INTERVIEW WITH TARIQ MAHBOOB, EVP & REGIONAL MANAGER SOUTH III MEEZAN BANK

MORE DEPOSIT AND FINANCING PRODUCTS SHOULD BE INTRODUCED TO GIVE ALTERNATIVES TO BUSINESS COMMUNITY.

KHALIL AHMED
(feedback@pgeconomist.com)
Sep 26 - Oct 2, 20
11

PAGE: TELL US SOMETHING ABOUT YOURSELF AND MEEZAN BANK.

TARIQ MAHBOOB: I did my schooling from Cadet College Petaro. After my intermediate from Adamjee Science College, I opted for commerce and did my B.Com. from Government College of Commerce and Economics securing first position in Karachi. I completed my M.Com. from Karachi University also securing first class first position. Luckily, in that year, 1995, MCB Bank Ltd. advertised for its trainee batch for graduates having first class first position. I was inducted in that batch and that is how my banking career started. I worked at almost every position of branch banking and in 2004 when I was the chief manager in MCB, it was then that I had an opportunity to join Meezan Bank Ltd., which was at that time a relatively new bank, but the belief in Islamic banking and its potential made me to switch from interest-based banking towards Islamic banking.

Today, I thank the Almighty who helped me take this wise and timely decision, as being a Muslim and having banking as a profession, I think one is blessed to get an opportunity to work in a full fledged Islamic bank.

Meezan Bank Limited is the first and largest Islamic bank in Pakistan. It was incorporated on January 27, 1997 starting operations as an Islamic investment bank in August of that year. In January 2002, the bank was granted Pakistan's first full-fledged commercial banking license dedicated to Islamic banking by the State bank of Pakistan.

Meezan Bank offers a complete range of Islamic banking products and services including free online banking for all Pak Rupee account at all its branches across Pakistan. The bank's retail banking network is supported by 24/7 banking services that include over 190 ATMs, internet banking and a 24-hour call center.

PAGE: WHAT ARE YOUR COMMENTS ON ISLAMIC BANKING?

TARIQ MAHBOOB: The structure of Islamic banking is radically different from conventional banking. A conventional bank is primarily a borrower of funds on the one hand and a lender on the other. An Islamic bank is rather a partner with its depositors, as well as with the entrepreneurs, sharing profit or loss both sides of the balance sheet. The establishment of Islamic banking opened a new chapter in the history of commercial banking in Pakistan. Islamic banking emerged as a response to both religious and economic needs. The efforts for economy-wide elimination of Riba started in 1970s. The initiative to re-introduce Islamic banking was taken in 2001 by Meezan Bank and this time it worked as Islamic jurisprudence and Shariah guidelines were properly implemented.

Currently, Islamic banking is one of the major emerging fields in global financial market having tremendous growth potential. Its progress is witnessed in various parts of the world especially in Pakistan. The growth of Islamic banking in Pakistan has been commendable.

PAGE: WHAT DO YOU SAY OF ISLAMIC BANKING'S CONTRIBUTION TOWARDS ECONOMIC PROSPERITY OF PAKISTAN?

TARIQ MAHBOOB: Today, the world economic system that is based on interest has resulted in concentrating of the wealth in the hands of a selected few and thus creating monopolies and widening the gap between the rich and the poor. In contrast, Islam encourages circulation of wealth and regards its role as important to an economy as the flow of blood to our human body. Just as clotting of blood paralyzes human body, concentration of wealth paralyzes economy.

Islamic banking is efficient and ensures equitable distribution of wealth thus laying foundation for a socially responsible banking. Just recall the financial meltdown in the year 2008, you will witness that Islamic banking sector was least affected during that worst turmoil. This clearly shows that Islamic banks succeed in demonstrating a practical example of socioeconomic justice by gradually enhancing their financing on PLS basis and also achieve further satisfactory operational results. The dawn of an era of justice is visualized with the fruits of the Islamic system available to a large number of people leading to overall social and economic prosperity.

PAGE: YOUR VIEWS ABOUT PERFORMANCE OF BANKING SECTOR.

TARIQ MAHBOOB: The performance of Islamic banking sector in Pakistan has been remarkable. The figures show that there has been excellent growth in Islamic banking industry with respect to deposits, assets and financing, especially during the last five years. At present, Islamic banking holds around 7-8 per cent of total banking assets. This is tremendous growth. It took Malaysia 30 years to get this share of Islamic banking. There was a time when people were unaware about Islamic banking. That was 2002, when Meezan Bank started its operation as the first Islamic commercial bank in Pakistan. Now, Meezan Bank is the leader of Islamic banking in Pakistan with over 230 branches in more than 60 cities and also holds around 50 per cent share in the Islamic banking sector (excluding Islamic windows of the interest based banks), and if we include these windows Meezan Bank's share is still more than 35 per cent. A great feat indeed.

PAGE: PLEASE TELL US ABOUT THE GOVERNMENT SUPPORT TO THE ISLAMIC BANKING SECTOR?

TARIQ MAHBOOB: After the re-introduction of Islamic banking in 2001, the government decided to promote Islamic banking in gradual manner and as a parallel and compatible system in line with the best international practices. Following the decision of the government to shift to interest-free economy in a phased manner without causing any disruptions, the effort was envisaged to be based on a market-driven and flexible approach. Furthermore, it aimed at building a broad based financial system in the country to enable all segments of the population access to the financial services. Islamic banking is one of the high priority areas for SBP as well. Steps are being taken to make Islamic banking sector robust enough to offer a viable alternative to conventional banking.

SBP wants to develop a progressive and sound Islamic banking system that is in line and compatible with the global financial sector, providing innovative Shariah-compliant products and services so as to achieve equitable economic growth. SBP has introduced Ijarah Sukuk in 2008, but need is to introduce much more arenas in this regard where Islamic banks can invest their liquidity, just like interest based banks have option of T-Bills and PIB's.

PAGE: WHAT IS THE LEVEL OF COMPETITION IN THE ISLAMIC BANKING SECTOR?

TARIQ MAHBOOB: There are five full-fledged Islamic banks operating in the country. There is more than 90 per cent market share that needs to be explored by Islamic banks. With innovation in Shariah-compliant products and services, the market share of Islamic banks will go on increasing if compatible alternate to conventional products are designed and introduced.

PAGE: WHAT MUST BE DONE TO ATTRACT INVESTMENTS?

TARIQ MAHBOOB: The need of the hour is to further promote Islamic banking as banking of first choice. This can be done by introducing every alternate to conventional banking products. Islamic banking has now made its basic grounds of introduction and much reliability, yet again it is an ongoing process of innovation and improvement. To attract more investments, it demands introduction of products on liability/deposit side and particularly on the financing side by introducing an alternative to the business community fulfilling their running finance need.