* Experts say non-availability of such instruments creates liquidity management issue for Islamic banksFinancial sector stakeholders have urged the ministry of finance to expedite efforts towards issuance of Islamic treasury bills in the shape of Baitul Maal certificates to provide the Islamic banks an opportunity to invest.
Speaking at the second day of 3rd World Asia Islamic Capital Conference here on Thursday, the stakeholders of Islamic banking sector said non-availability of instruments like Baitul Maal certificates has been creating a liquidity management issue for Islamic banks.
As a result of the unavailability of these investment opportunities, Islamic banks are at a disadvantage against conventional banks in terms of optimising returns on excess liquidity.
Pervez Said, Head of Islamic Banking, State bank of Pakistan said that Islamic banks must jointly work out a future plan of action with the regulators for issuance of Baitul Maal certificates.
The success factor behind Islamic banking growth is supportive regulatory framework of the central bank, he said adding that there is enormous potential in Pakistani market for Sukuk issues. A number of Sukuk issues are in the pipeline. He said Islamic banks need to have standardization of guideline documents so that the industry could work in harmony.
He said that in order to facilitate the operations of Islamic banking industry, State Bank has allowed the Islamic banks to execute any transaction only after the approval of their Shariah Boards without getting prior approval from SBP. “The regulators can review and approve the transactions later on,” he said.
Ashar Nazim, Managing Director, Islamic Capital Partners announced that his company would organize an Investors Forum in Dubai in May 2008. This forum would help bring gulf region’s investors and Pakistani corporate together to explore the investment opportunities in Pakistan. “We would organise this conference again in November 2008 in Karachi and we hope that it would also serve as a good platform for Pakistani financial sector,” he said.
Financial experts said that current 3 percent share of Islamic banking industry needs to grow to 25 percent in the next decade. Experts said that trained human resource is the biggest challenge being faced by Pakistani Islamic banking industry. They said Islamic banks need qualified human resource to keep the current pace of growth intact.
Speaking at a session on emergence of Takaful in Pakistan, experts said that they needed to move out of niche market syndrome and grab the maximum potential available in the market. They said that 63 percent Islamic banking and Takaful consumers in Malaysia are non-Muslims, which shows the benefits for consumers available in Islamic mode of finance.
Pervaiz Ahmad, CEO, Pak-Qatar Family Takaful, emphasised the need of synergy in Islamic banks and Takaful companies. “The Takaful products should be competitively priced and available with best services and being Halal should be an additional benefit,” he said.
Takaful operators needed to bring innovation in business process and product distribution. “We also need to focus on development of human resource for the Islamic financial sector,” he added.
Faizan Mitha, Senior Executive Vice President of Habib Bank; Anwer Sheikh, Chief Executive Access Finance; Irtiza Kazmi, Head of Capital Markets & Syndication, Dubai Islamic Bank Pakistan; Anthony Dutton of Norton Rose; Capt. Jamil Akhtar, Chief Executive, Takaful Pakistan; Abdul Rahim Abdul Wahab, Executive Director, Sidat Hyder Morshed Associates; Asif Kamal, Chairman, Trust Investment Bank; Zaigham Mahmood Rizvi, Chairman and Managing Director, HBFC; Akmal Jamil, CEO, Arif Habib Private Equity Fund also spoke on the occasion.