injunctions for which approval in principle has been granted and various banks are preparing to set up these branches soon.
Almeezan Bank has got the licence; Alfalah Bank applied for five branches; Khyber Bank is opening one on 27th of Ramazan. Habib Bank A G Zurich has also got approval. MCB has already opened one branch.
HBL, UBL and Union Bank are also planning to open their branches.
The SBP department would also collaborate with Pakistan Bankers Association headed by Shaukat Tarin to carry forward their jobs. They could also help create awareness among people for Islamic financial system.
The department would not only play as regulator but also as facilitator during infancy stage of the Islamic banking in Pakistan.
The basic modes of financing include Mobdaraba, Musharaka, Ijara, Salam and Murabah.