Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin Tuesday highlighted the main components of Islamic Banking and stated that Islamic finance is one of the most rapidly growing sectors of the global financial system. He said this while addressing the 10th Islamic Finance Expo and Conference.
The theme of the conference was New Normal-Digital Transformation and Islamic Economy and was organized by The Professional Network and IBA-CEIF, said a press release issued here. Shaukat Tarin said that it has emerged as an effective tool for financing development worldwide, including in non-Muslim countries. It promotes risk sharing, connects the financial sector with the real economy, and emphasizes financial inclusion and social welfare.
The sustainable development of Islamic finance offers benefits for economic growth, reducing poverty and fostering shared prosperity, he added. He believed that through directed instruments, such as Zakah, Sadaqat, Waqf, and Qard-al-Hassan interest-free system creates effective wealth redistribution in the society.
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The adviser expressed that Islamic finance has much in common with 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.
Tarin emphasized that the 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 solving the major economic problems faced by the world today. No risk, no gain is the basic juristic principle of Shariah and a normative rule of justice” he added.
According to the #IFDI2021 Report, the #IslamicFinance industry saw double-digit growth of 14% in 2020 to a total US$3.37 trillion https://t.co/Y733gKMop8 pic.twitter.com/4AFz6CmOT1
— Islamic Finance Gateway (@IFGateway) November 25, 2021
Islamic banking can bring a positive change
Tarin 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 the development of real economy, social justice, transparency, equity and property rights; entitlement to profit – with risk and reward sharing; prohibition of speculative behavior and excessive uncertainty.
The adviser 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. Innovations in the use of Islamic financial instruments can go a long way in supporting the SDGs.
Green Sukuk is a unique example of an Islamic-based impact investing instrument, which demonstrates how Islamic finance resources can be utilized towards renewable energy investments. He stressed the strong need for collaboration among academia, Shariah scholars, and industry professionals, which can allow synergies along with identifying priority research areas. In his concluding remarks, the adviser showed assurance on the government’s commitment to developing and strengthening the Islamic finance industry in Pakistan.
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He acknowledged that the involvement of academia and practitioners is vital for continued progress and advancements in the Islamic Financial System. Tarin extended felicitation to The Professionals Network and the Centre of Excellence in Islamic Finance, Institute of Business Administration, Karachi on arranging a productive conference, and hoped that the event will prove great importance for Islamic finance in this time and age to stay abreast with the fast-changing digital landscape.
He hoped that the dialogue, deliberations, and offerings to be presented here around the new normal, digital transformation and Islamic economy will be useful for our country and for the global Islamic financial industry.