Developments in Islamic banking: the case of Pakistan
Saved in:
| Main Authors: | , |
|---|---|
| Format: | Book |
| Language: | English |
| Published: |
New York [u.a.]
Palgrave Macmillan
2008
|
| Series: | Palgrave Macmillan studies in banking and financial institutions
|
| Subjects: | |
| Online Access: | Contributor biographical information Publisher description Table of contents only Inhaltsverzeichnis |
| Item Description: | Includes bibliographical references and index |
| Physical Description: | XXV, 264 S. |
| ISBN: | 1403998779 |
Staff View
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| 100 | 1 | |a Khan, Mohammed Mansoor |e Verfasser |4 aut | |
| 245 | 1 | 0 | |a Developments in Islamic banking |b the case of Pakistan |c Mohammed Mansoor Khan and Ishaq Bhatti |
| 264 | 1 | |a New York [u.a.] |b Palgrave Macmillan |c 2008 | |
| 300 | |a XXV, 264 S. | ||
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| 490 | 0 | |a Palgrave Macmillan studies in banking and financial institutions | |
| 500 | |a Includes bibliographical references and index | ||
| 648 | 7 | |a Geschichte 1977-2007 |2 gnd |9 rswk-swf | |
| 650 | 4 | |a Bank | |
| 650 | 4 | |a Religion | |
| 650 | 4 | |a Banks and banking, Pakistani | |
| 650 | 4 | |a Banks and banking |x Religious aspects |x Islam | |
| 650 | 4 | |a Banks and banking |z Pakistan | |
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| 689 | 0 | 2 | |a Geschichte 1977-2007 |A z |
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| 700 | 1 | |a Bhatti, Ishaq |e Verfasser |4 aut | |
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Record in the Search Index
| _version_ | 1804137925459312640 |
|---|---|
| adam_text | Contents
List of Tables and Figures xiv
Foreword by Rodney Wilson xv
Foreword by Agil Natt xvii
Preface and Acknowledgements xix
List of Abbreviations xxi
Glossary of Arabic Words and Terms xxiii
1 Introduction 1
1.1 Preamble 1
1.2 Outline of the book 5
2 Islamic economics: Divine vision of distributive justice 7
2.1 Introduction 7
2.2 Ethical dilemmas of Conventional Economics 8
2.3 Guiding principles and goals of Islamic Economics 12
2.3.1 Right of private ownership 15
2.3.2 Free consent and mutual co-operation 15
2.3.3 Law of inheritance 17
2.3.4 Honesty, fairness and promise-keeping 17
2.3.5 Benevolence 18
2.3.6 Payment of zakah (obligatory religious tax) 18
2.3.7 Spending wealth on charity (sadaqah) 19
2.3.8 Condemnation of extravagance, hoarding and
black marketeering 19
2.3.9 Condemnation of bribery, fraud and
embezzlement 19
2.3.10 Prohibition of gambling and speculative
(grarar) activities 20
2.3.11 Prohibition of the wine trade 20
2.3.12 Prohibition of riba (interest) 20
2.3.12.1 Universal prohibition of riba (interest) 21
2.3.12.2 Rationale behind the prohibition
of riba (interest) 21
Contents vii
2.3.12.3 The debt crisis of poor countries 22
2.3.12.4 Rejection of time value of money
and indexation of loans 25
2.4 Modern theories of equity and justice 25
2.4.1 John Rawls s theory of justice 26
2.4.2 Right-libertarianism 28
2.4.3 Left-libertarianism 29
2.4.4 Utilitarianism 30
2.4.5 Pluralism 34
2.4.6 Strict egalitarianism 35
2.5 Summary and conclusions 36
Islamic Banking and Finance Movement Worldwide:
Performance and Prospects 38
3.1 Introduction 38
3.2 Evolution and growth of IBF 38
3.3 The IBF infrastructure 41
3.4 Factors contributing to exponential growth in IBF 42
3.5 Salient features of IBF 43
3.5.1 The value-based paradigm 43
3.5.2 Banking for the poor 44
3.5.3 Market-based credentials 44
3.6 Theory and practice of IBF 45
