Awareness about Islamic Banking in Pakistan
Banking sector has immense important for the growth and economic development of a country. Pakistan has a growing economy and banking sector is playing a vital role in it. Being a Muslim nation our first priority should be Islamic Banking. Efforts for economy wide elimination of Riba started during 1970s and most of the significant and practical steps were taken in 1980. In 1980 initial steps were taken by the State Bank of Pakistan by changing the rules and regulation of the Banking sector. After that in 2001 first certificate had been issued to Meezan bank of Pakistan as a full fledge Islamic Bank. And present there are six full fledge Islamic Bank in Pakistan. (Meezan Bank, Albarka Islamic Bank, Dai Islamic Bank, Dawood Islamic Bank, burj Bank, Bank Islamic Pakistan). More efforts are needed to increase the share of Islamic bank in Pakistan.
Question is how much people are aware about the Islamic banking in our country?
The demand for Islamic banking in Pakistan is strong. Industry is growing rapidly since 2002. The potential for further expansion is vast in Islamic Banking. However it requires awareness about Islamic banking. For this purpose steps should be taken to educate the people. According to a research majority of the people know about the Islamic banking but they do not know about the product offered by the Islamic Banks, such as Musharaka, Mudarbah etc. Most of the people think that Islamic banking is such like conventional Banking. Here need arises of aware to the people about the benefits of Islamic banking. For the purpose of growth, Islamic Banks should start public awareness programs. Islamic Bank is an institution of conducting business according to Islamic values and for the welfare of the society. To promote this slogan Islamic bank should conduct social welfare programs, launch development projects and play their role to eliminate poverty from the society. These are the steps towards success which can motivate people towards Islamic banking. An important issue arises here that, most of the customers are using both banking system Islamic as well as conventional. The reason is IBS do not provide the efficient product to their customers as the conventional banks provide. So Islamic banks have to consider this issue and offer the products to their customers and expand their networks and the products. Awareness should be created that the product offered by the Islamic banks is different from the conventional banks.
The Role of education is crucial in every aspect of life. Education gives us knowledge and enhances our perception and our point of view about things in the right way. Education makes a person capable to do things right. It is quoted that “Education is that whole system of human training within and without the school house walls, which molds and develops men”. The lack of education and unawareness creates ignorance and uncertainty in our choices. Islamic finance industry is facing the challenges of ignorance about the Islamic banking system. People have different point of view about Islamic banking, some says Islamic bank is just like the conventional bank, whereas few do not agree with the concept of Islamic banking and finance system. People do not consider their religious obligation while entering into banking system. They are not well aware about how harmful riba is for the society as well as for the Day of Judgment.
Let’s agree that concept of Banking is not prescribed in Quran and Hadith but the other comprehensive source which lay out the foundation of Islamic banking is there. Shariah provides the guide line about conducting business in fair way. Awareness of Shariah roles and their compliance is necessary to promote Islamic banking in Pakistan. People should be educated that Islam emphases both Ibadat as well as mamlat. Most probably 75% teaching of Islam is about mamlat. It is well said “It's all to do with the training: you can do a lot if you're properly trained (Queen Elizabeth II). A well-educated and trained person can persuade people easily. The staff of Islamic banks should be properly trained and well educated. They must know about the Islamic financial practices properly. They just not only know about practices of banks but also having proper knowledge of Shariah. Proper trained staff can guide the customer easily and they can very well explain the products of Islamic banking. It should be mandatory for the banks to hire the staff which possesses at least basic knowledge of Shariah as well as the banking practices.
Evidences have shown that the staff of the Islamic bank lacks the basic knowledge about the products of Islamic banks. Thus the staff should be qualified and trained in their field. A well trained staff leads to increase in product selling. So Islamic banks should focus on the training of their staff. Training session should be conducted with a regular interval. Shariah advisers can play their vital rule in the training and development of the staff. Advisers have to make sure that bank is running in compliance with the Shariah regulation and SPB laws. It is also noticed that mostly the management of the Islamic banking has started career with conventional banking. They have concern with attractive salaries and better opportunities so they moved to Islamic banking. Such people cannot represent the Islamic banks ideology. However, there were a few who had a more faith driven agenda in moving to the Islamic banking sector. So the selection and the training of staff do matter in the awareness of Islamic Banking to public.
