Is Meezan Bank really an Islamic Bank? Letters to Editor
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by Syed Haq Nawaz Ahmed
As a Meezan Bank customer we can see the bank’s Profit after Taxation has incredibly increased by 105.6% in 2012(3,391million) as compare to 2011(1,649 million) but Meezan Bank is still paying profits to its account holders with decreased rates; for example 11 months average profit rate for PKR saving is decreased from 5% to 4.99% in Mar 12, for ‘Meezan Bachat Account’ 1million slab profit rate is decreased from 7.87% to 7.82% in Mar 12. 
We also know that as per contract between customer and Meezan bank; “The customer enters into a relationship based on Mudarabah with Meezan Bank”.
Under this relationship, the customer is an Investor (Rab-ul-Maal) and the Bank is the Manager (Mudarib) of the funds deposited by the customers”. This mean bank would be eligible to have its funds management fee (and a little administrative fee etcetera) and customer (Investor/Rab-ul-Maal) should be benefited most not the Bank (Funds Manager/Mudarib), if the returns on bank’s asset are high.
Meezan Bank is totally doing Opposite of it.
If Meezan Bank (unlike other / conventional banks) would share due and rightful profits with its customers then it will promote Islamic banking, as more prospective customers will join Islamic Banking circle and overall economy of country will grow, which I believe is core objective of Bank’s Vision and Mission.
Therefore it is requested to Meezan Bank’s management and Shariah Advisory Board to look into this matter urgently and take necessary actions in the benefit of Meezan Bank customers to provide them due profit with the adjustment of previous period.
Letter written to EconomyAge reflect the thoughts and feelings of readers. EconomyAge may or may not, partially or fully, agree with content of these letters.
You can write to us by visiting this page or email us here: ali.ahmad [a] economyage.com (remove spaces and replace [a] with @ )
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bhae sab naam kay islami hain yahan
I read the letter written by Mr. Haq Nawaz. As i am a student of Islamic finance in International Islamic University Malaysia. In this letter what i can see is lack of concepts about Islamic Finance and its and blur face of knowledge about islamic banking products and different deposit accounts. I do not want to comment in detail but what i can say is that it is responsibility of Islamic bank to make its customers understand about their financing in terms of Islamic Banking rules and Shariah teaching on it.
imran.M Shaikh
Islamic Finance Scholar
IIUM
I’m currently considering enrolling in the same program at IIUM. Would you mind a chat?
Dear Haq Nawaz sb,
I would like to know more about your account details and the source/basis of your working regarding profit percentages. This is to inform you that bank’s income is not solely dependent on Mudarba contracts but banks have several other sources of income so it is not necessary that growth in bank’s income is solely due to mudarba contacts. Furthermore it is practically not possible for any bank in Pakistan to offer profit rate less than 5% and this minimum profit limit has now increased to 6% by SBP.
Moreover being a meezan customer if you have any doubts or complains, you are advised to approach relevant department instead of writing incorrect articles on blogs.
Dear Syed
is mezan bank investing in short term TDRs of others banks??
if yes then at least one of your income head comes under interest income i guess
Dear who ever you are, first of all correct your concept on the bank earnings, SBP encourages 70 to 80 % of deposits to be endulged in advances otherwise that management should be sacked by the BoD who are paying the depositors from their own equity. The other income is earned from the services & treasury operations to pay the remaining depsoitors whose funds are not involved. FOR ANY BANK DEPSOIT ARE ITS BLOOD LINE. There is no iota of doubt that MEEZAN is not paying appropriately to its depsoitors and playing with the weightages. When the much smaller & relevantly new entrants are paying the profit in the vicinity of 10% why can’t the oldest and the PREMIER ISLAMIC BANK can do so. If thay have the guts why don’t they revert to Musharkah basis as was done in the begnining.
Valid point. Shariah team should look into the matter.
Some of the investors has invested thier money in Meezan Mahana Amdan Certificate and in Meezan Sovourn Fund Scheme. In my opinion most of investors has invested thier money just having name of our Mufti-a-azam Pakistan’s sons Mufi Sb Rafi Usmani in Advisory Board of Meezan Bank. So, no one should have doubt for the Islami premium banking in Meezan Bank. InshaAllah.
