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Thursday, 17 May 2012

Islamic financial system can boost economy

Karachi—The fast-growing Islamic finance industry (IFI) holds the potential to contain unemployment and boost economy if an efficient and effective monitoring mechanism is in place.

Dr Ali Hasan Hamdani, an economist associated with a local private sector university in a statement received here on Tuesday said IFI industry needed creativity and guidance to ensure Shariah compatibility and integrity of the products offered in the country.

He said around five per cent share held by IFI in Pakistan indicated that masses need to know difference between Islamic and conventional products.

The economist recommended that all the details of the Islamic products, internal compliance, methodology and conflict of opinions should be openly discussed and masses be sensitized about it.

He also suggested need for a good risk management system that is important to protect the interests of investors and institutions.

“The industry must be open to criticism and listen to the clients to win approval,” he said.

Dr. Hamdani said there was an equally urgent need to educate masses as well as investors to boost Islamic finance.

“Islamic banks should not compete or compare themselves with conventional banks,” he suggested and cautioned that financial institutions must not offer services through sub-contractors who lack knowledge of Islamic finance.

A properly developed Islamic financial system can reduce miseries of humanity by bailing out ailing economies in the world claimed the economist.

(Pakistan Observer / 16 May 2012)

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