Muslims count over 1.6 billion of the world population, but are divided and even sub-sub divided on economic, political, geographical, cultural and ethnic lines. Islam rejects interest-based economy whereas the current banking system prevailing in all the Muslim countries is offshoot of capitalism where interest is the key to business ethics.
The State Bank of Pakistan has issued a document titled “Knowledge, attitudes and practices of Islamic banking in Pakistan” based on the latest nationwide survey of 10,000 participants, including 9,000 households and 1,000 corporate entities. The document focuses on four key areas: satisfaction, knowledge, use and religious beliefs and has incorporated 100 interviews of top management at the Islamic banks to ascertain the supply-side perspective of the Islamic order.
Keeping in view the demand for the Sharia-based products, various banks in the western economies have started Islamic banking operations and doing a thriving business.
Several world financial institutions have already indicated that Pakistan has not yet achieved the level of financial access available to its people according to the western standards. A large portion of rural population have little knowledge even about the conventional banking system and the poor, whether in urban or ruler centres, never dare enter a bank in their life span. The SBP survey suggests that 52 percent of the population, which was engaged in the survey, has never used any banking product. Only 38 percent responded in positive that they had availed services of conventional banks at some point of time. The situation indicates a real time government steps to vigorously persuade and educate the people about the Sharia-based banking system by removing their suspicions about banking products – claimed to be interest-free, such as personal loans, remittances, insurance, or fixed-deposit accounts.
There is great potential for the Islamic products if they are properly introduced to agriculture and industrial sectors and religious scholars can be asked to encourage the potential customers.
The central bank sees great demand for Islamic banking products if are introduced to potential customers in rural and urban areas of the country. Pakistan can share its experience of a successful Islamic banking system with other Muslim countries.
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