LAHORE: Takaful, the Islamic mode of insurance, for being very transparent, is emerging globally as a very viable model and being used successfully as engine of growth in a number of Muslim countries.
This was stated by Chief Executive Officer Pak-Qatar Takaful Pervaiz Ahmad while speaking at Lahore Chamber of Commerce and Industry on Saturday. LCCI Vice President Saeeda Nazar presented the welcome address while former Vice President Shafqat Saeed Piracha also spoke on the occasion. Pervaiz Ahmad said Islamic mode of banking and all its tools are fast gaining ground in Pakistan when compared to conventional mode of banking; though it is a highly untapped market as yet.He said Islamic financing products such as Murabaha, Ijara, Musharaka and Islamic Export Refinance, etc, are catering to a diverse cross-section of the economy, including corporate, SME and consumer sectors.
He informed the participants that Sudan was the first country which introduced Takaful in 1979 while in 1987 Malaysian government used Takaful as an engine of growth by issuing First Takaful Act. He said that Takaful met such a big success in Malaysia that 60 per cent of the Takaful customers in that country are Chinese. Pervaiz Ahmad said that Takaful is emerging globally as a very viable model as it remains unaffected by the economic meltdown witnessed by the Western world. Speaking on the occasion LCCI Vice President Saeeda Nazar said that today more than two hundred and fifty Islamic financial institutions are operating world-wide from China to USA. Western banks through their Islamic units in UK., Germany, Switzerland, Luxembourg, etc also practice Islamic banking.
She said the basic principle of Islamic banking is the prohibition of Riba or interest, which has seldom been recognised as applicable beyond the Islamic world but many of its guiding principles have consciously or unconsciously been accepted. The majority of these principles are based on simple morality and common sense, which form the bases of many religions including Islam.LCCI Vice President said that Islamic finance was practiced mostly in the Muslim world throughout the Middle Ages facilitating trade and business activities. In Spain and Baltic States, Islamic merchants became indispensable middlemen for trading activities. It is claimed many concepts, techniques and instruments of Islamic finance were later adopted by European financers and businessmen.
She said Islamic financial system employs the concept of participation in the enterprise, utilising the funds at risk on a profit-and-loss-sharing basis. This by no means implies that investments with financial institutions are necessarily speculative. This can be excluded by careful investment policy, diversification of risk and prudent management by Islamic financial institutions.LCCI Vice President suggested that the Islamic countries that had undergone the experience of Islamic banking should be consulted so that the existing level of services could be improved and more diversified products could be introduced. LCCI Executive Committee Members Sheikh Mohammad Ayub, Ilyas Majid Sheikh and Khawaja Khawar Rashid were prominent among participants. – PT