KARACHI: The Asian Development Bank (ADB) showed its willingness to finance multi-billion dollars loans to Pakistan under different instruments of Islamic banking.
However, Islamabad did not make any formal request to any multilateral institutions. “The Islamic Banking has become an emerging market as the international financial institutions such as the IMF and Asian Development Bank (ADB) are taking keen interest to do business in Islamic banking sector in Pakistan and other countries,” said Director General of Cambridge Institute of Islamic Banking Dr Humayon Dar during a literary discussion held here on Monday.
He said that different international institutions want to enter Islamic Banking in Pakistan. He added that the Asian Development Bank had also showed its interest to come in Islamic banking sector, adding that ADB’s Islamabad Office called him some years ago for taking briefing on this issue.
The World Bank and IMF are more interested to adopt Islamic Banking structure for dealing to Islamic countries which is like to emphasizing. Some years ago, The Country Director of (ADB) in Pakistan has called and said that there are reports that government is going to adopt pro-Islamic banking and ADB had commitment of $10 billion during next 10 years and the Bank is ready to give financing on Islamic banking structure.
Later on, the government did not make request to the ADB for taking loan on Islamic banking structure”, he said On a query regarding expensive loan of Islamic Development Banking (IDB), he said that the source of the liquidity of the IDB is sukuks which is costly and expensive that’s why its loan is more expensive as compare to other international institutions.
He said that Iran had made progress on placing Islamic banking and declared that the extra money charged within the public sector institutions could be declared as Riba. He said that Malaysia made progress as many scholars opposed their initial moves but they remained stick to the path for several years and now moving towards Islamic banking. He was of the view that there was need to show intentions for moving towards Islamic banking and phased wise approach needs to be adopted for achieving the desired results.
On the issue of defaulting, Dar said that this is the area where, the Islamic Shariah Scholars should look into and give solutions to the Islamic banks. He said that Islamic Banks should imposed penalties on defaulting.
Regarding a query about the interest on loan, he said that it could not eliminate because no government wants to do so in Islamic countries added that these governments are influential by strong lobbies of banking which don’t wants to do so.
He said that there is no justification of imposing interest on loan due to devaluation of currency and inflation added that these are macroeconomic factors and borrower cannot be held responsible for these factors.