I agreed with Mr. Nawaz and many customers, So it’s time we needs transparency in the process of Pool Management at least electronically to trance the amount earn by Raab-ul-Maal, It is requested to Central Bank (SBP) and Sharia Advisory Board explicitly and all IB’s management in general to clear the ambiguity in system and make comfort to customer.
why not ? is your given reason can be a argument on Meezan is islamic or not ?
Some of the investors has invested thier money in Meezan Mahana Amdan Certificate and in Meezan Sovourn Fund Scheme. In my opinion most of investors has invested thier money just having name of our Mufti-a-azam Pakistan’s sons Mufi Sb Rafi Usmani in Advisory Board of Meezan Bank. So, no one should have doubt for the Islami premium banking in Meezan Bank. InshaAllah. However, the profit distribution should distributed amonst customer as per actual ratio of profit.
That has a license(not 007) from Central Bank.
That follows Shariah Board of Central Bank.
That is vetted by a Shriah Board.
We need to ask Regulator & Shariah Boards.
Rest will be in Qiyamat!
naam Islam ka, kaam sood ka . Islamic Banking is just a sham. Mufti hazraat ko misguide karke fatwa lete hain ye bank wale. profit is linked to KIBOR. profit will only rise when there is a rise in interest rate (not when funds perform well).
G8, But Dont worry abt Profit payment/Islamic or Conventional, this might be ok
Salary is matter , if the bank grow well then It shd gives it’s employee More
I do not write like that! I find it interesting that you choose my name to post a comment.
(Hafidh Jamaluddin – the real Hafidh Jamaluddin)
All “Islamic Banks” keep their rent/profit/markup x% above KIBOR/Discount Rate of StateBank.. and They all deal with state bank in Interest/Sood..
Dear Sheikh Sb.
Keeping profit rates above the KIBOR or any other benchmark does not mean at all that IBs are dealing in Interest or Riba, nevertheless, we can say that it is an unethical practice which should be rectified.
Dealing of all IBs with State Bank is regulatory requirement and an economic need to run the economy under defined rules. As far as IBs dealings with State Bank are concern, they do deal under Shariah Compliant Contracts (Halal) contrary to conventional banks.
Let me clear what is KIBOR rate ? It is the daily reference rate upon which
banks borrow and lend money. This benchmark rate is decided by five big conventional banks keeping in view the liquidity position in the market…This rate is inflation adjusted rate and then banks by adding 2 or 3% in KIBOR rate charge their customers for their profit.
If the market rent at my area is Rs. 15000 its upon me whether ill rent my house portion to Rs. 14000 or Es. 20000. If i charge higher then the market, i’ll be at loss to get customer if i charge less ill be in loss of money. Therefore to be inline with the market is necessary.
Lets take another example two brothers want to do a business of beverages averge market rate of glass a drink is Rs, 100, one bro start a fresh juice business another starts a wine business both fix their price at Rs. 100 a glass. So Rs.100 the bench mark is haram or the nature of the business?? The transaction structure which doesnt break any Shariah rule is basically decides the transaction interest free, not the KIBOR the bench mark. But to remove this concept Islamic banks are also working on IBOR(Islamic interbank offer rate) in accordance with islamic banks liquidity position to remove these misconceptions.
term you used “Market Rate” is itself core of capitalism which is based on interest rate itself. lets take answer my example.. i want to go in contract with islamic bank for House Mortgage.. will i pay “RENT” equivalent to House in neighbourhood? or it will based on “Market Rate” prevailing in “Conventional and Interest based” bank? charging rent of DHA for House in Lyari is “Injustice” even if it is bound by any Contract ( when borrower is not as knowledgeable as banker )
The Minimum 5% or 6% percent distribution is again percentage based not profit based. The quoted figures are available at Meezan Bank website.
Question is
What are parameters allowing an Islamic bank to work on minimum percentage advised by SBP and ignoring actual profit ratios?
The minimum percentage is no longer applicable for Islamic Banks (Nov 2012)
I think the issue has to be split in two parts:
Whether whatever Meezan Bank (or for that matter all Islamic Banks and Islamic branches of conventional Banks) are doing conforms to Sharia or not
Whether the banks are justified or not to pay smaller shares of profit to the depositors (Rabb-ul- Mall) and take the bigger share themselves.