3.6.1 PLS modes: Mudarabah and Musharakah 45
3.6.2 Interest-free modes: Mumbaha (deferred
payment sale) 51
3.6.3 Interest-free modes: Ijarah (lease financing) 54
3.6.4 Interest-free modes: Bai Salam (advance payment)
and Bai Istisna (procurement engagement) 54
3.7 Islamic financial market 57
3.7.1 Islamic capital market: Sukuks 57
3.7.2 Islamic equity investment funds market 59
3.7.3 Takaful or Islamic insurance market 60
3.8 IBF: Worldwide growth 62
3.8.1 IBF in the Middle East 63
3.8.2 IBF in South Asia (Subcontinent) 67
3.8.3 IBF in Southeast Asia 67
3.8.4 IBF in Africa: Sudan 69
3.8.5 IBF in European and Western countries 70
3.9 IBF: Challenges and prospects 71
3.10 Summary and conclusions 75
viii Contents
4 Conceptual Developments in Islamic Banking and
Finance in Pakistan (1977-1980) 77
4.1 Introduction 77
4.2 Policy instruments for eliminating interest 79
4.2.1 Primary and ideal instrument: The PLS system 79
4.2.2 Secondary instruments: Interest-free modes 81
4.2.2.1 Leasing 81
4.2 2.2 Investment auctioning 82
4.2.2.3 Bai Muajjal (Murabaha or deferred
payment sale) 83
4.2.2.4 Hire purchase 84
4.2.2.5 Financing on the basis of normal
rate of return 85
4.2.2.6 Time multiple counter-loans 86
4.2.2.7 Special loan facility 89
4.2.3 Unsuitable instruments 89
4.2.3.1 Service charge 89
4.2.3.2 Indexation of bank deposits
and advances 90
4.3 Elimination of interest from economy-wide operations 91
4.3.1 Long-term financing: Participation Term
Certificates (PTCs) 91
4.3.2 Islamic discounting of trade bills 93
4.3.3 Islamization of bank deposits 94
4.3.4 The evolutionary plan to eliminate interest 96
4.4 Islamic framework for central banking operations 97
4.4.1 Group one: Monetary policy tools requiring
minor changes 97
4.4.2 Group two: Monetary policy tools requiring
radical changes 99
4.4.2.1 Bank rate 99
4.4.2.2 Open market operations 100
4.5 The 1980 CII Report s scope and prospects 101
4.5.1 Broader context of the interest problem 101
4.5.2 The paradox of business ethics and
moral hazard 102
4.5.3 Fair and truthful accounts versus
certified accounts 102
4.5.4 Uncertain future for the PLS system 103
4.5.5 Islamic solutions to interest within
conventional reach 103
Contents ix
4.5.6 The biggest obstacle to financial Islamization 104
4.6 Summary and conclusions 104
Islamic Banking and Finance Practice in Pakistan
(1981-1991) 106
5.1 Introduction 106
5.2 Adoption and growth of 1BF 106
5.2.1 Amendments to conventional banking laws 107
5.2.2 Early breakthrough in IBF set-ups 107
5.2.3 Islamization of non-banking financial institutions 108
5.2.4 Public response to PLS deposits 108
5.2.5 IBF framework execution phase 109
5.3 Critical features of IBF practice 110
5.3.1 Mark-up (BaiMuajjal/Murabaha) financing 111
5.3.2 Musharakah (equity participation) financing 112
5.3.3 Mudarabah (joint venture) financing (companies) 114
5.3.4 Participation Term Certificates (PTCs) 115
5.3.5 PLS deposits 116
5.4 Financial performance evaluation of IBF 117
5.4.1 Rate of Return (ROR) on PLS deposits 117
5.4.2 Return on Equity (ROE) 119
5.4.3 Strictly regulated market environments 120
5.5 Some reservations about the IBF practice 121
5.5.1 Gross deviations from the CII s recommendations 121
5.5.2 Lack of proper Islamic training for bankers 123
5.5.3 Public concerns and doubts 123
5.5.4 The cover of Islamic nomenclatures 124
5.6 Summary and conclusions 124
The 1991 Federal Shariat Court (FSC) Judgement on
Riba (Interest) and Islamic Banking and Finance
Practice in Pakistan 126
6.1 Introduction 126
6.2 Judicial status of the FSC in Pakistan 126
6.3 The FSC s questionnaire 127
