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Monday, 9 June 2014

Islamic banking in Pakistan

Sunday, June 08, 2014 - Banking sector has immense importance for the growth and economic development of a country. Pakistan has a growing economy and banking sector is playing a vital role in it. Being a Muslim nation our first priority should be Islamic Banking. Efforts for elimination of Riba started during 1970s and most of the significant and practical steps were taken in 1980. In 1980 initial steps were taken by the State Bank of Pakistan by changing the rules and regulations of the Banking sector. After that in 2001 first certificate had been issued to Meezan Bank as a full fledged Islamic Bank.

Many people think that there is no concept of Banking in Islam. Obviously, the concept of Banking is not categorically prescribed in Quran and Hadith, but the fundamentals and a comprehensive code has been provided, which lays down the foundation of Islamic banking. Shahriah provides the guide line about conducting business in fair way. Ulema can play an important role for the promotion of Islamic banking. They can create awareness in people about Islamic banking and mobilize the society for elimination of riba. This is their religious obligation to tell the people how strictly riba is prohibited in Islam. Ulema should give the reference to the Quran and Hadith to people. 

Awareness of Islamic banks can also be created by media. People can be encouraged to deposit their savings in the banks. 

Most of the people have spare money and they do not deposit their money in the banks. Such saving remains idol unless it is invested for productive purpose. If people deposit their savings in the banks, it leads to the financial strength of the country and enhances employment opportunities in the country. 

Proper steps should be taken to educate the people; enhancement in the Islamic banking training of the staff should be taken into consideration.

(Pakistan Observer / 08 June 2014)
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Saudi Investment Bank Sells $533m Capital-Boosting Sukuk

Saudi Investment Bank (Saib) has completed a SAR2 billion ($533.3 million) capital-boosting sukuk issue, it said on Thursday, the latest lender in the kingdom to offer such an instrument to enhance its reserves.

The subordinated Islamic bond, which boosts Tier 2 supplementary capital, has a ten-year lifespan and includes an option for the bank to buy back the paper after five years, a statement to the Saudi bourse said.

Pricing of the instrument was at 145 basis points over the six-month Saudi interbank offered rate (Saibor).

The offering will support the bank’s capital base in accordance with Basel III requirements, assist its future growth and diversify funding sources, the statement added.

Sources had told Reuters in March that Saib had picked the investment banking arm of Riyad Bank to arrange the issue, which was slated to take place in the first half of the year.
Saib, the kingdom’s eighth-largest lender by assets, is the latest bank in Saudi Arabia to issue a capital-boosting sukuk.

While lenders in the kingdom have high capital ratios compared with Western banks thanks the regulator’s conservative stance, a period of sustained lending growth has led many banks to sell such instruments to strengthen their reserves.

National Commercial Bank, the kingdom’s largest lender, sold a SAR5 billion subordinated sukuk in February, while Banque Saudi Fransi is planning to complete a deal before the end of this month, sources said in May.

(Gulf Business / 09 June 2014)
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