-1-

Macroeconomics Term Report

Islamic Banking & Finance

Submitted to: Mr. Khalid Mustafa

Submitted by: Syed Asad Mehmood

MBA Evening
MEN-2200475

Macroeconomic Term Report on Islamic Banking and Finance

 -2-

Table of Contents

Islamic Banking and Finance

1.The Prohibition of Riba in the light of Quran & Hadith …. 1
2.Brief History of Islamic Banking and Finance …. 2
3.Brief Introduction of Islamic Banking and Finance ……. 3
a. Advantages of Islamic Banking System over conventional
Banking System ………………. 3
b. Conventional and Islamic Banking, the main difference. 4
c. Islamic Modes of Financing ……………. 5
i.Musharakah ………………. 5
ii.Mudarabah ………………. 5
iii.Diminishing Musharakah ………………. 5
iv.Murabaha ………………. 6
v.Ijarah (Leasing) ………………. 6
vi.Ijarah Wa Iqtina ………………. 6
vii.Istisna' ………………. 6
viii.Bai Muajjal (Credit Sale) ………………. 7
d.Permissible Investment Vehicles in Islamic Finance 7
i.Investment in Stock ………………. 7
ii.Investment in Mutual Funds ………………. 8
iii.Investment in Day-to-day Trading………………. 8
e.Problems facing by Islamic Banking and Finance 9
4.Islamic Banking and Finance, The Global Scenario . 10
5.Islamic Banking and Finance in Pakistan ……. 12
a.Brief History of Islamic Banking and Finance
Development in Pakistan ………………. 12
b.The Prominent Icons of Islamic Finance in Pakistan 13
c.Current Status of Islamic Banking in Pakistan …. 14
d.Role of Islamic Banking and Finance in Pakistan
Development 16
e.State Bank’s Role in Development of Islamic Finance in
Pakistan ……………… 18
f.Future Prospectus of Islamic Finance

Macroeconomic Term Report on Islamic Banking and Finance

 -3-

1. THE PROHIBITION OF RIBA IN THE LIGHT OF QURAN &

HADITH

Most probably, the reader is familiar with the verses of prohibition of Riba in the
Quran. Unfortunately, negligent interpretations of the meaning of those verses has
led many individuals to assume that the prohibition only relates to situations where
the creditor is likely to charge exploitatively high rates of interest. One of the most
popular translations of the meaning of the Quran, Yusuf ‘Ali (1991), translates the
meaning of verses [2:278-279] thus:

278. O ye who believe! Fear Allah, and give up what remains of your
demand for usury, if ye are Indeed believers.

279. If ye do not, take notice of war from Allah and His Messenger: but if
ye turn back, ye shall have your capital sums; Deal not unjustly, and ye
shall not be dealt with unjustly.

The (sole) objective served by the prohibition of Riba is the avoidance of injustice (in
the sense of exploitation of the poor debtor by the rich creditor). However, the
meaning of the ending of the verse – as explained by ’Abu Jafar Ibn Abbas, and
others (c.f. Al-Imam Al-Tabarı (1992, vol.3, pp.109-110)) – is much closer to: “if you
turn back, then you should collect your principal, without inflicting or receiving
injustice”. The exegetes (ibid.) then explain “without inflicting or receiving injustice”
as “without increase or diminution”, where both an increase or a decrease of the
amount returned relative to the amount lent would be considered injustice.

Muslim narrated on the authority of ’Abu Saıd Al-Khudriy; The Messenger of Allah
(pbuh) said:

“Gold for gold, silver for silver, wheat for wheat, barley for barley,
dates for dates, and salt for salt; like for like, hand to hand, in equal
amounts; and any increase is Riba.”

Muslim narrated on the authority of ’Abu Saıd Al-Khudriy:

Bilal visited the Messenger of Allah (pbuh) with some high quality
dates, and the Prophet (pbuh) inquired about their source. Bilal
explained that he traded two volumes of lower quality dates for one
volume of higher quality. The Messenger of Allah (pbuh) said: “this is
precisely the forbidden Riba! Do not do this. Instead, sell the first type
of dates, and use the proceeds to buy the other.”

The first Hadıth enumerates six goods, which are eligible for Riba. Since barter
trading (e.g. dates for dates, as in the second Hadıth) is rarely of concern today, we
shall mainly be concerned with Riba as it pertains to gold and silver, the monies
(Roman and Persian, respectively) used during the Prophet’s (pbuh) time. With the
exception of juristic schools which denied the use of reasoning by legal analogy
(qiyas) as a source of legislation (e.g. the Z.ahirıs), and a few contemporary
detractors, most Islamic schools of jurisprudence accepted gold and silver in the first
Hadıth to signify money in general, including contemporary monies.

Macroeconomic Term Report on Islamic Banking and Finance

 -4-

2. BRIEF HISTORY OF ISLAMIC BANKING AND FINANCE

In Muslim communities, limited banking activity, such as acceptance of deposits,
goes back to the time when the Prophet Muhammad (PBUH) was still alive. At that
time, people deposited money with the Prophet or with Abu Bakr Sedique (RWU),
the First Khalif of Islam. The first modern Islamic bank, established in Egypt in 197,
was called Nasser's Social Bank. Islamic accounting, an essential tool for the success
of Islamic banks, is said to have been developed contemporaneously at the
University of Cairo (Crane, p. 80).

The desirability of abolishing fixed interest rates and the Islamization of financial
systems were discussed at the first meeting of the Islamic Organization Conference
(IOC) in Jeddah in 1973. Subsequently, many Islamic banks were founded under the
profit-and-Loss sharing system (PLS), which will be discussed below.

Modern Islamic banking has undergone three phases of development:

Emergence-1972 through 1975: This period was marked by a surge in oil revenues
and great liquidity .Parallel events included a resurgence of fundamentalist Muslim
movements, reemphasis on the Wahabi School of Brotherhood and Pan-Islamism,
and establishment of IOC.

Expansion-1976 to the early 1980s: Islamic banking spread from the Arabian Gulf
eastward to Malaysia, and westward to England. More than Accounting Needs of
Islamic Banking 20 Islamic banks were established, including international and
intercontinental institutions. Islamic banking associations or consultancy. bodies
broadened their operations.

Maturity--1983 to the present: The Arab world was confronted by economic

setbacks, including slowdowns in oil revenues, the collapse of Kuwait's Souk al-
Manakh, the relative strength of the U.S. dollar, higher interest rates in the United
States, and capital outflows from OPEC nations. At the same time, Arab banks
opened branches in the United States and Islamic banking practices were
implemented in both Pakistan and Iran.