6.4 The FSC judgement 127
6.5 The un-Islamic features of the Pakistani finance sector 128
6.6 Public response to the FSC judgement 129
6.7 Government reaction to the FSC judgement 130
6.8 The FSC judgement on foreign investments 131
x Contents
6.9 Appeals against the FSC judgement 132
6.10 Lessons learned from the FSC judgement 132
6.11 Summary and conclusions 133
7 Efforts to Revive Islamic Banking and Finance in
Pakistan (1992-1998) 135
7.1 Introduction 135
7.2 The CIE s role and responsibilities 136
7.3 The CIE s first initiative: The 1992 Report on Banks
and Financial Institutions 136
7.3.1 Gross irregularities in IBF practice 137
7.3.2 Main recommendations 138
7.3.3 Critical assessment of the CIE s
recommendations 139
7.3.3.1 Narrow vision on interest problem 139
7.3.3.2 The pro-banking mentality 139
7.3.3.3 Lack of creativity and practicability 140
7.3.3.4 Time constraints and absence of
devotion 141
7.3.3.5 Political considerations 141
7.4 The CIE s second initiative: The 1998 HIE Report 141
7.4.1 The IIIE s banking model 143
7.4.1.1 Bai Muajjal (deferred payment sale) 143
7.4.1.2 Bai Salam (advance payment) 144
7.4.1.3 Ijarah (operating lease) 144
7.4.1.4 Mudarabah (joint venture) and
Musharakah (equity participation) 144
7.4.1.5 Qard-e-Hasanah and service charge
(non-recommended modes) 145
7.4.2 IBF practice within Shariah framework 146
7.4.2.1 Mobilization of funds (deposits) 146
7.4.2.2 Funding different sectors of
the economy 147
7.4.3 Central banking and monetary management 148
7.4.3.1 Islamic inter-bank money market 149
7.4.3.2 Monetary control measures 150
7.4.3.3 Monetary regulatory measures 151
7.4.3.4 Co-ordination in fiscal and
monetary management 152
Contents xi
7.4.4 Critique of the IIIE s overall themes 153
7 .4.4.1 Tentative premises to eliminate interest 153
7.4.4.2 Islamic financial system versus
conventional financial system 154
7.4.4.3 Moral and motivational reinforcements 154
7.4.4.4 Passive approach towards
practical difficulties 155
7.5 Summary and conclusions 156
The Impact of the Supreme Court Judgements of
1999 and 2002 on Riba (Interest) on the IBF
Movement in Pakistan (1999-2007) 158
8.1 Introduction 158
8.2 The SC s stature in the judicial system of Pakistan 159
8.3 Main observations on the 1999 SC judgement 159
8.3.1 The SC s definition of riba (interest) 160
8.3.2 The Bai Muajjal (deferred payment sale) practice 160
8.3.3 The Ijarah (leasing) practice 161
8.3.4 The service charge practice 161
8.3.5 The PLS practice 161
8.3.6 The indexation system 162
8.3.7 Negotiable instruments and debt-based securities 162
8.3.8 Government borrowings 162
8.3.9 Need for a sound IBF infrastructure 163
8.4 The SC parameters for the Islamization of the economy 163
8.5 The process of Islamic transformation 164
8.5.1 Commission for transformation in the SBP 164
8.5.2 Task force in the Ministry of Law and
Parliamentary Affairs 164
8.5.3 Task force in the Ministry of Finance 165
8.6 The Start-up process of Islamization 165
8.7 The government s appeal for an extension 166
8.8 Dramatic U-turn on Islamization 166
8.9 The SC bench manoeuvring 167
8.10 The 2002 riba (interest) case review 168
8.10.1 The government s arguments before the SC 168
8.10.2 UBL s arguments before the SC 170
8.10.3 The religious parties arguments before the SC 170
8.11 The SC judgement on the 2002 riba (interest)
case review 170
xii Contents
8.12 Anomalies in the 2002 SC judgement 171
8.13 Debate over the 2002 SC judgement 173
8.14 Reflection on the government s Islamization efforts 174
8.15 Present and future prospects of IBF in Pakistan 177