As for the 1st part I would say that although such (Islamic) banks and branches do not strictly and completely lead to the cherished goals of Islamic economic or social system yet in this era of all pervasive capitalistic thought, they (IBs and IBBs) should be encouraged to research and find products and processes which bring the banking system closer to the Islamic teachings and goals. They have moved in this direction successfully in certain areas of banking but much is yet to be desired or done.
As for the second part, SBP has always and insistingly advised the banks to reward the depositors adequately if not sufficiently. Increase in bank spreads has always been criticized by the depositors and economists alike and SBP has also upheld their views. In these days of double digit inflation banks return on deposits is in effect a negative return.
Realizing the need for rationalization of return to depositors, it becomes more important for the Islamic Banks and Branches to ensure that their depositors who fall in the category of Rabb ul Mall get due share in the overall profit of the bank. Without going into the financials and statistical analysis of such banks my principled stand is that Rabb ul Mall’s share in profit should be in direct proportion of the net profit earned.
I would like to listen from some Sharia Adviser of a bank of his views on this apparent anomaly hinted by the correspondent.
it run their operations at interest base banking but it share 7% ratio on deposit & Lending activities differ
In pakistan none of bank including mezan is working on pure islamic banking as ultimately its connection ends in riba. Also head of all the banks is State bank, which is the member of international banking and hence work on riba. Couple of years ago 400 Ulma e karam in a meeting held in Jamia Banori Town released fatwa that all banks who claims to be islamic banks are not true islamic banks. Maulana Taqee Usmani and brothers yet unable to justify the true islamic banking to rest of Ulmas, they implemented in Meezan bank.
Danish,
How many of us comply all Farz, even we want but cant do due to our busy life schedules ,We watch TV daily ,listen music , our life styles are inline with wht prevails in western countries, the life we are leading is also finally ends in wht any non-muslim do. Still we say our selves muslims? but we try try and try we offer prays whenver we have chance, not daily we receite Quran but in ramadan we do, all year may be hardly do any welfare but in ramadan we do. We know there are some constraints in our life which we hardly can remove but we struggle to make ourself a better muslim. Same like Islamic banks are en devouring , their are so many things that Islamic banks cant change but they keep on doing things change to promote Islamic banking system in Pakistan. SO that we can free ourselve from the western economy chain and boast our own Islamic economy which is based on Islamic economy system. Is it a bad idea to do?
Danish very Few ullema has excellence over Fiancial matters alongwith Shariah matters, therefore confusions arises. I think all scholars should combine and sit together on the matter because in Saudi Arabia,UAE, Malaysia and other Islamic countries Islamic banking exist and growing.
Well, this is what we do best as a nation. Without knowing and studding anything we just start commenting on whatever we heard from others.
All the people who have spoken against Islamic Banking, have you all ever tried to learn what Islamic Banking is, what Islamic Banking is all about, what are the basic principles on which Islamic Banking works.
I must tell you all that its not that easy as you all thinks. Simple comments leek Islamic bank also works hand in hand with SBP so they are not Islamic or in other words they are investing in interest base instruments, comments like they use KIBOR as benchmark makes them less Islamic or non-shariah. Well this is all sheer ignorance.
I request you all that please first try to read and learn what Islamic banks are doing and take your selfless to a certain knowledge level where at least you can understand if someone explains you what Islamic banking is. I can answer all the reservations raised above because I have studied Islamic Banking; I have practiced it and would keep on endorsing it in the given circumstances.
A simple reply would be each and every transaction of Islamic Banking is backed by a certain contract, which both parties agreed on (bank and customer) and Shariah Advisors/teams also vetted the same. Further, such big transaction such as monthly profit payments along with its percentages are specifically reviewed by Shariah Advisor of that specific banks (as other small transaction are also reviewed periodically but on sample basis), they personally sign the profit payment sheet and then the same is disbursed to the customers. They are learned and professional people they know what they are doing, if you want to question their integrity please, at least take you knowledge level to at least half of what they have. Do some research, study about it and them come up with some valid arguments. What most of you are talking about, Islamic Banks in Pakistan doesn’t even do that.
I hope my reply would suffice the purpose.
