ISLAMIC BANKING EXCELS ON ITS APPEALING FEATURES
Dubai Islamic Bank has arrived in Pakistan as an important new participant to the industry
July 31 - Aug 06, 2006
Islamic Banking in recent decades has set some most important trends, especially in the financial world of Pakistan. In fact, Islamic Banking carries some appealing features for the customers irrespective of their religious affiliation because it is an ethical and equitable mode of financial service that derives its principles from the Shariah (Islamic law).
Prohibition of interest — whether "nominal" or "excessive", simple or compound, fixed or floating — definitely seems to be the most distinctive element of Islamic Banking.
Other elements, which are equally important and supplement its growth, include emphasis on equitable contracts, the linking of finance to productivity, the desirability of profit sharing, and the prohibition of gambling and certain types of uncertainty.
These are the parameters which define the nature and scope of Islamic Banking, as interpreted by the Shariah scholars that work with Islamic financial institutions.
The State Bank of Pakistan has, however, played a significant role in the promotion of the concept of Islamic Banking especially by using its prerogative of issuing licence for any new bank by giving first priority to Islamic Banking, yet there is no embargo imposed on the choice of the customer to do banking either on traditional commercial banking or go for Islamic Banking.
However, in certain Middle Eastern geographies, it is mandatory to have Islamic Banking & finance systems in place regardless of the investment made in the country of origin. Islamic Banking booms are now emerging in South Asia as well as Asia Pacific markets like Malaysia & Indonesia.
Dubai Islamic Bank appeared on the global banking set-up thirty years ago and has successfully led the way in translating the principles of Islam into moral, publicly responsible and novel products and services. Currently, the bank receives the status of the world leader in Islamic finance from amongst virtually three hundred existing Islamic financial institutions. This has enabled it to attract attention not only within the Muslim world but also amongst international businesses operating in the non-Muslim world, as it manages to provide quality services and has set for itself a benchmark in the Islamic Banking industry.
ISLAMIC BANKING PLAYERS
No. of Islamic Banks (IBs)
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No. of conventional banks operating Islamic Banking Branches
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The bank has a wide range of experience from strategic alliances with the major businesses in the world to strong presence in main Islamic countries. Dubai Islamic Bank lead-managed the world's largest Sukuk (Shariah-compliant bond) with Barclays Capital. The US$3.5 billion issue was part of a large financing package arranged for the expansion plans of Dubai Ports, Customs & Free Zone Corporation (PCFC). The bank has acquired 60% shares in the Bank of Khartoum, Sudan, and now exercises complete management control over the oldest bank in the Arab world, established since 1913. The bank has also been involved in raising US$28.5 million by way of an IPO for a new financial institution to be known as Emirates and Sudan Bank, which will also operate in Sudan. The bank also has a vast experience of operating in a network through representative offices in Turkey and Iran.
Pakistan, under the global change in the financial world, is no exception. The country has received a heavy investment in the last few years in the Islamic Banking system. A year ago, Dubai Islamic Bank, touched down the shores of Arabian Sea. The bank has adapted to the local conditions very well and is expanding its network exhaustively. It currently operates in Karachi, Lahore Faisalabad and plans to expand its network by investing another 100 million in the country. This phenomenal performance by the bank gives high hopes to the future of the Islamic Banking sector in the country.
From its first launch in March at the Avari Towers Karachi, the bank has retained its international pedigree of dominating the market by working on customer needs. The company plans to establish a network of 70 branches in a period of 18 months. This ensures the determination by the company to provide benchmark services to its customer base. In the opening ceremony of Karachi Cloth Market Branch on July 19th the Governor State Bank expressed that considering the international stature and regional presence of Dubai Islamic Bank, it is anticipated that the bank will bring to Pakistan, the required technology, instruments and institutional framework, so as to set the standard for other Islamic banks to follow. Two days later the bank inaugurated another branch in the textile hub, Faisalabad.
If we analyze this success takes its background from strong demand for Shariah practices in the banking sector. The Pakistani nation had been eager to have banking practices in the country as per Islamic principles. By laying this foundation of Islamic Banking practices, Dubai Islamic Bank has arrived in Pakistan as an important new participant to the industry.
To conclude, with the promising start made by Dubai Islamic Bank in Pakistan and the way it has maintained its international standards, one can foresee a better future of Islamic Banking in the country. Dubai Islamic Bank will flourish in the Pakistani market as it has in other parts of the world. This, in turn, would create employment in the country, in addition to the added facilities to customers.