8.16 Summary and conclusions 179
The Causes of the Failure of Islamic Banking and
Finance in Pakistan 181
9.1 Introduction 181
9.2 Government machinery 181
9.2.1 Lack of genuine political support 183
9.2.2 The noncommittal attitude of bureaucrats 184
9.3 The banking and financial sector environments 185
9.3.1 Lack of professionalism
at the SBP 185
9.3.2 Lack of Islamic training and education
for bankers 186
9.3.3 Financial mismanagement and incompetence 186
9.3.3.1 Non-performing loans, write-offs and
co-operative scandals 187
9.3.3.2 Monopoly on bank credit 188
9.3.3.3 Expensive and unpopular
financial services 189
9.4 General socio-economic governance 189
9.4.1 Risk-averse depositors 190
9.4.2 Cold shoulder from business people 190
9.4.3 Huge burden of foreign and domestic debt 191
9.4.4 Weak and slow legal system 194
9.4.5 Rigid and narrowly based tax system 194
9.4.6 Malpractices and rampant corruption 195
9.4.7 The exploitative socio-economic set-up 196
9.5 Privatization and globalization of the market economy 198
9.6 Summary and conclusions 198
10 Summary and Conclusions 200
Notes 207
References 220
Contents xiii
Appendices 231
Appendix I 231
Appendix II 238
Appendix III 241
Appendix IV 244
Appendix V 246
Appendix VI 251
Index 255
List of Tables and Figures
Tables
3.1 Application of PLS (Mudarabah and Musharakah), Murabaha
(deferred payment sale), Ijara and Bai Istinna/Bai Salam
modes in the IBF industry (US$ thousands) 50
4.1 Profit and loss distribution under the daily product system 95
5.1 Profit rates on PLS deposits on the basis of the
daily product method 117
5.2 Rate of Return (ROR) on PLS deposits in the nationalized
commercial banks of Pakistan for the period 1981-1990
(percentage per annum) 118
5.3 Return on Equity (ROE) of nationalized banks of Pakistan
for the period 1981-1989 (percentage per annum) 118
9.1 Loan defaults and write-offs in the financial sector of
Pakistan for the period 1985-2002 (Rs in billion) 187
9.2 Foreign debt in the economy of Pakistan for the period
1955-2006/7: long- and medium-term (US$ million) 191
9.3 Expenditure and budget deficit of the economy of Pakistan
for the period 1981-2006/7 (Rs in billion) 193
Figures
2.1 Guiding principles and goals of Islamic Economics 16
3.1 The IBF model: basic policy instruments 46
3.2 Mudarabah (joint venture) banking model 47
3.3 Musharakah (equity participation) banking model 49
3.4 Murabaha (deferred payment sale) banking model 52
3.5 Ijarah (leasing) banking model 55
3.6 Bai Salam (advance payment) and Bai Istisna (procurement
engagement) banking model 56
4.1 The CII s IBF model: main policy instruments 80
4.2 Time multiple counter-loans arrangement (hypothetical
example) 88
4.3 Policy instruments of the CII s central banking model 98
9.1 Strategic relationship of IBF institutions with other
state institutions 182
|
| adam_txt |
Contents
List of Tables and Figures xiv
Foreword by Rodney Wilson xv
Foreword by Agil Natt xvii
Preface and Acknowledgements xix
List of Abbreviations xxi
Glossary of Arabic Words and Terms xxiii
1 Introduction 1
1.1 Preamble 1
1.2 Outline of the book 5
2 Islamic economics: Divine vision of distributive justice 7
2.1 Introduction 7
2.2 Ethical dilemmas of Conventional Economics 8
2.3 Guiding principles and goals of Islamic Economics 12
2.3.1 Right of private ownership 15
2.3.2 Free consent and mutual co-operation 15
2.3.3 Law of inheritance 17
2.3.4 Honesty, fairness and promise-keeping 17
2.3.5 Benevolence 18
2.3.6 Payment of zakah (obligatory religious tax) 18
2.3.7 Spending wealth on charity (sadaqah) 19