Islamic banking operations are not limited to Arab soil, or Islamic countries, but are
spreading throughout the world. One reason is the "growing trend toward
transcending national boundaries, and unifying Muslims into a political and
economic entity that could have a significant impact on the pattern of world trade.
Since Muslims are inclined to follow Islamic traditions, there is a tendency to
establish an Islamic economic system in every Islamic nation and to restore Shariah
Law as the basic source for legislation" (Abdel-Magid, p. 81).

Macroeconomic Term Report on Islamic Banking and Finance

 -5-

3. INTRODUCTION OF ISLAMIC BANKING & FINANCE

Over the last three decades Islamic banking and finance has developed into a
full-fledged system and discipline reportedly growing at the rate of 15 per cent per
annum. Today, Islamic financial institutions, in one form or the other, are working in
about 75 countries of the world. Besides individual financial institutions operating in
many countries, efforts have been underway to implement Islamic banking on a
country wide and comprehensive basis in a number of countries. The instruments
used by them, both on assets and liabilities sides, have developed significantly Ad
therefore; they are also participating in the money and capital market transactions.

In this report we have taken the advantages provided by the Internet and collect and
analyze all available resources.

The road ahead for Islamic banking and finance is long and will be full of challenges.
More so, in the current global financial environment characterized by volatile and
unpredictable market dynamics, rapid advancements in technology and financial
innovation, which have all culminated in increasingly more complex and heightened
financial risks. With the continued cooperation and active participation of the central
banks and the financial community.

a. CONVENTIONAL AND ISLAMIC BANKING, MAIN

DIFFERENCE

The main difference between the two banking systems is that Islamic banks
are supposed to work without charging and giving interest. Rather than
charging a predetermined fixed rate of interest to those who want to use
banks' funds for trade, commerce and production, Islamic banks are ideally
required to have a profit and loss sharing arrangement with them.

On the other side, the depositors have two choices. First, they can keep all or
part of their money in an Islamic bank in a no-risk account. The bank will
keep this money as safe deposit and guarantee the principal amount (it could
be suggested that Islamic banks should not use these deposits for investment
ie, a 100% reserve requirement for such accounts). Alternatively, depositors
can choose to put all or part of their money in investment accounts. Islamic
banks will use the proceedings of these accounts to make investments in
trade and production.

The profits made by Islamic banks are then shared with depositors. To avoid
gharar, the details of profit and loss sharing arrangements are completely and
clearly known to all parties in advance. The Islamic sense of social justice
requires that all parties directly or indirectly financing in a business should
share the risk of the business. The banks should combine shareholders'
equity funds with those of their depositors and provide these funds to the
ultimate users: traders and producers.

All parties of this business arrangement should share the benefits as well as
the risks of these investments. Conventional banks have to guarantee the
principal and accrued interest by law, whereas Islamic banks will violate their

Macroeconomic Term Report on Islamic Banking and Finance

 -6-
very basic principles if they give such guarantee (to their investment deposit
holders). In principle, Islamic banks are not supposed to ask for collateral.

In order to avoid risk, the integrity, capability/competence of the potential

user of banks' funds (or the entrepreneurs) and the viability of the trade or
business proposal are given much more importance in comparison to
conventional banks.

Banks being equity provider of a business would be given the right to inspect
all financial accounts of the business. This is normally not the case when
conventional banks provide loans on interest.

A number of conventional commercial banks all over the world go bankrupt

every year due to bad loans or bad economic condition or both. To be
competitive, Islamic banks have to be prudent and efficient. However, even
when banks are working prudently, they could still face insolvency due to an
overall downturn in the economy.

The sharing principles of Islamic banking would channel negative

consequences of a genuine downturn to all parties involved: depositors,
banks and traders/producers. The depositors may get a lower than normal
return in some years.

In extreme cases, a negative return is also a possibility. However, one should

also keep in mind that when most businesses would realize better returns,
both shareholders of Islamic banks and their depositors should also receive
higher than normal returns.

b. ADVANTAGES OF ISLAMIC BANKING AND FINANCE

SYSTEM OVER CONVENTIONAL BANKING SYSTEM
A number of theoretical works examined the implications of preferred
Islamic modes of finance in the contemporary world. In their theoretical
work, Siddiqui and Zaman (1989a & 1989b) have shown how the application
of Mudarabah and Musharakah techniques of finance has the potential to
enhance investment and could also generate a more equitable desirable
income distribution pattern.

Their models confirm the intuitive point that compared to a debt

arrangement, both under deterministic and probabilistic framework,
Mudarabah and Musharakah finance could lead to higher level of investment
as new (marginal) projects would be under taken as long as they are expected
to give a positive rate of return, however small those rates might be.

It also shows that under these Islamic techniques of finance, compared to a

debt system, a greater portion of profits is allocated to the providers of funds
if the economy is doing well. On the other hand, in bad conditions, the
providers of fund receive a lower return and in extreme cases they may get a
negative return. This has a stabilising effect on the economy.

Macroeconomic Term Report on Islamic Banking and Finance

 -7-

Siddiqui (1994) further discuss how an economy based on the institution of

interest is inherently unstable (a proposition so elegantly presented and
championed by prominent post-Keynesian economist, Hyman Minsky) and
how the Islamic techniques of finance based on profit and loss sharing have
the potential to provide financial stability.

It emphasises the point that Mudarabah finance is particularly capable of

attracting those potential capable entrepreneurs who are unable to provide
any collateral. This possible increase in the supply of entrepreneurs would
decrease the power of existing entrepreneurs and can lead to a desirable
distribution of income by discouraging concentration of wealth in fewer
hands.

