ISLAMIC BANKING INDUSTRY MOVING FORWARD IN HIGHLY COMPETITIVE ENVIRONMENT
Sep 10 - 16, 2012
Mr. Salman Raza is one of the country's leading bankers. Currently, he is serving in KASB Bank as General Manager Branch Banking.
Mr. Salman Raza is among those few executives in KASB Bank who has taken the bank to new height through his devotion, hard work and commitment. He only means business and sincerely striving to improve the image and standing of the KASB Bank.
In an interview with Pakistan and Gulf Economist (PAGE), Mr. Salman Raza said, "KASB Bank is now serving clients through 104 branches in 43 cities of Pakistan, offering unique and innovative financial solutions to large portfolio of investment, corporate and consumer banking customers. KASB Bank is regarded as the flagship entity of the group with state of the art technology providing wide scale financial services to a diversified client base. The Bank also provides a host of financial services offered by the KASB Group.
To a question, Mr. Raza said, "KASB Bank has evolved an aggressive strategy for the year 2013.î He said, "We plan to extend our branch network with new branches across Pakistan. Our products will also be expanded to include wealth management services."
Powered by our talented workforce, diligently serving our growing client base, KASB Bank's future is bright and promising, Mr. Raza said, adding: "Our ability to provide our clients with custom made financial solutions and furnishing their individual business needs, has strengthened us in an increasingly competitive market."
As one of the leading banks in Pakistan today with one of the largest and most active teams, we have intimate knowledge of domestic markets and industries, a well-established relationship with local and international investors and a global affiliation. Our main focus is to provide our clients par excellence services, Mr. Raza added.
Mr. Raza said KASB Islamic Income Opportunity Fund (KIIOF) (Formerly: KASB Islamic Income Fund) is an income fund purely based on Shariah principles with no direct exposure to the stock market. For consistent income and liquidity, KIIOF keeps exposure in short term instruments, while a medium to long term exposure is maintained to add growth to the portfolio.
KIIOF's primary objective is to provide investors with Halal and regular income, by investing in Shariah compliant income products.
Talking about Islamic banking industry, Mr. Salman Raza said the emergence and growth of the Islamic finance industry is a phenomenon that has generated considerable public interest in the financial world in recent years. Given its ability to offer innovative financial solutions to an under-served market, it is seen as a socially responsible, faith based banking niche with considerable growth potential. In the Muslim world and increasingly in the West, significant segments of the institutional and retail markets are increasingly choosing Islamic finance for their financing and investment needs. Today, more than 500 Islamic Financial Institutions are operating throughout the world. Western banks are also doing Islamic banking, through their Islamic Units in U.K, Germany, Switzerland, Luxembourg and other countries. The industry is growing at a rate of roughly 15 percent per year, and could serve 40 to 50 percent of the world's Muslim population within a decade, he added.
Referring to State Bank of Pakistan's released figures, Mr. Raza said these figures indicate that in year 2011, Islamic banks fetched Rs.10 billion profit. Compared to the previous years, this banking segment has achieved a 34% year on year growth rate. Both the asset and deposit books of Islamic Banks have shown significant growth in 2011 and State Bank report has clearly stated that the growth in this industry is complemented by the profit level achieved last year.
Mr. Raza said total assets of Islamic banking in Pakistan have grown by 34 percent to Rs 641 billion at the end of December 31, 2011 over last year's Rs477 billion. Similarly, deposits base has also surged by 34 percent to Rs 521 billion during 2011 over last year's Rs390 billion. The market share of Islamic banking has grown tremendously in the overall banking industry. Total assets of Islamic banking are 7.8 percent of the total banking industry while deposits have 8.4 percent share in the total banking sector in the country, he added.
Regarding the issues being faced by Islamic Industry, he underlined the need for effective legislation for the faster growth of Islamic banking in Pakistan. He urged Islamic banks to introduce all the products available in the conventional banking so that the businessmen can also depend on Shariah banking.
He said the lack of investment avenues, especially short-term, has been one of the major problems faced by Islamic Financial Institutions (IFIs) in Pakistan. IFIs cannot invest in conventional interest based sovereign debt instruments such as T-bills and Pakistan Investment Bonds. Therefore, short term liquidity management has been a key challenge. Government patronage and regulatory/tax reforms play a pivotal role for any industry to grow with leaps and bounds. Islamic banks are new players in the market and they should be given some relaxation in terms of taxation, he added.
Since inception of the Islamic banking industry, Mr. Salman Raza said the supply of trained or experienced human resource has lagged behind the expansion of Islamic banking. He said, "There is a dearth of qualified bankers who are well versed in Islamic laws as well as contemporary economics and finance. Currently, few universities and training institutes are offering courses in Islamic finance but they also face lack of competent human resources to conduct these courses." At the experts' level, he said, there are only a few scholars with the requisite knowledge and expertise in the field of Islamic finance. Therefore, the industry has to rely on a handful of Shariah scholars for the product development needs and these scholars find it difficult to accommodate multiple requests for their time. To cater to the needs of the industry, both business schools and religious schools should offer specialist courses in conjunction with industry experts to prepare the next generation of Shariah scholars and Islamic financial managers, he added. However, he said, despite challenges Islamic banking industry is moving forward in a highly competitive environment.