Dear Khan Sb.,
I think most of the persons contributing to this discussion are well aware of the basics of Islamic Banking. Simply think why these Banks do not offer better rates than conventional banks. After all they are promoting Islam then why not attract people by such an incentive. All these things are secondary that an agreement is signed then profit is reviewed by Sharia Board etc etc. The real thing is that IBs are exploiting in the name of Islam. If they IBs are serving a motto to spread Islamic ways of banking then why don’t they offer competitive rates? I believe this is a material world and everybody is after money making and Islamic Banks are also a part of this race. Even the banker operating these Islamic Accounts do not have sufficient knowledge of what they are doing. They only have a plea that our procedures are approved by Sharia Board. By just believing that is approved by some Mufti does not make you free of your responsibilities. You should have knowledge of your doings. In the end I must say that do not find Islam in Islamic Banking, in the first place put Islam in every aspect of your life.
They are not promoting Islam primarily but results would be, they are bankers primarily do business earn money but under the teachings of Islam, they do business accordingly what Shariah scholars says , when one say Mufti it means he has vast Islamic knowledge that no body among possess, if they allowed something it’d be assumed it must contain valid background in light of Islam, approval from shariah board is the most important thing in islamic banking because they are the root. Well to attract people by giving cheap rates is what you called ISLAM ? or the main purpose should be the riba free transaction ? Islamic banks have limited investment opportunities thats why they several times not generate enough profit that leads to lower rates, and that thing is communicated to the client on day first when one open an account. Islamic banking are for those who in real sense want riba free transactions not for those who want low rates. Sir ! at last Islam is not in Islamic banking its just the name of riba free transactions, you can only become Islamic by adopting what our religion says. Islamic banking is just the one step contribution in adopting Islamic ways as it is better than what is openly forbidden in Islam.
I have just argued that IBs are not serving Islam instead they are using Islam for their own interests. They are just doing business in the name of Islam by using the same procedures as other conventional banks are. It is ridiculous that by just signing a Musharaqa, Modaraba or Bai Salam, you can convert a so called un-islamic thing into self made Islamic. I know the IBs quite well because I deal with them on daily basis and have seen them myself manipulating and altering things in their self interest and in the interest of customer as well. Islamic Banking is just a theory not practical in fact. By the way, before going into details of IBs, just go through The Quran and try to learn What is Riba and Why it was banned by Allah Almighty. Riba was banned to just avoid exploitation either it is poor or rich. As far as you are not exploiting anybody you are doing right otherwise wrong.
Well to differentiate it from conventional banking the word Islam is used. Musharikah Murabahah
Istisna are the contracts which have to be signed in Islamic banking as not only the requirement its just not the paper work if you go in detail process you ll learn the importance of those documents, these documents are signed on different stages upon delivery of goods,upon signing of agency agreement, different visit reports etc, which reveals the vitality of the process nd validity of transaction. (only if the transaction is executed by designated officer in its prescribed form). Any alteration, changes , manipulation is highly prohibited , Islamic banks should take notice if mal practices are prevailing. But good and bad people are every where we should learn , concern with the actual transactions not with other things.IBs are endevouring hard to meet the modern business needs following Islamic principles. Islamic banking theory is based on Trade ‘Tijarat’ not just a theorythat system successfully used to prevail in the time period of Holy Prophet (SAW).Additionally there are tonnes of material available now that proves that ‘commercial interest’ was also prevalent in the times of Holy Prophet SAW butthe Fiqh Academy Jeddah has ruled that commercial interest is indeed the one that is prohibited nd not allowed Our Prophet also give us guide lines how we can conduct our business and also prohibit us to do certain things. Riba is the excess compensation over and above principal which is without due consideration. It is a premium paid to the lender in return for his waiting condition for a loan. Riba was not banned just to avoid exploitation between rich and poor, it is banned because it is the law by Allah, Validity of transaction is not based on the financial status of a party law does not differentiate between poor and wealthy or if you exploiting any body its wrong if not its right . when one thing is prohibited all its general and specific forms are prohibited for example gambling, pork, liquor are haram now as they were in Jahiliya. One more thing you should also know that mere consent or mutual benefit of the parties does not make any transaction acceptable. Riba is haram in every form. For a transaction to be within four corner of shariah, it has to be acceptable according to principles of Shariah. IBs are not ofcourse fully serve Islam but the main purpose is to do modern banking and to earn profit but according to Shariah principles bcoz banking has now a days geniunie need of the Muslim also,therefore scholars select mid way for the protection for those who want an escape from conventional banking and to avoid RIBA , Please dont misconcept it with the whole Islam, it is not 100% pure due to external factors but if it is 60% pure and I believe some thing good is better than every thing bad.