Siddiqui (1994) also addresses the problems one would face under Islamic
techniques of finance and argues that those problems are not
insurmountable. He points out that any serious attempt to implement profit
sharing financing would require, at the initial stages, commitment and often
supervision and intervention by the government.

c) MAJOR ISLAMIC MODES OF FINANCING

i) MUSHARAKAH (PARTNERSHIP)
The literal meaning of Musharakah is sharing. The root of the word
"Musharakah" in Arabic is Shirkah, which means being a partner. It is
used in the same context as the term "shirk" meaning partner to
Allah. Under Islamic jurisprudence, Musharakah means a joint
enterprise formed for conducting some business in which all partners
share the profit according to a specific ratio while the loss is shared
according to the ratio of the contribution. It is an ideal alternative for
the interest based financing with far reaching effects on both
production and distribution. The connotation of this term is little
limited than the term "Shirkah" more commonly used in the Islamic
jurisprudence. For the purpose of clarity in the basic concepts, it will
be pertinent at the outset to explain the meaning of each term, as
distinguished from the other. "Shirkah" means "Sharing" and in the
terminology of Islamic Fiqh, it has been divided into two kinds:

ii) MUDARIBAH
This is a kind of partnership where one partner gives money to
another for investing in a commercial enterprise. The investment
comes from the first partner who is called "Rab-ul-Maal" while the
management and work is an exclusive responsibility of the other,
who is called "Mudarib" and the profits generated are shared in a
predetermined ratio.

iii) DIMINISHING MUSHARAKAH

Another form of Musharakah, developed in the near past, is
'Diminishing Musharakah'. According to this concept, a financier and
his client participate either in the joint ownership of a property or an

Macroeconomic Term Report on Islamic Banking and Finance

 -8-
equipment, or in a joint commercial enterprise. The share of the
financier is further divided into a number of units and it is
understood that the client will purchase the units of the share of the
financier one by one periodically, thus increasing his own share until
all the units of the financier are purchased by him so as to make him
the sole owner of the property, or the commercial enterprise, as the
case may be.

iv) MURABAHAH
Murabahah is a particular kind of sale where the seller expressly
mentions the cost of the sold commodity he has incurred, and sells it
to another person by adding some profit thereon. Thus, Murabahah
is not a loan given on interest; it is a sale of a commodity for
cash/deferred price. The Bai' Murabahah involves purchase of a
commodity by a bank on behalf of a client and its resale to the latter
on cost-plus-profit basis. Under this arrangement the bank discloses
its cost and profit margin to the client. In other words rather than
advancing money to a borrower, which is how the system would
work in a conventional banking agreement, the bank will buy the
goods from a third party and sell those goods on to the customer for
a pre-agreed price. Murabahah is a mode of financing as old as
Musharakah. Today in Islamic banks world-over 66% of all
investment transactions are through Murabahah.

v) IJARAH (LEASING)
Ijarah is a contract of a known and proposed usufruct against a
specified and lawful return or consideration for the service or return
for the benefit proposed to be taken, or for the effort or work
proposed to be expended. In other words, Ijarah or leasing is the
transfer of usufruct for a consideration which is rent in case of hiring
of assets or things and wage in case of hiring of persons.

vi) IJARAH-WAL-IQTINA (HIRE PURCHASE)

A contract under which an Islamic bank provides equipment,
building or other assets to the client against an agreed rental together
with a unilateral undertaking by the bank or the client that at the end
of the lease period, the ownership in the asset would be transferred
to the lessee. The undertaking or the promise does not become an
integral part of the lease contract to make it conditional. The rentals
as well as the purchase price are fixed in such manner that the bank
gets back its principal sum alongwith with profit over the period of
lease.

vii) MUSAWAMAH
Musawamah is a general and regular kind of sale in which price of the
commodity to be traded is bargained between seller and the buyer
without any reference to the price paid or cost incurred by the
former. Thus, it is different from Murabaha in respect of pricing
formula. Unlike Murabaha, seller in Musawamah is not obliged to
reveal his cost. Both the parties negotiate on the price. All other
conditions relevant to Murabaha are valid for Musawamah as well.

Macroeconomic Term Report on Islamic Banking and Finance

 -9-
Musawamah can be used where the seller is not in a position to
ascertain precisely the costs of commodities that he is offering to sell.

viii) ISTISNAA (ISLAMIC FORWARDS)

It is a contractual agreement for manufacturing goods and
commodities, allowing cash payment in advance and future delivery
or a future payment and future delivery. Istisna’a can be used for
providing the facility of financing the manufacture or construction of
houses, plants, projects and building of bridges, roads and highways.

ix) BAI MUAJJAL (CREDIT SALE)

Literally it means a credit sale. Technically, it is a financing technique
adopted by Islamic banks that takes the form of Murabaha Muajjal. It
is a contract in which the bank earns a profit margin on his purchase
price and allows the buyer to pay the price of the commodity at a
future date in a lump sum or in installments. It has to expressly
mention cost of the commodity and the margin of profit is mutually
agreed. The price fixed for the commodity in such a transaction can
be the same as the spot price or higher or lower than the spot price.

d) PERMISSIBLE INVESTMENT VEHICLES OF ISLAMIC

FINANCE
i) Investing in equities
Common shares in a listed company are – as the name suggests –
“shares” in the assets of the company. Thus, if the company’s
business is legitimate, and its conduct complies with the rules of
Shar¯ı‘a, Muslims are allowed to own such common shares (stock).
Other common means of investing in claims on companies’ capital
are not allowed: bonds are explicitly a claim on a portion of the
company’s interest-bearing debt, and preferred stock is a hybrid
stock/bond. Since common stocks of Islamically appropriate
companies may thus be bought and sold, it is also possible to create
mutual funds in such stocks.

Muslims before going to park equity investment considers following

set of filters:
The first set of filters is straightforward: exclude all companies whose
primary business involves forbidden products (e.g. alcohol, pork,
tobacco, financial services, weapon production, and
“entertainment”).

The second set of filters, based on “financial ratios”, is significantly

more dubious. The rules recently adopted by the DJII board are
virtually identical with those adopted in earlier years by other fund
management company Sh¯ar¯ı‘a boards in Islamic countries. Those
rules relate to the above mentioned compromises on three
prohibitions due to the inherent Rib¯a and other impurities:

1. Carrying interest-bearing debt.

2. Receiving interest or other impure income.

Macroeconomic Term Report on Islamic Banking and Finance

 - 10 -
3. Trading in debts at a price other than their face values.

