Financial Risk Manager

Islamic Banking Institutions of Pakistan are offering a wide range of Shariah Compliant products & services. Murabaha is dominating the financing portfolio of IBIs. Similarly, Ijara, Musharaka and Diminishing Musharaka are also used depicting a noticeable share in total financing of IBIs. However, Mudaraba, Salam and Istisna portfolios still needs to be triggered. May be, in the coming years, by introduction the Shariah compliant Agricultural products, their share get increased. Presently, these financing have relatively small share as compared to Murabaha and Diminishing Musharaka.

A comprehensive range of Islamic Banking products and services is being offered, in order to meet customer's demand of Shariah Compliant Banking, in the following areas:

 Corporate /SME Banking
 Investment Banking
 Trade Finance
 General Banking
 Consumer Banking

Islamic Banking products have to be approved by the Bank's Shariah Advisor as instructed vide IBD Circular 2 of 2008. As per Shariah requirements, funds and products of Islamic Banking are managed separately from the Conventional Banking side. All funds obtained, invested and shared in Halal modes & investments, under supervision of the Shariah Advisor.

In order to ensure compliance with minimum Shariah standards by the banks conducting Islamic banking in Pakistan, the Commission for Transformation of Financial System set up in the SBP approved essentials of Islamic modes of financing.

These are model agreements which have been approved in line with Supreme Court Judgement on Riba. These include Musharaka, Mudaraba, Murabaha, Musawama, Leasing, Salam and Istisna. These model agreements are expected to facilitate the existing Islamic banking sector in creating awareness about Islamic banking products and to develop such products. These model agreements, however, can be modified, in conformity to the products designed by the banks conducting Islamic banking business. But to bring any kind of change in these model agreements, banks conducting Islamic banking operations, will seek approval of the Shariah Board of Islamic Commercial Banks or Shariah Adviser of banks having Islamic banking branches, ensuring that such changes are consistent with the principles of Shariah.

The industry over the years has managed to offer a wide array of products encompassing almost the entire range of Islamic modes of financing that are able to cater to the needs of majority of the sectors of the economy.

Asset Side


The segments covered by the industry through various Shariah compliant modes such as Murabaha, Mudaraba, Musharaka, Ijarah, Diminishing Musharaka, Salam, Istisna, Wakala and Islamic Export Refinance etc. include

• Corporate / Commercial,
• Agriculture,
• Consumer,
• Commodity Financing,
• SME sector,
• Treasury & Financial Institutions.

Also with the increased issuance of Sukuk by corporates investments of IBIs in these Shariah compliant instruments is on the rise.

Liability Side


On the Liability side, Islamic Banking Industry offers various Shariah compliant deposit schemes that are available for customers to invest their funds. These include

• Current Accounts,
• Basic Banking Account,
• Savings Accounts,
• Term Deposits of various maturities, and
• Certificates of Investment etc.

Current Account is mostly being offered on Qard basis whereas Mudaraba is the preferred mode used by Islamic banks for offering savings accounts, term deposits & certificates of investment.
Others

Some full fledged banks are also offering investment banking products and services including Sukuk Arrangement, Financial Advisory, Private Placement, Syndication, Trusteeship, Underwriting, Structured Finance, Listing on Capital Markets, Project Financing, Mergers & Acquisitions etc. Further, a variety of other ancillary services are also being offered in a Shariah compliant manner such as

• Bonds & Guarantees,
• Letters of Credit
• Remittances ( local & International),
• Online banking,
• ATM/debit card ( including Visa),
• Safe deposit lockers and
• Utility bill payments etc.
• Collection of export bills, assignment of export / local bills
• Inter-Bank funds transfer facility through ATM,
• E-Statement facility,
• Lockers,
• Phone Banking and 24 /7 Call Centre service.
• Deposit accepting ATMs