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Addressing the challenges in Islamic Finance education in Pakistan

The Islamic financial industry has witnessed a phenomenal growth in the past decade in terms of the number of Islamic financial institutions and their asset base which is a strong indicator of its steady demand at the grass-root level. In Pakistan, this demand is evident from the growth of full-fledged Islamic banks as well as Islamic windows of conventional banks. By 2020, the Islamic banking branch network in the country is projected to cross 3,300 branches while the Islamic banking industry’s growth is projected at 20% by the State Bank of Pakistan. According to an estimate, the industry currently employs roughly 25,000 professionals while the annual demand for the next five years of qualified and skilled Islamic bankers seems to be increasing by 3,000 to 4,000 professionals. We are also witnessing a growing demand for industry experts such as accountants and auditors, and according to one estimate, this reaches almost 500 professionals per annum. Given this steady increase in demand, we are becoming more and more cognizant of the dearth of skilled human capital in the industry that has led to the creation of multiple challenges pertaining to skilled and qualified human resource.

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Meezan Bank, being the largest and pioneer Islamic bank of the country, needs a regular supply of trained human resource for coping up with its growth. As the fastest growing bank in the industry, it struggles with bridging the gap in demand of Islamic finance education at different levels. According to Islamic Finance Country Report published by IBA CEIF and Thomson Reuters, almost 76% of the Islamic finance industry executives believe that the number of entry-level trained professionals in the industry is insufficient.

For Islamic banks, the search for qualified human resource is typically divided into two streams. One is fresh graduates who come from various educational institutions and the second is the influx of experienced personnel coming from other Islamic and conventional banks.

While hiring fresh graduates, the Bank is increasingly aware of the reality that Islamic finance is not considered as a core element of any finance and accounting related program and professional qualification. There has to be a significant investment of both time and resources into training such individuals into skilled Islamic professionals. I feel that with the changing dynamics of financial industry, a qualification in finance and accounting is incomplete without the knowledge of the concepts and framework of Islamic finance.

As Pakistan’s premier Islamic bank, we ensure that despite these challenges, our recruitment processes are transparent and designed to encourage diversity to further inculcate Islamic finance amongst the masses. Presently, there are not enough graduates specializing in Islamic Finance, therefore, we consider business graduates with conventional finance education as well and give little preference to a graduate with specialization in Islamic Finance. This is mainly based on the fact that graduates having degrees in Islamic Finance have very basic knowledge concerning this field and therefore are required to pass through our entire training program. Regretfully, Islamic finance education amongst young scholars and UIlemas who graduate from traditional Madaris, with the exception of a few, is insufficient. The need to address this gap at religious schools as well universities and colleges is now greater than ever.

At the same time, the Bank also considers conventional bankers, when it needs experienced professionals. Here, greater emphasis lies on their acquired skills. Once they form a part of our teams, we try to develop their approach towards Islamic banking, helping them to understand the key differences between Islamic and conventional finance. For an individual coming from conventional banking background, it is difficult to bring about a change in their approach as he/she may see every process and procedure from his/her previously acquired knowledge. For the Bank, each time a person switches from Islamic to conventional banking; it is viewed as a major setback. We, at Meezan, run a rigorous training program for our staff to enhance their knowledge and skills about Islamic banking. This includes a comprehensive Orientation Program for all of our new staff so as to ensure that they are fully aware of the concepts underlying Islamic banking as well as the various products of Meezan Bank; specialized functional modules on various business products and processes.

 

The Bank also provides learning opportunities to its staff through in-house, external and international training programs to improve their knowledge and skills. The Bank has four dedicated learning centers, located at Karachi, Lahore, Islamabad and Multan, where learning sessions are conducted round the year under an organized learning calendar developed to address the learning needs of the staff at each Region. The Bank has also employed a robust Distance Learning System through which video-based training courses are rolled out to the staff. Given the importance we place on training our resources, it comes as a great loss when our employees switch to conventional banking.

In the current scenario, the role of educational institutions becomes very important. If they provide quality Islamic finance education to their students, the supply of hard-core Islamic finance people will increase and that will support the growth of Islamic banking at both local and international levels. The quality of Islamic finance education can be improved if students are groomed well by focusing on their interpersonal skills and application of their Islamic finance knowledge in real business activities. Currently, the students of Islamic finance are good in theory but their interpersonal skills and application of their Islamic finance knowledge in real business activities needs improvement. As mentioned earlier, presently, very few educational institutes provide Islamic finance education, so there is a need for more and more institutions to actively pursue this academic gap. I suggest that Islamic finance should be a compulsory course in all business & management programmes and industry experts should be engaged in improving the alignment of Islamic finance courses with the industry needs.

Moreover, the depth of knowledge in Islamic finance education also needs to be catered. Depth of knowledge can be increased effectively if Islamic finance is introduced from primary education level and then built on progressively to include more complex concepts. At the degree level, more and more specialized courses can be offered. Moreover, every one getting education will know something about Islamic finance which may increase its demand and overall awareness regarding Riba-free banking. We need people in general as well as in specialized banking areas. Business graduates are normally hired as general banking officers but at entry level, however, we do need people good in financial accounting, corporate finance, liquidity & asset management. In these specialized areas, we need to train people; therefore, if people come with sufficient knowledge in these areas, we can consider them.

Meezan Bank is therefore placing a key focus on providing quality Islamic finance education to the youth, an approach that has rooted itself firmly as an extension of our values and as part of our business strategy. The Bank has entered into cause-related partnerships with Lahore University of Management Sciences (LUMS), Institute of Business Administration (IBA) and IM Sciences in order to help foster the learning and development of Islamic banking and finance across the country by supporting their newly established Centres for Excellence in Islamic Finance. These collaborations focus on various joint activities including development and launch of training programs on Islamic banking and finance, co-authoring of case studies and research papers, and participation of our employees as guest speakers in executive programs. This contribution plays an instrumental role in the promotion of ethical practices across the country, as the Bank aims to equip students and executives with adequate Islamic knowledge and professional skills.

Keeping in view the demand for Islamic finance in their country, and the challenges pertinent to dearth of qualified Islamic finance professionals, I strongly suggest that Islamic finance related courses should be included across all universities in Pakistan. This needs to be supplemented with a research-based culture with an altruistic motivation to support the growth of Riba-free banking system and economy. The accomplishment of these objectives requires increasing participation from all stakeholders including academicians, Regulators, Scholars as well as industry experts.

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