The Shar¯ı‘a boards of most Islamic fund managers and equity

indices have reached very similar compromises. The following is the
list of rules/compromises (ibid, p.10) used by DJII:

1. Exclude companies with a debt to total asset ratio of 33% or more.

2. Exclude companies with “impure plus non-operating interest
income” to revenue ratio of 5% or more.
3. Exclude companies with accounts receivable to total assets ratio of
45% or more.

ii) Investment in Mutual Funds

Recall that an Islamic financial institution engaged in a number of

lease contracts continues to own the assets throughout the life of the
leases. While some jurists restricted the lessor’s ability to sell the
leased asset or parts thereof during the lease period, most others
permitted such a sale as long as the lease continues. Therefore, the
Islamic financial institution can treat its portfolio of leased assets as a
company or fund, shares of which may be sold to investors. The
investors then earn a fixed income according to their shares in the
fund. Like the forbidden conventional fixed income investments (e.g.
money market funds, bonds, etc.), the fixed income from a lease fund
will move up with inflation, and the risks borne are minimal (default
in the conventional contract vs. default and repairs or losses of assets
in the lease fund).

iii) Investment in Day-to-day Trading

Following a “buy low and sell high” strategy is at the heart of all
profitable trading, including the caravan trades in which the Prophet
(pbuh) participated. If a profitable opportunity presents itself sooner
than anticipated, a good merchant or investor would be criticized for
foregoing such profits. Whether or not speculation amounts to
gambling depends on the intentions of the trader, and the nature of
the traded goods.

The issue of whether “day trading”, where the investor intends to

liquidate all positions at the end of each day, is particularly close to
gambling as compared to other investment strategies. There is no
reason to believe that the term of the trading activities influences
whether or not it is considered gambling. Tradition has it that
‘Abdul-Rah.m¯an ibn ‘Awf (mAbpwh) reached Mad¯ınah without
any wealth (having left it all in Makkah), went to the market with an
axe, and returned at the end of the day with a small fortune. His
abilities to amass wealth were legendary, but that did not reduce his
religious status, as he was one of the sh¯¯ura group tonominate the
Kh¯al¯ıfah, and he was one of the ten companions of the Prophet
(pbuh) to receive glad tidings of admission into paradise.

Macroeconomic Term Report on Islamic Banking and Finance

 - 11 -

e) PROBLEMS FACING BY ISLAMIC BANKING AND

FINANCE
Current Problems of Islamic Banking and Finance may be summarized as follows:

i) Shortage of experts in Islamic banking: The supply of trained or

experienced bankers has lagged behind expansion of Islamic banking.
The training needs affect not only Arab domestic banks. both Islamic
and non-lslamic. but foreign banks. Academic institutions.
international organizations, and transnational firms must respond to
the need by organizing training materials, lectures. and workshops;
although ml and IAIB have made successful efforts. much remains to
be accomplished. Mr. AI-Yasin, the chairman of KFH. has proposed
"an Islamic banking institute which will provide professional Islamic
bankers and expand. the resent training activities of IAIB" (Arabia.
February 1984. p. 52).

ii) Absence of accounting (and auditing) standards pertinent to Islamic

banks: Uncertainty in accounting principles involves revenue
realization, disclosures of accounting information, accounting bases.
valuation, revenue and expense matching. etc. Thus. the results of
Islamic banking schemes may not be adequately defined. particularly
profit and loss shares attributed to depositors.

iii) Lack of uniform standards of credit analysis: Islamic banks have no

appropriate standard of credit analysis, especially for PLS schemes.
Similarly, there is a widespread training need involving related aspects
such as financial feasibility studies, monitoring of ventures, and
portfolio evaluation.

iv) Potential conflicts with central banks: Islamic banks have been
established as separate legal entities; therefore, their relationships
with central banks and/or other commercial banks are uncertain.
Problems may be complicated when an Islamic bank is established in
a non-muslim nation, and is subject to that nation's rules and
requirements.

v) Potential conflict between domestic banks. foreign banks, and

Islamic banks : It appears that domestic banks and foreign banks will
experience continuing difficulty in adopting Islamic banking
practices, including the PLS scheme, until they can become more
confident of the results of investing ventures.

vi) Difficulties in cash management: For example, KFH suffered from

excessive cash in late 1983 and 1984, i.e..lack of promising
investments. The situation is believed to have contributed to KFH's
1984 action, whereby it paid no dividend and transferred its entire
annual surplus to reserves.

Macroeconomic Term Report on Islamic Banking and Finance

 - 12 -
vii) Lack of a deposit insurance system: The lack of such a system
becomes more grave, because Islamic banks generally do riot have
standard measures of reserve requirements or liquidity ratios.

4. ISLAMIC BANKING AND FINANCE GLOBAL SCENARIO

Over the last three decades Islamic banking and finance has developed into a full-
fledged system and discipline reportedly growing at the rate of 15percent per annum.
Today, Islamic financial institutions, in one form or the other, are working in about
75 countries of the world. Besides individual financial institutions operating in many
countries, efforts have been underway to implement Islamic banking on a country
wide and comprehensive basis in a number of countries. The instruments used by
them, both on assets and liabilities sides, have developed significantly and therefore,
they are also participating in the money and capital market transactions. In Malaysia,
Bahrain and a few other countries of the Gulf, Islamic banks and financial
institutions are working parallel with the conventional system. Bahrain with the
largest concentration of Islamic financial institutions in the Middle East region, is
hosting 26 Islamic financial institutions dealing in diversified activities including
commercial banking, investment banking, offshore banking and funds management.
It pursues a dual banking system, where Islamic banks operate in the environment in
which Bahrain Monetary Agency (BMA) affords equal opportunities and treatment
for Islamic banks as for conventional banks. Bahrain also hosts the newly created
Liquidity Management Centre (LMC) and the International Islamic Financial Market
(IIFM) to coordinate the operations of Islamic banks in the world. To provide
appropriate regulatory set up, the BMA has introduced a comprehensive prudential
and reporting framework that is industry-specific to the concept of Islamic banking
and finance. Further, the BMA has pioneered a range of innovations designed to
broaden the depth of Islamic financial markets and to provide Islamic institutions
with wider opportunities to manage their liquidity.

Another country that has a visible existence of Islamic banking at comprehensive

level is Malaysia where both conventional and Islamic banking systems are working
in a competitive environment. The share of Islamic banking operations in Malaysia
has grown from a nil in 1983 to above 8 percent of total financial system in 2003.
They have a plan to enhance this share to 20 percent by the year 2010. However,
there are some conceptual differences in interpretation and Shariah position of
various contracts like sale and purchase of debt instruments and grant of gifts on
savings and financial papers.

In Sudan, a system of Islamic banking and finance is in operation at national level.

Like other Islamic banks around the world the banks in Sudan have been relying in
the past on Murabaha financing. However, the share of Musharaka and Mudaraba
operations is on increase and presently constitutes about 40 percent of total bank
financing. Although the Islamic financial system has taken a good start in Sudan,
significant problems still remain to be addressed.

