Shar¯ı‘ah Governance Framework and Perception of Islamic Banking in Pakistan

Authors

  • Kazi Afaq Ahmed
  • Masood Hassan IoBm
  • Imam Uddin

Keywords:

Islamic Banking Sharia Governance, Islamic banking public perception, sharia scholar perception

Abstract

Globally commercial Islamic Banks were launched in 1970s in Middle East, Africa and 2002 in Pakistan. As of 2019, there were 5 full-fledge Islamic Banks operating in Pakistan and nearly all conventional banks have Islamic windows. Islamic Banks captured more than 15.5% share of the total Pakistani Banking market and have far greater potential and capacity to take major share in the market. However, the most critical bottleneck to gain even greater share is public perception about the sharia compliance of the Islamic banking system. Shariah Scholars are key drivers of the perception and opinion of the masses towards the Shariah compliance of the banking system. Researcher has examined State Bank of Pakistan Sharia Governance Framework and compared it with Shariah Governance framework of Malaysia, in light of IFSB guidelines.  Based on key findings focused group interviews of Shariah scholars were carried out to get their perception about the sharia compliance and effectiveness of Shariah Governance Framework in Pakistan. The study focused on 5 key components of a good governance system, independency of Shariah Board, Competence, confidentiality, Consistency and Disclosure requirement. The study revealed that Pakistani Shariah Governance system is compliant with IFSB guidelines and comparable with Malaysian Model. The Shariah scholars have positive opinion and shown satisfaction on Shariah governance system and effectiveness of sharia controls. The study results can be used to improve public perception about sharia Compliance of Islamic banking system in Pakistan

 

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Published

2021-06-30