Islamic, conventional banks are different: SBP

KARACHI: One of the biggest challenges facing Islamic banking in Pakistan is to create awareness and convince people that it is different from conventional banking, Saleemullah, Director Islamic Banking, State Bank of Pakistan (SBP), said.

The wrong perception of “old wine in a new bottle” should be dealt with by convincing people that what Islamic banks offer is distinct, he said. He was speaking at a seminar on Islamic banking organised at the Federation House on Saturday. The slogan of the Islamic banking industry should be ‘Let’s grow together’ because of its unique characteristic to benefit both the depositor and the bank at the same time, he said, adding that Islamic banks share profit and loss with the customers and hedge its customers against the shock of loss.

Because of low understanding, people generally think that conventional bankers are actually presenting the same products in new packaging. This damages the image of the industry which can be checked by creating awareness of the products being offered by Islamic banks, he added. Saleemullah offered full support to the local Islamic banking industry in overcoming future challenges. Tariq Saeed, a prominent businessman, said that the real concept of Islamic banking is profit and loss sharing.

The number of people who want Riba-free (interest-free) banking is increasing but this will bring results when Islamic banks introduce their products, he said, adding that regular seminars and more interaction can be helpful for the understanding of Islamic banking. Saeed offered that if Islamic banks introduce new products for importers and exporters, he could bring hundreds of importers to these banks. Mohammad Aslam, Head of Islamic Banking, Habib Bank Limited (HBL), said Islamic banking in Pakistan has many challenges before it. Some of the top challenges are untrained staff and the perception that Islamic banking is the same as conventional banking.

“The more Islamic banks cooperate with each other, the earlier the industry will increase its business,” said Aslam, “The perception of Islamic banking will improve as people start understanding this industry.”