Islamic Banking in Pakistan

Only available on StudyMode
  • Topic: Sharia, Islam, Islamic banking
  • Pages : 5 (1138 words )
  • Download(s) : 200
  • Published : December 15, 2012
Open Document
Text Preview
Muhammad Bilal CH;Kanwal Talib
2012
Islamic Banking in Pakistan
Muhammad Bilal CH;Kanwal Talib
2012
Islamic Banking in Pakistan

Islamic Banking in Pakistan has been the idea based on Islamic laws derived by Quran, Hadith and sharia. The idea was first promoted in 1960’s which was never completely implemented but even then in 1985 Banking in Pakistan was declared to be Interest free. Many advantages can be observed using this system whereas it may lead to some complications. Financial Institutes & Markets

MBA 3.5 Yrs.
i10-1301
i10-1308

Islamic Banking in Pakistan has been the idea based on Islamic laws derived by Quran, Hadith and sharia. The idea was first promoted in 1960’s which was never completely implemented but even then in 1985 Banking in Pakistan was declared to be Interest free. Many advantages can be observed using this system whereas it may lead to some complications. Financial Institutes & Markets

MBA 3.5 Yrs.
i10-1301
i10-1308

Literature Review

Subject
FIM

Date: 19 April, 2012

Submitted by: Submitted to: Muhammad Bilal Khalid Mr. Atique Shah Kanwal Talib

MBA 10 (3.5 Years)
National University
Of Computer & Emerging Sciences Islamabad

Islamic Banking in Pakistan
Islamic Banking in Pakistan

Introduction

Islamic banking is banking activity that is consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics. The rules and regulation come from Quran, Hadith and Sharia. Exchange of monetary value for monetary value is prohibited in Islam. The main difference of Islamic banking from conventional banking is that there is prohibition of interest (riba) in Islamic Banking. Implication of Islamic banking in Pakistan first took movement in 1960’s. Islamic banking due to its profit and loss nature is almost default free and cannot fail. It helps economy bloom with regard to the rights and obligations of all as equal. Islamic banking is cut off from all the financial tools used and available to conventional banking.

Literature Review

Pakistani banking sector has faced many changes during the period since independence. Almost 81% of the banking assets are owned by private sector and the foreign investments are 47% of the paid up capital. At first there was the conventional banking system working in Pakistan but in 1960,s very late but at last it was pointed out that being Islamic state Pakistan should observe Islamic mode of banking and eradicate interest (riba) from its system. The first firm order to work against interest banking and implementation of Islamic banking was given by the president in September, 1977. On 1st July, 1985 all commercial banks were declared interest free and all deposits were opened on PL&S basis. Many financial tools were developed keeping Islamic preaching and sharia in context to replace the conventional financial tools. These tools are Modarba, Musharka, zakat, Usher, Participation term certificates (PTC’s), Qard-ul-hassan etc. The concept of profit and loss sharing was introduced in which both lender and borrower face equal risk. The capital supplier must share the risk with the user. No transaction without transfer of possession is legal. Monetary value for monetary value is strictly prohibited. Empathy is the magnitude of caring and individual attention given to customers. Many reports put emphasis on the fact that the banking depends on customer service quality. The better the quality and time management the more the clientele. The factor they put importance to be: Reliability, Tangibility, Responsiveness, Assurance, Empathy. There were many problems as to full implication and functionality of Islamic banking...
tracking img