Shariah-based banking hit with Afghans 

(MENAFN - Arab News) Around 30 million people have been waiting for a full-fledged Islamic banking system in Afghanistan as they do not want to deal with interest-based conventional banks, says Alam Khan Hamdard, Islamic banking chief of Kabul Bank. He was talking to Arab News on Tuesday on the sidelines of the World Islamic Retail Banking Conference at the Jumeirah Beach Hotel in Dubai.

The conference that opened on Monday highlighted that Shariah-compliant financial services were increasingly becoming a part of the financial mainstream in the wake of the global economic downturn. This was emphasized by Hussain Al-Qemzi, group CEO of Noor Islamic Bank, on Monday.

The conference with over 200 delegates, including CEOs and heads of Islamic and conventional retail banking, will conclude on Wednesday. The second day witnessed several interesting sessions such as Open Fatwa in Islamic Retail Banking and Domestic and International Remittances with mobile interface etc. The fatwa session discussed the future of Shariah- compliant retail banking in the Middle East.

Sheikh Nizam Yaquby, Shariah scholar from Bahrain, answered several questions including raffles and lucky draws offered by different Islamic banks in the region.

On Wednesday the conference will discuss Islamic finance and risk management. The training workshop will have four sessions: Credit risk, market risk, operational risk and challenges and issues.

Stressing the growth in liquidity in Afghanistan, Hamdard said: "We have around $32 billion circulating money in our economy, but only $1.4 billion has been invested in conventional banks. Because people dislike going with conventional banks as it is based on interest."

"When we announced the Islamic banking service last week, the response was immense and we have already got huge investment offers," he said. "Around 30 million people in the country want Islamic banking; unfortunately our country has no human resources to cope with this demand. However, we will seek help from our brotherly countries to get expertise and human resources to overcome this issue," he explained. "The current scenario for Islamic banking is very positive and some banks have approached the government to start Islamic services across the country. The Central Bank of Afghanistan is working to form a full-fledged Islamic banking law which will be ready within three months with the approval from the Parliament, said Hamdard, who is also a member of the Islamic banking law formation committee.

"Kabul Bank is going to start Islamic banking system in a wider and professional way. Initially it will be in Kabul but it will be extended to other provinces soon," he said, adding, "Further, we will go for tie-ups with different Arab countries including Saudi Arabia, United Arab Emirates and Kuwait. Additionally, we are cooperating with the Asian Development Bank and Islamic Development Bank in Shariah-compliant funds."

Dr. Abdul Shakoor, advisor of Islamic banking at Maiwandbank in Kabul, agreed that there was immense demand for Islamic banking products in Afghanistan. "Most of our people are Muslims and they want only Islamic banking products, and currently we are developing a faultless system for them," he said. "Regarding Islamic banking, we are first in Afghanistan. We announced our service three months ago and response was incredible."

On the opening day, the convention tackled the structural challenges of the industry and untapped opportunities, which if prudently addressed, could help in the revitalization and further shaping of the industry on a new international level. "Islamic banking is growing rapidly but it should focus more on its spiritual aspect than its physical facet," said Pervez Saed, director of Islamic banking at the State Bank of Pakistan.

While addressing a session titled "Regulatory Frameworks for Sustainable Industry Growth," he claimed that Islamic banking system in Pakistan has had 5 percent of the retail market for the last five years.

By K.T. Abdurabb