AL-MEEZAN BANK LAUNCHES 'RIBA FREE'
Al Meezan Investment Bank operating strictly under the principles of Islamic Sharia'a.
By AMANULLAH BASHAR
Mar 13 - 26, 2000
Al-Meezan Investment Bank is about to launch a new product namely "Riba Free" an Islamic Investment Deposit shortly. The introduction of this new mode of Islamic finance has been scheduled to coincide with Hujjat ul Wida, the last sermon delivered by Prophet Mohammad (pbuh) in which the interest was declared forever as "Haram".
This was stated by Pervez Said, Head of Business Development in Al-Meezan Investment Bank while talking to PAGE about the change in the financial sector following the verdict of the Supreme Court declaring interest as repugnant to the tenets of Islam.
Pervez Said, an MBA from Ohio University USA carries a 20 year rich experience in conventional banking, marketing and business management with leading multinationals including Exxon Chemicals, Lever Brothers, Reckitt & Colman and Citibank. He feels that Islamic banking has already won a respectable place in all the leading banks in Europe and America and is on its way to take a leading position in the banking system around the world. Its practicability indicated from the fact that over 200 banks have opened windows for this type of banking to cater to the need of a large Muslim clientele around the world.
Giving the background of newly introduced product "Riba-Free" Pervez said that in order to test the concept a focus group research was conducted in April 1999 which concluded that a strong need for such a product exist in the market. It held that customers perceive a number of emotional benefits from a product that is based on the tenets of Islam but there was a general confusion between riba free and profit free of which the Bank would need to rectify through proper marketing.
He said that a segmentation study was also conducted in November 1999 which highlighted that the rate of return was not found to be a problem for people looking for an Islamic Investment product. Their objective of investing in such a product is to harmonize their banking habits with their religious beliefs. The research showed that many people feel that such a product will help fight the ills of the economy of the country. Riba Free is just the product for those people who feel the need for an Islamic banking product and are looking for an alternative for conventional interest based banking.
Highlighting the salient features of Riba Free, Pervez said that it is a Certificate of Islamic Investment available with tenures of 3 months, 6 months and 12 months. The deposits' money will be used in the Morabaha business of the Bank. Riba Free is a truly Islamic product, which has been designed according to the rules of Islamic Fiqh.
The Bank will declare profit and loss every quarter. Profits shall depend on the tenure of investment. The longer the period of investment, the higher the return. On maturity the depositor's principal amount and profit will be reinvested on the same terms and conditions or returned on the customer's instructions.
Regarding existing area of operations of the bank, Pervez said that currently various products introduced by Al-Meezan are available which include Certificates of Islamic Investment, the bank is providing investment opportunity to investors on profit and loss sharing basis besides a host of Islamic finance products to meet the monetary requirements of the borrowers.
Al Meezan Investment Bank, is a premier Islamic investment bank in Pakistan operating strictly under the principles of Islamic Sharia'a. Its vision to establish Islamic banking as a banking of first choice to facilitate the implementation of an equitable economic system, providing a strong foundation for establishing a fair and just society for mankind.
With a paid up capital of Rs721 million (approx. $13.9 million) which makes it one of the largest investment banks in Pakistan, the bank offers innovative sharia'a compatible products structured to meet customer requirements. The Management team comprises of highly qualified professionals sharing a strong commitment to Islamic finance. The bank brings together sponsors including highly respected multinational financial institutions and multilateral Islamic institutions. Each and every transaction of the Bank is monitored by its Sharia'a Adviser Dr. Imran Usmani who is a Ph.D in Islamic Finance.
Meezan Bank is a public (unlisted) limited company and incorporated on January 27, 1997 thereafter it commenced business in September 1997.
The Bank has been established an authorized capital of Rs1 billion of which Rs721 million of the shareholders equity has been paid up. The balance share holding will be offered to the general public through an initial public offering and to the employees through a share ownership plan in coming June.
Meezan Bank is a joint venture between Pakistan Kuwait Investment Company (Private) Limited and Islamic Investment Company of the Gulf, Bahrain E.C. Other sponsors include Islamic Development Bank, Kuwait Awqaf Public Foundation and Saudi Pak Industrial and Agricultural Investment Company.