2.3.8 Condemnation of extravagance, hoarding and
black marketeering 19
2.3.9 Condemnation of bribery, fraud and
embezzlement 19
2.3.10 Prohibition of gambling and speculative
(grarar) activities 20
2.3.11 Prohibition of the wine trade 20
2.3.12 Prohibition of riba (interest) 20
2.3.12.1 Universal prohibition of riba (interest) 21
2.3.12.2 Rationale behind the prohibition
of riba (interest) 21
Contents vii
2.3.12.3 The debt crisis of poor countries 22
2.3.12.4 Rejection of time value of money
and indexation of loans 25
2.4 Modern theories of equity and justice 25
2.4.1 John Rawls's theory of justice 26
2.4.2 Right-libertarianism 28
2.4.3 Left-libertarianism 29
2.4.4 Utilitarianism 30
2.4.5 Pluralism 34
2.4.6 Strict egalitarianism 35
2.5 Summary and conclusions 36
Islamic Banking and Finance Movement Worldwide:
Performance and Prospects 38
3.1 Introduction 38
3.2 Evolution and growth of IBF 38
3.3 The IBF infrastructure 41
3.4 Factors contributing to exponential growth in IBF 42
3.5 Salient features of IBF 43
3.5.1 The value-based paradigm 43
3.5.2 Banking for the poor 44
3.5.3 Market-based credentials 44
3.6 Theory and practice of IBF 45
3.6.1 PLS modes: Mudarabah and Musharakah 45
3.6.2 Interest-free modes: Mumbaha (deferred
payment sale) 51
3.6.3 Interest-free modes: Ijarah (lease financing) 54
3.6.4 Interest-free modes: Bai Salam (advance payment)
and Bai Istisna (procurement engagement) 54
3.7 Islamic financial market 57
3.7.1 Islamic capital market: Sukuks 57
3.7.2 Islamic equity investment funds market 59
3.7.3 Takaful or Islamic insurance market 60
3.8 IBF: Worldwide growth 62
3.8.1 IBF in the Middle East 63
3.8.2 IBF in South Asia (Subcontinent) 67
3.8.3 IBF in Southeast Asia 67
3.8.4 IBF in Africa: Sudan 69
3.8.5 IBF in European and Western countries 70
3.9 IBF: Challenges and prospects 71
3.10 Summary and conclusions 75
viii Contents
4 Conceptual Developments in Islamic Banking and
Finance in Pakistan (1977-1980) 77
4.1 Introduction 77
4.2 Policy instruments for eliminating interest 79
4.2.1 Primary and ideal instrument: The PLS system 79
4.2.2 Secondary instruments: Interest-free modes 81
4.2.2.1 Leasing 81
4.2 2.2 Investment auctioning 82
4.2.2.3 Bai Muajjal (Murabaha or deferred
payment sale) 83
4.2.2.4 Hire purchase 84
4.2.2.5 Financing on the basis of normal
rate of return 85
4.2.2.6 Time multiple counter-loans 86
4.2.2.7 Special loan facility 89
4.2.3 Unsuitable instruments 89
4.2.3.1 Service charge 89
4.2.3.2 Indexation of bank deposits
and advances 90
4.3 Elimination of interest from economy-wide operations 91
4.3.1 Long-term financing: Participation Term
Certificates (PTCs) 91
4.3.2 Islamic discounting of trade bills 93
4.3.3 Islamization of bank deposits 94
4.3.4 The evolutionary plan to eliminate interest 96
4.4 Islamic framework for central banking operations 97
4.4.1 Group one: Monetary policy tools requiring
minor changes 97
4.4.2 Group two: Monetary policy tools requiring
radical changes 99
4.4.2.1 Bank rate 99
4.4.2.2 Open market operations 100
4.5 The 1980 CII Report's scope and prospects 101
4.5.1 Broader context of the interest problem 101
4.5.2 The paradox of business ethics and
moral hazard 102
4.5.3 Fair and truthful accounts versus
certified accounts 102
4.5.4 Uncertain future for the PLS system 103
4.5.5 Islamic solutions to interest within
conventional reach 103
Contents ix
4.5.6 The biggest obstacle to financial Islamization 104
4.6 Summary and conclusions 104
Islamic Banking and Finance Practice in Pakistan
(1981-1991) 106
5.1 Introduction 106
5.2 Adoption and growth of 1BF 106