Like Sudan, Iran also switched over to Usury Free Banking at national level in March
1984. However, there are some conceptual differences between Islamic banking in
Iran and the mainstream movement of Islamic banking and finance.

Macroeconomic Term Report on Islamic Banking and Finance

 - 13 -
Owing to the growing amount of capital availability with Islamic banks, the refining
of Islamic financing techniques and the huge requirement of infrastructure
development in Muslim countries there has been a large number of project finance
deals particularly in the Middle East region. Islamic banks now participate in a wide
financing domain stretching from simple Shariah-compliant retail products to highly
complex structured finance and large-scale project lending. These projects, inter alia,
include power stations, water plants, roads, bridges and other infrastructure projects.
Bahrain is the leading centre for Islamic finance in the Middle East region. The
establishment of the Prudential Information and Regulatory Framework for Islamic
Banks (PIRI) by the BMA in conjunction with AAOIFI has gone a long way towards
establishing a legal and regulatory framework to meet the specific risks inherent in
Islamic financing structures.

The BMA has quite recently signed MoU with the London Metal Exchange (LME)
to pool assets to develop and promote Shariah compliant tradable instruments for
Islamic banking industry. The arrangement is seen as a major boost for industry’s
integration in the global financial system and should set the pace for commodity-
trading environment in Bahrain. BMA has also finalized draft guidelines for issuance
of Islamic bonds and securities from Bahrain. In May 03, the Liquidity Management
Centre (LMC) launched its debut US$ 250 million Sukuk on behalf of the
Government of Bahrain.

National Commercial Bank (NCB) of Saudi Arabia has introduced an Advance Card
that has all the benefits of a regular credit card. The card does not have a credit line
and instead has a prepaid line. As such, it does not incur any interest. Added benefits
are purchase protection, travel accident insurance, etc and no interest, no extra fees
with no conditions, the card is fully Shariah compliant. It is more secure than cash,
easy to load up and has worldwide acceptance. This prepaid card facility is especially
attractive to women, youth, self employed and small establishment employees who
sometimes do not meet the strict requirements of a regular credit card facility. Saudi
Government has also endorsed an Islamic-based law to regulate the kingdom's
lucrative Takaful sector and opened it for foreign investors.

Islamic banks have also built a strong presence in Malaysia, where Standard & Poor's
assigned a BBB+ rating to the $600 million Sharia-compliant trust certificates (called
sukuk) issued by Malaysia Global Sukuk Inc. Bank Negara Malaysia (BNM) has
announced to issue new Islamic Bank licences to foreign players. The Financial
Sector Master plan maps out the liberalisation of Malaysia's banking and insurance
industry in three phases during the next decade. It lists incentives to develop the
Islamic financial sector and enlarge its market share to 20 percent, from under 10
percent now. A dedicated high court has been set up to handle Islamic banking and
finance cases.

In United Kingdom, the Financial Services Authority is in final stages of issuing its
first ever Islamic banking license to the proposed Islamic Bank of Britain, which has
been sponsored by Gulf and UK investors. The United States of America has
appointed Dr. Mahmoud El Gamal, an eminent economist/expert on Islamic
banking to advise the US Treasury and Government departments on Islamic finance
in June 2004.

Macroeconomic Term Report on Islamic Banking and Finance

 - 14 -

5. ISLAMIC BANKING AND FINANCE IN PAKISTAN

a) HISTORY OF ISLAMIC FINANCE IN PAKISTAN

1949 The Objectives Resolution was adopted by the first constituent

Assembly based on the ideology of a sovereign Islamic state. This
was the first step in the conception towards Pakistan’s Constitution.

1956 The first constitution defined Islam as the State Religion and all laws
to be according to the injunctions of the Qur’an and Sunnah.

1962 The establishment of the Council of Islamic Ideology (CII) was

followed by the conception of second constitution of Pakistan.

1973 The third constitution of Pakistan was passed allowing

comprehensive legislation on Islamic principles and establishment of
a Federal Shariat Court (FSC)

1980 CII presents its report on the elimination of interest, genuinely

considered to be the first major work in the world undertaken on
Islamic Banking and Finance.

1985 Procedures adopted by banks, was declared un-Islamic by the FSC.

The government and some banks/DFIs made appeals to the Shariat
Appellate Bench (SAB) of the Supreme Court of Pakistan

1997 Al-Meezan Investment Bank is established as the first Islamic Bank

of Pakistan. Dr. Muhammed Imran Usmani appointed as resident
Shariah Advisor.

1999 The Shariat Appellate Bench of the Supreme Court of Pakistan

rejects the appeals and directs all laws on interest banking to cease.
The Government sets a high level commission, task forces and
committees to institute and promote Islamic Banking on parallel
basis with the conventional system.

2001 The Shariah Supervisory Board is established at Al-Meezan

Investment Bank, led by Justice (Retd.) Muhammad Taqi Usmani as
Chairman. The SBP sets criteria for the establishment of Islamic
Commercial Banks in the private sector and subsidiaries and stand-
alone branches by existing commercial banks, to conduct Islamic
Banking in the country.

2002 The first Islamic Banking license is issued to Meezan Bank by the
State Bank of Pakistan. Societe Generals’s, (a French Commercial
Bank) operating in Pakistan were amalgamated with Meezan Bank.
President Gen. Pervez Musharraf inaugurates the first commercial
bank branch of Meezan Bank at the FTC Building, Karachi.

2003 A Musharakah based Export Refinance Scheme is designed by the

SBP in coordination with Meezan bank, in order to provide export

Macroeconomic Term Report on Islamic Banking and Finance

 - 15 -
finance to eligible exporters on the basis of Islamic mode of
financing. Efforts are underway to develop Islamic money market
instruments like Ijarah Sukuk to facilitate Banks in term of liquidity
and SLR management. Pakistan’s first Shariah compliant Mortgage
facility is launched by Meezan Bank. Approved by the Shariah
Supervisory Board, the product enables home purchase, home
construction, renovation, as well as replacement of any existing
mortgage.

2004 The SBP establishes a dedicated Islamic Banking Department (IBD)

by merging the Islamic Economics Division of the Research
Department with the Islamic Banking Division of the Banking Policy
Department. A Shariah Board has been appointed to regulate and
approve guidelines for the emerging Islamic Banking industry.

The Government of Pakistan awards the mandate for its debut

international Sukuk (Bond) offering for US$ 600 million. The
offering is a success and establishes a benchmark for Pakistan.
Meezan Bank acts as the Shariah Structuring Advisor for this historic
transaction.

