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Islamic banking on rapid pace in Pakistan, will grow 20 to 25pc by 2023

Islamic banking on rapid pace in Pakistan, will grow 20 to 25pc by 2023

Meezan Bank’s Shariah-compliant products, services have taken major standings
Interview Irfan Siddiqui — President & Chief Executive Officer, Meezan Bank

PAGE: Kindly tell us something about yourself and your organization:

Irfan Siddiqui: I am the founding President and Chief Executive Officer of Meezan Bank. My educational background includes a Foundation Course in Accountancy from Sunderland, UK and I am a Fellow Chartered Accountant from Institute of Chartered Accountants England and Wales. I have served on a number of senior management positions including Chief Executive Officer at Al-Meezan Investment Bank Limited, as a General Manager at Pakistan Kuwait Investment Company, Manager Finance and Operation at Abu Dhabi Investment Company and Senior Business Analyst at Exxon Chemical (Pakistan) Ltd.

The idea of setting up an Islamic bank came to my mind in 1995 due to my faith reasons. Alhamdulillah, I was able to establish Al Meezan Investment Bank in 1997. For the first five years we functioned with a workforce of 30 people, then in 2002, the State Bank of Pakistan (SBP) issued Meezan with Pakistan’s first Islamic commercial banking license, and concurrently we took over the operations of Societe Generale (SG) in Pakistan. Converting SG’s four-branch conventional banking operations into a Shariah-compliant one, which was an achievement and we operated as Pakistan’s only Islamic commercial bank for the next two years. Today, we have a nationwide network of over 700 commercial banking branches in more than 190 cities pan Pakistan.

In 17 years of operations, we are not only the largest Islamic bank in Pakistan but rank among the largest commercial banks in the country and have been recognized as the ‘Best Bank – 2018’ by Pakistan Banking Awards. Pakistan Banking Awards are recognized as the most credible and prestigious awards in the banking industry of Pakistan.

Meezan Bank is currently the 7th largest bank (in terms of Deposits and Branch Network) in Pakistan. This milestone highlights how Islamic banking is successfully attracting more customers and gaining market share. All branches of Meezan Bank offer a comprehensive and broad range of Islamic financial products as well as real-time online banking facilities to customers.

PAGE: How do you see the Islamic banking sector today and five years from now?

Irfan Siddiqui: I believe that the growth of Islamic banking sector is undeniable. Islamic banking growth over the next few years will come from new channels as well as newer markets. There is increasing penetration of branchless banking across the globe. Newer markets, even those that do not hold Muslim majority are actively investigating and investing in the Islamic banking framework. In addition, a number of both established as well as new banks are considering Islamic banking operations which further highlight the growing popularity of Islamic finance. In Pakistan, Islamic banking industry has now grown to more than 16% of the overall banking sector, and it is expected to grow to 20%-25% by the year 2023. Recently, the Senate of Pakistan has unanimously passed a resolution, which requires the Government of Pakistan to convert at least 30% of its debt into Islamic financing modes. This Resolution has been followed by the enforcement of new regulations called ‘Shariah Governance Regulations 2018’ by the Securities and Exchange Commission of Pakistan; in line with the spirit of the article 38 (f) of the Constitution of Pakistan.

We are hopeful that with the correct enforcement of this initiative and adequate Government support, this will not only enable the Islamic banking industry to grow at a faster pace but will also strengthen the foundations of a true Riba-free, Islamic economic system. Over the next few years, I see Islamic banks more actively responding to this growing demand. We have already seen a number of long-established conventional banks establish Islamic banking windows which is very encouraging.


PAGE: Could you tell us about the products of Islamic banking sector vis-a-vis the conventional banking sector?

Irfan Siddiqui: Meezan Bank works with an aim to provide a wide range of products and services to its customers under the guidance of Shariah. Alhamdulillah, we provide a comprehensive range of Shariah-compliant Deposit Products, including Current Accounts, Savings Accounts, Savings Accounts for minors and Term Certificates of Islamic investment where you can place your funds for short/long term investment. The Bank also provides a comprehensive range of Riba-free financing solutions for acquiring car, home, generator, laptop, bike. Moreover, our Meezan Consumer Ease for durable goods is the first-ever Shariah-compliant limit-based financing facility that offers a range of products including LED TV, washing machine, AC, cameras and smart phones etc.

We also provide a financing facility for performing Hajj and Umrah and our product ‘MeezanKafalah’ provides a Shariah-compliant alternative to Bancassurance. Besides retail, we also provide a complete range of Corporate Banking solutions including short-and long-term financing, Islamic Export Refinance Facility, Trade Financing facilities for importers and exporters, and dedicated facilitation for the Cash Management needs of our clients. Over the last few years, the general understanding of Islamic finance has increased and our customers are now more aware of the underlying principles behind our products.

PAGE: Which Islamic banking products are doing well in Pakistan?

Irfan Siddiqui: With the blessings of Allah SWT, I believe Islamic banks are doing well in all the products offered to customers. At Meezan Bank, we feel that our wide variety of Shariah-compliant products and services enable our customers to bank with us with convenience and as a result of our customer focus, these offerings have built credibility now. In addition to the traditional banking channels, Meezan Bank has also kept pace with the changing market dynamics and therefore makes banking easier through a range of Alternate Distribution Channels. Here too, we have kept true to our aim of providing customer convenience and offer our customers 24/7 access to banking through Debit Cards, Mobile Apps, Internet Banking, ATMs etc.

PAGE: How can partnering with startups help financial firms compete in a crowded payments marketplace?

Irfan Siddiqui: The banking sector is overwhelmed by the possibilities opened up by partnering with financial firms, startups and FinTechs. It can help create a mutually beneficial relationship in which banks can gain a better understanding of their customers. FinTechs, with their appetite to discover new areas of interests for customers can help banks offer financial services to meet unattended and specialized needs that they generally tend to overlook. If traditional financial institutions can identify areas of problems, FinTechs can help them provide innovative solutions creating a win-win solution for everyone involved.

In my view FinTechs are the change agents in the banking sector and in addition to providing faster to market innovations, they are also helping banks lower the overall cost of innovation. It is expected that the global FinTech industry will continue to grow at a fast pace. Banks offer reliability, trust, safety and financial experience, whereas Fintechs offer innovation, agility, and speed. As internet and smartphone penetration further increases, Pakistan too will see a plethora of new opportunities, ranging from financial inclusion to mobile banking and even telecom. Instead of viewing startups as a competition, the banking industry in Pakistan will benefit from these collaborations, which can help it further remove any friction between the customer and service provider banks.

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