5.2.1 Amendments to conventional banking laws 107
5.2.2 Early breakthrough in IBF set-ups 107
5.2.3 Islamization of non-banking financial institutions 108
5.2.4 Public response to PLS deposits 108
5.2.5 IBF framework execution phase 109
5.3 Critical features of IBF practice 110
5.3.1 Mark-up (BaiMuajjal/Murabaha) financing 111
5.3.2 Musharakah (equity participation) financing 112
5.3.3 Mudarabah (joint venture) financing (companies) 114
5.3.4 Participation Term Certificates (PTCs) 115
5.3.5 PLS deposits 116
5.4 Financial performance evaluation of IBF 117
5.4.1 Rate of Return (ROR) on PLS deposits 117
5.4.2 Return on Equity (ROE) 119
5.4.3 Strictly regulated market environments 120
5.5 Some reservations about the IBF practice 121
5.5.1 Gross deviations from the CII's recommendations 121
5.5.2 Lack of proper Islamic training for bankers 123
5.5.3 Public concerns and doubts 123
5.5.4 The cover of Islamic nomenclatures 124
5.6 Summary and conclusions 124
The 1991 Federal Shariat Court (FSC) Judgement on
Riba (Interest) and Islamic Banking and Finance
Practice in Pakistan 126
6.1 Introduction 126
6.2 Judicial status of the FSC in Pakistan 126
6.3 The FSC's questionnaire 127
6.4 The FSC judgement 127
6.5 The un-Islamic features of the Pakistani finance sector 128
6.6 Public response to the FSC judgement 129
6.7 Government reaction to the FSC judgement 130
6.8 The FSC judgement on foreign investments 131
x Contents
6.9 Appeals against the FSC judgement 132
6.10 Lessons learned from the FSC judgement 132
6.11 Summary and conclusions 133
7 Efforts to Revive Islamic Banking and Finance in
Pakistan (1992-1998) 135
7.1 Introduction 135
7.2 The CIE's role and responsibilities 136
7.3 The CIE's first initiative: The 1992 Report on Banks
and Financial Institutions 136
7.3.1 Gross irregularities in IBF practice 137
7.3.2 Main recommendations 138
7.3.3 Critical assessment of the CIE's
recommendations 139
7.3.3.1 Narrow vision on interest problem 139
7.3.3.2 The pro-banking mentality 139
7.3.3.3 Lack of creativity and practicability 140
7.3.3.4 Time constraints and absence of
devotion 141
7.3.3.5 Political considerations 141
7.4 The CIE's second initiative: The 1998 HIE Report 141
7.4.1 The IIIE's banking model 143
7.4.1.1 Bai Muajjal (deferred payment sale) 143
7.4.1.2 Bai Salam (advance payment) 144
7.4.1.3 Ijarah (operating lease) 144
7.4.1.4 Mudarabah (joint venture) and
Musharakah (equity participation) 144
7.4.1.5 Qard-e-Hasanah and service charge
(non-recommended modes) 145
7.4.2 IBF practice within Shariah framework 146
7.4.2.1 Mobilization of funds (deposits) 146
7.4.2.2 Funding different sectors of
the economy 147
7.4.3 Central banking and monetary management 148
7.4.3.1 Islamic inter-bank money market 149
7.4.3.2 Monetary control measures 150
7.4.3.3 Monetary regulatory measures 151
7.4.3.4 Co-ordination in fiscal and
monetary management 152
Contents xi
7.4.4 Critique of the IIIE's overall themes 153
7 .4.4.1 Tentative premises to eliminate interest 153
7.4.4.2 Islamic financial system versus
conventional financial system 154
7.4.4.3 Moral and motivational reinforcements 154
7.4.4.4 Passive approach towards
practical difficulties 155
7.5 Summary and conclusions 156
The Impact of the Supreme Court Judgements of
1999 and 2002 on Riba (Interest) on the IBF
Movement in Pakistan (1999-2007) 158
8.1 Introduction 158
8.2 The SC's stature in the judicial system of Pakistan 159
8.3 Main observations on the 1999 SC judgement 159
8.3.1 The SC's definition of riba (interest) 160
8.3.2 The Bai Muajjal (deferred payment sale) practice 160
8.3.3 The Ijarah (leasing) practice 161
