Islamic Banking
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Introduction
1945 - Global System of 1945 and prudence of Quaid-e-Azam ( prudence of WTO leadership in post 1985 era ) 1947 - Emergence of Pakistan within legal framework 1948 - Foundation of State Bank of Pakistan – Economic prudence of Quaid-eAzam The crux of historic address of July 01, 2007 – Research for Islamic Economic System Responsibility vested with State Bank and Educational Institutions 1966 - Absence of material efforts and even the intent for achieving this goal among Banks – Practical denial by Educational Institutions
Islamic Banking
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Presentation Format
Economic System of State of Madina – Not based on Banking - neither then nor before it Only new product – Bai Salam – Separate discussion (Tarjuman-ul-Quran April 07) Was this system an accidental occurrence ? Or a continuation of Divine revelation and guidance History of Divine revelation and guidance and completion with Surah Quresh – Emergence of Riba (product) Expansionary System of Khilafat – Beginning of Banking (Ajmaa-e-Sahaba) System of Malookiat Today's Conventional System vs System of Khilafat System of Khilafat as Universal basis of Islam for a Universal Economic System Both the systems are partially assisting but can not integrate fully (Riba) A new system can only be further extension of System of Khilafat (rather than products) System currency (today) and the need for a new system (elimination of Riba) Balance Sheet of State Bank of Pakistan and difficulty to its acceptance Where can we begin (beginning of a debate) Role of Education and Finance Departments and Bait-ul-Mal (beginning of a debate)
Islamic Banking
The Concept of Economy and Banking in Islam
Socio-Economic and Welfare Based Economic System of Islam
od ar ab ah
Zakat
ka h
I S L A M
Debt
M
I N
Bait al mal
us ha ra
W E L F A R E
M
Hayat Al-Nabi (PBUH) 23 Yrs
Islamic Banking
Currency
From Earth, Earth & above ‌‌
Trade in Islam
Islamic Banking
Islamic Economy 1 From Ibrahim (AS) to Mohammad (PBUH)
1
5 2
3
ECONOMY 6
1. Cash and Credit 2. Trade and Riba 3. Trade, Riba, Modarabah and Musharakah 4. Sadaqat 5. Bait-al-mal 6. Trading house - Deposit based
4
Islamic Banking
Qasa-ul-Ambia/Qasas-ul-Quaran Hazrat Ibrahim (AS) Hazrat Ishaq (AS) Hazrat Ismail (AS) Hazrat Yaqoob (AS)
Palastine to Egypt to Arab
Bani Qatoora
Palastine/ Egypt
Hazrat Yousaf
(AS)
Dirham Makkah
Tijarata
Dua-e-Khalil
Syria Karwan-e-Tijarat Yemen
Defections in Calibration Equipment
Marabaha
Hazrat Shoaib (AS)
Defections
Mal bil Mal
Waeed
Azzab Takhliqe-Riba
Qabal
Types of Riba
Hazrat Musa (AS)
(Torat- Humat-Riba)
Distruction of Uroshulum 2 times Hazrat Esah (AS) Bani Israil
Yasrab
Safar Amad Alnabi (SAW) Refusal/Acceptance
Hazrat Muhammad (PBUH) Dua-e-Khalil
Islamic Banking
Economic System of Khilafat Khilafat
Welfare Model of Economics in Islam
Global Economy
Record of Assets
Banking in Islam
Trade in Islam
History of Islam
Source: Islam
Bait-al-mal Source: Quaran & Sunnah
Beginning: Histroy of Islam
Currency Banking Source: Quaran & Sunnah Beginning: Histroy of Islam
Qarz
Curre ncy
Mush Moda arka rbah
ECONOMY
Beginning: Dars-iNizami
Islamic Banking
Economic System of Malookiat Malookiat
Welfare Model of Economics in Islam
Global Economy
Record of Assets
Banking in Islam
Trade in Islam
History of Islam
Source: Islam
Bait-al-mal Source: Quaran & Sunnah
Beginning: Histroy of Islam
Currency Banking Source: Quaran & Sunnah Beginning: Histroy of Islam
Qarz
Curre ncy
Mush Moda arka rbah
ECONOMY
Beginning: Dars-iNizami
Islamic Banking
Economics and Banking in Islam - Global IMF WB WTO
Islamic Confedral Parliament Central Bait-al-mal at Madian Muawara
Other Bait-al-mal
Genral Trade
Parliament Welfare Model of Economics in Islam
Bait-al-mal Source: Quaran & Sunnah
Banking in Islam
Trade in Islam
History of Islam
Source: Islam
Currency Banking
Beginning: Histroy of Islam
GLOBAL ECONOMY
Record of Assets
Source: Quaran & Sunnah Beginning: Histroy of Islam
Qarz
Mush arka
ECONOMY
Curre ncy Moda rbah
Beginning: Dars-iNizami
Conventional System Vs System in Islam - Linkage
1. Trade in Islam 2. Banking in Islam 4
3
2
1
3. Bait-al-Mal 4. Welfare economy of Islam
Currecny
Usury
Interest
Riba
I. Trade II. Commercial Banking IV III.Central Banking IV.Secular Economy
III
II
I
Currency
Islamic Banking
Islamic Banking
Man and Money Circle
1375 yrs History of Europe - Not Properly Documented
Goods & Services
Social System of Islam Asset based
Surplus Assets Currency
Banking
m e a n s
Asset based
Currency
Trade in Islam
Currency
Banking in Islam
Banking
Documents
Currecny
Central Bank
Currecny
Banking
Exchange Rate
Bait-al-mal
"Welfare System of Islam"
Secular System
Global Secular System Currency
Trade & Commerce
m o n e y
B a n k i n g
Riba
Currency Assets to No Asset
d e p o s i o t n s l y o f
Asset Leased
a c c e p t a n c e
o f
Public Debt Deficits
m e a n s
Riba WTO
B a n k i n g
1472 yrs History of Islam - Properly Documented
a c c e p t a n c e
o f d e p o s i o t n s l y o f m o n e y
Islamic Banking
SBP – Account pursuant to SBP Act, 1956,on week ended May 20, 2006 (Issue Department)
Liabilities
Rs.
