Islamic banking showing phenomenal growth: Tarin

ISLAMABAD: Islamic finance is one of the most rapidly growing sectors of the global financial system, as it has emerged as an effective tool for financing development worldwide, including in non-Muslim countries, a senior government official said.

Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin virtually addressed the 10th Islamic Finance Expo and conference. The theme of the conference was “New Normal-Digital Transformation and Islamic Economy” and was organised by The Professional Network and IBA-CEIF.

Addressing the conference, Tarin said that Islamic banking promotes risk sharing, connects the financial sector with the real economy, and emphasises financial inclusion and social welfare.

The sustainable development of Islamic finance offers benefits for economic growth, reducing poverty and fostering shared prosperity.

He believed that through directed instruments, such as Zakat, Sadaqat, Waqf, and Qarz-el-Hasna interest-free system creates effective wealth redistribution in the society.

The adviser expressed that Islamic finance has much in common with the environmental, social and governance (ESG) objectives and has an appeal far beyond Muslim audiences.

Structured around risk sharing and avoiding interest, Islamic finance helps reduce poverty, expand access to finance, develop the financial sector, and build stability and resilience, he said.

Tarin emphasised that Islamic finance industry must strive to become an outward looking industry, with a global appeal transcending borders, that presents unique solutions for real world problems.

The economic principles taught by the Quran and Sunnah of the Prophet (Peace Be Upon Him) provide a useful guide for resolving the major economic problems being faced by the world today.

“No risk, no gain” is the basic juristic principle of Shariah and a normative rule of justice.

The adviser underlined the core principles of Islam, which lay immense weight on inclusion, social justice, and sharing of resources. A Riba-free system; thus, entails the elements of development of real economy, social justice, transparency, equity and property rights; entitlement to profit, with risk and reward sharing; prohibition of speculative behaviour and excessive uncertainty.

Tarin suggested that Islamic banking and finance needs to take the lead for bringing positive change in the financial system through increased focus on value-based intermediation and socially responsible investment.

The innovations in the use of Islamic financial instruments can go a long way in supporting the SDGs, he added.