Meezan Bank’s assets management arm, AL-Meezan Investment

Management Limited (AMIML), launches the Meezan Balanced Fund
(MBF). The offering was oversubscribes 1.25 times.

2005 The State Bank of Pakistan granted license to Al Baraka Islamic Bank
BSC EC, and Bank Islami Pakistan Ltd., Emirates Global Islamic
Bank Ltd., and Dubai Islamic Bank Ltd.

2006 State Bank of Pakistan granted license to First Dawood Islamic Bank
Ltd, the country's sixth Islamic bank. First Dawood Bank is co-
owned by local partners and a consortium comprising Bank Islam
Malaysia Berhad, Unicorn Investment Bank of Bahrain and a wing of
the Islamic Development Bank.

b) PROMINENT ICONS OF ISLAMIC FINANCE IN PAKISTAN

1. Justice (Retd.) Muhammad Taqi Usmani

Renowned figure in the field of Shariah, particularly Islamic Finance.

He holds the position of Deputy Chairman at the Islamic Fiqah
Academy, Jeddah. He is also member of Shariah Advisory boards of
a number of financial institutions practicing Islamic Banking and
Finance including Saudi American Bank, Saudi Arabia; HSBC Plc,
Global Islamic Finance, London; Citi Islamic Investment Bank,
Bahrain and Dow Jones Islamic Market Index. Justice Usmani has
also serving as the Vice Prsident of Darul-Uloom, Korangi, Karachi.

Born in Pakistan, Justice Usmani holds an LLB from Karachi

University. He graduated from Punjab University in 1970. Prior to

Macroeconomic Term Report on Islamic Banking and Finance

 - 16 -
the he completed Takassus course i.e. the specialization cource of
Islamic Fiqah and Fatwa from Jamia Darul-Uloom, Karachi.

2. Dr. Muhammad Imran Usmani

Is an LLB, M.Phil, and Ph. D. in Islamic Finance and graduated as a

scholar from Jamia Darul-Uloom, Karachi where he also completed a
specialization course in Islamic Jurisprudence. He is the Shariah
Advisor for the Al Meezan Bank where he is involved in conducting
training sessions for the staff in Islamic Finance and Shariah Issue.
Dr. Usmani has been teaching several branches of Islamic learning
since 1990 at Jamia Darul-Uloom, Karachi he is also visiting faculty
member of the Institute of Business Administration (IBA) Karachi.

Dr. Usmani serve as an Advisor/Member of Shariah Board of the

following institutions.

• State Bank of Pakistan

• HSBC Amana Finance
• Guidance Financial Group, USA
• Lloyds TSB Bank, UK
• Credit Suisse, Switzerland
• Future Growth Equity, South Africa

3. Mr. Irfan Siddiqui

The founding CEO of Meezan Bank (Pakistan first premier Islamic

Bank) has held senior management positions with various financial
institutions in Pakistan and abroad, including Pakistan Kuwait
Investment Authority, Abu Dhabi Investment Company, Abu Dhabi
Investment Authority and Coopers & Lybrand, London.

4. Mr. Pervez Said

He is the Director of Islamic Banking Department of State Bank of

Pakistan (SBP). He is also advisor to the Governor SBP on Islamic
Banking. He also handles issues relating to the central bank and
sharia board. He has worked as Head of Marketing and Business
Development at Pakistan’s first Islamic Bank (Meezan Bank) Most
probably he is the first Pakistani banker who has got the experience
of developing sharia-compliant products and actually marketing those
at the initial stages of process of islamization of banking system in
Pakistan.

c) CURRENT STATUS OF ISLAMIC BANKING AND FINANCE IN

PAKISTAN

Islamic Financial services in Pakistan, a relatively recent occurrence, have

recorded a noteworthy progress during the last three years, constituting an

Macroeconomic Term Report on Islamic Banking and Finance

 - 17 -
asset base of Rs: 57.10 billion and deposits of over Rs: 37.6 billion as of
September’2005.

GROWTH OF ISLAMIC BANKING

2003 2004 2005
Total Assets 12.90 44.00 60.00
(Rupees in Billion)

Given its nascent stage of Development, the share of the Islamic Banking
industry in the total assets of the banking sector grew from 0.5 % in 1996 to
1.7 % as of September’2005. However, given the rapid growth of this
industry, it is expected that this share would grow considerably in the years to
come.

LIST OF ISLAMIC BANKS OPERATING IN PAKISTAN

Fully functional Islamic Banks Status

Meezan Bank Ltd. Operating
Albaraka Islamic Bank Operating
BankIslami Pakistan Ltd. Operating
Emirates Global Islamic Bank Ltd. In The Pipeline
Dubai Islamic Bank Ltd. In The Pipeline
First Dawood Islamic Bank Ltd. In The Pipeline

Standalone Islamic Bank Branches of Conventional Banks

Askari Commercial Bank Ltd.

Soneri Commercial Bank Ltd.
Faysal Bank
Bank Alfalah Ltd.
Muslim Commercial Bank Ltd.
The Bank of Khyber
Standard Chartered Commercial Bank Ltd.
Prime Commercial Bank Ltd.
Bank of Punjab Ltd.
Habib Bank AG Zurich

Total No. of Islamic Branch Banking (IBB) 54

(As on March’05)

Modarabas can be rightly termed as the pioneer of long drawn process of

Islamization of financial system in Pakistan. According to data compiled by
Modaraba Association of Pakistan (MAP) the number of management
companies has come down from32 in 2001 to 27 as on 30 th June’2005 and
number of Modarabas declined from 35 to 28. However, this should not be
considered a sign of weakness, during the period aggregate paid-up capital of
the sector grew from Rs: 6.648 Million to Rs: 7,406 Million, growth of total
assets, growing from Rs: 15,216 Million to Rs: 21,131 Million and net profit
going up from Rs: 97 Million to Rs: 794 Million – also touching the highest
level of Rs: 1,072 in year 2003.