They claim so.The Central Bank Certified.
please count my last reply…!
I dont know so much about the system running inside, but one thing I know that we should appriciate this effort and try to streamlines all Islamic banking processes as per Islamic guidlines accordingly,
This was an effort by Usmani sb to be a placement of Riba free banking solution, and this is NOT ONLY the need of mufti sb, but we all needy for this system as we are muslims and we all need riba free deeds,
So we all should come forward and contribute and participate to make this effort success and PURE aligned with the Islamic guidelines.
Criticism for betterment is GOOD, BUT criticism for controvrcy is BAD.
inka true business nature hai wo inho ne disclose nahi kia hoga Mufti Hazraat ko. aur bhi jo jo cheezen aisi hoti hain jisse Haram kaam ki indication mile wo ye log nahi batate honge Muftis ko. ye hosakta hai k…………………………..
Faizan, those are banks not pan shopa which have no records or counter checks, Shahriah Board is over Islamic banks all the time, each and every transaction is undersigned by Shariah department, For every facility there is a complete process flow which is designed by Shariah board , Corporate teams work under this process flow. In the end internal auditors also rectify the same if any miscommunication/misrepresentation occurs or staff didnt follow the process flow in true and fair manner, strict action is taken.
again assumptions, assumptions and all assumptions.
Let me tell you something, the Mufti Hazrat who are looking after Islamic Banks are not the typical Molvi Hazarat, who only knows about Shariah and that’s all. Most of them are very learned people habing exposure of different fields including finance which enables them to analysis and evaluate what Islamic Banks are doing. Moreover, as i said they periodically review Bank’s portfolio i.e. in simple words, from where the banks are getting money and where they are investing it, in short from where the banks are generating profits.
so i would again say…don’t assume…KERTAY HOONGAY…AISA HOTA HOGA…study the system first and then comment.
and Malik Shams-ul-Arfeen Sab, I totally endorse what you have said, at least we have started moving in the right direction, there might be some flaws in the system but give it a chance and ample time too evolve.
Conventional banking system is more than 200 years old and for everyone’s information most of Ph.d are been done in finance and our of finance majority of the research is been done on Banking…but still, few years back we have seen ourselves that how easily American and European economy and banks collapsed despite of the fact that so much research is been done in this field.
Criticism is good but same should not be done just for the sake of it.
lol there’s no such thing as islamic banking
Wrong…!!! It could only be said by a personn who does not have sufficient knowledge about the concept of business in Islam or isalmic banking…lol
Salam to all the members!!
I will not go into calculations raised by the author.
In Real & True sense, there is no Islamic Banking in anywhere. All stage is SET for those who don’t like Interest in their life. So all calculations FAILS.
Mazhar Bokhari
CEO
GX3 Sports Company
United Kingdom
Wsalam,
In real true sense Islamic banking is performing by Islamic banks. The transactions have been designed so that no Shariah rule could be broken by any business transaction. All stage is set for Muslims and to bring Islamic economic system and you free our economy on interest based Western system. We should appreciate it as its a good start for us and should go in calculations, complications so that we could better answer our confusions. I could recommend you to plz learn from authentic sources from financial scholars , Shariah boards then decide
Well Mazhar Sab and Bilal Sab, do you have any valid arguments to prove your point or its just a mere decision you guys have made.
Dear Mr Haris Yameen Khan
There is always some sincere ppls like you in every corner in our country but Can you put some light or your Mufties on any one Subject like
1- Pool Management system’s Bia-Aynahبيع العينة, (كان في حقيقته بيع عينة )
2- Share screening principle,Who gonna decide the amount of interest been appropriated for buying shares of a Company. (e.g if you wanna buy the share of company that has deal with convensional banks and their book shows less then 33% of Interest being paid Are you allowed to buy?)
Many more question ,I asked manytime with many Muftiees in pakistan, they don’t have a valid answer from Book and sunnah
kindly us for this matter , as its our deen
هذا العلم دين فانظروا عمن تأخذون دينكم
Thank You So Much for your kind words.
