Islamabad, March 10, 2014 (PPI-OT): The Federal Minister for Finance Senator Mohammad Ishaq Dar addressed the inauguration ceremony of 2nd Global forum on Islamic Finance arranged by COMSATS Institute of Information Technology today in Lahore.
Addressing the participants through video conferencing, the Federal Minister for Finance said, “the area of Islamic Finance is really important to me personally for I am convinced about the utility of Islamic Finance for development of a just and fair economic and financial system. The efforts of this Forum in disseminating scholarship on Islamic economic system to cope with the current financial challenges are indeed admirable.”
The Finance Minister further said “I am delighted by the establishment of the Centre of Islamic Finance at the Lahore Campus of COMSATS Institute of Information Technology for institutionalizing research on the subject. The Center would perform research, impart training and strengthen the syllabi of Islamic finance and, therefore, play an instrumental role in bridging the gap between academia and industry”.
The origin of Islamic banking and finance is as old as the advent of Islam. However, its present form dates back to around four to five decades, and has now started establishing itself as an important component of the mainstream global financial system. The numbers speak for themselves. With over 150 percent growth over the last seven years, the Islamic finance industry is forecasted to grow to US Dollars 2.5 trillion by 2015, added the Minister.
Highlighting the importance of Islamic Financial system, the Finance Minister said, “the recent financial crisis raised some serious concerns about the ability of the conventional financial system to withstand the internal and external shocks due to its structural flaws. I strongly believe that Islamic finance has answers and solutions to most of these issues; its asset backed nature that ensures growth of the financial sector in tandem with the growth of the real economy, prohibition of investment in speculative activities and excessive leveraging, and risk sharing nature rather than ‘risk transfer’, which is the hallmark of the conventional system, makes it a more stable and prudent system than its conventional counterpart. The resilience of the Islamic finance industry during the financial crisis has largely testified the supremacy of the moral and ethics based economic model put forth by Islamic Shariah. The western world has also started appreciating the inherent strengths of Islamic finance as can be seen in various reforms initiated post crisis to avoid a recurrence of the crisis in future.”
Islamic Finance has seen a tremendous growth in Pakistan. At present the Islamic finance industry of Pakistan consists of 19 Islamic banks with a network of 1200 branches, 27 Mudaraba companies, 15 mutual funds and 5 Takaful companies. The industry now constitutes over 10 percent of the country’s financial system and maintains strong growth momentum. This, however, is well below the huge potential we have in Pakistan, said the Minister.
The Finance Minister said “Our banking system has taken the initiative to develop financial instruments, in keeping with the spirit of the Islamic economic system. Our Government strongly believes in the supremacy and utility of Islamic Finance for inclusive development and socio-economic wellbeing of the masses. We are fully committed and determined to nurture the Islamic finance industry on sound foundations”.
“We have recently formed a Steering Committee on Promotion of Islamic Banking with representation from all key stakeholders to formulate a comprehensive framework to address challenges/hurdles that are adversely affecting the growth momentum of the industry. The Committee will also suggest a roadmap and timeframe for progression of various phases of the Islamic banking in the country. In addition, the Government formed a Steering Committee on Qarz-e-Hasna as well. The Government is, thus, fully committed to facilitate and nurture development of Islamic finance industry on sound footings through an enabling policy and regulatory environment, said the Finance Minister.”
The Federal Minister for Finance Senator Mohammad Ishaq Dar appreciated the efforts of COMSATS Institute of Information Technology for organizing the conference and expressed hope that such endeavors will also continue in future.
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