Tell us about yourself, how long have you been associated with Islamic Banking Industry? What are the milestones have you achieved during your association with the Industry?
I started my banking career from 1969, during these 39 years of banking experience, I have been associated with Islamic Banking Industry for the last 16 year and I have been affiliated with AlBaraka Islamic Bank since then. At the time when I entered in Islamic Banking Industry, it was at a very early stage. There was no awareness about Islamic Banking among the bankers & general public. It took some time for the public to be educated about the concept. Now Islamic Banking is progressing tremendously with annual growth rate of 15% - 18%. There are 6 full fledge Islamic Banks and 12 Conventional Banks having Islamic Banking Services in Pakistan with the total 289 number of Branches network.
Islamic Banking Branches in Pakistan.
How do you feel about being the pioneer of Islamic Banking in Pakistan?
AlBaraka Islamic Bank (AIB) has the honor of being the pioneer of Islamic banking in Pakistan and has been operating in the country as branches of AlBaraka Islamic Bank Bahrain since 1991. At that time, it was a big challenge to regulate, to maintain reserve, Capital & introduce specified Islamic Banking product in Pakistan Banking Industry. As Pakistan is very big market of Islamic Banking & Finance since almost 97% of the population is Muslim.
Over the years, the bank has successfully developed and maintained its identity as one of the leading providers of a host of banking products and services in strict compliance with Shari’ah principles. According to our vision “To be a leading and a diversified International Islamic Bank’, Offering a wide range of Quality Products and Services and forming strategic alliances for a Competitive Edge”
AlBaraka Banking Group (ABG) is operating in 12 countries with the equity of US$ 1.5 billion, what are your experiences in Pakistani Market?
There is a huge potential in Pakistani Islamic Banking Market, but there is some need to create awareness about Islamic Banking among the masses. ABG is committed to expanding its presence in Pakistan, which is evident from the rapid growth being undertaken by AlBaraka Islamic Bank in the country. Building on the expertise and experience of its workforce and the growing awareness of Shari’ah compliant banking solutions among the masses, AIB has successfully developed itself as a major unit of ABG operating in the region, capitalizing on the Group’s geographical presence and high quality research and development in Islamic financial products for its business expansion in the country. Faced with growing challenges in this rapidly developing market, AIB strongly relies on its ability to be an effective and efficient market player through renewed focus on superior customer service, development of Islamic alternatives to conventional financing facilities, and strict adherence to Shari’ah rulings and principles.
Explain expansion strategy of AlBaraka Islamic Bank in the region? Have you any plan to start operation as a Local Islamic Bank in Pakistan?
We have very aggressive expansion policy in the region. In this year we are establishing a full fledge Islamic Bank in Syria with the capital 100 million US$ and another expansion project In Jakarta on 5th June, 2008 and than Philippine & Malaysia. Currently in Pakistan, we are operating with 18 branches in 10 major cities of the country, AIB offers a wide array of Islamic financing products such as Murabaha, Ijara, Musharaka and Islamic Export Refinance, catering to a diverse cross-section of the economy, including the Corporate, SME and Consumer sectors. Moreover, various Shari’ah compliant deposit schemes are available for customers to invest their funds in, along with a variety of other ancillary services such as online banking, ATM/debit card, safe deposit lockers and utility bill payments etc.
Our group is also committed for expansion in Pakistan, in this current year, we plan to open 12 more branches and we will Insha’Allah start operations as a local Islamic Bank from Pakistan very soon.
Please Give Brief Introduction of Albaraka Banking Group (ABG) to our readers.
