The practice of Islamic insurance known as Takaful is on the rise in Pakistan and the indicators allude that the phenomenon is on the upward swing in terms of performance and efficiency. The five companies working in Pakistan have been making notable progress with the 12 percent growth rate.
This was stated during a seminar on ‘Takaful: Evolution and Current Status in Pakistan’ held at Institute of Policy Studies (IPS), Islamabad by Riphah International University, Islamabad Head of Riphah Centre for Islamic Business Professor Atiq-uz-Zafar while delivering his presentation.
International Islamic University’s Shariah Academy Director General Dr Mohammad Tahir Mansoori chaired the seminar, which was also addressed by IPS DG Khalid Rahman.
The seminar was also attended by a group of insurance professionals and Ministry of Finance apart from a large number of finance professionals, Islamic scholars and students.
Quoting verses from the Quran and referring the verdict of Federal Shariat Court regarding the prohibition of interest, Prof Zafar said that interest (riba) widened the gap between the rich and the poor and created parasites in societies.
“It is ironic that while we all try to avoid trivial social evils, we pay much less attention to this serious issue plaguing our society,” he deplored.
Prof Zafar deliberated upon the principles and contracts of Islamic system of finance, which provided sound basis to avoid such crisis.
He said that Islamic financial contracts prohibit riba (interest), Gharar (uncertain, unknown, doubtful and high risk) and qimar (gambling), maysir (game of chance), sale of debt with debt, and combination of two mutually inconsistent contracts.
He also apprised the participants about the major financial contracts in Islamic banking which included muajjal/murabaha and musawama, salam, istisna’a, musharakah, mudarabah and Islamic insurance system known as Takaful.
Dr Mansoori dispersed the impression that there was some controversy regarding the Shariah legitimacy of the conventional insurance practices. He said that Islamic scholars across the world have settled this issue in the decade of 1990s declaring conventional insurance as against Shariah. Responding to a question he noted that it (Takaful) is basically a question of being Shariah compliant, not necessarily Shariah based.
Dr Mansoori opined that despite the tremendous progress and proliferation of Takaful practice in the country there were some areas that need to be addressed to make it more effective and beneficial.
IPS DG Khalid Rahman, while concluding the session, drew the attention of the audience towards the emerging trends among people especially in Muslim societies including Pakistan towards adopting Islamic alternatives to the current capitalist economic system.
He said that though in today’s capitalist world it was not possible to provide Islamic alternatives in the ideal sense without establishing the Islamic system, however Islamic financial institutions were providing a window into it. He urged the Islamic finance professionals and scholars to continue striving for the ideal and do not be satisfied with the present Islamic financial solutions, which may be fulfilling the minimum requirements of Shariah and hence may be ‘compliant’ to it but were not ideally Shariah-based.
(Daily Times / 30 Sep 2012)
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