Behind the Money Why Islamic banking is taking off
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Apr 2, 2025 Humza Jilani, a Financial Times journalist covering Pakistan's shift to Islamic banking, shares fascinating insights on the country's financial transformation. He discusses how Pakistan is embracing a non-interest banking system, driven by cultural values. Jilani highlights the successful Mizan Bank and the unique profit-sharing principles of Islamic finance. Amid economic challenges, he examines the rise of Islamic banking as a potential solution while exploring recent policy changes and the sector's growth potential. It's a compelling look at a financial revolution!
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Mizan Bank Visit
- Hamza Jilani visited Mizan Bank in Islamabad during Ramadan and observed many people withdrawing cash for Eid gifts.
- One customer, Ali Shams, explained his preference for Islamic banking despite lower returns, valuing the spiritual satisfaction.
Islamic Banking Principles
- Islamic banking aligns with Islamic values, prohibiting investments in alcohol, casinos, or pork products.
- It primarily bans fixed interest rates, considered unethical and promoting wealth inequality.
Profit-Sharing Model
- Instead of interest, Islamic banks profit through profit-sharing or asset-based models.
- The bank invests in assets like land, and customers earn returns based on the asset's performance.