Islamic Finance and Banking: How It All Began

financeBackground of the system

The first experiment of Islamic banking started in1963, when Mit Ghamr Saving Bank began a project offering interest free banking in Egypt. The project was a success and led the bank to open four new branches by 1967. In the same year, eight new banks started offering interest free banking.

It was the Organization of Islamic Countries (OIC) summit in 1974, in Lahore, Pakistan that fostered the concept of an “Islamic bank” and recommended the creation of an Islamic Development Bank. There are estimated to be over 200 Islamic financial institutions all over the world. The industry is said to be growing at rate of 15% per annum. Not only do a number of Islamic countries such as, Kuwait, Dubai, Saudi Arabia, Iran, Malaysia, Brunei, Bangladesh and Pakistan have Islamic financial institutions, but many non-Muslim countries also house Islamic institutions. Some of these non-Muslim countries include USA, UK, Canada, Switzerland, Australia, and Sri Lanka. Major international conventional banks, such as Citibank, ANZ Grindlays, ABN Amro, HSBC, and Standard Chartered also have Islamic windows.

Islamic banking in Pakistan

Financial institutions in Pakistan seem to follow a cautious “wait and see” approach towards Islamic banking. A number of key players have obtained a license for conducting Islamic banking operations. These include: Meezan Bank Limited, Faysal Bank Limited, Al Baraka Islamic Bank and First Islamic Investment Bank. Meezan Bank is already operating as the first Islamic bank of Pakistan since May 1, 2002 when it acquired the Pakistani operations of Societe Generale. Other banks, including Habib Bank, Habib Bank AG Zurich, National Bank of Pakistan and United Bank Limited, are in the process of initiating Islamic banking products. Muslim Commercial Bank has already set up a dedicated Islamic banking branch.

Efforts towards establishing an Islamic economic system really took off after the Supreme Court’s judgment in the latter half of 1999, ordered the government to abolish the ‘interest-based system’ and establish an alternative Shariah-based system. For the launch of Islamic banking in the country, the State Bank of Pakistan (SBP) has given three options, i.e., to establish an independent Islamic bank, to establish subsidiaries of the existing banks or any commercial bank or to set up stand-alone branches. The stand-alone branches would have to carry business only in the Islamic banking area where both deposit and grant of loans would be according to Islamic injunctions. The development of Prudential Regulations for Islamic banking is already in process. The SBP is also working towards the establishment of an Islamic banking division. The launch of Islamic T-bills, known as Ijarah Sukook, is already under serious consideration in order to solve the liquidity problems of Islamic banks.

These instruments are being developed at a rapid pace. The huge market potential for Islamic products is proof of the fact that the efforts of these entities are bearing fruit. Moreover, while the current conventional financial system has had years to reach the maturity it enjoys now, a modern model of Islamic finance has only been developing over the past few decades.  As difficulties arise and are resolved, the industry is sure to ripen.

A Place for Pets

Image petsWhat type of animals can we own?

There are many types of animals that we can own, for example, cats are considered to be preferred pets. The Prophet (sa) liked cats a lot, and sometimes made Wudu from the same bowl from which a cat drank. He said: “It is not unclean; it is one of those who go round among you.” (Muslim)

Owning a dog however is a different matter and there are many rules and restrictions to owning a dog. Angel Gabriel (as) does not enter the house where a dog is, and so in order for angels to enter our home we must keep them free of dogs. The Prophet (sa) said: “He who keeps a dog other than that meant for watching the herd or for hunting loses every day out of his deeds equal to two Qirat.”(Bukhari)

Lessons for kids

Owning a pet gives us a prime opportunity to teach our children not only about responsibility, but also how to care for something other than themselves.

We can also teach our children not to be cruel to animals. The Prophet (sa) said: “Allah, the Blessed and Exalted is kind and loves kindness…” (Bukhari)

Children who are taught nurturing and compassionate behaviour are more likely to become kind and just adults too.

To buy or not to buy pets?

The Prophet (sa) has prohibited us from buying and selling certain types of animals. Horses are permissible to buy and sell; however cats and dogs are forbidden. In addition, the Prophet (sa) forbade the breeding of dogs.

Don’t go to extremes or be neglectful

In some western countries people buy gifts for their pets and take them to salons.

We should not go to extremes while caring for the pets. Allah (swt) has forbidden us to waste our money.

Similarly, we are also instructed not to become miserly. Allah (swt) states: “And those, who, when they spend, are neither extravagant nor miserly, but hold a medium (way) between those (extremes).” (Al-Furqan 25:67)

We should also not neglect the pets we own. We should give them proper shelter and food and adequate area to roam about. Keeping any animal tied or chained for long periods is inhumane and unnatural.

With regard to animal health care, all cats and dogs must have rabies shots, etc. It is a step like any other preventive measure that should not be neglected. Choosing not to provide pets with the proper protection from a dangerous disease would be irresponsible behaviour towards the animal and the surrounding community.

How should we treat our pets?

In Islam, even before we sacrifice an animal, we are to provide it with a drink of water, and ensure that the knife we slaughter it with is as sharp as possible so not to cause the animal unnecessary pain.

The Prophet (sa) said: “Once while a Prophet among the Prophets was taking rest underneath a tree, an ant bit him. He therefore, ordered that his luggage be taken away from underneath that tree and then ordered that the dwelling place of the ants should be set on fire. Allah (swt) sent him a revelation: ‘Wouldn’t it have been sufficient to burn a single ant (that bit you)?’”(Bukhari)

The punishment for mistreatment of Allah’s (swt) living creatures could be the ultimate price as in the case of the old woman that was sent to the hellfire for neglecting to feed a cat or allowing it to acquire necessary sustenance for itself. (Muslim)

It is our responsibility as parents to teach our children by example, to treat animals with kindness and respect. Insha’Allah, we will raise Muslims whose deeds are rewarded for kind treatment, rather then those whose mistreatment will be punished.