8.3.4 The service charge practice 161
8.3.5 The PLS practice 161
8.3.6 The indexation system 162
8.3.7 Negotiable instruments and debt-based securities 162
8.3.8 Government borrowings 162
8.3.9 Need for a sound IBF infrastructure 163
8.4 The SC parameters for the Islamization of the economy 163
8.5 The process of Islamic transformation 164
8.5.1 Commission for transformation in the SBP 164
8.5.2 Task force in the Ministry of Law and
Parliamentary Affairs 164
8.5.3 Task force in the Ministry of Finance 165
8.6 The Start-up process of Islamization 165
8.7 The government's appeal for an extension 166
8.8 Dramatic U-turn on Islamization 166
8.9 The SC bench manoeuvring 167
8.10 The 2002 riba (interest) case review 168
8.10.1 The government's arguments before the SC 168
8.10.2 UBL's arguments before the SC 170
8.10.3 The religious parties' arguments before the SC 170
8.11 The SC judgement on the 2002 riba (interest)
case review 170
xii Contents
8.12 Anomalies in the 2002 SC judgement 171
8.13 Debate over the 2002 SC judgement 173
8.14 Reflection on the government's Islamization efforts 174
8.15 Present and future prospects of IBF in Pakistan 177
8.16 Summary and conclusions 179
The Causes of the Failure of Islamic Banking and
Finance in Pakistan 181
9.1 Introduction 181
9.2 Government machinery 181
9.2.1 Lack of genuine political support 183
9.2.2 The noncommittal attitude of bureaucrats 184
9.3 The banking and financial sector environments 185
9.3.1 Lack of professionalism
at the SBP 185
9.3.2 Lack of Islamic training and education
for bankers 186
9.3.3 Financial mismanagement and incompetence 186
9.3.3.1 Non-performing loans, write-offs and
co-operative scandals 187
9.3.3.2 Monopoly on bank credit 188
9.3.3.3 Expensive and unpopular
financial services 189
9.4 General socio-economic governance 189
9.4.1 Risk-averse depositors 190
9.4.2 Cold shoulder from business people 190
9.4.3 Huge burden of foreign and domestic debt 191
9.4.4 Weak and slow legal system 194
9.4.5 Rigid and narrowly based tax system 194
9.4.6 Malpractices and rampant corruption 195
9.4.7 The exploitative socio-economic set-up 196
9.5 Privatization and globalization of the market economy 198
9.6 Summary and conclusions 198
10 Summary and Conclusions 200
Notes 207
References 220
Contents xiii
Appendices 231
Appendix I 231
Appendix II 238
Appendix III 241
Appendix IV 244
Appendix V 246
Appendix VI 251
Index 255
List of Tables and Figures
Tables
3.1 Application of PLS (Mudarabah and Musharakah), Murabaha
(deferred payment sale), Ijara and Bai'Istinna/Bai'Salam
modes in the IBF industry (US$ thousands) 50
4.1 Profit and loss distribution under the daily product system 95
5.1 Profit rates on PLS deposits on the basis of the
daily product method 117
5.2 Rate of Return (ROR) on PLS deposits in the nationalized
commercial banks of Pakistan for the period 1981-1990
(percentage per annum) 118
5.3 Return on Equity (ROE) of nationalized banks of Pakistan
for the period 1981-1989 (percentage per annum) 118
9.1 Loan defaults and write-offs in the financial sector of
Pakistan for the period 1985-2002 (Rs in billion) 187
9.2 Foreign debt in the economy of Pakistan for the period
1955-2006/7: long- and medium-term (US$ million) 191
9.3 Expenditure and budget deficit of the economy of Pakistan
for the period 1981-2006/7 (Rs in billion) 193
Figures
2.1 Guiding principles and goals of Islamic Economics 16
3.1 The IBF model: basic policy instruments 46
3.2 Mudarabah (joint venture) banking model 47
3.3 Musharakah (equity participation) banking model 49