As I mentioned, AlBaraka Islamic Bank is a member of Albaraka Banking Group (ABG) which is a Bahraini Joint Stock Company listed on Bahrain and Dubai stock exchanges and one of the well-known leading international Islamic banks. ABG is the biggest Islamic banking group listed on the Bahrain Stock Exchange in terms of capitalization. It has been rated by Standard & Poor's as BBB- with a short-term rating of A-3. ABG offers retail, corporate and investment banking and treasury services strictly in accordance with the principles of the Shariá. The authorized capital of ABG is US$1.5 billion, while the total equity amounts to about US$ 1.5 billion. The Group has a wide geographical presence in the form of subsidiary banking Units in 12 countries, which in turn provide their services through more than 240 branches. These banking Units are Jordan Islamic Bank/ Jordan, Al Baraka Islamic Bank/ Bahrain, Al Baraka Islamic Bank/ Pakistan, Banque Al Baraka D'Algerie/ Algeria, Al Baraka Bank Sudan/Sudan, Al Baraka Bank Ltd/ South Africa, Al Baraka Bank Lebanon/Lebanon, Bank Et-Tamweel Al- Tunisi Al Saudi/ Tunisia,The Egyptian Saudi Finance Bank/Egypt, Al Baraka Turk Participation Bank/Turkey, Albaraka Bank Syria (under establishment), and representative office, Indonesia.
What are the Commitments of AlBaraka to Islamic Banking?
AlBaraka Islamic Bank and Albaraka Banking Group are fully committed to develop and promote an integrated Islamic Financial System. Compliance with the rules and principles of Islamic Shariah is the core of the banking and financial activities and its philosophy. All its banking activities are very closely regulated by a Board of Shariah Advisors based at the Head Office in Bahrain and a Shariah Advisor based in Pakistan, to ensure strict compliance with the highest standards of Islamic Banking principles.
Shafqaat Ahmed during Interview.
What are the major challenges facing the infancy industry in Pakistan?
No doubt, Islamic Banking has a great potential in Pakistan. But, there are many challenges facing infancy Islamic Banking Industry in Pakistan right now. Some of them are;
- Liquidity management
- Human Resources
- Lack of awareness about Islamic Banking products.
It is an immediate need to form a forum for creating awareness, Training & Islamic Financial product development.
Islamic Banking Industry Progress in Pakistan
HR & Training is the main issue of the Islamic Banking Industry in the World, how are you tackling this issue?
Islamic Banks are facing many problems on the issue of Quality Human Resources during the last couple of Years. There has been a phenomenal growth of Islamic Banks & Branches in Pakistan and also worldwide and it is difficult to staff these branches with trained & professional Islamic Bankers. There are very far reputable Islamic Banking training Institutions in Pakistan and there is a big vacuum in this area. We appreciate AlHuda CIBE activities to develop quality human resources in this direction.
AlBaraka has intended to establish an Islamic Banking academy on International standard in Pakistan? Please share the details of the project?
We at AlBaraka Islamic Bank realise that it is a cooperate social responsibility to establish a academy for the development of Islamic Banking Training and awareness, and has decided to set up a training academy, dedicated for training of bankers of various on Islamic Banking. We hope to complete this project during the current year. We will also take advantage of our global network and invite senior members of our management from all the locations for lectures on various aspects of Islamic Banking & Finance.
What is the product offering by AlBaraka Islamic Bank? Do you have any plan to further expand your product range?
AlBaraka Islamic Bank in Pakistan offers a comprehensive range of Islamic banking products and services, to suit and serve customers in individual, retail, corporate, SME and consumer categories. Our Islamic Banking Products are
ISLAMIC EXPORT FINANCING
IMPORT LETTERS OF CREDIT
FOREX SALE & PURCHASE
LETTERS OF GUARANTEE
SAVING AND CURRENT ACCOUNTS
TERM DEPOSIT ACCOUNTS
MURABAHA INVESTMENT ACCOUNTS
SAFE DEPOSIT BOXES
E - BANKING
Like all other Islamic Banks our main product is Murabahah, but I am happy to state that the portion of Murabahah in our total portfolio is gradually decreasing. This is mainly due to introduction of other shariah compliance products. Such as Ijarah Istisna & Diminishing Musharakah. Our head office in Bahrain is in the process of issuing 200 US$ million, since sukuk is a fast developing Islamic Product. The current size of the Global Sukuk is 97 US$ billion now. It is estimated that 300$ billion worth of sukuk will be issued in next there year.
Mode of Islamic Banking in Pakistan.
Source “ SBP “