Ulema can play their important role in the development of Islamic banking. They can create awareness in people about Islamic banking. They can take steps in the elimination of riba, and this is their religious obligation as well to tell the people how strictly riba is prohibited in Islam. Ulema should give the reference to the Quran and Hadith to people.
Awareness of Islamic banks can be created with the help of media campaign. People can be encouraged to deposit their savings in the banks. Most of the people have spare money and they could not deposit their money in the banks. Such saving remains idol unless it would be invested in productive purpose. If people deposit their saving in the banks it creates capital formation which leads to employment opportunity in the country. So such people should be motivated and offered incentives on their investments in banks. Sometimes people think that they can suffer the loss as well profit if they invest in Islamic banks. Bank guides them, if there would be no chances of loss or the investment is fixed it will be riba which is not allowed in Islam. State bank is the pioneer which took step in 1980 first time to implement Islamic banking in Pakistan. And in 2002 a full fledge Islamic bank was open in this regard.
Currently Islamic banks have 10% share of the banking industry with almost 1200 branches all over the Pakistan. State bank as regulator of the banking industry can play important role in promoting the Islamic banking and finance in Pakistan. State banks have taken initiative to aware the public about Islamic banking. In this regard awareness campaign has been launched in which seminars and conferences have been conducted. While announcing the five year policy of Islamic banking it was focused that market share of the Islamic banks should be increased by 15 percent till 2020. In this regard Expansion of the branches over the country was taking into consideration. So the role of the state bank is vital in promoting Islamic banking. State bank should join hand with the Islamic banking to aware the people and takes part in the media campaign with the Islamic banks. Initiative should be given to the Islamic banks in the monitory policy and strict the roles of interest based banking.
Conclusion
At the end considering to the current scenario we would say that the consumption of the Islamic banking could be high, if the awareness about Islamic banking is created among the public. But due to misconception and lack of awareness about the industry is not achieving its optimum level. However for 10 years industry is growing rapidly. Growth rates can be increase by proper marketing and five years growth plan with the collaboration of state bank of Pakistan. Proper steps should be taken to educate the people; enhancement in the training of the staff should take into consideration.
According to a Hadith of Holy prophet (PBUH) trading with riba is a much graver sin than eating pork.However majority of the Muslims do not consider it as much. These all challenges are due to lack of awareness about Islamic financial system and education. In fact promoting Islamic financial system is not only fulfilling the religious obligation but good for the economy of the country. Many of the Muslims as well as the non-Muslims country adopted the Riba free banking system and benefiting their economies such as Malaysia, Indonesia, Qatar, Saudi Arabia, Kuwait, Bahrain and UAE. These countries are fully benefiting their economies from Islamic financial system. Pakistan as a Muslim country should takes steps to promote the Islamic financial system in country by educating the people. This all can be done by the proper education and awareness of the people. Although it not an easy task to educate the people easily in a country where the literacy rate is 56 %( according to World Bank), but steps can be taken to educate the people. In this sense Islamic bank can play vital role by expanding their operations in every locality and involve with the local communities. They should Offer the benefits to the customers which they can be offered by the conventional banks. State should offer the syllabus in which Islamic banking should be taught to students. Prohibition of the Riba should be emphasized in the syllabus which will improve awareness about Islamic banking since childhood. As we have discussed earlier that most of the people think that there is no concept of Banking in Islam.
Let’s agree that concept of Banking is not prescribed in Quran and Hadith but the other comprehensive source which lay out the foundation of Islamic banking is there. Shariah provides the guide line about conducting business in fair way. Awareness of Shariah roles and their compliance is necessary to promote Islamic banking in Pakistan. People should be educated that Islam emphases both Ibadat as well as mamlat. Most probably 75% teaching of Islam is about mamlat. It is well said “It's all to do with the training: you can do a lot if you're properly trained (Queen Elizabeth II). A well-educated and trained person can persuade people easily. The staff of Islamic banks should be properly trained and well educated. They must know about the Islamic financial practices properly. They just not only know about practices of banks but also having proper knowledge of Shariah. Proper trained staff can guide the customer easily and they can very well explain the products of Islamic banking. It should be mandatory for the banks to hire the staff which possesses at least basic knowledge of Shariah as well as the banking practices.
