Islamic banking is playing a vital role in the socio-economic sector, creating opportunities for the masses
KARACHI: Islamic finance has seen its revival in the last 50 years. Schools of thought have a consensus on Islamic banking and have constituted a body called the Accounting and Auditing Organisation for Islamic Financial Institutions based in Bahrain, which directs and monitors the execution of Islamic modes of finance around the globe with the help of respective central banks of countries.
Criticism on using the Karachi interbank offered rate (KIBOR) in the determination of profit is inappropriate as far as Shariah is concerned. The KIBOR is just a tool by which the profit of any transaction is determined by investment banking institutes at the time of contract with the customer. Profit calculation with the KIBOR as a benchmark and doing interest-based transactions are contrary to each other. Furthermore, investment banking institutes are bound to use the KIBOR by the state in profit calculation as there is no alternative.
Islamic banking is playing a vital role in the socio-economic sector, creating opportunities for the masses. There is a dire need of professional training in order to introduce Islamic finance. Authorities are requested to educate people and promote the system smartly so that a layman is not misguided and understands the system easily.
Muhammad Adeel khan
Published in The Express Tribune, November 1st , 2016.
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