Firstly, let me clear one thing that I am not a qualified Shahiah personal. I had worked for an Islamic Bank for almost six years where I was looking after the assets side i.e. loans and investments. During my stay with that bank they were kind enough to equipped me with shariah knowledge and made me part of numerous trainings regarding Islamic Banking. During the same, I got many opportunities to meet with different Mufti Hazrats and Shariah advisors of different Banks who are working day in and out for evolution of this Islamic Banking System and to make it more pure and fine. Apart from that as I was working at the front end, so I use to get so many similar question from different people who want to make sure that what we are doing is Shariah Compliant. Based on our knowledge, sometimes we used to answer these questions ourselves or if they are of more complex nature, we used to refer them to our Shariah Advisor.
As far as your questions are concerned;
1) I can tell you in detail about pool management system but I really didn’t get what do you mean by بيع العينة….in poll management. However, بيع العينة mean sample sale but I didn’t get what you actually want to ask. I would appreciate if you could rephrase your question.
2) There is a criteria devised for that. This predetermined screening criterion is known as “share screening” or “purification methodology”. Two types of screening are considered in filtering or white listing the shares in Islamic fund management. The first is referred as an “industry screen” and the other is a “financial screen”. It is implemented based on AAOIFI Shariah Standard 21. These two screening methodologies are carried out by Islamic indices companies/Banks to ensure shares are sufficiently white listed, in order to invest in them (by purchasing their shares) and to get halal profit out of them, for their investors/depositors. It’s not that simple that if their book shows less than 33% of Interest payments then you can buy that company’s share on invest in them for a longer term. Further, there is another aspect of it that even a company has certain part of income from interest or from interest earnings, in certain conditions you might purchase the shares of that company and earn good money by short term or long term selling in share market, but if that company pay dividend, then in that case u might not allow to use that, as major earning of the company is from interest.
Now, you can easily evaluate, that it’s not easy working in an Islamic Financial System, you have to look after so many things that a person working in a conventional system can never think of and all of this is being done make transactions Shariah compliant. And then there in a proper check and balance system is available to monitor us that what we say and what we are doing is correct or not.
That’s why I have said that please learn about the system and practices of Islamic Banks and then comment. It’s not easy running an Islamic Bank because you have limited opportunities to invest, limited business to lend to, limited sectors to invest into, late payment income loss issues, charity issues and then you have to compete on equal terms with conventional system having 93% of market share and having much more options than you to offer the target market, which an Islamic Bank can’t because of Shariah constraints.
Meezan bank has paid around 11% return in March on its Mudarabah Partnership based dollar deposits, this is in a market where the return on dollar depsoits has not been more than 2%. This is the beauty of Islamic Banking and partnership based deposits higher the profits higher the return. No Bank in the history of Pakistan or in fact in global banking history has ever paid such returns.
Very true.
Suleman Sab join the cause as you are working for Product Development & Shariah Compliance, you would be the best guy to answer all the quries.
I Paraphrase my First Question for you and All
Pool Management system:
1- Describe Whole System (From Sources to Destination)
2- Pool Asset Transfer and Retransfer from Depositor Source of money to Bank own and fro
E.g let Create a Pool A funded by 2 Customer only and having Amount 2 Billion and Used to Finance Assets B, what happen when one of customer leaved the contract?
I know very well about the Both Screening Criteria and AAOIFI, 21. Financial Papers (Shares and Bonds),(الأوراق المالية (الأسهم والسندات)) I think you need to understand retrospectivly
I dont wanna go further details so just strict to the point as
Shariah Screening Criteria
1- Business Activity Screens [ like
alcohol, tobacco and pork-related products;
entertainment (hotels, gambling, cinema/movie theatres, music, pornography and so on) business activities are not permissible under the Shariah]
and the other is
2- Financial Ratio Screens (Most Imp and equivocal enough)
The Shariah screening criteria provide guidelines to screen companies conducting non-Shariah–compliant business activities. The criteria also exclude companies whose financials do not meet the minimum acceptable levels. [? who can define that minimum acceptable levels?]
I raised the question to All who are true muslim more than me
AS PER ADOPTED CRITERIA IN ALL IB WHO GONNA DETERMINE ALL THOSE PERSENTAGE?
A company would be acceptable for Shariah–compliant investments if it meets the following criteria in terms of level of debt, receivables or impure interest income:
total debts (non-Shariah compliant) should be less than 33% of the equity;
account receivables should be less than 49% of total assets; and
interest income from cash and interest-bearing securities should not be more than 5% of the total income
That’s why I also saying that please learn about the system and practices of Islamic Banks and then comment.