Macroeconomic Term Report on Islamic Banking and Finance

 - 18 -
Top 10 MODARABAS

Standard Chartered Modaraba Rs: 2,725 Million

First Habib Modaraba Rs: 2,657 Million
Al-Zamin Leasing Modaraba Rs: 2,276 Million
B.R.R. International Modaraba Rs: 2,030 Million
Fayzan Manufacturing Modaraba Rs: 1,357 Million
First Punjab Modaraba Rs: 1,325 Million
Guardian Modaraba Rs: 1,288 Million
First Habib Bank Modaraba Rs: 1,215 Million
First National Bank Modaraba Rs: 1,206 Million
First Equity Modaraba Rs: 742 Million

Source : MAP Year Book 2006

Islamic Banking in Pakistan

Breakup of Financings March’05

Murabaha 53%
Ijarah 28%
Musharaka 1%
Diminishing Musharaka 8%
Salam 1%
Others 9%

Breakup of Deposits March’05

Savings 47%
Current non-remunerative 24%
Others 1%
Fixed 28%

*Source: State Bank of Pakistan

d) ROLE OF ISLAMIC BANKING AND FINANCE IN

DEVELOPMENT OF COUNTRY

Islamic banks, while functioning within the framework of Shariah, can

perform a crucial task of resource mobilization, their efficient allocation on
the basis of both PLS (Musharaka and Mudaraba) and non-PLS (trading &
leasing) based categories of modes and strengthening the payments systems
to contribute significantly to economic growth and development. Sharing
modes can be used for short, medium and long-term project financing,
import financing, pre-shipment export financing, working capital financing
and financing of all single transactions. In order to ensure maximum role of
Islamic finance in development of the economy it would be necessary to
create an environment that could induce financiers to earmark more funds
for Musharakah/Mudarabah based financing of productive units, particularly
of small enterprises. The non-PLS techniques, as acceptable in the Islamic
Shariah, not only complement the PLS modes, but also provide flexibility of
choice to meet the needs of different sectors and economic agents in the

Macroeconomic Term Report on Islamic Banking and Finance

 - 19 -
society. Trade-based techniques like Murabaha with lesser risk and better
liquidity options have several advantages vis-à-vis other techniques but may
not be as fruitful in reducing income inequalities and generation of capital
goods as participatory techniques. Ijarah related financing that would require
Islamic banks to purchase and maintain the assets and afterwards dispose of
them according to Shariah rules, require the banks to engage in activities
beyond financial intermediation and can be very much conducive to the
formation of fixed assets and medium and long-term investments.

On the basis of the above it can be said that supply and demand of capital
would continue in an interest-free scenario with additional benefit of greater
supply of risk-based capital alongwith more efficient allocation of resources
and active role of banks and financial institutions as required in asset based
Islamic theory of finance. Islamic banks can not only survive without interest
but also could be helpful in achieving the objective of development with
distributive justice by increasing the supply of risk capital in the economy,
facilitating capital formation, and growth of fixed assets and real sector
business activities.

Salam has a vast potential in financing the productive activities in crucial

sectors, particularly agriculture, agro-based industries and the rural economy
as a whole. It also provides incentive to enhance production as the seller
would spare no effort in producing, at least the quantity needed for
settlement of the loan taken by him as advance price of the goods. Salam can
also lead to creating a stable commodities market especially the seasonal
commodities and therefore to stability of their prices. It would enable savers
to direct their savings to investment outlets without waiting, for instance,
until the harvesting time of agricultural products or the time when they
actually need industrial goods and without being forced to spend their
savings on consumption.

Banks might engage in fund and portfolio management through a number of

asset management and leasing & trading companies. Such companies/entities
can exist in the economy on their own or can be an integral part of some big
companies or subsidiaries, as in the case of Universal Banking in Europe.
They would manage Investors Schemes to mobilize resources on Mudarabah
basis and to some extent on agency basis, and use the funds so collected on
Murabaha, leasing or equity participation basis.

Subsidiaries can be created for specific sectors/operations, which would

enter into genuine trade and leasing transactions. Lowrisk Funds based on
short-term Murabaha and leasing operations of the banks in both local as
well as foreign currencies would be best suited for risk-averse savers who
cannot afford possible losses, in PLS based investments. Under equity based
Funds, banks can offer a type of equity exposure through specified
investment accounts where they may identify possible investment
opportunities from existing or new business clients and invite account-holder
to subscribe. Instead of sharing in the bank’s profit, the investors would
share the profits of the enterprise in which funds are placed with the bank
taking a management fee for its work. Banks can also offer open-ended
Multiple Equity Funds to be invested in stocks.

Macroeconomic Term Report on Islamic Banking and Finance

 - 20 -

Small and medium enterprises (SME) sector has a great potential for
expanding production capacity and self-employment opportunities in the
country. Enhancing the role of financial sector in development of SME sub-
sector could mitigate the serious problems of unemployment and low level of
exports. The banks may introduce ‘SME Financing Funds’ with various
geographical locations. The corporate sector and the commercial banks may
set up a network of such Funds under the aegis of SECP by establishing
institutions under syndicate arrangements or otherwise.

e) ROLE OF STATE BANK IN THE DEVELOPMENT OF ISLAMIC

BANKING AND FINANCE IN PAKISTAN

Former Governor SBP Dr. Ishrat Hussain and his team at SBP have worked
very sincerely to promote Islamic Banking in the country. In Junuary’2003,
SBP announced critical measures to promote Islamic Banking in the country.
It has established separate Islamic Banking Department to facilitate Islamic
Banking. Another major step was the introduction of an Islamic Export
Refinance Scheme, that enabled Islamic Banks to provide Export Refinance
at confessional rates under Shariah compliant instruments.

In order to promote Islamic Banking in Pakistan, State Bank is following a

three pronged strategy as under:
I) Establishment of full-fledged Islamic bank(s) in the private sector;
II) Setting up of subsidiaries for Islamic Banking by existing commercial
banks; and
III) Allowing Stand-alone branches for Islamic banking in the existing
commercial banks.
In line with Part-I of this strategy, on 1st December, 2001, State Bank of
Pakistan had issued detailed criteria for setting up of Scheduled Islamic
Commercial banks based on Shariah Principles in the Private Sector in the
form of a Press Release,
As regards Part-II of this strategy, in terms of Banking Companies
(Amendment) Ordinance, 2002 notified in the Gazette of Pakistan dated
November 4, 2002, inter alia, a new clause (aa) has now been inserted in sub-
section (1) of section 23 of the Banking Companies Ordinance as follows:
“(aa) the carrying on of banking business strictly in conformity with the
Injunctions of Islam as laid down in the Holy Quran and Sunnah”.
Therefore, the scheduled commercial banks are henceforth allowed to open
subsidiaries for Islamic Banking operations. Accordingly, a Detailed Criteria
for setting up of Islamic Banking Subsidiaries by existing Commercial Banks
has been prepared.
For Part-III of this strategy, Guidelines for opening of Stand-alone branches
for Islamic banking by existing commercial banks, enlisting Eligibility
Criteria, Licensing Requirements and other operational guidelines on the
subject have been prepared.

f) FUTURE PROSPECTUS OF ISLAMIC FINANCE IN PAKISTAN

The rapidly increasing focus on Islamic Banking in this market is a clear

indication of its viability as a profitable alternative to traditional finance, and

Macroeconomic Term Report on Islamic Banking and Finance

 - 21 -
one that cannot be ignored. The entry of credible new players in the nascent
Islamic Banking industry are welcomed by the peoples and it will result in
significant growth in the market.

