Islamic Banks in Pakistan agree upon mechanism of Islamic inter-bank market
Islamic banks have recently achieved a major milestone towards development of an interbank market for Islamic banks.
Meezan Bank recently hosted a meeting of Shariah advisors and product development experts of all full-fledged Islamic banks to decide upon the mechanism for inter-bank placement amongst Islamic banks and to move towards the development of an Islamic inter-bank market.
After careful deliberation, standardized agreements – namely Interbank Musharaka and Interbank Wakala Agreements – were finalized and it was agreed that henceforth only these standard contracts would be used by the Islamic banking industry.
This achievement is an important milestone towards development of inter-bank market for Islamic banks and will pave the way for the long awaited Islamic benchmark rate as an alternative to KIBOR. The meeting was attended by Shariah advisors / product development heads of Meezan Bank, BankIslami, Dubai Islamic Bank, Emirates Global Islamic Bank and First Dawood Islamic Bank.
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Pakistan: Islamic banks’ deposits grow by 18% amidst recession in conventional banks
At a time when deposit growth of conventional banks has almost stagnated, Islamic banks are enjoying handsome growth in deposits, indicating increasing preference to Islamic banking in the country.
According to latest data, deposits of Islamic banks rose by Rs 31 billion or 18 percent to Rs 202 billion at the end of second quarter of current fiscal year (Oct-Dec 2008) from Rs 171 billion at the end of first quarter (Jul-Sep 2008).
It is pertinent to mention here that deposits of overall banking industry rose by Rs 20 billion or 0.52 percent to Rs 3.801 trillion from Rs 3.781 trillion during the quarter under review. This means that there was negative growth in deposits of conventional banks during the quarter and the growth in overall banking industry’s deposit base came only from Islamic banks.
There was a phenomenal growth of 40 percent in the number of branches of Islamic banks during the quarter. Islamic banks had 514 branches at the end of December 2008, an increase of 147 branches from 367 branches at the end of September 2008. Five years ago-at the end of 2003-Islamic banks had only 17 branches.
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Standard Chartered Islamic to Expand in Pakistan
Pakistan, which faces slowing economic growth and a Taliban insurgency, will remain a “core market” for Standard Chartered Plc’s Islamic banking unit, a bank official said.
“Pakistan is a core market for us,” Afaq Khan, the Dubai- based chief executive officer of Standard Chartered’s Saadiq Islamic unit said in an interview in Singapore. “We take a very long term view of the economy. These are very small aberrations, if you will. Investors who take a strategic view on Pakistan see it as an opportunity.”
Standard Chartered has eight Islamic bank branches in the country and “a plan for expansion,” he said last night on the sidelines of the Islamic Financial Services Board summit, without providing details.
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Pak-Qatar Family Takaful Ltd. to provide Takaful to Meezan Bank housing finance customers
Meezan Bank Ltd and Pak-Qatar Family Takaful Ltd have signed an agreement whereby all customers of Meezan Bank’s Housing Finance (Easy Home) will be provided with Shari’ah-Compliant Life Takaful Coverage. Irfan Siddiqui President and CEO Meezan Bank Ltd and P. Ahmed CEO Pak-Qatar Family Takaful Ltd. signed the Takaful (Islamic insurance) Agreement at a ceremony on Tuesday.
According to the agreement, all housing finance customers of Meezan Bank will be provided comprehensive Takaful that will cover not only life but also accidental and natural disability. Moreover, the premium for the first year will be paid by the bank which is to be adjusted later.
The insurance penetration in Pakistan is only 0.3 per cent of its total GDP, which means just 10 to 15pc families are opting out this facility, while in developing countries 60 to 70pc families go for this.
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Islamic finance offers tips to correct faulty conventional system: M. Umer Chapra
The current global financial crisis stems from the absence of adequate market discipline, and Islamic finance can help fix it by injecting a greater discipline into the system, an expert at the Islamic Development Bank said.
Speaking at an international gathering here Saturday, Umer Chapra from the Bank’s Islamic Research and Training Institute said the global financial system lacks discipline because the reward and punishment mechanism in the banking system was not working.
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