Takaful that is an Islamic mode of insurance is emerging worldwide as a very viable model and being used successfully as engine of growth in a number of Muslim countries.
Pak-Qatar Takaful Chief Executive Officer, Pervaiz Ahmad stated this while speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Saturday. He said that Islamic mode of Banking and all its tools are making place in Pakistan, when compared to conventional mode of banking, though it is a highly untapped market as yet.
He said the Islamic financing products such as Murabaha, Ijara, Musharaka and Islamic Export Refinance are catering to a diverse cross-section of the economy, including the corporate, SME and consumer sectors.
He told the participants that Sudan was the first country, which introduced Takaful in 1979, while in 1987 Malaysian government used Takaful as engine of growth by issuing First Takaful Act.
Pervaiz Ahmad said that Takaful met such a big success in Malaysia where 60 per cent of the Takaful customers are Chinese.
Takaful is emerging globally as a viable model, which remained unaffected by the economic meltdown witnessed by the Western world.
Speaking on the occasion the 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 that 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.
The 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 financiers and businessmen.
She said that the 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.
She 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.
Source: Business Recorder