Notes held in the Banking Department
144,703,000
Notes in Circulation Total Notes Issued
Rs.
Assets
Rs.
I.A Gold Coin and Bullion Silver Bullion Special Drawing Rights held with the International Monetary fund
806,603,447,000 806,748,150,000
53,870,004,000
12,057,228,000
Approved Foreign Exchange India notes representing aseets receivable from the reserve Bank of India
550,402,144,000
592,981,000
B. Rupee Coin Government of Pakistan Securities Internal Bills of Exchange and Other Commercial paper: i) Agricultural sector
2,643,656,000 185,851,685,000
Rs.
ii) Industrial sector Rs. iii) Export sector Rs. iv) Housing sector Rs. v) Others Rs.
Total Liabilities
616,922,357,000
II. Held with the Reserve Bank of India pending transfer to Pakistan: Gold Coin and Bullion Sterling Securities Government of India Securities Rupee Coin 806,748,150,000 Total Assets
78,500,000
78,500,000
876,161,000 357,795,000 13,910,000 4,086,000
188,573,841,000
1,251,952,000 806,748,150,000
Islamic Banking Liabilities Capital paid up Reserve fund Rural Credit fund Industrail Credit fund Export Credit fund Loans Gurantee fund Housing Credit Fund
Deposits
(a) Federal Government
(b) Provincial Governments
(c) Banks
(d) Others
Allocation of Special Drawing Rights Bills payable Revaluation Account Other Liabilities Total Liabilities
SBP – Statement of Affairs as on May 20, 2006 (Banking Department) Rs.
Assets
100,000,000 Notes Rupee Coin 15,414,474,000 Subsidiary coins Bills purchased and Discounted: 2,600,000,000 a) Internal: i) Agricultural sector 1,600,000,000 ii) Industrial sector iii) Export sector 1,500,000,000 iv) Housing sector v) Others b) External c) Government Treasury bills 4,700,000,000 Balances held outside Pakistan in approved Foreign Exchange Special Drawing Rights held with the International monetary fund Loans and Advances to Governments Government Debtor Balances 76,904,335,000 Loans and Advances to Scheduled Banks: A. Agricultural sector B. Industrial sector 53,466,164,000 C. Export sector D. Housing sector E. Others
Rs. 144,703,000
Rs. Rs. Rs. Rs. Rs.
3,567,000 33,400,000
36,967,000
900,000,000
201,795,069,000 Loans and Advances to Non-Bank Financial Institutions: A. Agricultural sector 274,428,772,000 B. Industrial sector C. Export sector D. Housing sector 1,525,958,000 E. Others 202,594,000 51,646,593,000 101,690,513,000 788,474,472,000
Investments: A. Scheduled Banks B. Non-Bank Financial Institutions C. Government Securities D. Others Other Assets Total Assets
Rs.
117,677,193,000
Rs.
1,308,416,000
Rs.
15,457,355,000
Rs. Rs. Rs. Rs. Rs.
61,643,982,000 6,279,515,000 109,704,885,000 16,102,465,000
Rs. Rs. Rs. Rs. Rs.
11,242,300,000 2,141,740,000
Rs. Rs. Rs.
25,751,477,000 1,673,375,000 247,849,599,000 919,943,000
193,730,847,000
564,343,000
13,948,383,000
276,194,394,000 169,976,214,000 788,474,472,000
Islamic Banking
Where to Start?
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Start with currency
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Why start with currency?
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Riba in currency issue (bearer) All products woven around currency Other un Islamic elements routed through Currency (and universal transfer) Exchange rate problems Shifting dealings from currency to accounts (Interest applied on accounts) All Muslims to open accounts to benefit from Bait-al-mal All accounts Islamic digit based Complete documentation Other impacts and Benefits Change to Islamic currency-gradual