Evidences have shown that the staff of the Islamic bank lacks the basic knowledge about the products of Islamic banks. Thus the staff should be qualified and trained in their field. A well trained staff leads to increase in product selling. So Islamic banks should focus on the training of their staff. Training session should be conducted with a regular interval. Shariah advisers can play their vital rule in the training and development of the staff. Advisers have to make sure that bank is running in compliance with the Shariah regulation and SPB laws. It is also noticed that mostly the management of the Islamic banking has started career with conventional banking. They have concern with attractive salaries and better opportunities so they moved to Islamic banking. Such people cannot represent the Islamic banks ideology. However, there were a few who had a more faith driven agenda in moving to the Islamic banking sector. So the selection and the training of staff do matter in the awareness of Islamic Banking to public.
Ulema can play their important role in the development of Islamic banking. They can create awareness in people about Islamic banking. They can take steps in the elimination of riba, and this is their religious obligation as well to tell the people how strictly riba is prohibited in Islam. Ulema should give the reference to the Quran and Hadith to people.
Allah says in Quran.” O ye who believe! Fear Allah and give up what remains of interest, if you are truly believers. But if you do it not, then beware of war from Allah and His Messenger; and if you repent, then you shall have your principal; thus you shall not wrong nor shall you be wronged”Islamic banks with the help of their Shariah advisers promote role of Ulema in eliminating riba from the society and gives the alternative financial system to the people which is according to the role of Shariah. Shariah advisers which are working in Islamic banks and check their transaction must make it sure that any of the dealing is not against the principle of Shariah. Because it is said that Islamic banking is also involved in such dealings which deviate from the Shariah, obviously this is impossible without the permission of their advisers. Board of Shariah advisers should have to check this issue and build the trust of public that Islamic banking system is different from the conventional banks.
Awareness of Islamic banks can be created with the help of media campaign. People can be encouraged to deposit their savings in the banks. Most of the people have spare money and they could not deposit their money in the banks. Such saving remains idol unless it would be invested in productive purpose. If people deposit their saving in the banks it creates capital formation which leads to employment opportunity in the country. So such people should be motivated and offered incentives on their investments in banks. Sometimes people think that they can suffer the loss as well profit if they invest in Islamic banks. Bank guides them, if there would be no chances of loss or the investment is fixed it will be riba which is not allowed in Islam. State bank is the pioneer which took step in 1980 first time to implement Islamic banking in Pakistan. And in 2002 a full fledge Islamic bank was open in this regard.
Currently Islamic banks have 10% share of the banking industry with almost 1200 branches all over the Pakistan. State bank as regulator of the banking industry can play important role in promoting the Islamic banking and finance in Pakistan. State banks have taken initiative to aware the public about Islamic banking. In this regard awareness campaign has been launched in which seminars and conferences have been conducted. While announcing the five year policy of Islamic banking it was focused that market share of the Islamic banks should be increased by 15 percent till 2020. In this regard Expansion of the branches over the country was taking into consideration. So the role of the state bank is vital in promoting Islamic banking. State bank should join hand with the Islamic banking to aware the people and takes part in the media campaign with the Islamic banks. Initiative should be given to the Islamic banks in the monitory policy and strict the roles of interest based banking.
Conclusion
At the end considering to the current scenario we would say that the consumption of the Islamic banking could be high, if the awareness about Islamic banking is created among the public. But due to misconception and lack of awareness about the industry is not achieving its optimum level. However for 10 years industry is growing rapidly. Growth rates can be increase by proper marketing and five years growth plan with the collaboration of state bank of Pakistan. Proper steps should be taken to educate the people; enhancement in the training of the staff should take into consideration.
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