3.4 Murabaha (deferred payment sale) banking model 52
3.5 Ijarah (leasing) banking model 55
3.6 Bai Salam (advance payment) and Bai Istisna (procurement
engagement) banking model 56
4.1 The CII's IBF model: main policy instruments 80
4.2 Time multiple counter-loans arrangement (hypothetical
example) 88
4.3 Policy instruments of the CII's central banking model 98
9.1 Strategic relationship of IBF institutions with other
state institutions 182 |
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| author | Khan, Mohammed Mansoor Bhatti, Ishaq |
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| geographic | Pakistan (DE-588)4075812-6 gnd |
| geographic_facet | Pakistan |
| id | DE-604.BV035006638 |
| illustrated | Not Illustrated |
| index_date | 2024-07-02T21:42:22Z |
| indexdate | 2024-07-09T21:20:02Z |
| institution | BVB |
| isbn | 1403998779 |
| language | English |
| lccn | 2008015869 |
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| series2 | Palgrave Macmillan studies in banking and financial institutions |
| spelling | Khan, Mohammed Mansoor Verfasser aut Developments in Islamic banking the case of Pakistan Mohammed Mansoor Khan and Ishaq Bhatti New York [u.a.] Palgrave Macmillan 2008 XXV, 264 S. txt rdacontent n rdamedia nc rdacarrier Palgrave Macmillan studies in banking and financial institutions Includes bibliographical references and index Geschichte 1977-2007 gnd rswk-swf Bank Religion Banks and banking, Pakistani Banks and banking Religious aspects Islam Banks and banking Pakistan Islamische Bank (DE-588)4272560-4 gnd rswk-swf Pakistan (DE-588)4075812-6 gnd rswk-swf Pakistan (DE-588)4075812-6 g Islamische Bank (DE-588)4272560-4 s Geschichte 1977-2007 z DE-604 Bhatti, Ishaq Verfasser aut http://www.loc.gov/catdir/enhancements/fy0829/2008015869-b.html Contributor biographical information http://www.loc.gov/catdir/enhancements/fy0829/2008015869-d.html Publisher description http://www.loc.gov/catdir/enhancements/fy0829/2008015869-t.html Table of contents only HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=016675951&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis |
| spellingShingle | Khan, Mohammed Mansoor Bhatti, Ishaq Developments in Islamic banking the case of Pakistan Bank Religion Banks and banking, Pakistani Banks and banking Religious aspects Islam Banks and banking Pakistan Islamische Bank (DE-588)4272560-4 gnd |
| subject_GND | (DE-588)4272560-4 (DE-588)4075812-6 |
| title | Developments in Islamic banking the case of Pakistan |
| title_auth | Developments in Islamic banking the case of Pakistan |
| title_exact_search | Developments in Islamic banking the case of Pakistan |
| title_exact_search_txtP | Developments in Islamic banking the case of Pakistan |
| title_full | Developments in Islamic banking the case of Pakistan Mohammed Mansoor Khan and Ishaq Bhatti |
| title_fullStr | Developments in Islamic banking the case of Pakistan Mohammed Mansoor Khan and Ishaq Bhatti |
| title_full_unstemmed | Developments in Islamic banking the case of Pakistan Mohammed Mansoor Khan and Ishaq Bhatti |
| title_short | Developments in Islamic banking |
| title_sort | developments in islamic banking the case of pakistan |
| title_sub | the case of Pakistan |
| topic | Bank Religion Banks and banking, Pakistani Banks and banking Religious aspects Islam Banks and banking Pakistan Islamische Bank (DE-588)4272560-4 gnd |
| topic_facet | Bank Religion Banks and banking, Pakistani Banks and banking Religious aspects Islam Banks and banking Pakistan Islamische Bank Pakistan |
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