Today there is a great demand for Islamic banking among the Muslims. It is
an alternate system for non-Islamic interest-bearing system. In Pakistan, our
clerics as well as people are very keen to adopt Shariah-based banking. Every
day commercial banks, whether local or foreign, are entering this field.

The resultant effects of increased competition and the benefits to the

consumer in terms of product variation and pricing will Inshallah support the
overall cause of Islamic Banking in Pakistan, which is now almost 1.7% of
total Financial Sector.

Finally, it is worth re-emphasizing that Islamic finance is a veritable reality.

The depth and scoop of this industry, both locally and internationally,
evidenced by the sheer size of investment being made, the mushrooming
client bases, the quality of portfolios, the wide experience and talent of its
stakeholders and executors, are all clearly indicative that its time to stand up
and take notice. In fact in Pakistan alone the growth rate is currently over
70% per annum with estimates of the total assets of Islamic Banks reaching
close to Rs: 600 Billion in the next few years.

Macroeconomic Term Report on Islamic Banking and Finance

 - 22 -

6. CONCLUSION
The Negative Aspect:

The advocates of Islamic banking assert that the Islamic banking is based on the laws
of contract as laid down in Islamic Fiqah, and all transactions and products offered
by them are in accordance with Shariah.

Most of the commercial banks have divisions of Islamic banking and these divisions
are transacting business according to the tenets of Shariah. But the question arises,
from where are these divisions of Islamic banking getting the funds? They are getting
funds from their parent organizations, which are functioning on interest-bearing
business. Since these funds are generated on interest, whether depositors' money or
borrowers' loans, the element of interest, howsoever negligible it may be, remains in
their funds. Thus, the products sold by the divisions of Islamic banking have the
element of interest, which is as per Shariah is not Halal.

Now the transactions of Islamic banks, such as Meezan Bank etc, are analysed. These
Islamic banks also canvas for deposits because without the support of deposits no
bank, whether Islamic or un-Islamic, can function.

Do these Islamic banks, while accepting depositors' money, examine the intrinsic
value is whether the money that they are accepting is pure (earned by halal means) or
impure means (Najis)? We do not think so because every bank is after deposits, and
very rarely they scrutinise the credentials of these prospective clients.

Unfortunately, our society is such that now-a-days it is very difficult to find an

honest and truthful trader, industrialist, bureaucrat, or moneyed person because
everywhere the devil of corruption reigns. Upright people are few and far between.
Can these Islamic banks, which accept deposits from depositors of our society,
vouch for pure and halal money?

The Positive Aspect:

Islamic Banking does not believe in demolition of existing systems unnecessarily.

Basic requirement of Shariah is that we need to undertake asset-based transactions
(Without Speculation & Gambling). Most of the commercial based loans are
obtained for the purpose of financing assets, therefore, for converting them into
Shariah acceptable mode we only need to change the processes. It is like McDonald’s
Burger in Karachi and New York would look like, taste alike and feel alike, but it is
the processing that makes one Halal and the other one Haram.

The Islamic bank has emerged as a unique socioeconomic, yet religiously motivated,
institution. Islamic banks have been confronted by a not unexpected "learning
curve" in handling complicated banking schemes, ever-increasing competition,
liquidity traps, credit crunches, and a need for accounting standards based on the
national ethos of the nations involved. It is less surprising that difficulties have
occurred, than that the difficulties have not been more serious. To resolve existing
and future problems, the authors present the following suggestions: credit analysis:
Standards should be established for credit evaluation; state of the art analytical
techniques should be emphasized.

Macroeconomic Term Report on Islamic Banking and Finance

 - 23 -

Modern technology: Although some Islamic banks have instituted modem systems
management, and have acquired centralized as well as microcomputer facilities,
considerable work is needed in other cases, especially in basic systems analysis.
Freer market facilities: Special efforts should be made to increase the productive use
of available short-term liquid funds. (The authors believe that Shariah principles may
allow at least some alternatives.) Improved coordination among banks would also be
especially helpful in the utilization of excessive deposits. Recommendations Bearing
on Legal and Regulatory Matters

Institutionalize Shariah boards: Although some Islamic banks have an oversight

(Shariah) board, there would seem to be a need for a coordinated and unified
authority to interpret Islamic law in cases not comprehended by the Quran, Shariah,
or Ijma.

Although it is evidently, clear that any new system competing against a well-
established structure that has prevailed for centuries will naturally require strong
efforts in the beginning, and Islamic Finance in his very beginning, lets hope and
prey for the full fledge commencement of true Islamic Financial Systems.

(Concluded)

7 REFERENCES

Macroeconomic Term Report on Islamic Banking and Finance

 - 24 -
1. A Basic Guide to Contemporary Islamic Banking and Finance
by Mahmoud Amin El-Gamal1
Rice University

2. Growing propensity for Islamic banking

Interview with Hamish Khan (CEO Bank of Punjab) by Monem Farooqi
The Nation - Monday, October 17, 2005

3. Islamic Mode of Financing (Al-Meezan Bank)

by Dr. Imran Usmani
Sharia Advisor Al-Meezan Bank

4. Islamic Financing Glossary

Courtesy: State Bank of Pakistan

5. Annual Reports 2004

Meezan Bank

6. Can We Avoid Interest

M.A. Chishti
May 31’2006 (Article Published in Daily Business Recorder)

7. Pakistan & Gulf Economist

August 15-21, 2005 Issue No. 33

8. Pakistan & Gulf Economist

March 27- April 2, 2006 Issue No. 13

9. Can Islamic financial instruments be meaningfully introduced?-II

Courtesy: General of Management Sciences
June 4'2006 (Article Published in Daily Business Recorder)

Macroeconomic Term Report on Islamic Banking and Finance