Islamic Bank Perception

Topics: Islamic banking, Sharia, Bank Pages: 43 (4873 words) Published: December 12, 2009
Table of Content

Problem Statement:2
Research Objectives:2


Sampling Design:5
Research Design:5
Exploratory Research:5
Conclusive Research:6
Data Collection Method:6
Data Analysis:6







This report contains a comprehensive record of our work performed on the research project. It includes detail of all the tasks that we performed in the course of this project. These tasks are presented in this report in a sequence to make it easy for the reader to understand and comprehend the results.

Problem Statement:

“What are the perceptions of people about Islamic Banking?”

Research Objectives:

Our research aims to fulfill many purposes. They are listed below: 1. To explore the perception of people regarding Islamic Banking. 2. To find out which Islamic Banks do people know of.
3. To see how many people use Islamic Banking and why.
4. To whether Islamic Banks are working strictly in accordance with Shariah compliances.


H1: Islamic Banks are working strictly according to the Shariah Compliances. H2: Islamic banking is banking without Riba only.
H3: Islamic banking is conventional banking with a different name only. H4: People are aware of the basic concepts of Islamic Banking The above stated hypotheses were developed in order to be tested by survey.


Although, Islamic Banking at very small scale was present in Pakistan at the time of her inception in 1947, but due to having a very small volume of capital, limited areas of operations these banks were vanished from the page of history. According to Wilson RJ, the first attempt to establish an Islamic financial institution was took place in Pakistan in late 1950s with the establishment of a local Islamic bank in rural area. This banking organization was known as “Rural Cooperative West Pakistan”. Some pious landlords who deposited their extra money (funds) at no interest, and then loaned to small landowners for agricultural advanced, but a small charge was levied to cover the bank’s operational costs. The charge was far lower than the rate of interest. Although the experience was encouraging, two main factors were responsible for its failure. First, the limited funds available to loan could not cover the gap between deposits and credit. Secondly, the bank staff did not have complete autonomy over its operation. The serious steps towards Islamization of the principles and constitution were took place in 1962 when the Council of Islamic Ideology (CII) was established. The third constitution of Pakistan was passed in 1973, which allowed comprehensive legislation on Islamic Principles and establishment of Federal Shariah Court (FSC).

In 1980, the Council of Islamic Ideology (CII) presented its report on the elimination of interest, genuinely considered to be the first major work in the world undertaken towards the establishment of Islamic Banking and Finance. In 1985, all commercial banks were bound by legislation to write-off all interest bearing transactions and transform their nomenclature stating all Rupee saving accounts as interest-free within next five years. However, foreign currency deposits in Pakistan and lending of foreign loans continued as those were done before.

In 1991, the Federal Shariat Court declared procedures adopted by the commercial banks non-Islamic. The government made appeals to the Shariat Appellate Bench of the Supreme Court of the Pakistan against the FSC’s declaration. Until today, the dispute between government and FSC is still in progress, and details of the news in print and other media revealed that government aimed to sabotage the historic decision of FSC. The Islamization process of all state owned banks in Pakistan seems to take very long time, because of very complex...
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