Ijara by Mehmood Shafqat 25-10-07

Ijara by Mehmood Shafqat 25-10-07 - 1 IJARAH Presented by...

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2 IJARAH Presented by: MAHMOOD SHAFQAT Joint Director Islamic Banking Department At AlHuda CIBE Workshop The views expressed in this presentation are those of the author and do not necessarily represent State Bank of Pakistan
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3 Overview Introduction and Brief Perspective of Islamic Banking Ijarah Essentials of Ijarah AAOIFI Standard Mechanism and Usage Risks and Issues Comparison with Conventional Leasing Documentation Ijarat ul Ashkhaas Some Common Misconceptions
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4 BRIEF HISTORY OF ISLAMIC BANKING IN PAKISTAN Efforts for economy wide elimination of Riba started during 1970s and most of the practical steps were taken in early 1980s, which are considered as pioneering work in the Muslim world. Banking and other relevant laws and regulations were amended to facilitate interest free banking system. Two important areas kept outside the purview of interest free banking system mainly due to lack of research in these fields, viz. Government borrowings (both local and foreign) and foreign exchange.
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5 FAILURE OF PREVIOUS EFFORTS Reasons Absence of Shari’ah compliance mechanism in financial institutions. Non-availability of Shari’ah compliant government securities. Ineffective enforcement of contracts and inefficient system for early recovery. Ineffective code of conduct for professionals. Lack of continued research and development in the field of Islamic finance and economics. Inadequate training to the staff of SBP and banks. Disoriented education system devoid of Islamic principles. Lack of public awareness about Islamic economic system. Adoption of free market economic (capitalistic) policies. Social and cultural factors. Weak Political resolve of successive governments for Islamization of economy.
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6 CURRENT STRATEGY Gradual approach for Transformation of economy Full fledged Islamic banks be established in Private sector Islamic banking Subsidiaries in existing banks be allowed Stand alone branches for Islamic banking be allowed in existing banks
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7 POLICY OBJECTIVES Introduce, promote and implement Islamic Banking in Pakistan as a parallel banking system comparable and compatible to conventional banking system and Shariah compliant In the long run let people “vote through their wallets”
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8 SBP APPROACH Parallel banking system offering users similar Functionality & Profitability In line with their beliefs Provide a level playing field to Islamic Banking Regulations Taxation
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9 SBP APPROACH Parameter based vs. Straight jacketed system Model vs. Standard Agreements Essentials of Islamic Modes PLS Mechanism Modes of Finance Shariah compliance mechanism Essentials of Islamic modes Shariah Advisor Internal Shariah Review Report of Shariah Advisor SBP Shariah Compliance Inspection SBP Shariah Board
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10 INDUSTRY PROGRESS Sept 2003 One full fledge bank and one conventional bank with
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Ijara by Mehmood Shafqat 25-10-07 - 1 IJARAH Presented by...

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