Habibi Suleman Muhammad
Manager Product Structuring & Research – Product Development & Shariah Compliance at Meezan Bank Limited ,
Kindly Put some light on the way the MBL performing all those screening and Also I need to know the Actual Percentage uses now a days in MBL.
Thanks in Advance
Dear All
Aslamu Alaikum
Please let the things be refined in Islamic banking, we can say this is not purely Islamic banking their are many ifs and buts, but everyone be positive about the people who involved in Islamic banking and they are working quite efficiently.
First of all we have to be clear about Islamic banking, In Shariah or Islam the concept of banking is not prevaling but doing business and its terms alongwith conditions are very much clarified. The terms and conditions of doing business are written in detail in FIQA books that how to do business and how a transaction become HALAL.
Now come on banking system if we implement these Shariah rulings in banking with its true spirit then every transaction will be ok and according to Islamic business ethicks and that will be Islamic Banking.
So please be positive
Regards
Atif Mahmood
First Habib Modaraba
I don’t know about the distribution of profits because banks stance has to be considered on that but as far as compliance with shariah laws regarding financing agreements are concerned, they are fully complied with..
Well i can answer these questions but my answers would be of generic nature.
So lets wait for Suleman Muhammad Sab’s reply as he is working for product development and would be a more appropriate guy to answer these questions based of his skills and knowladge.
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Great discussions. I am from Bangladesh. The enthusiasm in your discussions has pleased me. In our country Islamic Bank Bangladesh Limited is the biggest bank, far bigger than any conventional bank.I teach Islamic Finance (beside conventional finance). I know the theoretical framework, and understand that it comply shariah (I studied 6 years in a night madrasah after my MBA in Finance). But the problem is I have little idea what the practices inside. After reading all the comments, I have learned a lot. But can anyone suggest any further reading to learn about the real practices inside. Any website or article. My final opinion is Mufti Taqi Usmani possesses a vision so matured and of high level that many of us can easily misunderstand him.
I want to know about the actual practices of Islamic banks. Any website or article.
You can refer Mufti Taqi Usmani book on financial system/Islamic banking, it will clear your all woes
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The main objective of islamic finance institues is to get a market in the name of Shariah compliant banking which does not exist anywhere in the World in its true form.
Yes this is a Islamic Bank. The conversion from conventional to Islamic is a very difficult task but according to my opinion and advices of the Shariah Advisors products are being used in meezan have the true spirit of Islamic finance.
Agreed with Waris
Dear Syed Haq Nawaz Ahmed,
Profit after tax has increased as u said but at the same time investment is increased by account holders than how it is possible to increase per invester?
Assume a partnership where were only 2 partners and than increases to 10 partners with increases in profit after tax and you are saying that new earning should be divided only into 2 partners.
your concepts are not clear kindly dont publish an article without having solid knowledge….
Regards!
Dear All,
I think we all sit together and start a business and what we will earn from that we will divide as per our investment ratio,i think it will rather better than we put our hand in banking or vast our time in these comments.
Why are they afraid of Agriculture,the main business of Pakistan?
There are mixed views about Islamic Banking in Pakistan or any other part of the world. Its totally a drama and the products of conventional Banking have been wrapped up with a thin cover of sharia compliant products. In Murabaha there is a clear cut illusion that the Bank makes the importer as agent and imports the goods in his own name. The surplus liquidity of Meezan Bank is kept with commercial banks which offer higher rate of interest. Yes its a new window for the opportunists to get lucrative jobs and rewards in the ayota of Islamic banking. Islam deals in commodities whereas the so called Islamic banking deals in papers which is totally unIslamic.
Sharia compliant products can be developed provided there 100 implementation of Islamic laws in a country. I think there is no any country on the face of the world in which Islamic laws are fully implemented.
i think we should read books about islamic finance and islamic banking so that we can research about it.. saying IT IS HARAM/HALAL is easy but doing research is difficulat which we dont do… for islamic economics i would like you to read MAQAALAAT E SAEEDi BY allama ghulam rasool saeedi sahib and for islamic insurance SHARA SAHI MUSLIM volume 4th by allama ghulam rasool saeedi… dont say islamic banking is haram… 1st read something and do research…. if islamic banking is not 100 % right so we muslims can help them to make it right and 100 % halal.. its our duty to make it good..
[...] Meezan Bank and Karachi University (KU) have signed a Memorandum of Understanding (MoU) under which Meezan Bank [...]
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