Interest-free banking system critical

Hyderabad traders welcome Summit Bank’s transition to Shariah-compliant bank

KARACHI:

Hyderabad Chamber of Small Traders and Small Industry (HCSTSI) President, Muhammad Farooq Shaikhani, emphasised the need for an interest-free banking system that aligns with the people’s values, welcoming all commercial banks in the country to transform the banking system into Islamic values and concepts.

He expressed his views at the opening ceremony that announced the change in the name and logo of Summit Bank to Bank Makramah Limited (BML) at Sadder Branch Hyderabad, according to a press release issued by the HCSTSI on Saturday.

Shaikhani stated that success in this world and the hereafter can be achieved only through an interest-free banking system. He mentioned that the bank was already providing better services to people and the business community, and now, with the new name under the Islamic system, it will offer the best facilities to business people in terms of all transactions following the interest-free mechanism, providing even better services.

According to the State Bank of Pakistan (SBP), in practical terms, Islamic banking is the transformation of conventional money lending into transactions based on tangible assets and real services. The model of the Islamic banking system leads towards achieving a system that helps attain economic prosperity, as per the statement.

The Commission for Transformation of Financial System, established in the SBP following the Supreme Court Judgment on Riba on December 23, 1999, approved essentials of Islamic modes of financing, including Musharaka, Mudaraba, Murabaha, Musawama, Leasing, Salam, and Istisna.

The central bank’s Shariah board has reviewed and approved these essentials of Islamic modes of financing, recommending that the same be circulated to banks conducting Islamic banking business in the country as guidelines.

Islamic banking is defined as a banking system that is in consonance with the spirit, ethos, and value system of Islam, governed by the principles laid down by Islamic Shariah, it added.
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The model of the Islamic banking system leads towards the achievement of a system that helps achieve economic prosperity, according to the statement.